Ingenia Communities Group Annual Report 2014

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FY2014 Annual Report · Ingenia Communities Group

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ANNUAL
REPORT

2014

Ingenia Communities Holdings Limited

57 quality
Australian seniors
living communities
and growing

$11.6m

Underlying proﬁt
Increased by 97%
on FY13

$14.2m 49%

Operating cashﬂow
Increased by 27%
on FY13

Increase in
Total segment revenue

www.ingeniacommunities.com.au

Annual Report 2014

Garden Villages
Settlers Lifestyle
Active Lifestyle Estates

Business
Strategy

Ingenia Communities Group (ASX ticker: INA) is a leading
property group that owns, operates and develops a diversiﬁed
portfolio of seniors living communities in Australia. Since
February 2013 Ingenia has become the largest owner, operator
and developer of lifestyle and tourism parks in NSW and is
presently assessing opportunities in South East Queensland.

Ingenia Communities Holdings Limited

Ingenia Communities Holdings Limited
Annual Reports

for the year ended 30 June 2014

CONTENTS
Directors’ Report

Auditors’ Independence Declaration

Consolidated Statement of Comprehensive Income

Consolidated Balance Sheet

Consolidated Cash Flow Statement

Statement of Changes in Equity

Notes to the Financial Statements

1. Summary of signiﬁcant accounting policies

2. Accounting estimates and judgements

3. Segment information

4. Earnings per security

5. Revenue

6. Finance expense

Income tax beneﬁt

8. Discontinued operations and assets held for sale

9. Cash and cash equivalents

10. Trade and other receivables

11. Inventories

12. Investment properties

13. Plant and equipment

14. Trade and other payables

15. Borrowings

16. Retirement village resident loans

17. Provisions

18. Derivatives

19. Deferred tax liabilities

20. Issued securities

21. Reserves

22. Accumulated losses

23. Commitments

24. Contingent liabilities

25. Share-based payment transactions

26. Capital management

27. Financial instruments

28. Fair value measurement

29. Auditor’s remuneration

30. Related parties

31. Company ﬁnancial information

32. Subsidiaries

33. Notes to the cash ﬂow statement

34. Subsequent events

Directors’ Declaration

Independent Auditors’ Report

Annual Report 2014

Philip Clark AM
Mr Clark is the Chair of SCA Property
Group Limited and Hunter Hall Global
Value Limited. He is a member of the
J.P. Morgan Advisory Council and
also chairs a number of government
and private company boards. He was
Managing Partner and Chief Executive

Officer of Minter Ellison and worked with that ﬁrm from
1995 until June 2005. Prior to joining Minter Ellison,
Mr Clark was Director and Head of Corporate with ABN
Amro Australia and prior to that he was Managing Partner
with Mallesons Stephen Jaques for 16 years.

Mr Clark is Chair of the Remuneration and
Nomination Committee.

Amanda Heyworth
Ms Heyworth is a professional
company director. She previously
served as Executive Director of
Playford Capital Venture Capital Fund.
She has a wealth of experience in the
ﬁnance, technology and government
sectors and teaches in the Australian

Graduate School of Management’s MBA program.
Ms Heyworth brings a ﬁnance and growth focus to the
Group, having worked on many product launches and
geographic expansions and over 40 capital raisings and
M&A transactions. She sits on a number of public sector
and private boards.

Ms Heyworth is Chair of the Audit and Risk Committee
and a member of the Remuneration and
Nomination Committee.

Robert Morrison
Mr Morrison has extensive experience
in property investment and funds
management. During his 21 years
at AMP, Mr Morrison’s executive
roles included Head of Property for
Asia Paciﬁc and Director of Asian
Investments. Mr Morrison’s investment

experience includes senior portfolio management roles
where he managed both listed and unlisted property funds
on behalf of institutional investors.

Mr Morrison was previously an Executive Director of AMP
Capital and a National Director of the Property Council of
Australia. He is a founding partner and Executive Director
of alternative investments ﬁrm, Barwon Investment
Partners and is a Non-executive Director to the Board of
Mirvac Funds Management Limited.

Mr Morrison is a member of the Audit and Risk Committee.

Directors’ Report

for the year ended 30 June 2014

The directors of Ingenia Communities Holdings Limited
(“ICH” or the “Company”) present their report together
with the Company’s ﬁnancial report for the year ended
30 June 2014 (the “current year”) and the Independent
Auditor’s Report thereon. The Company’s ﬁnancial
report comprises the consolidated ﬁnancial report of the
Company and its controlled entities, including Ingenia
Communities Fund (“ICF” or the “Fund”) and Ingenia
Communities Management Trust (“ICMT”) (collectively,
the “Trusts”).

The shares of the Company are “stapled” with the units of
the Trusts and trade on the Australian Securities Exchange
(“ASX”) effectively as one security. Ingenia Communities
RE Limited (“ICRE” or “Responsible Entity”), a wholly
owned subsidiary of the Company is the responsible entity
of the Trusts. In this report, the Company and the Trusts
are referred to collectively as the Group.

In accordance with Accounting Standard AASB 3 Business
Combinations, the stapling of the Company and the Trusts
is regarded as a business combination. The Company has
been identiﬁed as the parent for preparing consolidated
ﬁnancial reports.

1. DIRECTORS
The directors of the Company at any time during or since
the end of the ﬁnancial year were:

Non-executive Directors (“NEDs”)
Jim Hazel (Chairman)

Appointed 1 March 2012

Philip Clark AM

Appointed 4 June 2012

Amanda Heyworth

Appointed 16 April 2012

Robert Morrison

Appointed 8 February 2013

Norah Barlow NZOM

Appointed 31 March 2014

Executive Directors
Simon Owen
(Managing Director and CEO)

Appointed 24 November 2011

1.1 Qualiﬁcations, Experience and

Special Responsibilities

Jim Hazel – Chairman
Mr Hazel has an extensive corporate
career in both the banking and
retirement sectors. His retirement
village operations experience includes
being Managing Director of Primelife
Corporation Limited (now part of
Lend Lease). Other listed company

directorships include Bendigo and Adelaide Bank Limited
since 2010, Centrex Metals Limited since 2010 and
Impedimed Limited since 2006. Mr Hazel also serves
on the Boards of Motor Accident Commission, Coopers
Brewery Limited and the Council for Ageing (SA) Inc.

Mr Hazel is a member of the Remuneration and
Nomination Committee.

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014(cid:13)|(cid:13)continued

Norah Barlow NZOM
Ms Barlow is a professional company
director. For the past 12 years, she
served as the Chief Executive Officer
of Summerset Group, the third largest
retirement village operator and the
second largest developer of villages
in New Zealand. Ms Barlow is also a

past President of Retirement Villages Association of New
Zealand, a role she held for six years.

Ms Barlow currently sits on the Board of Cigna Life
Insurance Limited, Vigil Monitoring Limited and Cooks
Global Food Group Limited. She serves as a member of the
New Zealand Government’s National Advisory Council for
the Employment of Women and remains with Summerset
as a Non-executive Director.

Ms Barlow is a member of the Audit and Risk Committee.

Simon Owen – Managing Director
and CEO
Mr Owen joined the Group in
November 2009 as the Chief Executive
Officer. He initiated the internalisation
of management and exit from the
ING Group as well as Ingenia’s recent
focus on lifestyle parks. Mr Owen

brings to the Group in-depth experience in the retirement
sector and is the immediate past National President of
the Retirement Villages Association (now part of the
Retirement Living Council), the peak industry advocacy
group for the owners, operators, developers and managers
of retirement communities in Australia.

Mr Owen’s experience spans multiple disciplines including
ﬁnance, funds management, mergers and acquisitions,
business development and sales and marketing. Prior to
Ingenia Communities, Mr Owen was the CEO of Aevum, a
formerly listed retirement company. Mr Owen is a qualiﬁed
accountant (CPA) with postgraduate diplomas in ﬁnance
and investment, and advanced accounting.

1.2 Meetings
The number of meetings of directors (including meetings of committees of directors) held during the year and the number
of meetings attended by each director was as follows:

Jim Hazel

Philip Clark AM

Amanda Heyworth

Robert Morrison

Norah Barlow

Simon Owen

Board

Audit & Risk Committee

Remuneration &
Nomination Committee

–

A: Meetings eligible to attend B: Meetings attended

1.3 Interests of Directors
Securities in the Group held by directors as at 30 June 2014 were:

Jim Hazel

Philip Clark AM

Amanda Heyworth

Robert Morrison

Norah Barlow

Simon Owen

Issued stapled
securities

Performance
quantum rights

Retention
quantum rights

1,333,334

208,334

561,334

221,667

178,000

–

2,179,667

4,720,000

1,070,000

Annual Report 2014

2. COMPANY SECRETARIES

3.1 Corporate Governance Structure

Leanne Ralph
Ms Ralph was appointed to the position of Company
Secretary in April 2012. Ms Ralph has over 20 years
experience in chief ﬁnancial officer and company
secretarial roles for various publicly listed and unlisted
entities. Ms Ralph is a member of the Governance Institute
of Australia and the Australian Institute of Company
Directors. Ms Ralph is the principal of Boardworx
Australia Pty Ltd, which supplies bespoke outsourced
Company Secretarial services to a number of listed
and unlisted companies.

Tania Betts
Ms Betts was appointed as Chief Financial Officer (“CFO”)
in May 2012, after a six-year career at Stockland Group
where she held various positions including National
Finance Manager within their Retirement Living Division.
Ms Betts’ previous experience includes several years within
the chartered accounting profession as well as working
for a leading health care provider. She holds a Bachelor
of Business in Accounting and Finance, and is a member
of both the Institute of Chartered Accountants and the
Governance Institute of Australia. Ms Betts was the 2011
winner of the Urban Development Institute of Australia
NSW and SMEC Young Developers’ Award for Excellence.

3. CORPORATE GOVERNANCE STATEMENT
This statement outlines the main corporate governance
practices currently in place for Ingenia Communities Group
and also addresses the 2nd Edition of the ASX Corporate
Governance Council’s Corporate Governance Principles
and Recommendations (ASX Recommendations). The
Board believes the Group accords with the majority
of the principles and recommendations of the ASX
Corporate Governance Council with the exception of one
recommendation, which is outlined in the report.

The corporate governance policies and practices
described below are those that have been in place for
the 2013-14 ﬁnancial year, or as at the date of this report
where indicated. The Board continues to review the
governance framework and practices of the Group to
ensure they meet the interests of securityholders. As at
the date of this report, a process to review the Group’s
governance practices against the 3rd Edition of the ASX
Recommendations is underway.

All references to the Group’s website are to:
www.ingeniacommunitites.com.au

a. Ingenia Communities Group and its Constitutions
Ingenia Communities Group is a triple stapled structure
comprising the parent company, Ingenia Communities
Holdings Limited, Ingenia Communities Fund and Ingenia
Communities Management Trust, (together known as the
Group). ICF and ICMT each have their own Constitution
(the Constitutions) both of which have been lodged with
the Australian Securities and Investments Commission
(“ASIC”). The rights and obligations of unitholders are
governed by these Constitutions and the Corporations
Act 2001. The terms contained in each Constitution are
substantially the same.

The responsible entity of ICF and ICMT, Ingenia
Communities RE Limited is the holder of an Australian
Financial Services Licence (“AFSL”).

As a result of the stapling, ICH and ICRE operate as a
coordinated Group with the Boards of both companies
having the same composition and the meetings held
concurrently where appropriate. References to the ‘Board’
in this statement are references to the Board of ICH and
ICRE (as the Responsible Entity of ICF and ICMT).

b. Compliance Plans
In accordance with Corporations Act requirements, the
Responsible Entity has registered compliance plans for
ICF and ICMT with ASIC. The compliance plans describe
the procedures that the Responsible Entity will apply in
operating ICF and ICMT to ensure compliance with the
Corporations Act and the Constitutions of ICF and ICMT.

The Board of the Responsible Entity is responsible for
monitoring the Group’s compliance with the compliance
plans. Further details are provided under the section on
risk management.

3.2 Role of the Board
The Board of Ingenia Communities Group is responsible for
overseeing the effective management and operation of the
Group. The Board operates under a formal charter, which
can be found on the Group’s website. In addition to the
functions prescribed by law, the Board has the following
responsibilities outlined in its charter:

Corporate Strategy
– Evaluate, approve and monitor the strategic and ﬁnancial

plans for the Group.

– Evaluate, approve and monitor the annual ﬁnancial

budgets of the Group.

– Evaluate, approve and monitor major capital

expenditure, capital management and all major
corporate transactions.

Board Composition and Structure
– Review the composition of the Board and consider

Board succession.

– Ensure an annual review of the performance of the

Board, its committees and directors is carried out.

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014(cid:13)|(cid:13)continued

Other Corporate
– Approve changes to the Group’s capital structure.
– Approve the establishment and issue of any equity rights

in the Group via incentive plans.

Investor Communications
– Approve all material reporting and other external

communications by the Group in accordance with the
Group’s Continuous Disclosure Policy.

– Establish and approve a distribution policy to

securityholders and any changes to that policy.

– Oversee the effective management and operation of

the Group.

– Approve the issue of Public Disclosure Statements.

Executive Management
– Appointment and removal of the Chief Executive Officer

(“CEO”).

– Approve the employment terms and conditions of

the CEO.

– Review and provide feedback on the performance of

the CEO.

– Approve the appointment of the CEO’s direct reports
and oversee their performance and remuneration.

– Review and ratify the employment terms of the CEO’s

direct reports (as recommended by the CEO).

– Review management succession planning.
– Approve the level of delegated authority to the CEO,

via the Delegations and Authorities Policy.

– Appointment and removal of the Company Secretary.

Governance and Risk Management
– Monitor and review the overall Risk Management

framework for the Group.

– Approve and monitor compliance with the Group’s

key corporate policies, and conduct a review of these
policies on an annual basis.

– Monitor the Group’s operations in relation to, and

compliance with, relevant regulatory requirements,
and any other contractual, statutory or legal obligation.

– Monitor compliance with the Group Delegations and

Authorities Policy.

– Recommending to securityholders the appointment

of the external auditor.

– Review and approve at least annually the Group’s

Corporate Governance Statement.

Financial Reporting
– Review and approve all ﬁnancial reports of the Group.
– Establish an Audit and Risk Committee to review
the Group’s ﬁnancial reporting and oversee the
independence of the external auditors, and to review
reports provided by the Audit and Risk Committee.

– Review and approve the disclosure in the annual report

and any departures from the ASX Corporate Governance
Principles and Recommendations.

– Review management’s strategy and program for investor

communications annually.

– Review management’s written policies and procedures

to ensure compliance with the ASX continuous
disclosure requirements.

Generally, the CEO is responsible for all matters not
speciﬁcally identiﬁed as the responsibility of the Board.

3.3 Role of the Board of the Responsible Entity
As the Responsible Entity, the Board of Ingenia
Communities RE Limited has additional responsibilities
for the operation of ICF and ICMT. The Responsible Entity
must exercise its powers and perform the obligations
conferred on it under the Constitutions and the
Corporations Act 2001 and ensure that the activities of
the Group are conducted in a proper and efficient manner
in the best interests of unitholders. The Responsible
Entity must also ensure compliance with the conditions
of the AFSL and approve and monitor compliance with
compliance plans.

3.4 Board size and Composition
The Constitution of the Group provides that there will
be a minimum of three directors and not more than
ten directors.

Directors are appointed with the aim of ensuring the
Board has:

–
–

–

an appropriate range of skills, experience and expertise;

a proper understanding of, and competence to deal with,
current and emerging issues in the industry in which it
engages;

the ability to effectively review and challenge the
performance of management and exercise independent
judgement; and

–

a majority of independent directors.

If additional directors are required speciﬁc skill sets
deemed appropriate for the Board to collectively possess
are identiﬁed and if required, an executive search may be
engaged to assist in this recruitment process.

a. Terms of Appointment
Non-executive directors are appointed pursuant to formal
letters of appointment which, among other things, set
out the key terms and conditions of the appointment,
the Board’s expectations in relation to the performance
of the director, procedures for dealing with a director’s
potential conﬂict of interest and the disclosure obligations
of the director, together with the details of the director’s
remuneration.

Annual Report 2014

b. Directors’ Interests
Directors are required to keep the Board advised of any
interest that may be in conﬂict with those of the Group, and
restrictions are applied to directors’ rights to participate in
discussion and to vote, as circumstances dictate when a
conﬂict has been identiﬁed. In particular, where a potential
conﬂict of interest may exist, directors concerned may be
required to leave the Board meeting while the matter is
considered in their absence.

The Group has also entered into a deed of disclosure with
each director, which is designed to facilitate the Group’s
compliance with its obligations under the ASX Listing
Rules relating to disclosure of changes in directors’ security
holdings. Directors and their nominated related party
security holdings, are also monitored to identify changes
that may require urgent disclosure.

c. Independent Advice
The Board has a policy of enabling directors to seek
independent professional advice for Group related matters
at the Group’s expense, subject to the prior notiﬁcation
of the Chairman and where the estimated costs are
considered to be reasonable.

d. Directors’ Independence
The Board has considered speciﬁc principles in relation
to directors’ independence. The Board considers an
independent director to be a non-executive director who is
not a member of the Group’s management and who is free
of any business or other relationship that could materially
interfere with, or could reasonably be perceived to interfere
with, the independent exercise of their judgement. The
Board will consider the materiality of any given relationship
on a case-by-case basis, having regard to both quantitative
and qualitative principles.

At the date of this report, the Board comprises ﬁve non-
executive directors, and one executive director. The Boards
of ICH and ICRE have the same directors.

The current members of the Board are:

– Mr Jim Hazel (Chairman)
– Ms Amanda Heyworth (Non-executive Director)
– Mr Philip Clark (Non-executive Director)
– Mr Robert Morrison (Non-executive Director)
– Ms Norah Barlow (Non-executive Director)
– Mr Simon Owen (Managing Director and CEO)

Mr Jim Hazel, Ms Amanda Heyworth, Mr Philip Clark,
Mr Robert Morrison and Ms Norah Barlow are considered
by the Board to be independent. The Group recognises
that having a majority of independent non-executive
directors provides assurance that the Board is structured
properly to fulﬁl its role in holding management
accountable for the Group’s performance.

The Board considers that the existing Board structure is
appropriate for the Group’s current operations and stage
of development.

Directors’ details are listed in the Directors Report,
including details of their other listed entity directorships
and experience.

e. Chairman
The role of Chairman and CEO is not occupied by the same
individual. The Board has agreed that it should continue to
have a majority of independent non-executive directors,
that the positions of Chairman and CEO must be separate,
and that the Chairman should be an independent non-
executive director.

Mr Jim Hazel was appointed Chairman of the Group
on 1 March 2012 and is considered an independent
director in accordance with recommendation 2.1 of the
ASX recommendations.

f. Diversity
In appointing members to the Board, consideration is
given to the skills, business experience and educational
backgrounds of candidates. The advantage of having a mix
of relevant business, executive and professional experience
on the Board; the importance of cultural and ethical values;
and the beneﬁts of diversity, including gender diversity
is also recognised. These factors will also be considered
in any future appointments to the Board including any
identiﬁed skills ‘gaps’.

The Remuneration and Nomination Committee oversees
the director nomination process. Ultimately, the full
Board determines who is invited to ﬁll a casual vacancy
after extensive one-on-one and collective interviews
with candidates and thorough due diligence and
reference checking.

The Group Board has two female non-executive
directors out of six directors. Ms Amanda Heyworth was
appointed to the Board for her speciﬁc skills and ﬁnancial,
investment and marketing experience. Ms Norah Barlow
was appointed to the Board on 31 March 2014 for her
extensive industry experience.

A formal diversity policy has been adopted by the Board
that outlines the Group’s commitment to diversity in the
workplace and the provision of a work environment that is
free from discrimination and promotes equal opportunity
for all. Ingenia promotes an inclusive workplace where
employee differences in areas like gender, age, culture,
disability and lifestyle choice are valued. The unique skills,
perspectives and experience that the Group’s employees
bring to the table encourage creativity and innovation in
thought that better represents Ingenia’s diverse customer
base, ultimately driving improved business performance.

The policy does not include measurable objectives for
achieving gender diversity as the Group has always had a
policy of actively encouraging gender diversity at all levels
in the organisation, and a culture that supports workplace
diversity. This is evidenced by:

– The proportion of female directors: 33%
– The proportion of female employees on the executive

committee: 60%

– The proportion of female employees in the whole

organisation: 70%

– The proportion of female employees in senior

positions: 48%

In accordance with the requirements of the Workplace
Gender Equality Act 2012, the Group has lodged its 2014
annual public report with the Workplace Gender Equality
Agency which is available on the Group’s website.

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014(cid:13)|(cid:13)continued

g. Board Meetings
The Board typically schedules meetings on a monthly
basis, with additional meetings convened as required.
Agendas for each meeting are prepared by the Company
Secretary together with the CEO and input from the
Chairman, and are distributed prior to the meeting
together with supporting papers.

Standing items include the CEO’s report and the ﬁnancial
report, as well as reports addressing matters of strategy,
governance and compliance. Senior executives are directly
involved in Board discussions, and directors have a number
of further opportunities to contact a wider group of
employees, including visits to business operations.

Board papers include minutes of Board committees and
subsidiaries as well as papers on material issues requiring
consideration. Signiﬁcant matters are presented to the
Board by senior executives, and the Board may seek
further information on any issue, from any executive.

h. Board and Director Performance
The Board is committed to enhancing its effectiveness
through performance management and review. The Board
review process is designed to help enhance performance
by providing a mechanism to raise and resolve issues and
to provide recommendations to enhance its effectiveness.

The Board has recently conducted its second performance
review in accordance with the principles in this statement.

3.5 Board Committees
The ultimate responsibility for the oversight of the
operations of the Group rests with the Board. However,
the Board may discharge any of its responsibilities
through committees of the Board in accordance with
the Constitutions and the Corporations Act 2001.

The Board has established the following committees,
which assist it with the execution of its responsibilities.
The composition and effectiveness of the committees
are reviewed on an annual basis:

– Audit and Risk Committee
– Remuneration and Nomination Committee

Each of these committees operate in accordance with
speciﬁc charters approved by the Board which can be
found on the Group’s website.

a. Audit and Risk Committee
The Board has established an Audit and Risk Committee
(“ARC”), which assists the Board in fulﬁlling its governance
and disclosure responsibilities. The ARC has a written
charter outlining its role and responsibilities.

The purpose of the ARC is to review the integrity of
the Group’s ﬁnancial reporting practices; oversee the
independence of the external auditors; maintain open
lines of communication among the Board and external
auditors, serve as an independent and objective party to
review the ﬁnancial information submitted by management
to the Board for issue to securityholders, regulatory
authorities and the general public; review the adequacy
of the reporting and accounting controls of the Group;
and to oversee the Group’s legislative compliance and risk
management policies and procedures.

The ARC has the following responsibilities:

i. Review of the Group’s ﬁnancial reports

• Review the Group’s ﬁnancial reports and
commentary prepared by management.

• Review any matters raised on the ﬁnancial reports

by the Group’s external auditor.

• Assess the appropriateness of the accounting
policies adopted in preparing the Group’s
ﬁnancial reports.

• Assess whether the ﬁnancial reports are adequate

for securityholder needs.

• Review compliance with disclosure requirements.

• Assess the adequacy of representations

by management as to presentation of the
ﬁnancial reports.

• Recommend approval of the ﬁnancial reports by

the Board.

• Review the Group’s ﬁnancial budget.

ii. External auditors

• Establish and maintain procedures for the
appointment and rotation of the Group’s
external auditor.

• Assess the performance of the external auditor.

• Assess the independence of the external auditor,

having regard to the provision of non-audit services.

• Review the reasonableness of the external audit fees.

iii. Internal control framework

• Review the written policies and procedures designed
to ensure accurate external ﬁnancial reporting and
make recommendations to the Board thereon.

• Whilst the Group does not currently have an internal
audit function, should there be one in the future,
the ARC will receive reports from the internal audit
function including all incidents of actual or suspected
fraud or theft.

• Review of operational risk management framework.

• Review of the internal compliance and control

systems in relation to functions other than ﬁnancial
reporting.

iv. Compliance

• Review the adequacy of the Group’s system for

compliance with relevant laws, regulations, standards
and codes.

Annual Report 2014

v. Risk management

• The ARC shall be responsible for implementing and
overseeing the Group’s risk management policies.

• Identifying and assessing the Group’s material

business risks.

• Regularly reviewing and updating the Group’s

risk proﬁle.

• Approving treasury and hedge policies.

• Overseeing the risk management policies

and systems.

• Considering whether the Group has any material
exposure to economic, environmental and social
sustainability risks, and if applicable, review and
monitor the systems in place to manage these risks.

The ARC consists of three non-executive directors, all of
whom are independent directors, and is chaired by an
independent director, who is not chair of the Board. The
chair satisﬁes the test of independence.

The current members of the ARC are:

– Ms Amanda Heyworth (Chair);
– Mr Robert Morrison; and
– Ms Norah Barlow.

Mr Philip Clark AM was a member of the ARC until
April 2014.

At least one member of the ARC has relevant accounting
qualiﬁcations and experience and all members have a
good understanding of ﬁnancial reporting. Details of these
directors’ qualiﬁcations and attendance at ARC meetings
are set out in the Directors’ report.

The external auditor attends the annual general meeting
and is available to answer securityholder questions about
the conduct of the audit and the preparation and content
of the audit report, accounting policies adopted by the
Group, and the independence of the auditor in relation to
the conduct of the audit.

b. Remuneration and Nomination Committee
The Board has an established Remuneration and
Nomination Committee (“RNC”). The RNC has a written
charter deﬁning its role and responsibilities.

The RNC has been established by the Board to assist in the
review of the overall strategies of the remuneration of the
Group’s non-executive directors and executives and for the
review of the composition of the Board.

The purpose of the RNC is to support and advise the Board
in the following areas:

– Review the on-going appropriateness and relevance of
the executive remuneration policy to enable the Group
to attract and retain executives and directors who will
create value for securityholders.

– Ensure that the executive remuneration policy

demonstrates a clear relationship between key executive
performance and remuneration.

– Recommend to the Board the remuneration of executive

and non-executive directors.

– Fairly and responsibly reward executives having regard

to the performance of the Group, the performance of the
executive and the prevailing remuneration expectations
in the market.

– Review the Group’s recruitment, retention and
termination policies and procedures for senior
management.

– Review and recommend to the Board the remuneration
of direct reports to the CEO, and as appropriate other
senior executives.

– Review and recommend to the Board any equity based

plans and other incentive schemes.

– Develop a process for evaluation of the performance of

the Board, its committees and directors.

– Oversee the annual performance evaluations of senior

executives of the Group.

– Make recommendations to the Board on the
appointment and re-election of directors.

– Review and report to the Board on the mix of skills and
experience of the Board with the aim of ensuring it
remains an effective decision-making body.

The RNC consists of three non-executive directors all
of whom are independent directors and is chaired by
an independent director, who is not chair of the Board.
The chair satisﬁes the test of independence.

The current members of the RNC are:

– Mr Philip Clark AM (Chair);
– Ms Amanda Heyworth; and
– Mr Jim Hazel.

Each member of the senior executive team, including the
executive director, signed formal employment contracts
at the time of their appointment, covering a range of
matters including their duties, rights, responsibilities and
any entitlements on termination. Each contract refers to a
speciﬁc formal job description. Each contract sets out the
remuneration of the executive, including their entitlements
to any rights under incentive plans.

The Group aims to have a clear process for evaluating
the performance of senior executives. The Board has
delegated to the RNC the responsibility to oversee the
annual performance evaluation of the Group’s senior
executives, but retains the performance evaluation of
the CEO.

The evaluation for all executives is based on speciﬁc
criteria, including the business performance of the Group,
whether strategic objectives are being achieved, and the
development of management and personnel.

Non-executive directors receive director’s fees outlined
in their letters of appointment and reviewed on an annual
basis pursuant to advice from an external remuneration
consultant. No non-executive director has any entitlement
to participate in any executive incentive plan.

Further information on directors’ and executives’
remuneration, including principles used to determine
remuneration, is set out in the Directors’ Report under
the heading ‘’Remuneration Report’’.

The compliance officer is primarily responsible for
reviewing compliance on an ongoing basis; reporting
on compliance matters, including breaches, to the ARC;
and acting on recommendations of the ARC. Matters are
escalated to the ICRE Board or ASIC when necessary.

The compliance officer has direct access to the Chair of
the ARC to ensure the compliance officer is well placed
to adequately deal with compliance issues. Management,
via the compliance officer, is required to assess risk
management and associated internal compliance and
control procedures, and is required to report back
quarterly to the ARC as to whether those risks are being
managed effectively. A quarterly risk and compliance
report is prepared by the compliance officer for review and
consideration by the Board.

a. Compliance Plans
ICF and ICMT both have formal compliance plans that
have been adopted by the Board and lodged with ASIC.
The purpose of each compliance plan is to set out key
processes, systems and measures the Responsible Entity
will apply to ensure compliance with:

–
–
–

–

the Corporations Act 2001;

the Constitutions of ICF and ICMT;

industry practice standards relevant to the particular
scheme; and

internal policies and procedures.

Each compliance plan is a ‘how to’ document and has been
prepared following a structured and systematic process to
consider the Responsible Entity’s key obligations under the
Act, and the Constitutions; the risk of non-compliance; and
measures required to meet the risks of non-compliance.

Each compliance plan describes the key obligations
that must be met by the Responsible Entity, and how
compliance with these measures will be monitored.
In addition, the compliance plans detail the risk of not
complying with these obligations, and how breaches
are to be reported and addressed.

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014(cid:13)|(cid:13)continued

c. Investment Committee
The Investment Committee (“IC”) has been established
to assist the Board oversee the investment activities of
the Group by reviewing and making recommendations
to the Board on:

– major capital expenditure;
–
capital management;
–

all major corporate transactions including acquisitions
and divestment; and

– developments and refurbishments.

The IC reviews investment activities greater than $250,000
and provides endorsement to the CEO for execution.
Investment activities greater than $500,000 are submitted
to the Board for approval.

The IC monitors the performance of the Group’s
investments by conducting quarterly reviews on
development activities and bi-annual reviews on
acquisitions.

The IC consists of:

– Chief Executive Officer;
– Chief Financial Officer;
– Chief Operating Officer;
– General Manager Operations;
– Senior Fund Analyst; and
– General Manager Commercial.

The Committee is chaired by the Senior Fund Analyst.

3.6 Risk Management
The Board is responsible for ensuring that sound risk
management strategy and polices are in place. The Board
has delegated to the ARC the responsibility for identifying
and overseeing major risks and ensuring that systems are
in place to manage them.

In addition, the ARC:

–

identiﬁes and assesses the Group’s material
business risks;

regularly reviews and updates the Group’s risk
proﬁle; and

– oversees the risk management policies and systems.

The Group’s risk management framework is integrated
with its day-to-day business processes and functional
responsibilities, and is supported by a dedicated
compliance officer.

The compliance officer has been appointed under the rules
of the compliance plans of ICF and ICMT. The compliance
officer is responsible for ensuring adequate internal
systems and controls have been implemented to ensure
compliance with the Corporations Act 2001, ICF and ICMT’s
Constitutions, the Responsible Entity’s AFSL, and internal
and industry standards. These duties include promoting a
strong compliance culture within the organisation and to
external service providers.

Annual Report 2014

3.9 Code of Conduct and Ethical Behaviour
The Board acknowledges the need for high standards of
corporate governance practice and ethical conduct by all
directors and employees of the Group.

The Board has endorsed a code of conduct which outlines
‘acceptable behaviour’ and attitudes expected from all
staff to promote and maintain the conﬁdence and trust
of all those dealing with the Group.

Various measures have been established to ensure that a
high standard of ethical business behaviour is observed by
all staff members, including policies and procedures for:

– managing conﬂicts of interests;
– personal security trading;
– whistleblower procedures;
–

acceptance of gifts and entertainment as part of the
Gifts, Entertainment and Anti-bribery Policy; and

–

handling conﬁdential information.

In addition to their obligations under the Corporations
Act 2001 in relation to inside information, all directors,
employees and consultants have a duty of conﬁdentiality
to the Group in relation to conﬁdential information they
possess.

3.10 Employee and Director Trading in Ingenia

Communities Group Securities

The Group has a Personal Trading Policy that governs the
ability of directors, executives and employees to trade in
the Group’s securities. Subject to necessary prior written
consents being obtained, the Group’s directors, executives
and employees may trade in the Group’s securities at any
time outside closed periods which cover the following:

– between 1 January and the release of half yearly results;
– between 1 July and the release of annual results; or
–

for any other time period determined by the Board.

Directors and senior executives may, in exceptional
circumstances as deﬁned in the policy, trade during a
closed period but only with the prior written consent of
the Chair for directors, the CEO for key executives, and
the CFO for other employees. Notwithstanding the closed
periods and approval requirements, a person is prohibited
from trading at any time if they possess material, price-
sensitive information about the Group that is not generally
available to the public.

The Group’s Securities Trading Policy may be viewed on
the Group’s website.

3.7 External Auditors

a. Compliance Plan Audit
The external auditors conduct annual audits on the
compliance plans and report on:

– whether the Responsible Entity has complied with

the compliance plans of the Trusts’ for the ﬁnancial year
end; and

– whether the compliance plans continue to meet the

requirements of Part 5C.4 of the Corporations Act 2001
as at year end.

b. Australian Financial Services Licence Audit
The AFSL audit is conducted annually by the external
auditor. The auditor reports on the following:

– whether the Responsible Entity has complied with

the speciﬁed provisions of Part 7.8 of the Corporations
Act 2001;

– whether the Responsible Entity has complied with
sections 981B and 982B of the Act (relating to the
control and operation of trust accounts);

– whether the Responsible Entity has complied

with speciﬁc AFSL conditions relating to ﬁnancial
requirements, including internal procedures used by
the Licensee to comply with the ﬁnancial requirements
under the licence; and

– whether the cash projections meet the cash need

requirement conditions of the AFSL.

3.8 Other External Review

a. ASIC
ASIC may undertake a review of the Responsible Entity’s
risk and compliance processes and systems at any time.

b. Executive Conﬁrmations
In accordance with the Group’s legal obligations, the
CEO and CFO have made the following certiﬁcations
to the Board:

–

the Group’s ﬁnancial records have been properly
maintained in accordance with Section 286 of the
Corporations Act 2001;

the Group’s ﬁnancial statements, and notes thereto;
present a true and fair view, in all material respects,
of the consolidated group’s ﬁnancial condition and
operational results and are prepared in accordance with
relevant Australian Accounting Standards, Corporations
Regulations 2001 and other mandatory professional
reporting requirements;

the statements made with respect to the integrity of the
Group ﬁnancial reports are founded on a sound system
of risk management and internal compliance and control
systems which, in all material respects, implement the
policies adopted by the Board; and

the risk management and internal compliance and
control systems, to the extent they relate to the ﬁnancial
reporting, were operating efficiently and effectively in all
material respects throughout the period.

Since 30 June 2014, the CEO and the CFO conﬁrm there
has been no material change to any of the statements
made above.

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014(cid:13)|(cid:13)continued

The Board aims to ensure that its securityholders are
kept well-informed of all major developments and
business events that are likely to materially affect the
Group’s operations and ﬁnancial standing, and the market
price of its securities. Information is communicated to
securityholders through:

–

annual and half year ﬁnancial reports lodged with the
ASX and made available to all securityholders;

announcement of market-sensitive and other
information, including annual and half year results
announcements and analyst presentations released
to the ASX;

the Chair’s and CEO’s addresses to, and the results of,
the annual general meeting; and

copies of announcements, presentations, past and
current reports to securityholders made available
on the Group website.

3.11 Securityholder Conﬁrmation
The Group has a Continuous Disclosure Policy that includes
a formal procedure for dealing with potentially price-
sensitive information. The policy sets out how the Group
meets its disclosure obligations under ASX Listing Rule 3.1.
The Group’s policy is to lodge with the ASX and place
on its website all market-sensitive information, including
annual and half year result announcements and analyst
presentations, as soon as practically possible.

The Group produces two sets of ﬁnancial information
each ﬁnancial year: the half year ﬁnancial report for the six
months ended 31 December and the annual ﬁnancial report
for the year ended 30 June. Both are made available to
securityholders and other interested parties.

Securityholders have the right to attend the Group
annual general meeting, held in November each year,
and are provided with an explanatory memorandum on
the resolutions proposed through the notice of meeting.
A copy of the notice of meeting is also posted on the
Group website and lodged with the ASX.

Securityholders are encouraged to vote on all resolutions.
Unless speciﬁcally stated otherwise in the notice of
meeting, all securityholders are eligible to vote on all
resolutions. Securityholders who cannot attend the annual
general meeting may lodge a proxy in accordance with
the Corporations Act 2001. Proxy forms may be lodged by
facsimile or electronically.

Transcripts of the Chair and CEO’s reports to
securityholders are also released to the ASX upon the
commencement of the annual general meeting. These
transcripts, together with the results of the annual general
meeting are also posted on the Group website.

3.12 Continuous Disclosure
Ingenia Communities Group is committed to continuous
disclosure of material information as a means of promoting
transparency and investor conﬁdence.

The Group’s Continuous Disclosure Policy incorporates
the continuous disclosure framework as set out in the ASX
Listing Rules Chapter 3, as well as the revised ASX Listing
Rules Guidance Note 8.

The company secretaries have been nominated as the
persons responsible for communications with the ASX. This
role includes the responsibility for monitoring compliance
with the continuous disclosure requirements in the ASX
listing rules and overseeing and coordinating information
disclosure to the ASX.

The Group has written policies and procedures that focus
on continuous disclosure of any information concerning
the Group that a reasonable person would expect to have
a material effect on the price of the Group’s securities.

4. OPERATING AND FINANCIAL REVIEW

a. Ingenia Communities Overview
The Group owns, manages and develops a diversiﬁed
portfolio of seniors living communities across Australia.
Its real estate assets are valued at $355 million and include
lifestyle parks, rental villages, deferred management
fee villages, and three non-core New Zealand Student
accommodation buildings.

The Group is a triple stapled structure, being a combination
of a unit in Ingenia Communities Management Trust, a
unit in Ingenia Communities Fund and a share in Ingenia
Communities Holdings Limited, which are traded together
on the ASX. The Group is in the ASX 300 with a market
capitalisation of approximately $315 million.

The Group’s vision is to be a leading Australian provider of
affordable seniors living accommodation whilst delivering
value to all stakeholders, including delivering strong
earnings growth to securityholders and providing an
affordable community environment for residents.

Annual Report 2014

b. Strategy
The Group’s strategy is to grow its Australian seniors
living portfolio with a strong focus on the lifestyle parks
sector. Using a disciplined investment framework, the
Group is continuing to increase its exposure to lifestyle
parks through targeted acquisitions and building out its
development pipeline. The Group remains focused on
divestment of its non-core New Zealand Students portfolio
and reducing its investment in DMF assets. It is the Group’s
intention to grow its investment in lifestyle parks through
capital recycling, efficient inventory management and
monetisation of stock.

A key element to achieving growth is efficient operational
and capital management. The Group is committed to
maintaining loan to value ratio (“LVR”) within a target
range of 30-35% and considering diversiﬁed sources
of funding. In August 2014, indicative terms were
agreed for a new multilateral Australian debt facility
of $175 million, which replaces the existing facility and
facilitates continued growth.

The key immediate business priorities of the Group are:

–

increase rate of new home delivery within the Active
Lifestyle Estates development pipeline;

– grow occupancy of the Garden Villages portfolio

towards the mid-term target of 92%;

–

sell recently completed homes and explore opportunities
to reduce exposure to the Settlers portfolio; and

invest available capital into further accretive
lifestyle parks.

c. FY14 Financial Results
FY14 has been a year of strong acquisitive growth resulting
in an underlying proﬁt of $11.6m and a statutory proﬁt of
$11.5m, which respectively represent an increase of $5.7m
and $21.8m on prior year. The results are underpinned
by a signiﬁcantly increased contribution from the Active
Lifestyle Estates and Garden Villages portfolios following
the acquisition of a further thirteen lifestyle parks and
ﬁve rental villages during the year. Furthermore, Ingenia
Communities Management Trust and its subsidiaries
formed a tax consolidation group, which is the primary
driver for the $7.3m income tax beneﬁt recorded.

During the year, the Group funded the acquisition of
numerous properties using a mix of debt and equity raised
from a June 2013 institutional placement of $21.2m and a
September 2013 rights issue of $61.7m. The total purchase
value of assets acquired during the year was $116.9m,
being thirteen lifestyle parks for $106.3m and ﬁve rental
villages for $10.6m.

Operating cash ﬂow for the Group was strong at $14.2m,
up $3.0m from prior year. The improvement in operating
cash ﬂow reﬂects increasing contribution from the
recurring rental income streams of both the Active Lifestyle
Estates and Garden Villages portfolios offset by cessation
of US distributions following divestment in the prior year.

The Group has continued to adopt a conservative capital
management approach with LVR at 33.9%, which is
comfortably within the 30-35% target range and the all
in cost of Australian debt has reduced by 126 basis points
to 5.1%.

The Group has today announced a full year distribution
of 1.15 cents which is a 15% increase on prior year,
which reﬂects the Board’s commitment to increasing
securityholder returns. The Board announced in May
2014 the reinstatement of the dividend reinvestment plan
which will help fund lifestyle park acquisitions and their
development.

d. Key Metrics
– Full year distribution of 1.15 cent per security, with ﬁnal

distribution up 30%.

– Underlying proﬁt was $11.6m, up 97% from FY13.
– Underlying proﬁt per security was 1.8 cents, up 50%

from FY13.

– Net asset value grew by 1.1 cents per security to

35.5 cents.

– Total Securityholder Return (TSR) of 55.8% for the

twelve months.(1)

– Statutory proﬁt was $11.5m, up $21.8m from FY13.
– Statutory proﬁt per security was 1.8 cents, up 3.8 cents

from FY13.

