Ingenia Communities Group Annual Report 2015

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FY2015 Annual Report · Ingenia Communities Group

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2015

Securityholder Review

Ingenia is a leading owner,
operator and developer of
affordable Retirement, Lifestyle
and Leisure communities

61 quality
Australian
seniors living
communities
and growing

Western Australia

6 Garden Villages
3 Settlers

Queensland

3 Active Lifestyle
2 Garden Villages
3 Settlers

New South Wales

19 Active Lifestyle
9 Garden Villages
2 Settlers

Victoria

9 Garden Villages

Tasmania

5 Garden Villages

Includes announced acquisitions.

Contents

Year in Review
Letter from the Chairman
Chief Executive Officer Update
Portfolio Overview
Investing in our People

1
2
4
8
22
26 Board of Directors
28 Leadership Team

Securityholder Review 20151

Year in Review

Highlights

Underlying profit up 51%, to $17.5m
Distribution up 17%, to 1.35 cents per security
Increased cash yielding asset base – now 85% of portfolio value
Garden Villages portfolio occupancy at 90.7%
Development pipeline of over 1,500 potential home sites now

in place

Lifestyle Parks business expanded through acquisition
and development – six parks acquired or contracted

Lifestyle Parks sales momentum building rapidly

– 56 home settlements

Financial Summary

$25.7m

Statutory Profit

123%
2014: ($11.5m)

$17.5m

Underlying Profit

51%
2014: $11.6m

2.1c

Underlying Profit EPS

17%
2014: 1.8c

$9.0m

Operating Cashflow

37%
2014: $14.2m

38.9c

1.35c

Net Asset Value per Security

Distribution Per Security

10%
2014: 35.5c

17%
2014: 1.15c

Ingenia Communities Group

Letter from
the Chairman

We have established
a strong platform
for the future and
are confident that
Ingenia remains
on track to continue
to deliver long-term
stable returns for
securityholders

Jim Hazel, Chairman

Dear Securityholders
The last year has again been one of significant
growth and achievement for Ingenia. We
delivered growth in distributions as we
continued to transition the business in line
with our strategy to focus on cash yielding
assets dominated by affordable seniors
housing in Australia.

Pleasingly, we finished the 2015 financial
year with significant progress on each of our
objectives and we have seen an increasing
contribution to returns from the now well
established Lifestyle Parks business which
Ingenia entered with an initial investment
in 2013.

In December 2014 we completed our exit
from offshore markets with the sale of
the NZ Student portfolio. Combined with
continued momentum in our Active Lifestyle
Estates business, Ingenia is now a scalable
business focused on stable cash yielding
Australian investments complemented by
low risk, capital light development.

Over the last financial year an increase of 51%
in underlying profit was achieved as newly
acquired assets and the growing development
business made a more substantial contribution.
A full year distribution of 1.35 cents per
security represented an increase of 17% on the
prior year, building on similar growth in 2014.

Commensurate with our focus on building
a significant portfolio of lifestyle and leisure
assets, much time was spent on establishing
our platform and building our development
and sales capability in this new business.
This investment has supported a significant
increase in the contribution from manufactured
home sales in the Lifestyle Parks business and
positions the Group well for further growth in
sales and rental returns.

Notwithstanding very strong price
performance since internalisation, the security
price closed the year at 43 cents, below the
50.8 cent security price at the beginning of
the 2015 financial year. Despite this, Ingenia’s
returns over the past 3 and 5 years have
been strong, with the Group significantly
outperforming the ASX All Ordinaries
Accumulation and S&P/ASX Property 300
Accumulation indices. We will continue to
focus on delivering results from the business
and trust that over time the price will re-rate
as our earnings grow and our business model
becomes more established.

Securityholder Review 20153

We raised $89.1 million through a capital
raising in September, which provided
additional funds for investment in the
Lifestyle Parks business and allowed existing
securityholders to participate in Ingenia’s
growth. We have carefully deployed this
capital and the capital from the sale of non-
core assets in accretive acquisitions with five
Lifestyle Parks acquired over the year and an
additional two acquisitions following year end.

