Ingenia Communities Group · ASX:INA
Ingenia Communities — FY2019 Earnings Presentation
39 slides from Ingenia Communities's earnings presentation, Aug 20, 2019
Slide 1: 2019 Full Year Results
For personal use only 2019 FULL YEAR RESULTS Creating Australia’s best lifestyle and holiday communities Ingenia Lifestyle Plantations, NSW
Slide 2: Highlights
Highlights For personal use only FINANCIAL STRATEGY • Guidance exceeded - third consecutive year • Capital recycling - $32 million non-core assets divested • EBIT $61.5 million – up 26% on FY18 • Rental base increased by 8% (now 7,775 sites) generating • Underlying EPS 21.0 cents – up 19% on FY18 st
Slide 3: Delivering strategic initiatives
Delivering strategic initiatives Building rental base and enhancing capital efficiency – four key initiatives For personal use only On balance sheet acquisitions - Three established communities acquired (700+ income producing sites) 1 $73 million invested to expand rental base Acquired 330+ pote
Slide 4: Key competitors
Key competitors For personal use only • Ingenia is the largest ASX listed lifestyle and holidays group • Further consolidation expected as global landlords seek entry/scale Allswell Communities 80 (managed from 22 August 2019) 70 60 No. of communities Other 50 Tourism Parks 40 Rental Villages Mixed
Slide 5: Building the rental base via acquisition
Building the rental base via acquisition Expansion in key markets - $73 million in new acquisitions For personal use only Ongoing focus on acquisitions growing rental base and expanding footprint • Mixed-use park in Byron Bay, NSW with 269 sites acquired for $11.6 million • Rivershore Holiday Resort
Slide 6: Building the rental base via co-investment
Building the rental base via co-investment Generating new revenue streams and capital efficiency Complementary Funds Management broadens footprint, revenue For personal use only streams and capital partnerships • Acquisition of established funds management business (Eighth Gate Capital) to complete
Slide 7: Business Overview
Business Overview Rental base growing through acquisition and development For personal use only $ $1B Stable rent base ~$2 million/pw Over 7,700 Income producing Property Portfolio sites Creating Australia’s Best Lifestyle and Holiday Communities Over 3,700 73 Development sites on balance sheet or s
Slide 8: Performance and capital management
For personal use only Performance and capital management Ingenia Lifestyle Lake Conjola, NSW
Slide 9: Key financials
Key financials Successful integration of new assets delivering increased earnings For personal use only KEY FINANCIAL METRICS FY19 FY18 Revenue and EBIT growth driven by increasing rents, acquisitions and Revenue $228.7m $189.5m 21% accelerating development EBIT1 $61.5m $48.8m 26% Statutory profit a
Slide 10: Underlying earnings growing as business expands
Underlying earnings growing as business expands For personal use only EBIT FY19 FY18 Expanding rental base – driven by growth in rental rates, acquisitions, additional rental cabins and new home settlements, offset by recent divestments Lifestyle and Holidays Operations $27.4m $25.3m 8% Lifestyle De
Slide 11: Capital management
Capital management Well positioned to fund growth Capital position enhanced - Joint Venture and funds For personal use only DEBT METRICS 30 JUN 19 30 JUN 18 management extend capital partnerships Loan to value ratio (covenant <50%) 29.8% 32.6% • Development Joint Venture with Sun Communities acceler
Slide 12: Strategy
For personal use only Strategy Construction of new community clubhouse at Ingenia Lifestyle Latitude One, Anna Bay, NSW
Slide 13: Underlying demand drivers remain strong
Underlying demand drivers remain strong Many seniors will struggle to fund a comfortable retirement Percentage of total population by age cohort For personal use only • There are 7 million people aged 55 or over in Australia 2050 today, representing 27% of the population 2030 75+ 2010 65-74 • This w
Slide 14: Strategy focussed on growing rental returns
