Ingenia Communities Group (ASX:INA) FY19 results & outlook


by Jessica Amir

Ingenia Communities Group Limited (ASX:INA) CFO, Scott Noble discusses the company's FY19 results, its portfolio and the demand for seniors' accommodation.

Jessica Amir: Hi, I'm Jessica Amir for the Finance News Network, and with me today, from Ingenia Communities Group (ASX:INA) is CFO Scott Noble. Scott, welcome to the network, it's great to see you and thank you very much for coming in.

Scott Noble: Thank you very much Jessica, glad to be here.

Jessica Amir: So you're Australia largest listed holiday and lifestyle community park operator. Just take us through where the business is at.

Scott Noble: Our business has grown quite a bit over the last couple of years. We now have 61 communities, 35 of those are lifestyle communities, and we have 26 Ingenia Gardens investments which deliver really good cash flow to shareholders. We're now collecting over $2 million, a week, in rent. And we have over 7,700 rental site, where we get rent, every single day.

Jessica Amir: And you've also just announced a great set of numbers for your financial year, 2019. Just take us through some of the highlights.

Scott Noble: We delivered at 26 per cent increase in both EBIT and operating cash flow. Our underlying EPS grew 19 per cent. We had a 17 per cent increase in settlements where we delivered 336 settlements in a really tough market. We finished the year in a really good positionfrom a capital management point of view. We declared a distribution to shareholders, which had growth on last year, with the full year distribution being 11.2 cents per security, a 4.2 per cent increase on last year.

Jessica Amir: Andfrom an operational perspective, what are the highlights?

Scott Noble: What was really pleasing this year is we actually achieved margin growth across each of our business segments. We bedded down the Sungenia joint venture which is our joint venture with Sun Communities, where it required its first two assets. And we've successfully integrated three new acquisitions which have added to both earnings and have been accretive to EPS and return on equity for shareholders. These are a holiday park at Byron Bay, a holiday park on the Sunshine Coast and a rental community in Brisbane.

Jessica Amir: And now, can we get an update on the business, starting with your Ingenia Lifestyle and Holiday Parks?

Scott Noble: Our lifestyle business is a key growth focus for Ingenia. It's targeted towards seniors who have equity in their home and are looking to downsize and free up capital. Such they that can then live a more comfortable retirement. The lifestyle business also has a really good development pipeline. It's now grown to 3,700 sites that we've secured, which we'll be able to develop out into to new rental contracts in the future.

The holidays business is a key cash flow generator for the business. It delivers really stable and growing, year on year cash flows, highly predictable for investors.

Jessica Amir: And you've also got a rental business. Your Ingenia Gardens business. Tell us about that.

Scott Noble: We have over 1,376 units that are delivering week on week rent. The business is located on the east coast of New South Wales, predominantly, with a number of sites also in Western Australia. It's over 90 per cent occupied and delivers really good, regular cash flow to the group.

Jessica Amir: And so, just a general question now, the property market is cooling. So is this really affecting the seniors who are downsizing?

Scott Noble: Yeah. The key impact that we're seeing is that it's now taking people longer to sell their house. There's still a high level of demand for lifestyle houses from seniors. But the time taken to actually sell their house, such that they can then free up equity to move into our villages, is just taking longer.

Jessica Amir: So, what are the key factors for seniors that they're looking at when finding their next property?

Scott Noble: When seniors are looking to downsize, key factors are both financial and lifestyle. They're looking to free up equity out of their home and live a more comfortable retirement. From a lifestyle perspective, they're looking for like minded individuals to live with in a community. Somewhere that's safe. Ingenia offers resort-style living and activities and provides an active lifestyle for seniors.

Jessica Amir: And Scott, you've just finalised the purchase of Eighth Gate Capital. So just tell about this and what it means for the group.

Scott Noble: We're very excited by the acquisition of Eighth Gate. It brings a whole new revenue stream to the business. It enables to us our existing scale in our operational activities and also our development platform. It also brings $140 million of assets under management.In addition to acquiring the business, we're also taking a co-investment in each of the funds that Eighth Gate Capital Management was managing.

Jessica Amir: And just lastly, Scott, before we let you go, what's your outlook for FY20?

Scott Noble: We delivered really good growth in FY19, we're expecting the momentum in the business to continue and we've now provided guidance for FY20 of 10 per cent to 15 per cent growth in EBIT and underlying EPS growth of 5 to 10 per cent. We're expecting a growth in the settlements that we delivered on FY19. We're also expecting a contribution from our development joint venture with Sun Communities, which will deliver its first settlements in FY20.

Jessica Amir: Wonderful. Scott Noble, congratulations on your results and congratulations on the announcements as well.

Scott Noble: Thank you very much, Jessica. Appreciate it.


Jessica Amir

Finance News Network
Jessica joined FNN in January 2017 after having worked in financial advising for seven years and in TV journalism for seven years, specialising in finance, equities and analysis. She has interviewed former Prime Ministers of Australia, Tony Abbott, Julia Gillard and Kevin Rudd and ex Treasurer Jo Hockey. Jessica has worked as a journalist with Sky News Business, ABC 1, ABC's The Business, ABC24 and has also been a regional Channel 7 and 9 TV reporter with Prime7 and Win News.