Ladies and gentlemen, thank you for standing by, and welcome to the Ingenia Communities Group FY 2019 Results Briefing. At this time, all participants are in a listen-only mode. There'll be a question and answer session, at which time, if you wish to de-queue for a question, you will need to press 0, followed by the number 1 on your telephone keypad and wait for your name to be announced. Please note that today's conference is being recorded Tuesday, the 20th of August, 2019. I would now like to hand the conference over to your host today, Mr. Simon Owen. Thank you, sir. Please go ahead.
Thanks, everybody, and sorry for the couple of technical issues. Today I'm really excited to be presenting Ingenia's results. In the most challenging residential market in a decade, looking back as far as the GFC, today Ingenia is pleased to announce our strongest results ever. We sold more homes at higher prices, at higher margins, and higher rents than ever before. Our market capitalization recently exceeded AUD 800 million for the first time, and we're knocking down the door for inclusion in the ASX 200. Our development model is now largely self-funding, as cash flows from new home settlements fund future projects, and we are creating some truly irreplaceable long-term assets, such as Latitude One in New South Wales, Lara in Victoria, and Chambers Pines in Brisbane. Just a few highlights.
We recorded record revenue of AUD 228.7 million for the year, which is up 21% on PCP. Our underlying earnings per security was up 18% to AUD 0.21 per security. Our operating cash flow was up 26% to AUD 59.3 million. Ingenia's business model is uniquely leveraged at the intersection of three key thematics: an aging population, a continuing housing affordability crisis, and several generations of people retiring with limited savings beyond the family home. We have an incredible growth runway in place. Our sector-leading development pipeline of over 3,700 home sites is larger than our two biggest competitors combined. We have a stable and highly capable leadership team in place. Our development joint venture with Sun Communities, a long-standing global leader in manufactured housing, only strengthens our capability to deliver, grow, and lead.
In recent weeks, we also announced our move into funds management with our acquisition and co-investment in the Eighth Gate Lifestyle and Holidays platform. I'm very confident that we're in the initial phases of an extended period of compelling earnings growth for security holders. Before we go into the details of the presentation, I'd really like to focus on four key things today. Strategy, portfolio construct, market leadership, and innovation. Number one, strategy. Our business is underpinned by owning land and collecting rent. We presently have over 7,700 income-yielding homes, cabins, and sites. This number continues to grow every week as we settle new homes and add new rental and tourism cabins across the portfolio.
Every week, we collect more than AUD 2 million in cash rent, with a significant component of this underwritten by government transfer payments, including the age pension and Commonwealth Rent Assistance. Our strategy is based around growing an increasingly deep pool of rental income that gives our business fantastically reliable weekly cash flow. Number 2, portfolio construct. The residential market is tough. I'm not going to pretend otherwise. I know Ben Leish yesterday called the bottom of the market, I probably wouldn't go that far, but it's certainly not getting any worse. We're having to work hard for sales and settlements, our portfolio is uniquely leveraged to the continuing aging population. Every day, some 700 Australians turn 65. That's 700 people every day, this will continue for the next 30 years.
Ingenia is firmly focused at the lower and mid-quartile private markets in outer-ring metro and accessible sea-change locations where there is genuine resilience in home prices and underlying demand. Our incoming residents are not requiring a mortgage or refinance. They're downsizing, both in terms of property size and financial commitment. Our incoming residents are typically selling to first homebuyers or upgraders who can sensibly support a mortgage based on generational low unemployment levels. Number 3, market leadership. This year, Ingenia remains on track to become the leading developer of lifestyle communities in Australia. We have an incredible growth runway in place of over 3,700 home sites. The end sales value of this development pipeline now exceeds AUD 1.2 billion and would add over AUD 32 million to our current annual cash rents.
