Lifestyle Communities Ltd · ASX:LIC
Lifestyle Communities — FY2015 Earnings Presentation
44 slides from Lifestyle Communities's earnings presentation, Aug 20, 2015
Slide 1: Results Presentation Year ended 30 June 2015
For personal use only Results Presentation Year ended 30 June 2015 20 August 2015 LIFESTYLE COMMUNITIES LIMITED - Downsize to a bigger life 1
Slide 2: Contents
CONTENTS 1. Overview 03 2. Financial & Operational Results 08 3. Market 15 For personal use only 4. Business Model 23 5. Outlook 32 6. Summary 36 APPENDIX A.1 Sales and Settlements 38 A.2 Investment Property Analysis 39 A.3 Cash Flow Analysis 41 This document should be read with the Disclaimer on pa
Slide 3: Business Snapshot and Financial Summary
OVERVIEW Business Snapshot Financial Summary BUSINESS • Founded in 2003 FY2015 FY2014 ($ Million) ($ Million) SNAPSHOT For personal use only • Develop and manage land lease communities which generate long-term Net profit after tax attributable to shareholders $16.7 $12.3 sustainable revenue streams
Slide 4: Board of Directors
OVERVIEW 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 l
Slide 5: FY2015 Business Snapshot
OVERVIEW A proven business model Home sites (annuities) under management (1) FY2015 structured for sustainable 1200 SNAPSHOT growth For personal use only 1100 Business Snapshot 1000 • Another strong year of settlements (240) 900 and sales (211)(1) • 1,146 occupied home sites (1) 800 • Over 1,700 hom
Slide 6: Portfolio continues to grow
OVERVIEW Lifestyle Communities’ PORTFOLIO portfolio continues to grow SNAPSHOT For personal use only 30 JUNE 2015 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 7: Community Locations
OVERVIEW Community Homes Settled COMMUNITY LOCATIONS For personal use only Melton 228 100% Tarneit 136 100% Warragul 182 99% Cranbourne 217 99% Shepparton 221 44% Chelsea Heights 186 87% Hastings 141 89% Wollert 154 1% Geelong 164 - Shepparton Rosebud (1) 150 - Officer 151 - Berwick Waters(1) 225 -
Slide 8: Financial & Operational Results
SECTION 2 FINANCIAL & For personal use only OPERATIONAL RESULTS LIFESTYLE COMMUNITIES LIMITED - Downsize to a bigger life 8
Slide 9: Years of Growing Annuity Income
2.1 10 Years of Growing Annuity Income FINANCIAL Annuity Income Streams RESULTS For personal use only $12,000,000 There are two components $10,000,000 to the annuity stream: 1. Site Rental Fee $8,000,000 • Approximately $171.00 per week per home $6,000,000 • Indexed at greater of CPI or 3.5% p.a. •
Slide 10: Sales and Settlements
2.2 Referrals provided SALES AND 33% of total sales SETTLEMENTS For personal use only Sales Commitments • 211 new home sales in FY2015(1) • Warragul, Cranbourne, Hastings and Chelsea Heights are fully sold-out • Shepparton sales exceeded expectations during the year achieving 54 sales (compared to 2
Slide 11: Monthly customer commitments July 2010 to June 2015
2.2 Monthly customer commitments - SALES AND July 2010 to June 2015 SETTLEMENTS For personal use only (CONTINUED) 45 59 74 91 79 42 73 126 141 105 106 40 35 30 25 20 15 10 5 Jul Aug Oct Feb Mar Jul Aug Oct Oct Feb Mar Aug Oct Feb Mar Sep Nov Dec Jan Apr May Jun Sep Nov Dec Feb Mar Oct Jan Apr May Ju
Slide 12: Profit and Loss
2.3 Profit growth in line with Profit loss highlights FY2014 FY2015 % PROFIT increased settlements ($’000) ($’000) Movement Home settlement revenue 54,812 66,344 21% & LOSS For personal use only • Net profit attributable to shareholders up 36% Rental 6,549 9,160 40% to $16.7 million Deferred manag
Slide 13: Balance sheet remains strong
2.4 Balance sheet Balance sheet highlights FY2014 FY2015 % BALANCE remains strong Cash and cash on deposit ($’000) 6,756 ($’000) 12,999 Movement SHEET For personal use only • Gearing (net debt to net debt plus equity) was Inventories 31,709 30,644 17.2% at year end Investment properties 110,652 132,