(1) TSR is the percentage gain from investment in the Group’s

securities over the twelve months to 30 June 2014 assuming
distributions are reinvested into the Group’s securities.

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014(cid:13)|(cid:13)continued

e. Group Results Summary
Underlying proﬁt for the ﬁnancial year has been calculated as follows:

EBIT – continuing operations

Net interest expense

Tax benefit associated to underlying profit

Underlying profit – continuing operations

Underlying profit – discontinued operations

Underlying profit

Net foreign exchange gain/(loss)

Net loss on disposal of investment properties

Net gain/(loss) on change in fair value of:

Investment properties

Derivatives

Retirement village resident loans

Gain on revaluation of newly constructed retirement villages

Amortisation of intangible assets

Other

Discontinued operations (below underlying profit), net of tax

Tax benefit associated with items below underlying profit

Statutory profit

2014
$’000

12,144

2013
$’000

8,933

(4,077)

(5,549)

2,896

10,963

605

11,568

(147)

–

(341)

(616)

(43)

3,341

2,526

5,867

(107)

3,457

752

327

(3,320)

(4,619)

–

(585)

(185)

(35)

(15,644)

4,368

11,518

410

(10,290)

Underlying Proﬁt is a non-IFRS measure designed to present, in the opinion of the Directors, the results from the on-going
operating activities in a way that appropriately reﬂects underlying performance. Underlying proﬁt excludes items such as
unrealised fair value gains/(losses) and adjustments arising from the effect of revaluing assets/liabilities (such as derivatives
and investment properties). These items are required to be included in Statutory Proﬁt in accordance with Australian
Accounting Standards.

f. Segment Performance and Priorities

Active Lifestyle Estates
Active Lifestyle Estates launched in March 2013 and the Group now owns ﬁfteen lifestyle parks and is the largest owner
and operator in New South Wales. This business is the key focus of growth for the Group as it provides an affordable yield
focused housing alternative for seniors and short-term residents with a capital light, low risk development cycle. The carrying
value of these assets at 30 June 2014 is $119.3m.

i. Performance

Active Lifestyle Estates

New and refurbished home settlements #

Development income $m

Residential rental income $m

Short-term rental income $m

EBIT $m

FY14

$1.3m

$4.2m

$5.4m

$3.9m

FY13

Variance

$0.1m

$0.4m

$0.1m

$0.4m

$1.2m

$3.8m

$5.3m

$3.5m

Annual Report 2014

Active Lifestyle Estates delivered a contribution of $3.9m in FY14, of which $1.3m was attributable to development of new
manufactured homes. The lead time from property acquisition to achieving set up for delivery of the ﬁrst new homes has
taken longer than anticipated. Supply agreements have been negotiated with two key manufactured home builders to
construct homes and further council approvals have been achieved in recent months. As delivery and settlement of homes
continue to build each half, the business is forecast to produce a stronger result in FY15.

ii. Strategic priorities
The key strategic priorities for this business over the coming year are securing any approvals required to deliver FY16
settlements, repositioning parks to grow both short-term and permanent rental returns and leveraging scale efficiencies
across a larger portfolio. The Group expects to deploy funds into the sector with expansion into the Southeast Queensland
market likely in the near future.

Garden Villages
Garden Villages is comprised of 34 rental villages located across the eastern seaboard and Western Australia. These villages
accommodate more than 1800 residents, and generate $21.0 million in gross rental income per annum. The carrying value of
these assets at 30 June 2014 is $114.3m.

i. Performance metrics

Garden Villages

Occupancy %

Like for like occupancy %

Rental income $m

Catering income $m

EBIT $m

FY14

84.6%

90.1%

$21.0m

$3.2m

$9.9m

FY13

Variance

85.1%

$17.4m

$2.6m

$7.7m

(0.5%)

5.0%

$3.6m

$0.6m

$2.2m

Garden Villages delivers a consistent stream of recurring cash income for the Group. The results are up $2.2m on prior
year due to growing occupancy levels which are up 5% on a like for like basis. In January 2014, the Group acquired ﬁve low
occupancy rental villages with the intention of repositioning them to grow occupancy and be accretive to the results. Since
acquisition, the occupancy level for these ﬁve villages has increased by 7% with repositioning efforts continuing to further
enhance the performance of these assets.

The Ingenia Care Assist program launched in October 2013 has also been a strong contributor to the growing occupancy
levels across this portfolio. This program enables residents to live independently for longer in the villages. Since this program
was launched, it has achieved 58 move-out preventions and 45 new move-ins.

ii. Strategic priorities
The key strategic priorities of this business over the coming year continue to be growing village occupancy, in particular
within the ﬁve recently acquired villages, improving cash operating margins, ensuring residents are actively engaged and
maintaining affordability whilst leveraging scale efficiencies across the portfolio. Beyond continuing reinvestment in existing
villages it is unlikely that any capital will be deployed in the Garden Villages portfolio.

Settlers Lifestyle
Settlers Lifestyle is comprised of nine deferred management fee villages, including those in the process of being converted
from the rental to deferred management fee model. These villages are located in Queensland, New South Wales and
Western Australia and accommodate more than 800 residents generating income from accrued deferred management
fees, rental income where villages are not yet fully converted and development income from unit conversions and village
expansion. The carrying value of these assets at 30 June 2014, net of resident loans and lease liabilities is $76.2m. The Group
is exploring opportunities of reducing its exposure to this portfolio with the ﬁrst divestment settling on 31 July 2014, when
the Settlers Lifestyle Noyea Park village settled for an adjusted sales price of $5.4m.

i. Performance

Settlers Lifestyle

Occupancy %

New unit settlements #

Development income $m

Accrued Deferred Management Fee income $m

EBIT $m

FY14

92.1%

$3.3m

$5.3m

$4.5m

FY13

Variance

89.9%

$4.6m

$4.7m

$5.6m

2.2%

(8)

($1.3m)

$0.6m

($1.1m)

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014(cid:13)|(cid:13)continued

The Settlers Lifestyle business delivered a lower result than the prior year due to reduced settlement volumes with some
development projects nearing completion and new product being under construction at Cessnock and Ridge Estate
Villages. There has also been a weakening in the Hunter Valley residential market, where the Cessnock and Ridge Estate
villages are located, which means incoming residents are requiring longer to sell their existing home in order to settle their
new unit within our village. The Gladstone and Rockhampton Villages are both nearly sold out.

ii. Strategic priorities
The key strategic priorities of this business over the coming year are completing the construction and sell down of the ﬁnal
stage at Ridge Estate and the sell down of remaining conversion units at Cessnock Gardens, Forest Lake, Rockhampton and
Gladstone. There will also be a continued focus on exploring opportunities to reduce the investment in these assets.

Discontinued Operations
A sales campaign was undertaken for the sale of the New Zealand Students portfolio and terms have been agreed with a
global real estate investment ﬁrm. The carrying value of these assets at 30 June 2014 is $45.9m.

g. Tax Consolidation
During the year ICMT and its Australian domiciled subsidiaries formed a tax consolidation group. The impact of entering
into this tax consolidated group was that tax cost bases for certain assets were reset resulting in income tax beneﬁts being
recorded. Additionally, unrecognised tax losses incurred by entities within this tax consolidated group are now available for
utilisation resulting in an additional income tax beneﬁt being recorded.

h. Capital Management
The Group adopts a prudent and considered approach to capital management. During the period, the Group strengthened
its capital position by undertaking a capital raising and renegotiating its core debt facility. The Group has maintained a
strong focus on prudent balance sheet management with an LVR at 33.9%, well within its target range of 30-35%.

On 23 August 2013, the Group reﬁnanced its Bank of New Zealand debt facility, which funds the New Zealand Students
portfolio with a NZ$32.7m core debt facility expiring 31 July 2018.

On 17 October 2013, the Group completed a non-renounceable rights issue to raise $61.7m (excluding transaction costs)
to fund the expansion of lifestyle parks. A total of 169.1m securities were issued at 36.5 cents each.

The Group has increased its full year distributions to 1.15 cents, in line with its commitment to grow distributions over the
medium term. The ﬁnal distribution represents a 30% increase over the previous period.

i. Financial position
The following table provides a summary of the Group’s ﬁnancial position as at 30 June 2014:

$’000

Cash and cash equivalents

Inventories

Investment properties

Assets held for sale

Assets of discontinued operations

Other assets

Total assets

Borrowings

Retirement village resident loans

Liabilities from discontinued operations

Other liabilities

Total liabilities

Net assets/equity

30 Jun2014 30 Jun 2013

Change %

12,894

2,208

38,531

285

498,863

370,931

5,439

47,657

7,863

–

36,576

13,251

574,924

459,574

98,356

190,122

30,449

15,820

70,806

175,703

21,528

16,885

334,747

284,922

240,177

174,652

(67%)

675%

34%

n/m

30%

(41%)

25%

39%

41%

(6%)

17%

38%

Inventories increased by $1.9m reﬂecting the Group’s growing investment in the lifestyle sector. A key element of the Group’s
strategy is development of new manufactured homes, which are classiﬁed as inventory until they are sold to new residents.
This element of the Group’s balance sheet will continue to grow as the number of active development projects increases.

Investment properties increased by $127.9m largely from the acquisition of thirteen lifestyle parks and ﬁve rental villages
during the year.

Annual Report 2014

Assets and liabilities of discontinued operations grew by $11.1m and $8.9m respectively which reﬂects completion of capital
refurbishment works on the New Zealand Students portfolio in line with the divestment strategy.

Borrowings increased by $27.6m due to the lifestyle park acquisitions being funded with a mix of debt and equity.

Movements in other assets and liabilities mainly reﬂects the collection of US$6.8m of escrows from the divestment of
US operations in prior periods together with movements in deferred tax balances following the tax consolidation of the
ICMT group.

j. Cashﬂow

$’000

Operating cashflows

Investing cashflow

Financing cashflow

Net change in cash and cash equivalents

Effects of exchange rate fluctuation on cash held

Cash at the end of the period

30 Jun 2014 30 Jun 2013

Change

14,240

(126,084)

11,240

17,314

3,000

(143,398)

89,012

(23,804)

112,816

(22,832)

4,750

(27,582)

(167)

14,551

(12)

(155)

37,550

(22,999)

Operating cash ﬂow for the Group was strong at $14.2m, up $3.0m from prior year. The improvement in operating cash ﬂow
reﬂects increasing contribution from the recurring rental income streams of both the Active Lifestyle Estates and Garden
Villages portfolios offset by a decrease in US distributions the Group no longer receives subsequent to divestment.

Investing cash ﬂows reﬂect the acquisition of thirteen lifestyle parks and ﬁve rental villages for $113.3m, along with capital
refurbishment works of $18.7m, including $9.1m on the New Zealand Students portfolio. US sale proceeds account for $7.0m
of the Investing cash ﬂows, being $1.2m proceeds from sale of investment properties and $5.8m proceeds from sale of
equity accounted investments. Financing cash ﬂows include net proceeds of $58.9m from the September rights issue along
with net proceeds from borrowings of $36.3m to partly fund the acquisition of lifestyle parks.

k. Distributions
The following distributions were made during or in respect of the period:

– On 25 February 2014 the directors declared an interim distribution of 0.5 cps (2012: 0.5 cps) amounting to $3,381,201, which

was paid on 21 March 2014.

– On 26 August 2014, the directors resolved to declare a ﬁnal distribution of 0.65 cps (2013: 0.5 cps) amounting to

$4,407,379, to be paid on 17 September 2014.

The distributions are 100% tax deferred and the dividend reinvestment plan will apply to the ﬁnal distribution.

The Group is committed to continuing to grow distributions in the near term.

l. Outlook
The Group is well positioned to continue growing its lifestyle parks business and has agreed indicative terms for a new
multilateral Australian debt facility of $175m. Whilst delays were encountered during FY14 delivering new manufactured
homes, Ingenia is conﬁdent these issues have been largely resolved and the rate of delivery and sale of new manufactured
homes will signiﬁcantly increase during FY15.

There will be a strong focus on ﬁnalising divestment of the New Zealand Students portfolio and exploring opportunities
for recycling capital from the Settlers Lifestyle portfolio. At the same time, the Group will continue to regularly assess
the performance of its existing assets and where appropriate to recycle that capital into other opportunities delivering
superior returns.

Ingenia is conﬁdent of delivering further improved ﬁnancial returns for securityholders during FY15 assuming no material
decline in market conditions. Consistent with prior years, these returns will likely be skewed to the second half of the
ﬁnancial year.

5. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Changes in the state of affairs during the ﬁnancial year are set out in the various reports in this ﬁnancial report. Refer to
Note 8 of the accompanying ﬁnancial statements for discontinued operations and assets held for sale, Note 12 for Australian
investment properties acquired or disposed of during the year, Note 15 for details of Australian debt reﬁnanced and Note 20
for issued securities.

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014(cid:13)|(cid:13)continued

6. EVENTS SUBSEQUENT TO REPORTING DATE

a. Retention Quantum Rights Vesting
On 1 July 2014, 1,818,000 Retention Quantum Rights (“RQRs”) granted to key management personnel (“KMP”) in 2012
vested. As a result, 1,818,000 fully paid stapled securities have been issued to the following KMP:

Simon Owen

Tania Betts

Nicole Fisher

1,070,000

374,000

b. Sale of Noyea
Settlement on the sale of Settlers Lifestyle Noyea Riverside Village (“Noyea”) was completed on 31 July 2014 at an adjusted
sales price of $5.4 million resulting in $nil gain or loss recognised upon completion.

c. Bank Guarantee
On 1 July 2014, the Group obtained a bank guarantee of $10 million from the bank facility in relation to cash requirements
under the Australian Financial Services Licence.

d. Sale of New Zealand Students Business
On 5 September 2014, the Group announced it had contracted to divest the New Zealand Students business for
consideration of NZ$49.4 million, representing the book value at 30 June 2014. Upon settlement, disposal costs
and a foreign currency translation reserve (“FCTR”) gain will be released through proﬁt. At 30 June 2014, the FCTR
balance was A$1.0 million.

e. Reﬁnance of Australian Debt
The Group’s current Australian banking facility expires in September 2015. The Group has recently undertaken a debt
reﬁnance and obtained credit approval for a new $175 million Australian Multilateral banking facility. This facility will be
split between a three year and ﬁve year maturity proﬁle.

7. LIKELY DEVELOPMENTS
Ingenia will continue to pursue strategies aimed at improving its cash earnings, proﬁtability and market share within
the seniors living industry during the next ﬁnancial year, with a strong focus on the development and acquisition of
manufactured home estates.

Other information about certain likely developments in the operations of Ingenia and the expected results of those
operations in future ﬁnancial years is included in the various reports in this Annual Report.

8. ENVIRONMENTAL REGULATION
The Group’s operations are not subject to any particular and signiﬁcant environmental regulation under a law of
the Commonwealth or of a State or Territory.

9. INDEMNITIES
The Group has purchased various insurance policies to cover a range of risks (subject to speciﬁed exclusions) for directors,
officers and employees of the Group serving in their respective capacities. Key insurance policies include: directors and
officers insurance, professional indemnity insurance and management liability insurance.

To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its
audit engagement agreement against claims by third parties arising from the audit (for an unspeciﬁed amount). No payment
has been made to indemnify Ernst & Young during or since the ﬁnancial year.

10. AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out
on page 39.

Annual Report 2014

11. ROUNDING OF AMOUNTS
Ingenia Communities Group is an entity of the kind referred to in ASIC Class Order 98/100, and in accordance with that
Class Order, amounts in the ﬁnancial report and Director’s report have been rounded to the nearest thousand dollars,
unless otherwise stated.

12. MESSAGE FROM THE REMUNERATION AND NOMINATION COMMITTEE
Dear Securityholders,

The Board of Ingenia Communities Group (“Ingenia”) is pleased to present the Remuneration Report for FY14.

12.1 Introduction
Ingenia has made signiﬁcant changes to its executive remuneration arrangements for FY15. The changes are detailed in the
Remuneration Report which follows. The purpose of this message is to highlight those changes, explain why we have made
them and to put them into the context of Ingenia’s strategy and performance.

12.2 Ingenia’s Performance
The Board has established a strong nexus between remuneration for executives and Ingenia’s performance and returns
to securityholders.

We are pleased to report that in 2014, Ingenia sustained the strong performance record it has established since
internalisation in June 2012. Some highlights of that performance are:

Ingenia was included in S&P/ASX 300 Index in September 2013

– Ranked # 1 in BDO A-REIT Survey 2012 and 2013
–
– Ranked # 1 TSR performer in FY14 National Australia Bank review of S&P/AREIT 300
–
–

Ingenia’s market capitalisation increased from $175m at 30 June 2013 to $338m at 30 June 2014, an increase of 93%

In FY14 Ingenia’s underlying proﬁt increased by 97% to $11.6m and the ﬁnal six months distribution increased from 0.5 cents
to 0.65 cents per security

– Securities are currently trading at a 41% premium to NAV
– The graph below compares Ingenia’s 1, 3 and 5 year percentage returns to 30 June 2014 against S&P/ASX 300 Property Index

67.2

60.8

55.8

11.1

15.2

14.3

1 Year

3 Years

5 Years

INA (%)

S&P/ASX 300 (Property) (%)

12.3 Ingenia’s Corporate Strategy
Ingenia has reﬁned its corporate strategy over the past three years to focus on affordable, yield orientated Australian
seniors accommodation, principally through the two core cash yielding businesses, outlined below, which now comprise
75% of the portfolio.

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014(cid:13)|(cid:13)continued

Active Lifestyle Estates (lifestyle parks)
Ingenia is a market leader in lifestyle parks and our business offers signiﬁcant opportunities for expansion. Ingenia is the
largest lifestyle parks owner, operator and developer in NSW, with 15 parks acquired since March 2013. We have integrated
tourism within our lifestyle parks business model.

Garden Villages (rental accommodation)
Ingenia is now the largest owner and operator of seniors rental villages in Australia. Ingenia has been able to signiﬁcantly
turnaround the performance of its Garden Villages rental business, which was previously seen as a poor quality asset class.
Occupancy growth has increased signiﬁcantly on a like for like basis, new operational management has been recruited and
over the past two years ten additional low-occupancy villages have been acquired from a mortgagee in possession at very
reasonable prices.

Other Operations
Ingenia’s New Zealand student accommodation has been contracted for sale and its DMF villages are under review to free
up capital to be reinvested in Active Lifestyle Estates.

12.4 Ingenia’s Remuneration Strategy FY15
The Board has aligned Ingenia’s remuneration objectives and strategy to its corporate strategy.

The Remuneration and Nominations Committee (RNC) has established the following three key objectives for our
remuneration strategy in FY15:

– Focus management on delivering outcomes, particularly underlying proﬁt growth in the short to medium term. Feedback

from numerous investor and analyst meetings has sent a very clear message: investors support our strategy but want to
see Ingenia deliver on that strategy and demonstrate that lifestyle parks can deliver proﬁts for securityholders in FY15 and
subsequent years.

– Provide long term value creation for securityholders and strong alignment between executive management and

securityholders’ interests.

– Attract, retain and motivate key executive personnel.

More detailed information on those objectives in set out in Section 2.12 (b) of the Remuneration Report.

12.5 Overview of Signiﬁcant Changes in Remuneration Structure
The Board has focussed our revised remuneration strategy on areas where we believe management can create the most
value for securityholders.

To implement the remuneration objectives, the RNC has made signiﬁcant changes to the structure of our remuneration
arrangements for executive Key Management Personnel in FY15. Those changes have been made after extensive
consultation with key stakeholders, including investors and proxy advisors, following Ingenia’s inclusion in the S&P/ASX
300 Index.

The changes made and the reasons for them are outlined below. Additional detail is included in the Remuneration
Report which we recommend you read.

a. Appointment of new Independent Remuneration Consultants
In March 2014 the Board engaged Guerdon Associates Pty Ltd (Guerdon) to provide independent remuneration advice
and to review the structure and operation of the Group’s remuneration and incentive plans for FY15. Guerdon worked
closely with the RNC in a wide ranging review, which led to signiﬁcant changes.

b. Change Review Date
Guerdon suggested that Ingenia should change the effective date for implementation of remuneration reviews from 1 July to
1 October each year. The Board resolved to do so on a recommendation from the RNC.

The rationale for this change was:

– The later review date allows time for results to be audited for assessment of Short Term Incentives (STI) awards and for

basing Long Term Incentives (LTI).

It allows ample time for release and market assessment of annual results so equity grants are priced on an informed market.

–
– Assessment of Total Shareholder Returns (TSR) is made in an informed market.

Annual Report 2014

c. Short Term Incentives – Signiﬁcant Changes in FY15

i. Increase STI
The percentage of total remuneration allocated to STI for each KMP has been increased. The FY15 maximum STI cash
awards have only increased $20,000 for the CEO and have been reduced for other executive KMP, because of the
introduction of deferred equity.

All FY14 STI awards were paid in cash. In FY15 50% of the STI award will be paid in cash and the other 50% will be
deferred for 12 months and paid in equity. Deferred STI is subject to a malus or forfeiture provision if earnings are not
sustained at a level within a set threshold of prior year’s earnings.

The primary reason for the increase in STI (which is partially offset by a decrease in LTI) is to focus executive KMP on
the key objective, delivering on our strategy, particularly delivering underlying proﬁt growth and the key operational
drivers of that growth, to meet investor expectations. The deferral has been introduced to recognise how important
it is that Ingenia’s high growth expectations are achieved and sustained, and to align STI awards with securityholder
interests.

ii. Deferred STI
Deferred STI will be awarded in Rights to stapled securities, plus additional securities equal to distributions paid on a
reinvestment basis upon vesting. KMP will not receive cash distributions on unvested Rights, they will receive additional
deferred Rights.

The rationale behind this change is to incentivise KMP to maintain and increase the level of distributions, in line with investor
expectations.

iii. KPIs
KPIs for STI have been set to incorporate a strong focus on earnings (40%), strategic and operational metrics (50%)
and people (10%). Quantiﬁed metrics have been preferred and KMP have been set challenging KPIs, with ‘Threshold’,
‘Target’ and ‘Stretch’ performance levels, based on Ingenia’s budget and business plan and taking account of analyst
consensus.

iv. 2013-2014 bonuses
In FY14 all bonuses paid to other direct reports of the CEO and other senior executives, who are not KMP, were paid
in cash. The STI arrangements outlined above (50% cash and 50% deferred equity) have been extended to all executive
KMP in FY15.

Again, deferred equity has been introduced to recognise how important it is that Ingenia’s high growth expectations
are achieved and sustained, and to align executive remuneration with securityholders’ interests.

d. Long Term Incentives – Signiﬁcant Changes in FY15

i. Reduction in LTI
The percentage of total remuneration allocated to LTI for each KMP has been reduced. This partially offsets the
increases in STI.

FY15 LTI awards are still material, so management will continue to focus on long term value creation.

ii. TSR hurdle
FY15 LTI awards in the form of Rights will be assessed on a relative TSR hurdle rather than the absolute TSR hurdle applied in
FY14. This change is in line with investors’ expressed preferences. The comparator for the relative TSR hurdle will be the S&P
ASX 300 Industrials Index (“Index”).

This change is to align to investor preference of relative TSR and the Industrial Index was chosen because the Board
considers it is better aligned to Ingenia’s core business operations and because it is transparent and readily available.

iii. Zero vesting at threshold
There will be zero vesting at Threshold, which is Index plus 1%. Ingenia must outperform the Index by at least 1% for LTI
awards to vest. There will be no cliff vesting. Vesting will be straight line between Threshold (at Index plus 1%) to Maximum
(at Index plus 6% or more).

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014(cid:13)|(cid:13)continued

iv. Rights vesting
The assessment date for LTI Rights vesting will be 30 September three years after grant and grants will be based
on 30 day VWAP.

The timing helps to ensure an informed market post release of audited results and 30 day VWAP reduces the risk and
impact of security price volatility.

v. Vested Rights
Vested Rights will be converted to stapled securities, plus additional securities equal to distributions paid on
a reinvestment basis upon vesting.

The rationale for this change is to incentivise executive KMP to maintain and increase distributions, in line with
investor expectations.

vi. Forfeiture provision
A ‘malus’ or forfeiture provision will be applied to all LTIs.

e. Equity Grants – Signiﬁcant Changes in FY15
The basis of allocating LTI Rights has been changed in FY15. This change will reduce executive KMP entitlements to LTI
awards and move towards market best practice.

In FY14, the formula provided by Ingenia’s Independent Remuneration Consultant to determine security value for the
purpose of calculating the number of LTI Rights, included a 0.5% ‘probability of vesting’ factor, which effectively doubled the
maximum LTI entitlement for each KMP. It was subject to some adverse comments from investors and proxy advisors.

The RNC and Board have consulted with proxy advisors and investors and have accepted a recommendation from our new
Independent Remuneration Consultant to change the formula in FY15 to eliminate the ‘probability of vesting’ multiple.

f. Plan Rules – Signiﬁcant Changes in FY15
Guerdon’s review has included a comprehensive review of Ingenia’s Plan Rules to accommodate the changes the Board
wishes to make. The changes to Plan Rules will be the subject of a Resolution at the 2014 AGM and details are set out in the
Notice of Meeting and Explanatory Memorandum. We urge securityholders to support that Resolution.

12.6 Conclusion
The advice we have received from our Independent Remuneration Consultant and extensive consultations undertaken by
the RNC has led to change.

The Board believes those changes have resulted in a better remuneration strategy and structure which will achieve the
remuneration objectives we set and which will serve all Ingenia’s stakeholders well.

I wish to thank all those involved, my RNC and Board colleagues, Guerdon, investors and proxy holders for their
valuable input.

We recommend Ingenia’s Remuneration Report to investors and seek your support for the resolution to adopt the
Remuneration Report at the Ingenia AGM on 12 November 2014.

Yours faithfully

Philip Marcus Clark AM
Chairman – Remuneration and Nomination Committee

Annual Report 2014

13. REMUNERATION REPORT (AUDITED)

13.1 Introduction
The Board presents the Remuneration Report for the Group for the year ended 30 June 2014, which forms part of the
Directors’ report and has been prepared in accordance with section 300A of the Corporations Act 2001 (“Act”). The data
provided in the Remuneration Report was audited as required under section 308(3C) of the Act.

13.2 Remuneration Governance

a. Remuneration and Nomination Committee (RNC)
The Board has an established the RNC, which is directly responsible for reviewing and recommending remuneration
arrangements for directors, the Chief Executive Officer (“CEO”) and senior executives who directly report to the CEO.

The RNC comprises the following NEDs:

– Philip Marcus Clark AM (Chairman);
–
– Amanda Heyworth.

Jim Hazel; and

The RNC provides oversight for general remuneration levels of the Group ensuring they are set at appropriate levels to
access the skills and capabilities the Group needs to operate successfully.

The RNC operates under the delegated authority of the Board for some matters related to remuneration arrangements for
both executives and non-executives, and is required to make recommendations to the Board. The RNC also reviews and
makes recommendations to the Board on incentive schemes.

The RNC is required to meet regularly throughout the year, and in any event at least twice per year, and considers
recommendations from internal management and external consultants.

The Board is ultimately responsible for decisions made on recommendations from the RNC.

b. External Remuneration Advisers
The Board engaged Godfrey Remuneration Group Pty Ltd (“GRG”) to provide independent recommendations in relation to
remuneration of the executive roles within the Group for FY14.

GRG provided a report on market benchmarking of executive remuneration which outlined the following:

new legislation requirements and regulatory developments;

–
– overall remuneration framework and strategy;
–
– market data and trends in remuneration structures.

considerations relating to termination of contracts; and

GRG also provided recommendations on ﬁxed remuneration and the design of short-term and long-term incentive plans for
the key executives of the Group, including the CEO.

GRG provided a further report on market benchmarking of senior executive remuneration for the CEO, Chief Financial
Officer (“CFO”) and Chief Operating Officer (“COO”) roles and made recommendations on their base remuneration and
incentive schemes. They also provided a benchmarking report and recommendations on NED remuneration.

For the provision of the advice for FY14, GRG were commissioned by, engaged with, and addressed reports directly to the
Chairman of the RNC.

In March 2014, the Board rotated external remuneration advisors and engaged Guerdon Associates to provide independent
remuneration advice for Key Management Personnel (KMP), including senior executives and NEDs and to review the rules of
the Group’s LTI and STI Plans for FY15.

For the provision of the advice and recommendations to date, Guerdon Associates have been commissioned by, engaged
with, and addressed reports directly to the Chairman of the RNC.

The Board is satisﬁed that the remuneration advice from both GRG and Guerdon Associates was made free from undue
inﬂuence by the KMP to whom the advice related, due to there being no engagement with the remuneration consultants
outside of the Chairman of the RNC. Declarations of independence from GRG and Guerdon Associates were received by the
Board prior to the acceptance of their engagements and accompanied their reports.

GRG were paid $26,400 for the remuneration advice work outlined above that they provided during the FY14.

While remuneration services were received, no remuneration recommendations as deﬁned under Division 1, Part 1.2.98 (1)
of the Act, were made by Guerdon Associates. For the remuneration advice they have provided, Guerdon Associates have
been paid $49,325 to the date of this report.

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014(cid:13)|(cid:13)continued

13.3 Details of KMP
KMP for the year ended 30 June 2014 are those persons who are identiﬁed as having authority and responsibility for
planning, directing and controlling the activities of the Group, directly or indirectly, including any executive or NED of
the Group.

The KMP of the Group for the year ended 30 June 2014 are:

Position

Appointment/Resignation date

Non-Executive Directors

Jim Hazel

Chairman of the Board

NED

Member – Remuneration and Nomination
Committee

Amanda Heyworth

NED

Chair – Audit and Risk Committee

Member – Remuneration and Nomination
Committee

Philip Clark AM

NED

Chair – Remuneration and Nomination
Committee

Member – Audit and Risk Committee
(until April 2014)

Robert Morrison

NED

Member – Audit and Risk Committee

Norah Barlow

NED

Appointed 31 March 2014

Executive Director

Simon Owen

Other Executives

Tania Betts

Nicole Fisher

Member – Audit and Risk Committee

Managing Director and CEO

CFO

COO

13.4 Remuneration of KMP (Excluding Non-Executive Directors)
a. Remuneration Policy
The Group’s Remuneration Policy is to ensure that remuneration packages properly reﬂect the person’s duties and
responsibilities and that the remuneration is competitive in attracting, retaining and motivating people of suitable quality.

The structure of remuneration, as explained below, is designed to attract suitably qualiﬁed candidates, reward the
achievement of strategic objectives, and achieve the broader outcome of long-term value creation for securityholders.
The remuneration structures take into account a range of factors, including the following:

ability to impact achievement of the strategic objectives of the Group;

capability, skills and experience;

–
–
– performance of the KMP in their roles;
–
the Group’s overall performance;
–
–

the need to ensure continuity of executive talent.

remuneration levels being paid by competitors for similar positions; and

Refer below for detail of the mechanisms in place, which link the remuneration outcomes to individual and the Group’s
performance.

Annual Report 2014

b. Link between Remuneration and Performance
The Board understands the importance of the relationship between the Group’s remuneration policy for KMP and
the Group’s performance. The remuneration packages for KMP are aimed at achieving this balance and aligning KMP
remuneration with the interests of securityholders.

Remuneration Component

Link to Group Performance

Fixed remuneration

Short-term incentive (STI)

Long-term incentive (LTI)

Fixed remuneration is not directly linked to Group
performance. It is set with reference to the individual’s role,
responsibilities and performance and remuneration levels for
similar positions in the market.

STIs are awarded to individuals whose achievements,
behaviour and focus meets the Group’s business plan and key
result expectations measured over the financial year.

In FY14 the payment is in cash. For FY15 payment will be in
cash and a deferred equity element linked to earnings growth
sustainability.

LTIs are granted to individuals to align their focus with the
Group’s required TSR performance measured over three
financial years.

The Board maintains sole discretion over the granting of the
LTI to eligible employees.

Payment will be received in equity for alignment with
securityholders.

The table below sets out summary information about the Group’s earnings and movement in securityholder wealth for the
ﬁve years to 30 June 2014:

Underlying profit ($000)

Statutory profit/(loss) ($000)

EPS (cents)

Net asset value per security (cents)

Security price 30 June (cents)

Distributions (cents)

30 June
2014

11,568

11,518

1.8(2)

35.5(2)

50.5

1.0

30 June
2013

5,867

(10,290)

(2.0)(1)

34.4(1)

34.5

1.0

30 June
2012

30 June
2011

30 June
2010

7,434

33,627

7.6

34.3

19.5

–

6,889

13,051

3.0

25.9

11.5

–

18,260

(67,717)

(15.4)

24.9

5.0

–

(1) During the year ended 30 June 2013, the Group issued 66,150,000 shares under an institutional placement.

(2) During the year ended 30 June 2014, the Group issued 169,061,000 shares under the non-renounceable rights issue.

c. Target mix of Remuneration Components
Executive remuneration packages include a mix of ﬁxed remuneration, STI’s and LTI’s. The Group aims to reward executives
with a mix of remuneration commensurate with their position and responsibilities and aligned with market practice.

The Group’s policy is to set the total employment cost of KMP by reference to the 50th percentile range of comparable
industry peers and other Australian listed companies of similar size and complexity, whilst also taking into account the
individual’s competence and the potential impact of incentives.

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014(cid:13)|(cid:13)continued

The target remuneration mix for executives for the year ended 30 June 2014, expressed as a percentage of total
remuneration, is detailed in the table below:

Target mix

CEO

CFO

COO

(1) PQRs: Performance Quantum Rights

Total Fixed
Remuneration (TFR)
(%)

50.0%

62.5%

STI
(%)

20.0%

18.75%

LTI
PQRs(1)
(%)

30.0%

18.75%

Total Remuneration
(%)

100.0%

13.5 Total Fixed Remuneration (Excluding Non-Executive Directors)
Total ﬁxed remuneration (TFR) is a guaranteed annual salary, which is calculated on a total cost basis, which may include
salary-packaged beneﬁts grossed up for FBT payable, as well as employer contributions to superannuation funds and other
non-cash beneﬁts that may be agreed from time to time.

The RNC reviews and makes recommendations to the Board in relation to ﬁxed remuneration levels for KMP on an
annual basis.

The table below details the TFR for each of the executives for the year ended 30 June 2014:

Executive

Simon Owen

Tania Betts

Nicole Fisher

Position

Total Fixed Remuneration

Managing Director and CEO

CFO

COO

$612,746(1)

$297,633(2)

$243,389(3)

(1) Additional payment was made during the current year due to underpayment in the prior ﬁscal year.

(2) Leave without pay was taken during the year.

(3) Based on four days per week.

13.6 Short-Term Incentive Scheme (STI)
The STI scheme aims to reward eligible employees whose achievements, behaviour and focus meets the Group’s business
plan and key result expectations during one or more speciﬁed measurement periods.

Initial participation in the scheme is completely at the discretion of the Board.

The quantum of the STI opportunity for the year ended 30 June 2014 was determined based upon recommendations
from GRG.

For those employees who participate in the scheme, the opportunity for reward is assessed against speciﬁc KPI’s for each
employee, which are documented in a written statement (Plan Statement) identifying:

– The percentage weighting and measurement period for each KPI;
– The KPI outcome measures set with a threshold, on target and stretch performance measure; and
– The maximum STI award amount payable for achieving each of the performance levels, calculated on the employee’s base

remuneration at the time the Plan Statement is issued.

The Board has structured the KPIs around both ﬁnancial metrics, such as underlying proﬁt and non-ﬁnancial metrics around
strategy development and execution, business performance, people and stakeholder relationships.

Annual Report 2014

KPIs, their applicability, targets, and outcomes are tabulated below:

Key Performance Indicator

Executives to which KPI applied

Key Considerations in assessments

Financial

CEO, CFO, COO

Strategy

Operational

CEO, CFO, COO

People and Reporting

CEO, CFO, COO

Operating income within 5% of threshold
Access to debt and equity capital on
acceptable terms

Execution of agreed business strategy

Achievement of operational metrics that
deliver on business strategy, established
for each KMP speciﬁc for their area of
responsibility

Minimal regretted turnover
Recruit and retain leading industry talent
High quality level reporting and analysis

For the year ended 30 June 2014 the Board assessed the performance of the CEO and the CEO assessed the performance
of the CFO and COO, against their respective KPIs. The RNC then recommended and the Board approved STI awards.

The Board approved STI awards for the year ended 30 June 2014 for each executive KMP as follows:

KMP

Position

Actual STI Awarded
$

Actual STI Awarded as
a % of Maximum STI

Simon Owen

Tania Betts

Nicole Fisher(1)

Managing Director and CEO $205,200

CFO

COO

$70,875

$56,160

85.5%

75.0%

78.0%

(1) The actual amount awarded was calculated on a pro-rata basis allowing for 4 days per week.

a. STI – Termination of Employment
The following table outlines the treatment of the short-term incentive scheme in place for FY14 at the time of a termination
of employment:

Termination Circumstance

Dismissal (termination for cause)

Resignation

Other circumstances

STI Awards

All are forfeited.

All are forfeited, unless otherwise determined by the Board at
its complete discretion.

A pro rata reduction in the STI opportunity for each KPI with
the assessor taking into account a variety of relevant factors
applicable to each KPI.

No STI award for the year ended 30 June 2014 was affected by termination of employment.

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014(cid:13)|(cid:13)continued

13.7 Long-Term Incentive Scheme
The objective of the Group’s LTI scheme is to align long-term securityholder returns with the ‘at risk’ compensation payable
to executive level employees whilst also acting as a mechanism to retain key talent.

The scheme comprises two types of security rights, RQRs and PQRs (together referred to as “quantum rights”).

RQRs are applied for retention purposes. No RQRs were granted in 2013-2014. PQRs are applied to focus and reward
executives on long term performance over 3 or more years. PQRs were granted during FY14.

Upon vesting of a number of quantum rights, the holder will be issued with securities equivalent to the value of vested
quantum rights on the vesting date, provided and to the extent that the value of the quantum rights on the vesting date
exceeds $1,000. The value of each quantum right on the vesting date shall be equivalent to the security price on the
vesting date.

The FY14 LTI components of Simon Owen’s remuneration were approved by securityholders at the Annual General Meeting
held on 19 November 2013. Any LTI components of Simon Owen’s remuneration for FY15 will be subject to securityholder
approval at the 2014 Annual General Meeting to be held on 12 November 2014.

a. PQRs
The Board has adopted an LTI plan (“LTIP”) with the aim of rewarding executives for delivering returns to securityholders
that are consistent with, or exceed, expectations.

PQRs granted in FY14 vest based on the Group’s performance as measured by the absolute TSR. TSR is calculated as the
percentage gain from an investment in Ingenia Communities securities over the vesting period, assuming that distributions
are reinvested.

GRG was speciﬁcally asked to advise on this practice in 2012. GRG advised that they considered absolute TSR to be the
appropriate measure for the Group to use. They conﬁrmed that advice in 2013 and 2014.

For 2015, Guerdon Associates has recommended that the performance criterion be relative TSR from 1 October to
30 September 3 years later, against ASX 300 Industrials Index. The Board has accepted this recommendation.

The vesting period for PQRs granted in FY14 is 3 years from 1 July 2013.

The vesting conditions are based on Group performance over the vesting period as measured by the actual TSR.

The Board has absolute discretion to vary the vesting conditions outlined in the table below.

i. PQRs issued in FY13
In respect of the 2012-13 year, the percentage of PQRs held by an eligible employee on the vesting date in respect
of a Scheme Year that may vest shall be determined in accordance with the table below:

Where Group’s Actual TSR over the
3 Year Vesting Period is:

Percentage of Employee’s RQRs that may Vest
in respect of the Scheme Year:

Below 26% - below threshold performance.

26% (approximately 8%pa compound), on threshold
performance.

25%

At or above 26% but below 40% performance, between
threshold and target performance.

25%-50%, in the same proportion as the Group’s actual
TSR bears to the threshold and target performance.

40% (approximately 12%pa compound), on target performance. 50%

Above 40% but below 56% performance, between target and
stretch performance.

50%-100%, in the same proportion as the Group’s actual
TSR bears to the target TSR and stretch performance.

56% or above (approximately 16%pa compound), stretch
performance.

100%

Annual Report 2014

ii. PQRs Issued in FY14
In respect of FY14, the percentage of PQRs held by an eligible employee on the vesting date in respect of a Scheme Year
that may vest shall be determined in accordance with the table below:

Where Group’s Actual TSR over the
3 Year Vesting Period is:

Percentage of Employee’s PQRS that may Vest
in respect of the Scheme Year:

Below 26% - below threshold performance.

26% (approximately 8%pa compound), on threshold
performance.

25%

At or above 26% but below 33% performance, between
threshold and target performance.

25%-50%, in the same proportion as the Group’s actual TSR
bears to the threshold and target performance.

33% (approximately 10%pa compound), on target performance. 50%

Above 33% but below 40% performance, between target and
stretch performance.

50%-100%, in the same proportion as the Group’s actual
TSR bears to the target TSR and stretch performance.

40% or above (approximately 12%pa compound), stretch
performance.

100%

The table below sets out the participation level of KMP in the LTI Scheme – PQRs, in terms of grant size, fair value and
the maximum amount to be expensed in the future. These PQRs were granted during the years ended 30 June 2013 and
30 June 2014 year.

KMP

Position

Simon Owen

Managing Director
and CEO

Tania Betts

CFO

Nicole Fisher COO

LTI
Scheme –
RQRs

Number of
Performance
Rights
Granted

Grant Date

Fair
Value of
Performance
Rights $

Vesting Date

Maximum
to Expense
in Future
Years $

2013

2014

2013

2014

2013

2014

2,260,000

31 May 2012

230,520

30 June 2015

76,840

2,460,000

19 November 2013 799,500

30 June 2016

533,243

791,000

14 May 2012

71,032

30 June 2015

23,730

641,000

19 November 2013 208,325

30 June 2016

138,947

791,000

4 June 2012

80,287

30 June 2015

26,874

615,000

19 November 2013 199,875

30 June 2016

133,311

No PQRs vested or lapsed during the year ended 30 June 2014.

