Ingenia Communities Group (ASX:INA) FY17 Results & Outlook

Interviews

by Jessica Amir

Ingenia Communities Group (ASX:INA) Managing Director and CEO Simon Owen discusses the company’s FY2017 results & strategy.


Jessica Amir:
Hello I’m Jessica Amir for the Finance News Network. Joining me from Ingenia Communities Group (ASX:INA) is CEO and Managing Director, Simon Owen to discuss their full year 2017 results. Simon, welcome back.

Simon Owen: Lovely to be here.

Jessica Amir: You’ve just announced your full year 2017 results. What were some of the highlights?

Simon Owen: Our EBIT, earnings before interest and tax was $32.1 million, which was above market consensus. Our operating cash flow was $30 million, which was up very strongly on the prior year. We settled 211 new homes, which is a record for the group and up around 97 per cent on the prior year. And our statutory profit after tax was $26.4 million. That was impacted by a loss on sale as we divested a non-core part of the business. But that was up just under nine per cent, so all up, a very strong year.

Jessica Amir: What was the final and total distribution for the year?

Simon Owen: Our final distribution was 5.1 cents for the year and that took the total distribution to 10.2 cents. And that’s in total up 9.7 per cent on the prior year.

Jessica Amir: Now to your portfolio, starting with lifestyle communities. Can you tell us how many properties you’ve got on the portfolio?

Simon Owen: Ingenia now owns 35 lifestyle and holiday communities across Queensland, New South Wales and Victoria. Over the last 12 months, we’ve really concentrated on key capital city and metro locations. And it’s great to say that we now own some of the most iconic parks, on the east coast of Australia.

Jessica Amir: How many have you settled over past 12 months?

Simon Owen: In the last 12 months we’ve settled eight new properties. We bought the largest single holiday park in Australia, Cairns Coconut, which was a $50 million deal. We bought the last institutional grade community in western Sydney, out at Vineyard, which was Avina. We acquired our first greenfields project just north of Newcastle, which was Latitude One. And we also acquired two parks up in Brisbane, in metropolitan Brisbane. So we’re really excited about those additions to the portfolio.

Jessica Amir: How many properties are in development?

Simon Owen: At the moment we have 12 properties in development and over the next 14 months, we’re going to either launch or expand, another eight communities. So it’s fair to say we’re one of the fastest growing lifestyle operators in Australia, at the moment.

Jessica Amir: In regards to your holiday parks, how are they performing?

Simon Owen: Our holiday parks are performing very well. Two key market, are grey nomads. So a lot of Australians are now retiring and the first thing they do is buy acaravan, and they’re going up and down the coast. So we’re catering to that market. And then the second market, which is probably closer to my heart, is young families with kids. So, my three boys they love going with me out to see holiday parks. Both of those markets are going very well and we’re seeing lots of opportunities to invest in that, and extract great returns from that development.

Jessica Amir: Now to your seniors rental business, Garden Villages. What are the occupancy levels and how’s the business tracking?

Simon Owen: So Garden closed out the year at a record all-time occupancy of 92.8 per cent. The EBIT contribution from that business was $11.6 million, which is up 5 per cent. So Garden Villlages remains a small but very much core part of our business.

Jessica Amir: You’ve just hit a record level of acquisitions. Can you tell us about the demand for affordable housing, and what makes your Ingenia Community lifestyle property so attractive?

Simon Owen: It’s a great question. I think about four years ago we identified that the fastest growing, but least competitive part of the seniors housing market, was actually affordable seniors housing. So we’ve really reshaped our business to target that market. And there’re two communities that we have that meet the affordability challenge that we have in Australia, at the moment. In our lifestyle communities, we’re typically targeting a new home price that’s around 60 per cent of the prevailing medium house price, in the market that we’re operating.

This means that a senior and actually 82 per cent of seniors own their home outright, means a senior can sell their home, they can put $200,000 or $300,000 in the bank to fund a more comfortable retirement. They can preserve their pension and by renting the land from us, they can actually get about $60 a week from the Government, through the Commonwealth rent assistance. What we’re really finding is that our highly transparent model with no exit fee, no stamp duty and where seniors get to keep all the capital gain, is really resonating with the ‘boomer’ market coming through. And there is about 1,000 people retiring every day in Australia, at the moment. So we’re finding that the depth of market is very strong.

The other thing that we’ve really done over the last 12 months is that we’ve reshaped our portfolio, to focus on capital cities and key metro markets. So our preferred target markets at the moment are obviously Sydney, Brisbane and Melbourne, but also coastal New South Wales. We’re finding a lot of people want to retire up to Newcastle, or even further up onto the mid north coast where they’ve typically holidayed all their life.

Jessica Amir: Last question now. What’s your guidance for FY18?

Simon Owen: We’re forecasting another strong year of growth. In terms of the EBIT, we’re targeting between $42 million and $46 million. And that’s based on home settlements of between 260 and 280 new homes.

Jessica Amir: Simon Owen, thank you so much for the update?

Simon Owen: Lovely to be here, thank you.


Ends