Results Presentation Half-year ended 31 December 2013 17 February 2014
OVERVIEW Business Snapshot 8 years of growing annuity income streams Annuity Income Founded in 2003 Develop and manage land lease communities which generate long-term sustainable revenue streams Focused on affordable pre-retirement housing for the over 55s market Pipeline of 1,628 sites either under development or management $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 Total number of homes settled Number of Resales Attracting a DMF 1HFY2011 2HFY2011 1HFY2012 2HFY2012 1HFY2013 2HFY2013 1HFY2014 356 412 493 546 614 695 804 8-6 5 4 6 10 Site Rental Fees (gross) Deferred Management Fee (cash) Financial Position Board of Directors FY2013 ($ million) 1HFY2014 ($ million) Total Assets $139.5 $149.5 Equity $82.6 $91.2 Total borrowings ($33.9) ($25.2) Tim Poole Chairman Non-executive, independent Net debt ($17.7) ($20.2) Net debt to equity ratio 18% 18% James Kelly Managing Director Founder Bruce Carter Executive Director Founder Jim Craig Non-executive Director Independent Philippa Kelly Non-executive Director Independent Lifestyle Communities Limited Downsize to a Bigger Life 2
COMMUNITY LOCATIONS MELTON TARNEIT GEELONG HASTINGS WOLLERT SHEPPARTON CHELSEA HEIGHTS CRANBOURNE WARRAGUL Community Homes Settled Melton 228 100% Tarneit 136 99% Warragul 182 81% Cranbourne 217 71% Shepparton 221 22% Chelsea Heights 186 39% Hastings 141 13% Wollert 155 - Geelong (1) 162-1,628 49% Correct as at 31 December 2013 Continued opportunities in metro Melbourne and regional Victoria Note: (1) Commencement of construction subject to planning approval and final contract becoming unconditional Lifestyle Communities Limited Downsize to a Bigger Life 3
EXECUTIVE SUMMARY Lifestyle Communities made very good progress during the first-half of FY2014 Strong half-year of settlements (109) and sales (126) (1) 804 occupied home sites (1) (1) (3) Portfolio of 1,628 home sites Contracted land and received planning permits for the expansion of Lifestyle Chelsea Heights and Lifestyle Lyndarum at Wollert Purchased land at Bell Park in Geelong (2) Revenue increased by 72% to $33.9 million Profit after tax attributable to shareholders increased by 183% to $6.5 million Net annuity cash flows increased by 40% to $2.1 million Home sites under management (1) 900 800 700 600 500 400 300 200 100 2006 2007 2008 2009 2010 2011 2012 2013 1H2014 A proven business model that is structured for sustainable growth Notes: (1) Represents gross numbers not adjusted for joint venture interests (2) Commencement of construction subject to completion of due diligence period and planning approval (3) Settled, under development or subject to planning Lifestyle Communities Limited Downsize to a Bigger Life 4
KEY METRICS - SALES, SETTLEMENTS & ANNUITIES Settlements and Sales 150 125 100 75 50 25 1HFY2012 2HFY2012 1HFY2013 2HFY2013 1HFY2014 Settlements Net Sales Commitments Gross Rental and DMF Annuities $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 Another strong half-year of settlements and sales - 109 home settlements in 1HFY2014 compared to 68 in 1HFY2013 (1) - 126 net sales commitments in 1HFY2014 compared to 89 in 1HFY2013 (1) 804 homes now completed and under management (1) 1,628 total homes in the portfolio (2) Achieved ten DMF settlements in 1HFY2014 compared to four in 1HFY2013 1HFY2012 2HFY2012 1HFY2013 2HFY2013 1HFY2014 Site Rental Fees (gross) Deferred Management Fee (cash) Continued growth in settlements and ongoing annuities as portfolio builds Notes: (1) Represents gross numbers not adjusted for joint venture interests (2) Settled, under development or subject to planning Lifestyle Communities Limited Downsize to a Bigger Life 5