No other PQRs were granted during the year ended 30 June 2014.

b. Legacy RQRs
These are rights that were granted at the time the Group was internalised, to encourage the retention of key executives and
were subject to the holder remaining an employee of the Group until the end of the retention period, which was two years.
An employee is not required to pay for a RQR.

RQRs were granted to the following employees during the year ended 30 June 2012 as a one off retention bonus of between
25% and 50% of the Executive’s total ﬁxed annual remuneration in FY13 only. They were aimed at incentivising them to
remain with the business during the important transitional phase of Internalisation.

These rights vested on 1 July 2014 and have been converted to Ingenia securities as at that date.

Grant Date

Retention
Period

Vesting Date

Simon Owen

31 May 2012

2 years

1 July 2014

Tania Betts

14 May 2012

2 years

1 July 2014

Nicole Fisher

4 June 2012

2 years

1 July 2014

Vesting
Conditions

Remaining
employed at
vesting date

Value of RQRs

50% of TFR in
year 1, $200,000

Number of
RQRs

1,070,000

25% of TFR in
year 1, $70,000

374,000

25% of TFR in
year 1, $70,000

374,000

There have been no additional RQRs issued during the year ended 30 June 2014 or to the date of this report.

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014(cid:13)|(cid:13)continued

c. LTI – Termination of Employment
The following table outlines the treatment of unvested rights at the time of a termination of employment:

Termination Circumstance

Unvested Quantum Rights

Dismissal (termination for cause)

All are forfeited.

Resignation

Other circumstance

All are forfeited unless and to the extent otherwise determined by the Board.

Rights granted in the financial year of termination of employment are forfeited in the
same proportion as the remainder of the financial year bears to the full financial year.

Rights that do not lapse at the termination of employment will continue to be held by
participants with a view to testing for vesting at the end of the measurement period.

If the security price at the end of the measurement period is less than the security price
at the date of cessation of employment then:

PQR – the rights will lapse and an amount up to the value of the Rights that would
otherwise have vested will be paid in cash.

If the security price at the end of the measurement period is not less than the security
price at the date of termination of employment then:

PQR – the rights will be tested for vesting in accordance with the terms of rights.

13.8 KMP Employment Contracts

Managing Director and CEO – Simon Owen

Contract duration

Commenced 4 June 2012, open-ended.

Fixed remuneration

Total remuneration package includes fixed remuneration and superannuation.

Variable remuneration eligibility

Eligible for STI of up to 40% for any one year of the executive’s total cost fixed annual
remuneration.

Eligible for LTI of up to 80% for any one year of the executive’s total cost of fixed annual
remuneration.

The Board may withdraw or vary the STI and LTI schemes at any time by written notice
to the executive, provided that the scheme will not be varied or withdrawn part way
through a financial year in respect of that same financial year.

Non-compete period

Non-solicitation period

Notice by Ingenia

Notice by executive

Treatment on termination

12 months.

Payment in lieu of notice: Payment may be made in lieu of notice, which would include
pro rata fixed remuneration and statutory entitlements.

Treatment of Incentives: As outlined above.

Annual Report 2014

Chief Financial Officer – Tania Betts

Contract duration

Commenced 14 May 2012, open-ended.

Fixed remuneration

Total remuneration package includes fixed remuneration and superannuation.

Variable remuneration eligibility

Eligible for STI of up to 30% for any one year of the executive’s total cost fixed annual
remuneration.

Eligible for LTI of up to 30% for any one year of the executive’s total cost of fixed annual
remuneration.

Non-compete period

Non-solicitation period

Notice by Ingenia

Notice by executive

Treatment on termination

12 months.

6 months.

Payment in lieu of notice: Payment may be made in lieu of notice, which would include
pro rata fixed remuneration and statutory entitlements.

Treatment of Incentives: As outlined above.

Chief Operating Officer – Nicole Fisher

Contract duration

Commenced 4 June 2012, open-ended.

Fixed remuneration

Total remuneration package includes fixed remuneration and superannuation.

Variable remuneration eligibility

Eligible for STI of up to 30% for any one year of the executive’s total cost fixed annual
remuneration.

Eligible for LTI of up to 30% for any one year of the executive’s total cost of fixed annual
remuneration.

Non-compete period

Non-solicitation period

Notice by Ingenia

Notice by executive

Treatment on termination

12 months.

6 months.

Payment in lieu of notice: Payment may be made in lieu of notice, which would include
pro rata fixed remuneration and statutory entitlements.

Treatment of Incentives: As outlined above.

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014(cid:13)|(cid:13)continued

13.9 Remuneration Tables
The following tables outline the remuneration provided to KMP excluding NEDs for the years ended 30 June 2014 and
30 June 2013.

No executive KMP appointed during the period received a payment as part of their consideration for agreeing to hold
the position.

Key Management Personnel – Executive Remuneration

Short-Term

Non-
Monetary
Benefits
$

Other
Payments
$

Super-
Annuation
Benefits
$

Salary
$

STI(2)
$

Total
Short-
Term
$

Other Long-

Term

Long Service

Leave

Performance

Quantum

Rights

LTI(3)

Retention

Quantum

Rights

Termination

Benefits

Total

Performance Related

STI+LTI

Percent of

Total

LTI

Percent of

Total

Executive Director

Simon Owen

Managing
Director
and CEO 2014

Senior Executives

Tania Betts

CFO

Nicole Fisher

COO

Total Executive KMP

2013

2014

2013

2014

588,915

340,155

279,989

262,516

225,780

2013(1)

154,064

2014

2013

1,094,684

756,735

–

23,831

205,200

817,946

19,017

108,000

467,172

17,644

17,585

17,609

12,355

70,875

368,508

52,500

332,601

56,160

299,549

21,882

188,301

59,084

332,235

1,486,004

48,957

182,382

988,074

(1) Nicole Fisher was on maternity leave from 19 November to 30 June 2013.

(2) STIs were accrued in the year ended 30 June 2014 and 30 June 2013.

(3) No rights vested or lapsed during the year. The RQRs vested on 1 July 2014 and 1,818,000 fully paid stapled securities

were issued at that time. LTI expense for the year ended 30 June 2014 was $680,600 (2013: 293,113).

–

343,097

76,840

93,108

23,677

93,458

26,762

529,663

127,279

91,085

99,243

30,222

31,902

29,630

34,689

150,937

165,834

–

1,252,128

643,255

491,838

388,180

422,637

249,752

2,166,604

1,281,187

Annual Report 2014

13.9 Remuneration Tables

30 June 2013.

the position.

The following tables outline the remuneration provided to KMP excluding NEDs for the years ended 30 June 2014 and

No executive KMP appointed during the period received a payment as part of their consideration for agreeing to hold

Key Management Personnel – Executive Remuneration

Executive Director

Managing

Director

Simon Owen

and CEO 2014

Senior Executives

Tania Betts

CFO

Nicole Fisher

COO

Total Executive KMP

588,915

340,155

279,989

262,516

225,780

1,094,684

756,735

2013

2014

2013

2014

2013

2013(1)

154,064

–

23,831

205,200

817,946

19,017

108,000

467,172

17,644

17,585

17,609

12,355

70,875

368,508

52,500

332,601

56,160

299,549

21,882

188,301

59,084

332,235

1,486,004

48,957

182,382

988,074

(1) Nicole Fisher was on maternity leave from 19 November to 30 June 2013.

(2) STIs were accrued in the year ended 30 June 2014 and 30 June 2013.

(3) No rights vested or lapsed during the year. The RQRs vested on 1 July 2014 and 1,818,000 fully paid stapled securities

were issued at that time. LTI expense for the year ended 30 June 2014 was $680,600 (2013: 293,113).

Short-Term

Non-

Monetary

Benefits

Other

Payments

Super-

Annuation

Benefits

STI(2)

Total

Short-

Term

Salary

Other Long-
Term

Long Service
Leave
$

Performance
Quantum
Rights
$

LTI(3)

Retention
Quantum
Rights
$

Termination
Benefits
$

Total
$

Performance Related

STI+LTI
Percent of
Total
%

LTI
Percent of
Total
%

–

343,097

76,840

93,108

23,677

93,458

26,762

529,663

127,279

91,085

99,243

30,222

31,902

29,630

34,689

150,937

165,834

–

1,252,128

643,255

491,838

388,180

422,637

249,752

2,166,604

1,281,187

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014(cid:13)|(cid:13)continued

13.10 Non-Executive Directors Remuneration

a. Directors’ Fees
The maximum aggregate fee pool available to NEDs is $1,000,000 as stipulated in the Constitution that was adopted
pre-internalisation.

b. Performance-based Remuneration
NEDs are remunerated by way of cash beneﬁts. They are not permitted to participate in performance based remuneration
practices unless approved by securityholders. The Group currently has no intention to remunerate NEDs by any way other
than cash beneﬁts.

c. Equity-based Remuneration
There is currently no equity-based remuneration plan in place for NEDs, however all NEDs have self funded the purchase of
securities on market thereby aligning their interests with securityholders. Details are shown below in Section 2.11.

d. NED Remuneration Table
The following table outlines the remuneration provided to NEDs for the year ended 30 June 2014 and 30 June 2013:

Non-Executive Directors

Jim Hazel

Amanda Heyworth

Philip Clark

Robert Morrison(1)

Norah Barlow(2)

Total Non-Executive KMP

Directors Fees
($)

170,000

150,000

90,000

70,000

90,000

70,000

90,000

29,167

22,500

–

462,500

319,167

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

(1) Robert Morrison was appointed as Director on 8 February 2013.

(2) Norah Barlow was appointed as Director on 31 March 2014.

In addition to the above fees, all NEDs receive reimbursement for reasonable travel, accommodation and other expenses
incurred while undertaking Ingenia business.

NEDs do not receive additional remuneration for chairing or being a member of Board committees.

The Board has introduced a policy guideline for Non-Executive Directors to hold the equivalent of one years gross fees in
INA Securities within a period of two years from the date of appointment.

13.11 KMP Interests
Securities held directly, indirectly or beneﬁcially by each key management person, including their related parties, were:

Directors

Jim Hazel

Philip Clark AM

Amanda Heyworth

Robert Morrison

Norah Barlow

Simon Owen

Balance
1 July 2013

1,000,000

100,000

421,000

110,000

–

1,517,750

Acquisitions

Disposals

On Exercise
of Options

Balance
30 June 2014

333,334

108,334

140,334

111,667

178,000

661,917

–

1,333,334

208,334

561,334

221,667

178,000

2,179,667

Performance quantum rights held by key management personnel were:

Director

Simon Owen

Executives

Tania Betts

Nicole Fisher

Balance
1 July 2013

Granted

Vested

Balance
30 June 2014

2,260,000

2,460,000

791,000

641,000

615,000

–

4,720,000

1,432,000

1,406,000

Retention quantum rights held by key management personnel were:

Director

Simon Owen

Executives

Tania Betts

Nicole Fisher

Balance
1 July 2013

Granted

Vested

Balance
30 June 2014

1,070,000

374,000

–

1,070,000

374,000

The retention quantum rights vested on 1 July 2014 and 1,818,000 fully paid stapled securities were issued at that time.

13.12 FY15 Remuneration
This section of the Remuneration Report deals with the period from 1 July 2014 to the date of this report.

Significant changes have been made to the Group’s approach to executive KMP remuneration for the FY15 year. These
changes are detailed and highlighted below.

a. External Remuneration Consultants
Guerdon Associates were appointed by the Board to provide independent remuneration advice for KMP remuneration
in respect of FY15, including latest market practices and a review of the STI and LTI scheme rules.

b. Remuneration Drivers
The following are considered key drivers in dictating the direction of the remuneration structures for FY15:

i. Focus management on delivering outcomes in the short to medium term, particularly significant underlying profit

growth

• Operationalising strategy: management must deliver tangible results on the strategy presented to securityholders

• Re-mix of remuneration components, increase STI (and include a 50% deferred equity element) and reduce LTI

• A significant proportion of total remuneration at risk for all executive KMP

ii. Provide long-term value creation for securityholders and strong alignment between management and securityholders

• Introduce STI awards with 50% deferred equity

• KPIs for STI: primary focus is delivery of underlying profit growth; additional focus on value adding metrics: lifestyle

park sales, increasing occupancy, capital recycling

• LTI 100% deferred equity

• Rights to be allocated based on the 30 day volume weighted average price after results are announced

• Shift from absolute TSR to relative TSR against S&P ASX 300 Industrials Index

• Rights hurdle requires performance above Index with progressive vesting

• All deferred equity (STI and LTI) has a forfeiture provision

iii. Attracting, retaining and motivating KMP

• FY12 Retention Rights vested 1 July 2014

• Small, cohesive senior management team

• A significant proportion of total remuneration for all executive KMP is performance based

c. Details of KMP
There have been no changes to the KMP since 30 June 2014 and before the date of this report.

Annual Report 201436

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014(cid:13)|(cid:13)continued

d. Review Date
Guerdon recommended that the Group change the annual remuneration review date from 1 July to 1 October each year,
to ensure that remuneration reviews are based on ﬁnal audited results and equity grants for deferred STI and LTI are based
on an informed market.

e. Target mix of Remuneration Components
Based on market data from Guerdon Associates and recommendations from the RNC, the Board has set the target
remuneration mix for executives for FY15, expressed as a percentage of total remuneration, as detailed in the table below:

Target mix

CEO

CFO

COO

TFR

43.5%

62.5%

STI

34.8%

25.0%

LTI

Total Remuneration

21.7%

12.5%

100.0%

The target mix reﬂects implementation of the key remuneration drivers set out above.

f. Total Fixed Remuneration
Based on market data from Guerdon Associates and recommendations from the RNC, the Board has set TFR for each of the
executives for FY15 as detailed in the table below:

Executives

Simon Owen

Tania Betts

Nikki Fisher(1)

Position

TFR (p.a.)

Managing Director and CEO

$650,000

CFO

COO

$328,000

$315,000

(1) Currently pro-rated for 4 days per week.

The increases in FY15 ﬁxed remuneration for the Managing Director and CEO is 8.3% and for the CFO and COO is 5.0% each.
The Board considers these increases reasonable in the context of:

– Over 90% increase in the total market capitalisation of the Group during FY14
– Over 55% total securityholder returns on a fully reinvested basis, during FY14

Data for TFR ranges for the CFO and COO for FY15 were provided by Guerdon Associates. The RNC used an element of
judgement to determine the appropriate positioning within this range and arrived at the TFR amounts set out above. Those
recommendations were approved by the Board.

g. Revised LTI and STI Scheme Rules
Guerdon Associates was engaged to review the rules of the plans for the STI and LTI scheme. Guerdon Associates proposed
new Rights Plan Rules, which were endorsed by the RNC and approved by the Board. These new rules will be subject to
securityholder approval at the Annual General Meeting to be held on 12 November 2014.

h. STI
A structural change has been implemented for the FY15 STI with 50% of the maximum STI for the executive KMP being paid
in cash and the remaining 50% being a deferred equity element, subject to forfeiture where earnings growth is not sustained.
The deferral is for 12 months and sustainability has been deﬁned as earnings growth in the following year to be equal to or
above a set threshold on prior year. The deferral is to be rights to INA stapled securities, plus additional stapled securities
equal to distributions during the deferral period on a reinvestment basis.

Executives

Simon Owen

Tania Betts

Nicole Fisher

Maximum STI
Cash

Maximum STI Deferred
(STI Rights)

Total Maximum STI
Available

40% of FY15 TFR

80% of FY15 TFR

$260,000

$520,000

20% of FY15 TFR

40% of FY15 TFR

$65,600

$131,200

20% of FY15 TFR

40% of FY15 TFR

$63,000

$126,000

(1) Subject to securityholder approval at the Annual General Meeting to be held on 12 November 2014.

Annual Report 2014

The STI deferral rights are subject to the following terms and conditions:

a ‘malus’ (forfeiture) provision during the deferral period

–
–
– on the vesting date Ingenia will cause the relevant number of INA securities to be issued to the executive in accordance

a one-year deferral period and are eligible to vest on or following 1 October 2016

with a prescribed formula

–

no amount is payable by the executive for the issue or transfer of INA securities to the executive.

The STI award is subject to STI performance conditions (KPIs) that focus on underlying proﬁt, strategic, operational and
people and reporting metrics. In each case, the KPIs are set with ‘threshold’, ‘target’ and ‘stretch’ performance levels,
with entitlements calculated on a pro-rata basis between these levels.

Details of the KPI split for each executive KMP is as follows:

CEO

CFO

COO

Underlying Profit
%

Strategic
%

Operational
%

People
%

i. LTI
There were no RQRs issued during the year ended 30 June 2014 or since then and before the date of this report, but note
the comment in Section 2.7(b) above in relation to RQR which vested on 1 July 2014.

i. Long term incentive plan
Since 1 July 2014 and before the date of this report, the value and number of Rights that have been offered to executives are:

Simon Owen(1)

Tania Betts

Nicole Fisher

Value of LTIP Rights

Vesting Date

50% of FY15 TFR

30 September 2017

$325,000

20% of FY15 TFR

30 September 2017

$65,600

20% of FY15 TFR

30 September 2017

$63,000

(1) Subject to securityholder approval at the Annual General Meeting to be held on 12 November 2014.

ii. Rights Performance Conditions
On advice from Guerdon, the RNC has recommended and the Board has approved, signiﬁcant changes in FY15 to:

–
–

the performance conditions for vesting of Rights, and

the methodology used to convert dollar amount awards to Rights entitlements.

The Rights are subject to the LTIP Performance Condition, which is based on growth in INA’s TSR relative to the ASX 300
Industrials Index return over the Rights Performance Period.

The ASX 300 Index was chosen because the Board considers it to be transparent and more closely aligned to the Group’s
core business operations.

Total TSR is the growth in the security price plus distributions, assuming distributions are reinvested. To minimise the impact
of any short-term volatility, INA’s TSR will be calculated using the weighted average of the closing security price over the
30 days up to and including the trading day prior to the start and the 30 days up to and including the end trading day of
the Rights Performance Period.

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014(cid:13)|(cid:13)continued

The Rights will vest on the following basis:

Growth Rate in INA’s TSR

% of Rights that Vest

Below Threshold

At Threshold

Index + less than 1% CAGR

Index + 1% CAGR

Nil

10%

Between Threshold and Maximum

Between Index + 1% and 6% CAGR 10% plus an additional amount

progressively vesting on a straight line
basis between Threshold and Maximum

Maximum

Index + 6% CAGR

100%

CAGR: compound annual growth rate

It is important to note that executive KMP must outperform the Index to qualify for an award of Rights.

The methodology recommended by the Group’s Independent Remuneration Consultant and used to calculate Rights
entitlement in FY14 was subject to some criticism. That formula included a 0.5 “probability of vesting” factors, which
effectively doubled Rights grants.

A different methodology has been used to calculate Rights entitlements in FY15 which has been recommended by Guerdon
and adopted by the RNC and the Board.

The FY15 methodology determines security value as the volume weighted average price (“VWAP”) of INA securities in the
period of 30 trading days ending on 30 September 2014. The number of Rights granted in FY15 will be calculated by dividing
the Rights by the 30 day VWAP of the INA security price. Each Right vested equals one INA security plus an additional
number of INA securities calculated on the basis of the distributions that would have been paid during the relevant period
being reinvested.

iii. Entitlement to Distribution adjustment
LTI grants will be entitlements to Rights to stapled securities plus additional stapled securities equal to distributions paid
during the vesting period. The Board is keen to see executive KMP incentivised to grow distributions to securityholders.

j. Total Maximum FY15 Remuneration

Executive

Simon Owen

Tania Betts

Nicole Fisher

Fixed
Remuneration

Maximum STI
Cash

Maximum STI
Deferred(1)

Maximum
LTI(1)

Maximum Total
Remuneration

$650,000

$260,000

$325,000

$1,495,000

$328,000

$65,600

$315,000

$63,000

$524,800

$504,000

(1) Subject to securityholder approval at the Annual General Meeting to be held on 12 November 2014.

In accordance with the Board’s objective, a signiﬁcant proportion of each executive KMP’s total maximum remuneration
in FY15 is performance based. The percentage of total maximum remuneration at risk for each executive KMP is:

CEO
CFO
COO

56.5%
37.5%
37.5%

It is worth noting that Simon Owen’s total maximum remuneration has reduced from an effective level of $1,971,600 in FY14
to a level of $1,495,000 in FY15. The principle factor contributing to that reduction is the change in the methodology used to
calculate the Rights entitlement, detailed above.

k. Non-Executive Directors’ Remuneration
Guerdon Associates was engaged to provide a benchmarking report on the levels of NED remuneration in determining the
appropriate level of fees for FY15.

Based on the Guerdon Associates report, the RNC recommended that the Chair’s remuneration for FY15 remain unchanged
at $170,000 per annum. The Board approved the RNC’s recommendation. The Chair did not participate in that decision.

Based on the Guerdon Associates report, the RNC recommended that remuneration for FY15 be set at $93,000 per annum
for each NED other than the Chair. The Board approved the RNC’s recommendation.

Signed in accordance with a resolution of the directors.

Jim Hazel
Chairman
Sydney, 19 September 2014

Auditors’ Independence Declaration

for the year ended 30 June 2014

Annual Report 2014

40 Ingenia Communities Holdings Limited

Consolidated Statement
of Comprehensive Income

for the year ended 30 June 2014

Continuing Operations

Revenue

Rental income

Accrued deferred management fee income

Manufactured home sales

Catering income

Other property income

Interest income

Property expenses

Employee expenses

Administration expenses

Operational, marketing and selling expenses

Cost of manufactured homes sold

Finance expenses

Net foreign exchange gain/(loss)

Net loss on disposal of investment properties

Net gain/(loss) on change in fair value of:

Investment properties

Derivatives

Retirement village resident loans

Amortisation of intangible assets

Other expenses

Profit from continuing operations before income tax

Income tax benefit

Profit from continuing operations

Profit/(loss) from discontinued operations

Net profit/(loss) for the year

Other comprehensive income, net of income tax

Items that may be reclassified subsequently to profit or loss:

Foreign currency translation differences arising during the year

Release of foreign currency translation reserve on disposal of foreign operations

Total comprehensive income for the year, net of tax

Note

2014
$’000

2013
$’000

5(a)

16(b)

5(b)

31,643

5,333

3,442

3,178

1,819

369

19,287

4,850

405

2,616

872

563

45,784

28,593

(11,613)

(7,650)

(15,341)

(10,239)

(4,371)

(3,136)

(2,130)

(4,446)

(147)

–

(341)

(616)

–

3,684

7,264

10,948

570

11,518

269

–

11,787

16(b)

8(b)

(3,172)

(2,358)

(297)

(6,112)

(107)

3,457

752

327

(585)

(185)

2,461

367

2,828

(13,118)

(10,290)

327

17,463

7,500

Annual Report 2014

2014
$’000

2013
$’000

(2,736)

15,313

(1,059)

(1,245)

(644)

(8,401)

11,518

(10,290)

(2,736)

15,533

(1,010)

11,787

2014
Cents

1.0(2)

1.7

(0.4)

1.8

(0.4)

1.7

(0.4)

1.8

(0.4)

(1,731)

16,898

(7,667)

7,500

2013
Cents

1.0

0.6

(0.2)

(2.0)

(0.2)

0.5

(0.2)

(2.0)

(0.2)

Note

Profit/(loss) attributable to securityholders of:

Ingenia Communities Holdings Limited

Ingenia Communities Fund

Ingenia Communities Management Trust

Total comprehensive income attributable to securityholders of:

Ingenia Communities Holdings Limited

Ingenia Communities Fund

Ingenia Communities Management Trust

Distributions per security

Earnings per security(1):

Basic earnings from continuing operations

Per security

Per security attributable to parent

Basic earnings

Per security

Per security attributable to parent

Diluted earnings from continuing operations

Per security

Per security attributable to parent

Diluted earnings

Per security

Per security attributable to parent

(1) Prior period weighted average number of securities and EPS have been adjusted in accordance with AASB 133 “Earnings per Share”

(“AASB 133”). The weighted average number of securities on issue for the current period, prior to the rights issue in September 2013, has
also been adjusted as required by AASB 133.

(2) Distributions relate to the amount paid during FY14. Subsequent to the end of the year, a ﬁnal distribution was declared for 0.65 cents for

a total full year distribution of 1.15 cents.

Ingenia Communities Holdings Limited

Consolidated Balance Sheet

as at 30 June 2014

Current assets

Cash and cash equivalents

Trade and other receivables

Inventories

Income tax receivable

Assets held for sale

Assets of discontinued operations

Total current assets

Non-current assets

Trade and other receivables

Investment properties

Plant and equipment

Total non-current assets

Total assets

Current liabilities

Trade and other payables

Borrowings

Retirement village resident loans

Provisions

Derivatives

Liabilities of discontinued operations

Total current liabilities

Non-current liabilities

Trade and other payables

Borrowings

Provisions

Derivatives

Deferred tax liabilities

Total non-current liabilities

Total liabilities

Net assets

Equity

Issued securities

Reserves

Accumulated losses

Total equity

Attributable to securityholders of:

Ingenia Communities Holdings Limited

Issued securities

Reserves

Retained earnings/(accumulated losses)

Ingenia Communities Fund

Ingenia Communities Management Trust

Net asset value per security (cents)

Note

8(a)

8(b)

2014
$’000

2013
$’000

12,894

3,745

2,208

960

5,439

47,657

72,903

2,168

498,863

990

502,021

574,924

10,409

283

38,531

8,789

285

757

–

36,576

84,938

2,671

370,931

1,034

374,636

459,574

8,559

267

190,122

175,703

718

507

–

8(b)

30,449

232,065

21,528

206,564

4,000

98,073

249

276

102,682

334,747

240,177

569,116

2,023

–

70,539

140

209

7,470

78,358

284,922

174,652

510,141

1,074

(330,962)

(336,563)

240,177

174,652

7,377

988

(2,659)

5,706

224,254

10,217

240,177

35.5

6,078

308

6,463

164,953

3,236

174,652

34.4

Consolidated Cash Flow Statement

for the year ended 30 June 2014

Annual Report 2014

Cash flows from operating activities

Rental and other property income

Payment of management fees

Property and other expenses

Proceeds from resident loans

Repayment of resident loans

Proceeds from sale of manufactured homes

Purchase of manufactured homes

Distributions received from formerly equity accounted investments

Interest received

Borrowing costs paid

Income tax paid

Cash flows from investing activities

Purchase and additions of plant and equipment

Payments for investment properties

Additions to investment properties

Proceeds from sale of investment properties

Proceeds from sale of equity accounted investments

Amounts received from/(advanced to) villages

Payments for lease arrangements

Cash flows from financing activities

Proceeds from issue of stapled securities

Payments for security issue costs

Receipts from derivatives

Payments for derivatives

Finance lease payments

Payments for internalisation

Distributions to securityholders

Payments for debt issue costs

Proceeds from borrowings

Repayment of borrowings

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Effects of exchange rate fluctuation on cash held

Note

2014
$’000

2013
$’000

16(b)

43,274

29,514

(29)

(166)

(34,847)

(26,270)

22,021

(10,361)

3,511

(4,035)

301

358

(5,811)

(142)

19,338

(7,118)

450

(275)

2,350

578

(7,085)

(76)

14,240

11,240

(443)

(626)

(113,255)

(31,023)

(18,724)

(16,890)

1,200

5,811

(745)

(126,084)

61,707

(2,771)

–

(81)

–

(5,885)

(216)

104,258

29,322

37,560

(330)

(699)

17,314

21,168

(1,056)

1,650

(150)

(13)

(600)

(4,235)

(587)

16,261

(68,000)

(56,242)

89,012

(23,804)

(22,832)

37,550

(167)

4,750

32,812

(12)

Cash and cash equivalents at the end of the year

14,551

37,550

Ingenia Communities Holdings Limited

Statement of Changes in Equity

for the year ended 30 June 2014

ATTRIBUTABLE TO SECURITYHOLDERS

INGENIA COMMUNITIES HOLDINGS LIMITED

Note

Issued
capital
$’000

Reserves
$’000

Retained
earnings
$’000

Total
$’000

ICF and
ICMT
$’000

Total
equity
$’000

Carrying amount at
1 July 2012

Net loss for the year

Other comprehensive
income

Total comprehensive
income for the year

Transactions with
securityholders in their
capacity as securityholders:

Issue of securities

Share-based payment
transactions

Payment of distributions to
securityholders

Carrying amount at
30 June 2013

Net profit/(loss) for the year

Other comprehensive
income

Total comprehensive
income for the year

Transactions with
securityholders in their
capacity as securityholders:

Issue of securities

Share-based payment
transactions

Payment of distributions to
securityholders

Carrying amount at
30 June 2014

6,000

–

293

–

1,808

(1,245)

7,823

143,349

151,172

(1,245)

(9,045)

(10,290)

(486)

18,276

17,790

(1,731)

9,231

7,500

–

20,019

20,097

293

–

293

–

(4,410)

6,078

308

6,463

168,189

174,652

–

1,299

–

680

–

(2,736)

14,254

11,518

–

269

(2,736)

14,523

11,787

–

1,299

57,676

58,975

680

–

680

–

(5,917)

7,377

988

(2,659)

5,706

234,471

240,177

Notes to the Financial Statements

for the year ended 30 June 2014

Annual Report 2014

1. SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES

a. The Group
The ﬁnancial report of Ingenia Communities Holdings
Limited (the “Company”) comprises the consolidated
ﬁnancial report of the Company and its controlled entities,
including Ingenia Communities Fund (“ICF” or the “Fund”)
and Ingenia Communities Management Trust (“ICMT”)
(collectively, the “Trusts”). The shares of the Company
are “stapled” with the units of the Trusts and trade on
the Australian Securities Exchange (“ASX”) effectively
as one security. Ingenia Communities RE Limited
(“ICRE”), a wholly owned subsidiary of the Company,
is the Responsible Entity of the Trusts. In this report,
the Company and the Trusts are referred to collectively
as the Group.

The constitutions of the Company and the Trusts require
that, for as long as they remain jointly quoted on the ASX,
the number of shares in the Company and of units in each
trust shall remain equal and those securityholders in the
Company and unitholders in each trust shall be identical.

The stapling structure will cease to operate on the ﬁrst to
occur of:

–

the Company or either of the Trusts resolving by
special resolution in accordance with its constitution to
terminate the stapling provisions; or

the commencement of the winding up of the Company
or either of the Trusts.

The ﬁnancial report as at and for the year ended 30 June
2014 was authorised for issue by the directors on
19 September 2014.

b. Basis of Preparation
The ﬁnancial report is a general purpose ﬁnancial report
which has been prepared in accordance with Australian
Accounting Standards, Australian Interpretations,
other authoritative pronouncements of the Australian
Accounting Standards Board (“AASBs”) and the
Corporations Act 2001.

The ﬁnancial report complies with Australian Accounting
Standards as issued by the Australian Accounting
Standards Board and International Financial Reporting
Standards (IFRS) as issued by the International Accounting
Standards Board.

As permitted by Class Order 05/642, issued by the
Australian Securities and Investments Commission, the
ﬁnancial statements and accompanying notes of the Group
have been presented in the attached combined ﬁnancial
report.

The ﬁnancial report is presented in Australian dollars and
all values are rounded to the nearest thousand dollars
($’000) unless otherwise stated.

The ﬁnancial report is prepared on an historical cost
basis, except for investment properties, retirement village
resident loans and derivative ﬁnancial instruments, which
are measured at fair value.

At 30 June 2014, the Group recorded a net current asset
deﬁciency of $159,162,000. This deﬁciency includes
retirement village resident loans of $190,122,000 and
liabilities from discontinued operations of $30,449,000.
Resident loans obligations of the Group are classiﬁed
as current liabilities due to the demand feature of these
obligations despite the unlikely possibility that the majority
of the loans will be settled within the next twelve months.
Furthermore, if required, the proceeds from new resident
loans could be used by the Group to settle its existing loan
obligations should those incumbent residents vacate their
units. The liabilities of the discontinued operations consist
mainly of borrowings of $30,081,000 related to a facility
with the Bank of New Zealand and will be repaid upon
disposal of the corresponding assets. Accordingly, there
are reasonable grounds to believe that the Group will be
able to pay its debts as and when they become due and
payable; and the ﬁnancial report of the Group has been
prepared on a going concern basis.

c. Adoption of New and Revised Accounting

Standards

The Group has adopted all of the new and revised
standards and interpretations issued by the Australian
Accounting Standards Board that are relevant to its
operations and effective for the current period. The
following standards were most relevant to the Group:

– AASB 10 “Consolidated Financial Statements” and AASB
2011-7 “Amendments to Australian Accounting Standards
arising from consolidation and Joint Arrangements
standards”;

– AASB 13 “Fair Value Measurement” and AASB 2011-8
“Amendments to Australian Accounting Standards
arising from AASB 13”;

– AASB 119 “Employee Beneﬁts” (2011) and AASB 2011-10
“Amendments to Australian Accounting Standards
arising from AASB 119 (2011)”;

– AASB 2012-2 “Amendments to Australian Accounting
Standards-Disclosures-Offsetting Financial Assets and
Financial Liabilities”; and

– AASB 2011-4 “Amendments to Australian Accounting
Standards to Remove Individual Key Management
Personnel Disclosure Requirements”.

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The impact of application of each Standard is as follows:

Accounting Standard

Impact on the Group

AASB 10 and AASB 2011-7

AASB 13 and AASB 2011-8

AASB 119 and AASB 2011-10

AASB 2012-2

AASB 2011-4

AASB 10 amends the definition of control such that an investor controls an investee when
a) it has power over an investee; b) it is exposed, or has rights, to variable returns from its
involvement with the investee and c) has the ability to use its power to affect its returns.
All three conditions have to be met for an investor to have control.

The application of the standard did not have any impact on the Group.

AASB 13 establishes a single source of guidance for fair value measurements and
disclosures about fair value. The standard is broad in scope and applies to both financial
instrument and non-financial instrument items with the exception of a few items like
share-based payments and leases, which are covered by other standards. AASB 13 defines
fair value as the price that would be received to sell an asset or liability in an orderly
transaction in the principal (or the most advantageous) market at the measurement
date under current market conditions. Valuations made are categorised into three levels
based on the inputs used. However, regardless of the valuation methodology applied,
fair value represents the exit price in relation to the asset or liability. The standard applies
prospectively from 1 January 2013.

The Group has applied requirements of the Standard in all its valuations, in particular
of investment properties. Additionally, the disclosure requirements of the standard,
which include information about assumptions made and the qualitative impact of those
assumptions on fair value, have been complied with.

AASB 119 amends the definition of short-term employee benefits, with the distinction
now being based on whether the benefits are expected to be settled within 12 months
after reporting date (short-term benefit). Long term employee benefits are required to
be measured using the actuarial valuation method. The method involves projecting future
cash flows and discounting back to present value. This requirement applies to the annual
leave balance for the Group. The application of the standard’s requirement for both
current and previous periods did not result in amendment to the figures disclosed, as the
changes were not material.

The standard provides application and presentation guidance to AASB 132 ‘Financial
Instruments: Presentation’ for applying some offsetting criteria. The Group has applied the
requirements of the Standard, which necessitates disclosure of information about rights of
offset and related arrangements for financial instruments under an enforceable master netting
arrangement or similar arrangement. This has resulted in changes to disclosure principally for
retirement village resident loans for the Group.

The standard amends AASB 124 ‘Related Party Disclosures’ to remove individual key
management personnel disclosures required by Australian specific paragraphs. The
application of the standard did not have any financial impact on the Group, though there
have been some changes to disclosures as mandated by the standard.

d. Principles of Consolidation
The Group’s consolidated ﬁnancial statements comprise the Company and its subsidiaries (including the Trusts). Subsidiaries
are all those entities (including special purpose entities) over which the Company or the Trusts have the power to govern the
ﬁnancial and operating policies so as to obtain beneﬁts from their activities.

The ﬁnancial statements of the subsidiaries are prepared for the same reporting period as the parent, using consistent accounting
policies. Inter-company balances and transactions including dividends and unrealised gains and losses from intra-group
transactions have been eliminated.

Subsidiaries are consolidated from the date on which the parent obtains control. They are de-consolidated from the date
that control ceases.

Investments in subsidiaries are carried at cost in the parent’s ﬁnancial statements.

The Company was incorporated on 24 November 2011. In accordance with Accounting Standard AASB 3 Business
Combinations, the stapling of the Company and the Trusts was regarded as a business combination. Under AASB 3, the
stapling was accounted for as a reverse acquisition with ICF “acquiring” the Company and the Company subsequently
being identiﬁed as the ongoing parent for preparing consolidated ﬁnancial reports. Consequently, the consolidated ﬁnancial
statements are a continuation of the ﬁnancial statements of the Trusts, and include the results of the Company from the date
of incorporation.

Annual Report 2014

e. Business Combinations and Goodwill
Business combinations are accounted for using the
acquisition method. The cost of an acquisition is measured
as the aggregate of the consideration transferred,
measured at acquisition date fair value and the amount
of any non-controlling interest in the acquiree. For each
business combination, the Group elects whether it
measures the non-controlling interest in the acquiree either
at fair value or at the proportionate share of the acquiree’s
identiﬁable net assets. Acquisition costs incurred are
expensed and included in other expenses.

When the Group acquires a business, it assesses the
ﬁnancial assets and liabilities assumed for appropriate
classiﬁcation and designation in accordance with the
contractual terms, economic circumstances and pertinent
conditions as at the acquisition date.

If the business combination is achieved in stages, the
acquisition date fair value of the acquirer’s previously held
equity interest in the acquiree is remeasured to fair value
at the acquisition date through proﬁt or loss.

Goodwill is initially measured at cost, being the excess of
the aggregate of the consideration transferred and the
amount recognised for non-controlling interest over the
net identiﬁable assets acquired and liabilities assumed.
If this consideration is lower than the fair value of the
net assets of the subsidiary acquired, the difference is
recognised in proﬁt or loss.

f. Discontinued Operations and Assets Held for Sale
The Group has classiﬁed certain components as
discontinued operations. A discontinued operation is a
component of the entity that has been disposed of, or is
classiﬁed as held for sale, and that represents a separate
major line of business or geographical area of operations,
or is part of a single co-ordinated plan to dispose of such
a line of business or area of operations. The results of
discontinued operations are presented separately on the
face of the income statement.

Components of the entity are classiﬁed as held for sale if
their carrying amount will be recovered principally through
a sale transaction rather than through continuing use.
They are measured at the lower of their carrying amount
and fair value less costs to sell, except for assets such as
investment property, which are carried at fair value.

An impairment loss is recognised for any initial or
subsequent write-down of the asset (or disposal group)
to fair value less costs to sell. A gain is recognised for
any subsequent increases in fair value less costs to sell
of an asset (or disposal group), but not in excess of any
cumulative impairment loss previously recognised. A gain
or loss not previously recognised by the date of the sale of
the non-current asset (or disposal group) is recognised at
the date of derecognition.

Non-current assets classiﬁed as held for sale, and the
assets of a disposal group classiﬁed as held for sale, are
presented separately from the other assets on the face
of the balance sheet. The liabilities of a disposal group
classiﬁed as held for sale are presented separately from
other liabilities on the face of the balance sheet.

Details of discontinued operations and assets held for sale
are given at Note 8.

g. Dividends and Distributions
A liability for any dividend or distribution declared on or
before the end of the reporting period is recognised on the
balance sheet in the reporting period to which the dividend
or distribution pertains.

h. Foreign Currency

i. Functional and presentation currencies
The presentation currency of the Group, and functional
currency of the Company, is the Australian dollar.

ii. Translation of foreign currency transactions
Transactions in foreign currency are initially recorded in
the functional currency at the exchange rate prevailing
at the date of the transaction. Monetary assets and
liabilities denominated in foreign currency are retranslated
at the rate of exchange prevailing at the balance date.
All differences in the consolidated ﬁnancial report are
taken to the income statement with the exception of
differences on foreign currency borrowings designated
as a hedge against a net investment in a foreign entity.
These are taken directly to equity until the disposal of
the net investment at which time they are recognised
in the income statement.

A non-monetary item that is measured at fair value in a
foreign currency is translated using the exchange rates at
the date when the fair value was determined.

iii. Translation of ﬁnancial statements of foreign

subsidiaries

The functional currency of certain subsidiaries is not the
Australian dollar. At reporting date, the assets and liabilities of
these entities are translated into the presentation currency of
the Group at the rate of exchange prevailing at balance date.
Financial performance is translated at the average exchange
rate prevailing during the reporting period. The exchange
differences arising on translation are taken directly to the
foreign currency translation reserve in equity.

On disposal of a foreign entity, the deferred cumulative
amount recognised in equity relating to that foreign
operation is recognised in the income statement.

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

1. SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (CONTINUED)

i. Leases
Finance leases, which transfer to the Group substantially
all the risks and beneﬁts incidental to ownership of the
leased item, are capitalised at the inception of the lease at
the fair value of the leased asset or, if lower, at the present
value of the minimum lease payments. Lease payments are
apportioned between the ﬁnance charges and reduction
of the lease liability to achieve a constant rate of interest
on the remaining balance of the liability. Finance charges
are recognised as an expense in the income statement.

Finance leases, which transfer away from the Group
substantially all the risks and beneﬁts incidental to
ownership of the leased item, are recognised at the
inception of the lease. A ﬁnance lease receivable is
recognised on inception at the present value of the
minimum lease receipts. Finance lease receipts are
apportioned between the interest income and reduction
in the lease receivable to achieve a constant rate of
interest on the remaining balance of the receivable.
Interest is recognised as income in the income statement.

Leases of properties that are classiﬁed as investment
properties, are classiﬁed as ﬁnance leases under AASB 140
Investment Properties.

