Ingenia Communities Group · ASX:INA
Ingenia Communities — FY2017 Earnings Presentation
43 slides from Ingenia Communities's earnings presentation, Aug 22, 2017
Slide 1: FY17 Results
| use only Taxe(=valte) FY17 RESULTS 22 August 2017
Slide 2: We create community
We creake community Ingenia Cas aor . ag <4 Ingenia Ingenta Ingenia Ingenia Gardens Care Holidays Settlers
Slide 3: FY17 highlights
FY17 highlights Guidance exceeded, supported by strong sales result For personal use only Portfolio refined in line with strategy – non core assets divested, lifestyle now largest contributor to earnings STRATEGY 33 lifestyle and holiday communities – a further four under contract or option Ov
Slide 4: A five year story
A five year story Delivering growth with significant embedded value EBIT (Continuing Operations) Income Generating Sites For personal use only 35 8,000 30 7,000 25 6,000 32.1 5,000 20 $m 4,000 6,843 15 24.2 3,000 5,337 4,435 10 18.1 2,000 12.1 3,932 5 8.9 1,000 1,750 0 0 FY13 FY14 FY15 FY16 FY17 FY1
Slide 5: Business overview
Business overview Creating Australia’s best lifestyle communities For personal use only Over 4,600 rental and Ingenia has lifestyle residents 66 Australian communities & growing Portfolio now 4,000 Occupied permanent homes $689 million 790,000+ ‘room nights’ p.a Villas and sites NT $ Annualised reve
Slide 6: Performance and capital management
Performance and capital management For personal use only Future Stage New Homes (Completed) Tourism Conversion (Completed) Ingenia Lifestyle Lake Macquarie NSW 6
Slide 7: Key financials
Key financials Strong operating earnings and cash flow KEY FINANCIAL METRICS FY17 FY16 CHANGE For personal use only Revenue up 40%, reflecting strong Revenue $149.9m $107.1m 40.0% performance from the core business and contribution from acquisitions EBIT $32.1m $24.2m 32.6% EBIT up 32.6% - above gui
Slide 8: Strong growth in EBIT
Strong growth in EBIT Jun 17 Jun 16 Strong EBIT growth from core business Change For personal use only ($m) ($m) EBIT Ingenia Lifestyle and Holidays • Lifestyle and Holidays • Rental base expanding – driven by acquisitions 17.4 11.0 58.2% operations and additional new home sales • Lifestyle developm
Slide 9: Capital management
Capital management 30 Jun 17 30 Jun 16 Strong balance sheet – LVR of 27.7% For personal use only Australian debt ($m) ($m) • Pro forma LVR 33.3%1 Total facility 300.0 200.0 • Significant headroom against covenant of 50% Total debt drawn 166.5 99.1 Bank guarantees1 10.8 26.2 Debt facility increased t
Slide 10: Growth in values as capitalisation rates sharpen
Growth in values as capitalisation rates sharpen • Independently valued c.50% of total portfolio by value (33 AV. CAP AV. CAP JUN 17 For personal use only assets) during FY17 (including twelve lifestyle and PORTFOLIO RATE JUN RATE JUN BOOK 20171 20161 VALUE ($m) holiday communities), confirming cap
Slide 11: Key drivers of NAV per security movement
Key drivers of NAV per security movement For personal use only 3.0 2.8 2.6 0.05 0.03 0.07 0.17 2.4 0.10 2.50 2.45 0.13 2.2 2.0 ($) 1.8 1.6 1.4 1.2 1.0 Opening Underlying Impact of Loss on Sale Amortisation Acquisition Distribution Closing balance profit Revaluations of Settlers and of transaction ba
Slide 12: Valuations: existing communities
Valuations: existing communities Significant cap rate compression evident For personal use only Lifestyle and Mixed-use Communities 11.50% 10.50% Implied cap rate % The Grange 9.50% Riverbreeze 8.50% Cairns Rockhampton Coconut Bonny Hills 7.50% Avina Durack Newport 6.50% (Hometown) Greenpoint (Boyua
Slide 13: Valuations: development sites
Valuations: development sites Approved development sites growing rapidly in value Recent Development Land Transactions For personal use only Greenpoint 160,000 (Boyuan) Newport 140,000 (Hometown) 120,000 $/development site Spinnakers 100,000 Newport (Hometown) 80,000 Albury Lifestyle Bethania Upper
Slide 14: Ingenia's most valuable project
Ingenia’s most valuable project Avina – Sydney North Western Growth corridor • For personal use only Project comprises existing 200 site permanent and holiday accommodation and significant land bank (140,000m2) • DA lodged for 247 new lifestyle homes in September 2016 • Due to project size, currentl
Slide 15: Strategy
Strategy For personal use only Ingenia Lifestyle Bethania, QLD 15