With work done during the year to secure
an increase in funding capacity at a lower
debt cost, a focus on recycling capital from
the non-core Deferred Management Fee
(Settlers) portfolio and the active Distribution
Reinvestment Plan, we will continue to pursue
growth opportunities which meet our strict
return requirements.

Importantly, we have made good progress on
key initiatives and priorities. Further scale has
been established in the lifestyle parks sector
and operationally these and our rental assets
are performing well, with the rental portfolio
achieving occupancy of over 90%. Both the
Garden Villages and Active Lifestyle Estates
portfolios demonstrated significant valuation
gains with capitalisation rates across these
asset classes beginning to tighten, leading
to higher values for these assets.

Striking the balance between returns to
securityholders and reinvestment for growth
continued to be a focus of the Board and
management. Following a 15% increase in
distributions in financial year 2014, distributions
were again increased, with a final distribution
payment for financial year 2015 of 0.70 cents
per security taking the full year distribution to
1.35 cents. We are committed to continuing to
grow distributions while maximising value to
securityholders through prudent reinvestment
into accretive investments to deliver ongoing
growth in returns.

The Group strategy remains driving
performance and organic growth within
existing assets and seeking to continue
to expand in the Lifestyle Parks business
through acquisitions and development in
targeted markets.

Much has been achieved this year and I would
like to thank Ingenia’s dedicated directors and
the management team for their hard work
and ongoing commitment.

INA Security Price since internalisation ($)

0.6

0.5

0.4

0.3

0.2

0.1

Compound Annual Growth Rate of 23%

2
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6

Performance against indices

Ingenia has outperformed relevant indices over the last 3
and 5 years (INA versus Indices to 30 June 2015 (%p.a))

%
2
0
2

%
7
5

1
.
1
1
-

%
3

8
1

%
5
4
1

%
8

4
3

1
.
7
5

Source: S&P/ASX
Property 300
Accumulation Index,
June 2015 (UBS).

%
2
4
1

%
4
9

1 Year

3 Years

5 Years

Ingenia

S&P/ASX 300 Property Accumulation Index

ASX All Ordinaries Accumulation Index

Entering the 2016 financial year we have
established a strong platform for the future
and are confident that Ingenia remains on track
to continue to deliver long-term stable returns
for securityholders.

As your Chairman I would like to take this
opportunity to thank all securityholders for
your continued support and I look forward
to meeting with you and providing a further
update on the business at our upcoming
Annual General Meeting to be held on
17 November 2015.

Jim Hazel
Chairman

Ingenia Communities Group

Chief Executive
Officer Update

We have rapidly
transformed Ingenia’s
business model into
an emerging high
growth asset class
with strong long-term
industry fundamentals
underpinned by a
convergence of an
ageing population and
the demand for quality
affordable housing

Simon Owen, Managing Director and CEO

The 2015 financial year represented a
significant year of achievement for the
business as we continued to deliver on our
strategy – further expanding our Australian
Lifestyle Parks business, divesting non-core
assets and continuing to extract performance
from the existing asset base to deliver stronger
returns for investors.

We also completed our first development in
the Lifestyle Parks business, achieved our sales
target in this business and most importantly
began to see the benefits of our strategy with
growth in distributions as we consolidated
Ingenia’s position as a provider of quality,
affordable seniors accommodation.

Financial performance
Reflecting the transition of the business in
line with Ingenia’s strategy, the 2015 financial
results demonstrate significant growth from
Ingenia’s Australian portfolios through a
revenue base dominated by stable rental
cashflows complemented by increasing
development returns.

There was a significant increase in revenue
from the Lifestyle Parks business as a result of
recent acquisitions and emerging development
profits from an expanded portfolio.

Overall, the Group reported a Statutory Profit
of $25.7 million (up 123% on the 2014 result),
reflecting improved operational performance
and strong increases in valuations across the
Garden Villages and Active Lifestyle Estates
rental portfolios.

Underlying profit of $17.5 million was up 51%
on the prior comparative period, driven by
growth in the core business as rental cashflow
increases were generated from the Garden
Village and Lifestyle Parks assets.

