Half Year FY20 Financial Results 19 February 2020
About Cedar Woods: Company Overview S&P ASX 300 property company; market capitalisation of ~$640m. Products: land estates, townhouses, apartments & commercial. 9400+ lots in pipeline; 34 projects across VIC, SA, WA, QLD. Track record of financial strength & performance with strong return metrics. Stable Board & management with strong governance structures & corporate reputation. Outlook supported by good presales, quality Price Point portfolio & improving conditions.
About Cedar Woods: Purpose, Vision, Values Our purpose & vision have interconnected objectives: Reliable & growing income streams for investors; Geography Quality housing or offices for customers; Vibrant communities for our customers to be part of; A high spirited and safe workplace for staff; and A loyal business partner to suppliers. 2019 Staff Survey Results: 93% have clarity on our Vision, Purpose, Values 84% are satisfied / very satisfied with their role Price Point 88% would recommend Cedar Woods as a place to work 3
About Cedar Woods: How we create value Geography Price Point 4
About Cedar Woods: Our Strategy To grow & develop our national Geography project portfolio, diversified by geography, product type & price point, so that it continues to hold broad customer appeal & performs well in a range of market conditions. Price Point 5
About Cedar Woods: Strategic Priorities – FY20 Progress Continued support from our 3 banks with facilities recently extended - ANZ, Bankwest & NAB; gearing at low end of target range; Significant capacity to fund growth. Geography Pivoted towards growth to capitalise on favourable buying conditions – 5 sites acquired in 18 months. Developing leading, integrated systems to create efficiencies, superior controls, real time data, & workforce mobility; Strong safety record; Projects with excellent sustainability credentials. Strong culture serving as form of advantage; staff surveys demonstrating high satisfaction levels. Price Point 6
Earnings growth: Recent Acquisitions 5 sites acquired in past 18 months; 3 of them in 1H FY20: ‒ Wollert VIC (500 lots) Geography ‒ Hamersley WA (200 lots) - conditional ‒ Subiaco WA (apartments / townhouses) Disciplined, counter cyclical buying – favourable prices & terms Locations with strong relative demand for new housing Fewer bidders due to finance constraints for some developers Significant additional capacity to acquire more Wollert, VIC projects with several under review Price Point 7
Financial: Performing through the cycles A strong track record of consistent profitability & fully franked dividends 8
Financial: FY20 H1 Summary Net Profit $10.2m Down 67% weighted to H2 as expected Presales Contracts Share Price Total Revenue Up 38% $340m $128.8m Down 5% 30 Jun 2019 to 31 Dec 2019 Down 37%, weighted to H2 as expected Earnings Per Share 12.7c Down 67% weighted to H2 as expected Net Bank Debt to Equity Settlements Interim Dividends 37.9% 330 lots 12.5c Lots / homes / offices settled in H1 At the low end of target range Down 31% weighted to final dividend
Financial: Balance sheet strength & access to funding 31 Dec 30 Jun 2019 2019 Total assets (book value) $644.7m $571.7m Net assets (equity) $377.8m $376.5m Net assets per share (book) $4.70 $4.70 Net bank debt $143.3m $105.3m Net bank debt to equity 37.9% 28.0% Net bank debt to total tangible assets (less cash) 22.5% 18.9% Finance facilities $235.0m $235.0m Finance facilities headroom $72.8m $101.2m Interest cover (annual) 6.9 x 8.6 x 10
Our Portfolio: Summary 9,400+ lots/dwellings/units 34 projects 4 states - VIC, WA, SA, QLD Land estates, townhouses, apartments & commercial projects High amenity locations & often located adjacent to train stations Projects positioned as quality developments within their respective markets Price Point Bushmead, WA Fletcher’s Slip 11
Our Portfolio: Diversified by product & location Location Product Type # lots/homes/offices # lots/homes/offices Commercial SA Townhouses 1% Geography 15% WA 9% Land Apartments 70% QLD 9% 20% 56% VIC 20% State Lots/units % Product Lots/units % SA 1,454 15% Commercial * 136 1% QLD 862 9% Townhouses 855 9% VIC * 1,873 20% Apartments 1,882 20% WA 5,240 56% Land 6,556 70% Total 9,429 100% Total 9,429 100% * Excludes additional 17ha land in Williams Landing for future projects. 12
