Lifestyle Communities Ltd · ASX:LIC
Lifestyle Communities — FY2014 Earnings Presentation
43 slides from Lifestyle Communities's earnings presentation, Aug 21, 2014
Slide 1: Results Presentation Year ended 30 June 2014
For personal use only Results Presentation Year ended 30 June 2014 21 August 2014
Slide 2: Overview: Business Snapshot
OVERVIEW Business Snapshot 9 years of growing annuity income streams Annuity Income For personal use only • Founded in 2003 $8,000,000 –– • Develop and manage land lease communities which $6,000,000 –– generate long-term sustainable revenue streams $4,000,000 –– • Focused on affordable housing for t
Slide 3: Community Locations
COMMUNITY LOCATIONS For personal use only Community Homes Settled (1) SHEPPARTON Melton 228 100% Tarneit 136 99% Warragul 182 92% Cranbourne 217 80% WOLLERT Shepparton 221 27% MELTON Chelsea Heights 186 52% TARNEIT Hastings 141 32% CHELSEA HEIGHTS GEELONG CRANBOURNE Wollert 154 - WARRAGUL Geelong 16
Slide 4: Contents
CONTENTS For personal use only 1. Executive Summary / Key Metrics 2. Financial & Operational Results 3. Market 4. Business Model 5. Outlook 6. Summary Appendix A.1 Sales and Settlements A.2 Investment Property Analysis A.3 Cash Flow Analysis This document should be read with the Disclaimer on page 4
Slide 5: Executive Summary
1.1 EXECUTIVE SUMMARY Lifestyle Communities delivered strong growth during FY2014 For personal use only • Another strong year of settlements (211) and sales Home sites (annuities) under management (1) (267)(1) 1000 –– • 906 occupied home sites(1) 900 –– • Over 1,300 homeowners(1) 800 –– • Portfolio
Slide 6: Key Metrics
1.2 KEY METRICS Settlements and Sales For personal use only 300 –– 200 –– 100 –– • Another strong year of settlements and sales FY2011 FY2012 FY2013 FY2014 - 211 home settlements in FY2014 Settlements Net Sales Commitments compared to 149 in FY2013 (1) - 267 net sales commitments in FY2014 compared
Slide 7: Key Metrics (cont.): Net Assets and Gearing
1.2 KEY METRICS (CONT.) Net Assets For personal use only $120,000,000 –– $100,000,000 –– $80,000,000 –– $60,000,000 –– $40,000,000 –– $20,000,000 –– • Net assets $95.0 million (at 30 June 2014) FY2011 FY2012 FY2013 FY2014 up from $82.6 million (at 30 June 2013) • Gearing (net debt to net debt plus e
Slide 8: Key Metrics (cont.): Portfolio continues to grow
1.2 KEY METRICS (CONT.) Lifestyle Communities’ portfolio continues to grow For personal use only Home sites Home sites occupied and Total home Home sites sold & awaiting settlement Communities sites in sold & awaiting communities occupied # % settlement Existing Communities – Mature Melton 228 228 -
Slide 9: Financial & Operational Results
For personal use only Section 2 FINANCIAL & OPERATIONAL RESULTS Lifestyle Communities Limited Downsize to a Bigger Life 9
Slide 10: Financial Results: Growing Annuity Income Streams
2.1 FINANCIAL RESULTS Nine Years of Growing Annuity Income Streams There are two components to the annuity stream: For personal use only Annuity Income 1. Site Rental Fee • pproximately $165.00 per week per A home $8,000,000 –– • Indexed at greater of CPI or 3.5% p.a. • Annual rental income at 30 Ju
Slide 11: Sales and Settlements
2.2 SALES AND SETTLEMENTS Referrals provided 25% of total sales For personal use only Sales Commitments Settlements • 267 new home sales in FY2014(1). • 211 settlements in FY2014.(1) • Hastings and Chelsea Heights sales exceeding • 65 settlements at Chelsea Heights, 45 at Hastings, 38 at expectation
Slide 12: Profit & Loss