KEY METRICS - NET ASSETS & GEARING Net Assets $105,000,000 $90,000,000 $75,000,000 $60,000,000 $45,000,000 $30,000,000 $15,000,000 Gearing 60% 50% 40% 30% 20% 10% FY2010 FY2011 FY2012 FY2013 1HFY2014 Net assets $91.2 million (at 31 December 2013) up from $82.6 million (at 30 June 2013) Gearing stable at 18.2% (net debt to net debt plus equity) Currently funding Shepparton and Hastings developments from cash reserves. There is $12.3 million liquidity in corresponding bank facilities that will be drawn on to assist with the land settlements at Chelsea Heights, Wollert and Geelong in the June 2014 quarter FY2010 FY2011 FY2012 FY2013 1HFY2014 Robust balance sheet with capacity to grow portfolio Lifestyle Communities Limited Downsize to a Bigger Life 6
KEY METRICS - PORTFOLIO Lifestyle Communities portfolio of communities continues to grow Communities Existing Communities Developed Total home sites in communities Home sites sold & occupied Home sites sold & awaiting settlement Home sites occupied and/or awaiting settlement # % Melton 228 228-228 100% Tarneit 136 135-135 99% Existing Communities Selling and Settling Warragul 182 148 24 172 95% Cranbourne (1) 217 153 28 181 83% Shepparton 221 48 29 77 35% Chelsea Heights (1) 104 73 25 98 94% Hastings 141 19 42 61 43% New Communities - Awaiting Commencement Chelsea Heights Expansion 82-40 40 49% Wollert 155 - - - - Geelong (2) 162 - - - - Total Home Sites 1,628 804 (4) 188 (5) 992 61% Maintaining focus on Victoria s key corridors and regions Notes: (1) Represents 100% of the development of which Lifestyle Communities will share 50% (2) Commencement of construction subject to planning approval and final contract becoming unconditional (3) Lifestyle Communities will have an economic interest in 1,427 home sites (4) Currently collecting annuity income (rent and DMF income) on these sites (5) Represents sites in the sales bank awaiting settlement as at 31 December 2013 Lifestyle Communities Limited Downsize to a Bigger Life 7
ANNUITY STREAMS Over Eight Years of Growing Annuity Income Streams Annuity Income $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 Total number of homes settled (1) Number of resales attracting a DMF 1HFY2011 2HFY2011 1HFY2012 2HFY2012 1HFY2013 2HFY2013 1HFY2014 356 412 493 546 614 695 804 8-6 5 4 6 10 109 (1) annuities added to the Community Management Business during the half-year Ten existing home sales attracting DMF settled during the half-year with 29 existing homes available for resale $3.6 million (gross) received from site rental and deferred management fees during the halfyear compared to $2.5 million in the corresponding period last year Site Rental Fees (gross) Deferred Management Fee (cash) Note: (1) Represents gross numbers not adjusted for joint venture interests Lifestyle Communities Limited Downsize to a Bigger Life 8
SALES AND SETTLEMENTS Strong half-year of sales and settlements Sales Commitments 126 new home sales in 1HFY2014 (1) Current committed sales bank as of 31 December 2013 is 188; this compares to a sales bank of 171 as at 30 June 2013 Settlements 109 settlements in 1HFY2014 (1) 41 settlements at Chelsea Heights, 19 at Hastings, 18 at Cranbourne, 16 at Shepparton, 12 at Warragul and 3 at Tarneit First settlements at Hastings occurred in September 2013 Monthly customer commitments - since January 2009 to December 2013 45 40 35 30 25 20 15 10 5 60 59 74 91 79 42 73 89 101 126 Jan Feb 2009 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 2010 2011 2012 2013 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Note: (1) Lifestyle Communities has an economic interest in 92 new home sales and 79 settlements after allowing for non-controlling interests Lifestyle Communities Limited Downsize to a Bigger Life 9
PROFIT & LOSS Profit & Loss highlights 1HFY2013 ($ 000) 1HFY2014 ($ 000) % Movement Home settlement revenue 15,848 28,266 78% Rental and utilities revenue 2,619 3,690 41% Deferred management fee 1,046 1,509 44% Total revenue 19,681 33,854 72% Cost of sales (13,085) (21,033) 61% Home settlement margin 17% 26% 9% Gross profit 6,596 12,821 94% Fair value adjustment 4,176 5,030 20% Development expenses (1,688) (1,745) 3% Community management expenses (1,663) (2,127) 28% Corporate overheads (1,809) (1,828) 1% Finance costs (1,433) (879) 38% Net profit before tax 4,179 11,273 170% Net profit after tax Members of the parent 2,294 6,483 183% Non-controlling interests 803 