Operating cashflow for the year of
$9.0 million was down on the prior year due
to the establishment of new home inventory
throughout an increasing number of lifestyle
parks under development. At 30 June 2015 the
Group had new manufactured home inventory
of $7.3 million comprising 45 completed
homes. A further 44 homes were under
construction. The majority of these homes
have since either been deposited or settled.

Net Asset Value per security (NAV) increased
by 10%, to 38.9 cents.

Securityholder Review 20155

Capital management
Active capital management continues to be
a key priority for the Board and management
and we are committed to divesting the
remaining non-core assets in the DMF
portfolio to provide additional capital for
on strategy growth.

Significant growth in the Lifestyle Parks
portfolio was funded via capital recycling from
divested assets, the proceeds of a successful
$89.1 million capital raising and debt.

At 30 June 2015, Ingenia’s LVR of 22.6%
was below the Group’s target range of 30-
35% and well below the Group’s covenant of
50%. Following completion of the recent and
pending Lifestyle Park acquisitions, Ingenia’s
LVR is expected to move towards the lower
end of the Group’s target range of 30-35%.

Consistent with our focus on maintaining
funding capacity to support future growth,
a new finance arrangement was put in place
during the year. This facility provides increased
capacity, greater lender diversity, and
improved pricing. Following the establishment
of this facility, Ingenia’s current all in cost of
debt is 4.6%.

Balancing capital return and reinvestment
in growth
The Board and management recognise
the importance of maximising returns to
securityholders while maintaining the ability
to secure opportunities for future growth.

Following an increase in distributions of 15%
in the 2014 financial year, distributions again
increased, to 1.35 cents for the year. This
represented a 17% increase on the prior year’s
distribution and a 63% payout ratio.

A disciplined approach to investment will
continue to underpin our capital allocation
strategy as we focus on delivering on the
Group’s strategy and expanding Ingenia’s
presence in the Lifestyle Parks sector
through further acquisition and development.

Highlights
We have rapidly transformed Ingenia’s
business model, removing exposure to offshore
assets and transitioning the business into an
emerging high growth asset class with strong
long-term industry fundamentals underpinned
by a convergence of an ageing population and
the demand for quality affordable housing.

Portfolio remixing
We finalised our exit from offshore investments
with the sale of the NZ Student portfolio in
December 2014 and sold additional non-core
assets from our Settlers and Garden Villages
portfolios during the year. Consistent with our
focus on deploying capital to deliver most
value to investors, the sale of these assets
released additional capital which has been
deployed into Lifestyle Park assets.

We have continued to access off market
acquisitions in the increasingly competitive
lifestyle parks market, driven by our internal
team and unique research database.

Over the year Ingenia invested an additional
$71.1 million in Lifestyle Parks, acquiring a
further five assets and adding close to 1,400
income generating sites and almost 190
approved development sites to support future
sales growth. We are committed to the sale
of the DMF portfolio which will finalise the
Group’s transition to a portfolio comprised
of yield based assets.

These recently acquired Parks have been acquired
on attractive metrics as shown in the table below:

Purchase
price ($m)

Approxi-
mate
Ingoing
Yield

Long-term
sites

Annual
sites

Short-
term sites

Potential
Development
sites

White Albatross,
Nambucca Heads, NSW

23.0

10%

Noosa, Tewantin, QLD

12.5

10%

Chambers Pines,
Brisbane, QLD

Sydney Hills,
Sydney, NSW

Monterey, Lake
Macquarie, NSW

16.8

12.0

6.8

135

204

–

Significant
repositioning

165

Significant
repositioning

136

– 277

Significant
repositioning

Ingenia Communities Group6

Chief Executive
Officer Update

continued

This acquisition strategy has seen Lifestyle
Parks rapidly becoming the key earnings
driver across the Group.

There were a further two acquisitions following year
end and the acquisition pipeline remains strong.
Bethania, a partially developed manufactured
home community outside Brisbane, settled in July
2015. We have also secured the right to acquire
an additional 7.1 hectares of land adjacent to
this community, providing potential for further
expansion. Conjola Lakeside, a prime waterfront
coastal park, which will seed a new Southern NSW
cluster, was acquired for $24 million and settled
in September 2015.

