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Ingenia Slowed by market but Earnings up 21%

August 20, 2019

 

Ingenia Communities Group announced this week an Underlying Profit of $47.2 million for the year ending 30 June 2019, an increase of 28% on the previous financial year. The group noted that whilst settlements were at a record level, the groups speed has been slowed by a softer residential market, with settlement delays common amongst residents.

 

Statutory Profit of $29.3 million was down 14% on the prior year and was impacted by several factors, including writing off transaction costs on $72.6 million of acquisitions, loss on divestment of non-core assets, mark to market impairment on interest rate derivatives and a fair value adjustment as development profits were realised.

 

Highlights

• Record EBIT of $61.5 million, up 26%

• Revenue of $228.7 million, up 21%

• Underlying EPS of 21 cents, up 19%

• Strong operating cash flow of $59.3 million, up 26%

• Ten projects under development with two commencing in FY20

 

The positive results in group revenue and operating cash flow were driven by an increase in settlements and rental income. Ingenia achieved 336 new home settlements, up 17% on FY18, with these settlements forecast to add approximately $2.7 million in annual rental income. Underlying EPS of 21 cents was also above guidance, with a 19% increase on FY18 driven by strong asset performance and increased settlements.

 

A final distribution of 5.80 cents per stapled security has been declared, with payment to be made on 26 September 2019. The full year distribution of 11.2 cents per stapled security represents an increase of 4% on FY18.

 

Ingenia’s CEO, Simon Owen, described the strong profit result as encouraging, particularly given the backdrop of a soft residential property market. “We have a resilient business model that has strong underlying demand drivers, combined with a growing property portfolio delivering stable and recurring cashflows.”

 

Ingenia has delivered on key strategic goals and has built a solid platform to grow, with a quality established portfolio that includes embedded growth across coastal and capital city markets.

 

FY20 Strategy

The company’s strategic focus in FY20 includes:

• Continuing to improve the performance of existing assets to drive growth in rental returns

• Executing the Joint Venture business plan, delivering opportunities for capital light growth and additional revenue streams

• Further asset recycling to fund growth

• Focusing on sales and marketing to launch new projects

• Capitalising on opportunities to expand the development pipeline to deliver new rental contracts and support the Joint Venture’s growth

• Completing the funds management acquisition and delivering performance for investors.

 

Guidance

Ingenia expects to deliver EBIT growth of 10-15%, and underlying EPS growth of 5-10% for FY20.

 

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