Lifestyle Communities Ltd · ASX:LIC
Lifestyle Communities — FY2017 Earnings Presentation
47 slides from Lifestyle Communities's earnings presentation, Aug 23, 2017
Slide 1: A Business for Purpose: Updated Results Presentation
For personal use only A Business for Purpose Updated Results Presentation Year ended 30 June 2017 23rd August 2017 LIFESTYLE COMMUNITIES LIMITED EMPOWERING POSSIBILITIES 1
Slide 2: Contents
For personal use only CONTENTS 1. Overview 03 2. Financial & Operational Results 07 3. Outlook 14 4. Market 19 5. Product & Marketing 23 6. Business Model 30 7. Summary 35 APPENDIX A.1 Sales and Settlements 38 A.2 Deferred Management Fees 39 A.3 Investment Property Analysis 40 A.4 Cash Flow Analysis
Slide 3: Our Story
OUR STORY For personal use only James Kelly, Dael 2003 Perlov and Bruce Carter develop business plan Development of first community at Brookfield. 2004 Opened in June 2005 Listed on the 2007 Australian Stock Exchange Major capital 2012 raising of $36m 1,000th homeowner moves in 2014 2,000th homeowne
Slide 4: Community Overview
COMMUNITY OVERVIEW How does the Lifestyle Communities For personal use only model of living work? Homeowners at Lifestyle Communities own their own home and lease the land upon which their Homeowners at homes are located, via a weekly site fee. Lifestyle Communities are protected by the Residential
Slide 5: Overview: Financial Summary
OVERVIEW Financial Summary Net profit after tax attributable to shareholders FY2017 ($ Million) $27.7 FY2016 ($ Million) $19.3 Underlying net profit after tax attributable to shareholders $25.0 $16.9 Business snapshot Total assets $266.1 $222.5 For personal use only Equity $155.5 $131.3 Dividends (i
Slide 6: Overview: FY2017 Highlights
OVERVIEW Lifestyle Communities had another positive result during FY2017 FY2017 Highlights Home sites (annuities) under management (1) For personal use only Business Snapshot 1700 • Record year of settlements (278) and 1600 sales (406) • 1,626(1) occupied home sites 1500 • 2,418 homeowners 1400 • Po
Slide 7: Lifestyle Communities' portfolio continues to grow
OVERVIEW Lifestyle Communities’ portfolio continues to grow Portfolio snapshot For personal use only 30 June 2017 Home sites occupied or sold Total home sites in Home sites sold & Home sites sold & and awaiting settlement Communities communities occupied awaiting settlement # % Existing Communities
Slide 8: Portfolio Overview
PORTFOLIO OVERVIEW 15 communities in planning, development or under management For personal use only Focus remains in Victoria Community Homes Settled • Favourable planning legislation • Better access to zoned, flat land for Brookfield at Melton 228 100% development Seasons at Tarneit 136 100% • Low
Slide 9: Financial & Operational Results
For personal use only Section 2 Financial & Operational results 7
Slide 10: Years of Growing Annuity Income Streams
2.1 12 Years of Growing Financial results Annuity Income Streams For personal use only Annuity Income There are two components $18,000,000 to the annuity stream: $16,000,000 1. Site Rental Fee $14,000,000 • Approximately $173 per single and $200 per couple per week per home $12,000,000 • Indexed at
Slide 11: Sales and settlements
2.2 Sales and settlements For personal use only Sales Commitments • Shepparton and Geelong continued to perform well achieving 37 and 44 sales respectively • Lyndarum sales accelerated during the year with 69 sales being achieved and only four homes remaining • Officer has five homes remaining after
Slide 12: Sales rates
2.3 Sales rates For personal use only Sales Sales profile from date of first sale • L ifestyle Communities’ focus has 180 shifted to improve pre-sales. This Chelsea Heights reduces risk by supporting a more 160 aggressive construction program to Cranbourne enable faster capital recycling 140 Berwick
Slide 13: Profit and loss
2.4 Profit and loss For personal use only • Net profit attributable to shareholders FY2016 FY2017 % up 44% to $27.7 million (on an underlying Profit loss highlights ($’000) ($’000) Movement basis up 48% to $25.0 million after Home settlement revenue 54,877 79,942 46% adjusting for favourable inves
Slide 14: Balance sheet
2.5 Balance sheet Balance sheet remains strong For personal use only • Gearing (net debt to net debt plus FY2016 FY2017 % equity) was 21.8% at year end Balance sheet highlights ($’000) ($’000) Movement • Total bank facility of $80.0 million Cash and cash on deposit 3,352 3,653 of which $47.0 million
Slide 15: Cash flow