Portfolio performance
We have continued to drive improvements in
operating performance from our existing assets
over the year with each portfolio delivering
improved performance.

Across Ingenia’s Garden Villages, like for like
occupancy increased by 2.8% over the year, with
rent increases also achieved. These villages provide
a high quality recurrent stream of cash earnings
which underpin our balance sheet and cashflows.
The portfolio also demonstrated strong growth in
valuations with an uplift of $15.9 million as a result
of strong portfolio management, rent growth and
capitalisation rate compression.

Across the Settlers Villages, a strong uplift in
Deferred Management Fee accruals driven by
rising prices in Western Australian assets was
offset by moderating development income as the
development and conversion program, which has
delivered significant value since commencement,
nears completion.

Ingenia’s main focus is the growth of the Lifestyle
Parks business, and development currently
underway at eight assets. The portfolio continued
to expand with the first acquisitions in Queensland
extending our presence into a new market. The
lifestyle parks market is attractive due to its strong
recurrent cash earnings, low risk and capital
light development returns, low level of industry
consolidation, and above all its affordability focus.

The Lifestyle Parks portfolio continued to build
returns with rental revenue of $19.8 million in
financial year 2015 reflecting significant growth
in sites through acquisition and development.
The portfolio’s EBIT contribution of $8.4 million
was up over 110% on the prior year, driven by
a growing rental revenue base and increasing
development profits.

Active Lifestyle Estates, Ettalong Beach – Community Centre

The Active Lifestyle Estates Portfolio value
of $204.2 million at 30 June 2015, reflected
additional acquisitions and the impact of a
compression in capitalisation rates on values.

Development
The Group continued to invest in internal capability
across the digital platform, asset and portfolio
branding and the development and sales platform
over the year.

Significant progress was made in development,
with works undertaken at six sites over the year
and growth secured through acquisitions and
additional development consents. The development
pipeline now consists of 1,500 potential sites with
an estimated end sales value of over $350 million.

Ingenia completed the first of the Group’s Lifestyle
Park developments during the year, with the
conversion of the Ettalong Beach community from
a mixed use (tourism and permanent living) to
pure permanent living community.

Securityholder Review 20157

Recently acquired Conjola Lakeside (Lake Conjola, NSW)

Along with sales at Lake Macquarie and Stoney
Creek, Ettalong was a key contributor to the
100 sales achieved over the year, with 56
settlements to 30 June 2015 contributing to a
development profit of $5.7 million. New projects
to launch at Chain Valley Bay, Chambers Pines
and Bethania in the 2016 financial year will
support future sales growth.

Outlook
Ingenia is well placed to continue to grow and
to build its return profile as we capitalise on
the demand for affordable seniors housing
and our leading position in the Lifestyle Parks
sector, which remains our focus for expansion.
With additional assets being assessed in
line with Ingenia’s focus on quality parks in
key metropolitan and coastal markets and a
development pipeline of 1,500 potential sites
we remain confident of continued growth
from this portfolio. The potential to release
additional capital for investment through the
planned divestment of the DMF portfolio will
assist in funding this growth.

Over the last year we have continued to
build our platform to position the business
for growth.

With supply secured and sales strategies in
place, we expect the rate of home delivery and
sales to continue to build in FY16, contributing
to future growth in returns. This, combined
with the integration of quality acquisitions and
amortisation of our cost base across a larger
operational platform, is anticipated to improve
earnings growth.

In closing, I would like to thank the Board for
their support and our management team and
all employees for their continuing commitment
and contribution to the business.

The remainder of this Review contains greater
detail on Ingenia’s business activities and
individual portfolios.

Simon Owen
Chief Executive Officer
and Managing Director

Ingenia Communities Group8

Portfolio
Overview

total properties

4,000

homes

Ingenia’s Australian business has
grown rapidly, with additional
assets secured over the year
delivering increased scale

Image: Ettalong Beach new community facilities

Securityholder Review 20159

Asset Allocation (by value)

Ingenia has now exited offshore markets, building
a large scale Australian portfolio dominated by
its core rental and lifestyle communities.

