Lifestyle Communities Ltd · ASX:LIC
Lifestyle Communities — FY2016 Earnings Presentation
47 slides from Lifestyle Communities's earnings presentation, Aug 18, 2016
Slide 1: Growing Through Evolution: Results Presentation Year Ended 30th June 2016
For personal use only Growing Through Evolution Results Presentation Year Ended 30th June 2016 18th August 2016 LIFESTYLE COMMUNITIES LIMITED - Downsize to a bigger life GROWING THROUGH EVOLUTION 1
Slide 2: Contents
CONTENTS 1. Overview 02 2. Financial & Operational Results 06 3. Outlook 13 For personal use only 4. Market 18 5. Business Model 28 6. Summary 36 APPENDIX A.1 Sales and Settlements 39 A.2 Deferred Management Fees 40 A.3 Investment Property Analysis 41 A.4 Cash Flow Analysis 43 This document should b
Slide 3: Business Snapshot and Financial Summary
OVERVIEW Business Snapshot Financial Summary BUSINESS • Founded in 2003 FY2016 ($ Million) FY2015 ($ Million) SNAPSHOT For personal use only • Develop and manage land lease communities which generate long-term Net profit after tax attributable to shareholders $19.3 $16.7 sustainable revenue streams
Slide 4: FY2016 Highlights: A proven business model
OVERVIEW A proven business model Home sites (annuities) under management (1) FY2016 structured for sustainable 1400 HIGHLIGHTS growth For personal use only 1300 1200 Business Snapshot • Solid year of settlements (202) and sales (221) 1100 • 1,348 occupied home sites 1000 • 1,995 homeowners 900 • Por
Slide 5: Portfolio continues to grow
OVERVIEW Lifestyle Communities’ PORTFOLIO portfolio continues to grow SNAPSHOT For personal use only 30 JUNE 2016 Communities Total home sites in Home sites sold & Home sites sold & Home sites occupied or sold communities occupied awaiting settlement and awaiting settlement # % Existing Communities
Slide 6: Community locations: focus remains in Victoria
OVERVIEW 13 communities in Focus remains COMMUNITY planning, development or in Victoria LOCATIONS under management For personal use only Victoria provides: • Favourable planning legislation • Better access to zoned, flat land for development Community Homes Settled • Lowest saturation of land lease
Slide 7: Financial & Operational Results
SECTION 2 FINANCIAL & For personal use only OPERATIONAL RESULTS LIFESTYLE COMMUNITIES LIMITED - Downsize to a bigger life 6
Slide 8: Years of Growing Annuity Income
2.1 11 Years of Growing Annuity Income FINANCIAL Annuity Income Streams RESULTS For personal use only $14,000,000 There are two components $12,000,000 to the annuity stream: $10,000,000 1. Site Rental Fee • Approximately $167 per single and $193 per $8,000,000 couple per week per home $6,000,000 • I
Slide 9: Sales and Settlements
2.2 Referrals provided approximately SALES AND one in three sales SETTLEMENTS For personal use only Sales Commitments • 221 new home sales in FY2016 (1) • Shepparton continued to perform well during the year achieving 49 sales (compared to 54 in FY2015) • Lyndarum and Geelong sold 39 and 51 homes re
Slide 10: Debt Re-financing
2.3 New corporate facility provides PREVIOUS POSITION DEBT greater flexibility to plan the RE-FINANCING construction of new communities For personal use only • In August 2015 the Company entered into a five year, $80 million facility with Westpac to replace existing core and development facilities •
Slide 11: Profit & Loss
2.4 Another solid year of Profit loss highlights FY2015 FY2016 % PROFIT profitability ($’000) ($’000) Movement Home settlement revenue 66,344 54,877 17% & LOSS For personal use only • Net profit attributable to shareholders up 16% to Cost of sales (47,512) (43,080) 9% $19.3 million (on an underlyi
Slide 12: Balance Sheet