The size of the lifestyle community market in Australia is growing, and so is Ingenia's share of the pie. It remains our absolute resolve to be the clear market leader as measured by settlements, pipeline profitability, and most importantly, resident satisfaction and engagement. Lastly, innovation. We are a genuine leader and innovator in our sector, and this should assist with longer-term peer outperformance. We are already a leader in the build-to-rent sector, where we own and manage over 2,400 rental homes, and we've developed considerable intellectual property in this space. We also have first-mover advantage into a number of compelling high-growth sector adjacencies, including importing flat-pack homes and rental units, which in themselves could be an entirely new business segment for Ingenia and our security holders. I'm now going to move on to the presentation.
Joining me on the call today is Scott Noble, our Chief Financial Officer, and Nikki Fisher, who's our Chief Operating Officer. We're going to start briefly on page three, which is delivering on strategic initiatives. Over the last 12 months, we acquired another AUD 73 million of assets, including three existing communities and a large home site adjacent to our large community in Victoria. We have tremendous visibility on multiple opportunities, which are currently under assessment. Last Thursday, we executed contracts to acquire the Eighth Gate Funds Management platform and made a significant co-investment in each of the six funds. That's really exciting for Ingenia because it diversified our revenue stream and enables us to monetize the significant platform that we've established over the last five years.
We also have the last right of refusal to acquire all of the assets in each of the funds, even when those funds are wound up. We're continuing to build on our joint venture with Sun Communities. We already have the first two projects underway. We have another four projects that we're looking at very closely. Most importantly, once those communities are built with Sun, Ingenia has the right to acquire those projects at market price. Lastly, we're continuing to grow our new home settlements. Over the last 12 months, we settled 336 homes, which adds around AUD 2.7 million per annum in additional long-term recurrent rent. All of those new contracts typically have a rent growth mechanism set at CPI plus 2%.
I've covered off a lot of the positive things in my opening comments, but there are a couple of things where I do think we can do better. Firstly, in refining our new community launch strategies. By that, I mean when we're launching a new community, trying to bring it to market two to three months quicker. This would be achieved through standardizing the design of our homes and community facilities and better alignment between our acquisition and development teams during the due diligence process. I think there's also a lot of work we can do with improving the consistency and move-in experience for our new residents. Generally, I think we do this very well, but in the month of June, we had over 90 new homes settled. That's around four for every working day.
I think our internal systems and processes struggled to keep up with that experience for a few residents. From my perspective, it wasn't as good as it should have been, and that's going to be a key area of focus. Competitor landscape on page four. Following the acquisition of the Eighth Gate Funds Management platform, Ingenia is now the largest ASX-listed lifestyle and holiday group, and we are the number 1 player in this space in Australia, which given that we only acquired our first community back in 2013, shows how hard we've been working. You can see from the chart that there's three dominant players, ourselves and Discovery and Hometown, and then beyond that, it quickly becomes a rapidly bifurcated market, offering some interesting opportunities. Just touching very briefly onto page six.
Just talking a little bit more about our funds management platform, which is the Eighth Gate business. That's a business we've been looking at for the last 2 to 3 years. It gives us tremendous additional asset and capital optionality. As I was noting before, at the five-year conclusion of when those funds may be wound up, Ingenia has the first right to acquire those assets. We do expect to be generating over AUD 2 million a year in fees, and there's also the opportunity for outperformance fees above that. On day one, it adds 1,600 income-producing sites to our portfolio. Again, gives us a great opportunity to monetize our platform that we've established. It also exposes us to a new greenfield, fully approved project in Ballarat, in Victoria. It gives us some really interesting opportunities for seeding additional assets into those funds.
Over the course of the last three or four months, when I've met all the large investors in those funds, there's tremendous appetite there for additional origination. That's something we are going to be looking at down the track. I'm now going to hand over to Scott, our CFO, who's going to talk through the financials.
Thanks, Simon. Good morning, everyone. Thank you for joining Ingenia for the results call. In terms of the financial results, revenue increased 21% to AUD 729 million and EBITDA increased 25% to AUD 61.5 million. These improved results were driven by growth in revenue from our development business, which delivered 236 turnkey settlements, 2% up on prior year with a 19% increase in average sales price. The growth in our rental income from our lifestyle and holiday business, which increased 10% on prior year. This increase in rental income was driven by our annual rental increase process, additional rental sites being delivered from development, new cabin investment, and our newly acquired communities. Underlying profit increased 28% to AUD 47.2 million and underlying EPS increased 19% to AUD 0.21 per share. Statutory profit declined from the prior year by 14%.