Cash yielding assets now comprise 85% of total portfolio value.

Asset Value 30 June 20141

Asset Value 30 June 20151

Target Allocation

$350.0m

$424.9m

Continued
growth

Garden Villages

DMF

Lifestyle Parks

NZ Students

33%

20%

34%

13%

1. Proforma, post announced acquisitions.

Garden Villages

DMF

Lifestyle Parks

29%

15%

56%

Garden Villages

Lifestyle Parks

~25%

~75%

— Over time, Ingenia is targeting a portfolio allocation of ~25% Garden Villages and ~75% Lifestyle Parks
— Ingenia is rapidly moving closer to this target allocation with a focus on exiting the Settlers (Deferred
Management Fee) portfolio and continued growth in the Lifestyle Parks portfolio as acquisitions and
developments are progressed

Ingenia Communities Group10

LIFESTYLE
ESTATES

1. New home at Active Lifestyle Estates, Albury (NSW)
2 & 3. New home interiors – Active Lifestyle Estates, Lake Macquarie (NSW)

Securityholder Review 201511

Active Lifestyle Estates

LIFESTYLE PARKS

Ingenia has rapidly grown the Lifestyle Parks business
– a business focused on high quality rental cashflows
complemented by capital light development.

Key data

Total properties

Total permanent sites

Total annual sites

Total short-term sites

Potential development sites2

30 June 20151 30 June 2014

1,468

306

1,033

1,135+

1,093

261

777

917+

Book value

$204.2m

$119.3m

Portfolio Location (by value)*

Coastal

50%

Metropolitan 36%

Regional

14%

1 Excludes Bethania and Conjola Lakeside

(acquired post year end).

2 Includes new and recycled permanent and

short-term sites.

* Includes announced acquisitions.

Number of sites*

9
2
2

6
8
3

1
3
1
,

1
6
3

,
1

0
3
2

Jun
13

Dec
13

Jun
14

Dec
14

Jun
15

Ingenia entered the Lifestyle
Parks sector in March 2013,
with an initial investment
in The Grange, a lifestyle
park located on the NSW
Central Coast.

The Lifestyle Parks portfolio
provides exposure to a growing
demand from Australia’s ageing
population through the provision
of affordable age-appropriate
housing. The portfolio is
dominated by stable cashflows
from short and long-term rental
income. Community expansion
and redevelopment provides
additional capital light, low risk
development earnings. Offering
a cash yielding affordable
accommodation segment within
the Australian seniors living

sector, Lifestyle Parks also
offer the opportunity for
highly accretive development
with limited risk and a modest
capital outlay.

Since entering the sector the
Group has used its proprietary
database and in house
acquisitions team to establish
a portfolio which includes 22
assets located largely in coastal
and metropolitan locations
across NSW and Queensland.
Rental revenue from the
portfolio was $19.8 million in
the 2015 financial year, up from
$9.6 million the prior year. The
portfolio’s EBIT contribution of
$8.4 million, was up over 110% on
FY14, driven by a growing rental
revenue base and increasing
development profits.

The core of this portfolio
is permanent site revenue
generated from residents which
is supported by government
pension and rental assistance.
This stable cashflow is
now generated from over
1,500 sites across Ingenia’s
growing portfolio.

In addition to strong rental
cashflows from permanent
homes the portfolio also
provides exposure to tourism
and to attractive development
returns through development
sites within existing parks.

The ongoing growth of this
portfolio through acquisition
and development is at the
core of Ingenia’s strategy
and will contribute to growing
securityholder returns.

Ingenia Communities Group12

1 & 2. Active Holiday Parks, White Albatross (Nabucca Heads, NSW)
3. Active Holiday Parks, Conjola Lakeside (Lake Conjola, NSW)

Securityholder Review 201513

Active Holiday Parks

HOLIDAY PARKS

Tourism provides a complementary strong cashflow
business with significant cross selling potential and
preserves longer term land redevelopment optionality.

Key data

Total properties

Total self contained units

Average daily rate1

Caravan and camping sites

Average daily rate1

1. Average daily rate represents average annualised rate.
* Includes Bethania and Conjola Lakeside (acquired post 30 June 2015).