2.5 Balance sheet Balance sheet highlights FY2015 FY2016 % ($’000) ($’000) Movement BALANCE remains strong Cash and cash on deposit 12,999 3,352 SHEET For personal use only • Gearing (net debt to net debt plus equity) was Inventories 30,644 49,746 25.6% at year end Investment properties 132,757 163,
Slide 13: Cash Flow
2.6 A year of project investment Cash Flow highlights FY2015 FY2016 CASH FLOW for future harvest Receipts from customers ($’000) 85,160 ($’000) 76,455 For personal use only • Cash flows from operations reduced to ($14.2) Payments to suppliers and employees (1) (63,099) (84,948) million, adjusted cas
Slide 14: Outlook
SECTION 3 OUTLOOK For personal use only LIFESTYLE COMMUNITIES LIMITED - Downsize to a bigger life 13
Slide 15: Outlook
3.1 Lifestyle Communities Lifestyle Communities’ model is driven OUTLOOK capitalises on the solid base by affordability, the aging population established for future growth and the emerging baby boomer For personal use only • Emerging baby boomer driving increased customer interest • Approximately on
Slide 16: Settlement Goals - New Sales
3.2 Settlements growing with increased SETTLEMENT sales rates and new projects GOALS - For personal use only FY2016 FY2017 FY2018 NEW SALES settlements settlement settlement (actual) range range TOTAL 202 250-270 260-290 Warragul 1 - - Casey Fields(1) 2 - - Shepparton 51 40-55 40-55 Chelsea Heights(
Slide 17: Likely Settlement Programme
3.3 Currently 2,445 homes LIKELY in the portfolio (1) SETTLEMENT For personal use only PROGRAMME Community FY17 FY18 FY19 FY20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Shepparton Lyndarum Geelong Officer Berwick Waters Bittern(2) Ocean Grove(2) Represents tail of development which is often a
Slide 18: Dividend Policy
3.4 Lifestyle Communities intends to pay dividends The growing level of free cash flow DIVIDEND out of operating cash flow from the community from the annuities provides the basis POLICY management business for increasing dividends over time For personal use only As a general principle, the Board of
Slide 19: Market
SECTION 4 MARKET For personal use only LIFESTYLE COMMUNITIES LIMITED - Downsize to a bigger life 18
Slide 20: The Market
4.1 Lifestyle Communities operates in an THE MARKET under-serviced sector of the over 50s housing market with a focus in Victoria For personal use only 64% OF VICTORIANS OVER 65 RELY ON THE AGE PENSION AS THEIR MAJOR SOURCE OF INCOME AVERAGE SUPERANNUATION BALANCE OF OVER 65s IN AUSTRALIA IS $72,247
Slide 21: Key Market Drivers
4.2 Demographic changes are driving an The Lifestyle Communities offer KEY MARKET increase in the size of the potential market addresses these key market themes DRIVERS For personal use only Affordability • More than 27% of total households (aged 65+) have net worth between $250,000 and $500,000 • 7
Slide 22: Victorian Population Growth
4.3 As at 30 June 2013 there were Lifestyle Communities is well VICTORIAN over 574,000 Victorians aged positioned to meet the needs POPULATION over 70 and over 906,000 aged of the baby boomer age wave For personal use only GROWTH between 55 and 69 85+ (114k) War Generation Average age Baby Boomer Ge
Slide 23: The Emerging Market Gap
4.4 The two key emerging trends THE EMERGING come together to create the MARKET GAP Lifestyle business model For personal use only Affordability Baby Boomer • Opportunity to create a • Wants to maintain control more affordable model • Want to own their home • Rents sustainable for • Wants to free up
Slide 24: RLLA Industry Advocacy
