Winton Land Limited (WIN) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Winton Land Limited Fiscal Year 2026 Annual Results. [Operator Instructions] I would now like to hand the conference over to Mr. Chris Mehan, CEO. Please go ahead.

Actually, Steven Joyce, Chair of Winton. Good morning, everybody. Presenting with me this morning are Julian Cook and Executive Director of Winton and Jean McMahon, Winton's Chief Financial Officer. We're also joined by Duncan Ally, who is the General Manager of Project Delivery. We will start with a business update from both Julian and myself Jean will then take you through the financial overview, and I will close with the market and outlook. We will take questions at the end. However, investors and analysts can add themselves to the question queue at any time. Let me start with an update on the business. Before I return -- before I turn to the detail, I want to acknowledge the environment we're operating in. market conditions across New Zealand were decidedly mixed again this year. Auckland remained very subdued, while conditions in other regions proved more resilient. The economy looks set to improve early in the calendar year, but then the war in the Middle East was a significant setback to the trading environment for Winton as it was for many other companies. Against that backdrop, a higher volume of residential settlements, a full year of trading across the Ayrburn venues and the opening of Bravo at Cracker Bay supported a significantly improved result for the company. We settled 430 units, up from 266 in full year '25 and revenue rose 21.5% to $188.8 million. Gross profit was $85.7 million at a margin of 45.4%. EBITDA was $45.6 million, up from $21.3 million and net profit after tax more than doubled to $22.7 million, which is an NPAT margin of 12%. We finished the year with $38.8 million of cash and borrowings reduced to $44.2 million. As of 30 June, we also carry a presale book of $27.4 million, a land bank yield of around 5,400 units, including 857 retirement living units and 22 current projects across 11 master-planned communities. Outside the financial results, FY '26 delivered a number of business highlights, which we will cover in more detail over the next few slides. Our presale strategy again underpins settlements in a mixed market with 430 units settling. At Lakeside to Calpeter, we concluded the land supply agreement with Cana Auto and that has underpinned that development. At Northbrook Wanaka, we completed the wellness spa and began Stage 2, the welcome and care building. In Auckland, we completed and opened Bravo at Cracker Bay in February and finished the refurbishment of the Cracker Bay offices. Two of our Ayrburn venues, Billy's and the Woolshed, were named in the Mitchell & selected category, and both Sunfield and the Ayrburn Screen Hub recorded positive decisions under the Fast Track Approvals Act, which I will come to shortly. As previously advised to the market, Chris Mean resigned as Chief Executive Officer and Chair Winton on 5th of July 2026. Mr. Men remains a Director of Winton and consult to the company on major development projects as required. The Board has confidence that the senior leadership team will continue to successfully deliver on Winton's plans and performance. Julian Cook, Executive Director of Retirement, has assumed an expanded role in an interim capacity to support the senior leadership team. And the Board has commenced a comprehensive process to appoint a permanent CEO and hope to make an announcement on progress with that appointment prior to the Annual Shareholders' Meeting. Just coming to Sunfield and the Woolshed screen hub, they were both approved under the Fast Track approval Act 2024 during the year. Sunfield, our master-planned community in South Auckland was approved by the expert panel on the 10th of March this year. Auckland Council lodged an appeal in the High Court on the 9th of April. Appeals under the act can only be made on a point of law and the hearing has set down for the 15th and 16th of September. Sun field remains 1 of our largest and most transformative projects planned to deliver significant housing supply to South Auckland and we'll continue to pursue the approval with discipline. Effort has upheld as our intention to progress the development. The Ayrburn screen hub was approved on 14th of April 2026 with no appeal lodged within this tech 3 time frame. It's planned is an all-inclusive film studio where users can work and stay on site through filming production and postproduction. Alongside 201 units of accommodation for film workers that will also double as visitor accommodation between productions. It will be a valuable addition to the Ayrburn precinct, generating revenue from the screen hub and supporting incremental growth across the hospitality precinct. Our land bank has an expected yield of around 5,400 units still to be delivered in future years. including 857 retirement living units. That pipeline, combined with our presale strategy gives us a long runway of future revenue to convert as market conditions allow. I'll now hand over to Julian to take you through our results across residential, retirement and commercial.