Leases where the lessor retains substantially all the risks
and beneﬁts of ownership are classiﬁed as operating
leases. Operating lease payments are recognised as an
expense in the income statement on a straight-line basis
over the term of the lease.

j. Plant and Equipment
Plant and equipment is stated at cost, net of accumulated
depreciation and accumulated impairment losses, if
any. Such cost includes the cost of replacing part of the
property, plant and equipment and borrowing costs for
long-term construction projects if the recognition criteria
are met. When signiﬁcant parts of property, plant and
equipment are required to be replaced at intervals, the
Group recognises such parts as individual assets with
speciﬁc useful lives and depreciates them accordingly.
Likewise, when a major inspection is performed, its cost
is recognised in the carrying amount of the plant and
equipment as a replacement if the recognition criteria
are satisﬁed. All other repair and maintenance costs are
recognised in proﬁt or loss as incurred. The present value
of the expected cost for the decommissioning of an asset
after its use is included in the cost of the respective asset
if the recognition criteria for a provision are met.

k. Financial Assets and Liabilities
Current and non-current ﬁnancial assets and liabilities
within the scope of AASB 139 Financial Instruments:
Recognition and Measurement are classiﬁed as fair value
through proﬁt or loss; loans and receivables; held-to-
maturity investments or as available-for-sale. The Group
determines the classiﬁcation of its ﬁnancial assets and
liabilities at initial recognition with the classiﬁcation
depending on the purpose for which the asset or
liability was acquired or issued.

Financial assets and liabilities are initially recognised at
fair value, plus directly attributable transaction costs
unless their classiﬁcation is at fair value through proﬁt
or loss. They are subsequently measured at fair value
or amortised cost using the effective interest method.
Changes in fair value of available-for-sale ﬁnancial assets
are recorded directly in equity. Changes in fair values
of any other ﬁnancial assets and liabilities classiﬁed as
at fair value through proﬁt or loss are recorded in the
income statement.

The fair values of ﬁnancial instruments that are actively
traded in organised ﬁnancial markets are determined by
reference to quoted market bid prices at the close of business
on the balance sheet date. For those with no active market,
fair values are determined using valuation techniques.
Such techniques include: using recent arm’s length market
transactions; reference to the current market value of another
instrument that is substantially the same; discounted cash
ﬂow analysis and option pricing models, making as much use
of available and supportable market data as possible and
keeping judgemental inputs to a minimum.

l. Impairment of Non-Financial Assets
Assets other than investment property and ﬁnancial assets
carried at fair value, are tested for impairment whenever
events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment
loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value
less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest
levels for which there are separately identiﬁable cash
inﬂows that are largely independent of the cash inﬂows
from other assets or groups of assets. Non-ﬁnancial assets
excluding goodwill which have suffered impairment are
reviewed for possible reversal of the impairment at each
reporting date.

m. Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet and cash
ﬂow statements comprise cash at bank and in hand and
short-term deposits that are readily convertible to known
amounts of cash and are subject to an insigniﬁcant risk
of changes in value.

n. Trade and Other Receivables
Trade and other receivables are recognised initially at
fair value and subsequently measured at amortised cost
using the effective interest method, less any provision
for impairment. An allowance for impairment is made
when there is objective evidence that collection of the
full amount is no longer probable.

o. Inventories
The Group holds inventory in relation to the acquisition
and development of manufactured homes within its
Active Lifestyle Estates segment.

Inventories are held at the lower of cost and net
realisable value.

Costs of inventories comprise all acquisition costs, costs
of conversion and other costs incurred in bringing the
inventories to their present location and condition.
Inventory includes work in progress and raw materials
used in the production of manufactured home units.

Net realisable value is determined on the basis of an
estimated selling price in the ordinary course of business
less estimated costs of completion and the estimated
costs necessary to make the sale.

p. Derivative Financial Instruments
The Group uses derivative ﬁnancial instruments such
as foreign currency contracts and interest rate swaps
to hedge its risks associated with foreign currency
and interest rate ﬂuctuations. Such derivative ﬁnancial
instruments are initially recognised at fair value on the date
in which the derivative contract is entered into and are
subsequently remeasured to fair value.

q. Investment Property
Land and buildings have the function of an investment
and are regarded as composite assets. In accordance with
applicable accounting standards, the buildings, including
plant and equipment, are not depreciated.

Investment property includes property under construction
and tourism cabins.

Investment properties are measured initially at cost,
including transaction costs. Subsequent to initial
recognition, investment properties are stated at fair value,
which reﬂects market conditions at the reporting date.
Gains or losses arising from changes in the fair values
of investment properties are included in the income
statement in the period in which they arise, including
corresponding tax effect.

Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date
in the principal market for the asset or liability or in its
absence, the most advantageous market.

It is the Group’s policy to have all investment properties
externally valued at intervals of not more than two years
and that such valuation be reﬂected in the ﬁnancial reports
of the Group. It is the policy of the Responsible Entity to
review the fair value of each investment property every six
months and to cause investment properties to be revalued
to fair values whenever their carrying value materially
differs to their fair values.

Changes in the fair value of the an investment property are
recorded in the statement of comprehensive income.

In determining fair values, expected net cash ﬂows
are discounted to their present value using a market
determined risk adjusted discount rate. The assessment
of fair value of investment properties does not take into
account potential capital gains tax assessable.

Annual Report 2014

r. Intangible Assets
Intangible assets acquired separately are measured on
initial recognition at cost. The cost of intangible assets
acquired in a business combination are their fair values
as at the date of acquisition. Following initial recognition,
intangible assets are carried at cost less any accumulated
amortisation and accumulated impairment losses.

Internally generated intangible assets are not capitalised
and expenditure is reﬂected in the income statement in
the year in which the expenditure is incurred.

The useful lives of intangible assets have been assessed
as ﬁnite. Consequently, intangible assets are amortised on
a straight-line basis over their useful economic lives and
assessed for impairment whenever there is an indication
that the intangible asset may be impaired. Amortisation
expense is recognised in the income statement in the
expense category consistent with the function of the
intangible assets.

s. Payables
Trade and other payables are carried at amortised cost and
due to their short-term nature are not discounted. They
represent liabilities for goods and services provided to the
Group prior to the end of the ﬁnancial year that are unpaid
and are recognised when the Group becomes obliged to
make future payments in respect of the purchase of these
goods and services.

t. Provisions, including Employee Beneﬁts

i. General
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event,
it is probable that an outﬂow of resources embodying
economic beneﬁts will be required to settle the obligation
and a reliable estimate can be made of the amount of the
obligation. When the Group expects some or all of a provision
to be reimbursed, for example, under an insurance contract,
the reimbursement is recognised as a separate asset, but only
when the reimbursement is virtually certain. The expense
relating to a provision is presented in the statement of proﬁt
or loss net of any reimbursement.

ii. Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary
beneﬁts and annual leave expected to be settled within
twelve months of the reporting date are recognised
in respect of employees’ services up to the reporting
date. They are measured at the amounts expected to be
paid when the liabilities are settled. Expenses for non-
accumulating sick leave are recognised when the leave is
taken and are measured at the rates paid or payable.

iii. Long service leave
The liability for long service leave is recognised and
measured as the present value of expected future
payments to be made in respect of services provided by
employees up to the reporting date using the projected
unit credit method. Consideration is given to expected
future wage and salary levels, experience of employee
departures, and periods of service. Expected future
payments are discounted using market yields at the
reporting date on national government bonds with
terms to maturity and currencies that match, as closely
as possible, the estimated future cash outﬂows.

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

1. SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (CONTINUED)

u. Retirement Village Resident Loans
These loans, which are repayable on the departure of the
resident, are classiﬁed as ﬁnancial liabilities at fair value
through proﬁt and loss with resulting fair value adjustments
recognised in the income statement. The fair value of the
obligation is measured as the ingoing contribution plus the
resident’s share of capital appreciation to reporting date.
Although the expected average residency term is more than
ten years, these obligations are classiﬁed as current liabilities,
as required by Accounting Standards, because the Group
does not have an unconditional right to defer settlement to
more than twelve months after reporting date.

This liability is stated net of accrued deferred management
fees at reporting date, because the Group’s contracts with
residents require net settlement of those obligations.

Refer to Notes 27(k) and 1(aa) for information regarding
the valuation of retirement village resident loans.

v. Borrowings
Borrowings are initially recorded at the fair value of the
consideration received less directly attributable transaction
costs associated with the borrowings. After initial recognition,
borrowings are subsequently measured at amortised cost
using the effective interest rate method. Under this method
fees, costs, discounts and premiums that are yield related are
included as part of the carrying amount of the borrowing and
amortised over its expected life.

Borrowings are classiﬁed as current liabilities unless the
Group has an unconditional right to defer settlement to
more than twelve months after reporting date.

Borrowing costs are expensed as incurred except
where they are directly attributable to the acquisition,
construction or production of a qualifying asset. When this
is the case, they are capitalised as part of the acquisition
cost of that asset.

w. Issued Equity
Issued and paid up securities are recognised at the fair
value of the consideration received by the Group. Any
transaction costs arising on issue of ordinary securities are
recognised directly in equity as a reduction of the security
proceeds received.

x. Revenue
Revenue from rents, interest and distributions is recognised
to the extent that it is probable that the economic beneﬁts
will ﬂow to the entity and the revenue can be reliably
measured. Revenue brought to account but not received
at balance date is recognised as a receivable.

Rental income from operating leases is recognised on a
straight-line basis over the lease term. Contingent rentals
are recognised as income in the ﬁnancial year that they
are earned. Fixed rental increases that do not represent
direct compensation for underlying cost increases or
capital expenditures are recognised on a straight-line basis
until the next market review date. Rent paid in advance is
recognised as unearned income.

Deferred management fee income is calculated as the
expected fee to be earned on a resident’s ingoing loan,
allocated pro-rata over the resident’s expected tenure,
together with any share of capital appreciation that has
occurred at reporting date.

Revenue from the sale of manufactured homes within the
Active Lifestyle Estate segment is recognised when the
signiﬁcant risks, rewards of ownership and effective control
has been transferred to the buyer.

Government incentives are recognised where there is
reasonable assurance the incentive will be received and
all attached conditions will be complied with. When the
incentive relates to an expense item, it is recognised as
income on a systematic basis over the periods that the
incentive is intended to compensate.

Interest income is recognised as the interest accrues using
the effective interest rate method.

y. Share-Based Payment Transactions
Certain senior executives of the Group receive
remuneration in the form of share-based payment
transactions, whereby employees render services as
consideration for equity instruments (equity-settled
transactions). The Group does not have any cash-settled
share-based payment transactions in the ﬁnancial year.

The cost of equity-settled transactions is recognised,
together with a corresponding increase in reserves in
equity, over the period in which the performance and
service conditions are fulﬁlled. The cumulative expense
recognised for these transactions at each reporting date
until the vesting date reﬂects the extent to which the
vesting period has expired and the Group’s best estimate
of the number of equity instruments that will ultimately
vest. The income statement expense or credit for a
period represents the movement in cumulative expense
recognised as at the beginning and end of that period and
is recognised in employee expenses.

No expense is recognised for awards that do not ultimately
vest, except for equity-settled transactions for which
vesting is conditional upon a market or non-vesting
condition. These are treated as vesting irrespective of
whether or not the market or non-vesting condition is
satisﬁed, provided that all other performance and service
conditions are satisﬁed.

When the terms of an equity-settled transaction are
modiﬁed, the minimum expense recognised is the expense
as if the terms had not been modiﬁed, if the original terms
of the award are met. An additional expense is recognised
for any modiﬁcation that increases the total fair value of
the transaction, or is otherwise beneﬁcial to the employee
as measured at the date of modiﬁcation.

When an equity-settled award is cancelled, it is treated as
if it vested on the date of cancellation, and any expense not
yet recognised for the award is recognised immediately.
This includes any award where non-vesting conditions
within the control of either the Group or the employee
are not met. However, if a new award is substituted for
the cancelled award, and designated as a replacement
award on the date that it is granted, the cancelled and
new awards are treated as if they were a modiﬁcation of
the original award, as described in the previous paragraph.

Annual Report 2014

The dilutive effect of outstanding rights is reﬂected as
additional share dilution in the computation of diluted
earnings per share.

z. Income Tax

i. Current income tax
Under the current tax legislation, ICF and its subsidiaries
are not liable to pay Australian income tax provided
that its taxable income (including any assessable capital
gains) is fully distributed to securityholders each year.
Tax allowances for building and ﬁxtures depreciation are
distributed to securityholders in the form of the tax-
deferred component of distributions.

However, the Company, ICMT and their subsidiaries are
subject to Australian income tax.

Current tax assets and liabilities for the current period are
measured at the amount expected to be recovered from,
or paid to, the taxation authorities based on the current
period’s taxable income. The tax rates and tax laws used
to compute the amount are those that are enacted or
substantively enacted at the reporting date.

The subsidiaries that hold the Group’s foreign properties may
be subject to corporate income tax and withholding tax in
the countries in which they operate. Under current Australian
income tax legislation, securityholders may be entitled to
receive a foreign tax credit for this withholding tax.

ii. Deferred income tax
Deferred income tax represents tax (including withholding
tax) expected to be payable or recoverable by taxable
entities on the differences between the tax bases of assets
and liabilities and their carrying amounts for ﬁnancial
reporting purposes. Deferred tax assets and liabilities are
measured at the tax rates that are expected to apply to the
year when the asset is realised through continuing use or
the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at reporting
date. Income taxes related to items recognised directly in
equity are recognised in equity and not against income.

iii. Tax Consolidation
Each of the Company and ICMT and their respective
subsidiaries have formed a tax consolidation group with
the Company or ICMT being the head entity. The head
entity and the controlled entities in the tax consolidation
group continue to account for their own current and
deferred tax amounts. Each tax consolidated group has
applied a group allocation approach in determining the
appropriate amount of current taxes and deferred taxes
to allocate to the members therein.

In addition to its own current and deferred tax amounts,
each tax consolidated group also recognises the current
tax liabilities (or assets) and the deferred tax assets arising
from unused tax losses and unused tax credits assumed
from entities in their respective tax consolidated group.

Assets of liabilities arising under tax funding agreements
with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the group.

aa. Fair Value Measurement
The Group measures ﬁnancial instruments, such as,
derivatives, and non-ﬁnancial assets such as investment
properties, at fair value at each balance sheet date. Also,
fair values of ﬁnancial instruments measured at amortised
cost are disclosed in Note 27.

Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability
takes place either:

–
–

In the principal market for the asset or liability, or

In the absence of a principal market, in the most
advantageous market for the asset or liability.

The principal or the most advantageous market must be
accessible to the Group.

The fair value of an asset or a liability is measured using
the assumptions that market participants would use
when pricing the asset or liability, assuming that market
participants act in their economic best interest.

A fair value measurement of a non-ﬁnancial asset takes
into account a market participant’s ability to generate
economic beneﬁts by using the asset in its highest and
best use or by selling it to another market participant that
would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate
in the circumstances and for which sufficient data are
available to measure fair value, maximising the use of
relevant observable inputs and minimising the use of
unobservable inputs.

For assets and liabilities that are recognised in the ﬁnancial
statements on a recurring basis, the Group determines
whether transfers have occurred between Levels in
the hierarchy by re-assessing categorisation (based on
the lowest level input that is signiﬁcant to the fair value
measurement as a whole) at the end of the reporting
period.

The Group’s Audit and Risk Committee determines the
policies and procedures for both recurring fair value
measurement, such as investment properties and resident
loans and for non-recurring measurement.

External valuers are involved for valuation of signiﬁcant
assets, such as properties and signiﬁcant liabilities.
Selection criteria include market knowledge, experience
and qualiﬁcations, reputation, independence and whether
professional standards are maintained.

On a six monthly basis management presents valuation
results to the Audit and Risk Committee and the
Group’s auditors. This includes a discussion of the major
assumptions used in the valuations.

For the purpose of fair value disclosures, the Group has
determined classes of assets and liabilities on the basis of
the nature, characteristics and risks of the asset or liability
and the level of the fair value hierarchy as explained above.

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

1. SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (CONTINUED)

bb. Goods and Services Tax (“GST”)
Revenue, expenses and assets (with the exception of
receivables) are recognised net of the amount of GST to
the extent that the GST is recoverable from the taxation
authority. Where GST is not recoverable, it is recognised as
part of the cost of the acquisition, or as an expense.

Receivables and payables are stated inclusive of GST.
The net amount of GST recoverable from or payable to the
tax authority is included in the balance sheet as an asset
or liability.

Cash ﬂows are included in the cash ﬂow statement
on a gross basis. The GST components of cash ﬂows
arising from investing and ﬁnancing activities, which are
recoverable from or payable to the tax authorities, are
classiﬁed as operating cash ﬂows.

cc. Earnings per Share (“EPS”)
Basic EPS is calculated as net proﬁt attributable to members
of the Group, divided by the weighted average number of
ordinary shares, adjusted for any bonus element.

Diluted EPS is calculated as net proﬁt attributable to
the Group divided by the weighted average number of
ordinary shares and dilutive potential ordinary shares,
adjusted for any bonus element.

dd. Pending Accounting Standards
AASB 9 Financial Instruments is applicable to reporting
periods beginning on or after 1 January 2018. The Group
has not early adopted this standard. This standard provides
requirements for the classiﬁcation and measurement of
ﬁnancial assets and accounting for ﬁnancial liabilities.
These requirements seek to improve and simplify the
requirements listed in AASB 139 Financial Instruments:
Recognition and Measurement. The Group is currently
evaluating the impact of this standard.

AASB 2012-3 Amendments to Australian Accounting
Standards-Offsetting Financial Assets and Liabilities is
applicable for annual ﬁnancial periods beginning on or
after 1 January 2014. The standard makes amendments to
AASB 132 Financial Instruments-Presentation as a result of
the issuance of International Financial Reporting Standard
Offsetting Financial Assets and Financial Liabilities and
provides application guidance to certain criteria mentioned
in AASB 132. The application of the Standard does not
have any impact on the results of the Group as retirement
village resident loans are already offset as there is a current
legally enforceable right and there is an intention to settle
on a net basis.

AASB 2014-1 Amendments to Australian Accounting
Standards is applicable for periods beginning on or after
1 July 2014. This standard clariﬁes that judgement is
needed to determine whether an acquisition of investment
property is solely the acquisition of an investment property
or whether it is an acquisition of a group of assets or a
business combination within the scope of AASB 3 Business
Combinations that includes an investment property.
The Group currently makes an assessment about this
classiﬁcation for each investment property acquired,
therefore no impact is expected from this change except for
additional disclosures regarding judgements and estimates.

Other new accounting standards, amendments to
accounting standards and interpretations have been
published that are not mandatory for the current reporting
period. These are not expected to have any material impact
on the Group’s ﬁnancial reporting future reporting periods.

ee. Current versus Non-Current Classiﬁcation
The Group presents assets and liabilities in the balance
sheet based on current/non-current classiﬁcation. An asset
is current when it is:

– Expected to be realised or intended to be sold or

consumed in the normal operating cycle

– Held primarily for the purpose of trading
– Expected to be realised within twelve months after the

reporting period, or

– Cash or cash equivalents unless restricted from being

exchanged or used to settle a liability for at least twelve
months after reporting period.

All other assets are classiﬁed as non-current.

A liability is current when:

–
–
–

It is expected to be settled in the normal operating cycle

It is held primarily for the purpose of trading

It is due to be settled within twelve months after the
reporting period, or

– There is no unconditional right to defer the settlement of
the liability for at least twelve months after the reporting
period.

The Group classiﬁes all other liabilities as non-current.

Deferred tax assets and liabilities are classiﬁed as non-
current assets and liabilities.

Annual Report 2014

2. ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of ﬁnancial statements requires the use
of certain critical accounting estimates. It also requires the
Group to exercise its judgement in the process of applying
the Group’s accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are signiﬁcant to the ﬁnancial
statements are disclosed below.

Estimates and judgements are continually evaluated and
are based on historical experience and other factors,
including expectations of future events that are believed
to be reasonable under the circumstances.

a. Critical Accounting Estimates and Assumptions
The Group makes estimates and assumptions concerning
the future. The resulting accounting estimates, by
deﬁnition, will seldom equal the related actual results. The
estimates and assumptions that have a signiﬁcant risk of
causing a material adjustment to the carrying amounts
of assets and liabilities within the next ﬁnancial year are
discussed below.

i. Valuation of investment property
The Group has investment properties with a carrying amount
of $498,863,000 (2013: $370,931,000) (refer Note 12), and
retirement village residents’ loans with a carrying amount
of $190,122,000 (2013: $175,703,000) (refer Note 16), which
together represent the estimated fair value of the Group’s
interest in seniors living properties. In addition, the Group
holds investment properties with carrying amounts of
$45,902,000 (2013: $35,343,000) which are included in
assets of discontinued operations (refer Note 8(b)).

These carrying amounts reﬂect certain assumptions about
expected future rentals, rent-free periods, operating
costs and appropriate discount and capitalisation rates.
The valuation assumptions for deferred management fee
villages reﬂect assumptions relating to average length of
stay, unit market values, estimates of capital expenditure,
contract terms with residents, discount rates and projected
property growth rates.

In forming these assumptions, the Responsible Entity
considered information about current and recent sales
activity, current market rents, and discount and capitalisation
rates, for properties similar to those owned by the Group,
as well as independent valuations of the Group’s property.

ii. Valuation of inventories
The Group has inventory in the form of manufactured
homes, which it carries at the lower of cost or net realisable
value. Estimates of net realisable value are based on the
most reliable evidence available at the time the estimates
are made, of the amount the inventories are expected
to realise and the estimate of costs to complete. Key
assumptions require the use of management judgement,
which are continually reviewed.

iii. Fair value of derivatives
The fair value of derivative assets and liabilities is based
on assumptions of future events and involves signiﬁcant
estimates. Given the complex nature of these instruments
and various assumptions that are used in calculating
mark-to-market values, the Group relies on counterparty
valuations for derivative values. The counterparty
valuations are usually based on mid-market rates and
calculated using the main variables including the forward
market curve, time and volatility.

iv. Valuation of share-based payments
Valuation of share-based payment transactions is
performed using judgements around the fair value of
equity instruments on the date at which they are granted.
The fair value is determined using a Monte Carlo based
simulation method. Refer to Note 25 for assumptions used
in determining the fair value.

v. Valuation of assets acquired in business combinations
Upon recognising the acquisition, management uses
estimations and assumptions of the fair value of assets
and liabilities assumed at the date of acquisition, including
judgements related to valuation of investment property
as discussed above.

vi. Valuation of retirement village resident loans
The fair value of the retirement village resident loans is
calculated by reference to the initial loan amount plus
the resident’s share of any capital gains in accordance
with their contracts less any deferred management fee
income accrued to date by the Group as operator. The key
assumption for calculating the capital gain and deferred
management fee income components is the value of the
dwelling being occupied by the resident. This value is
determined by reference to the valuation of investment
property as referred to above.

vii. Calculation of deferred management fee (“DMF”)
Deferred management fees are recognised by the Group
over the estimated period of time the property will be
leased by the resident and the accrued DMF is realised
upon exit of the resident. The accrued DMF is based on
various inputs including the initial price of the property,
estimated length of stay of the resident, various contract
terms and projected price of property at time of re-leasing.

b. Critical Judgements in Applying the Entity’s

Accounting Policies

There were no judgements, apart from those involving
estimations, that management has made in the process
of applying the entity’s accounting policies that had
a signiﬁcant effect on the amounts recognised in the
ﬁnancial report.

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

3. SEGMENT INFORMATION

a. Description of Segments
The Group invests in seniors living properties located in Australia with three reportable segments:

– Garden Villages – rental villages;
– Settlers Lifestyle – deferred management fee villages; and
– Active Lifestyle Estates – comprising permanent and short stay rentals within lifestyle parks and the sale of manufactured

homes.

The Group has identiﬁed its operating segments based on the internal reports that are reviewed and used by the chief
operating decision maker in assessing performance and in determining the allocation of resources. Other parts of the Group
are neither an operating segment nor part of an operating segment. Assets that do not belong to an operating segment are
described below as “unallocated”.

b. 30 June 2014

i.°Segment revenue

External segment revenue

Interest income

Reclassification of gain on revaluation of newly
constructed villages

Total revenue

ii.°Segment underlying profit

External segment revenue

Interest income

Property expenses

Employee expenses

Administration expenses

Operational, marketing and selling expenses

Manufactured home cost of sales

Finance expense

Income tax benefit

Underlying profit/(loss) – continuing
operations

Reconciliation of underlying profit to profit
from continuing operations:

Active
Lifestyle
Estates
$’000

Settlers
$’000

Garden
Villages
$’000

Corporate/
Unallocated
$’000

13,589

10,575

24,571

–

13,589

–

(3,320)

7,255

–

24,571

13,589

10,575

24,571

–

(2,640)

(4,096)

(384)

(421)

(2,130)

–

(1,900)

(2,173)

(226)

(1,801)

–

(6,798)

(6,365)

(996)

(512)

–

369

–

369

–

369

(275)

(2,707)

(2,765)

(402)

–

(4,446)

2,896

Total
$’000

48,735

369

(3,320)

45,784

48,735

369

(11,613)

(15,341)

(4,371)

(3,136)

(2,130)

(4,446)

2,896

3,918

4,475

9,900

(7,330)

10,963

Net foreign exchange loss

–

(147)

Net gain/(loss) on change in fair value of:

¶Investment properties

¶Derivatives

¶Retirement village resident loans

Gain on revaluation of newly constructed villages

Income tax benefit associated with
reconciliation items

Profit from continuing operations per the
Consolidated Statement of Comprehensive
Income

iii.°Segment assets

Segment assets

Assets held for sale

Discontinued operations

Total assets

(2,124)

–

(599)

–

(616)

(3,320)

–

2,382

–

(341)

(616)

(3,320)

4,368

1,794

(60)

12,282

(3,068)

10,948

130,243

262,498

115,293

13,794

521,828

5,439

47,657

574,924

Annual Report 2014

Active
Lifestyle
Estates
$’000

Settlers
$’000

Garden
Villages
$’000

Corporate/
Unallocated
$’000

879

11,443

20,327

–

879

–

(37)

(59)

(51)

(80)

(297)

–

(4,619)

6,824

–

20,327

11,443

20,327

–

(2,390)

(2,045)

(218)

(1,125)

–

(5,312)

(5,349)

(991)

(984)

–

Total
$’000

32,649

563

(4,619)

28,593

32,649

563

(7,650)

–

563

–

563

–

563

(2,786)

(10,239)

(1,912)

(169)

–

(6,112)

(43)

(3,172)

(2,358)

(297)

(6,112)

(43)

c. 30 June 2013

i.°Segment revenue

External segment revenue

Interest income

Reclassification of gain on revaluation of newly
constructed villages

Total revenue

ii.°Segment underlying profit

External segment revenue

Interest income

Property expenses

Employee expenses

Administration expenses

Operational, marketing and selling expenses

Manufactured home cost of sales

Finance expense

Income tax expense

Underlying profit/(loss) – continuing
operations

355

5,665

7,691

(10,370)

3,341

Reconciliation of underlying profit to profit from continuing operations:

Net foreign exchange gain

Net loss on disposal of investment property

Net gain/(loss) on change in fair value of:

¶Investment properties

¶Derivatives

¶Retirement village resident loans

Gain on revaluation of newly
constructed villages

Amortisation of intangibles

Other

Income tax benefit associated with
reconciliation items

Profit from continuing operations per the
Consolidated Statement of Comprehensive
Income

iii.°Segment assets

Segment assets

Discontinued operations

Total assets

–

(107)

(15)

(1,512)

4,984

–

327

(4,619)

–

752

–

(585)

(185)

(107)

3,457

752

327

(4,619)

(585)

(185)

410

340

(139)

12,568

(9,941)

2,828

18,559

255,006

101,108

48,325

422,998

36,576

459,574

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

4. EARNINGS PER SECURITY(1)

a. Per Security

Profit/(loss) attributable to securityholders ($’000)

Profit from continuing operations ($’000)

Profit/(loss) from discontinued operations ($’000)

Weighted average number of securities outstanding (thousands):

¶Issued securities

¶Dilutive securities

¶¶Performance quantum rights

¶¶Retention quantum rights

Note

2014

2013

11,518

10,948

570

(10,290)

2,828

(13,118)

646,603

509,716

2,310

1,818

3,842

1,818

Weighted average number of issued and dilutive potential securities outstanding
(thousands)

650,731

515,376

Basic earnings per security from continuing operations (cents)

Basic earnings per security from discontinued operations (cents)

Basic earnings per security (cents)

Dilutive earnings per security from continuing operations (cents)

Dilutive earnings per security from discontinued operations (cents)

Dilutive earnings per security (cents)

b. Per Security Attributable to Parent

Loss attributable to securityholders ($’000)

Weighted average number of securities outstanding (thousands):

Issued securities

Dilutive securities

Performance quantum rights

Retention quantum rights

Weighted average number of issued and dilutive potential securities outstanding
(thousands)

Basic earnings per security (cents)

Dilutive earnings per security (cents)

1.7

0.1

1.8

1.7

0.1

1.8

0.6

(2.6)

(2.0)

0.5

(2.5)

(2.0)

(2,734)

(1,245)

646,603

509,716

2,310

1,818

3,842

1,818

650,731

515,376

(0.4)

(0.2)

(1) Prior year weighted average number of securities and EPS have been adjusted in accordance with AASB 133 “Earnings per Share (“AASB

133”). The weighted average number of securities on issue for the current year, prior to the rights issue in September 2013, has also been
adjusted as required by AASB 133.

5. REVENUE

a. Rental Income

Residential rental income – Garden Villages

Residential rental income – Settlers Lifestyle

Residential rental income – Active Lifestyle Estates

Short-term rental income – Active Lifestyle Estates

Total rental income

b. Other Property Income

Government incentives

Commissions and administrative fees

Linen fees

Land transfer duty refund

Sundry income

Utility recoveries

Total other property income

6. FINANCE EXPENSE

Interest paid or payable

Finance lease interest paid or payable (1)

Total finance expense

Annual Report 2014

2014
$’000

2013
$’000

21,032

1,025

4,231

5,355

17,432

1,362

437

31,643

19,287

219

239

170

622

263

306

1,819

2014
$’000

4,189

257

4,446

127

426

138

–

181

–

872

2013
$’000

6,076

6,112

(1) Finance lease interest relates to a long term lease with Gosford City Council for the land and facilities of Ettalong Holiday Village and long

term Crown leases in relation to One Mile Beach Holiday Park. Refer to Note 15(b).

7. INCOME TAX BENEFIT

a. Income Tax Beneﬁt

Current tax

Decrease in deferred tax liabilities

Income tax benefit

b. Reconciliation between Tax Expense and Pre-Tax Proﬁt

Profit before income tax

Less amounts not subject to Australian income tax

Income tax at the Australian tax rate of 30% (2013: 30%)

ICMT tax consolidation impact

Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:

¶Prior period income tax return true-ups

¶Movements in carrying value and tax cost base of investment properties

¶Movements in carrying value and tax cost base of DMF receivables

¶Other timing differences

¶Non-recognition of Australian tax losses

Income tax benefit

2014
$’000

2013
$’000

7,180

7,264

3,684

(14,741)

(11,057)

3,317

2,823

613

1,163

(1,232)

580

–

7,264

(84)

451

367

2,461

(7,365)

(4,904)

1,471

–

(52)

(80)

(907)

289

(354)

367

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

7. INCOME TAX BENEFIT (CONTINUED)

c. Tax Consolidation
Effective from 1 July 2011, ICH and its Australian domiciled wholly owned subsidiaries formed a tax consolidation group with
ICH being the head entity. Under the tax funding agreement the funding of tax within the tax group is based on taxable
income as if that entity was not a member of the tax group.

Effective from 1 July 2012, ICMT and its Australian domiciled owned subsidiaries formed a tax consolidation group with ICMT
being the head entity. Under the tax funding agreement the funding of tax within the tax group is based on taxable income
as if that entity was not a member of the tax group.

Upon entering into the ICMT tax consolidated group, the tax cost bases for certain assets were reset resulting in income tax
beneﬁts being recorded. In addition, unrecognised losses incurred by entities within the ICMT tax consolidated group are
now available for utilisation by the ICMT tax consolidated group resulting in an additional income tax beneﬁt being recorded.

8. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

a. Assets Held for Sale

i. Details of assets held for sale
Prior to 30 June 2014, the Group entered into discussions with a third party regarding the sale of Noyea Riverside Village
(“Noyea”). Noyea was included within the Settlers Lifestyle segment. Settlement on the sale of Settlers Lifestyle Noyea was
completed on 31 July 2014 at an adjusted sales price of $5.4 million resulting in $nil gain or loss recognised upon completion.

ii. Assets held for sale
The following is the breakdown of the assets held for sale at Noyea:

Investment property

Deferred management fee receivable

b. Discontinued Operations

Note

12(b)

16(b)

2014
$’000

–

5,439

i. Details of discontinued operations
The Group’s investment in the New Zealand Students business has been classiﬁed as a discontinued operation since 30 June
2011, which is consistent with the previously announced strategy to focus on transitioning to an actively managed Australian
seniors living business. The Group holds a 100% interest in three facilities in Wellington, New Zealand that are primarily
leased for 15 years to Victoria University of Wellington and Wellington Institute of Technology.

The Group has completed a sales campaign and terms have been agreed with a global real estate investment ﬁrm. Following
divestment of these operations the proceeds will be reinvested into its Australian lifestyle parks business.

The comparative ﬁgures include results from certain properties held is the United States, which had been classiﬁed
as discontinued operations since November 2009. The Group completely exited US operations in February 2013 with
some funds remaining in escrow. During the current year, the Group received US$6.8 million of escrows and based on
an assessment of remaining amounts due an additional gain of $0.3 million has been booked.

Annual Report 2014

ii. Financial performance
The ﬁnancial performance of components of the Group disposed of or classiﬁed as discontinued operations was:

Revenue

Net loss on change in fair value of Investment properties

Unrealised net foreign exchange gain/(loss)

Other income

Expenses

Distributions from formerly equity accounted investments

Disposal costs associated with overseas investments

Profit/(loss) from operating activities before income tax

Income tax expense

Profit/(loss) from operating activities

Gain on sale of discontinued operations

Release of foreign currency translation reserve on disposal of foreign operations

Profit/(loss) from discontinued operations for the year

2014
$’000

3,210

(1,630)

1,557

–

(2,864)

274

(290)

257

(14)

243

327

–

570

2013
$’000

5,295

(2,783)

(718)

(4,746)

2,350

(672)

(1,243)

(1,002)

(2,245)

6,590

(17,463)

(13,118)

Proﬁt/(loss) from discontinued operations attributable to the Company for periods ending 30 June 2014 and 30 June 2013
is $nil.

iii. Cash ﬂows
The cash ﬂows of components of the Group disposed of or classiﬁed as discontinued operations were:

Net cash flow from operating activities

Net cash flows from investing activities:

¶(Payments)/proceeds on sale of discontinued operations

¶Additions to investment properties

¶Payments for lease arrangements

Net cash flow from financing activities

Transfer to continuing operations

Net cash flows from discontinued operations

2014
$’000

1,135

2013
$’000

1,156

(120)

64,349

(9,081)

(13,665)

(745)

11,449

–

2,638

–

(26,285)

(29,786)

(4,231)

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

8. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE (CONTINUED)

iv. Assets and liabilities
The assets and liabilities of components of the Group classiﬁed as disposal groups at each reporting date were:

Assets

Cash and cash equivalents

Trade and other receivables

Investment properties

Total assets

Liabilities

Bank overdraft

Payables

Borrowings

Total liabilities

Net assets of disposal groups

Note

2014
$’000

2013
$’000

1,657

45,902

47,657

–

368

30,081

30,449

17,208

974

259

35,343

36,576

1,955

2,051

17,522

21,528

15,048

The change in investment properties increased for the year due to capitalised expenditure of $7.8 million, lease incentive
payments of $0.4 million and foreign exchange gain of $4.0 million offset by a fair value loss of $1.6 million.

v. Capital commitments
There were no capital commitments under construction contracts for the New Zealand Students business for the year
ended 30 June 2014 (2013: A$9,208,234).

vi. Capitalisation rate
The weighted average capitalisation rate of the New Zealand Students internal valuation within discontinued operations
is 8.6% (2013: 7.75%).

9. CASH AND CASH EQUIVALENTS

Cash at bank and in hand

Reconciliation to statements of cash flows

Cash and cash equivalents attributable to:

Continuing operations – cash at bank

Discontinued operations – cash at bank

Discontinued operations – bank overdraft

Cash at the end of the year as per cash flow statement

2014
$’000

12,894

2013
$’000

38,531

12,894

1,657

–

14,551

38,531

974

(1,955)

37,550

10. TRADE AND OTHER RECEIVABLES

Current

Other receivables

Prepayments and deposits

Total current trade and other receivables

Non-current

Accrued income, prepayments and deposits

Annual Report 2014

2014
$’000

2013
$’000

291

3,454

3,745

278

8,511

8,789

2,168

2,671

Rental amounts due are typically paid in advance and other amounts due are receivable within 30 days. There are no
receivables which are neither past due nor impaired.

11. INVENTORIES

Current assets

Manufactured homes

12. INVESTMENT PROPERTIES

a. Summary of Carrying Amounts

Completed properties

Land not yet under construction

2014
$’000

2013
$’000

2,208

285

2014
$’000

495,048

3,815

2013
$’000

367,116

3,815

498,863

370,931

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

12. INVESTMENT PROPERTIES (CONTINUED)

b. Individual Valuations and Carrying Amounts

Cost to
date
$’000

Latest
external
valuation
date

Date of
purchase

Valuation
$’000

2014
$’000

2013
$’000

2014
%

2013
%

CARRYING
AMOUNT

CAPITALISATION
RATE

Property

Location

Completed properties

Garden Villages

Yakamia Gardens

Yakamia, WA

Jun 04

5,459 Dec 12

2,900

2,730

2,500

10.0%

7.5%

Mardross Gardens

Albury, NSW

Jun 04

5,610

Jun 14

2,400

2,320

10.0%

5.5%(2)

Seville Grove Gardens Seville Grove, WA

Jun 04

4,559 Dec 12

3,400

3,390

3,240

10.5%

9.8%

Hertford Gardens

Sebastopol, VIC

Jun 04

4,119

Jun 14

3,770

3,780

10.8%

10.5%

Carey Park Gardens

Bunbury, WA

Jun 04

4,944 Dec 12

2,600

3,520

2,840

11.0%

10.0%

Jefferis Gardens

Bundaberg North, QLD Jun 04

4,992 Dec 13

2,600

3,480

2,720

11.0%

10.0%

Claremont Gardens

Claremont, TAS

Jun 04

4,293 Dec 13

3,320

3,230

2,900

10.5%

9.5%

Taloumbi Gardens

Coffs Harbour, NSW Jun 04

5,072 Dec 12

4,200

4,170

4,020

10.5%

10.3%

Devonport Gardens

Devonport, TAS

Jun 04

4,028 Dec 12

2,500

2,100

2,120

9.0%

5.3%(2)

Wheelers Gardens

Dubbo, NSW

Jun 04

4,362 Dec 13

3,800

4,300

3,950

10.0%

10.5%

Elphinwood Gardens

Launceston, TAS

Jun 04

4,464 Dec 12

2,750

2,910

2,740

10.5%

10.0%

Glenorchy Gardens

Glenorchy, TAS

Jun 05

4,164 Dec 13

3,250

3,370

3,010

10.5%

10.0%

Chatsbury Gardens

Goulburn, NSW

Jun 04

4,828 Dec 13

2,940

3,430

3,340

10.5%

10.0%

Grovedale Gardens

Grovedale, VIC

Jun 05

4,960 Dec 12

3,600

4,010

4,090

10.5%

Horsham Gardens

Horsham, VIC

Jun 04

4,467

Jun 14

3,300

3,170

10.8%

10.0%

Sea Scape Gardens

Erskine, WA

Jun 04

4,577 Dec 12

4,200

4,170

4,180

11.0%

10.3%

Marsden Gardens

Marsden, QLD

Jun 05

10,375 Dec 12

8,150

8,380

7,900

12.5%

10.5%

Coburns Gardens

Brookfield, VIC

Jun 04

4,355 Dec 12

3,000

3,290

3,260

10.5%

Brooklyn Gardens

Brookfield, VIC

Jun 04

4,186 Dec 12

2,400

3,270

2,790

10.5%

9.5%

Oxley Gardens

Port Macquarie, NSW Jun 04

4,416 Dec 12

2,600

3,120

2,320

10.5%

10.0%

Townsend Gardens

St Albans Park, VIC

Jun 04

4,811

Jun 14

3,800

3,390

St Albans Park Gardens St Albans Park, VIC

Jun 04

5,099

Jun 14

4,140

4,030

11.0%

9.8%

10.5%

Swan View Gardens

Swan View, WA

Jan 06

7,888 Dec 12

5,650

5,990

5,780

11.5%

10.3%

Taree Gardens

Taree, NSW

Dec 04

4,635 Dec 12

2,400

2,320

2,950

9.0%

10.0%

Dubbo Gardens

Dubbo, NSW

Dec 12

2,700 Dec 13

3,290

2,670

2,652

10.3%

5.3%(2)

Ocean Grove Gardens Mandurah, WA

Feb 13

3,161 Dec 13

3,280

3,100

3,015

10.8%

11.0%

Peel River Gardens

Tamworth, NSW

Mar 13

3,642 Dec 13

2,970

2,040

3,464

9.0%

7.3%(2)

Sovereign Gardens

Ballarat, VIC

Jun 13

3,321

Jun 14

3,100

3,265

10.5%

5.3%(2)

Wagga Gardens

Wagga Wagga, NSW Jun 13

4,010

Jun 14

3,930

3,953

12.0%

11.8%

Bathurst Gardens

Bathurst, NSW

Jan 14

2,405

Jun 14

2,580

Launceston Gardens

Launceston, TAS

Jan 14

2,462

Jun 14

Shepparton Gardens

Shepparton, VIC

Jan 14

1,668

Jun 14

Murray River Gardens Mildura, VIC

Jan 14

2,316

Jun 14

2,510

1,780

2,170

2,510

1,780

2,170

Warrnambool Gardens Warrnambool, VIC

Jan 14

1,933

Jun 14

1,800

–

9.0%

8.0%

7.5%

8.0%

–

148,281

114,270 99,689

Annual Report 2014

Property

Location

Settlers Lifestyle

Cost to
date
$’000

Latest
external
valuation
date

Date of
purchase

Valuation
$’000

2014
$’000

2013
$’000

2014
%

2013
%

CARRYING
AMOUNT

DISCOUNT RATE

Forest Lake

Forest Lake, QLD

Nov 05

14,324

Jun 13

12,662

14,194

12,663

16.7%

15.0%

South Gladstone

South Gladstone, QLD Nov 05

8,212

Jun 13

12,093

12,534

12,093

15.0%

Rockhampton

Rockhampton, QLD

Nov 05

10,785 Dec 13

13,900

14,314

13,768

17.9%

14.7%

Cessnock

Lakeside

Cessnock, NSW

Jun 04

7,476 Dec 12

3,190

6,009

4,871

19.0%

16.1%

Ravenswood, WA

Apr 07

71,167 Dec 12

77,584 77,242

78,673

14.2%

13.5%

Noyea Riverside

Mt Warren Park, QLD Apr 07

2,521 Dec 12

549

–(3)

324

13.8%

14.5%

Meadow Springs

Mandurah, WA

Apr 07

18,430

Jun 13

17,066

16,510

17,066

14.0%

14.5%

Ridgewood

Ridgewood, WA

Apr 07

85,378

Jun 13

105,104 103,552 105,104

14.3%

13.5%

Ridge Estate

Gillieston Heights, NSW Jul 12

10,174

–

11,765

5,471

20.0%

15.0%

228,467

256,120 250,033

Active Lifestyle Estates

CAPITALISATION
RATE

The Grange

Morisset, NSW

Mar 13

12,895 Dec 13

12,129

11,848

12,293

9.1%

Ettalong Beach Holiday
Village(1)

Ettalong Beach, NSW

Apr 13

5,581 Dec 13

5,850

5,811

5,101

21.0%

Albury Citygate
Caravan and Tourist
Park

Nepean River Holiday
Village

Mudgee Valley Tourist
Park

Mudgee Tourist and
Van Resort

Albury, NSW

Aug 13

2,697

Jun 14

2,000

Penrith, NSW

Aug 13

10,932

Jun 14

11,000 11,000

Mudgee, NSW

Sep 13

4,519

Jun 14

4,250

Mudgee, NSW

Oct 13

7,911

Jun 14

7,200

Drifters Holiday Village Kingscliff, NSW

Nov 13

11,511

Lake Macquarie Holiday
Village

Morisset, NSW

Nov 13

7,683

Macquarie Lakeside
Holiday Village

Chain Valley Bay, NSW Dec 13

4,045

One Mile Beach Holiday
Park(4)

Anna Bay, NSW

Dec 13

11,975

Cessnock, NSW

Feb 14

9,782

Cessnock, NSW

Feb 14

1,665

Mulwala, NSW

Apr 14

7,708

Marsden Park, NSW

May 14

19,444

Rouse Hill, NSW

Jun 14

7,362

Big4 Valley Vineyard
Tourist Park

Wine Country Caravan
Park

Sun Country Holiday
Village

Town and Country
Estate

Rouse Hill Lifestyle
Residential Park

Total completed
properties

–

11,511

7,683

4,045

13,349

9,782

1,665

7,708

19,444

7,362

125,710

502,458

124,658

17,394

495,048 367,116

–

10.5%

10.4%

10.5%

8.8%

–(5)

–

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

12. INVESTMENT PROPERTIES (CONTINUED)

Property

Location

Land not yet under construction

Settlers

CARRYING
AMOUNT

Cost to
date
$’000

Latest
external
valuation
date

Date of
purchase

Valuation
$’000

2014
$’000

2013
$’000

South Gladstone Gardens – land

South Gladstone, QLD

Nov 05

199

Jun 13

750

Meadow Springs

Active Lifestyle Estates

Mandurah, WA

Apr 07

2,470

Jun 13

2,455

The Grange

Morisset, NSW

Ettalong Beach Holiday Village (1)

Ettalong Beach, NSW

Land not yet under construction

Total Investment Properties

Mar 13

Apr 13

300

310

3,279

–

300

310

300

310

3,815

505,737

498,863 370,931

(1) Ettalong Beach Holiday Village land component is leased from the Gosford City Council and is recognised as investment property with

an associated ﬁnance lease.