4.5 Industry advocacy to promote Government is increasing their RLLA land lease communities understanding of the land lease industry For personal use only • Member of the Residential Land Lease Alliance (RLLA) (James Kelly is the RLLAs inaugural chair) • Represents the land lease industry to underta
Slide 25: The Land Lease Industry
4.6 Our focus remains THE LAND in Victoria LEASE For personal use only INDUSTRY SA • There are 2,500 Residential Land Lease 4 Communities (RLLCs) and caravan parks around Australia • Of those: WA - 1,650 are pure tourist parks 10 - 750 are mixed use parks with tourists and permanents VIC - 170 are d
Slide 26: Customer Referral
4.7 Every touch-point Set organisational goal CUSTOMER drives customer referral to increase referral rate REFERRAL For personal use only • Implemented a focused strategy to try and lift the number of homeowner referrals for new sales • Have developed an action plan for each of the 32 touchpoints we
Slide 27: Marketing Channels
NEWS 4.8 Press MARKETING CHANNELS For personal use only Radio TV NEWS Outdoor Press Website Digital ABOVE THE LINE Evolved to BELOW THE LINE Industry Expos Events Mass Direct Mail Referral Digital • Our marketing strategy has continued to evolve to more below the line channels to drive visitation an
Slide 28: Case Study: Lifestyle Berwick Waters Launch
4.9 Paradigm shift in how we launch a Pre-sales record for the Company with CASE STUDY: project resulting in increased pre-sales 40 pre-sales in first four months LIFESTYLE For personal use only BERWICK WATERS OLD PARADIGM NEW PARADIGM LAUNCH Create collateral Integrated VIP registration campaign La
Slide 29: Business Model
SECTION 5 BUSINESS For personal use only MODEL LIFESTYLE COMMUNITIES LIMITED - Downsize to a bigger life 28
Slide 30: Business Strategy
5.1 Lifestyle Communities will continue BUSINESS rolling out affordable housing for STRATEGY the over 50s For personal use only • 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 emerging
Slide 31: Business Model
5.2 Lifestyle Communities aims The growing level of free cash flow from the BUSINESS to recover 100% of its project community management business provides MODEL related costs from home sales the basis for future dividends For personal use only Development Business Community Management Business Total
Slide 32: Business Model (Continued)
5.2 Lifestyle Communities develops and manages affordable BUSINESS land lease communities delivering long term annuities MODEL from home site fees and resales For personal use only (CONTINUED) MOVING IN LIVING MOVING OUT CUSTOMER Move into a new, affordable, Release of equity on downsizing Net proce
Slide 33: Affordability
5.3 Rent as a percentage of the pension AFFORDABILITY remains affordable and sustainable For personal use only Attributes Site rental as a % of pension • Lifestyle Communities’ homeowners who receive the age pension and rent assistance are paying 30.0% approximately: - 19.1% of their pension as rent
Slide 34: Focused Acquisition Strategy
5.4 Lifestyle Communities continually A rigorous acquisition strategy FOCUSED performs detailed due diligence on de-risks community roll-outs ACQUISITION Victoria’s growth corridors to source sites For personal use only STRATEGY • Focusing on opportunities in Victoria to capitalise on the lack of su
Slide 35: Land Acquisition and Expansion
5.5 In FY2016 acquired land at Expansion of Shepparton LAND Bittern and Ocean Grove community ACQUISITION For personal use only AND EXPANSION FY2016 acquisitions and expansion: 1. In August 2015, Lifestyle Communities 2. In May 2016, Lifestyle Communities announced 3. Due to the continued strong sal
Slide 36: Key Risks