This is a result of transaction costs and stamp duty on new acquisitions. A fair value loss on investment property, which was impacted by the realization of development profits on high-margin projects and the write-down of some non-core assets. Statutory profit was also impacted by the fair value of the profit share arrangement at Latitude One and a mark-to-market loss on derivatives. Pleasingly, the group's operating cash flow for the year was up 26% to AUD 59.3 million. Net asset value per security increased 3% to AUD 2.65. A final distribution of AUD 0.058 per security has been declared, taking the full-year distribution to AUD 0.112, up 4.2% from the prior year. Turning to slide 10. Ingenia delivered a 26% growth in EBIT from prior year. Lifestyle and Holidays EBIT increased 8% to AUD 27.4 million, with the Lifestyle and Holiday stabilized margin improving to 39.3%.
Lifestyle development EBIT grew 59% to AUD 33.4 million, with development EBIT margin growing to 28%. This improved result was driven by a combination of increased settlements and new greenfield projects delivering higher above-ground development profit. Ingenia Gardens continued to deliver strong cash flows to Ingenia. On a like-for-like basis then, excluding the impact of the five Tasmanian villages we sold last year, Ingenia Gardens delivered marginally improved EBIT for the group. Corporate costs were up in line with expanded asset base and were predominantly due to higher insurance premiums and higher business development costs being incurred compared to prior year. Turning to capital management on slide 11. Ingenia ended the year in a strong capital management position. At 30 June, gearing was up 23.7%, and LVR was 29.8% compared to our covenant of 50%. Weighted average debt maturity was 3.3 years, and the cost of drawn debt was 3.6%.
During the year, we completed AUD 32 million of non-core asset sales, providing funding to further invest into our development pipeline. We entered into a strategic joint venture with Sun Communities, which has accelerated the group's development profile and created new asset management revenue streams using the group's existing development platform. We completed a placement of Sun Communities at a 13% premium to the closing share price, part of the placement raising AUD 75 million. Post 30 June, we will settle the acquisition of the Eighth Gate Capital Management platform and take a strategic investment in the funds managed by the group. This will expand the group's assets under management by AUD 140 million, utilizing Ingenia's existing operating and development platforms, providing new revenue streams and access to a really strong investor base. We also declared a final distribution of AUD 0.058 per share.
The dividend reinvestment plan is open, and a 2% discount will be applied to the DRP. Thank you, Simon.
Thanks, Scott. I might now just move into operations. Moving to page 17 around Ingenia Lifestyle and Holidays. Total income from our Lifestyle and Holidays business was 71.7% for the full year. We were able to grow our rents on a same-store basis by around 3%, up to AUD 168 per week. That was really through a combination of in-built rent increases, which are embedded in the contracts. The new communities that we're selling typically have a much higher rent. Ingenia at Latitude One is now around AUD 190 per week. Also, we're getting strong rate growth when our homes turn over, and that was nearly 10% for the 12 months to 30 June. Over the course of the last 12 months, we added around 1,300 income-producing sites to the portfolio through a combination of acquisitions, through additional investment in our communities, and through new home settlements.
Just touching on to Ingenia Holidays, which is over the next page, on page 18. We acquired the Rivershore Resort up on the Sunshine Coast and the Byron Bay Holiday Park in Byron, and that added another 360 additional sites to the portfolio. We've continued to invest in our communities, and we added around 17 new cabins, which delivered nearly AUD 1 million in extra income, most of which flows through straight to the bottom line. We were able to grow our like-for-like revenue by 3%, and RevPAR, but revenue per available room night, by around 1%. We have seen a little bit of discount by some of our peers in a couple of markets, which has compressed our ability to really strongly grow rates over the last 12 months.