(2) The replacement value exceeds the value implied by the capitalisation rate valuation approach resulting in implied capitalisation rates

below market.

(3) Noyea Park was classiﬁed as held for sale at 30 June 2014. Refer to Note 8(a) for additional information.

(4) One Mile Beach land component is leased from the Crown under 40 year and perpetual leases and is recognised as investment property

with an associated ﬁnance lease.

(5) Acquired during the year and carried at cost at balance date. Cost to date is deemed to represent fair value at the end of the year.

Investment property that has not been valued by external valuers at reporting date is carried at the Responsible Entity’s
estimate of fair value in accordance with the accounting policy detailed at Note 1(q). Properties acquired during the year are
held at cost, which is reﬂective of the estimate of fair value.

Valuations made in a foreign currency have been converted at the rate of exchange ruling at valuation date which are
subsequently translated at exchange rates prevailing at reporting date.

Valuations of retirement villages are provided net of residents’ loans (after deducting any accrued deferred management
fees). For presentation in this note, the external valuations shown are stated before deducting this liability to reﬂect its
separate balance sheet presentation. The carrying amounts include the fair value of units completed since the date of the
external valuation.

Select Settlers Lifestyle villages continue to be in the process of converting from a rental to a deferred management fee
model. The discount rate reﬂects a combination of development risk on vacant units and DMF from both occupied and
vacant units. Over time, these properties’ discount rates will likely revert downwards as project risk diminishes.

c. Movements in Carrying Amounts

Carrying amount at beginning of year

Acquisitions

Expenditure capitalised

Disposals

Sale of units – Strata title

Transferred from plant and equipment

Transfer to inventory

Transferred to discontinued operations

Net gain/(loss) on change in fair value

Carrying amount at end of year

2014
$’000

370,931

118,303

10,336

–

(492)

320

(194)

–

(341)

2013
$’000

327,632

39,313

4,076

(3,140)

–

(195)

(212)

3,457

498,863

370,931

The net change in fair value are recognised in proﬁt or loss as net gain/(loss) on change in fair value of investment properties.

Fair value hierarchy disclosures for investment properties have been provided in Note 28.

Annual Report 2014

Garden
Villages
$’000

Settlers
Lifestyle
$’000

Active
Lifestyle
Estates
$’000

99,689

253,238

18,004

–

107,686

10,617

1,588

–

7,182

(492)

–

1,566

–

320

(194)

(2,114)

Total
$’000

370,931

118,303

10,336

(492)

320

(194)

(341)

d. Reconciliation of Fair Value

Carrying amount at 1 July 2013

Acquisitions

Expenditure capitalised

Sale of units – Strata title

Transferred from plant and equipment

Transferred to inventory

Net gain/(loss) on change in fair value

2,376

(603)

Carrying amount at 30 June 2014

114,270

259,325

125,268

498,863

e. Description of Valuations Techniques used and Key Inputs to Valuation on Investment Properties

Valuation
technique

Significant
unobservable
inputs

Range
(weighted
average)

Relationship of
unobservable
input to fair value

Garden
Villages

Capitalisation
method

Stabilised
occupancy

62-98% (87%)

As costs are fixed in nature, occupancy has a direct
correlation to valuation (i.e. the higher the occupancy,
the greater the value).

Capitalisation rate 8-13% (11%)

Capitalisation has an inverse relationship to valuation.

Settlers
Lifestyle

Discounted
cash flow

Current market
value per unit

$115,000-$470,000
($307,000)

Market value and growth in value have a direct
correlation to valuation, while length of stay and
discount rate have an inverse relationship to valuation.

Growth in value

0-4%

Average length
of stay – future
residents

Average length
of stay – current
residents

11.4 years

14.6 years

Discount rate

14-20% (15%)

Active
Lifestyle
Estates

Capitalisation
method (for
existing rental
streams)

Short-term
occupancy

Residential
occupancy

Operating profit
margin

15-70% based on
seasonality and
accommodation
categories

90-100%

50-70% dependent
upon short-term
and residential
accommodation mix

Higher the occupancy, the greater the value.

Higher the profit margin, the greater the value.

Capitalisation rate 9-12%

Capitalisation has an inverse relationship to valuation.

Discount rate

15-25%

Discount rate has an inverse relationship to valuation.

Discounted
cash flow
(for future
development)

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

12. INVESTMENT PROPERTIES (CONTINUED)

Capitalisation Method
Under the capitalisation method, fair value is estimated using assumptions regarding the expectation of future beneﬁts.
The capitalisation method involves estimating the expected income projections of the property into perpetuity and applying
a capitalisation rate. The capitalisation rate is based on current market evidence. Future income projections take into account
occupancy, rental income and operating expenses.

The duration of the cash ﬂows and the speciﬁc timing of inﬂows and outﬂows are determined by events such as rent
reviews, lease renewal and related re-letting, redevelopment, or refurbishment as well as the development of new units.
The appropriate duration is typically driven by market behaviour that is a characteristic of the class of real property. Periodic
cash ﬂow is typically estimated as gross income less vacancy, non-recoverable expenses, collection losses, lease incentives,
maintenance cost, agent and commission costs and other operating and management expenses. The series of periodic net
underlying cash ﬂows, along with an estimate of the terminal value anticipated at the end of the projection period, is then
discounted.

13. PLANT AND EQUIPMENT

a. Summary of Carrying Amounts

Plant and equipment

Less: accumulated depreciation

Total plant and equipment

b. Movements in Carrying Amount

Carrying amount at beginning of year

Acquired through acquisitions

Assets written off

Transferred to investment property

Additions

Depreciation

Carrying amount at end of year

14. TRADE AND OTHER PAYABLES

Current liabilities

Trade and other payables

Deposits and other unearned income

Total current liabilities

Non-current liabilities

Deferred land payment

2014
$’000

2013
$’000

1,880

(890)

990

1,034

–

(82)

(320)

569

(211)

990

1,774

(740)

1,034

769

320

–

(173)

296

(178)

1,034

2014
$’000

2013
$’000

8,814

1,595

10,409

8,175

384

8,559

4,000

–

15. BORROWINGS

Current liabilities

Finance leases

Non-current liabilities

Bank debt

Prepaid borrowing costs

Finance leases

Total non-current borrowings

Annual Report 2014

Note

2014
$’000

2013
$’000

(c)

(a)

(c)

283

267

94,000

68,000

(312)

4,385

98,073

(578)

3,117

70,539

a. Bank Debt
On 21 February 2014, the Group reﬁnanced its Australian dollar denominated bank debt facility to $129,500,000. The facility
expires on 30 September 2015 and has the following principal ﬁnancial covenants:

Loan to value ratio (“LVR”) is less than or equal to 50%;

–
– Total leverage ratio does not exceed 50%; and
–

Interest cover ratio (as deﬁned) of at least 1.50x in ﬁnancial year ending 2014 increasing to at least 1.75x in FY2015.

As at 30 June 2014, the facility has been drawn to $94,000,000 (2013: $68,000,000). The carrying value of investment
property net of resident liabilities at reporting date for the Group’s Australian properties pledged as security is
$290,375,000 (2013: $179,320,000).

b. Bank Guarantees
The Group has the ability to utilise a portion of its $129.5 million bank facility to provide bank guarantees. Bank guarantees
at 30 June 2014 were $4.4 million. Refer to Note 24.

c. Finance Leases
On 23 April 2013, the Group was assigned a commercial lease with 16.5 years remaining with the Gosford City Council for
land and facilities as part of its Ettalong Beach Holiday Village acquisition. The lease is for an initial three years commencing
September 2012 with two renewal options of seven years each. The below table is based on the expectation that the lease
options will be exercised.

In December 2013, the Group acquired One Mile Beach Holiday Park, accounted for as investment property. Two Crown
leases are attached to the land, one for 40 years expiring on 19 September 2031 and one for perpetuity.

i. Minimum lease payments – excluding perpetual lease

Minimum lease payments:

Within one year

Later than one year but not later than five years

Later than five years

Total minimum lease payments

Future finance charges

Present value of minimum lease payments

Present value of minimum lease payments:

Within one year

Later than one year but not later than five years

Later than five years

2014
$’000

2013
$’000

292

1,242

3,761

5,295

(1,765)

3,530

283

1,056

2,191

3,530

267

1,135

3,766

5,168

(1,784)

3,384

258

962

2,164

3,384

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

15. BORROWINGS (CONTINUED)

ii. Minimum lease payments – perpetual lease
The perpetual lease is recognised as investment property and non-current liability at a value of $1.1 million based on
a capitalisation rate of 10.6% applied to the current lease payment. Payments each period in relation to the lease are
recognised as ﬁnance expenses in the statement of comprehensive income, therefore, there is no subsequent change
to the originally determined present value of the minimum lease payments as calculated above.

As this is a perpetual lease, the lease liability will not amortise and no fair value adjustments in relation to the lease will
be recognised unless circumstances of the lease change. Under the terms of the lease, lease payments will continue
into perpetuity. The current annual lease payment is $121,000.

16. RETIREMENT VILLAGE RESIDENT LOANS

a. Summary of Carrying Amounts

Gross resident loans

Accrued deferred management fee

Net resident loans

b. Movements in Carrying Amounts

Carrying amount at beginning of year

Net (gain)/loss on change in fair value of resident loans

Accrued deferred management fee income

Deferred management fee cash collected

Acquired resident loans

Proceeds from resident loans

Repayment of resident loans

Transfer to assets held for sale

Other

Carrying amount at end of year

Fair value hierarchy disclosures for retirement village resident loans have been provided in Note 28.

2014
$’000

2013
$’000

218,639

206,629

(28,517)

(30,926)

190,122

175,703

162,603

616

(5,333)

1,811

–

22,021

(10,361)

5,439

226

(327)

(4,850)

1,368

4,473

19,338

(7,118)

–

216

190,122

175,703

2014
$’000

2013
$’000

718

249

507

140

Note

2014
$’000

2013
$’000

–

209

17. PROVISIONS

Current liabilities

Employee liabilities

Non-current liabilities

Employee liabilities

18. DERIVATIVES

Current liabilities

Interest rate swap contracts

Non-current liabilities

Interest rate swap contracts

19. DEFERRED TAX LIABILITIES

Deferred tax assets

Tax losses

Other

Deferred tax liabilities

DMF receivable

Investment properties

Net deferred tax liabilities

Annual Report 2014

2014
$’000

2013
$’000

14,228

1,081

8,176

7,409

276

8,317

430

6,756

9,461

7,470

Deductible temporary differences and carried forward losses tax effected for which no
deferred tax asset has been recognised

7,488

4,220

The availability of carried forward tax losses of $7.5 million to the ICMT tax consolidated group is subject to recoupment
rules at the time of recoupment. Further, the rate at which these losses can be utilised is determined by reference to market
values at the time of tax consolidation and subsequent events. Accordingly, a portion of these carried forward tax losses
may not be available in the future.

The Group offsets tax assets and liabilities, if and only if, it has a legally enforceable right to set off current tax assets and
current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same
tax authority.

20. ISSUED SECURITIES

a. Carrying Values

At beginning of year

Issued during the year:

¶Institutional placement securities

¶Transaction costs of institutional placement securities

¶Rights issue

¶Rights issue costs

At end of year

The closing balance is attributable to the securityholders of:

¶Ingenia Communities Holding Limited

¶Ingenia Communities Fund

¶Ingenia Communities Management Trust

b. Number of Issued Securities

At beginning of year

Issued during the year

At end of year

2014
$’000

2013
$’000

510,141

490,044

–

61,707

(2,732)

21,168

(1,071)

–

569,116

510,141

7,377

6,078

547,642

497,957

14,097

569,116

6,106

510,141

2014
Thousands

2013
Thousands

507,179

169,061

676,240

441,029

66,150

507,179

c. Terms of Securities
All securities are fully paid and rank equally with each other for all purposes. Each security entitles the holder to one vote,
in person or by proxy, at a meeting of securityholders.

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

21. RESERVES

Foreign currency translation reserve

Balance at beginning of year

Translation differences arising during the year

Amounts transferred to profit and loss on disposal of foreign operations

Balance at end of year

Share-based payment reserve

Balance at beginning of year

Share-based payment transactions

Balance at end of year

Total reserves at end of year

The closing balance is attributable to the securityholders of:

¶Ingenia Communities Holding Limited

¶Ingenia Communities Fund

¶Ingenia Communities Management Trust

2014
$’000

2013
$’000

766

269

–

1,035

308

680

988

2,023

988

866

169

2,023

(17,024)

327

17,463

766

293

308

1,074

308

646

120

1,074

The foreign currency translation reserve records exchange differences arising from the translation of the ﬁnancial statements
of foreign subsidiaries.

The share-based payment reserve records the value of equity-settled share-based payment transactions provided to
employees, including key management personnel, as part of their remuneration. Refer Note 25.

22. ACCUMULATED LOSSES

Balance at beginning of year

Net profit/(loss) for the year

Distributions

Balance at end of year

The closing balance is attributable to the securityholders of:

¶Ingenia Communities Holding Limited

¶Ingenia Communities Fund

¶Ingenia Communities Management Trust

2014
$’000

2013
$’000

(336,563)

(321,863)

11,518

(5,917)

(10,290)

(4,410)

(330,962)

(336,563)

(2,659)

(324,254)

(333,650)

(4,049)

(2,990)

(330,962)

(336,563)

Annual Report 2014

23. COMMITMENTS

a. Capital Commitments
There were commitments for capital expenditure on investment property contracted but not provided for at reporting date
of $3,266,000 (2013: $nil).

For commitments for capital expenditure on discontinued operations, refer to Note 8(b)(v).

b. Operating Lease Commitments
The Group has two non-cancellable operating leases for its Sydney and Brisbane offices. These leases have remaining lives
of 1.5 years and ﬁve years respectively.

Future minimum rentals payable under these leases as at reporting date were:

Within one year

Later than one year but not later than five years

2014
$’000

482

1,106

1,588

2013
$’000

346

395

741

c. Finance Lease Commitments
The Group was assigned a commercial lease with 16.5 years remaining with the Gosford City Council for land and facilities as
part of its Ettalong Holiday Village acquisition. The lease is for an initial three years commencing September 2012 with two
renewal options of seven years each.

Refer to Note 15 for future minimum lease payments payable and the present value of minimum lease payments payable at
reporting date for the ﬁnance leases at Ettalong Holiday Village and One Mile Beach Holiday Park.

24. CONTINGENT LIABILITIES
There are no known contingent liabilities other than the bank guarantees of $4.4 million provided for under the $129.5 million
bank facility (Note 15). Bank guarantees of $4.0 million are in relation to deferred land payments recognised as non-current
payables (refer to Note 14). These guarantees will not be called by the counterparty unless the payable is not paid per the
terms of the agreement.

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

25. SHARE-BASED PAYMENT TRANSACTIONS
The Group has established a long-term incentive scheme (“Scheme”), which provides for the grant of conditional rights to
receive securities in the Group. The intention of the Scheme is to align long-term securityholder returns with the ‘at-risk’
compensation potentially payable to executive level employees and to reward managers who remain in employment and
perform at the required levels of performance.

The Scheme encompasses two types of security rights: performance quantum rights (“PQRs”) and retention quantum
rights (“RQRs”). PQRs vest on completion of a period of service, with the number of rights vesting based on the Group’s
performance, as measured by total securityholder returns, and RQRs vest on completion of a period of service. On vesting,
each right entitles the employee to receive one security of the Group for no consideration.

Movements in rights during the year were:

PQRs

Outstanding at beginning of year

Granted during the year

Outstanding at end of year

Exerciseable at end of year

Weighted average remaining contractual life of outstanding rights (years)

RQRs

Outstanding at beginning of year

Granted during the year

Outstanding at end of year

Exerciseable at end of year (1)

Weighted average remaining contractual life of outstanding rights (years)

2014
Thousands

2013
Thousands

3,842

3,716

7,558

–

1.5

1,818

–

1,818

–

3,842

–

3,842

–

2.0

1,818

–

1,818

–

0.9

(1) The RQRs vested on 1 July 2014 and 1,818,000 fully paid stapled securities were issued at that time.

On 19 November 2013, 3,716,000 Performance Quantum Rights (“PQR”) were granted to senior executives of the Group
under the long-term incentive scheme (“Scheme”). The number of PQRs that will vest under the Scheme depends on Total
Securityholder Return (“TSR”) achieved and is also conditional on the individual being in employment of the Group on the
vesting date (30 June 2016). The measurement period for the PQRs is 1 July 2013 to 30 June 2016 and full rights vest if a
TSR above 40% is achieved during the measurement period. A sliding scale applies for lower TSRs with the number of PQRs
vesting being nil for a TSR below 26%. One PQR equates to one security in the Group.

The fair value of the PQRs issued during the year was estimated using a Monte Carlo Simulation model. Assumptions made
in determining these fair value, and the results of these assumptions, are:

Price of stapled securities at grant date

Volatility of security price

Distribution yield

Risk-free rate at grant date

Expected remaining life at grant date

Fair value of each right

$0.495

30.0%

3.93%

2.96%

2.6 years

$0.325

The fair value of the rights is recognised as an employee beneﬁt expense with a corresponding increase in reserves. The
fair value is expensed on a straight-line basis over the vesting period. The expense recognised for the ﬁnancial year was
$680,600 (2013: $293,113).

Annual Report 2014

26. CAPITAL MANAGEMENT
The Group aims to meet its strategic objectives and operational needs and to maximise returns to securityholders through
the appropriate use of debt and equity, while taking account of the additional ﬁnancial risks of higher debt levels.

In determining the optimal capital structure, the Group takes into account a number of factors, including the views of
investors and the market in general, the capital needs of its portfolio, the relative cost of debt versus equity, the execution
risk of raising equity or debt, and the additional ﬁnancial risks of debt including increased volatility of earnings due to
exposure to interest rate movements, the liquidity risk of maturing debt facilities and the potential for acceleration prior to
maturity.

In assessing this risk, the Group takes into account the relative security of its income ﬂows, the predictability of its expenses,
its debt proﬁle, the degree of hedging and the overall level of debt as measured by gearing.

The actual capital structure at a point in time is the product of a number of factors, many of which are market driven and to
various degrees outside of the control of the Group, particularly the impact of revaluations on gearing levels, the availability
of new equity and the liquidity in real estate markets. While the Group periodically determines the optimal capital structure,
the ability to achieve the optimal structure may be impacted by market conditions and the actual position may often differ
from the optimal position.

The Group’s capital position is primarily monitored through its ratio of total liabilities to total assets (“Leverage Ratio”),
calculated on a look-through basis. The Group’s medium term strategy is to maintain the Leverage Ratio in the range of 45%
- 55%. At 30 June 2014, the Leverage Ratio was 58.2%, compared to 62.0% at 30 June 2013, calculated as follows:

Total look-through liabilities

Total look-through assets

Leverage ratio

2014
$’000

2013
$’000

334,747

574,924

58.2%

284,922

459,574

62.0%

In addition, the Group monitors the ratio of debt to total assets (“Gearing Ratio”), calculated on a look-through basis. At 30
June 2014, the Gearing Ratio was 30.7%, compared to 20.6% at 30 June 2013, calculated as follows:

Total consolidated borrowings

Less cash & cash equivalents (including associates)

Total look-through debt

Total consolidated assets

Less cash & cash equivalents

Less retirements village residents loans

Total look-through assets

Gearing ratio

2014
$’000

2013
$’000

128,437

88,328

(14,551)

(37,550)

113,886

50,778

575,924

459,574

(14,551)

(37,550)

(190,122)

(175,703)

371,251

30.7%

246,321

20.6%

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

27. FINANCIAL INSTRUMENTS

a. Introduction
The Group’s principal ﬁnancial instruments comprise cash and short-term deposits, receivables, payables, interest bearing
liabilities, other ﬁnancial liabilities, and derivative ﬁnancial instruments.

The main risks arising from the Group’s ﬁnancial instruments are interest rate risk, foreign exchange risk, credit risk and
liquidity risk. The Group manages its exposure to these risks primarily through its treasury policy. The policy sets out various
targets aimed at restricting the ﬁnancial risk taken by the Group. Management reviews actual positions of the Group against
these targets on a regular basis. If the target is not achieved, or forecast not to be achieved, a plan of action is, where
appropriate, put in place with the aim of meeting the target within an agreed timeframe. Depending on the circumstances
of the Group at a point in time, it may be that positions outside of the treasury policy are accepted and no plan of action is
put in place to meet the treasury targets, because, for example, the risks associated with bringing the Group into compliance
outweigh the beneﬁts. The adequacy of the treasury policy in addressing the risks arising from the Group’s ﬁnancial
instruments is reviewed on a regular basis.

While the Group aims to meet its treasury policy targets, many factors inﬂuence its performance, and it is probable that
at any one time it will not meet all its targets. For example, the Group may be unable to negotiate the extension of bank
facilities sufficiently ahead of time, so that it fails to achieve its liquidity target. When reﬁnancing loans it may be unable to
achieve the desired maturity proﬁle or the desired level of ﬂexibility of ﬁnancial covenants, because of the cost of such terms
or their unavailability. Hedging instruments may not be available, or their cost may outweigh the beneﬁt of risk reduction or
they may introduce other risks such as mark to market valuation risk. Changes in market conditions may limit the Group’s
ability to raise capital through the issue of new securities or sale of properties.

b. Interest Rate Risk
The Group’s exposure to the risk of changes in market interest rates arises primarily from its use of borrowings. The main
consequence of adverse changes in market interest rates is higher interest costs, reducing the Group’s proﬁt. In addition, one
or more of the Group’s loan agreements may include minimum interest cover covenants. Higher interest costs resulting from
increases in market interest rates may result in these covenants being breached, providing the lender the right to call in the
loan or to increase the interest rate applied to the loan.

The Group manages the risk of changes in market interest rates by maintaining an appropriate mix of ﬁxed and ﬂoating rate
borrowings. Fixed rate debt is achieved either through ﬁxed rate debt funding or through derivative ﬁnancial instruments
permitted under the treasury policy. The policy sets minimum and maximum levels of ﬁxed rate exposure over a ten-year
time horizon.

At 30 June 2014, after taking into account the effect of interest rate swaps, approximately 47% of the Group’s borrowings
are at a ﬁxed rate of interest (2013: 26%).

Exposure to changes in market interest rates also arises from ﬁnancial assets such as cash deposits and loan receivables
subject to ﬂoating interest rate terms. Changes in market interest rates will also change the fair value of any interest rate
hedges.

c. Interest Rate Risk Exposure
The Group’s exposure to interest rate risk and the effective interest rates on ﬁnancial instruments at reporting date was:

FIXED INTEREST MATURING IN:

Floating
interest rate

Less than
1 year

1 to 5
Years

More than
5 years

Total

30 June 2014

Principal amounts $’000

Financial assets

Cash at bank

Financial liabilities

Bank debt denominated in AUD

Finance leases (excluding perpetual lease)

–

283

1,056

2,191

Interest rate swaps:

- denominated in AUD; Group pays fixed rate

(45,000)

45,000

–

12,894

94,000

–

12,894

94,000

3,530

Annual Report 2014

The Group’s exposure to interest rate risk and the effective interest rates on ﬁnancial instruments at the end of the previous
ﬁnancial year was:

30 June 2013

Principal amounts $’000

Financial assets

Cash at bank

Financial liabilities

Bank debt denominated in AUD

Finance leases

Interest rate swaps:

FIXED INTEREST MATURING IN:

Floating
interest rate

Less than
1 year

1 to 5
Years

More than
5 years

Total

38,531

68,000

–

258

962

2,164

38,531

68,000

3,384

- denominated in AUD; Group pays fixed rate

(45,000)

45,000

–

Other ﬁnancial instruments of the Group not included in the above tables are non-interest bearing and are therefore not
subject to interest rate risk.

d. Interest Rate Sensitivity Analysis
The impact of an increase or decrease in average interest rates of 1% (100 basis points) at reporting date, with all other
variables held constant, is illustrated in the tables below. This analysis is based on the interest rate risk exposures in existence
at balance sheet date. As the Group has no derivatives that meet the documentation requirements to qualify for hedge
accounting, there would be no impact on securityholders interest (apart from the effect on proﬁt).

i. Increase in average interest rates of 1%
The effect on net interest expense for one year would have been:

Variable interest rate instruments denominated in:

¶Australian dollars

The effect on change in fair value of derivatives would have been:

Interest rate swaps denominated in:

¶Australian dollars

EFFECT ON PROFIT AFTER
TAX HIGHER/(LOWER)

2014
$’000

2013
$’000

(940)

(680)

EFFECT ON PROFIT AFTER
TAX HIGHER/(LOWER)

2014
$’000

2013
$’000

417

793

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

27. FINANCIAL INSTRUMENTS (CONTINUED)

ii. Decrease in average interest rates of 1%
The effect on net interest expense for one year would have been:

Variable interest rate instruments denominated in:

¶Australian dollars

The effect on change in fair value of derivatives would have been:

Interest rate swaps denominated in:

¶Australian dollars

EFFECT ON PROFIT AFTER
TAX HIGHER/(LOWER)

2014
$’000

2013
$’000

940

680

EFFECT ON PROFIT AFTER
TAX HIGHER/(LOWER)

2014
$’000

2013
$’000

(297)

(810)

e. Foreign Exchange Risk
By holding properties in offshore markets, the Group is exposed to the risk of movements in foreign exchange rates.
Foreign exchange rate movements may reduce the Australian dollar equivalent of the carrying value of the Group’s offshore
properties, and may result in lower Australian dollar equivalent proceeds when an offshore property is sold. In addition,
foreign exchange rate movements may reduce the Australian dollar equivalent of the earnings from the offshore properties
while they are owned by the Group.

The Group reduces its exposure to the foreign exchange risk inherent in the carrying value of its offshore properties and
interests in offshore investments by partly or wholly funding their acquisition using borrowings denominated in the particular
offshore currency, and by using derivatives. The treasury policy sets a target for minimum and maximum hedging of the
carrying value of its offshore properties.

The Group’s exposure to the impact of exchange rate movements on its earnings from its offshore properties is partly
mitigated by the foreign denominated interest expense of its foreign denominated borrowings and any derivative hedges.
The Group aims to reduce any residual exposure to its earnings arising because of its investment in offshore markets by
using forward exchange contracts. The Treasury Policy sets out targets of minimum and maximum hedging of its earnings
from offshore properties over a ﬁve-year time horizon.

f. Net Foreign Currency Exposure
The Group’s net foreign currency monetary exposure, after taking into account the effect of foreign exchange derivatives,
as at reporting date is shown in the following table. The net foreign currency exposure reported is of foreign currencies held
by entities whose functional currency is the Australian dollar. It excludes assets and liabilities of entities, including equity
accounted investments, whose functional currency is not the Australian dollar.

Net foreign currency exposure:

¶United States dollars

NET FOREIGN CURRENCY
ASSETS/(LIABILITY)

2014
$’000

2013
$’000

157

1,282

Annual Report 2014

g. Foreign Exchange Sensitivity Analysis
The impact of an increase or decrease in average foreign exchange rates of 10% at reporting date, with all other variables
held constant, is illustrated in the tables below. This analysis is based on the foreign exchange risk exposures in existence
at balance sheet date. In these tables, the effect on securityholders interest excludes the effect on proﬁt after tax.

i. Effect of appreciation in Australian dollar of 10%:

Foreign exchange risk exposures denominated in:

¶United States dollars

ii. Effect of depreciation in Australian dollar of 10%:

Foreign exchange risk exposures denominated in:

¶United States dollars

EFFECT ON PROFIT AFTER
TAX HIGHER/(LOWER)

2014
$’000

2013
$’000

(16)

(128)

EFFECT ON PROFIT AFTER
TAX HIGHER/(LOWER)

2014
$’000

2013
$’000

128

The Group believes that the reporting date risk exposures are representative of the risk exposure inherent in its ﬁnancial
instruments.

These tables do not show the effect on equity that would occur from the translation of the ﬁnancial statements of foreign
operations with a change in exchange rates.

h. Foreign Exchange Derivatives Held
Forward exchange contracts, options and foreign exchange swaps outstanding at reporting date are taken out to mitigate
the effect of foreign exchange movements on the ﬁnancial statements.

At balance sheet date, the Group did not hold any foreign exchange derivatives. There was no impact to the consolidated
result for the year for the change in fair value for foreign exchange derivatives ended 30 June 2014 (2013: loss $9,000).

i. Credit Risk
Credit risk refers to the risk that a counterparty defaults on its contractual obligations resulting in a ﬁnancial loss to the
Group.

The major credit risk for the Group is default by tenants, resulting in a loss of rental income while a replacement tenant is
secured and further loss if the rent level agreed with the replacement tenant is below that previously paid by the defaulting
tenant.

The Group assesses the credit risk of prospective tenants, the credit risk of in-place tenants when acquiring properties and
the credit risk of existing tenants renewing upon expiry of their leases. Factors taken into account when assessing credit risk
include the ﬁnancial strength of the prospective tenant and any form of security, for example a rental bond, to be provided.

The decision to accept the credit risk associated with leasing space to a particular tenant is balanced against the risk of the
potential ﬁnancial loss of not leasing up vacant space.

Rent receivable balances are monitored on an ongoing basis and arrears actively followed up in order to reduce, where
possible, the extent of any losses should the tenant subsequently default.

The Group believes that its receivables that are neither past due nor impaired do not give rise to any signiﬁcant credit risk.

Credit risk also arises from deposits placed with ﬁnancial institutions and derivatives contracts that may have a positive value
to the Group. The Group’s treasury policy sets target limits for credit risk exposure with ﬁnancial institutions and minimum
counterparty credit ratings. Counterparty exposure is measured as the aggregate of all obligations of any single legal entity
or economic entity to the Group, after allowing for appropriate set offs which are legally enforceable.

The Group’s maximum exposure to credit risk at reporting date in relation to each class of ﬁnancial instrument is its carrying
amount as reported in the balance sheet.

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

27. FINANCIAL INSTRUMENTS (CONTINUED)

j. Liquidity Risk
The main objective of liquidity risk management is to reduce the risk that the Group does not have the resources available
to meet its ﬁnancial obligations and working capital and committed capital expenditure requirements. The Group’s treasury
policy sets a target for the level of cash and available undrawn debt facilities to cover future committed capital expenditure
in the next year, 75% of forecast net operating cash ﬂow in the next year, six months estimated distributions and 5% of the
value of resident loan liabilities.

The Group may also be exposed to contingent liquidity risk under its term loan facilities, where term loan facilities include
covenants which if breached give the lender the right to call in the loan, thereby accelerating a cash ﬂow which otherwise
was scheduled for the loan maturity. The Group monitors adherence to loan covenants on a regular basis, and the treasury
policy sets targets based on the ability to withstand adverse market movements and remain within loan covenant limits.

In addition, the Group targets the following benchmarks to ensure resilience to breaking covenants on its primary debt
facilities:

–
–

10% reduction in value of assets and 15% fall in the exchange rate for LVR covenants; and

2% nominal increase in interest rates combined with a 5% fall in income for ICR covenants.

The contractual maturities of the Group’s non-derivative ﬁnancial liabilities at reporting date are reﬂected in the following
table. It shows the undiscounted contractual cash ﬂows required to discharge the liabilities at market rates. Foreign
currencies have been converted at rates of exchange ruling at reporting date.

Although the expected average residency term is more than ten years, retirement village residents’ loans are classiﬁed as
current liabilities, as required by Accounting Standards, because the Group does not have an unconditional right to defer
settlement to more than twelve months after reporting date.

2014

Trade and other payables

Retirement village residents loans

Borrowings

Provisions

Finance leases (excluding perpetual lease)

Finance lease (perpetual lease)(1)

2013

Trade and other payables

Retirement village residents loans

Borrowings

Provisions

Finance leases

Less than
1 year
$’000

10,624

190,122

1 to 5
Years
$’000

4,398

–

4,521

99,653

718

292

121

249

1,242

483

More than
5 years
$’000

–

3,761

–

Total
$’000

15,022

190,122

104,174

967

5,295

604

206,398

106,025

3,761

316,184

8,559

175,703

3,271

507

267

–

72,089

140

1,135

188,307

73,364

–

3,766

8,559

175,703

75,360

647

5,168

265,437

(1) For purposes of the table above, the lease payments are included for ﬁve years for the perpetual lease. Refer to Note 15(c)(ii).

The contractual maturities of the Group’s derivative ﬁnancial liabilities at reporting date are reﬂected in the following table.
It shows the undiscounted contractual cash ﬂows required to discharge the instruments at market rates. Foreign currencies
have been converted at rates of exchange ruling at reporting date.

Annual Report 2014

2014

Liabilities

Less than
1 year
$’000

1 to 5
Years
$’000

More than
5 years
$’000

Total
$’000

Derivative liabilities – net settled

2013

Liabilities

Derivative liabilities – net settled

–

209

–

168

209

k. Other Financial Instrument Risk
The Group carries retirement village residents’ loans at fair value with resulting fair value adjustments recognised in the
income statement. The fair value of these loans is dependent on market prices for the related retirement village units.
The impact of an increase or decrease in these market prices of 10% at reporting date, with all other variables held constant,
is shown in the table below. This analysis is based on the retirement village residents’ loans in existence at reporting date.

Increase in market prices of investment properties of 10%

Decrease in market prices of investment properties of 10%

EFFECT ON PROFIT AFTER
TAX HIGHER/(LOWER)

2014
$’000

2013
$’000

(21,864)

(20,700)

21,864

20,700

These effects are largely offset by corresponding changes in the fair value of the Group’s investment properties. The effect
on equity would be the same as the effect on proﬁt.

l. Fair Value
The Group uses the following fair value measurement hierarchy:

Level 1: fair value is calculated using quoted prices in active markets for identical assets or liabilities;

Level 2: fair value is calculated using inputs other than quoted prices included in Level 1 that are observable for the asset

or liability, either directly (as prices) or indirectly (derived from prices); and

Level 3: fair value is calculated using inputs for the asset or liability that are not based on observable market data.

Quoted market price represents the fair value determined based on quoted prices on active markets as at the reporting date
without any deduction for transaction costs.

The following table presents the Group’s ﬁnancial instruments that were measured and recognised at fair value at reporting
date:

Financial assets/
financial liabilities

Valuation technique(s)
and key inputs

Significant
unobservable inputs

Relationship of unobservable
inputs to fair value

Retirement village
resident loans

Deferred
management fee
accrued

Loans measured as the ingoing
resident’s contribution plus
the resident’s share of capital
appreciation to reporting date,
less DMF accrued to reporting
date.

DMF measured using the initial
property price, estimated length
of stay, various contract terms
and projected property price at
time of re-leasing.

Long-term capital appreciation
rates for residential property
between 0-4%.

Estimated length of stay of
residents based on life tables.

The higher the appreciation, the
higher the value of resident loans.
The longer the length of stay, the
lower the value of resident loans.

The longer the length of stay, the
higher the DMF accrued, capped
at a predetermined period of time.

Derivative interest
rate swaps

Net present value of future cash
flows discounted at market rates
adjusted for the Group’s credit
risk.

N/A

There has been no movement from Level 3 to Level 2 during the current period.

Changes in the Group’s retirement village resident loans which are Level 3 instruments are presented in Note 16.

The carrying amounts of the Group’s other ﬁnancial instruments approximate their fair values.

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

28. FAIR VALUE MEASUREMENT
The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities:

a. Assets Measured at Fair Value

30 June 2014

Date of valuation

Investment properties

30 June 2014
Refer to Note 12

Discontinued operations-
investment property

30 June 2014
Refer to Note 8(b)

Assets held for sale – investment
property

30 June 2014
Refer to Note 8(a)

Assets held for sale – deferred
management fee receivable

30 June 2014
Refer to Notes 8(a) and 16

b. Liabilities Measured at Fair Value

30 June 2014

Date of valuation

Retirement village
resident loans

Derivatives

30 June 2014
Refer to Note 16

30 June 2014

FAIR VALUE MEASUREMENT USING

Quoted
prices in
active
markets
(Level 1)
$’000

Significant
observable
inputs
(Level 2)
$’000

Significant
unobservable
inputs
(Level 3)
$’000

–

498,863

45,902

–

5,439

FAIR VALUE MEASUREMENT USING

Quoted
prices in
active
markets
(Level 1)
$’000

Significant
observable
inputs
(Level 2)
$’000

Significant
unobservable
inputs
(Level 3)
$’000

–

190,122

168

–

Total
$’000

498,863

45,902

–

5,439

Total
$’000

190,122

168

There have been no transfers between Level 1 and Level 2 during the year.

c. Fair Value Hierarchy for Financial Instruments Measured at Fair Value as at 30 June 2013:

30 June 2013

Retirement village resident loans

Derivatives

29. AUDITOR’S REMUNERATION

Amounts received or receivable by Ernst & Young for:

¶Audit or review of the financial reports

¶Other audit related services

¶Non-audit related services

Total
$’000

175,703

209

175,912

Level 1
$’000

Level 2
$’000

–

209

Level 3
$’000

175,703

–

175,703

2014
$

2013
$

333,355

277,423

34,450

27,295

32,683

–

395,100

310,106

Annual Report 2014

30. RELATED PARTIES

a. Key Management Personnel
The aggregate compensation paid to Key Management Personnel (“KMP”) of the Group is as follows:

Directors fees

Salaries and other short-term benefits

Short-term incentives

Superannuation benefits

Share-based payment

Note

2014
$

2013
$

462,500

1,094,684

332,235

59,084

680,600

319,167

756,735

182,382

48,957

293,113

2,629,103

1,600,354

The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key
management personnel.

