Ingenia Communities Group · ASX:INA
Ingenia Communities — H1 2020 Earnings Presentation
40 slides from Ingenia Communities's earnings presentation, Feb 18, 2020
Slide 1: ASX / Media Release
ASX / Media Release 18 February 2020 Ingenia Communities Group (INA) provides its 1H20 Results Presentation which is authorised for release by the Ingenia Communities Group Board. ENDS For further information please contact: Donna Byrne General Manager Investor Relations P 02 8263 0507 M 0401 711 54
Slide 2: Accelerating Growth
. ACCELERATING GROWTH | a] e Nn la AERIAL VIEW OF INGENIA LIFESTYLE FRESHWATER DEVELOPMENT FEBRUARY. 2020 18. FEBRUARY. 2020
Slide 3: Highlights
Highlights • Revenue of $116.9 million – up 25% on 1H19 FINANCIAL • EBIT $32.2 million – up 40% on 1H19 • Underlying EPS 10.7 cents – up 32% on 1H19 • Rental revenue continuing to grow – up 13% on 1H19 to $49.8 million OPERATIONS • Continuing Ingenia Lifestyle margin expansion – up 110 basis points
Slide 4: Acquisition of Lake Munmorah Residential Resort
Acquisition of Lake Munmorah Residential Resort Continued focus on growing rental base Acquisition of quality established lifestyle community • Ingoing yield of over 6.0% driven by in place rents • Expected settlement March 2020 Located on NSW Central Coast approximately 100 km north of Sydney • Com
Slide 5: Business Overview
Business Overview Rental base growing through acquisition and development $ Stable rent base $1.1B $2.1 million/pw Over 9,800 Income producing sites Property Portfolio 4,260 75 Development sites 9 communities under development Communities 37 Lifestyle and Holiday Communities >1.1 million ‘room night
Slide 6: Performance and Capital Management
Performance and Capital Management INGENIA GARDENS SWAN VIEW, WA 5 1H20 RESULTS PRESENTATION
Slide 7: Key financials
Key financials Successful integration of new communities delivering increased earnings KEY FINANCIAL METRICS 1H20 1H19 Revenue $116.9m $93.4m 25% Revenue and EBIT growth driven by increasing rents, recent acquisitions and settlements growth EBIT1 $32.2m $22.9m 40% Underlying profit1 $26.5m $17.5m 52
Slide 8: Underlying earnings growing as business expands
Underlying earnings growing as business expands EBIT 1H20 1H19 Lifestyle and Holidays Operations $16.1m $13.5m 19% Expanding rental base – driven by growth in rental rates, recent acquisitions, additional rental cabins and new home settlements Lifestyle Development $15.1m $8.8m 72% Ingenia Gardens $
Slide 9: Capital management
Capital management Capital position enhanced DEBT METRICS 31 DEC 19 30 JUN 19 Loan to value ratio (covenant <50%) 24.9% 29.8% $225m 3.2% 3.8YRS 24.9% Gearing ratio1 19.3% 23.7% COST OF Interest cover ratio (total) DEBT WT AV DEBT 7.6x 6.4x DRAWN LVR (covenant >2x) CAPACITY4 MATURITY4 DEBT3 Total deb
Slide 10: Growth in value across core portfolios
Growth in value across core portfolios Lifestyle cap rates continue to compress • Independent valuation of 22 assets in 1H20 Av. Cap Rate Av. Cap Rate Dec 19 Portfolio Dec 191 Dec 181 Book Value • Ingenia Gardens and Lifestyle and Holidays portfolio value up 4.9% Lifestyle and Holidays 7.44% 7.68% $
Slide 11: Operations
Operations Core Rental business delivering growth INGENIA HOLIDAYS WHITE ALBATROSS, NSW 10 1H20 RESULTS PRESENTATION
Slide 12: Ingenia Lifestyle and Holidays
Ingenia Lifestyle and Holidays Expanding rental base in capital city and coastal markets • Over 30% increase in permanent sites over the past 12 months KEY DATA 31 DEC 19 31 DEC 18 • Portfolio enhanced as development continues to accelerate and new Total properties1 37 36 communities acquired Perman
Slide 13: Ingenia Lifestyle and Holidays
Ingenia Lifestyle and Holidays Rental income growing KEY DATA 1H20 1H19 Lifestyle and Holiday rental income up 17% Permanent rental income $14.7m $11.9m 24% Further margin expansion Annuals rental income $2.3m $2.5m 8% • Margin positively impacted by growing rents and scale leverage Tourism rental i
Slide 14: Ingenia Holidays
Ingenia Holidays Strong first half as new assets contribute Holidays revenue up 14% on prior corresponding period • Revenue Per Available Room (RevPAR) up 4% (like for like) • Occupancy up 8% (like for like) Strong forward bookings in place - April bookings up more than 15% on prior year • Growing m
Slide 15: Ingenia Gardens (seniors rental)
Ingenia Gardens (seniors rental) Strong, stable, government supported rent KEY DATA 1H20 1H19 Total revenue $12.4m $12.5m EBIT $5.2m $5.1m EBIT margin 41.5% 41.0% 31 DEC 19 31 DEC 18 Total properties 26 26 Total units 1,376 1,375 Av. weekly rent $342 $343 Occupancy 91.6% 90.8% 31 DEC 19 30 JUN 19 IN
Slide 16: Funds Management Platform