2,007 150% Total net profit after tax 3,097 8,490 174% Net profit attributable to shareholders up 183% for the half-year to $6.5 million compared to $2.3 million in the prior half-year Home settlement revenue up $12.4 million; average realisation uplift of 11% to $259k (excl. GST) Cash deferred management fees increased by $299k to $383k after achieving ten resales in the half-year compared to four in the prior half-year. The remaining increase is attributable to the movement in the deferred management fee asset Development expenses remained relatively consistent due to increasing expenditure at Chelsea Heights and Hastings offset by reduced expenditure at Tarneit and Warragul Community management expenses increased due to an increase in operations at Lifestyle Chelsea Heights and the commencement of operations at Lifestyle Hastings Finance costs were down 38% due to a $16.8 million reduction in the loan note facility during December 2012 Lifestyle Communities Limited Downsize to a Bigger Life 10
BALANCE SHEET Balance sheet highlights 30 JUN 13 ($ 000) 31 DEC 13 ($ 000) % Movement Cash and cash equivalents 16,144 4,999 Inventories 21,280 21,403 Total current assets 38,978 28,167 28% Trade and other receivables 8,344 9,213 Inventories 14,253 18,992 Investment properties 74,974 89,925 Total non-current assets 100,547 121,334 21% Total assets 139,524 149,501 7% Trade and other payables 9,565 16,839 Interest-bearing loans and borrowings 5,692 1,157 Current tax payable - 326 Total current liabilities 15,552 18,634 20% Interest-bearing loans and borrowings 28,182 24,068 Deferred tax liabilities 12,939 15,395 Total non-current liabilities 41,337 39,698 4% Using cash reserves to fund the development of Shepparton and Hastings to minimise funding costs Investment properties include the new sites at Chelsea Heights and Wollert, both will settle in the June 2014 quarter. A current liability has been recorded to reflect settlement amounts owing of $8.2 million Total project bank debt as at 31 December 2013 is $1.2 million with liquidity of $12.3 million available to assist with land settlements in the June 2014 quarter Total liabilities 56,889 58,332 3% Net assets 82,635 91,168 10% NTA per share (cents) 82.6 91.2 Balance sheet remains strong Lifestyle Communities Limited Downsize to a Bigger Life 11
CASH FLOW Cash flow highlights 1HFY2013 ($ 000) 1HFY2014 ($ 000) Receipts from customers 20,597 35,206 Payments to suppliers and employees^ (23,316) (34,406) Net interest payments (2,988) (1,269) Cash flows used in operations (5,707) (469) Project capital expenditure (civil and facilities infrastructure) 6,258 5,617 Cash flow from operations (excluding project capital expenditure) 551 5,148 Purchase of investment properties (56) (1,641) Cash flows used in investing activities (228) (1,965) Net movement in borrowings (15,119) (8,706) Dividend paid (782) - Entitlement offer and placement 35,305 - Cash flows from / (used in) financing activities 19,392 (8,718) Net cash flows 13,458 (11,151) Cash as at the beginning of the half-year 3,330 16,144 Cash as at the end of the half-year 16,787 4,993 Free cash has been used to fund the development of Shepparton and Hastings to minimise funding costs. This has resulted in a reduction in cash compared to the prior half-year but is offset by liquidity of $12.3 million available in the Shepparton and Hastings bank facilities Adjusted cash flows from operations (excluding project capital expenditure) up to $5.1 million from $0.6 million Net interest savings of $1.7 million mainly due to loan note part payment in December 2012 Net repayment of debt $8.7 million, this related to bank development borrowings as Chelsea Heights debt was fully repaid and Shepparton and Hastings developments were being funded from cash reserves ^ Due to Lifestyle Communities accounting policies and legal structure, payments to suppliers and employees includes all gross costs of infrastructure construction (i.e. civil works, clubhouse and other facilities). If structured alternatively these costs would form part of investing cash flows. Therefore cash flows from operations will be negatively impacted when Lifestyle Communities is in the cash intensive development phase of a community To assist with further understanding of cash flows, please refer to Page 16 for a detailed break-down of development and management cash flows per community for 1HFY2014 Lifestyle Communities Limited Downsize to a Bigger Life 12