5.6 The company ensures diligent risk management KEY RISKS at each stage of the development cycle For personal use only 1 2 3 4 5 Financial Site Selection Community Roll Out Sales Community Management • Strong balance sheet • Long-term experience in • Level of pre-sales • Control customer touch • Ri
Slide 37: Summary
6.0 SUMMARY For personal use only • FY2016 delivered another solid year of home settlements (202)(1) • The recently announced Ocean Grove acquisition, along with the Bittern acquisition and Shepparton expansion has increased the total portfolio to 2,445 homes (2) • Annuity income from homeowner rent
Slide 38: Board of Directors
6.1 BOARD OF DIRECTORS For personal use only Tim Poole James Kelly Chairman Managing Director Non-executive, independent Founder Bruce Carter Philippa Kelly Jim Craig Non-executive Non-executive Non-executive Founder Independent Independent LIFESTYLE COMMUNITIES LIMITED - Downsize to a bigger life G
Slide 39: Appendix
APPENDIX For personal use only LIFESTYLE COMMUNITIES LIMITED - Downsize to a bigger life 38
Slide 40: Sales and Settlements
A.1 New Home New homes - Resale homes Resale homes - SALES AND Settlements net sales commitments commitments settlements net sales commitments commitments SETTLEMENTS For personal use only FY2016 FY2015 FY2016 FY2015 FY2016 FY2015 FY2016 FY2015 Brookfield - - - - 23 15 17 20 Seasons - 1 - - 5 5 7 4
Slide 41: Deferred Management Fees
A.2 Brookfield Seasons Warragul Casey Fields Shepparton Chelsea Heights Hastings Total DEFERRED Historical resales(1) 87 16 28 14 2 7 4 158 MANAGEMENT For personal use only Average tenure (years) 5.20 4.55 3.49 2.39 2.27 2.06 1.91 4.33 FEES Price growth p.a. 3.7% 2.1% 2.5% 3.3% 1.4% 11.4% 9.8% 3.5%
Slide 42: Investment Property Analysis: Community Valuation Summary
A.3.1 Community Valuation Summary INVESTMENT 30 June 2016 Investment properties per PROPERTY For personal use only financials 30 June 2016 ANALYSIS Total Homes Homes Occupied Investment properties at cost (1) ($m) At fair value ($m) Mature Communities Brookfield 228 228 6.76 25.63 Seasons 136 136 3.
Slide 43: Community Valuation Summary (On Completion)
A.3.2 Community Valuation Summary (On Completion) INVESTMENT Rental Metrics DMF metrics (extracts from valuations) PROPERTY For personal use only ANALYSIS Last valuation Rental cap. rate Net rental per home DMF discount DMF terminal Average sale value date (from valuation) cap. rate (GST incl.) (fro
Slide 44: Supplementary Cash Flow Analysis for FY2016
A.4.1 Supplementary Cash Flow Analysis for FY2016 Brookfield Seasons Warragul Casey Shep- Chelsea Hastings Lyndarum Geelong Officer Fields(3) parton Heights(3) Berwick Bittern Ocean Total Waters Grove CASHFLOW Total Number of Homes 228 136 182 217 268 186 141 154 164 151 220 208 190 2,445 ANALYSIS F
Slide 45: Supplementary Cash Flow Analysis for FY2015
A.4.2 Supplementary Cash Flow Analysis for FY2015 Brookfield Seasons Warragul Casey Fields(3) Shepparton Chelsea Hastings Lyndarum Geelong Rosebud Officer Berwick Total Heights(3) Waters CASHFLOW Total Number of Homes 228 136 182 217 221 186 141 154 164 150 151 225 2,155 ANALYSIS For personal use on
Slide 46: Important Notice and Disclaimer
IMPORTANT • This Presentation contains general background information about Lifestyle Communities only and should not be relied upon as (and is not) an indication of future performance. not to place undue reliance on forward-looking statements and LIC assumes no obligation to NOTICE AND Limited (LIC
Slide 47: Lifestyle Communities Limited contact details
For personal use only DOWNSIZE TO A BIGGER LIFE LIFESTYLE COMMUNITIES LIMITED Level 2, 25 Ross Street South Melbourne VIC 3205 Ph: (03) 9682 2249 www.lifestylecommunities.com.au LIFESTYLE COMMUNITIES LIMITED - Downsize to a bigger life GROWING THROUGH EVOLUTION 46