Strategy focussed on growing rental returns For personal use only A large portfolio of rental communities with significant organic, development and acquisition growth optionality ENHANCING CREATING PARTNERING Contractual Rent Growth Occupancy Growth Development Development JV (Sun) • Contracted annu
Slide 15: Operations
For personal use only Operations Ingenia Holidays Rivershore, QLD
Slide 16: Ingenia Lifestyle and Holidays
Ingenia Lifestyle and Holidays Over 95% weighting to capital city and coastal markets For personal use only KEY DATA 30 JUN 19 30 JUN 18 • Portfolio enhanced as new communities acquired, non core assets sold and development continues to accelerate Total properties 35 35 • Strong growth in rental bas
Slide 17: Ingenia Lifestyle and Holidays: Rental income growing
Ingenia Lifestyle and Holidays Rental income growing For personal use only KEY DATA FY19 FY18 EBIT margin stable Permanent rental income $25.0m $21.7m • Margin positively impacted by growing rents, offset by greenfield assets not yet stabilised (Latitude One, Plantations) and decanting at Rouse Hill
Slide 18: Ingenia Holidays
Ingenia Holidays Stable returns and growing footprint For personal use only Revenue up 9%, driven by acquisitions and investment • Acquisition of Rivershore Resort and Byron Bay Holiday Park (370 additional income producing sites) • Addition of 17 cabins across key tourism assets (~$900,000 revenue
Slide 19: Ingenia Gardens (seniors rental)
Ingenia Gardens (seniors rental) Strong, stable, government supported rent For personal use only KEY DATA FY19 FY18 Continuing to deliver stable returns Total revenue $24.6m $28.0m • Occupancy maintained at over 90% EBIT $10.0m $11.4m • Average rent now $342 per week EBIT margin 40.7% 40.8% › Growth
Slide 20: Development
For personal use only Development First Joint Venture project – greenfield site at Burpengary, QLD
Slide 21: Development: Accelerated growth in challenging market
Development Accelerated growth in challenging market For personal use only KEY DATA FY19 FY18 New home settlements up 17% on prior year New home settlements 336 287 17% • Average above ground margin per home over 40% Av. new home sales price1 • Higher sales prices, above ground margins and home rent
Slide 22: Record sales achieved despite market conditions
Record sales achieved despite market conditions For personal use only New record for home sales (336 new home settlements) delivered FY19 • Record sales, homes prices and margins achieved despite challenging residential market • Growing average home sale price driven by new greenfield projects where
Slide 23: Continuing to secure future opportunities
Continuing to secure future opportunities Pipeline supporting ongoing development returns For personal use only Approved Not Approved Development Size >200 sites Far North Coast NSW (JV) (new, optioned) <200 sites Latitude One (expansion) Joint Venture/ > $550 Eighth Gate Forecast Home Sales Price (
Slide 24: Joint Venture making rapid progress
Joint Venture making rapid progress First settlements anticipated FY20 50:50 Joint Venture with Sun Communities for greenfield For personal use only development established November 2018 • Fees include origination, development and asset management fees (with potential for performance fees) › $0.8m i
Slide 25: Ingenia in the community
Ingenia in the community Driving resident and team engagement For personal use only Partnership with Ronald McDonald House Charities © Australia • First ever National Family Room Partner, providing support across all 18 locations • Cash ($100,000 gifted) and in kind support Strong sense of engagemen
Slide 26: FY20 focus
FY20 focus For personal use only Improve performance of existing assets to drive growth in rental revenue Execute Joint Venture business plan, delivering opportunities for capital light growth and additional revenue streams Continue asset recycling to fund growth Continue focus on sales and marketin
Slide 27: Appendices
For personal use only Appendices Ingenia Holidays White Albatross, NSW
Slide 28: Underlying profit