Slide 16: Many seniors will struggle to fund a comfortable retirement
Many seniors will struggle to fund a comfortable retirement Median House Price Home Ownership Limited savings or Pension For personal use only ($) (Age) superannuation Superannuation account balances 1,400,000 Source: ASFA Research and Resource Centre. 100% 1,200,000 100% 90% According to ASFA a 1,0
Slide 17: Land lease communities offer a solution
Land lease communities offer a solution Resident has $216,373 net proceeds from selling For personal use only Median Brisbane home and buying at Ingenia Lifestyle Bethania house price 700,000 600,000 $555,373 500,000 Ingenia Lifestyle Bethania 400,000 ($) 300,000 $339,000 200,000 100,000 0 Camellia
Slide 18: Ingenia value levers
Ingenia value levers Ingenia has significant embedded opportunity within the portfolio to create value use only 2,470 Development Sites $20 million pa incremental rent once built out, over $705 million in sales revenue Below Market Rents $170,000 growth pa in rent For personal Growing Commercial Lea
Slide 19: Operations review
Operations review Expanding business generating strong cashflow growth For personal use only Ingenia Lifestyle Latitude One, NSW Ground Breaking 1 JULY 2017 19
Slide 20: Large, quality portfolio established
Large, quality portfolio established Diverse cashflows and return profile Core Portfolio by Value1 For personal use only Lifestyle and Ingenia Holidays Gardens Lifestyle and Holidays now 80% of portfolio by Development Rent value 16% 20% • Additional $208 million1 committed FY17 in coastal and metro
Slide 21: Ingenia Lifestyle and Holidays
Ingenia Lifestyle and Holidays Over 90% weighting to capital and coastal markets KEY DATA 30 Jun 17 30 Jun 16 Strong growth in cashflows – rental revenue up 35.1% For personal use only Total properties 33 26 • Mature portfolio delivering >9% yield on purchase price2 Permanent sites 2,323 1,620 • Lik
Slide 22: Ingenia Holidays
Ingenia Holidays Compelling opportunity with attractive returns Brand recognition growing For personal use only Sites • Acquired over 770 additional income producing sites in FY17 (by location) • Own some of the largest, most profitable holiday parks on East Coast • Cairns Coconut – delivering stron
Slide 23: Ingenia Lifestyle: rapidly growing development pipeline
Ingenia Lifestyle: rapidly growing development pipeline Record 211 new homes settled FY17, exceeding guidance of 190 FY17 FY16 Settlement of 211 new homes, up 97% on FY16 For personal use only New home settlements 211 107 • Contributing to improved operating margin and yield at key development commu
Slide 24: Investing in growth: right-sizing platform
Investing in growth Right-sizing platform as growth accelerates For personal use only Realising efficiencies across core capabilities of operations and finance Continuing to invest in development, sales Benefits emerging and marketing teams to support increasing settlement targets • Bringing project
Slide 25: Investing in growth: further settlement growth
Investing in growth Targeting further growth in settlements over next three years For personal use only 600 550 LATITUDE ONE (NEW) Forecast Home Sales Price ($'000s) > 500 $500 GLENWOOD 450 (NEW) AVINA (EXPANSION) 400 > $375 350 THE GRANGE (EXPANSION) 300 BETHANIA UPPER Development Size (EXPANSION)
Slide 26: Swan View Gardens, WA
For personal use only Swan View Gardens, WA 26
Slide 27: Ingenia Gardens (seniors rental)
Ingenia Gardens (seniors rental) Strong, stable, government supported cashflows KEY DATA FY17 FY16 Occupancy and rent growth driving For personal use only operational performance Total revenue $28.4m $27.5m EBIT $11.6m $11.0m • All time record occupancy achieved (92.8%) 30 Jun 17 30 Jun 16 • EBIT up
Slide 28: Non-core assets
Non-core assets 30 June 17 30 Jun 16 • Divestment of majority investment in five DMF assets to For personal use only Forum Partners completed October 2016 Settlers (DMF) value $10.8m $62.5m • Reduced asset base has significantly impacted DMF FY17 FY16 earnings Accrued DMF income $1.8m $4.2m • Remain
Slide 29: Outlook: market landscape
Outlook: market landscape Macro/Residential Housing For personal use only • Housing affordability and ageing population driving long-term core demand • Key risk would be slowdown in residential housing (not apartments) – alert but not alarmed • Ageing population and changing vacation patterns drivin