2.3 PROFIT & LOSS FY2013 FY2014 % For personal use only Profit & Loss highlights ($’000) ($’000) Movement Home settlement revenue 36,552 54,812 50% Rental revenue 4,892 6,549 34% • Net profit attributable to shareholders up 76% to Deferred management fee(1) 381 910 139% $12.3 million Total revenue 4
Slide 13: Balance Sheet
2.4 BALANCE SHEET FY2013 FY2014 % For personal use only Balance sheet highlights ($’000) ($’000) Movement Cash and cash equivalents 16,144 2,757 Other financial assets - 1,000 • $16.8 million deployed for land Inventories 21,274 22,516 settlements at Chelsea Heights, Total current assets 38,978 29,8
Slide 14: Cash Flow
2.5 CASH FLOW FY2013 FY2014 Cash flow highlights ($’000) ($’000) For personal use only Receipts from customers 46,462 69,097 Payments to suppliers and employees^ (43,169) (56,850) Net interest payments (3,355) (2,788) Cash flows from operations (42) 9,459 Project capital expenditure (civil and facil
Slide 15: Market
For personal use only Section 3 MARKET Lifestyle Communities Limited Downsize to a Bigger Life 15
Slide 16: The Market
3.1 THE MARKET Lifestyle Communities operates in an under-serviced sector of the over 55’s housing market with a focus in Victoria For personal use only Over 743,000 Victorians are aged over 65, a further 633,000 are aged between 82% of couples 64% of Victorians 55 and 64 over 65 and 71% of over 65
Slide 17: Key Market Drivers
3.2 KEY MARKET DRIVERS Demographic changes are driving an increase in the size of the potential market For personal use only 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
Slide 18: Market Size
3.3 MARKET SIZE Lifestyle Communities’ affordable housing solution targets the largest segment of the market For personal use only Victorian Market Size (Number of people, over 65) 43% of the 57% of the total market total market Equity High-tier Market Gap: Mid-tier Rental Only Equity: Customer Equi
Slide 19: Marketing Strategy
3.4 MARKETING STRATEGY Straddling two segments but focusing on the ageing baby boomer For personal use only War Generation Baby Boomer Generation (1925-1945) (1946-1964) Marketing Transition • Aged 69-89 • Ageing into the retirement space • Negative trigger buyers • Positive trigger buyers • Charact
Slide 20: Who Is Our Customer?
3.5 WHO IS OUR CUSTOMER? Socio/Economic Profile • Majority on pension/benefit For personal use only • Located outer urban Melbourne • Low levels of superannuation Buyer Behaviour Triggers • Accept pension will be part of life • Transparency & Openness • 66% couples, 28% single women, • Security - Fi
Slide 21: Digital Marketing
3.6 DIGITAL MARKETING Digital marketing providing increased traction as our customer becomes more computer literate For personal use only Website Unique Visitors: 1 November 2013 - 30 July 2014 7,000 6,500 6,000 • Website at centre of all marketing activities 5,500 • Purchase cycles have halved in l
Slide 22: Business Model
For personal use only Section 4 BUSINESS MODEL Lifestyle Communities Limited Downsize to a Bigger Life 22
Slide 23: Business Strategy
4.1 BUSINESS STRATEGY Lifestyle Communities will continue rolling out affordable housing for the over 55’s For personal use only • Focused strategy to dominate the niche of affordable housing to the over 55’s market • Lifestyle Communities’ brand is now clearly differentiated in the consumer’s mind
Slide 24: Business Model
4.2 BUSINESS MODEL Lifestyle Communities has a low risk sustainable business model For personal use only Development Business Community Management Business Total annuities at year end Circulating Settled homes are transferred to the Capital Community Pool Management Business FY06 FY07 FY08 FY09 FY10
Slide 25: Business Model (cont.)
