Ingenia Communities Group

Thank you for standing by and welcome to the Ingenia Communities Group 1H26 results teleconference and webcast. Participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr John Kharfi, CEO and Managing Director. Please go ahead.

Good morning and thank you all for attending. I'm pleased to be presenting our first half results for FY26 and to confirm we remain on track to deliver the targets and objectives set out in our five-year plan, including a 10% to 15% compound annual growth rate in settlements. We are now halfway through the second year of our five year plan and despite growing competition in the living sector, are well progressed in the delivery of improved shareholder returns. Before I get underway, allow me to introduce some of our executive team who are here joining me to present and also to answer questions. Justin Mitchell, our CFO, Donna Byrne, General Manager of Investor Relations and Sustainability, Kristy Minter, EGM Residential Communities Matt Young EGM Tourism and Michael Raby EGM Acquisitions and Development I'll start on slide five. We started this year with a solid foundation in place having successfully delivered on our year one goals which established a more streamlined business with a clear purpose and focus on improving development returns, operational efficiency, enhanced productivity and industry leading customer service. Our first half result demonstrates further targeted execution which puts us on track to deliver our year three goals and a full year result at the top of our guidance range this financial year. New home settlements, a key driver of our result, are in line with our expectations and are down on first half last year as we revert to a more traditional second half skew. We are seeing ongoing demand for our land lease communities and have increased both occupancy and rate across the holidays business underpinning our growth for the second half. Operationally we're seeing ongoing strong demand from our customers with consistent momentum across all areas of the business and I'm extremely pleased with our progress in relation to key strategic goals. Key to improving returns is the significant progress made in development where we have established the foundations for a strong second half, growing lot settlements and improving returns in line with our five year plan. Over the half we commenced five new projects and progressed the execution of key project milestones including facilities delivery, display homes and home production. This timing has driven the second half skew consistent with prior years and puts us on track to deliver our five year settlements CAGR target of 10-15% underpinned by sales in hand. With greater financial discipline in place we are now implementing design and procurement changes across new projects. as we cycle through older projects and deliver communities which have been designed with greater efficiency and improve financial goals including cash generation. Importantly and despite growing competition in the sector, we have managed to strategically restock and extend our development pipeline and I look forward to announcing further details as each transaction concludes. Financial metrics will improve this year in line with our Year 3 targets as we see higher return projects such as Sanctuary and Latitude One Expansion contribute in the second half. Over to Justin now to discuss our financials.

Great. Thanks John and good morning everyone and thanks for joining us this morning. I will start on page 8 with the key financial highlights Pleasingly the group has maintained momentum across our operating businesses delivering a solid performance for the first half in line with expectations and the group is on track to deliver at the top end of guidance. The holidays business has continued to deliver strong results with tourism revenue increasing 12% on a like for like basis. While new home settlements were lower this is consistent with previous communications with a more pronounced skew to the second half. Development gross margin has remained stable for Ingenia at 46% while the joint venture pleasingly saw an increase to 53%. We remain focused on delivering enhanced financial returns for development and across our diversified business while maintaining a prudent balance sheet position to fund growth which I'll talk to in more detail shortly. Now focusing on the financial results. Revenue was flat relative to the prior year. Holidays performed well, driving significant growth in revenue, demonstrating continued momentum with ongoing strategic investment to deliver enhanced value across the portfolio. Together with the growth in rents from our living business, this offset the lower development settlements I referred to before and the impact of DMF recognised in the prior period. Group EBIT reduced 1% to $85 million. This slight decline was in line with expectations, primarily due to the timing of settlements and DMF noted previously, offset by a higher composition of settlements from the joint venture projects. Overall first half settlements totaled $248 with 29% of those coming from the joint venture. Our underlying profit was $62 million and the EPS was $0.152. The decline in these metrics was the result of items noted previously, as well as a higher debt cost and the normalisation of the effective tax rate. Normalising for both these, tax and EMF, underlying profit was down 3.5%. Our statutory profit increased 11% to $97 million, driven by positive net revaluations across our portfolio with strong underlying earnings growth. coupled with relatively stable cap rates. These valuations uplifts contributed to an increase in our NTA to $4.10. An interim distribution of 4.8 cents per security has been declared as we move towards alignment of distribution with the taxable earnings from the Trust. Turning to slide 9. Whilst we have seen growth in EBIT across our non-development segments, there continues to be cost headwinds with growth above CPI and in particular council rates, utilities, waste and volume related expenses within our tourism business. Lifestyle rental contributed $25.7 million in EBIT, up 6%, driven by contracted and market rent reviews and new annuity income from settled homes. The lifestyle EBIT margins have been impacted by lower CPI and legislative changes reducing rental growth in comparison to the prior year, no DMF income recognised and newer community scaling as the portfolio expands. Lifestyle development contributed EBIT of $32 million, impacted by higher marketing costs due to the launch of new projects as well as anticipated second half skew of settlements. Average home prices and gross margin were relatively flat year on year, but we do expect these both to improve in the second half, driven by the mix of projects. The development joint venture delivered a 56% increase in operating profit to $12 million, with settlement volumes increasing to 72 for the half, coupled with both average price and gross margin improvement. Holidays delivered a 10% increase in EBIT to $31.5 million. The business has benefited from higher occupancy and rate growth, supported by our strategic investment in new acquisitions and in new cabins. I'll now turn to slide 10. We continue to actively manage capital with discipline and have maintained a prudent balance sheet position. At 31 December gearing was 31%, comfortably within our target range and providing capacity to fund further investment. The group has circa $200 million of funding headroom which combined with strong cash flows from lifestyle rental and holidays provides capacity for growth. The group remains well supported by its lenders. In December we secured an additional $100 million in new facilities and our weighted average debt maturity is 3.3 years with no expiries before January 2027. Drawn debt was 55% hedged with the weighted average cost of debt at December being 5.03% which we forecast to increase in the second half. I want to emphasise that the group can fund its existing projects. As opportunities arise to expand our development pipeline and strategic investment in holidays, we are able to strategically recycle capital from lower growth assets across our lifestyle and holidays business. This would facilitate the release of capital, reduce gearing to be invested into higher returning projects. In closing, Ingenia is well positioned. underwritten by stable and recurring income with strong momentum from our existing operating assets. The group has delivered a solid result for the first half in line with expectations and has continued to make good progress on executing our strategic targets. Based on this momentum we expect to deliver at the top end of our guidance range. We maintain a disciplined capital position while continuing to invest in growth aligned with our strategic objectives. and we have sufficient capital available to fund this growth with multiple capital recycling options available as required. I will now hand over to Michael Grabey to discuss the development results.