30 June 2015

376

$113

657

$33

Portfolio Location
(by site numbers)*

Coastal

64%

Metropolitan 10%

Regional

26%

A number of Ingenia’s
Lifestyle Parks contain
tourism and short-term
accommodation. This
accommodation includes
tourism villas, cabins,
caravan and camping
sites which target the
affordable tourism market,
are attractive to grey
nomads and families and
are located in a range of
attractive locations.

In addition to regional areas such
as Mudgee and metropolitan
locations such as Dural (Sydney),
Ingenia owns a number of iconic
coastal parks which generate
compelling returns.

While a number of tourism sites
will be converted to permanent
home sites through development,
short-term accommodation
provides a number of benefits
to the portfolio, including:

— Diversifying and

increasing cashflows

— Providing potential residents
with their first exposure to an
Ingenia community and the
manufactured home estate
(lifestyle parks) model

— Access to Australia’s growing
grey nomad caravanning
market

— Generating cashflows pending

development

— Significant cross selling
opportunities (through
resident discounts at Ingenia’s
holiday parks and the ability
to market permanent homes
to visitors).

Short-term sites are managed
as a complementary business
where they represent the highest
and best use of land and are
beginning to generate growing
returns as Ingenia’s scale in this
market increases and with it the
ability to leverage the Group’s
brand and marketing platform.

A key focus has been investing
in a digital platform which is
beginning to generate benefits
through increased revenues and
rates. Ingenia also introduced
an Investor Discount card and
has progressed a range of cross
selling opportunities, including
a Resident Gold Card. Over the
year, partnerships with online
travel agents have also been
extended, and bookings through
these agents are now providing
over $100,000 in revenue
monthly.

As further initiatives are
implemented and Ingenia’s brand
and marketing gain further
recognition, ongoing growth in
returns from short-term sites
are anticipated.

Ingenia Communities Group
14

Lifestyle Park
Development

PARK DEVELOPMENT

Development provides the opportunity to improve returns
through the sale of new homes, expand cash yields through
additional future rent roll, and improve the amenity of existing
communities as new, high quality homes are delivered.

Key data

30 June 2015 30 June 2014

Total active development projects

Sales projects ‘in market’

Homes under construction

Contracted and reserved

Gross development profit

Settlements

Average price ($’000)

$5.7m

$293

$1.3m

$253

A key focus for management
is the build out of the
accretive development
pipeline embedded within
Ingenia’s existing Lifestyle
Parks. The development
pipeline offers attractive
returns while growing
permanent rental income.

The pipeline has been extended
with recent acquisitions and
now represents 1,500 potential
development sites with a
potential end sales value of over
$350 million, providing Ingenia
with significant organic growth
as projects are approved and
developments commenced.

Significant progress was
made in development over the
past year. Ingenia completed
its first development and
invested in development and
sales capabilities to support
accelerated growth and sales as
new projects were launched.

The Portfolio delivered
development profit of
$5.7 million, with 56 settlements
totalling $16.4 million of revenue
and is well placed to continue
to grow this contribution. These
settlements were largely at
Ingenia’s Ettalong Beach and
Lake Macquarie projects on the
NSW Central Coast and Stoney
Creek in Marsden Park (Sydney).

With Ettalong Beach sold out,
strong sales at Lake Macquarie
and ongoing demand at Stoney

Creek will contribute to sales in
the coming year, supplemented
by the launch of Ingenia’s first
Queensland projects (Bethania
and Chambers Pines).

Customer research and
efficiencies are contributing
to product evolution targeting
increased market penetration
and sales growth.

Based on current contracts in
place and the level of interest in
new projects to be launched, 120
sales (either reserved, contracted
or settled) are forecast for the
current financial year.

Development earnings are
anticipated to grow in the
coming year as projects are
launched and targeted sales
achieved.

Securityholder Review 201515

1. Floor plan at Ettalong Beach (NSW)
2 & 3. Construction of manufactured home
4. Active Lifestyle Estates, Ettalong Beach (NSW)

Ingenia Communities Group16

Ettalong Beach
Holiday Village

DEVELOPMENT CASE STUDY

Ingenia’s first development, at Ettalong Beach, sold
out in 7 months and was completed in under a year.