The aggregate PQRs and RQRs (refer to Note 25) of the Group held directly, by KMP, are as follows:

Issue date

2012

2013

Rights

RQR

PQR

Expiry date

2014

2015

2016

31. COMPANY FINANCIAL INFORMATION
Summary ﬁnancial information about the Company is:

Current assets

Total assets

Current liabilities

Total liabilities

Net assets

Securityholders’ equity

¶Issued securities

¶Reserves

¶Accumulated losses

Total securityholders’ equity

Profit from continuing operations

Net profit attributable to securityholders

Total comprehensive income

NUMBER OUTSTANDING

2014

2013

1,818,000

3,842,000

3,716,000

–

2014
$’000

2013
$’000

–

7,870

7,320

550

7,377

988

190

6,459

3,494

3,117

3,342

6,078

308

(7,815)

(3,044)

550

(4,771)

3,342

(3,636)

The Company is a joint guarantor of the Commonwealth Bank of Australia debt facility, which has an outstanding balance of
$94,000,000 at 30 June 2014 (2013: $68,000,000).

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

32. SUBSIDIARIES

a. Names of Subsidiaries
The consolidated ﬁnancial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in Note 1(d):

Name

Bridge Street Trust

Browns Plains Road Trust

Casuarina Road Trust

Edinburgh Drive Trust

Garden Villages Management Trust

INA CC Holdings Pty Ltd

INA CC Pty Ltd

INA Community Living Lynbrook Trust

INA Community Living Subsidiary Trust

INA Community Living Subsidiary Trust No. 2

INA Garden Villages Pty Ltd

INA Kiwi Communities Pty Ltd

INA Kiwi Communities Subsidiary Trust No. 1

INA Management Pty Ltd

INA CC Trust

INA Regency Co Pty Ltd

INA Settlers Co Pty Ltd

INA Sunny Communities Pty Ltd

INA Sunny Trust

Ingenia Communities RE Limited

Jefferis Street Trust

Lovett Street Trust

ILF Regency Operations Trust

ILF Regency Subsidiary Trust

Settlers Operations Trust

Settlers Subsidiary Trust

SunnyCove Gladstone Unit Trust

SunnyCove Rockhampton Unit Trust

Ridge Estate Trust

Taylor Street (2) Trust

INA Subsidiary Trust No.1

INA Subsidiary Trust No.2

INA Subsidiary Trust No.3

INA Operations Pty Ltd

INA Operations Trust No.1

INA Operations Trust No.2

INA Operations Trust No.3

Noyea Pty Ltd

Noyea Operations Pty Ltd

IGC NZ Student Holdings Ltd

INA NZ Subsidiary Trust No 1

OWNERSHIP INTEREST

Country of
residence

2014
%

2013
%

Australia

New Zealand

100

–

100

Name

CSH Lynbrook GP LLC

CSH Lynbrook LP

Lynbrook Freer Street Member LLC

Lynbrook Management, LLC

INA Community Living LLC (formerly ING Community
Living LLC)

Country of
residence

United States of America

INA Community Living II (formerly ING Community Living II)

United States of America

INA US Community Living Fund LLC (formerly ING US
Community Living Fund LLC)

United States of America

The Group’s voting interest in its subsidiaries is the same as its ownership interest.

33. NOTES TO THE CASH FLOW STATEMENT

Reconciliation of proﬁt to net cash ﬂow from operating activities

Net profit for the year

Adjustments for:

¶Net foreign exchange (gain)/loss

¶Release of FCTR on disposal of foreign operations

¶Net loss on disposal of investment properties - continuing

¶Net loss on disposal of investment properties - discontinuing

¶Disposal costs associated with overseas investments - continuing

¶Disposal costs associated with overseas investments - discontinued

¶Gain on disposal of equity accounted investments

¶Net (gain)/loss on change in fair value of:

¶¶Investment properties – continuing

¶¶Investment properties – discontinued

¶¶Derivatives

¶¶Retirement village residents’ loan

¶Income tax expense/(benefit):

¶¶Continuing

¶¶Discontinued

¶Amortisation of intangibles

¶Share-based payments expense

¶Other non-cash items

Annual Report 2014

OWNERSHIP INTEREST

2014
%

2013
%

100

2014
$’000

2013
$’000

11,518

(10,290)

(1,410)

–

290

(327)

341

1,630

(41)

616

(7,264)

–

681

211

718

17,463

107

994

150

672

(7,584)

(3,457)

2,783

(752)

(327)

(367)

1,002

585

293

Operating profit for the year before changes in working capital

6,259

2,025

Changes in working capital:

¶(Increase)/decrease in receivables

¶Increase in inventory

¶Increase in retirement village residents’ loans

¶Increase/(decrease) in other payables and provisions

Net cash provided by operating activities

5,237

(1,923)

6,327

(1,660)

14,240

(3,309)

–

12,220

304

11,240

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued

34. SUBSEQUENT EVENTS

a. RQR Vesting
On 1 July 2014, 1,818,000 Retention Quantum Rights (“RQRs”) granted to KMP in 2012 vested. As a result, 1,818,000 fully paid
stapled securities have been issued to the following KMP:

Simon Owen

Tania Betts

Nicole Fisher

1,070,000

374,000

b. Sale of Noyea
Settlement on the sale of Settlers Lifestyle Noyea was completed on 31 July 2014 at an adjusted sales price of $5.4 million
resulting in $nil gain or loss recognised upon completion.

c. Bank Guarantee
On 1 July 2014, the Group obtained a bank guarantee of $10 million from the bank facility in relation to cash requirements
under the Australian Financial Services Licence.

d. Sale of New Zealand Students Business
On 5 September 2014, the Group announced it had contracted to divest the New Zealand Students business for
consideration of NZ$49.4 million, representing the book value at 30 June 2014. Upon settlement, disposal costs
and a FCTR gain will be released through proﬁt. At 30 June 2014, the FCTR balance was A$1.0 million.

Directors’ Declaration

for the year ended 30 June 2014

Annual Report 2014

In accordance with a resolution of the directors of Ingenia Communities Holdings Limited, I state that:

In the opinion of the directors:

the ﬁnancial statements and notes of Ingenia Communities Holdings Limited for the ﬁnancial year ended 30 June
2014 are in accordance with the Corporations Act 2001, including:

ii.

giving a true and fair view of its ﬁnancial position as at 30 June 2014 and of its performance for the year ended
on that date; and

complying with Accounting Standards (including Australian Accounting Interpretations) and Corporations
Regulations 2001; and

there are reasonable grounds to believe that Ingenia Communities Holdings Limited will be able to pay its debts as
and when they become due and payable.

The ﬁnancial statements and notes also comply with International Financial Reporting Standards as disclosed in
Note 1(b).

This declaration has been made after receiving the declarations required to be made to the directors in accordance with
section 295A of the Corporations Act 2001.

On behalf of the Board

Jim Hazel
Chairman
Sydney, 19 September 2014

Ingenia Communities Holdings Limited

Independent Auditors’ Report

for the year ended 30 June 2014

Annual Report 2014

Ingenia Communities Holdings LimitedIngenia Communities Fund & Ingenia Communities
Management Trust Annual Reports
for the year ended 30 June 2014

Annual Report 2014

Directors’ Report

Auditors’ Independence Declaration

Consolidated Statements of Comprehensive Income

Consolidated Balance Sheets

Consolidated Cash Flow Statements

Statements of Changes in Unitholders’ Interest

Notes to the Financial Statements

1. Summary of signiﬁcant Accounting policies

2. Accounting estimates and judgements

3. Segment information

4. Earnings per unit

5. Finance expense

6. Income tax beneﬁt

7. Discontinued operations and assets held for sale

8. Cash and cash equivalents

9. Trade and other receivables

10. Inventories

11. Investment properties

12. Plant and equipment

13. Trade and other payables

14. Borrowings

15. Retirement village resident loans

16. Provisions

17. Derivatives

18. Deferred tax liabilities

19. Issued units

20. Reserves

21. Accumulated losses

22. Commitments

23. Contingencies

24. Capital management

25. Financial instruments

26. Fair value measurement

27. Auditor’s remuneration

28. Related parties

29. Parent ﬁnancial information

30. Subsidiaries

31. Notes to the cash ﬂow statements

32. Subsequent events

Directors’ Declaration

Independent Auditors’ Report

Securityholder Information

Investor Relations

Corporate Directory

100

107

108

112

113

114

116

117

119

121

122

123

124

125

131

132

135

136

137

138

139

141

142

143

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014

The Ingenia Communities Fund (ARSN 107 459 576)
and the Ingenia Communities Management Trust
(ARSN 122 928 410) are Australian registered schemes.
Ingenia Communities RE Limited (ACN 154 464 990;
Australian Financial Services Licence number 415862),
the Responsible Entity of both Trusts, is incorporated
and domiciled in Australia.

The parent company of Ingenia Communities RE Limited
is Ingenia Communities Holdings Limited (the “Company”).
The shares of the Company and the units of the Trusts are
“stapled” and trade on the Australian Securities Exchange
(“ASX”) as a single security. The Company and the Trusts
along with their subsidiaries are collectively referred to as
the Group in this report.

The directors’ report is a combined directors’ report that
covers both Trusts.

DIRECTORS
The directors of the Ingenia Communities RE Limited at
any time during or since the end of the ﬁnancial year were:

Jim Hazel (Chairman)

Appointed 27 March 2012

Philip Clark AM

Appointed 4 June 2012

Amanda Heyworth

Appointed 16 April 2012

Robert Morrison

Appointed 8 February 2013

Norah Barlow

Appointed 31 March 2014

Simon Owen
(Managing Director and CEO)

Appointed 25 November 2011

PRINCIPAL ACTIVITY
The principal activity of ICF is investment in seniors
living communities in Australia. The principal activities of
ICMT are the development, management and operation
of seniors living communities in Australia. There was no
signiﬁcant change in the nature of either Trust’s activities
during the ﬁnancial year.

OPERATING AND FINANCIAL REVIEW

a. ICF and ICMT Overview
ICF and ICMT are two of the entities forming part of
Ingenia Communities Group which is a triple stapled
structure traded on the ASX.

The Group’s vision is to be a leading Australian provider of
affordable seniors living accommodation whilst delivering
value to all its stakeholders, including strong earnings
growth for securityholders and providing an affordable
community environment for residents.

b. Strategy
The strategies of ICF and ICMT are aligned with the
Group’s strategy of growing its Australian seniors living
portfolio with a focus on the lifestyle parks sector. Using a
disciplined investment framework, the Group is continuing
to increase its exposure to lifestyle parks through targeted
acquisitions and building out its development pipeline. The
Group remains focused on divestment of its non-core New
Zealand Students portfolio and reducing its investment
in DMF assets. It is the Group’s intention to grow its
investment in lifestyle parks through capital recycling,
efficient inventory management and monetisation of stock.

c. FY14 Financial Results
FY14 has been a year of strong acquisitive growth. The
results are underpinned by a signiﬁcantly increased
contribution from the Active Lifestyle Estates and Garden
Villages portfolios following the acquisition of a further
thirteen lifestyle parks and ﬁve rental villages during the
year. Furthermore, ICMT and its subsidiaries formed a tax
consolidation group which is the primary driver for the
$6.5m income tax beneﬁt recorded in ICMT.

During the year, the acquisition of numerous properties
were funded using a mix of debt and equity raised from
a June 2013 institutional placement of $21.2m and a
September 2013 rights issue of $61.7m.

d. Key Metrics
– Net proﬁt for the year of $15.4 million for ICF and a loss

of $1.2 million for ICMT

– Full year distribution of 1.15 cent per security by ICF, nil

for ICMT

These results are reﬂective of execution of the strategy to
divest overseas operations, which is now largely complete,
and redeploy that capital into the Australian market to
generate strong returns for securityholders.

e. Continuing Operations
The key strategic priorities of the continuing operations
are:

–

increase rate of new home delivery within the Active
Lifestyle Estates development pipeline;

– grow occupancy of the Garden Villages portfolio

towards the mid-term target of 92%;

–

sell recently completed homes and explore opportunities
to reduce exposure to the Settlers portfolio; and

invest available capital into further accretive lifestyle
parks.

f. Discontinued Operations
A sales campaign was undertaken for the sale of the New
Zealand Students portfolio and terms have been agreed
with a global real estate investment ﬁrm. The carrying
value of these assets at 30 June 2014 is $45.9m.

Annual Report 2014

b. Sale of Noyea
Settlement on the sale of Settlers Lifestyle Noyea was
completed on 31 July 2014 at an adjusted sales price
of $5.4 million resulting in $nil gain or loss recognised
upon completion.

c. Bank Guarantee
On 1 July 2014, ICF obtained a bank guarantee
of $10 million from the bank facility in relation to
cash requirements under the Australian Financial
Services Licence.

d. Sale of New Zealand Students Business
On 5 September 2014, the Trusts announced they had
contracted to divest the New Zealand Students business
for consideration of NZ$49.4 million, representing the book
value at 30 June 2014. Upon settlement, disposal costs
and a foreign currency translation reserve (“FCTR”) gain
will be released through proﬁt. At 30 June 2014, the FCTR
balance was A$1.0 million.

e. Reﬁnance of Australian Debt
ICF’s current Australian banking facility expires in
September 2015. ICF has recently undertaken a debt
reﬁnance and obtained credit approval for a new
$175 million Australian multilateral banking facility.
This facility will be split between a three year and ﬁve
year maturity proﬁle.

LIKELY DEVELOPMENTS
The Trusts will continue to pursue strategies aimed at
improving cash earnings, proﬁtability and market share
within the seniors living industry during the next ﬁnancial
year, with a strong focus on the development and
acquisition of manufactured home estates.

Other information about certain likely developments in
the operations of the Trusts and the expected results of
those operations in future ﬁnancial years is included in the
various reports in the Ingenia Communities Annual Report.

ENVIRONMENTAL REGULATION
The Trusts’ operations are not subject to any particular
and signiﬁcant environmental regulation under a law of
the Commonwealth or of a State or Territory.

INDEMNITIES
The Trusts have not indemniﬁed, nor paid any insurance
premiums for, a person who is or has been an officer of
the Responsible Entity or an auditor of either Trust.

g. Capital Management
ICF strengthened its capital position by undertaking a
capital raising and renegotiating its core debt facility.

On 23 August 2013, ICF reﬁnanced its Bank of New
Zealand debt facility, which funds the New Zealand
Students portfolio with a NZ$32.7m core debt facility in
place expiring 31 July 2018.

On 17 October 2013, ICF completed a non-renounceable
rights issue to raise $61.7m (excluding transaction costs)
to fund the expansion of lifestyle parks. A total of 169.1m
securities were issued at 36.5 cents each.

ICF has increased its full year distributions to 1.15 cents,
in line with its commitment to grow distributions over
the medium term. The ﬁnal distribution represents a 30%
increase over the previous period.

h. Outlook
The Trusts are well positioned to continue growing their
lifestyle parks business and ICF has agreed indicative terms
for a new multilateral Australian debt facility of $175m,
which replaces the existing facility. Whilst the lead time
from property acquisition to achieving set up for delivery
of the ﬁrst new homes has taken longer than anticipated,
Ingenia is conﬁdent the rate of delivery and settlement
of new homes will continue to slowly build each half and
deliver a much stronger result in FY15.

There will be a strong focus on ﬁnalising divestment
of the New Zealand Students portfolio and exploring
opportunities for recycling capital from the Settlers
Lifestyle portfolio. At the same time, the Trusts will
continue to regularly assess the performance of its
existing assets and where appropriate to recycle that
capital into other opportunities delivering superior returns.

SIGNIFICANT CHANGES IN THE STATE
OF AFFAIRS
Changes in the state of affairs during the ﬁnancial
year are set out in the various reports in this Annual
Report. Refer to Note 7 of the accompanying ﬁnancial
statements for discontinued operations, Note 11 for
Australian investment properties acquired or disposed
of during the year, Note 14 for details of Australian debt
reﬁnanced and Note 19 for units issued.

EVENTS SUBSEQUENT TO REPORTING DATE

a. Retention Quantum Rights Vesting
On 1 July 2014, 1,818,000 Retention Quantum Rights
(“RQRs”) granted to KMP in 2012 vested. As a result
1,818,000 fully paid stapled securities have been issued
to the following KMP:

Simon Owen

1,070,000

Tania Betts

Nicole Fisher

374,000

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2014

INTERESTS OF DIRECTORS OF THE RESPONSIBLE ENTITY
Units in each Trust held by directors of the Responsible Entity as at 30 June 2014 were:

Jim Hazel

Philip Clark AM

Amanda Heyworth

Robert Morrison

Norah Barlow

Simon Richard Owen

Number
of units

Performance
quantum rights

Retention
quantum rights

1,333,334

208,334

561,334

221,667

178,000

–

2,179,667

4,720,000

1,070,000

OTHER INFORMATION
Fees paid to the Responsible Entity and its associates, and the number of units in each Trust held by the Responsible Entity
and its associates as at the end of the ﬁnancial year; are set out in Note 28 in the ﬁnancial report.

AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page 93.

ROUNDING OF AMOUNTS
The Trusts are of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission,
relating to the ‘’rounding off’’ of amounts in this report and in the ﬁnancial report. Amounts in these reports have been
rounded off in accordance with that Class Order to the nearest thousand dollars, unless otherwise stated.

Signed in accordance with a resolution of the directors of the Responsible Entity.

Jim Hazel
Chairman
Sydney, 19 September 2014

Auditors’ Independence Declaration

for the year ended 30 June 2014

Annual Report 2014

Ingenia Communities Holdings Limited

Consolidated Statements
of Comprehensive Income

for the year ended 30 June 2014

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

Note

2014
$’000

2013
$’000

2014
$’000

2013
$’000

Revenue

Rental income

Accrued deferred management fee income

Manufactured home sales

Catering income

Other property income

Interest income

Property expenses

Employee expenses

Administration expenses

Operational, marketing and selling expenses

Manufactured home cost of sales

Finance expense

Net foreign exchange gain/(loss)

Net loss on disposal of investment properties

Net gain/(loss) on change in fair value of:

Investment properties

Derivatives

Retirement village resident loans

(3,955)

(3,841)

(10,145)

9,354

8,439

–

10,339

19,693

(274)

–

(682)

(295)

–

142

3,524

12,105

–

(797)

(96)

–

(147)

–

1,530

–

(107)

1,618

752

–

(1,101)

(185)

31,643

5,333

3,442

3,178

1,819

19,287

4,850

405

2,617

871

45,431

28,044

(20,693)

(16,198)

(11,131)

(2,050)

(2,734)

(2,130)

–

(1,871)

–

(616)

(1,626)

–

(7,565)

6,506

(1,059)

(111)

(1,170)

(111)

(1,059)

(1,170)

(7,226)

(1,439)

(2,189)

(297)

(5,212)

–

1,839

–

327

(1,456)

–

(3,807)

(17)

(3,824)

(7,891)

(11,715)

(3,314)

(8,401)

(11,715)

Responsible Entity’s fees and expenses

(1,170)

Other expenses

–

Profit/(loss) from continuing operations
before income tax

Income tax benefit/(expense)

Profit/(loss) from continuing operations

Profit/(loss) from discontinued operations

Net profit/(loss) for the year

Attributable to unitholders of:

Ingenia Communities Fund

Ingenia Communities Management Trust

14,741

8,385

–

14,741

681

15,422

–

15,422

8,385

(5,715)

2,670

–

2,670

Annual Report 2014

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

Note

2014
$’000

15,422

2013
$’000

2,670

2014
$’000

2013
$’000

(1,170)

(11,715)

Net profit/(loss) for the year

Other comprehensive income, net of income tax:

Items that may be reclassified subsequently
to profit or loss:

Foreign currency translation differences arising
during the year

Release of foreign currency translation reserve
on disposal of foreign operations

Total comprehensive income for the year, net of tax

Total comprehensive income/(loss) for the year is
attributable to:

(226)

1,389

495

(1,064)

–

15,196

15,507

19,566

–

2,444

(675)

(10,335)

Ingenia Communities Fund

15,196

19,566

335

Ingenia Communities Management Trust

–

(1,010)

(2,668)

(7,667)

15,196

19,566

(675)

(10,335)

Distributions per unit

Earnings per unit(1):

Basic earnings from continuing operations

Basic earnings

Diluted earnings from continuing operations

Diluted earnings

Note

2014
Cents

1.0(2)

2.3

2.4

2.3

2.4

2013
Cents

1.0

1.6

0.5

1.6

0.5

2014
Cents

–

(0.2)

2013
Cents

–

(0.8)

(2.3)

(0.7)

(2.3)

(1) Prior period weighted average number of units and earnings per unit have been adjusted in accordance with AASB 133 “Earnings per

Share” (“AASB 133”). The weighted average number of units on issue for the current period, prior to the rights issue in September 2013,
has also been adjusted as required by AASB 133.

(2) Distributions relate to the amount paid during FY14. Subsequent to the end of the year, a ﬁnal distribution was declared for 0.65 cents for

a total full year distribution of 1.15 cents.

Ingenia Communities Holdings Limited

Consolidated Balance Sheets

as at 30 June 2014

Current assets

Cash and cash equivalents

Trade and other receivables

Inventories

Income tax receivable

Assets held for sale

Assets of discontinued operations

Total current assets

Non-current assets

Trade and other receivables

Receivable from related party

Investment properties

Plant and equipment

Total non-current assets

Total assets

Current liabilities

Trade and other payables

Borrowings

Retirement village resident loans

Provisions

Derivatives

Provision for income tax

Payable to related party

Liabilities of discontinued operations

Total current liabilities

Non-current liabilities

Trade and other payables

Borrowings

Provisions

Derivatives

Deferred tax liabilities

Total non-current liabilities

Total liabilities

Net assets

Equity

Issued units

Reserves

Accumulated losses

Unitholders’ interest

Non-controlling interest

Total equity

Attributable to unitholders of:

Ingenia Communities Fund

Ingenia Communities Management Trust

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

Note

2014
$’000

2013
$’000

2014
$’000

2013
$’000

2,658

4,280

–

975

–

3,874

11,787

39,334

135,805

134,488

239

309,866

321,653

31,014

9,204

–

882

–

3,874

44,974

39,472

31,870

120,167

339

191,848

236,822

1,210

1,569

–

3,893

3,131

2,208

–

5,439

47,657

62,328

–

1,229

2,819

285

–

36,576

40,909

438

–

364,375

250,764

180

364,595

426,923

547

251,749

292,658

8,480

3,461

6,305

3,589

190,122

175,703

590

–

133,249

30,449

507

–

126

30,769

21,527

1,294

1,569

366,380

238,526

–

93,688

67,422

–

93,772

95,066

226,587

–

209

–

67,631

69,200

167,622

4,000

41,883

249

–

1,433

47,565

–

40,475

140

–

7,855

48,470

413,945

286,996

12,978

5,662

547,642

497,956

(226)

–

14,097

169

6,106

120

(320,829)

(330,334)

(4,049)

(2,990)

226,587

167,622

–

226,587

167,622

226,587

167,662

–

226,587

167,622

10,217

2,761

12,978

2,761

10,217

12,978

3,236

2,426

5,662

2,426

3,236

5,662

Consolidated Cash Flow Statements

for the year ended 30 June 2014

Annual Report 2014

Cash flows from operating activities

Rental and other property income

Payment of management fees (including arrears)

Property and other expenses

Proceeds from resident loans

Repayment of resident loans

Proceeds from manufactured home sales

Payments for manufactured homes

Distributions received from equity accounted investments

Interest received

Borrowing costs paid

Income taxes received/(paid)

Cash flows from investing activities

Payments for plant and equipment

Additions to investment properties

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

Note

2014
$’000

2013
$’000

2014
$’000

2013
$’000

–

43,274

29,478

(29)

(167)

(51)

(210)

(30,286)

(21,487)

–

295

205

(4,123)

(125)

–

2,353

243

22,021

(10,361)

3,511

(4,035)

19,338

(7,118)

450

(275)

–

(5,249)

(1,689)

(1,836)

(76)

–

(3,799)

(2,906)

22,428

18,437

–

(2)

(81)

(474)

(150)

(329)

(18,723)

(16,416)

Proceeds/(costs) from sale of investment properties

1,321

3,030

(120)

26,292

Payments for investment properties

(10,452)

(23,315)

(102,803)

(7,708)

Amounts received from/(advanced to) villages

Payments for lease arrangements

Proceeds of equity accounted investments

–

5,695

(3,438)

37,560

16,720

(745)

116

(122,353)

(330)

(699)

–

810

Cash flows from financing activities

Proceeds from the issue units

Payment for issue costs

Internalisation costs

Distributions to unitholders

Receipts from derivatives

Payments for derivatives

Finance lease payments

(Repayment of)/proceeds from borrowings with related
parties

(100,124)

Proceeds from borrowings

Repayment of borrowings

Payment of borrowing costs

Net increase/(decrease) in cash

Cash at beginning of the year

Effects of exchange rate changes on cash

Cash at the end of the year

61,707

(2,528)

–

18,170

(907)

(600)

(5,885)

(4,235)

–

1,650

(150)

–

94,000

16,261

–

(243)

2,900

(145)

–

(81)

(13)

108,231

–

(68,000)

(33,195)

(2,581)

(27,749)

(142)

(586)

(75)

–

(20,972)

(3,592)

105,251

(25,007)

(28,209)

31,014

(147)

2,658

10,222

20,777

31,014

5,326

248

(24)

5,550

(5,760)

6,029

(21)

248

Ingenia Communities Holdings Limited

Statements of Changes
in Unitholders’ Interest

for the year ended 30 June 2014

INGENIA COMMUNITIES FUND

ATTRIBUTABLE TO UNITHOLDERS

Note

Issued
capital
$’000

Reserves
$’000

Retained
earnings
$’000

Total
$’000

Non-
controlling
interest
$’000

Total
equity
$’000

Carrying amounts at
1 July 2012

Net profit for the year

Other comprehensive
income

Total comprehensive
income for the year

Transactions with unitholders
in their capacity as
unitholders:

Placement securities

Distributions paid
or payable

Carrying amounts at
30 June 2013

Net profit for the year

Other comprehensive
income

Total comprehensive
income for the year

Transactions with unitholders
in their capacity as
unitholders:

Placement securities

Distributions paid
or payable

Carrying amounts at
30 June 2014

480,693

(16,896)

(328,594)

135,203

–

2,670

16,896

–

16,896

2,670

19,566

17,263

–

497,956

–

17,263

(4,410)

(330,334)

167,622

15,422

(226)

–

(226)

15,422

15,196

49,686

–

49,686

(5,917)

547,642

(226)

(320,829)

226,587

–

135,203

2,670

16,896

19,566

17,263

(4,410)

167,622

15,422

(226)

15,196

49,686

(5,917)

226,587

Annual Report 2014

INGENIA COMMUNITIES MANAGEMENT TRUST

ATTRIBUTABLE TO UNITHOLDERS

Note

Issued
capital
$’000

Reserves
$’000

Retained
earnings
$’000

Total
$’000

Non-
controlling
interest(1)
$’000

Total
equity
$’000

Carrying amounts at
1 July 2012

Net profit for the year

Other comprehensive
income

Total comprehensive
income for the year

Transactions with unitholders
in their capacity as
unitholders:

3,351

(614)

5,411

8,148

5,094

13,242

–

(8,401)

(3,314)

(11,715)

734

–

734

646

1,380

734

(8,401)

(7,667)

(2,668)

(10,335)

Placement securities

2,755

Carrying amounts at
30 June 2013

Net loss for the year

Other comprehensive
income

Total comprehensive
income for the year

Transactions with unitholders
in their capacity as
unitholders:

6,106

–

120

–

2,755

–

2,755

(2,990)

3,236

2,426

5,662

(1,059)

(111)

(1,170)

–

(1,059)

(1,010)

446

335

495

(675)

Placement securities

7,991

–

7,991

–

7,991

Carrying amounts at
30 June 2014

14,097

169

(4,049)

10,217

2,761

12,978

(1) Non-controlling interest relates to the portion in which ICF owns subsidiaries consolidated within ICMT.

100 Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2014

1. SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES

a. The Trusts
The Ingenia Communities Fund (“ICF” or the “Fund”)
(ARSN 107 459 576) and the Ingenia Communities
Management Trust (“ICMT”) (ARSN 122 928 410)
(together the “Trusts”) are Australian registered schemes.
Ingenia Communities RE Limited (ACN 154 464 990;
Australian Financial Services Licence number 415862),
the Responsible Entity of the Trusts, is incorporated and
domiciled in Australia.

The parent company of Ingenia Communities RE Limited
is Ingenia Communities Holdings Limited (the “Company”).
The shares of the Company and the units of the Trust are
“stapled” and trade on the Australian Securities Exchange
(“ASX”) as a single security. The Company and the Trust
along with their subsidiaries are collectively referred to as
the Group in this report.

The stapling structure will cease to operate on the ﬁrst
to occur of:

–

the Company or either of the Trusts resolving by
special resolution in accordance with its constitution
to terminate the stapling provisions; or

the commencement of the winding up of the Company
or either of the Trusts.

b. Basis of Preparation
The ﬁnancial report is a general purpose ﬁnancial report
that has been prepared in accordance with Australian
Accounting Standards (“AASB”), Australian Interpretations,
other authoritative pronouncements of the Australian
Accounting Standards Board (the “Board”) and the
Corporations Act 2001.

As permitted by Class Order 05/642, issued by the
Australian Securities and Investments Commission, this
ﬁnancial report is a combined ﬁnancial report that presents
the ﬁnancial statements and accompanying notes of both
the Ingenia Communities Fund and Ingenia Communities
Management Trust. The ﬁnancial statements and
accompanying notes of the Trusts have been presented in
the attached associated ﬁnancial report.

The ﬁnancial report complies with Australian Accounting
Standards as issued by the Australian Accounting
Standards Board and International Financial Reporting
Standards (“IFRS”) as issued by the International
Accounting Standards Board.

The ﬁnancial report is presented in Australian dollars and
all values are rounded to the nearest thousand dollars
($’000) unless otherwise stated.

The ﬁnancial report is prepared on an historical cost
basis, except for investment properties, retirement village
residents’ loans and derivative ﬁnancial instruments,
which are measured at fair value.

As at 30 June 2014, ICMT recorded a net current asset
deﬁciency of $304,052,000. This deﬁciency includes
retirement village resident loans of $190,122,000,
liabilities from discontinued operations of $30,449,000
and payables to other entities within the Group of
$133,249,000. Resident loan obligations of the Trusts are
classiﬁed as current liabilities due to the demand feature
of these obligations despite the unlikely possibility that the
majority of the loans will be settled within the next twelve
months. Furthermore, if required, the proceeds from new
resident loans could be used by the Group to settle its
existing loan obligations should those incumbent residents
vacate their units. Intercompany loan balances are payable
on demand, however ICF has undertaken not to call its
loan receivable from ICMT within twelve months of the
date of this report, if calling the loan would result in ICMT
being unable to pay its debts as and when they are due
and payable.The liabilities of the discontinued operations
consist mainly of borrowings of $30,081,000 related to
a facility with the Bank of New Zealand, which has been
reﬁnanced recently for a ﬁve year period and will be repaid
upon disposal of the corresponding assets. Accordingly,
there are reasonable grounds to believe that ICMT will
be able to pay its debts as and when they become due
and payable; and the ﬁnancial report of ICMT has been
prepared on a going concern basis.

c. Adoption of New and Revised

Accounting Standards

– AASB 10 ”Consolidated Financial Statements” and AASB
2011-7 “Amendments to Australian Accounting Standards
arising from consolidation and Joint Arrangements
standards”;

– AASB 13 ‘Fair Value Measurement’ and AASB 2011-8
‘Amendments to Australian Accounting Standards
arising from AASB 13’;

– AASB 119 ‘Employee Beneﬁts’ (2011) and AASB 2011-10
‘Amendments to Australian Accounting Standards
arising from AASB 119 (2011);

– AASB 2012-2 ‘Amendments to Australian Accounting

Standards-Disclosures-Offsetting Financial Assets and
Financial Liabilities’

– AASB 2011-4 ‘Amendments to Australian Accounting
Standards to Remove Individual Key Management
Personnel Disclosure Requirements’

Annual Report 2014

101

The impact of application of each Standard is as follows:

Accounting Standard

Impact on the Group

AASB 10 and AASB 2011-7 AASB 10 amends the definition of control such that an investor controls an investee when
a) it has power over an investee; b) it is exposed, or has rights, to variable returns from its
involvement with the investee and c) has the ability to use its power to affect its returns.
All three conditions have to be met for an investor to have control.

The application of the standard did not have any impact on the Group.

AASB 13 and AASB 2011-8 AASB 13 establishes a single source of guidance for fair value measurements and disclosures
about fair value. The standard is broad in scope and applies to both financial instrument and
non-financial instrument items with the exception of a few items like share-based payments
and leases, which are covered by other standards. AASB 13 defines fair value as the price that
would be received to sell an asset or liability in an orderly transaction in the principal (or the
most advantageous) market at the measurement date under current market conditions.
Valuations made are categorised into three levels based on the inputs used. However,
regardless of the valuation methodology applied, fair value represents the exit price in relation
to the asset or liability. The standard applies prospectively from 1 January 2013.

The Group has applied requirements of the Standard in all its valuations in particular of
investment properties. Additionally, the disclosure requirements of the standard, which
includes information about assumptions made and the qualitative impact of those assumptions
on fair value, have been complied with.

AASB 119 and AASB 2011-10 AASB 119 amends the definition of short-term employee benefits, with the distinction now

AASB 2012-2

being based on whether the benefits are expected to be settled within 12 months after
reporting date (short-term benefit). Long term employee benefits are required to be measured
using the actuarial valuation method. The method involves projecting future cash flows and
discounting back to present value. This requirement applies to the annual leave balance for the
Group. The application of the standard’s requirement for both current and previous periods did
not result in amendment to the figures disclosed, as the changes were not material.

AASB 2011-4

The standard amends AASB 124 ‘Related Party Disclosures’ to remove individual key
management personnel disclosures required by Australian specific paragraphs. The application
of the standard did not have any financial impact on the Group.

d. Principles of Consolidation
ICF’s consolidated ﬁnancial statements comprise the parent and its subsidiaries. ICMT’s consolidated ﬁnancial statements
comprise ICMT and its subsidiaries. Subsidiaries are all those entities (including special purpose entities) whose ﬁnancial
and operating policies a trust has the power to govern, so as to obtain beneﬁts from their activities.

The ﬁnancial statements of the subsidiaries are prepared for the same reporting period as the parent, using consistent
accounting policies. Adjustments are made to bring into line dissimilar accounting policies. Inter-company balances and
transactions including unrealised proﬁts have been eliminated.

Subsidiaries are consolidated from the date on which the parent obtains control. They are de-consolidated from the date
that control ceases.

Investments in subsidiaries are carried at cost in the parent’s ﬁnancial statements.

102 Ingenia Communities Holdings Limited

Notes to the Financial Statements
Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued
for the year ended 30 June 2014

1. SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (CONTINUED)

e. Business Combinations and Goodwill
Business combinations are accounted for using the
acquisition method. The cost of an acquisition is measured
as the aggregate of the consideration transferred,
measured at acquisition date fair value and the amount
of any non-controlling interest in the acquiree. For each
business combination, the Trusts elect whether it measures
the non-controlling interest in the acquiree either at fair
value or at the proportionate share of the acquiree’s
identiﬁable net assets. Acquisition costs incurred are
expensed and included in other expenses.

When the Trusts acquire a business, they assess the
ﬁnancial assets and liabilities assumed for appropriate
classiﬁcation and designation in accordance with the
contractual terms, economic circumstances and pertinent
conditions as at the acquisition date.

f. Discontinued Operations and Assets Held for Sale
The Trusts have classiﬁed certain components as
discontinued operations. A discontinued operation is a
component of the entity that has been disposed of or is
classiﬁed as held for sale and that represents a separate
major line of business or geographical area of operations,
or is part of a single co-ordinated plan to dispose of such
a line of business or area of operations. The results of
discontinued operations are presented separately on the
face of the income statement.

Non-current assets classiﬁed as held for sale, and the
assets of a disposal group classiﬁed as held for sale are
presented separately from the other assets on the face
of the balance sheet. The liabilities of a disposal group
classiﬁed as held for sale are presented separately from
other liabilities on the face of the balance sheet.

Details of discontinued operations and assets held
for sale are given at Note 7.

g. Distributions
A liability for any distribution declared on or before the end
of the reporting period is recognised on the balance sheet
in the reporting period to which the distribution pertains.

h. Foreign Currency

i. Functional and presentation currencies
The functional currency and presentation currency
of the Trusts and their subsidiaries, other than foreign
subsidiaries, is the Australian dollar.

ii. Translation of foreign currency transactions
Transactions in foreign currency are initially recorded in
the functional currency at the exchange rate prevailing at
the date of the transaction. Monetary assets and liabilities
denominated in foreign currency are retranslated at
the rate of exchange prevailing at the balance date. All
differences in the consolidated ﬁnancial report are taken
to the income statement with the exception of differences
on foreign currency borrowings designated as a hedge
against a net investment in a foreign entity. These are taken
directly to equity until the disposal of the net investment at
which time they are recognised in the income statement.

A non-monetary item that is measured at fair value in a
foreign currency is translated using the exchange rates
at the date when the fair value was determined.

iii. Translation of ﬁnancial statements of foreign

subsidiaries

The functional currency of certain subsidiaries is not the
Australian dollar. At reporting date, the assets and liabilities
of these entities are translated into the presentation
currency of the Trusts at the rate of exchange prevailing
at balance date. Financial performance is translated at
the average exchange rate prevailing during the reporting
period. The exchange differences arising on translation are
taken directly to the foreign currency translation reserve
in equity.

On disposal of a foreign entity, the deferred cumulative
amount recognised in equity relating to that foreign
operation is recognised in the income statement.

i. Leases
Finance leases, which transfer to the Trusts substantially
all the risks and beneﬁts incidental to ownership of the
leased item, are capitalised at the inception of the lease at
the fair value of the leased asset or, if lower, at the present
value of the minimum lease payments. Lease payments are
apportioned between the ﬁnance charges and reduction
of the lease liability to achieve a constant rate of interest
on the remaining balance of the liability. Finance charges
are recognised as an expense in the income statement.

Finance leases, which transfer away from the Trusts
substantially all the risks and beneﬁts incidental to
ownership of the leased item, are recognised at the
inception of the lease. A ﬁnance lease receivable is
recognised on inception at the present value of the
minimum lease receipts. Finance lease receipts are
apportioned between the interest income and reduction
in the lease receivable to achieve a constant rate of interest
on the remaining balance of the receivable. Interest is
recognised as income in the income statement.

Annual Report 2014 103

l. Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet and cash
ﬂow statement comprise cash at bank and in hand and
short-term deposits that are readily convertible to known
amounts of cash and are subject to an insigniﬁcant risk of
changes in value.

m. Trade and Other Receivables
Trade and other receivables are recognised initially at
fair value and subsequently measured at amortised cost
using the effective interest method, less any provision
for impairment. An allowance for impairment is made
when there is objective evidence that collection of the
full amount is no longer probable.

n. Inventories
The Trusts hold inventory in relation to the acquisition and
development of manufactured homes within their Active
Lifestyle Estates segment.

Inventories are held at the lower of cost and net realisable
value.

Net realisable value is determined on the basis of an
estimated selling price in the ordinary course of business
less estimated costs of completion and the estimated
costs necessary to make the sale.

o. Derivative Financial Instruments
The Trusts use derivative ﬁnancial instruments such
as foreign currency contracts and interest rate swaps
to hedge its risks associated with foreign currency
and interest rate ﬂuctuations. Such derivative ﬁnancial
instruments are initially recognised at fair value on the date
in which the derivative contract is entered into and are
subsequently remeasured to fair value.

Leases of properties that are classiﬁed as investment
properties, are classiﬁed as ﬁnance leases under AASB 140
Investment Properties.

j. Financial Assets and Liabilities
Current and non-current ﬁnancial assets and liabilities
within the scope of AASB 139 Financial Instruments:
Recognition and Measurement are classiﬁed as at fair
value through proﬁt or loss; loans and receivables; held-
to-maturity investments; or as available-for-sale. The
Trusts determine the classiﬁcation of their ﬁnancial assets
and liabilities at initial recognition with the classiﬁcation
depending on the purpose for which the asset or liability
was acquired or issued. Financial assets and liabilities are
initially recognised at fair value, plus directly attributable
transaction costs unless their classiﬁcation is at fair value
through proﬁt or loss. They are subsequently measured
at fair value or amortised cost using the effective interest
method. Changes in fair value of available-for-sale ﬁnancial
assets are recorded directly in equity. Changes in fair
values of ﬁnancial assets and liabilities classiﬁed as at fair
value through proﬁt or loss are recorded in the income
statement.

The fair values of ﬁnancial instruments that are actively
traded in organised ﬁnancial markets are determined
by reference to quoted market bid prices at the close of
business on the balance sheet date. For those with no
active market, fair values are determined using valuation
techniques. Such techniques include: using recent arm’s
length market transactions; reference to the current market
value of another instrument that is substantially the same;
discounted cash ﬂow analysis and option pricing models,
making as much use of available and supportable market
data as possible and keeping judgemental inputs to a
minimum.

k. Impairment of Non-Financial Assets
Assets other than investment property and ﬁnancial assets
carried at fair value are tested for impairment whenever
events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment
loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value
less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest
levels for which there are separately identiﬁable cash
inﬂows that are largely independent of the cash inﬂows
from other assets or groups of assets. Non-ﬁnancial assets
excluding goodwill which have suffered impairment are
reviewed for possible reversal of the impairment at each
reporting date.

104 Ingenia Communities Holdings Limited

Notes to the Financial Statements
Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued
for the year ended 30 June 2014

1. SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (CONTINUED)

p. Investment Property
Land and buildings have the function of an investment
and are regarded as composite assets. In accordance with
applicable accounting standards, the buildings, including
plant and equipment, are not depreciated.