Funds Management Platform Generating new revenue streams and capital efficiency Acquisition of Eighth Gate platform complete August 2019 Funds Management is a key growth platform • Six funds with $140 million in assets under management • Strong appetite from investor base • Includes 1,600 income pro
Slide 17: Development
Development Consolidating market leadership INGENIA LIFESTYLE PLANTATIONS, NSW 16 1H20 RESULTS PRESENTATION
Slide 18: Development
Development Sales volumes continue to grow KEY DATA 1H20 1H19 New home settlements up 22% on prior year New home settlements 140 115 22% • Average above ground margin per new home >45% (43% 1H19) Av. new home sales price1 420 363 16% EBIT margin up 490 basis points as scale benefits emerge ($’000) D
Slide 19: Development Joint Venture with Sun Communities
Development Joint Venture with Sun Communities Generating new revenue streams and capital efficiency Joint Venture progressing well • Initial acquisitions complete • Terms agreed for third party debt finance First settlements at Freshwater (Burpengary, QLD) from April 2020 • Construction program wel
Slide 20: Pipeline supporting ongoing development returns
Pipeline supporting ongoing development returns VACANT DEVELOPMENT COMMENCEMENT TO COMPLETION SITES REMAINING* KEY PROJECTS Current Dec 20 Dec 21 Dec 22 Latitude One 272 Strong sales rate – 111 approved sites remaining Potential 161 additional sites (STA) Greenfield projects Plantations 129 Second g
Slide 21: Development progress (Latitude One)
Development progress (Latitude One) AUGUST 2017 AUGUST 2018 FEBRUARY 2020 Capitalisation rate 6.02% AUGUST 2019 20 1H20 RESULTS PRESENTATION
Slide 22: Sustainability
Sustainability As one of Australia’s largest providers of affordable seniors and holiday accommodation, Ingenia is uniquely positioned to deliver on broader social and environmental outcomes ESG initiatives and reporting are a key focus for Board and Management • Audit and Risk Committee will overse
Slide 23: Contributing to our communities
Contributing to our communities Driving resident and team engagement Ingenia’s communities provide a sense of community and support for residents • Reducing social isolation • Assistance to access home care Partnership with Ronald McDonald House Charities Australia® established 2017 • National Famil
Slide 24: Strategy & Outlook
Strategy & Outlook INGENIA LIFESTYLE LATITUDE ONE, NSW - CLUBHOUSE 23 1H20 RESULTS PRESENTATION
Slide 25: Strategic initiatives driving growth
Strategic initiatives driving growth Building rental base and enhancing capital efficiency Acquisition of Colonial Village and Bevington Shores adds 347 yielding sites On balance sheet acquisitions – to the portfolio 1 two communities settled with more to follow Lake Munmorah Residential Resort
Slide 26: An ageing population underpins demand growth
An ageing population underpins demand growth Our target market is deep, growing and has limited alternatives • Australians aged 65 or over represent 27% of the population • Some 40% of seniors aged 65-74 have <$500k net wealth – represents over (7 million people) and will increase to 32% by 2050 (11
Slide 27: Despite growing demand, supply growth remains constrained
Despite growing demand, supply growth remains constrained Ingenia’s sector leading development pipeline provides a significant competitive advantage Forecast demand in 2026 The population aged 65 plus is forecast to grow to 7,000+ 5 million persons by 2026 homes p.a. • This represents an average inc
Slide 28: Sector remains immature, but interest is building
Sector remains immature, but interest is building Larger corporations and private equity groups emerging Competitive Landscape (Total Sites) • There is growing interest from domestic and offshore corporates, however Ingenia maintains a strong Long Term Tourism Development Pipeline competitive positi
Slide 29: FY20 focus
FY20 focus Improve performance of existing assets to drive growth in rental revenue Expand in key markets through acquisition and development – move to clear sector leadership Continue focus on sales and marketing to successfully launch new projects and deliver new rental contracts Capitalise on opp
Slide 30: Appendices
Appendices ALLSWELL COMMUNITIES – WAIRO BEACH HOLIDAY PARK, NSW 29 1H20 RESULTS PRESENTATION
Slide 31: Underlying profit
Appendix 1 Underlying profit 1H20 1H19 ($M) ($M) Lifestyle and Holidays – Operations 16.1 13.5 Lifestyle Development 15.1 8.8 Ingenia Gardens 5.2 5.1 Fuel, food & beverage 0.5 0.4 Other 0.3 (0.3) Portfolio EBIT 37.2 27.5 Corporate costs (5.0) (4.6) EBIT 32.2 22.9 Share of loss of a Joint Venture (0.