Thanks, Stephen. Residential development remains the core of the business, and it underpinned this year's result. Residential revenue was $147.8 million, driven by the 430 units that settled during the year, up from 266 in FY '25. Lakeside led the way with 317 settlements. Northlake contributed 102 and the balance came from beaches, Bridsdale and. As you can see from the product mix, 89% of settlements by volume were residential land lots, which keeps our exposure to construction risk low. Average revenue per unit was $344,000, down from $489,000, reflecting a higher proportion of land lots in this year's mix rather than the higher value built product. Looking across our larger communities. At Northlake and Wanaka stages 8B and C were completed entitled, including a stage of 125 land lots with 41 units either presold or available. Stage 15 land lots and units settled with just 1 unit remaining in the final 2 commercial units settled. Our proposed plan chain is underway to enlarge stage 19 and enable around 65 additional residential lots, a meaningful extension of 1 of our most established communities. At Lakeside, Te Kauwhata, the remaining 317 land lots across stages 4 and 5 settled during the year, concluding the land supply agreement with Kainga Ora, in parallel, we've begun the process to vest around 60 hectares of reserve land to the community, a significant milestone in delivering the long-term vision for Lakeside. And in Australia, at Northridge in SinoStage 7 design is complete and the planning application has been lodged with SisnokCity Council. Stage V was released to the market in October 2025 and has sold well and works have commenced on the WallumbyRoad upgrade between Citox CBD and Northridge. Turning to retirement. Northbrook Wanaka marked its first birthday on the 14th of May. New residents have continued to move in steadily through the year with entry prices tracking in line with our expectations and the village generated deferred management and weekly fees for the first time as occupancy builds towards stabilization. The wellness bar opened on the 4th of February and has quickly become a focal point for the community, with a heated indoor pool, spa and sonar, a fully equipped Jim, a yoga and pilates studio, Assel in a consultation room for physiotherapy in Allied Health. Construction of Stage 2, the welcoming care building began in January. The welcome building will house a cafe, restaurant and community amenities and the care building will deliver 35 care suites providing risk home, hospital level and dementia care, extending North Brooks ability to support residents across the full range of later life needs. Both are on track to open in 2027. During the year, we also introduced good fellows. Our new lifestyle village at Lakeside, Te Kauwhata designed for those over 60. Good fellows extends Winton established master-planned community model making use of the land we already hold within our Lakeside community offered under occupation right agreements. The village is expected to build a base of recurring deferred management and weekly fee income over time, complementing our development earnings. Good fellows launched on the second of May with 18 lots released in the first part of Stage 1. The village will ultimately comprise 210 stand-alone homes with Stage 1 delivering 72 across 7 house types, ranging from 2 to 4 bedrooms. The internal resident facilities within the existing commercial building were completed in April, including the residents lounge, a fully equipped gym and office space and groundworks for the additional facilities are underway and on track for completion in 2027, ahead of the first residents moving it. Construction of 4 display homes is well advanced ahead of a full market launch in October 2026. Moving to our commercial portfolio. Cracker Bay is continued to establish itself as a distinctive Waterfront Precinct during the year. The modernized office building is now 77% occupied with Level 1, the only floor still to lease. The car park remains leased to secure parking providing around 160 spaces for tenants, marina users and restaurant patrons and the dry stack Marina facility continued to serve bots throughout the year. The standout addition was Bravo, which opened in February, and I'll speak to that on the next slide. Bravo opened on the 26th of February and overwater restaurant an all-day dining venue on Auckland's White matter harbor that serves contemporary cuisine from breakfast through to dinner with views across the marina in an. For those arriving by water, there are book of birth options that welcomes families with a kid's menu and dedicated play area and Bravo Go offers takeaway coffee and cabinet food. Bravo is a food and beverage dimension to Cracker Bay, complementing the office and Marina offerings and lifting traffic across the precinct. Now to Ayrburn FY '26 was the first full year with all Ayrburn venues trading in Hospitality, revenue grew 69.4% to $35.8 million. It was a strong year for recognition to with Billy's and the Wall Sheet both named in the Michelin selected category. The second Ayrburn classic held in February built on a successful first event and drew 9,000 visitors with a parade of 40 supercars and classics and a live car option. -- our Ayrburn Homestead and Takanini continue to earn recognition most recently, 5-star ratings from Cuisine magazine for the 2024 vintage, and demand for the now exceeds supply. Events and winnings were a real highlight with winnings doubling year-on-year, all of which strengthens Ayrburn's profile as a destination precinct. With that, I'll hand over to Jean to take you through the financials.