2.6 A year of project harvest and Cash flow strong operational cashflows For personal use only • Cash flows from operations FY2016 FY2017 increased to $17.6 million, adjusted Cash Flow highlights ($’000) ($’000) cash flows from operations Receipts from customers 76,455 107,773 (excluding project cap
Slide 16: Outlook
For personal use only Outlook Section 3 14
Slide 17: Outlook
3.1 Lifestyle Communities’ model is driven Outlook by affordability, the ageing population For personal use only and the emerging baby boomer • Emerging baby boomer driving increased customer interest • Approximately one in two of sales are coming from customer referrals • Settlements in FY2018 expe
Slide 18: Settlement goals - new sales
3.2 Settlement goals - new sales For personal use only FY2017 FY2018 FY2019 Settlements growing settlements settlement settlement (actual) range range with increased sales rates and new projects TOTAL 278 260-290 300-340 Shepparton 50 40-50 35-50 Lyndarum 68 30-40 - Geelong 50 45-55 20-40 Officer 98
Slide 19: Likely settlement program
3.3 Likely settlement program For personal use only Currently 2,827 homes in the portfolio (1) Community FY18 FY19 FY20 FY21 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Shepparton Wollert Geelong Officer Berwick Waters Bittern Ocean Grove Armstrong Creek (1) Kaduna Park (1) Represents tail of de
Slide 20: Dividend policy
3.4 Dividend policy The growing level of free cash flow For personal use only from the annuities provides the basis As a general principle, the Board of Lifestyle Communities for increasing dividends over time intends to pay dividends out of post tax, operating cashflow generated from community mana
Slide 21: Market
For personal use only Market Section 4 19
Slide 22: Key market drivers
4.1 Key market drivers For personal use only The Lifestyle Communities offer addresses these key market themes Affordability • More than 27% of total households (aged 65+) have net worth between $250,000 and $500,000 • 72% of people (over 65) retire on the pension. 64% of people (over 65) in Victori
Slide 23: Victorian population growth
4.2 Victorian population Growth As at 30 June 2016 there were For personal use only over 629,000 Victorians aged over 70 and over 1,345,000 aged between 50 and 69 85+ (127k) 80-84 (119k) War Generation Average age of Baby boomer Generation 75-79 (165k) someone moving into a Lifestyle Communities’ 70
Slide 24: Key themes
4.3 Key themes For personal use only Two key emerging trends come together to create the Lifestyle Communities business model Affordability Baby Boomers • O pportunity • Want to maintain to create more control affordable housing • Want to own their • Rents sustainable home for Age pensioners • Want
Slide 25: Product & Marketing
For personal use only Section 5 Product & Marketing 23
Slide 26: Community Designs
5.1 Community Designs You never get a second For personal use only chance at a first impression Urban Layout Entry Landscaping Clubhouse Home Designs Ensure that the homes Create a sense of arrival Significant investment Ongoing evolution with Evolving to meet baby work together by varying and secur
Slide 27: Lifestyle Officer
5.2 We are continually Lifestyle Officer improving our offer For personal use only LIFESTYLE COMMUNITIES LIMITED EMPOWERING POSSIBILITIES 25
Slide 28: Customer touchpoints
5.3 Customer touchpoints For personal use only Brand Sales Every touchpoint drives customer referral • Implemented a focused strategy to lift the number of homeowner referrals for new sales Above • Developed an action plan for each of the 32 Construction the line touchpoints Process Marketing • Aimi
Slide 29: Lifestyle Wellness program
5.4 Lifestyle Wellness program For personal use only • A Wellness Coordinator was employed in FY2017 • Provides practical support for holistic homeowner health and wellbeing • Monthly community seminars and fitness programs targeted to age group • Induction programs to help homeowners use and enjoy
Slide 30: Marketing campaigns driving enquiry
5.5 Marketing campaigns driving enquiry For personal use only WHERE LIFE IS FULL OF Possibilities I’M READY FOR A New Chapter IN MY LIFE Enjoy a new sense of freedom where time is your own and the opportunity to meet new people is easy and relaxed at Lifestyle Communities. Downsize to a brand new, l
Slide 31: Successful Bittern & Ocean Grove launches
5.6 Successful Bittern & Ocean Grove For personal use only launches Strong pre-sales on communities • Successful launches of both Bittern and Ocean Grove in March 2017 have resulted in 74 pre-sales at Bittern and 24 pre-sales at Ocean Grove • Upgrading and focusing collateral on the baby boomer • Be