Slide 30: Outlook: organic growth and capital recycling
Outlook: organic growth and capital recycling ► Improve performance of existing assets to drive For personal use only revenue growth and leverage operating and sales platform ► Accelerate development pipeline to deliver new rental contracts and increase development profit ► Progress asset sales and
Slide 31: Appendices
For personal use only photo Appendices 31
Slide 32: Appendix 1: underlying profit
Appendix 1: underlying profit Lifestyle communities key driver of earnings growth For personal use only FY17 FY16 (A$m) (A$m) Continuing operations • Growing cashflows from core business as lifestyle and holidays Lifestyle – operations 17.4 11.0 portfolios expand Lifestyle – development 10.9 5.5 Ing
Slide 33: Reconciliation to EBIT and underlying profit
Appendix 2 Reconciliation to EBIT and underlying profit For personal use only Lifestyle Lifestyle Lifestyle Ingenia (A$m) Operations Develop. Total Gardens Settlers Corporate TOTAL Rental income 45.0 - 45.0 24.8 0.2 - 70.0 Accrued DMF fee income - - - - 1.8 - 1.8 Manufactured home sales - 63.8 63.8
Slide 34: Cashflow
Appendix 3 Cashflow For personal use only (A$m) 30 June 2017 30 June 2016 Opening cash at 1 July 15.0 15.1 Rental and other property income 82.6 71.2 Property and other expenses (63.9) (56.0) Net cashflow associated with manufactured home development 15.8 5.1 Net borrowing costs paid (6.0) (5.1) All
Slide 35: Balance sheet
Appendix 4 Balance sheet For personal use only 30 June 30 June (A$m) 2017 2016 Cash 9.6 15.0 Inventory 21.5 17.7 Investment property and property under development 693.5 710.7 Other assets 23.6 23.4 Total assets 748.2 766.8 Borrowings 170.8 104.1 Derivatives 0.3 0.4 Retirement village resident loans
Slide 36: Guidance commentary
Appendix 5 Guidance commentary For personal use only Metric FY18 Guidance Comment Will depend on launch timing of new and expansion projects (Latitude One, Settlements 260-280 homes Conjola, Glenwood and The Grange) Dependant on settlement volumes and margins, timing of asset sales (earnings foregon
Slide 37: Case study - Lake Conjola, NSW
Appendix 6 Case study - Lake Conjola, NSW Acquired Sep 15 FY17 Outcomes For personal use only Value enhancement strategies Asset level operating margin up over 52% • Install new cabin stock (six in stage 1) (revenue growth and cost management)* • Integrate to portfolio website and revenue OTA’s
Slide 38: Case study – Lake Conjola value uplift
Appendix 6 Case study – cont’d For personal use only Lake Conjola - Value Uplift 35,000 32,500 33,000 Dev Land 31,000 Value ~ 5,000 $5.0 m 29,000 27,000 1,673 Existing $'000s Tourism 25,000 24,000 1,059 Operations ~ $27.5 m 23,000 Dev Land Value ~ 4,200 $3.4 m 21,000 Existing 19,000 Tourism Operatio
Slide 39: Case study - Ingenia Holidays Kingscliff, NSW
Appendix 7 Case study - Ingenia Holidays Kingscliff, NSW Acquired Nov 13 FY17 Outcomes For personal use only Value enhancement strategies Improved aesthetic across park with minimal • Modest managed capital investment spend, predominately from in-house labour • Tight expense rationalisation, drive
Slide 40: Case study – Kingscliff value bridge
Appendix 7 Case study – cont’d For personal use only Kingscliff - Value Bridge from Acquisition 13,000 12,525 804 12,000 248 11,000 Existing 973 10,500 Tourism Operations $'000s ~ $12.5 m 10,000 Existing Tourism Operations 9,000 ~ $10.5 m 8,000 7,000 Acquisition Price Improved operating Re-configura
Slide 41: Appendix 8: competitor landscape
Appendix 8: competitor landscape Major Competitor Properties Locations Strategy For personal use only Ingenia Communities 35 NSW, QLD, and VIC Acquire lifestyle and tourism parks and undertake greenfield development. (ASX: INA) Discovery Parks 60 NSW, NT, QLD, SA, Acquired from private equity by Sun
Slide 42: Contact information
Contact information For personal use only 42
Slide 43: Disclaimer
Disclaimer For personal use only This presentation was prepared by Ingenia Communities Holdings The forward looking statements included in this presentation involve Limited (ACN 154 444 925) and Ingenia Communities RE Limited (ACN subjective judgment and analysis and are subject to significant 154 4
Ingenia Communities Group — FY2017 Earnings Presentation on 6ix