MARKET ENVIRONMENT Housing Market Strengthening Melbourne housing market has improved consumer confidence and their ability to sell existing homes Land Access Focused on acquiring land in the key growth corridors in Melbourne, and building on the recent acquisitions at Chelsea Heights, Wollert and Geelong The contract at Geelong is expected to go unconditional on 2 March 2014, the initial due diligence period was extended by 30 days to finalise investigation Demand Sales for first-half of FY2014 were 126 (1) home sales which was up 42% on the prior corresponding half Tax Following on from the AGM update relating to the ATO s GST draft ruling on moveable homes, Lifestyle Communities advises that the draft ruling was withdrawn by the ATO in late December 2013 Lifestyle Communities can confirm that there will be no change to the GST treatment relating to our communities Settlements Settlements for first-half FY2014 were 109 (1). Assuming market conditions do not change materially, the company expects settlements to exceed 200 for FY2014 compared to 149 for FY2013 Note: (1) Represents gross numbers not adjusted for joint venture interests Lifestyle Communities Limited Downsize to a Bigger Life 13
OUTLOOK FY2014 Construction to commence on the Company s eighth community, Lifestyle Lyndarum at Wollert, as well as the Chelsea Heights expansion, both during the June 2014 quarter Market sentiment continues to improve with the uplift in the residential property market Assuming market conditions do not change materially we expect new home settlements for FY2014 to exceed 200 (1) (compared with 149 (1) for FY2013) Note: (1) Represents gross numbers not adjusted for joint venture interests Lifestyle Communities Limited Downsize to a Bigger Life 14
LIKELY SETTLEMENT PROGRAMME Currently 1,628 homes in the portfolio (1) Community FY14 FY15 FY16 FY17 FY18 Q3 Q4 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 Wollert Geelong Represents tail of development Notes: (1) Settled, under development or subject to planning; gross numbers not adjusted for joint venture interests The above timescale reflects current estimates of the settlement period for the existing developments. Settlement rates are a function of market conditions Lifestyle Communities Limited Downsize to a Bigger Life 15
CASH FLOW ANALYSIS - 1HFY2014 Supplementary Cash Flow Analysis for 1HFY2014 Melton Tarneit Warragul Cranbourne (4) Shepparton Chelsea Heights (4) Hastings Wollert Geelong Total Total Number of Homes 228 136 182 217 221 186 141 155 162 1,628 Settled 1HFY2014-3 12 18 16 41 19 - - 109 (1) Remaining homes and lots available to settle - 1 34 64 173 113 122 155 162 824 Capital Cash Flows ($million) Land - - - - - (0.25) - (0.67) (0.69) (1.61) (3) Development Expenditure (development and sales) (0.02) (0.07) (0.34) (0.96) (1.11) (0.77) (4.20) - - (7.47) Home Construction (0.01) (0.03) (2.09) (2.98) (3.22) (5.81) (5.05) - - (19.19) Home Settlements - 0.73 2.86 5.08 3.20 11.42 4.97 - - 28.26 Net Development Cash Flows (0.03) 0.63 0.43 1.14 (1.13) 4.59 (4.28) (0.67) (0.69) (0.01) Annuity Cash Flows ($million) Site Rentals (incl. Management Fees) 0.98 0.58 0.64 0.63 0.18 0.23 - - - 3.24 Deferred Management Fees Received 0.19 0.09 0.04 0.06 - - - - - 0.38 Community Operating Costs (0.29) (0.25) (0.17) (0.23) (0.17) (0.10) (0.05) - - (1.26) Net result from utilities (0.02) 0.01 (0.01) - (0.01) (0.02) - - - (0.05) Share to non-controlling interests (2) - - - (0.17) - (0.03) - - - (0.20) Net Annuity Cash Flows 0.86 0.43 0.50 0.29-0.08 (0.05) - - 2.11 Head Office Costs (1.74) Net Operating Cash Flows 0.36 Reconciliation to statutory cash flows Less Interest (1.27) Add Land (investing cash flow) 1.61 Less Movement in inventory and creditors and JV fees owing Statutory Cash Flows from Operations ($million) (0.47) (1.17) Notes: (1) Represents gross numbers not adjusted for joint venture interests (2) Lifestyle Communities record 100% rental income and pay out 50% (after management fees) to non-controlling interests (3) Represents deposits paid for land settling in the June 2014 quarter (4) These are 50% owned JV development, 100% cashflows are represented Lifestyle Communities Limited Downsize to a Bigger Life 16