Slide 32: Business Model
For personal use only Section 6 Business Model 30
Slide 33: Business strategy
6.1 Lifestyle Communities will remain Business strategy focused on rolling out affordable For personal use only housing for the over 50s • Focused strategy to dominate the niche of affordable housing to the over 50s market building on the key thematics of the ageing population, affordability and the
Slide 34: Affordability
6.2 Affordability For personal use only Site rental as a % of pension Attributes 30.0% • Lifestyle Communities’ homeowners who receive the age pension 25.0% and rent assistance are paying approximately: 20.0% • 19.6% of their pension as rental (for couples) net of rental 15.0% assistance (19.8% seve
Slide 35: Acquisition strategy
6.3 Acquisition strategy For personal use only Focused on Melbourne and Geelong’s growth corridors • Targeting zoned land in Melbourne and Geelong’s growth corridors • Increasing opportunities to buy superlots from land developers • Melbourne has the strategic benefit of flat topography which increa
Slide 36: Recent land acquisitions
6.4 Recent land acquisitions For personal use only Lifestyle Berwick Waters • First homeowners moved in May 2017 • 136 homes sold to 30 June 2017 since project launch in April 2016 Lifestyle Bittern • Planning to commence construction in the first quarter of the 2018 financial year • 74 pre-sales ac
Slide 37: Summary
For personal use only Summary Section 7 35
Slide 38: Summary
7.1 Summary For personal use only • FY2017 delivered a record year of home settlements (278) and sales (406) • The recently announced Armstrong Creek and Kaduna Park acquisitions, as well as the Shepparton expansion has increased the total portfolio to 2,827 homes(1) • Annuity income from homeowner
Slide 39: Appendix
For personal use only Appendix 37
Slide 40: Sales and settlements
A.1 Sales and For personal use only settlements New homes - Resale homes - New Home Resale homes net sales net sales Settlements settlements commitments commitments FY2017 FY2016 FY2017 FY2016 FY2017 FY2016 FY2017 FY2016 Brookfield - - - - 12 23 14 17 Seasons - - - - 3 5 1 7 Warragul - 2 - - 16 9 15
Slide 41: Deferred management fees
A.2 Deferred For personal use only management fees Casey Chelsea Brookfield Seasons Warragul Shepparton Hastings Total Fields Heights Historical resales(1) 99 19 44 26 7 19 17 231 Average tenure (years) 5.45 4.8 3.82 2.99 2.55 2.42 2.25 4.22 Average price growth p.a. 3.8% 2.3% 3.0% 5.5% 3.9% 17.4% 1
Slide 42: Investment property analysis
A.3.1 Investment property analysis For personal use only Community Valuation Summary Investment properties per 30 June 2017 financials 30 June 2017 Total Homes Investment properties At fair value Homes Occupied at cost (1) ($m) ($m) Mature Communities Brookfield 228 228 6.76 26.83 Seasons 136 136 3.
Slide 43: Investment property analysis: community valuation summary
A.3.2 Investment property analysis For personal use only Community Valuation Summary (On Completion) Rental Metrics DMF metrics (extracts from valuations) Last Rental cap. Net rental per home Average DMF discount DMF terminal valuation rate (1) (from valuation sale value rate cap. rate date adjusted
Slide 44: Cashflow analysis FY2017
A.4.1 Cashflow analysis FY2017 Arm- Casey Chelsea Berwick Ocean For personal use only Supplementary Cash Flow Shepparton Hastings Lyndarum Geelong Officer Bittern strong Total Brookfield Seasons Warragul Waters Grove Analysis for FY2017 Fields(3) Heights(3) Creek Total Number of Homes 228 136 182 21
Slide 45: Cashflow analysis FY2016
A.4.2 Cashflow analysis FY2016 For personal use only Supplementary Cash Flow Casey Chelsea Berwick Ocean Brookfield Seasons Warragul Shepparton Hastings Lyndarum Geelong Officer Bittern Total Analysis for FY2016 Fields(3) Heights(3) Waters Grove Total Number of Homes 228 136 182 217 268 186 141 154
Slide 46: Important Notice and disclaimer
Important • This Presentation contains general background information about may be suffered by any recipient through use or reliance on anything “estimate”, “expect”, “anticipated” and similar expressions are Notice and Lifestyle Communities Limited contained in or omitted from this intended to iden
Slide 47: Lifestyle Communities Limited contact details
For personal use only LIFESTYLE COMMUNITIES LIMITED Level 2, 25 Ross Street South Melbourne VIC 3205 Ph: (03) 9682 2249 www.lifestylecommunities.com.au LIFESTYLE COMMUNITIES LIMITED EMPOWERING POSSIBILITIES 45