Appendix 1 Underlying profit For personal use only FY19 FY18 ($m) ($m) Lifestyle and Holidays – Operations 27.4 25.3 Lifestyle Development 33.4 21.0 Ingenia Gardens 10.0 11.4 Fuel, food & beverage 0.6 0.4 Other 0.2 (0.2) Portfolio EBIT 71.6 57.9 Corporate costs (10.1) (9.1) EBIT 61.5 48.8 Share of A
Slide 29: EBIT and underlying profit by segment
Appendix 2 EBIT and underlying profit by segment For personal use only LIFESTYLE LIFESTYLE INGENIA FUEL, FOOD CORPORATE ($M) TOTAL OPERATIONS DEVELOPMENT GARDENS AND BEVERAGE AND OTHER Rental income 68.1 - 21.7 - - 89.8 Manufactured home sales - 119.1 - - - 119.1 Catering income - - 2.6 - - 2.6 Fuel
Slide 30: Reconciliation: underlying profit to statutory profit
Appendix 3 Reconciliation: underlying profit to statutory profit Statutory profit decline largely driven by transaction costs and increased sales at high margin developments For personal use only • Write-off of stamp duty and transaction costs of $5.4 million • Fair value adjustment of $7.7 million
Slide 31: Fair value adjustment on high value greenfield projects
Appendix 4 Fair value adjustment on high value greenfield projects For personal use only Latitude One is generating strong margins and growing home sale prices • Latitude One remains on track to deliver pre tax unlevered project IRR >25% • Ingenia enjoys risks and rewards of development stage at Lat
Slide 32: Cash flow
Appendix 5 Cash flow FY19 FY18 For personal use only ($M) ($M) Opening cash at 1 July 14.5 9.6 Rental and other property income 107.4 102.1 Property and other expenses (93.3) (81.4) Net cash flow associated with lifestyle home development 55.7 34.6 Net borrowing costs paid (8.9) (8.9) All other oper
Slide 33: Consolidated balance sheet
Appendix 6 Consolidated balance sheet For personal use only 30 JUN 19 30 JUN 18 ($M) ($M) Cash 20.2 14.5 Inventories 36.0 30.2 Investment properties 846.8 730.4 Investment in Joint Venture 11.6 - Assets held for sale 12.8 28.7 Other assets 25.5 22.0 Total assets 952.9 825.8 Borrowings (excluding fin
Slide 34: Drivers of change in EBIT
Appendix 7 Drivers of change in EBIT For personal use only Drivers of change in EBIT FY18 to FY19 70.0 2.0 0.6 2.6 1.4 1.0 6.5 61.5 60.0 5.9 50.0 48.8 $m 40.0 30.0 20.0 10.0 0.0 EBIT June 18 Development sales Development Acquisitions Same store NOI Other Impact of Corporate & BD EBIT June 19 volume
Slide 35: Capitalisation rates have progressively tightened
Appendix 8 Capitalisation rates have progressively tightened For personal use only Lifestyle and Mixed-use Communities 11.50% 10.50% Crystal Cascades,QLD Hervey Bay,QLD Implied cap rate % 9.50% Highway 1,SA Grange, Jun16 Capricorn Palms,QLD 8.50% Green Wattle,QLD Aspley,QLD 7.50% Rivershore,QLD Gran
Slide 36: High quality greenfield projects building momentum
Appendix 9 High quality greenfield projects building momentum For personal use only Latitude One, Anna Bay, NSW • Premium community with extensive facilities and infrastructure supporting 270 new homes • Settled 84 homes FY19, average home sale price now $515,000 › Strong demand for future stages ›
Slide 37: Credit rating of lifestyle communities
Appendix 10 Credit rating of lifestyle communities For personal use only Premium Grade office 1 Farrer Place, Sydney Current independent cap rate 4.63% Minter Ellison, Grant Samuel, Goldman Sachs, Tenants (include) Walker Corporation Constant, often involving rental voids and leasing Re-leasing risk
Slide 38: Contact Information
For personal use only Contact Information Scott Noble Donna Byrne Chief Financial Officer General Manager Investor Relations Tel: +61 2 8263 0538 Tel: +61 2 8263 0507 snoble@ingeniacommunities.com.au dbyrne@ingeniacommunities.com.au Ingenia Communities Group Level 9, 115 Pitt Street Sydney NSW 2000
Slide 39: Disclaimer
Disclaimer This presentation was prepared by Ingenia Communities Holdings Limited (ACN 154 444 925) The forward looking statements included in this presentation involve subjective judgment and For personal use only and Ingenia Communities RE Limited (ACN 154 464 990) as responsible entity for Ingeni
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