Key Metrics

On acquisition

On completion

Average weekly rent

Permanent sites

Tourism sites

Average sale price

$121

$165 (new homes)

116

–

$320,000
Profit in excess of total spend

With an average price for new
homes of $320,000 and land
lease rent of $165 per week,
the completed development
is forecast to deliver ~10% yield
and an unlevered internal rate
of return of ~19%.

The end result is not only
a financially successful
development but a vibrant new
community which includes a
community centre and library, a
new pool and is home to many
happy residents.

Ettalong Beach Holiday
Village, located at Ettalong
Beach in NSW, was Ingenia’s
second lifestyle park
investment.

Acquired in April 2013, Ettalong
Beach was a mixed use
community with dated facilities
consisting of 85 permanent
homes and 29 tourism sites
(including 22 cabins and
7 powered sites).

Ingenia acquired this leasehold
community for $2.1 million.

On acquisition Ingenia identified
the opportunity to capitalise on
the attractive beachside location
and proximity to services by
repositioning the village as an
over 50s estate. This would
be achieved by converting the
tourism offering and utilising
vacant land.

A Development Application
(DA) was lodged in March 2014
and approval for 31 new home
sites was received in June 2014.
Tourism was progressively
removed from August 2014
and development commenced
in September that year.

The first homes were delivered
to site in November 2014 with
initial settlements occurring the
following month. All homes were
sold in 7 months of the project’s
launch with the final settlements
complete in August 2015.
With homes sold off the plan
at prices above expectations,
strong development profits
were achieved and the return
from the development exceeded
Ingenia’s total spend.

Securityholder Review 201517

1. Development of new homes
2. New signage at Ettalong Beach (NSW)
3. New homes

Ingenia Communities Group18

Focus on care and wellness is improving resident quality
of life whilst driving occupancy and revenue growth.

1. Garden Villages interior
2. Wheeler Gardens, Dubbo (NSW)
3. General Manager Care Development, Janene Eagleton, engaging with residents

Securityholder Review 201519

Garden Villages

RENTAL

Ingenia is the largest owner/operator of
seniors’ rental accommodation in Australia.

This portfolio provides stable recurring
cashflows underpinned by Government
payments (pension and rent assistance).

Key data

Total properties

Total units

Occupancy1

Book value

1. Excludes villages sold June 2015.

30 June 2015 30 June 2014

1,629

90.7%

1,801

87.9%

$125.7m

$114.3m

The Garden Villages
portfolio consists of 31 rental
communities with over 1,600
units across Australia.

The portfolio was remixed
during the year and operating
metrics improved with the sale
of three non-core villages in
regional NSW and Victorian
locations. The villages were sold
in June at a premium to Ingenia’s
December 2014 book value.

Over the year portfolio
occupancy increased to close
the year at an all time high of
90.7%. This occupancy increase,
combined with rent growth
and margin enhancement,
contributed to increased revenue
from the portfolio, to $28.2
million (up from $24.6 million
in 2014).

The benefit of improved
occupancy and operating
performance across a number
of assets was also reflected
in increased asset values.

The portfolio benefitted from
movement in capitalisation rates
as the value of stable cashflows
delivered from rental based
seniors assets began to gain
greater market recognition.

Across the Garden Villages
portfolio engaging residents and
contributing to their health and
wellbeing has continued to be a
key element of Ingenia’s service
and value proposition.

In its fourth year of operation,
the resident engagement
program, ‘Activate 2015’,
continued to build on the sense
of community in the Villages,
offering a range of social events
as well as services to promote
resident health, including eye
and hearing checks, talks on
men’s and women’s health and
maintaining an active brain.

Complementing this focus,
‘Ingenia Care Assist’, a free
service that acts as a ‘care
concierge’, to assist residents
find a pathway through the
maze of accessing care, was
launched in October 2013.

Ingenia Care Assist extends
Ingenia’s commitment to resident
health and well being, enabling
residents to access primary
health services, social support,
transport and allied health
services, assisting them to age in
place while extending the tenure
of residents across the villages.