We've also seen some structural changes in the way that people book holidays, and online bookings now represent over 51% of all cabin bookings. Moving forward onto page 19, which is Ingenia Gardens, which we don't spend a lot of time talking about, but that's a great core part of our business. We're now charging on average AUD 341 per week. We did only achieve same store rent growth of around 1% over the last 12 months. That was impacted by the growth in pensions, which for the last 12 months was a little bit lower than CPI. Also, across our villages in Western Australia, we had to sacrifice a little bit of rate growth in order to maintain our occupancy. Ingenia Care has been a great catalyst for our business.
It's a key differentiator to our competitors. It also has a meaningful impact on the length of stay that our residents have with us. We presently have over 650 Ingenia Gardens residents accessing care through our care assist package. In our Ingenia Gardens business, we are continuing to assess opportunities up in Brisbane to build a brand new seniors rental village, but we're not quite at the threshold return that we would like to see to underwrite that investment. Moving through into development on page 21. The EBIT contribution from development was up 59% to AUD 33.4 million for the 12 months, and the EBIT margin was up 400 basis points to 28%, which I think is very pleasing.
Our average above the ground margin group is now around 40%, and in the next three months, we expect to be launching our new communities at Hervey Bay, which is currently coming out of the ground with the first residents scheduled to move in later this year or early next year. Burpengary, just north of Brisbane, where we expect to be breaking ground in the next four to six weeks. Over the page, on page 22, as I noted in my opening comments, in a very challenging residential year, we had a record year in terms of settlements, margins, gross sales price, and the rents that we're charging. I think the chart on the bottom right-hand corner is very interesting, and that shows that since 2014, when we started building our first homes, we've cumulatively now added 917 new homes to the portfolio.
We've banked that development margin, which is really underwritten new development. That's adding those 917 built and occupied homes is now adding around AUD 8 million per year to our rental income, which is very pleasing. Just going to jump forward a couple of slides now to our key focus, which is on page 26. There's really seven key areas that management really wants to focus on moving forward. Firstly, it's about driving improved performance from our existing assets. Across a lot of our assets, there's vacant land, which we want to install new cabins or new homes. In some of our holiday parks, there's the opportunity to convert lower-yielding sites into cabins. We've got some great organic growth opportunities there.
Secondly, we want to continue to work with Sun Communities on executing our joint venture business plan and delivering opportunities for capital light growth, and that will be first starting with our Burpengary community just north of Brisbane, and then quickly followed by Fullerton Cove near Newcastle. Thirdly, we want to continue asset recycling to fund growth. Over the last 12 months, we successfully divested a number of assets, including our Rouse Hill site in Western Sydney and our Mudgee Lifestyle Park in the mid-northwest of New South Wales, but we have an additional around AUD 25 million of non-core assets that we're really focused on divesting over the next 12 months. We're going to continue to focus on executing well in sales and marketing to successfully launch new projects and deliver new rental contracts.
Fifthly, we're going to continue to capitalize on opportunities to expand our development pipeline, again, to deliver new rental contracts and support the joint venture growth. Sixth, we're going to integrate our funds management business and deliver performance for fund investors. The Eighth Gate transaction settles on Thursday. The small team from Eighth Gate based in Brisbane will be moving into our Brisbane Hamilton office within the week, and we're looking to grow that platform over the next 6 to 12 months. Lastly, in terms of our guidance, I'm pleased to announce that for FY 2020, we are anticipating growth in EBIT of between 10% and 15% and underlying EPS growth of between 5% and 10%. That will obviously depend on market conditions at the time. Based on the great visibility we've got, we're currently sitting on around 225 contracts or settlements.
We do have great look-through visibility there, so we are confident that we can deliver those numbers based on current market conditions. That's all that Scott and I were going to present today, now we'd be delighted to hand over to Q&A.
Thank you. If you wish to ask a question at this time, please press zero followed by the number one on your telephone keypad and wait for your name to be announced. Again, that is zero one. Once again, if you wish to ask a question at this time, please press zero one.