Slide 14: Cash Flow
2.5 • Cash flows from operations up by 73% to $16.4 million, adjusted cash flows from operations Cash Flow highlights FY2014 ($’000) FY2015 ($’000) CASH FLOW (excluding project capital expenditure) Receipts from customers 69,097 85,160 For personal use only up by 79% to $33.8 million Payments to sup
Slide 15: Market
SECTION 3 MARKET For personal use only LIFESTYLE COMMUNITIES LIMITED - Downsize to a bigger life 15
Slide 16: The Market
3.1 Lifestyle Communities operates in an under- THE MARKET serviced sector of the over 55s 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 $72,24
Slide 17: Key Market Drivers
3.2 Affordability Demographic changes are KEY MARKET • More than 27% of total households (aged 65+) driving an increase in the have net worth between $250,000 and $500,000 DRIVERS size of the potential market For personal use only • 72% of people (over 65) retire on the pension. 64% of people (over
Slide 18: Victorian Population Growth
3.3 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 19: Market Strategy
3.4 Straddling two segments Lifestyle Communities’ business MARKET but focusing on the ageing model is well placed to capitalise STRATEGY baby boomer on this emerging customer For personal use only War Generation (1925-1945) Baby Boomer Generation (1946-1964) • Aged 70+ • Aged 51-69 • Negative trigg
Slide 20: Who Is Our Customer?
3.5 Triggers Drivers WHO IS OUR • Security - Financial • Independence CUSTOMER? For personal use only • Safety - Personal • Maintaining control • Fear of being unable • Social interaction • Maintenance (time and cost) • Health/physical state Roadblocks Buyer Behavior • Getting rid of stuff • Transpa
Slide 21: The Emerging Market Gap
3.6 The two key emerging THE EMERGING trends come together MARKET GAP to create the Lifestyle For personal use only business model 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 22: Marketing Direction
3.7 Lifestyle Communities’ Digital marketing is driving MARKETING marketing targets the future growth with 50% of emerging baby boomer leads coming from our website For personal use only DIRECTION 2: PRESS CAMPAIGN DIRECTION 3: PRESS CAMPAIGN PRESS PRESS FACEBOOK LIFESTYLE COMMUNITIES LIMITED - Down
Slide 23: Business Model
SECTION 4 BUSINESS For personal use only MODEL LIFESTYLE COMMUNITIES LIMITED - Downsize to a bigger life 23
Slide 24: Business Strategy
4.1 Lifestyle Communities BUSINESS will continue rolling out STRATEGY affordable housing for For personal use only the over 55s • Focused strategy to dominate the niche of affordable housing to the over 55s market • Lifestyle Communities’ brand is now clearly differentiated in the consumer’s mind ag
Slide 25: Business Model
4.2 Lifestyle Communities has a The growing level of free cash flow from the BUSINESS sustainable business model community management business provides MODEL the basis for future dividends For personal use only Development Business Community Management Business Total annuities at year end Cash break
Slide 26: Business Model (continued)
4.2 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 27: Business Model Features and Benefits
4.2 FEATURES BENEFITS BUSINESS Lifestyle Communities control all touch points with MODEL For personal use only L ifestyle Communities is the developer, sales agent its customers which translates into high levels of and manager of its affordable communities (CONTINUED) service delivery and brand reco
Slide 28: Affordability
4.3 Rent as a percentage AFFORDABILITY of the pension remains affordable 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: - 18.5% of their pension as rental 25.0% (for co