SUMMARY The first-half of FY2014 delivered another strong result for net sales commitments (126) and home settlements (109) (1) Homes under management are now 804 and this resulted in growing annuity income from homeowner rentals of $3.2 million compared to $2.3 million in the prior half-year The recently announced Geelong acquisition, along with the expansion of Chelsea Heights and a site at Wollert in Melbourne s north has increased the total portfolio to 1,628 (2) Funded and resourced to roll-out a community every 12-18 months subject to identification of appropriate sites Note: (1) Represents gross numbers not adjusted for joint venture interests (2) Settled, under development or subject to planning Lifestyle Communities Limited Downsize to a Bigger Life 17
IMPORTANT NOTICE AND DISCLAIMER This Presentation contains general background information about Lifestyle Communities Limited (LIC) and its activities current at 17 February 2014 unless otherwise stated. It is information in a summary form and does not purport to be complete. It should be read in conjunction with LIC s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange, which are available at www.asx. com.au. This Presentation has been prepared by LIC on the information available. To the maximum extent permitted by law, no representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions in this presentation and LIC, its directors, officers, employees, agents and advisers disclaim all liability and responsibility (including for negligence) for any direct or indirect loss or damage which may be suffered by any recipient through use or reliance on anything contained in or omitted from this presentation. Past performance information given in this Presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. This Presentation contains certain forward-looking statements and prospective financial information. These forward looking statements and information are based on the beliefs of LIC s management as well as assumptions made by and information currently available to LIC s management, and speak only as of the date of this presentation. All statements other than statements of historical facts included in this presentation, including without limitation, statements regarding LIC s forecasts, business strategy, synergies, plans and objectives, are forwardlooking statements. In addition, when used in this presentation, the words forecast, estimate, expect, anticipated and similar expressions are intended to identify forward looking statements. Such statements are subject to significant assumptions, risks and uncertainties, many of which are outside the control of LIC and are not reliably predictable, which could cause actual results to differ materially, in terms of quantum and timing, from those described herein. Readers are cautioned not to place undue reliance on forward-looking statements and LIC assumes no obligation to update such information. The information in this Presentation remains subject to change without notice. In receiving this Presentation, you agree to the foregoing restrictions and limitations. This Presentation is not for distribution or release in the United States or to, or for the account or benefit of, US persons. Lifestyle Communities Limited Downsize to a Bigger Life 18
Lifestyle Communities Limited Level 2, 35 Market Street South Melbourne VIC 3205 Ph: (03) 9682 2249 www.lifestylecommunities.com.au GEELONG - WOLLERT - HASTINGS - CHELSEA HEIGHTS - SHEPPARTON - CRANBOURNE - WARRAGUL - TARNEIT - MELTON