Just regarding any questions. If there are any questions on the line?
If you wish to ask a question, please press 01 at this time. The first question comes to the line of Shane Solly from Harbour Asset Management. The line is now open. Please go ahead.
Morning, guys. Great result. Clearly got some great opportunities coming up. If you look at the key things you got to deliver to get to that 5%-10% in earnings growth and the 10%-15% EBIT growth, what are they and what are the opportunities around that?
Can you just repeat that question? We just had a bit of audio glitch here.
I want to say the call has been a bit garbled, at my end as well. If you look at the 10%-15% EBIT growth you're talking about for FY 2020, what are the key components behind that?
Yeah. The key components there will be, firstly, the number of new homes that we settle and the margin that we achieve there.
Secondly, it'll be based on, we've got some non-core assets that we're looking to dispose. The timing of those disposals will have an impact. We do believe across our Ingenia Gardens portfolio that there's another 200 to 300 basis points of rent growth there. We're looking to install upwards of 40 or 50 additional new rental cabins into our Brisbane rental community. The timing and the rent that we achieve on those will have a meaningful impact. I do think that we'll probably be looking at a few acquisitions over the course of the next 12 months. When we announce those and integrate as quickly as we can, start feeding new assets into the new development joint venture with Sun and start collecting meaningful fees, and similarly with Eighth Gate.
On day one, we expect to be collecting around AUD 2 million a year in gross fees plus potential for outperformance. I do think that fee income from our capital partnering initiatives will have a meaningful input. Also across our holidays business, we're looking to put in additional cabins there. The rate that we can achieve and the level of occupancy across the year, I think they're going to be the key impacts. Scott, do you want to add anything?
Only other one was we acquired a couple of assets during the year, which only had a part benefit in terms of EBIT. We'll get a full year impact next year for those.
Okay, thank you. Just going back to overall conditions, you said it's been a tough year. In terms of more recent trading, are you seeing a stabilization in inquiry? What's happening in recent weeks?
In recent weeks, I guess the ironic thing is that when the coalition government was reelected, whilst we had a lot more inquiry, people felt that the market was going to pick up. A lot of people who were in the process of selling their home actually deferred selling and have decided to wait until spring. Certainly, the level of inbound inquiry we're getting, the level of people who are attending our open days, is materially higher than it was, say, six months ago. We do think that augurs very well, but there's no doubt that it's still taking residents who, they need to sell their own current family home to move into an Ingenia community, and you're still looking at the average time on market across most of the markets we operate in is between 60 and 70 days.
That's probably having the single biggest impact. We are seeing some returns in price growth opportunities. The level of inquiry is very strong. In a lot of the markets we operate in, it's still taking upwards of 60 days for a resident to sell their home, which just slows down the overall cycle time.
Okay, great. Thanks so much, guys. Appreciate it.
Once again, if you wish to ask a question at this time, please press zero followed by the number one on your telephone keypad and wait for your name to be announced. Again, that is zero followed by one. We will pause a moment to assemble a queue. There appears to be no further questions at this time. I will now hand back to the speakers for closing remarks.
Well, thanks everybody for dialing in today. I apologize if we've had a few audio technical issues. Shane and Scott and I will be available this afternoon if anyone would like to have a chat. Otherwise, over the next two to three weeks, we intend to be coming out and meeting with all of our key investors. Thank you very much for participating today. In summary, I think Ingenia's got a very strong period of growth ahead of us. This was, without exception, the strongest set of numbers we've ever reported. We've got great look-through visibility on what the next six to 12 months look like. We've got great visibility on some pending acquisitions with Sun Communities and Eighth Gate.
We have some great capital partnering initiatives in place. I think the underlying thesis of providing affordable community living for seniors who are downsizing out of a family home who are looking to top up the pension remains a very attractive market space to be in. We see the outlook for the business is very strong moving forward. Thank you very much.
Thank you.
That does conclude the conference for today. Thank you for your participation. You may all disconnect.