Investment property includes property under construction
and tourism cabins.

It is the Trusts’ policy to have all investment properties
externally valued at intervals of not more than two years
and that such valuation be reﬂected in the ﬁnancial reports
of the Trusts. It is the policy of the responsible trust to
review the fair value of each investment property every six
months and to cause investment properties to be revalued
to fair values whenever their carrying value materially
differs to their fair values.

q. Payables
Trade and other payables are carried at amortised cost and
due to their short-term nature are not discounted. They
represent liabilities for goods and services provided to the
Trusts prior to the end of the ﬁnancial year that are unpaid
and are recognised when the Trusts become obliged to
make future payments in respect of the purchase of these
goods and services. The amounts are unsecured and are
usually paid within 60 days of recognition.

r. Retirement Village Resident Loans
These loans, which are non-interest bearing and repayable
on the departure of the resident, are classiﬁed as ﬁnancial
liabilities at fair value through proﬁt and loss with resulting
fair value adjustments recognised in the income statement.
The fair value of the obligation is measured as the
ingoing contribution plus the resident’s share of capital
appreciation to reporting date. Although the expected
average residency term is more than ten years, these
obligations are classiﬁed as current liabilities, as required
by Accounting Standards, because the Trusts do not have
an unconditional right to defer settlement to more than
twelve months after reporting date.

This liability is stated net of deferred management fee
accrued to reporting date, because the Trusts contracts
with residents require net settlement of those obligations.

Refer to Notes 25(k) and 1(y) for information regarding the
valuation of retirement village resident loans.

s. Borrowings
Borrowings are initially recorded at the fair value of
the consideration received less directly attributable
transaction costs associated with the borrowings. After
initial recognition, borrowings are subsequently measured
at amortised cost using the effective interest rate
method. Under this method fees, costs, discounts and
premiums that are yield related are included as part of the
carrying amount of the borrowing and amortised over its
expected life.

Borrowings are classiﬁed as current liabilities unless
the Trusts do not have an unconditional right to
defer settlement to more than twelve months after
reporting date.

t. Issued Units
Issued and paid up units are recognised at the fair value of
the consideration received by the Trusts. Any transaction
costs arising on issue of ordinary units are recognised
directly in unitholders’ interest as a reduction of the units
proceeds received.

u. Revenue
Revenue from rents, interest and distributions is recognised
to the extent that it is probable that the economic beneﬁts
will ﬂow to the entity and the revenue can be reliably
measured. Revenue brought to account but not received at
balance date is recognised as a receivable.

Deferred management fee income is calculated as the
expected fee to be earned on a residents ingoing loan,
allocated pro-rata over the resident’s expected tenure,
together with any share of capital appreciation that has
occurred at reporting date.

Interest income is recognised as the interest accrues using
the effective interest rate method.

Annual Report 2014 105

v. Provisions, Including for Employee Beneﬁts

i. General
Provisions are recognised when the Trusts have a
present obligation (legal or constructive) as a result of
a past event, it is probable that an outﬂow of resources
embodying economic beneﬁts will be required to settle
the obligation and a reliable estimate can be made of the
amount of the obligation. When the Trusts expect some
or all of a provision to be reimbursed, for example, under
an insurance contract, the reimbursement is recognised
as a separate asset, but only when the reimbursement
is virtually certain. The expense relating to a provision
is presented in the statement of proﬁt or loss net of any
reimbursement.

iii. Long service leave
The liability for long service leave is recognised and
measured as the present value of expected future
payments to be made in respect of services provided by
employees up to the reporting date using the projected
unit credit method. Consideration is given to expected
future wage and salary levels, experience of employee
departures, and periods of service. Expected future
payments are discounted using market yields at the
reporting date on national government bonds with terms
to maturity and currencies that match, as closely as
possible, the estimated future cash outﬂows.

w. Income Tax

i. Current income tax
Under the current tax legislation, the Fund is not liable to
pay Australian income tax provided that its taxable income
(including any assessable capital gains) is fully distributed
to unitholders each year. Tax allowances for building and
ﬁxtures depreciation are distributed to unitholders in the
form of the tax-deferred component of distributions.

x. Goods and Services Tax (“GST”)
Revenue, expenses and assets (with the exception of
receivables) are recognised net of the amount of GST to
the extent that the GST is recoverable from the taxation
authority. Where GST is not recoverable, it is recognised as
part of the cost of the acquisition, or as an expense.

Receivables and payables are stated inclusive of GST. The
net amount of GST recoverable from or payable to the tax
authority is included in the balance sheet as an asset or
liability.

y. Fair Value Measurement
The Trusts measure ﬁnancial instruments, such as,
derivatives, and non-ﬁnancial assets such as investment
properties, at fair value at each balance sheet date. Also,
fair values of ﬁnancial instruments measured at amortised
cost are disclosed in Note 26.

–
–

In the principal market for the asset or liability, or

In the absence of a principal market, in the most
advantageous market for the asset or liability.

However, ICMT and its subsidiaries are subject to Australian
income tax.

The principal or the most advantageous market must be
accessible to the Trusts.

The subsidiaries that hold the Trusts foreign properties
may be subject to corporate income tax and withholding
tax in the countries in which they operate. Under
current Australian income tax legislation, unitholders
may be entitled to receive a foreign tax credit for this
withholding tax.

106 Ingenia Communities Holdings Limited

Notes to the Financial Statements
Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued
for the year ended 30 June 2014

1. SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (CONTINUED)

The Trusts use valuation techniques that are appropriate
in the circumstances and for which sufficient data are
available to measure fair value, maximising the use of
relevant observable inputs and minimising the use of
unobservable inputs.

All assets and liabilities for which fair value is measured
or disclosed in the ﬁnancial statements are categorised
within the fair value hierarchy, described as follows, based
on the lowest level input that is signiﬁcant to the fair value
measurement as a whole:

–

Level 1 — Quoted (unadjusted) market prices in active
markets for identical assets or liabilities

Level 2 — Valuation techniques for which the lowest level
input that is signiﬁcant to the fair value measurement is
directly or indirectly observable

Level 3 — Valuation techniques for which the lowest level
input that is signiﬁcant to the fair value measurement is
unobservable

For assets and liabilities that are recognised in the ﬁnancial
statements on a recurring basis, the Trusts determine
whether transfers have occurred between Levels in
the hierarchy by re-assessing categorisation (based on
the lowest level input that is signiﬁcant to the fair value
measurement as a whole) at the end of the reporting
period.

The Trusts’ Audit and Risk Committee determines the
policies and procedures for both recurring fair value
measurement, such as investment properties and resident
loans and for non-recurring measurement.

On a six monthly basis management presents valuation
results to the Audit and Risk Committee and the
Trusts’ auditors. This includes a discussion of the major
assumptions used in the valuations.

For the purpose of fair value disclosures, the Trusts have
determined classes of assets and liabilities on the basis of
the nature, characteristics and risks of the asset or liability
and the level of the fair value hierarchy as explained above.

z. Pending Accounting Standards
AASB 9 Financial Instruments is applicable to reporting
periods beginning on or after 1 January 2018. The Group
has not early adopted this standard. This standard provides
requirements for the classiﬁcation and measurement of
ﬁnancial assets and accounting for ﬁnancial liabilities.
These requirements seek to improve and simplify the
requirements listed in AASB 139 Financial Instruments:
Recognition and Measurement. The Group is currently
evaluating the impact of this standard.

AASB 2012-3 “Amendments to Australian Accounting
Standards- Offsetting Financial Assets and Liabilities” is
applicable for annual ﬁnancial periods beginning on or
after 1 January 2014. The standard makes amendments
to AASB 132 “Financial Instruments- Presentation” as a
result of the issuance of International Financial Reporting
Standard “Offsetting Financial Assets and Financial
Liabilities” and provides application guidance to certain
criteria mentioned in AASB 132. The application of the
Standard does not have any impact on the results of the
Group as retirement village resident loans are already
offset as there is a current legally enforceable right and
there is an intention to settle on a net basis.

AASB 2014-1 Amendments to Australian Accounting
Standards is applicable for periods beginning on or after
1 July 2014. This standard clariﬁes that judgement is
needed to determine whether an acquisition of investment
property is solely the acquisition of an investment property
or whether it is an acquisition of a group of assets or a
business combination within the scope of AASB 3 Business
Combinations that includes an investment property. The
Trusts are currently making an assessment about this
classiﬁcation for each investment property acquired,
therefore no impact is expected from this change except
for additional disclosures regarding judgements and
estimates.

aa. Current versus Non-Current Classiﬁcation
The Trusts present assets and liabilities in the balance sheet
based on current/non-current classiﬁcation. An asset is
current when it is:

– Expected to be realised or intended to be sold or

consumed in the normal operating cycle

– Held primarily for the purpose of trading
– Expected to be realised within twelve months after the

reporting period, or

– Cash or cash equivalents unless restricted from being

exchanged or used to settle a liability for at least twelve
months after reporting period.

All other assets are classiﬁed as non-current.

A liability is current when:

–
–
–

It is expected to be settled in the normal operating cycle

It is held primarily for the purpose of trading

It is due to be settled within twelve months after the
reporting period, or

– There is no unconditional right to defer the settlement of
the liability for at least twelve months after the reporting
period.

The Group classiﬁes all other liabilities as non-current.

Deferred tax assets and liabilities are classiﬁed as non-
current assets and liabilities.

Annual Report 2014 107

2. ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of ﬁnancial statements requires the use
of certain critical accounting estimates. It also requires the
Responsible Entity to exercise its judgement in the process
of applying the Trusts accounting policies. The areas
involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are signiﬁcant to
the ﬁnancial statements are disclosed below.

a. Critical Accounting Estimates and Assumptions
The Trusts make estimates and assumptions concerning
the future. The resulting accounting estimates, by
deﬁnition, will seldom equal the related actual results. The
estimates and assumptions that have a signiﬁcant risk of
causing a material adjustment to the carrying amounts
of assets and liabilities within the next ﬁnancial year are
discussed below.

i. Valuation of investment property
The Trusts have investment properties with a combined
carrying amount of $498,863,000 (2013: $370,931,000)
(refer Note 11), and combined retirement village residents’
loans with a carrying amount of $190,122,000 (2013:
$175,703,000) which together represent the estimated
fair value of the Trusts interest in retirement villages.
In addition, the Trusts hold investment properties with
carrying amounts of $45,902,000 (2013: $35,343,000)
which are included in assets of discontinued operations.
These carrying amounts reﬂect certain assumptions about
expected future rentals, rent-free periods, operating
costs and appropriate discount and capitalisation rates.
The valuation assumptions for deferred management fee
villages reﬂect assumptions relating to average length of
stay, unit market values, estimates of capital expenditure,
contract terms with residents, discount rates and projected
property growth rates. In forming these assumptions,
the Responsible Entity considered information about
current and recent sales activity, current market rents, and
discount and capitalisation rates, for properties similar
to those owned by the Trusts, as well as independent
valuations of the Trusts’ property.

ii. Fair value of derivatives
The fair value of derivative assets and liabilities is based
on assumptions of future events and involves signiﬁcant
estimates. Given the complex nature of these instruments
and various assumptions that are used in calculating
mark-to-market values, the Trusts rely on counterparty
valuations for derivative values. The counterparty
valuations are usually based on mid-market rates and
calculated using the main variables including the forward
market curve, time and volatility.

iii. Valuation of assets acquired in business

combinations

Upon recognising the acquisition, management uses
estimations and assumptions of the fair value of assets
and liabilities assumed at the date of acquisition, including
judgements related to valuation of investment property as
discussed above.

iv. Valuation of retirement village resident loans
The fair value of the retirement village resident loans is
calculated by reference to the initial loan amount plus the
resident’s share of any capital gains in accordance with
their contracts less any deferred management fee income
accrued to date by the operator. The key assumption for
calculating the capital gain and deferred management
fee income components is the value of the dwelling
being occupied by the resident. This value is determined
by reference to the valuation of investment property as
referred to above.

v. Calculation of deferred management fee (“DMF”)
Deferred management fees are recognised by the Trusts
over the estimated period of time the property will be
leased by the resident and the accrued DMF is realised
upon exit of the resident. The accrued DMF is based on
various inputs including the initial price of the property,
estimated length of stay of the resident, various contract
terms and projected price of property at time of re-leasing.

b. Critical Judgements in Applying the Entity’s

Accounting Policies

108 Ingenia Communities Holdings Limited

Notes to the Financial Statements
Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued
for the year ended 30 June 2014

3. SEGMENT INFORMATION

a. Description of Segments
The Trusts invest in seniors living properties located in Australia with three reportable segments:

homes.

The Trusts have identiﬁed their operating segments based on the internal reports that are reviewed and used by the chief
operating decision maker in assessing performance and in determining the allocation of resources. Other parts of the Trusts
are neither operating segments nor part of an operating segment. Assets that do not belong to an operating segment are
described below as “unallocated”.

b. Ingenia Communities Fund – 30 June 2014

i. Segment revenue

External segment revenue

Interest income

Total revenue

ii. Segment underlying profit

External segment revenue

Interest income

Property expenses

Administration expenses

Operational, marketing and selling expenses

Finance expense

Underlying profit – continuing operations

Reconciliation of underlying profit to profit from
continuing operations:

Net foreign exchange gain

Net gain/(loss) on change in fair value of:

Investment properties

Derivatives

Responsible Entity fees

Profit from continuing operations per the
Consolidated Statement of Comprehensive Income

iii. Segment assets

Segment assets

Discontinued operations

Total assets

Active
Lifestyle
Estates
$’000

Settlers
$’000

Garden
Villages
$’000

Corporate/
Unallocated
$’000

Total
$’000

–

(852)

–

(852)

–

9,354

–

10,339

9,354

10,339

9,354

10,339

19,693

9,354

–

10,339

(274)

(682)

(295)

9,354

10,339

(274)

(682)

(295)

(3,955)

9,354

5,133

14,487

–

(147)

2,382

–

1,530

(1,170)

11,736

3,857

14,741

6,904

53,992

114,286

142,597

317,779

3,874

321,653

Annual Report 2014 109

c. Ingenia Communities Fund – 30 June 2013

i. Segment revenue

External segment revenue

Interest income

Total revenue

ii. Segment underlying profit

External segment revenue

Interest income

Administration expenses

Operational, marketing and selling expenses

Finance expense

Underlying profit/(loss) – continuing operations

Reconciliation of underlying profit to profit from
continuing operations:

Net foreign exchange gain

Net gain/(loss) on disposal of investment property

Net gain/(loss) on change in fair value of:

Investment properties

Derivatives

Responsible Entity fees

Other

Profit from continuing operations per the
Consolidated Statement of Comprehensive Income

iii. Segment assets

Segment assets

Discontinued operations

Total assets

Active
Lifestyle
Estates
$’000

Settlers
$’000

Garden
Villages
$’000

Corporate/
Unallocated
$’000

Total
$’000

8,581

3,524

8,341

–

122

3,524

8,341

3,646

12,105

8,341

–

8,341

–

(107)

1,618

–

122

3,524

(797)

(96)

(3,841)

(1,088)

–

752

(1,101)

(185)

8,581

3,524

(797)

(96)

(3,841)

7,371

(107)

1,618

752

(1,101)

(185)

9,852

(1,585)

8,385

118

–

118

–

118

–

118

–

7,154

54,009

99,704

72,081

232,948

3,874

236,822

110 Ingenia Communities Holdings Limited

Notes to the Financial Statements
Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued
for the year ended 30 June 2014

3. SEGMENT INFORMATION (CONTINUED)

d. Ingenia Communities Management Trust – 30 June 2014

Active
Lifestyle
Estates
$’000

Settlers
$’000

Garden
Villages
$’000

Corporate/
Unallocated
$’000

i. Segment revenue

External segment revenue

Interest income

Reclassification of gain on revaluation of newly
constructed villages

Total revenue

ii. Segment underlying profit

External segment revenue

Interest income

Property expenses

Employee expenses

Administration expenses

Operational, marketing and selling expenses

Manufactured home cost of sales

Finance expense

Income tax benefit

13,589

10,576

24,570

–

(3,320)

–

13,589

7,256

24,570

13,589

10,576

24,570

–

(2,570)

(2,367)

(320)

(377)

(2,130)

–

(1,738)

(16,385)

(851)

(157)

(3)

–

(7,913)

(1,129)

(2,354)

–

Underlying profit/(loss) – continuing operations

5,825

7,827

(3,211)

(8,436)

Reconciliation of underlying profit to profit from
continuing operations:

Net loss on change in fair value of:

Investment properties

(1,273)

Retirement village resident loans

Gain on revaluation of newly constructed villages

Responsible Entity fees

Income tax benefit associated with reconciliation items

Profit from continuing operations per the
Consolidated Statement of Comprehensive Income

iii. Segment assets

Segment assets

Assets held for sale

Discontinued operations

Total assets

(598)

(616)

(3,320)

–

(1,626)

4,369

–

4,552

3,293

(3,211)

(5,693)

(1,059)

122,955

249,183

1,420

269

373,827

5,439

47,657

426,923

–

Total
$’000

48,735

(3,320)

45,431

48,735

(20,693)

(11,131)

2,137

2,005

(1,871)

(616)

(3,320)

(1,626)

4,369

(444)

(2,050)

–

(2,734)

(2,130)

(10,145)

2,137

Annual Report 2014

111

e. Ingenia Communities Management Trust – 30 June 2013

i. Segment revenue

External segment revenue

Interest income

Reclassification of gain on revaluation of newly
constructed villages

Total revenue

ii. Segment underlying profit

External segment revenue

Interest income

Property expenses

Employee expenses

Administration expenses

Operational, marketing and selling expenses

Manufactured home cost of sales

Finance expense

Income tax benefit

Active
Lifestyle
Estates
$’000

Settlers
$’000

Garden
Villages
$’000

Corporate/
Unallocated
$’000

940

11,444

20,265

–

(4,619)

–

940

6,825

20,265

940

–

11,444

20,265

–

(216)

(3,577)

(12,405)

(59)

(15)

(80)

(297)

–

(939)

(132)

(1,087)

(6,228)

(1,058)

(1,022)

–

(234)

–

(5,212)

(427)

Underlying profit/(loss) – continuing operations

273

5,709

(448)

(5,859)

Reconciliation of underlying profit to profit from
continuing operations:

Net loss on change in fair value of:

Investment properties

Retirement village resident loans

Gain on revaluation of newly constructed villages

Responsible Entity fees

Income tax benefit associated with reconciliation items

Profit from continuing operations per the
Consolidated Statement of Comprehensive Income

iii. Segment assets

Segment assets

Discontinued operations

Total assets

(15)

(1,513)

3,367

–

327

(4,619)

–

(1,456)

410

258

(96)

2,919

(6,905)

(3,824)

11,489

241,674

1,390

1,529

256,082

36,576

292,658

Total
$’000

32,649

(4,619)

28,044

32,649

(16,198)

(7,226)

(1,439)

(2,189)

(297)

(5,212)

(427)

(325)

1,839

327

(4,619)

(1,456)

410

112

Ingenia Communities Holdings Limited

Notes to the Financial Statements
Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued
for the year ended 30 June 2014

4. EARNINGS PER UNIT

Earnings per unit

Profit/(loss) from continuing operations ($’000)

Profit/(loss) from discontinued operations ($’000)

Net profit/(loss) for the year ($’000)

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014

2013

2014

2013

14,741

681

15,422

8,385

(5,715)

2,670

(1,059)

(111)

(1,170)

(3,824)

(7,891)

(11,715)

Weighted average number of units outstanding (thousands)

646,603

509,716

646,603

509,716

Dilutive securities:

Performance quantum rights (thousands)

Retention quantum rights (thousands)

Weighted average number of issued and dilutive potential
securities outstanding (thousands)

Basic earnings per unit from continuing operations (cents) (1)

Basic earnings per unit from discontinued operations (cents) (1)

Basic earnings per unit (cents) (1)

Diluted earnings per unit from continuing operations (cents) (1)

Diluted earnings per unit from discontinued operations (cents) (1)

Diluted earnings per unit (cents) (1)

2,310

1,818

3,842

1,818

2,310

1,818

3,842

1,818

650,731

515,376

650,731

515,376

2.3

0.1

2.4

2.3

0.1

2.4

1.6

(1.1)

0.5

1.6

(1.1)

0.5

(0.2)

–

(0.2)

–

(0.2)

(0.8)

(1.5)

(2.3)

(0.7)

(1.5)

(2.3)

(1) Prior period weighted average number of units and earnings per unit have been adjusted in accordance with AASB 133 “Earnings per

Share” (“AASB 133”). The weighted average number of units on issue for the current period, prior to the rights issue in September 2013,
has also been adjusted as required by AASB 133.

5. FINANCE EXPENSE

Interest paid or payable

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

3,955

2013
$’000

3,841

2014
$’000

10,145

2013
$’000

5,212

Annual Report 2014

113

6. INCOME TAX BENEFIT

a. Income Tax Beneﬁt/(Expense)

Current tax

Decrease in deferred tax liabilities

Income tax benefit/(expense)

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

2014
$’000

2013
$’000

–

6,423

6,506

(83)

(17)

b. Reconciliation between Tax Expense and Pre-Tax

Net Proﬁt

Profit/(loss) before income tax

Less amounts not subject to Australian income tax

14,741

(14,741)

8,385

(8,385)

Income tax at the Australian tax rate of 30% (2013: 30%)

ICMT tax consolidation impact

Tax effect of amounts which are not deductible/(taxable) in
calculating taxable income

Prior period income tax return true-ups

Movement in carrying value and tax cost base of investment
properties

Movements in carrying value and tax cost base of DMF
receivables

Other timing differences

Non-recognition of Australian tax losses

Recognition of Australian tax losses

Income tax benefit/(expense)

–

(7,565)

(3,807)

–

(7,565)

(3,807)

2,270

2,823

588

1,163

(1,232)

406

–

488

1,142

–

(92)

(80)

(907)

101

(181)

6,506

(17)

c. Tax Consolidation
Effective from 1 July 2012, ICMT and its Australian domiciled owned subsidiaries formed a tax consolidation group with the
ICMT being the head entity. Under the tax funding agreement the funding of tax within the tax group is based on taxable
income as if that entity was not a member of the tax group.

114

Ingenia Communities Holdings Limited

Notes to the Financial Statements
Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued
for the year ended 30 June 2014

7. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

a. Assets Held for Sale

i. Details of assets held for sale
Prior to 30 June 2014, a subsidiary of ICMT entered into discussions with a third party regarding the sale of Noyea Riverside
Village (“Noyea”). Noyea was included within the Settlers Lifestyle segment.

Settlement on the sale of Settlers Lifestyle Noyea was completed on 31 July 2014 at an adjusted sales price of $5.4 million
resulting in $nil gain or loss recognised upon completion.

ii. Assets held for sale
The following is the breakdown of the assets held for sale at Noyea:

Investment property

Deferred management fee receivable

b. Discontinued Operations

Note

2014
$’000

–

5,439

i. Details of discontinued operations
The Trusts’ investment in the New Zealand Students business has been classiﬁed as a discontinued operation since 30 June
2011, consistent with the previously announced strategy to focus on transitioning to an actively managed Australian seniors
living business. The Trusts holds a 100% interest in three facilities in Wellington, New Zealand that are primarily leased for
15 years to Victoria University of Wellington and Wellington Institute of Technology.

The Trusts have completed a sales campaign and terms have been agreed with a global real estate investment ﬁrm.
Following divestment of these operations the proceeds will be reinvested into its Australian lifestyle parks business.

ii. Financial performance
The ﬁnancial performance of components of the Trusts disposed of or classiﬁed as discontinued operations at each
reporting date were:

Revenue

Net loss on change in fair value of investment properties

Unrealised net foreign exchange gain/(loss)

Other income

(Expenses)/income

Gain on disposal of equity investments

Distributions from formerly equity accounted investments

Disposal costs associated with overseas investments

Profit/(loss) from operating activities before income tax

Income tax benefit/(expense)

Profit/(loss) from operating activities

Gain/(loss) on sale of discontinued operations

Release of foreign currency translation reserve on disposal of
foreign operations

Net profit/(loss) for the year

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

–

104

–

(5)

320

268

–

687

(6)

681

–

681

(43)

–

759

–

2,262

–

3,049

(747)

2,302

7,490

(15,507)

(5,715)

2014
$’000

3,211

(1,630)

1,453

–

2013
$’000

5,256

(2,740)

(718)

–

(2,859)

(5,505)

(290)

(103)

(8)

(111)

–

(111)

–

(672)

(4,355)

(255)

(4,610)

(837)

(2,444)

(7,891)

Net proﬁt attributable to the parent of ICF is $681,000 (2013: loss of $5,715,000), and net loss attributable to the parent of
ICMT is $nil (2013: $4,577,000).

Annual Report 2014

115

iii. Cash ﬂows
The cash ﬂows of components of the Trusts disposed of or classiﬁed as discontinued operations at each reporting date were:

Net cash flow from operating activities

Net cash flow from investing activities:

Proceeds/(payments) on sale of discontinued operations

Additions to investment properties

Payments for lease arrangements

Net cash flow from financing activities

Net cash flows from discontinued operations

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

–

2013
$’000

1,155

2014
$’000

1,135

2013
$’000

–

28,531

(120)

35,818

–

(29,786)

(100)

(9,081)

(13,666)

(745)

11,448

2,637

–

(26,283)

(4,131)

iv. Assets and liabilities
The assets and liabilities of components of the Trusts classiﬁed as disposal groups at each reporting date were:

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

2014
$’000

2013
$’000

Assets

Cash and cash equivalents

Trade and other receivables

Investment properties

Plant and equipment

Equity accounted investments

Total assets

Liabilities

Bank overdraft

Payables

Borrowings

Deferred tax liabilities

Total liabilities

–

3,874

–

Net assets of disposal groups

3,874

1,657

974

259

45,902

35,343

–

47,657

36,576

–

368

30,081

–

30,449

17,208

1,955

2,050

17,522

–

21,527

15,049

v. Capital commitments
There were no capital commitments under construction contracts for the New Zealand Students business for the year
ended 30 June 2014 (2013: A$9,208,234).

vi. Capitalisation rate
The weighted average capitalisation rate of the New Zealand Students properties within discontinued operations is 8.6%
(2013: 7.75%).

116

Ingenia Communities Holdings Limited

Notes to the Financial Statements
Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued
for the year ended 30 June 2014

8. CASH AND CASH EQUIVALENTS

Cash at bank and in hand

Reconciliation to statements of cash flows

Cash and cash equivalents attributable to:

Continuing operations – cash at bank

Discontinued operations – cash at bank

Discontinued operations – bank overdraft

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

Note

2014
$’000

2,658

2013
$’000

31,014

2014
$’000

3,893

2013
$’000

1,229

974

(1,955)

248

2,658

31,014

–

3,893

1,657

–

5,550

Cash at end of the year as per cash flow statement

2,658

31,014

9. TRADE AND OTHER RECEIVABLES

Current

Rental and other amounts due

Finance lease receivable from stapled entity

Accrued income, prepayments and deposits

Total current trade and other receivables

Non-current

Finance lease receivable from stapled entity

Accrued income, prepayments and deposits

Total non-current trade and other receivables

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

2014
$’000

2013
$’000

866

3,322

4,280

37,356

1,978

39,334

4,822

3,322

1,060

9,204

37,358

2,114

39,472

1,648

–

1,483

3,131

–

1,336

–

1,483

2,819

–

438

Rental amounts due are typically paid in advance and other amounts due are receivable within 30 days. There are no
receivables which are neither past due nor impaired.

ICF has leased a number of its properties to ICMT under leases that are classiﬁed as ﬁnance leases. The remaining term
of each agreement varies between 92 and 115 years. There are no purchase options. Minimum payments under the
agreements and their present values are:

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

2014
$’000

2013
$’000

Minimum lease payments receivable:

Not later than one year

Later than one year and not later than five years

Later than five years

Unearned finance income

Net present value of minimum lease payments

Net present value of minimum lease payments receivable:

Not later than one year

Later than one year and not later than five years

Later than five years

3,322

13,287

3,322

13,287

301,540

304,862

318,149

321,471

(277,471)

(280,791)

40,678

40,680

3,178

10,399

27,101

40,678

3,178

10,400

27,102

40,680

Finance income recognised and included in interest income in
the income statement

3,320

3,160

Information about the related ﬁnance lease payable by ICMT is given in Note 14.

–

Annual Report 2014

117

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

2014
$’000

2013
$’000

–

2,208

285

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

2014
$’000

2013
$’000

134,188

119,867

360,860

247,249

300

3,515

134,488

120,167

364,375

250,764

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

2014
$’000

2013
$’000

119,867

100,357

247,249

225,005

10,616

2,175

–

1,530

134,188

300

–

300

23,317

108,300

474

–

(2,830)

–

(3,069)

–

1,618

7,551

320

–

(495)

–

(194)

(1,871)

16,006

3,070

–

3,069

(195)

294

119,867

360,860

247,249

310

300

–

(310)

300

3,515

–

3,515

1,660

310

1,545

–

3,515

10. INVENTORIES

Current assets

Manufactured homes

11. INVESTMENT PROPERTIES

a. Summary of Carrying Amounts

Completed properties

Land not yet under construction

Total investment properties

b. Movements in Carrying Amounts

Completed investment property

Carrying amount at beginning of year

Acquisitions

Expenditure capitalised

Transferred from plant and equipment

Disposals

Sale of units – Strata title

Transfer (to)/from finance lease

Transfer to inventory

Net gain/(loss) on change in fair value

Carrying amount at end of year

Land not yet under construction

Carrying amount at beginning of year

Expenditure capitalised

Net gain/(loss) on change in fair value

Disposals

Carrying amount at end of year

The net change in fair value is recognised in proﬁt or loss as net gain/(loss) on change in fair value of investment properties.

Fair value hierarchy disclosures for investment properties have been provided in Note 26.

118

Ingenia Communities Holdings Limited

Notes to the Financial Statements
Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued
for the year ended 30 June 2014

11. INVESTMENT PROPERTIES (CONTINUED)

c. Description of Valuation Techniques used and Key Inputs to Valuation of Investment Properties:

Valuation technique

Significant
unobservable inputs

Range
(weighted average)

Garden Villages

Capitalisation
method

Stabilised occupancy

62-98% (87%)

Capitalisation rate

8-13% (11%)

Settlers Lifestyle Discounted cash

flow

Current market value
of property

$115,000-$470,000
($307,000)

Growth in value

0-4%

Average length
of stay – future
residents

Average length
of stay – current
residents

11.4 years

14.6 years

Discount rate

14-20% (15%)

Relationship of
unobservable input
to fair value

As costs are fixed in
nature, occupancy has
a direct correlation to
valuation (ie. the higher
the occupancy, the
greater the value).

Capitalisation has an
inverse relationship to
valuation.

Market value and growth
in value have a direct
correlation to valuation,
while length of stay and
discount rate have an
inverse relationship to
valuation.

Active Lifestyle
Estates

Capitalisation
method (for existing
rental streams)

Short-term
occupancy

Residential
occupancy

Operating profit
margin

15-70% based on
seasonality and
accommodation
categories

90-100%

Higher the occupancy,
the greater the value.

50-70% dependent upon
short-term and residential
accommodation mix

Higher the profit margin,
the greater the value.

Capitalisation rate

9-12%

Discounted cash
flow (for future
development)

Discount rate

15-25%

Capitalisation has an
inverse relationship to
valuation.

Discount rate has an
inverse relationship to
valuation.

Capitalisation Method
Under the capitalisation method, fair value is estimated using assumptions regarding the expectation of future beneﬁts. The
capitalisation method involves estimating the expected income projections of the property into perpetuity and applying a
capitalisation rate. The capitalisation rate is based on current market evidence. Future income projections take into account
occupancy, rental income and operating expenses.

Discounted Cash Flow Method
Under the discounted cash ﬂow method, fair value is estimated using assumptions regarding the beneﬁts and liabilities of
ownership over the asset’s life including an exit or terminal value. This method involves the projection of a series of cash
ﬂows on a real property interest. To this projected cash ﬂow series, a market-derived discount rate is applied to establish the
present value of the income stream associated with the asset. The exit yield normally reﬂects the exit value expected to be
achieved upon selling the asset and is a function of the risk adjusted returns of the asset and expected capitalisation growth
rate. The duration of the cash ﬂows and the speciﬁc timing of inﬂows and outﬂows are determined by events such as rent
reviews, lease renewal and related re-letting, redevelopment, or refurbishment as well as the development of new units. The
appropriate duration is typically driven by market behaviour that is a characteristic of the class of real property. Periodic
cash ﬂow is typically estimated as gross income less vacancy, non-recoverable expenses, collection losses, lease incentives,
maintenance cost, agent and commission costs and other operating and management expenses. The series of periodic
net underlying cash ﬂows, along with an estimate of the terminal value anticipated at the end of the projection period,
is then discounted.

Annual Report 2014

119

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

2014
$’000

2013
$’000

423

(184)

239

423

(84)

339

342

–

(100)

239

–

(84)

339

824

(644)

180

547

–

(82)

(320)

102

(67)

180

1,185

(638)

547

427

320

–

(173)

(76)

547

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

2014
$’000

2013
$’000

1,210

1,569

8,480

6,305

–

4,000

–

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

Note

2014
$’000

2013
$’000

2014
$’000

2013
$’000

(c)

(a)

(c)

–

94,000

68,000

(312)

–

(578)

–

93,688

67,422

3,461

–

41,883

3,589

–

40,475

12. PLANT AND EQUIPMENT

a. Summary of Carrying Amounts

Plant and equipment

Less: accumulated depreciation

Total plant and equipment

b. Movements in Carrying Amount

Carrying amount at beginning of year

Acquired through acquisitions

Assets written off

Transferred to investment property

Additions

Depreciation

Carrying amount at end of year

13. TRADE AND OTHER PAYABLES

Current liabilities

Trade and other payables

Non-current liabilities

Other payables

14. BORROWINGS

Current liabilities

Finance leases

Non-current liabilities

Bank debt

Prepaid borrowing costs

Finance leases

120 Ingenia Communities Holdings Limited

Notes to the Financial Statements
Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued
for the year ended 30 June 2014

14. BORROWINGS (CONTINUED)

a. Bank Debt
On 21 February 2014, ICF reﬁnanced its Australian dollar denominated bank debt facility to $129,500,000. The facility
expires on 30 September 2015 and has the following principal ﬁnancial covenants:

Loan to value ratio (“LVR”) is less than or equal to 50%;

–
– Total leverage ratio does not exceed 50%; and
–

Interest cover ratio (as deﬁned) of at least 1.50x in ﬁnancial year ending 2014 increasing to at least 1.75x in FY2015.

As at 30 June 2014, the facility has been drawn to $94,000,000 (2013: $68,000,000).

The carrying value of investment property net of resident liabilities at reporting date for the Group’s Australian properties
pledged as security is $290,375,000 (2013: $179,320,000).

b. Bank Guarantees
ICF has the ability to utilise a portion of its $129.5 million bank facility to provide bank guarantees. Bank guarantees at
30 June 2014 were $4.4 million. Refer to Note 23.

c. Finance Leases
Subsidiaries of ICMT have entered into agreements with subsidiaries of ICF. The subject of each agreement is to lease a
retirement village. The remaining term of each agreement varies between 92 and 115 years. There are no purchase options.

On 23 of April 2013, ICMT was assigned a commercial lease with 16.5 years remaining with the Gosford City Council for land
and facilities as part of its Ettalong Holiday Beach acquisition. The lease is for an initial three years commencing September
2012 with two renewal options of seven years each. The below table is based on the expectation that the lease options will
be exercised.

In December 2013, ICMT acquired One Mile Beach Holiday Park, accounted for as investment property. Two Crown leases
are attached to the land, one for 40 years expiring on 19 September 2031 and one for perpetuity.

i. Minimum Lease Payments – excluding Perpetual Lease

Minimum lease payments:

Within one year

Later than one year but not later than five years

Later than five years

Total minimum lease payments

Future finance charges

Present value of minimum lease payments

Present value of minimum lease payments:

Within one year

Later than one year but not later than five years

Later than five years

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

2014
$’000

2013
$’000

–

3,613

14,530

305,301

323,444

3,589

14,422

308,628

326,639

(279,237)

(282,575)

44,207

44,064

3,461

11,456

29,290

44,207

3,436

11,362

29,266

44,064

ii. Minimum Lease Payments – Perpetual Lease
The perpetual lease is recognised as investment property and non-current liability at a value of $1.1 million based on
a capitalisation rate of 10.6% applied to the current lease payment. Payments each period in relation to the lease are
recognised as ﬁnance expenses in the statement of comprehensive income therefore there is no subsequent change
to the originally determined present value of the minimum lease payments as calculated above.

Annual Report 2014

121

15. RETIREMENT VILLAGE RESIDENT LOANS

a. Summary of Carrying Amounts

Gross resident loans

Accrued deferred management fee

Net resident loans

b. Movements in Carrying Amounts

Carrying amount at beginning of year

Net (gain)/loss on change in fair value of resident loans

Accrued deferred management fee income

Deferred management fee cash collected

Acquired resident loans

Proceeds from resident loans

Repayment of resident loans

Transfer to assets held for sale

Other

Carrying amount at end of year

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

2014
$’000

2013
$’000

–

218,639

206,629

(28,517)

(30,926)

190,122

175,703

162,603

616

(5,333)

1,811

–

22,021

(10,361)

5,439

226

(327)

(4,850)

1,368

4,473

19,338

(7,118)

–

216

190,122

175,703

Fair value hierarchy disclosures for retirement village resident loans have been provided in Note 26.

16. PROVISIONS

Current liabilities

Employee liabilities

Non-current liabilities

Employee liabilities

17. DERIVATIVES

Current liabilities

Interest rate swap contracts

Non-current liabilities

Interest rate swap contracts

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

2014
$’000

2013
$’000

–

590

249

507

140

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

Note

2014
$’000

2013
$’000

2014
$’000

2013
$’000

–

209

–

122 Ingenia Communities Holdings Limited

Notes to the Financial Statements
Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued
for the year ended 30 June 2014

18. DEFERRED TAX LIABILITIES

Deferred tax assets

Tax losses

Other

Deferred tax liabilities

DMF receivable

Investment properties

Net deferred tax liabilities

Deductible temporary differences and carried forward
losses tax effected for which no deferred tax asset has
been recognised

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

2014
$’000

2013
$’000

–

13,269

883

8,176

7,409

1,433

8,120

242

6,756

9,461

7,855

7,488

4,220

19. ISSUED UNITS

a. Carrying Amounts

At beginning of year

Placement securities

Transaction costs of institutional placement securities

Rights issue

Rights issue costs

At end of year

The closing balance is attributable to the unitholders of:

Ingenia Communities Fund

Ingenia Communities Management Trust

b. Number of Issued Units

At beginning and end of year

Placement securities

At end of year

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

497,956

480,693

–

51,985

(2,299)

18,179

(916)

–

2014
$’000

6,106

–

8,364

(373)

2013
$’000

3,351

2,908

(153)

–

547,642

497,956

14,097

6,106

547,642

497,956

–

547,642

497,956

–

14,097

–

6,106

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
Thousands

2013
Thousands

2014
Thousands

2013
Thousands

507,179

169,061

676,240

441,029

66,150

507,179

169,061

676,240

441,029

66,150

507,179

c. Terms of Units
All units are fully paid and rank equally with each other for all purposes. Each unit entitles the holder to one vote, in person
or by proxy, at a meeting of unitholders.

Annual Report 2014

123

20. RESERVES

Foreign currency translation reserve

Balance at beginning of year

Translation differences arising during the year

Amounts transferred to profit and loss on disposal
of foreign operations

Deconsolidation of ICMT

Balance at end of a year

The closing balance is attributable to the unitholders of:

Ingenia Communities Fund

Ingenia Communities Management Trust

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

2014
$’000

2013
$’000

–

(16,896)

(226)

1,389

–

(226)

–

(226)

15,507

–

766

495

–

1,261

1,092

169

1,261

(614)

(1,064)

2,444

–

766

646

120

766

The foreign currency translation reserve records exchange differences arising from the translation of the ﬁnancial statements
of foreign subsidiaries.

21. ACCUMULATED LOSSES

Balance at beginning of year

Net profit/(loss) for the year

Distributions

Balance at end of year

The closing balance is attributable to the unitholders of:

Ingenia Communities Fund

Ingenia Communities Management Trust

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

2014
$’000

(330,334)

(328,594)

(6,304)

2013
$’000

5,411

15,422

(5,917)

2,670

(4,410)

(1,170)

(11,715)

–

(320,829)

(330,334)

(7,474)

(6,304)

(320,829)

(330,334)

–

(320,829)

(330,334)

(3,425)

(4,049)

(7,474)

(3,314)

(2,990)

(6,304)

124 Ingenia Communities Holdings Limited

Notes to the Financial Statements
Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued
for the year ended 30 June 2014

22. COMMITMENTS

a. Capital Commitments
ICMT had commitments for capital expenditure on investment property contracted but not provided for at reporting date
amounting to $3,266,000 (2013: $nil), all payable within one year.

b. Operating Lease Commitments
A subsidiary of ICMT has entered into a non-cancellable operating lease for its Brisbane office. The lease has a remaining life
of ﬁve years.

Future minimum rentals payable under this lease as at reporting date were:

Within one year

Later than one year but not later than five years

Later than five years

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

2014
$’000

2013
$’000

–

220

973

–

1,193

–

c. Finance Lease Commitments
A subsidiary of ICMT was assigned a commercial lease with 16.5 years remaining with the Gosford City Council for land and
facilities as part of its Ettalong Holiday Beach acquisition. The lease is for an initial three years commencing September 2012
with two renewal options of seven years each.

In December 2013, a subsidiary of ICMT acquired One Mile Beach Holiday Park, accounted for as investment property.
Two Crown leases are attached to the land, one for 40 years expiring on 19 September 2031 and one for perpetuity.