Market Conditions: Sector drivers Macro conditions remain supportive Stimulus also supporting market Two interest rate cuts, pushing mortgage rates to record lows, & the prospect of further falls; Population GDP growth 2 Unemployment 3 APRA’s relaxing of mortgage stress growth 1 tests, improving availability of credit; VIC 2.1% 2.50% 4.9% Federal Government’s Loan Deposit Scheme; 1.7% 2.50% 5.7% QLD Federal & State Government infrastructure spending; 1.1% 3.00% 5.4% WA Tax cuts for some income 0.9% 1.75% 6.2% SA segments. Notes: (1) ABS: Australian demographic statistics June 2019, (2) State Treasuries: Forecast FY20 Gross State Product growth per FY2020 Mid Year State Budget Reviews, (3) ABS: December 2019 seasonally adjusted unemployment. 13
Market Outlook & Cedar Woods Experience Conditions expected to improve across most markets Market Outlook Melbourne Brisbane Adelaide Perth Submarine & shipbuilding is expected to boost Strong population growth – especially from interstate Improving employment conditions- mining Strong population growth driving demand economic activity from 2021 Unemployment rate has materially reduced over employment approaching previous peak Clearance rates continue to be high Substantial government infrastructure investment Highly competitive in some corridors the December quarter Excess stock being absorbed but sales volumes underway Established housing performing better recently Tightening rental market; low vacancies remain well below peak Low rental vacancies & improving rents but Prices affordable compared with Melbourne & Strong new home sales increase from a low base Established housing performing well, with median housing market remains steady Sydney suggesting scope for growth in the three months to Nov 2019 prices close to peak levels; new housing still Relatively strong price growth forecast recovering. Relatively strong price growth forecast Cedar Woods’ Experience Perth Adelaide Melbourne Brisbane FY20 FY20 FY20 FY20 Fletcher’s Slip townhouse sales slow in H1 but Increasing owner occupier enquiry & sales, but Enquiry & sales have marginally improved over Bushmead & Ariella, north of Perth performed have improved in 2020 so far investors remain quiet the course of H1 well over H1 in contrast to southern corridor Glenside apartment sales slow in H1 with a Land estates selling well but apartment & projects where sales remain slow. Owner occupiers active but investors remain new launch expected in H2 offering more townhouse sales slow inactive Prices & incentives stable with potential for floorplan options Incremental price growth in Williams Landing & margin growth as the market gradually New stages of Glenside townhouses to occur Carlingford improves mid 2020
Our Projects: Western Australia 15 projects & more than 5,200 lots / dwellings Projects catering for a range of buyer types Land subdivision, townhouses & apartments 2 new developments delivering first contributions in FY21 (Solaris & additional Ariella land) Cedar Woods has strong leverage to WA 15
Our Projects: Western Australia highlights Ariella (Brabham) 880 lots, in north-east growth corridor Strong sales continuing Price range $175,000 - $320,000 Increased project life extended to FY25 with acquisition of additional 20 hectares in FY19 Ariella Ariella Salvado Road, Subiaco 1.44 ha site, 4.5km west of Perth CBD Ariella Sought after inner suburb with strong relative performance Mix of townhouses and apartments proposed Development application for townhouses being prepared for lodgement soon Early concept image – Subiaco Sales launch planned for FY21 16
Our Projects: Victoria 13 projects (6 currently at Williams Landing) More than 1,800 lots / dwellings / offices + 17 hectares of commercial / apartment sites Land subdivision, townhouses, apartments & commercial projects Acquired 43 Ha, over 500 lots in Wollert in H1 FY20 17
Our projects: Victoria Williams Landing Up to 10 years remaining project life 101 Overton Rd - strata office Diverse mix of land, townhouses, apartments & commercial developments Numerous projects underway (apartments, commercial, residential lots) including 2 office developments 95 Overton Road Office for Pre-lease 101 Overton Strata Office 101 Overton Strata Office Artist’s impression Artist impression Jackson Green (Clayton South) 570 townhouses & apartments Townhouse component completed Huntington, 165 Apartments commenced construction Apartment price range $380,000 - $700,000 Lancaster Apartments Artist’s impression Target Australia Headquarters Jackson Green Target Australia Headquarters 18
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