Slide 29: Focused Acquisition Strategy
4.4 Lifestyle Communities continually FOCUSED performs detailed due diligence ACQUISITION on Victoria’s growth corridors For personal use only STRATEGY • Focusing on opportunities in Victoria to capitalise on the lack of supply of affordable housing, forecast population growth and brand equity • Tar
Slide 30: Land Acquisition
4.5 In FY2015 and subsequent to year- end we have secured: LAND AQUISITION For personal use only 1. A new site located in Rosebud, on Melbourne’s 2. A new site located in Officer between Berwick 4. A new site in Bittern, on Melbourne’s Mornington Mornington Peninsula. This site has added 150 and Pak
Slide 31: Key Risks
4.6 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 32: Outlook
SECTION 5 OUTLOOK For personal use only LIFESTYLE COMMUNITIES LIMITED - Downsize to a bigger life 32
Slide 33: Outlook
5.1 Lifestyle Communities Lifestyle Communities’ model is driven OUTLOOK capitalises on the solid by affordability, the aging population base established and the emerging baby boomer For personal use only for future growth • Emerging baby boomer driving increased customer interest • 33% of sales are
Slide 34: Likely Settlement Programme
5.2 Currently 2,315 homes LIKELY in the portfolio (1) SETTLEMENT For personal use only PROGRAMME Community FY16 FY17 FY18 FY19 FY20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Warragul Cranbourne Chelsea Heights Hastings Shepparton Wollert Geelong Rosebud(2) Officer Berwick Waters(2)
Slide 35: Dividend Policy
5.3 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 36: Summary
6.0 • FY2015 delivered another strong result for home settlements (240)(1) SUMMARY • The recently announced Berwick Waters and For personal use only Bittern acquisitions, along with the Rosebud and Officer acquisitions has increased the total portfolio to 2,315 homes (2) • Annuity income from homeow
Slide 37: Appendix
APPENDIX For personal use only LIFESTYLE COMMUNITIES LIMITED - Downsize to a bigger life 37
Slide 38: Sales and Settlements
A.1 New Home New homes - Resale homes Resale homes - SALES AND Settlements net sales commitments settlements net sales commitments SETTLEMENTS For personal use only FY2015 FY2014 FY2015 FY2014 FY2015 FY2014 FY2015 FY2014 Brookfield - - - - 15 12 20 16 Tarneit 1 3 - 1 5 4 4 4 Warragul 12 32 1 26 7 2
Slide 39: Investment Property Analysis: Community Valuation Summary
A.2 Community Valuation Summary INVESTMENT 30 June 2015 Investment properties per PROPERTY For personal use only financials 30 June 2015 ANALYSIS Total Homes Homes Occupied Investment properties at cost (1) ($m) At fair value ($m) Mature Communities Brookfield 228 228 6.85 24.98 Tarneit 136 136 3.68
Slide 40: Community Valuation Summary (On Completion)
A.2.2 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) (management rate cap. rate
Slide 41: Supplementary Cash Flow Analysis FY2015
A.3.1 Supplementary Cash Flow Analysis for FY2015 Melton Tarneit Warragul Cranbourne(3) Shepparton Chelsea Heights(3) Hastings Wollert Geelong Rosebud Officer Berwick Waters Total CASHFLOW Total Number of Homes 228 136 182 217 221 186 141 154 164 150 151 225 2,155 ANALYSIS For personal use only Sett
Slide 42: Supplementary Cash Flow Analysis FY2014
A.3.2 Supplementary Cash Flow Analysis for FY2014 Melton Tarneit Warragul Cranbourne(3) Shepparton Chelsea Heights (3) Hastings Wollert Geelong Total CASHFLOW Total Number of Homes 228 136 182 217 221 186 141 154 164 1,629 ANALYSIS For personal use only Settled FY2014 - 3 32 38 28 65 45 - - 211 FY20
Slide 43: 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 44: Downsize to a Bigger Life
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 44