Refer to Note 14 for future minimum lease payments payable and the present value of minimum lease payments payable
at reporting date for the ﬁnance leases at Ettalong Holiday Village and One Mile Beach Holiday Park.

For commitments for inter-staple related party ﬁnance leases refer to Notes 9, 14 and 25.

23. CONTINGENCIES
There are no known contingent liabilities other than the bank guarantees of $4.4 million provided for under the ICF
$129.5 million bank facility (Note 14). Bank guarantees of $4.0 million are in relation to deferred land payments within ICMT
recognised as non-current payables (refer to Note 13). These guarantees will not be called by the counterparty unless the
payable is not paid per the terms of the agreement.

24. CAPITAL MANAGEMENT
The capital management of ICF and ICMT is not managed separately, but rather, is managed at a consolidated Group level
(ICH and subsidiaries).

At the Group level, the aim is to meet strategic objectives and operational needs and to maximise returns to security holders
through the appropriate use of debt and equity, while taking account of the additional ﬁnancial risks of higher debt levels.

In assessing this risk, the Group takes into account the relative security of income ﬂows, the predictability of expenses, debt
proﬁle, the degree of hedging and the overall level of debt as measured by gearing.

The Group’s capital position is primarily monitored through the ratio of total liabilities to total assets (“Leverage Ratio”),
calculated on a look-through basis.

In addition, the Trusts monitor the ratio of debt to total assets (“Gearing Ratio”), calculated on a look through basis.

Annual Report 2014

125

25. FINANCIAL INSTRUMENTS

a. Introduction
The Trusts principal ﬁnancial instruments comprise receivables, payables, interest bearing liabilities, other ﬁnancial liabilities,
cash and short-term deposits and derivative ﬁnancial instruments.

The main risks arising from the Trusts’ ﬁnancial instruments are interest rate risk, foreign exchange risk, credit risk and
liquidity risk. The Trusts manage the exposure to these risks primarily through the Treasury Policy. The policy sets out
various targets aimed at restricting the ﬁnancial risk taken by the Trusts. Management reviews actual positions of the Trusts
against these targets on a regular basis. If the target is not achieved, or forecast not to be achieved, a plan of action is, where
appropriate, put in place with the aim of meeting the target within an agreed timeframe. Depending on the circumstances
of the Trusts at a point in time, it may be that positions outside of the Treasury Policy are accepted and no plan of action is
put in place to meet the treasury targets, because, for example, the risks associated with bringing the Trusts into compliance
outweigh the beneﬁts. The adequacy of the Treasury Policy in addressing the risks arising from the Trust’s ﬁnancial
instruments is reviewed on a regular basis.

While the Trusts aim to meet the Treasury Policy targets, many factors inﬂuence the performance, and it is probable that at
any one time, not all targets will be met. For example, the Trusts may be unable to negotiate the extension of bank facilities
sufficiently ahead of time, so that they fail to achieve their liquidity target. When reﬁnancing loans they may be unable to
achieve the desired maturity proﬁle or the desired level of ﬂexibility of ﬁnancial covenants, because of the cost of such terms
or their unavailability. Hedging instruments may not be available, or their cost may outweigh the beneﬁt of risk reduction
or they may introduce other risks such as mark to market valuation risk. Changes in market conditions may limit the Trusts
ability to raise capital through the issue of units or sale of properties.

The main risks arising from ICMT’s ﬁnancial instruments are interest rate risk, foreign exchange risk, credit risk and liquidity
risk. These risks are not separately managed. Management of these risks for the ICF may result in consequential changes
for ICMT.

b. Interest Rate Risk
The Trusts exposure to the risk of changes in market interest rates arises primarily from its use of borrowings. The main
consequence of adverse changes in market interest rates is higher interest costs, reducing the Trust’s proﬁt. In addition, one
or more of the Trust’s loan agreements may include minimum interest cover covenants. Higher interest costs resulting from
increases in market interest rates may result in these covenants being breached, providing the lender the right to call in the
loan or to increase the interest rate applied to the loan.

The Trusts manage the risk of changes in market interest rates by maintaining an appropriate mix of ﬁxed and ﬂoating rate
borrowings. Fixed rate debt is achieved either through ﬁxed rate debt funding or through derivative ﬁnancial instruments
permitted under the Treasury Policy. The policy sets minimum and maximum levels of ﬁxed rate exposure over a ten-year
time horizon.

At 30 June 2014, after taking into account the effect of interest rate swaps, approximately 47% of ICF’s borrowings are at
a ﬁxed rate of interest (30 June 2013: 26%).

c. Interest Rate Risk Exposure
ICF’s exposure to interest rate risk and the effective interest rates on ﬁnancial instruments at reporting date were:

30 June 2014

Principal amounts $’000

Financial assets

Cash at bank

Financial liabilities

Bank debt denominated in AUD

Interest rate swaps:

Floating
interest
rate

2,658

94,000

INGENIA COMMUNITIES FUND

FIXED INTEREST MATURING IN:

Less than
1 year

One to five
Years

More than
5 years

Total

–

2,658

94,000

–

– denominated in AUD; Fund pays fixed rate

(45,000)

45,000

ICMT’s exposure to interest rate risk and the effective interest rates on ﬁnancial instruments at reporting date were:

126 Ingenia Communities Holdings Limited

Notes to the Financial Statements
Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued
for the year ended 30 June 2014

25. FINANCIAL INSTRUMENTS (CONTINUED)

30 June 2014

Principal amounts $’000

Financial assets

Cash at bank

Financial liabilities

INGENIA COMMUNITIES MANAGEMENT TRUST

FIXED INTEREST MATURING IN:

Floating
interest
rate

Less than
1 year

One to five
Years

More than
5 years

Total

3,893

–

3,893

Finance leases (excluding perpetual lease)

–

3,461

11,456

29,290

44,207

ICMT’s exposure to interest rate risk and the effective interest rates on ﬁnancial instruments at the end of the previous
ﬁnancial year were:

30 June 2013

Principal amounts $’000

Financial assets

Cash at bank

Financial liabilities

Finance leases

INGENIA COMMUNITIES MANAGEMENT TRUST

FIXED INTEREST MATURING IN:

Floating
interest
rate

Less than
1 year

One to five
Years

More than
5 years

Total

1,229

–

1,229

–

3,436

11,362

29,266

44,064

Other ﬁnancial instruments of the Trusts not included in the above tables are non-interest bearing and are therefore not
subject to interest rate risk.

d. Interest Rate Sensitivity Analysis
The impact of an increase or decrease in average interest rates of 1% (100 basis points) at reporting date, with all other
variables held constant, is illustrated in the tables below. This analysis is based on the interest rate risk exposures in existence
at balance sheet date. As the Trusts have no derivatives that meet the documentation requirements to qualify for hedge
accounting, there would be no impact on unitholders’ interest (apart from the effect on proﬁt).

i. Increase in average interest rates of 1%
The effect on net interest expense for one year would have been:

EFFECT ON PROFIT AFTER TAX

INGENIA COMMUNITIES
FUND
HIGHER/(LOWER)

INGENIA COMMUNITIES
MANAGEMENT TRUST
HIGHER/(LOWER)

2014
$’000

2013
$’000

2014
$’000

2013
$’000

Variable interest rate instruments denominated in:

Australian dollars

(940)

(680)

–

The effect on change in fair value of derivatives would have been:

Interest rate swaps denominated in:

Australian dollars

EFFECT ON PROFIT AFTER TAX

INGENIA COMMUNITIES
FUND
HIGHER/(LOWER)

INGENIA COMMUNITIES
MANAGEMENT TRUST
HIGHER/(LOWER)

2014
$’000

2013
$’000

2014
$’000

2013
$’000

417

793

–

Annual Report 2014

127

ii. Decrease in average interest rates of 1%
The effect on net interest expense for one year would have been:

EFFECT ON PROFIT AFTER TAX

INGENIA COMMUNITIES
FUND
HIGHER/(LOWER)

INGENIA COMMUNITIES
MANAGEMENT TRUST
HIGHER/(LOWER)

2014
$’000

2013
$’000

2014
$’000

2013
$’000

Variable interest rate instruments denominated in:

Australian dollars

940

680

–

The effect on change in fair value of derivatives would have been:

Interest rate swaps denominated in:

Australian dollars

EFFECT ON PROFIT AFTER TAX

INGENIA COMMUNITIES
FUND
HIGHER/(LOWER)

INGENIA COMMUNITIES
MANAGEMENT TRUST
HIGHER/(LOWER)

2014
$’000

2013
$’000

2014
$’000

2013
$’000

(297)

(810)

–

e. Foreign Exchange Risk
By holding properties in offshore markets, the Trusts are exposed to the risk of movements in foreign exchange rates.
Foreign exchange rate movements may reduce the Australian dollar equivalent of the carrying value of the Trusts offshore
properties, and may result in lower Australian dollar equivalent proceeds when an offshore property is sold. In addition,
foreign exchange rate movements may reduce the Australian dollar equivalent of the earnings from the offshore properties
while they are owned by the Trusts.

The Trusts reduce exposure to the foreign exchange risk inherent in the carrying value of its offshore properties and
interests in offshore investments by partly or wholly funding their acquisition using borrowings denominated in the particular
offshore currency, and by using derivatives. The Treasury Policy sets a target for minimum and maximum hedging of the
carrying value of its offshore properties.

The Trusts exposure to the impact of exchange rate movements on earnings from offshore properties is partly mitigated by
the foreign denominated interest expense of its foreign denominated borrowings and any derivative hedges. The Trusts aim
to reduce any residual exposure to earnings arising because of investment in offshore markets by using forward exchange
contracts. The Treasury Policy sets out targets of minimum and maximum hedging of earnings from offshore properties over
a ﬁve-year time horizon.

The Trusts net foreign currency monetary exposure, after taking into account the effect of foreign exchange derivatives, as
at reporting date is shown in the following table. The net foreign currency exposure reported is of foreign currencies held
by entities whose functional currency is the Australian dollar. It excludes assets and liabilities of entities, including the Trusts’
United States subsidiaries and equity accounted investments, whose functional currency is not the Australian dollar.

Net foreign currency exposure:

United States dollars

NET FOREIGN CURRENCY ASSET/(LIABILITY)

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

2014
$’000

2013
$’000

157

1,282

–

128 Ingenia Communities Holdings Limited

Notes to the Financial Statements
Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued
for the year ended 30 June 2014

25. FINANCIAL INSTRUMENTS (CONTINUED)

f. Foreign Exchange Sensitivity Analysis
The impact of an increase or decrease in average foreign exchange rates of 10% at reporting date, with all other variables
held constant, is illustrated in the tables below. This analysis is based on the foreign exchange risk exposures in existence at
balance sheet date. In these tables, the effect on unitholders’ interest excludes the effect on proﬁt after tax.

i. Effect of appreciation in Australian dollar of 10%:

EFFECT ON PROFIT AFTER TAX

INGENIA COMMUNITIES
FUND
HIGHER/(LOWER)

INGENIA COMMUNITIES
MANAGEMENT TRUST
HIGHER/(LOWER)

2014
$’000

2013
$’000

2014
$’000

2013
$’000

Foreign exchange risk exposures denominated in:

United States dollars

(16)

(128)

–

ii. Effect of depreciation in Australian dollar of 10%:

EFFECT ON PROFIT AFTER TAX

INGENIA COMMUNITIES
FUND
HIGHER/(LOWER)

INGENIA COMMUNITIES
MANAGEMENT TRUST
HIGHER/(LOWER)

2014
$’000

2013
$’000

2014
$’000

2013
$’000

Foreign exchange risk exposures denominated in:

United States dollars

128

–

g. Foreign Exchange Derivatives Held
Forward exchange contracts, options and foreign exchange swaps are taken out to mitigate the effect of foreign exchange
movements on the ﬁnancial statements.

At balance sheet date, the Trusts did not hold any foreign exchange derivatives. There was no impact to the consolidated
result for the year for the change in fair value for foreign exchange derivatives ended 30 June 2014 (2013: loss $9,000).

h. Credit Risk
Credit risk refers to the risk that a counterparty defaults on its contractual obligations resulting in a ﬁnancial loss to
the Trusts.

The major credit risk for the Trusts is default by tenants, resulting in a loss of rental income while a replacement tenant
is secured and further loss if the rent level agreed with the replacement tenant is below that previously paid by the
defaulting tenant.

The Trusts assess the credit risk of prospective tenants, the credit risk of in-place tenants when acquiring properties and
the credit risk of existing tenants renewing upon expiry of their leases. Factors taken into account when assessing credit risk
include the ﬁnancial strength of the prospective tenant and any form of security, for example a rental bond, to be provided.

The decision to accept the credit risk associated with leasing space to a particular tenant is balanced against the risk of the
potential ﬁnancial loss of not leasing up vacant space.

Rent receivable balances are monitored on an ongoing basis and arrears actively followed up in order to reduce, where
possible, the extent of any losses should the tenant subsequently default.

The Responsible Entity believes that the Trust’s receivables that are neither past due nor impaired do not give rise to any
signiﬁcant credit risk.

Credit risk also arises from deposits placed with ﬁnancial institutions and derivatives contracts that may have a positive value
to the Trusts. The Trust’s Treasury Policy sets target limits for credit risk exposure with ﬁnancial institutions and minimum
counterparty credit ratings. Counterparty exposure is measured as the aggregate of all obligations of any single legal entity
or economic entity to the Trusts, after allowing for appropriate set offs which are legally enforceable.

The Trust’s maximum exposure to credit risk at reporting date in relation to each class of ﬁnancial instrument is the carrying
amount as reported in the balance sheet.

Annual Report 2014

129

i. Liquidity Risk
The main objective of liquidity risk management is to reduce the risk that the Trusts do not have the resources available to
meet their ﬁnancial obligations and working capital and committed capital expenditure requirements. The Trust’s Treasury
Policy sets a target for the level of cash and available undrawn debt facilities to cover future committed expenditure in the
next year, loan maturities within the next year and an allowance for unforeseen events such as tenant default.

The Trusts may also be exposed to contingent liquidity risk under term loan facilities, where term loan facilities include
covenants which if breached give the lender the right to call in the loan, thereby accelerating a cash ﬂow which otherwise
was scheduled for the loan maturity. The Trusts monitor adherence to loan covenants on a regular basis, and the Treasury
Policy sets targets based on the ability to withstand adverse market movements and remain within loan covenant limits.

The Trusts monitor the debt expiry proﬁle and aims to achieve debt maturities below a target level of total committed debt
facilities, where possible, to reduce reﬁnance risk in any one year.

The contractual maturities of the Trust’s non-derivative ﬁnancial liabilities at reporting date are reﬂected in the following
table. It shows the undiscounted contractual cash ﬂows required to discharge the liabilities including interest at market rates.
Foreign currencies have been converted at rates of exchange ruling at reporting date.

Although the expected average residency term is more than ten years, retirement village residents’ loans are classiﬁed as
current liabilities, as required by Accounting Standards, because the Trusts do not have an unconditional right to defer
settlement to more than twelve months after reporting date.

2014

Trade and other payables

Borrowings

2013

Trade and other payables

Borrowings

2014

Trade and other payables

Retirement village resident loans

Borrowings (excluding perpetual lease)

Finance lease (perpetual lease)

Provisions

2013

Trade and other payables

Retirement village resident loans

Borrowings

Provisions

INGENIA COMMUNITIES FUND

Less than
1 year
$’000

1 to 5
years
$’000

More than
5 years
$’000

1,210

4,521

5,731

1,569

3,271

4,840

–

99,653

–

72,089

–

Total
$’000

1,210

104,174

105,384

1,569

75,360

76,929

INGENIA COMMUNITIES MANAGEMENT TRUST

Less than
1 year
$’000

8,480

190,122

3,613

121

590

1 to 5
years
$’000

4,000

–

More than
5 years
$’000

–

Total
$’000

12,480

190,122

14,530

305,301

323,444

483

249

–

604

839

202,926

19,262

305,301

527,489

6,305

175,703

3,589

507

–

6,305

175,703

14,422

308,628

326,639

140

–

647

186,104

14,562

308,628

509,294

The contractual maturities of ICF’s derivative ﬁnancial liabilities at reporting date are reﬂected in the following table. It shows
the undiscounted contractual cash ﬂows required to discharge the instruments including interest at market rates. Foreign
currencies have been converted at rates of exchange ruling at reporting date.

130 Ingenia Communities Holdings Limited

Notes to the Financial Statements
Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued
for the year ended 30 June 2014

25. FINANCIAL INSTRUMENTS (CONTINUED)

2014

Liabilities

INGENIA COMMUNITIES FUND

Less than
1 year
$’000

1 to 5
years
$’000

More than
5 years
$’000

Total
$’000

Derivative liabilities – net settled

2013

Liabilities

Derivative liabilities – net settled

–

209

ICMT did not have any derivative ﬁnancial liabilities at either 30 June 2014 or 30 June 2013.

–

168

209

j. Other Financial Instrument Risk
The Trusts carry retirement village residents’ loans at fair value with resulting fair value adjustments recognised in the
income statement. The fair value of these loans is dependent on market prices for the related retirement village units. The
impact of an increase or decrease in these market prices of 10% at reporting date, with all other variables held constant, is
shown in the table below. This analysis is based on the retirement village residents’ loans in existence at reporting date.

EFFECT ON PROFIT AFTER TAX

INGENIA COMMUNITIES
FUND
HIGHER/(LOWER)

INGENIA COMMUNITIES
MANAGEMENT TRUST
HIGHER/(LOWER)

2014
$’000

2013
$’000

2014
$’000

2013
$’000

Increase in market prices of investment properties of 10%

Decrease in market prices of investment properties of 10%

–

(21,864)

(20,700)

21,864

20,700

However, these effects are largely offset by corresponding changes in the fair value of the Trusts’ investment properties.

The effect on unitholders’ interest would have been the same as the effect on proﬁt.

k. Fair Value
The Trusts use the following fair value measurement hierarchy:

Level 1:

Level 2:

fair value is calculated using quoted prices in active markets for identical assets or liabilities;

fair value is calculated using inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly (as prices) or indirectly (derived from prices); and

Level 3:

fair value is calculated using inputs for the asset or liability that are not based on observable market data.

Quoted market price represents the fair value determined based on quoted prices on active markets as at the reporting date
without any deduction for transaction costs.

The following table presents the Trusts’ ﬁnancial instruments that were measured and recognised at fair value at
reporting date:

Financial assets/
financial liabilities

Valuation
technique(s) and
key inputs

Significant
Unobservable
Inputs

Relationship of
unobservable
inputs to fair value

Sensitivity to
the input to
fair value

Retirement village resident loans Loans measured as

Derivative interest rate swaps

the ingoing resident's
contribution plus the
resident's share of
capital appreciation
to reporting date,
less DMF accrued to
reporting date.

Net present value
of future cash flows
discounted at market
rates adjusted for the
Group's credit risk.

Long-term capital
appreciation rates
for residential
property between
0-4%. Estimated
length of stay of
residents based
on life tables.

The higher the
appreciation, the
higher the value
of resident loans.
The longer the
length of stay, the
lower the value of
resident loans.

The higher the
appreciation, the
higher the value of
resident loans. The
longer the length of
stay, the lower the
value of resident
loans.

N/A

The longer the length
of stay, the higher the
DMF accrued, capped
at a predetermined
period of time.

There has been no movement from Level 3 to Level 2 during the current period. Changes in ICMT’s retirement village
resident loans which are level 3 instruments are presented in Note 26.

The carrying amounts of the Trusts’ other ﬁnancial instruments approximate their fair values.

Annual Report 2014

131

26. FAIR VALUE MEASUREMENT

a. Ingenia Communities Fund
The following table provides the fair value measurement hierarchy of Ingenia Communities Fund assets and liabilities:

i. Assets measured at fair value

30 June 2014

Date of valuation

Total

FAIR VALUE MEASUREMENT USING

Quoted
prices in
active
markets
(Level 1)

Significant
observable
inputs
(Level 2)

Significant
unobservable
inputs
(Level 3)

Investment properties

30 June 2014
Refer to Note 11

134,488

–

134,488

ii. Liabilities measured at fair value

30 June 2014

Derivatives

Date of
valuation

Total

168

30 June 2014

There have been no transfers between Level 1 and Level 2 during the year.

FAIR VALUE MEASUREMENT USING

Quoted
prices in
active
markets
(Level 1)

Significant
observable
inputs
(Level 2)

Significant
unobservable
inputs
(Level 3)

–

168

–

b. Ingenia Communities Management Trust
The following table provides the fair value measurement hierarchy of Ingenia Communities Management Trust assets and
liabilities:

i. Assets measured at fair value

30 June 2014

Date of valuation

Total

FAIR VALUE MEASUREMENT USING

Quoted
prices in
active
markets
(Level 1)

Significant
observable
inputs
(Level 2)

Significant
unobservable
inputs
(Level 3)

Investment properties

Discontinued operations
– investment property

Assets held for sale
– investment property

30 June 2014
Refer to Note 11

30 June 2014
Refer to Note 7(b)

30 June 2014
Refer to Note 7(a)

Assets held for sale
– deferred management fee receivable

30 June 2014
Refer to Notes 7(a) and 15

364,375

45,902

–

5,439

–

5,439

364,375

45,902

–

ii. Liabilities measured at fair value

30 June 2014

Date of valuation

Total

FAIR VALUE MEASUREMENT USING

Quoted
prices in
active
markets
(Level 1)

Significant
observable
inputs
(Level 2)

Significant
unobservable
inputs
(Level 3)

Retirement village resident loans

30 June 2014
Refer to Note 15

190,122

–

190,122

There have been no transfers between Level 1 and Level 2 during the year.

132 Ingenia Communities Holdings Limited

Notes to the Financial Statements
Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued
for the year ended 30 June 2014

26. FAIR VALUE MEASUREMENT (CONTINUED)

c. Fair Value Hierarchy for Financial Instruments Measured at Fair Value as at 30 June 2013:

30 June 2013

Financial liabilities – derivatives

30 June 2013

Financial liabilities – retirement village resident loans

27. AUDITOR’S REMUNERATION

INGENIA COMMUNITIES FUND

Total
$’000

209

Level 1
$’000

Level 2
$’000

Level 3
$’000

–

209

–

INGENIA COMMUNITIES MANAGEMENT TRUST

Total
$’000

175,703

Level 1
$’000

Level 2
$’000

Level 3
$’000

–

175,703

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$

2013
$

2014
$

2013
$

Amounts received or receivable by Ernst & Young for:

Audit or review of financial reports

146,025

120,339

146,025

122,364

Other audit related services

28. RELATED PARTIES

9,350

9,183

9,350

–

155,375

129,522

155,375

122,364

a. Responsible Entity
The Responsible Entity for both trusts from 4 June 2012 is Ingenia Communities RE Limited (“ICRE”). ICRE is an Australian
domiciled company and is a wholly owned subsidiary of ICH.

b. Fees of the Responsible Entity and its Related Parties

Ingenia Communities RE Limited:

Asset management fees

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$

2013
$

2014
$

2013
$

1,170,374

1,101,265

1,625,516

1,456,230

The Responsible Entity is entitled to a fee of 0.5% of total assets. In addition, it is entitled to recover certain expenses.

The amount accrued and recognised but unpaid at reporting date was:

Current trade payables

2,340,175

1,169,801

3,167,572

1,542,056

These are included in current trade payables in the balance sheet.

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$

2013
$

2014
$

2013
$

Annual Report 2014

133

c. Holdings of the Responsible Entity and its Related Parties
There were no holdings of the Responsible Entity and its related parties (including managed investment schemes for which a
related party is the Responsible Entity) as at 30 June 2014 and 30 June 2013.

d. Other Related Party Transactions
Subsidiaries of ICMT have entered into agreements with subsidiaries of ICF for the leases of land that retirement villages are
operated on. The remaining term of each agreement varies between 92 and 115 years. There are no purchase options. Rental
villages have been classiﬁed as operating leases and DMF villages have been classiﬁed as ﬁnance leases.

Intercompany loans are subject to a loan deed dated 29 June 2012 encompassing ICH, ICF and ICMT and their respective
subsidiaries. The deed stipulates that on the last business day of each month intercompany balances are set off within each
of the ICH, ICF and ICMT sub-groups and the balances between ICH, ICF and ICMT incur interest at 8.5%pa. Intercompany
loan balances are payable on demand, however ICF has undertaken not to call its loan receivable from ICMT within twelve
months of the date of this report, if calling the loan would result in ICMT being unable to pay its debts as and when they are
due and payable.

There are a number of other transactions and balances that occur between the Trusts, which are detailed below:

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

Note

2014
$

2013
$

2014
$

2013
$

Finance lease fees received or accrued/(paid or payable)
for the year between ICF and ICMT

Finance lease balance receivable/(payable) between ICF
and ICMT

3,319,833

3,321,780

(3,319,833)

(3,321,780)

40,677,551

40,679,518

(40,677,551)

(40,679,518)

Finance lease commitments

318,149,045

321,470,845 (318,149,045) (321,470,845)

Operating lease fees received or accrued/(paid or
payable) for the year between ICF and ICMT

Interest on intercompany loans received or accrued/(paid
or payable) between stapled entities

9,354,036

8,467,260

(9,354,036)

(8,467,260)

6,807,133

2,039,631

6,335,522

1,820,680

Intercompany loan balances between stapled entities

135,805,451

31,870,000 (133,249,024) (30,769,000)

134 Ingenia Communities Holdings Limited

Notes to the Financial Statements
Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued
for the year ended 30 June 2014

28. RELATED PARTIES (CONTINUED)

e. Key Management Personnel
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including any director of the Responsible Entity.

The names of the directors of ICRE, and their dates of appointment or resignation if they were not directors for all of the
ﬁnancial year, are:

Jim Hazel (Chairman)

Philip Clark AM

Amanda Heyworth

Robert Morrison

Norah Barlow

Appointed 31 March 2014

Simon Owen (Managing Director and CEO)

The names of other key management personnel, and their dates of appointment or resignation if they did not occupy their
position for all of the ﬁnancial year, are:

Simon Owen

Nicole Fisher

Tania Betts

Managing Director and CEO

Chief Operating Officer

Chief Financial Officer

Key management personnel do not receive any remuneration directly from the Trusts. They receive remuneration from ICH
in their capacity as Directors or employees of ICH. Consequently, the Trusts do not pay any compensation as deﬁned in
Accounting Standard AASB 124 Related Parties to its key management personnel.

The aggregate compensation paid to Key Management Personnel (“KMP”) of the Group is as follows:

Directors fees

Salaries and other short-term benefits

Short-term incentives

Superannuation benefits

Share-based payment

2014
$

2013
$

462,500

1,094,684

332,235

59,084

680,600

319,167

756,735

182,382

48,957

293,113

2,629,103

1,600,354

The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key
management personnel.

The aggregate PQRs and RQRs of the Group held directly, by KMP, are as follows:

NUMBER OUTSTANDING

Issue date

Rights

Expiry date

2014

2013

2012

2013

RQR

PQR

2014

2015

2016

1,818,000

3,842,000

3,716,000

–

Annual Report 2014

135

29. PARENT FINANCIAL INFORMATION
Summary ﬁnancial information about the parent of each Trust is:

Current assets

Total assets

Current liabilities

Total liabilities

Net assets/(liabilities)

Unitholders equity:

Issued units

Accumulated losses

Total unitholders’ equity

Profit/(loss) from continuing operations

Net profit/(loss) attributable to unitholders of each Trust

Total comprehensive income/(loss)

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

2013
$’000

134,675

253,843

1,379

95,067

158,776

57,833

183,749

1,779

69,202

114,547

2014
$’000

178

3,165

8,108

5,772

2013
$’000

2,991

9,332

(2,607)

(6,341)

547,643

497,957

14,092

6,106

(388,867)

(383,410)

(16,699)

(12,447)

158,776

460

114,547

(4,744)

19,704

19,703

(2,607)

(4,252)

(6,341)

(3,511)

(9,088)

(9,055)

136 Ingenia Communities Holdings Limited

Notes to the Financial Statements
Notes to the Financial Statements

for the year ended 30 June 2014(cid:13)|(cid:13)continued
for the year ended 30 June 2014

30. SUBSIDIARIES

Name

Country of residence

Subsidiaries of Ingenia Communities Fund

OWNERSHIP INTEREST

2014
%

2013
%

Bridge Street Trust

Browns Plains Road Trust

Casuarina Road Trust

Edinburgh Drive Trust

INA CC Trust

INA Community Living Subsidiary Trust No. 2

INA Community Living Subsidiary Trust

INA Kiwi Communities Subsidiary Trust No. 1

INA Sunny Trust

Jefferis Street Trust

Lovett Street Trust

ILF Regency Subsidiary Trust

Settlers Subsidiary Trust

SunnyCove Gladstone Unit Trust

SunnyCove Rockhampton Unit Trust

Taylor Street (2) Trust

INA Subsidiary Trust No.1

INA Subsidiary Trust No.2

Noyea Pty Ltd

INA Community Living LLC (formerly ING Community
Living LLC)

INA US Community Living Fund LLC (formerly ING US
Community Living Fund LLC)

Subsidiaries of Ingenia Communities Management Trust

Garden Villages Management Trust

INA Community Living Lynbrook Trust

ILF Regency Operations Trust

Settlers Operations Trust

INA Operations Trust No.1

INA Operations Trust No.2

INA Operations Trust No.3

Noyea Operations Pty Ltd

Ridge Estate Trust

INA Subsidiary Trust No.3

INA NZ Subsidiary Trust No. 1

CSH Lynbrook GP LLC

CSH Lynbrook LP

Australia

United States of America

Australia

New Zealand

United States of America

INA Community Living II (formerly ING Community Living II)

United States of America

Lynbrook Freer Street Member LLC

Lynbrook Management, LLC

United States of America

The Trusts voting interest in all other subsidiaries is the same as the ownership interest.

100

–

100

–

100

Annual Report 2014

137

31. NOTES TO THE CASH FLOW STATEMENTS

a. Reconciliation of Proﬁt to Net Cash Flows from Operations

Net profit for the year

Adjustments for:

Net foreign exchange (gain)/loss

Release of FCTR on disposal of foreign operations

Net (gain)/loss on disposal of equity accounted investment

Net loss on disposal of investment properties

Net (gain)/loss on change in fair value of:

Investment properties – continuing

Investment properties – discontinued

Derivatives

Retirement village resident loans

Disposal costs associated with overseas investments

Income tax expense/(benefit)

Other non-cash items

INGENIA COMMUNITIES
FUND

INGENIA COMMUNITIES
MANAGEMENT TRUST

2014
$’000

15,422

2013
$’000

2,670

2014
$’000

(1,170)

–

320

–

(1,530)

–

(41)

–

(1,453)

15,507

(7,584)

107

(1,618)

(752)

–

150

748

–

1,871

1,630

–

616

290

(6,498)

–

2013
$’000

(11,715)

718

2,444

–

994

(1,839)

2,740

–

(327)

672

273

–

Operating profit/(loss) for the year before changes in working
capital

14,219

9,306

(4,714)

(6,040)

Changes in working capital:

(Increase)/decrease in receivables

(Increase)/decrease in other assets

Increase in retirement village resident loans

Increase/(decrease) in other payables and provisions

(18,310)

(12,676)

20,710

12,060

–

292

–

464

(1,923)

6,327

2,028

–

12,220

197

18,437

Net cash provided by operating activities

(3,799)

(2,906)

22,428

32. SUBSEQUENT EVENTS

a. RQR Vesting
On 1 July 2014, 1,818,000 Retention Quantum Rights (“RQRs”) granted to KMP in 2012 vested. As a result 1,818,000 fully paid
stapled securities have been issued to the following KMP:

Simon Owen

1,070,000

Tania Betts

374,000

Nicole Fisher

374,000

b. Sale of Noyea
Settlement on the sale of Settlers Lifestyle Noyea was completed on 31 July 2014 at an adjusted sales price of $5.4 million
resulting in $nil gain or loss recognised upon completion.

c. Bank Guarantee
On 1 July 2014, ICF obtained a bank guarantee of $10 million from the bank facility in relation to cash requirements under the
Australian Financial Services Licence.

d. Sale of New Zealand Students business
On 5 September 2014, the Trusts announced they had contracted to divest the New Zealand Students business for
consideration of NZ$49.4 million, representing the book value at 30 June 2014. Upon settlement, disposal costs
and a FCTR gain will be released through proﬁt. At 30 June 2014, the FCTR balance was A$1.0 million.

e. Reﬁnance of Australian Debt
ICF’s current Australian banking facility expires in September 2015. ICF has recently undertaken a debt reﬁnance and
obtained credit approval for a new $175 million Australian multilateral banking facility. This facility will be split between
a three year and ﬁve year maturity proﬁle.

138 Ingenia Communities Holdings Limited

Directors’ Declaration

for the year ended 30 June 2014

In accordance with a resolution of the directors of Ingenia Communities RE Limited, I state that:

In the opinion of the directors:

(a) the ﬁnancial statements and notes of Ingenia Communities Fund and of Ingenia Communities Management Trust are

in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of each Trust’s ﬁnancial position as at 30 June 2014 and of their performance for the

year ended on that date; and

(ii) complying with Accounting Standards and Corporations Regulations 2001; and

(b) there are reasonable grounds to believe that Ingenia Communities Fund and Ingenia Communities Management Trust

will be able to pay their debts as and when they become due and payable.

The notes to the ﬁnancial statements include an explicit and unreserved statement of compliance with international
ﬁnancial reporting standards at Note 1(b).

This declaration has been made after receiving the declarations required to be made to the Directors in accordance with
section 295A of the Corporations Act 2001 for the ﬁnancial year ended 30 June 2014.

On behalf of the Board

Jim Hazel
Chairman
Sydney, 19 September 2014

Independent Auditors’ Report

for the year ended 30 June 2014

Annual Report 2014

139

140 Ingenia Communities Holdings Limited

Independent Auditors’ Report

for the year ended 30 June 2014

Securityholder Information

for the year ended 30 June 2014

Annual Report 2014

141

The information set out below was prepared as at 4 September 2014 and applies equally to units in the trusts and shares in
the company under the terms of the joint quotation on the Australian Securities Exchange.

Twenty Largest Securityholders as at 4 September 2014

Securityholder

J P MORGAN NOMINEES AUSTRALIA LIMITED

NATIONAL NOMINEES LIMITED

CITICORP NOMINEES PTY LIMITED

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

BNP PARIBAS NOMS PTY LTD

MERCANTILE INVESTMENT COMPANY LTD

MCNEIL NOMINEES PTY LIMITED

CITICORP NOMINEES PTY LIMITED

MERCANTILE INVESTMENT COMPANY LTD

MIRRABOOKA INVESTMENTS LIMITED

BNP PARIBAS NOMS (NZ) LTD

GWYNVILL TRADING PTY LTD

UBS NOMINEES PTY LTD

CUSTODIAL SERVICES LIMITED

RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED

BOND STREET CUSTODIANS LIMITED

BODIAM PROPERTIES PTY LTD

MRS MONIKA BATKIN

FORSYTH BARR CUSTODIANS LTD

RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED

Number of
Securities Held

% of Issued
Capital

151,820,670

107,560,963

74,958,077

54,600,979

31,278,400

19,514,519

16,400,531

14,109,792

13,103,817

8,500,000

6,444,114

6,166,667

4,941,940

4,207,549

3,413,091

3,249,667

3,123,000

3,100,000

2,442,900

2,374,473

22.39%

15.86%

11.05%

8.05%

4.61%

2.88%

2.42%

2.08%

1.93%

1.25%

0.95%

0.91%

0.73%

0.62%

0.50%

0.48%

0.46%

0.36%

0.35%

TOTAL

531,311,149

78.36%

Distribution of securityholders as at 4 September 2014

Holding (securities)

1 to 1,000

1,001 to 5,000

5,001 to 10,000

10,001 to 100,000

100,001 and over

Total

Number of
Securityholders

% of Issued
Capital

252

814

785

1,906

282

4,039

6.24

20.15

19.44

47.19

6.98

100.00

The number of securityholders holding less than a marketable parcel on 4 September 2014 is 265 and they hold
92,420 securities.

Substantial holders in INA as at 4 September 2014

Securityholder

Mercantile Investment Company Limited

Fisher Funds Management Limited

Number of
Securities

35,428,533

35,202,706

VOTING
Securityholders in Ingenia Communities Group are entitled to 1 vote for each security they hold in the Group.

142 Ingenia Communities Holdings Limited

Investor Relations

for the year ended 30 June 2014

Enquiries relating to Ingenia Communities Group (ASX code: INA) can be directed to the Link Market Services Investor
Information line on 1300 554 474 (or from outside Australia +61 1300 554 474). This service is available from 8:30am
to 5:30pm (Sydney time) on all business days.

Link Market Services can assist with:

– Change of address details
– Requests to receive communications online
– Provision of tax ﬁle numbers
– Changes to payment instructions
– General enquiries about your securityholding.

www.ingeniacommunities.com.au
Ingenia’s corporate website provides investors with extensive information about the Group. You can visit the website to ﬁnd:
information on Ingenia and its property portfolios; the latest ﬁnancial information; reports; announcements; and corporate
governance information.

Securityholders can access their investment details, including holding balance and payment history, from the site.

Distribution Payments
Distribution payments are made twice a year, for the six months ending 30 June and the six months ending 31 December.
Distributions are declared and paid in Australian dollars.

The table below details distribution payments for the 2013/2014 ﬁnancial year. A history of distribution payments made since
2005 is available from the Group’s website www.ingeniacommunities.com.au.

Period Ended

June 2014

December 2013

Date Paid

Total Amount

17 Sept 2014

21 March 2014

$0.0065

$0.0050

* For resident securityholders the distribution is tax deferred. For non-resident securityholders, the total FY14 distributions comprised 0.496
cents of tax deferred amount and 0.654 cents of interest income.

Ingenia Communities Group operates a Distribution Reinvestment Plan through which securityholders can elect to reinvest
all or part of their distributions in additional Ingenia securities. The rules of the Plan and how to apply can be found on the
website or obtained from the Registry, Link Market Services.

Annual Taxation Statement
Annual Taxation Statements, which summarise payments made during the year and include information required to
complete an Australian tax return, are dispatched each September. Details of past distributions and relevant tax information
are available on Ingenia’s website.

Annual General Meeting
The Annual General Meeting will be held on 12 November 2014 at the Grace Hotel in Sydney.

2014/2015 Securityholder Calendar*
17 September 2014
17 September 2014
12 November 2014
February 2015
March 2015

Final FY14 distribution paid
Annual Tax Statement dispatched
Annual General Meeting
1H15 Result announced
Interim FY15 distribution paid

*Dates are indicative.

Privacy Policy
Ingenia Communities Group is committed to ensuring the conﬁdentiality and security of your personal information. The
Group’s Privacy Policy, detailing our handling of personal information, is available online at www.ingeniacommunities.com.au

Complaints
Any securityholder wishing to register a complaint should direct it to Investor Relations in the ﬁrst instance, at the
Responsible Entity’s address listed in this Report.

Ingenia Communities RE Limited is a member of an independent dispute resolution scheme, the Financial Ombudsman
Service (FOS). If a securityholder feels that a complaint remains unresolved or wishes it to be investigated further, FOS
can be contacted as detailed below:

By telephone: 1300 780 808

In writing: Financial Ombudsman Service Limited
GPO Box 3, Melbourne VIC 3001
Website: www.fos.org.au

Annual Report 2014 143

Corporate Directory

for the year ended 30 June 2014

Ingenia Communities Group
Ingenia Communities Holdings Limited
ACN 154 444 925

Ingenia Communities Management Trust
ARSN 122 928 410

Ingenia Communities Fund
ARSN 107 459 576

Responsible Entity
Ingenia Communities RE Limited
ACN 154 464 990 (AFSL 415 862)

Registered Office
Level 5, 151 Castlereagh Street Sydney NSW 2000

Telephone: 1300 132 946
Facsimile: +61 2 8263 0500

Email: investor@ingeniacommunities.com.au
Website: www.ingeniacommunities.com.au

Directors of INA (as at 4 September 2014)
J Hazel (Chairman)
A Heyworth
N Barlow NZOM
P Clark AM
R Morrison
S Owen

Secretary
L Ralph
T Betts

Security Registry

Link Market Services Limited
Level 12, 680 George Street Sydney NSW 2000
Locked Bag A14 Sydney South NSW 1235

Telephone: 1300 554 474 (local call cost)
or from outside Australia: +61 1300 554 474
Facsimile: +61 2 9287 0303

Email: registrars@linkmarketservices.com.au

Auditors

EY
680 George Street Sydney NSW 2000

Stock Exchange Quotation
Ingenia Communities Group is listed on the Australian Securities Exchange under ASX listing code: INA.

144 Ingenia Communities Holdings Limited

Disclaimer
This report was prepared by Ingenia Communities Holdings Limited (ACN 154 444 925)
and Ingenia Communities RE Limited (ACN 154 464 990) as responsible entity for Ingenia
Communities Fund (ARSN 107 459 576) and Ingenia Communities Management Trust
(ARSN 122 928 410) (together Ingenia Communities Group, INA or the Group). Information
contained in this report is current as at 30 June 2014. This report is provided for information
purposes only and has been prepared without taking account of any particular reader’s
ﬁnancial situation, objectives or needs. Nothing contained in this report constitutes
investment, legal, tax or other advice. Accordingly, readers should, before acting on any
information in this report, consider its appropriateness, having regard to their objectives,
ﬁnancial situation and needs, and seek the assistance of their ﬁnancial or other licensed
professional adviser before making any investment decision. This report does not constitute
an offer, invitation, solicitation or recommendation with respect to the subscription for,
purchase or sale of any security, nor does it form the basis of any contract or commitment.

www.ingeniacommunities.com.au

Ingenia Communities Group

Level 5, 151 Castlereagh Street Sydney NSW 2000
T. 1300 132 946
E. investor@ingeniacommunities.com.au
W. www.ingeniacommunities.com.au