Slide 32: EBIT and underlying profit by segment
Appendix 2 EBIT and underlying profit by segment LIFESTYLE LIFESTYLE INGENIA FUEL, FOOD CORPORATE ($M) TOTAL OPERATIONS DEVELOPMENT GARDENS AND BEVERAGE AND OTHER1 Rental income 38.8 - 11.0 - - 49.8 Lifestyle home sales - 55.4 - - - 55.4 Catering income - - 1.3 - - 1.3 Fuel, food and beverage income
Slide 33: Cash flow
Appendix 3 Cash flow 1H20 1H19 ($M) ($M) Opening cash at 1 July 20.2 14.5 Rental and other property income 63.0 54.1 Property and other expenses (52.5) (45.3) Net cash flow associated with lifestyle home development 21.7 12.9 Net borrowing costs paid (5.4) (4.7) All other operating cash flows 0.4 0.
Slide 34: Consolidated balance sheet
Appendix 4 Consolidated balance sheet 31 DEC 19 30 JUN 19 ($M) ($M) Cash 11.3 20.2 Inventories 38.5 36.0 Investment properties 948.8 846.8 Investment in Joint Venture 14.1 11.6 Other financial assets 13.8 - Assets held for sale 9.0 12.8 Other assets 30.5 25.5 Total assets 1,066.0 952.9 Borrowings (e
Slide 35: Drivers of change in EBIT
Appendix 5 Drivers of change in EBIT Drivers of change in EBIT 1H19 to 1H20 35.0 1.0 0.6 0.5 0.3 32.2 2.2 2.8 30.0 3.6 25.0 22.9 20.0 $m 15.0 10.0 5.0 0.0 EBIT Dec 2018 Sales volume Margin expansion Acquisitions Rent growth Funds Management Divestments Corporate Costs EBIT Dec 19 34 1H20 RESULTS PRE
Slide 36: Capitalisation rates have progressively tightened
Appendix 6 Capitalisation rates have progressively tightened Lifestyle and Mixed-use Communities 11.50% 10.50% Crystal Cascades,QLD Hervey Bay,QLD Big4 Mudgee,NSW Implied cap rate % 9.50% Silvershores,QLD Highway 1,SA Grange,Jun16 8.50% Aspley,QLD Capricorn Palms,QLD Green Wattle,QLD Colonial,QLD 7.
Slide 37: Property snapshot
Appendix 7 Property snapshot Ingenia Lifestyle and Holidays Lifestyle Development snapshot 31 Dec 2019 31 Dec 2019 snapshot DA approved sites Total properties 37 Ingenia 1,150 Total permanent homes 3,677 Sun Communities Joint Venture 276 Total annual sites 760 Funds 163 Total tourism sites 2,481 DA
Slide 38: Property snapshot (cont'd)
Appendix 7 cont’d Property snapshot Ingenia Gardens snapshot 31 Dec 2019 Funds Management snapshot Total properties 26 Permanent Tourism Communities Total units 1,376 sites sites Dec 19 $342 • Federation Village, Glenroy, VIC 182 Ave. weekly rent • Federation Village, Sunshine, VIC 142 - Dec 18 $343
Slide 39: Contact Information
KARUAH RIVER, SOLDIERS POINT, NSW Contact Information Scott Noble Chief Financial Officer Donna Byrne 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 Sydn
Slide 40: 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 and Ingenia Communities RE Limited (ACN 154 464 990) as responsible entity for Ingenia analysis and are sub
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