4.2 BUSINESS MODEL (CONT.) Lifestyle Communities develops and manages affordable land lease communities delivering long term annuities from home site fees and resales For personal use only Moving in Living Moving out Move into a new, affordable, low Release of equity on downsizing Net proceeds of ho
Slide 26: Business Model (cont.): Features and Benefits
4.2 BUSINESS MODEL (CONT.) Lifestyle Communities has a differentiated business model that produces long-term growing CPI indexed annuity streams for its investors For personal use only Features Benefits Lifestyle Communities control all touch points with its ifestyle Communities is the developer, sa
Slide 27: The Lifestyle Business
4.3 THE LIFESTYLE BUSINESS Lifestyle Communities has two components to its business For personal use only Community roll-out Community management Attributes Attributes • Circulating pool of capital • Growing pool of annuities (homes • Used to fund development of settled) communities • Large proporti
Slide 28: Affordability
4.4 AFFORDABILITY Rent as a percentage of the pension remains affordable For personal use only Site rental as a % of pension 30.0% –– 25.0% –– • Lifestyle Communities’ homeowners who receive the age pension 20.0% –– are paying approximately: - 18.1% of their pension as rental (for couples) 15.0% ––
Slide 29: Key Risks
4.5 KEY RISKS The company ensures diligent risk management at each stage of the development cycle For personal use only Community Financial Site Selection Community Roll Out Sales Management • Strong balance • Long-term • Level of pre-sales • Control customer • Rigorous staff sheet experience in the
Slide 30: Outlook
For personal use only Section 5 OUTLOOK Lifestyle Communities Limited Downsize to a Bigger Life 30
Slide 31: Outlook
5.1 OUTLOOK Lifestyle Communities capitalises on the solid base established for growth For personal use only • Emerging baby boomer driving increased customer interest • Company’s portfolio (settled, under development and subject to planning) now at 1,779(1) following recent acquisition of Rosebud s
Slide 32: Likely Settlement Programme
5.2 LIKELY SETTLEMENT PROGRAMME Currently 1,779 homes in the portfolio(1) For personal use only Community FY15 FY16 FY17 FY18 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Seasons (Tarneit) Warragul Cranbourne Shepparton Chelsea Heights Hastings Chelsea Heights Expansion Lyndarum (Wollert) Geelong
Slide 33: Focused Acquisition Strategy
5.3 FOCUSED ACQUISITION STRATEGY Lifestyle Communities continually performs detailed due diligence on Victoria’s growth corridors For personal use only • Focusing on opportunities in Victoria to capitalise on the lack of supply of affordable housing, forecast population growth and brand equity • Tar
Slide 34: Dividend Policy
5.4 DIVIDEND POLICY Lifestyle Communities intends to pay dividends out of operating cash flow from the community management business For personal use only As a general principle, the Directors of Lifestyle Communities intend to pay dividends out of post tax, operating cash flow generated from commun
Slide 35: Summary
6. SUMMARY For personal use only • FY2014 delivered another strong result for net sales commitments (267) and home settlements (211)(1) • Annuity income from homeowner rentals grew by $1.6 million to $6.5 million as a result of having 906 settled homes • Net profit attributable to shareholders up 76
Slide 36: Appendix
For personal use only Appendix Lifestyle Communities Limited Downsize to a Bigger Life 36
Slide 37: Sales and Settlements
A.1 SALES AND SETTLEMENTS New home New homes - net sales Resale homes Resale homes - settlements commitments settlements net sales commitments For personal use only FY2014 FY2013 FY2014 FY2013 FY2014 FY2013 FY2014 FY2013 Brookfield - 2 - 1 12 5 16 5 Tarneit 3 6 1 - 4 2 4 3 Warragul 32 27 26 26 2 3 (
Slide 38: Investment Property Analysis: Community Valuation Summary
A.2.1 INVESTMENT PROPERTY ANALYSIS For personal use only Community Valuation Summary Investment properties per 30 June 2014 financials 30 June 2014 Investment Homes At fair value + DMF Total fair Total homes properties at occupied ($m) asset(2) ($m) value ($m) cost(1) ($m) Mature Communities Brookfi
Slide 39: Investment Property Analysis: Community Valuation Metrics
A.2.2 INVESTMENT PROPERTY ANALYSIS For personal use only Community Valuation Metrics (on-completion) DMF metrics Rental Metrics (extracts from valuations) Rental cap. Net rental Last DMF Average sale rate per home DMF valuation terminal cap. value (from (management discount rate date rate (GST excl.
Slide 40: Cash Flow Analysis - FY2014
A.3.1 CASH FLOW ANALYSIS - FY2014 Chelsea Supplementary Cash Flow Cranbourne Melton Tarneit Warragul Shepparton Heights Hastings Wollert Geelong Total Analysis for FY2014 (50% JV) (50% JV) For personal use only Total Number of Homes 228 136 182 217 221 186 141 154 164 1,629 Settled FY2013 - 3 32 38
Slide 41: Cash Flow Analysis - FY2013
A.3.2 CASH FLOW ANALYSIS - FY2013 Chelsea Supplementary Cash Flow Cranbourne Melton Tarneit Warragul Shepparton Heights Hastings Total Analysis for FY2013 (50% JV) (50% JV) For personal use only Total Number of Homes 228 136 182 217 221 105 141 1,230 Settled FY2013 2 6 27 55 27 32 – 149* Remaining h
Slide 42: Important Notice and Disclaimer
IMPORTANT NOTICE AND DISCLAIMER For personal use only • This Presentation contains general background information about Lifestyle Communities Limited (LIC) and its activities current at 21 August 2014 unless otherwise stated. It is information in a summary form and does not purport to be complete. I
Slide 43: 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 R O SE B UD - GEELONG - WO L L E R T - H AS T I NG S - C H ELS EA H EI G H T S - S H EP PA RTO N - CR A NBO UR NE - WA R R AG UL - TA R NE I T - M E