Thank you, Julian, and good morning, everyone. I'm pleased to take you through Winton's financial results for FY '26. Winton delivered revenue of $188.8 million, up 21.5% on the $155.4 million reported in FY '25. A total of 430 units settled an increase of 164. Cost of goods sold was $103.1 million, $7.2 million higher than last year on the back of higher settlement volumes and additional hospitality in used trading. Despite that, our development gross margin improved to 37.1% from 31.2% as a higher proportion of Lakeside land lots settled at above average margins. Group gross profit was $85.7 million at a margin of 45.4%, up from 38.3%. Commercial revenue increased by $15.2 million with a full year of trading across the Ayrburn venues and the opening of Bravo, and hospitality revenue alone was up $14.7 million to $35.8 million. We've recorded a net fair value gain of $2.3 million on the investment property portfolio compared with $5.1 million in FY '25. On costs, selling expenses were lower. Employee benefits rose $2.5 million with additional venues trading and administrative expenses fell $2.8 million, largely on lower legal costs. The result was EBITDA of $45.6 million, up from $21.3 million and net profit after tax of $22.7 million, up from $10.3 million in FY '25. Basic earnings per share more than doubled to $0.074 per share. Turning to balance sheet. We finished the year in a strong position with cash of $38.8 million and borrowings reduced to $44.2 million from $99.4 million in the prior year. During June, we repaid the Lakeside and Northlake development facilities from residential settlement proceeds and we extended the Sunfield and Cracker Bay facilities with new expiry date of August 2027 and November 2027. The Winton has no recourse debt at a group level and all other properties across the group outside Sunfield and Cracker Bay remain unencumbered. Inventories reduced by $53.5 million as unit settled. Investment properties increased by $10.8 million and property, plant and equipment increased by $17 million due to continued investment at Northbrook, Wanaka and Cracker Bay. Revenue received in advance and residence loans reflect ongoing sales and occupancy at Northbrook Wanaka and will be recognized over the average expected occupancy of residence. Net assets rose from $555.4 million or $1.869 per share. On cash flows, net operating cash flows increased by $63.6 million to $105.9 million, driven by additional proceeds from residential settlements, lower development land purchases and reduced payments to suppliers and employees with lease work on site. Investing activity outflows fell to $21.7 million with investment property spend relating mainly to Northbrook Wellness building and property, plant and equipment to Northbrook Stage 2. As noted in the accounts, the Board is continuing to pause dividends to maintain financial discipline in the current softer market conditions while actively considering how and when dividends might resume. With that, I'll hand back to Steven for the market and outlook.

Thank you very much, Jean. Let me finish with a few comments on the market and our outlook. Property market has remained subdued across much of the country. particularly in Auckland and the economy has continued to struggle after a brief period of optimism earlier in this year, calendar year. The picture is mixed rather than uniformly negative, net migration remains well below its long-run average though it has ticked up modestly from the lows of last year. On the more encouraging side, building consents have begun to improve. Ready-mix concrete volumes have recovered back towards their long-run average and construction cost inflation has eased considerably from the peaks of 2021 to 2023. Unemployment has climbed, reaching 5.6% in June of this year. We don't yet see clear evidence that, that has peaked. We maintain our view of the residential property market is unlikely to turn around substantially until unemployment has peaked. So we are planning on that basis. We are navigating these conditions as carefully as we can. In the near term, that means focusing on the recurrent income parts of the business on Sunfield and on our South Island developments where the market has held up better and being disciplined about committing further capital until we see clear evidence of sustained growth. We are cautiously positive about an improvement in trading conditions in the year ahead, but the economic uncertainty does remain high. We'll stay focused on converting our land bank into settlements, progressing Sunfield and the Ayrburn screen hub and optimizing our commercial and retirement offerings. And the Board will shortly review projects for investment and update shareholders accordingly. I'd like to thank the Winton team for their work through a demanding year along with our trade partners, contractors and suppliers and our shareholders for their continued support. Now just before I close, I would just note one further thing, and that is that Guy Ferguson and myself have announced our resignations as directors this morning. It's now on the exchange. Would want to thank our fellow directors and the Winton team for their support during our time on the board. We don't plan to answer any further questions with regards to that at the moment. But we'll have more on that later. Thank you. That brings our presentation to an end. Let's move on to any questions.

[Operator Instructions] Your first question comes from Nicholas Hill with Craigs Investment Partners.

On the FY '26 development margin of will it be possible to get a sense of what the average margin for the lag side in North Lake elements were given the Lakeside units were settled under a government contract while North Lake was settled by market sales.

Nick, sorry, we don't release that level of detail by community or by project, sorry.

Moving on to the Sun field, has any preparatory work, see civil engineering or funding arrangements continuing inbanding the appeal welcome? Or has everything paused.