The Care Assist service also
assists residents, many of whom
have little family support, to
prepare Powers of Attorney
and Advanced Care Directives.
For residents with complex
histories or where one partner
is caring for the other the Care
Assist service ensures that these
residents are well supported
socially and health wise to live
a good quality life.

Through referrals and regular
dialogue the program is
increasing the awareness of
health professionals to the
benefits of Garden Villages
for seniors needing supported
accommodation as a rental
alternative to assisted living
apartments and residential
care. These professionals are
increasingly referring residents
to Ingenia’s villages.

Commencing in four villages,
the program is operating across
all 31 Garden Villages and has
now been extended to selected
communities within the Active
Lifestyle Estates portfolio.

With occupancy growing across
the portfolio, the key focus will
be on growing rents above the
pension/CPI. Combined with an
ongoing focus on community
engagement, operational
efficiencies and the growing
benefit of Ingenia Care Assist,
the portfolio is positioned well to
continue to improve occupancy
towards the target of 93%
and grow earnings in the 2016
financial year.

Ingenia Communities Group20

1. Home at Settlers Ridge Estate (Gillieston Heights, NSW)
2. Residents enjoying the summer sun
3. Community Centre at Settlers Lakeside (Ravenswood, WA)

Securityholder Review 201521

Settlers

DEFERRED MANAGEMENT FEE

Ingenia’s Settlers Villages provide traditional
retirement living for self funded retirees.

Ingenia’s focus is on maximising returns while
seeking to exit the portfolio at an appropriate value.

Key data

Total properties

Total units

Occupancy

Book value

30 June 2015 30 June 2014

838

93%

980

92%

$62.9m

$76.0m

Despite this, the portfolio
has started 2016 well with an
additional 27 contracts in place
at 30 June 2015.

The sale of Settlers Lifestyle
Noyea Park settled in July 2014,
providing net proceeds of
$5.4 million for reinvestment
in the higher yielding Lifestyle
Parks portfolio.

Growth from the portfolio
is anticipated to moderate,
as developments and the
conversion program are largely
complete. Ingenia will seek to
divest these assets over time,
in line with the Group’s strategy
to focus on cash yielding
rental assets.

The Settlers Lifestyle
portfolio consists of eight
Deferred Management Fee
(DMF) communities with
over 830 homes across WA,
QLD and NSW.

An increase in accrued deferred
management fee income as a
result of rising prices in Ingenia’s
Western Australian Villages
contributed to a strong result
for the year.

Development profits across
the portfolio were down on
the prior year as stock levels
have reduced, reflecting the
completion of developments
and remaining 1 bedroom and
studio stock. With the conversion
program (which has seen the sale
of 192 converted units for over
$34 million over the past four
and a half years) also nearing
completion, development profits
will continue to moderate.

Ingenia Communities Group22

Investing in
our People

Committed, motivated
and passionate staff
are vital to Ingenia’s
service proposition
to residents.

As the Group continues to grow, we
remain committed to building a team
delivering exceptional service to our
residents and results for our investors.

We promote an engaging and healthy work
culture and seek to grow the skills of our team
to keep pace with business growth; ensuring
team members have opportunities to develop
new skills and experiences to help them
achieve their individual career goals.

As an organisation, we are very fortunate to
have many highly committed, experienced
people. They are key to our success and to
our ability to continue to meet the needs of
a growing number of residents and holiday
makers across our extensive portfolio.

This year, we are again delighted to showcase
employees who are a testament to what
drives our success.

Securityholder Review 201523

Maggie Arnold
General Manager
Village Operations,
Swan View Gardens

What is your role within
Ingenia, and how long have
you worked for the Group?
My role is Village Manager at
Swan View Gardens. Swan View
is Ingenia’s largest village in
Western Australia with 72 units,
in a busy suburb not far from the
Perth Airport.

How long have you
worked for the Group?
I have been Village Manager
at Swan View Gardens for
over nine years and have been
with Ingenia since the Group
acquired the Village.

How has your
career progressed?
Before we came to Swan View
Gardens my husband Keith
(our Village Cook) and I had
been self employed, which
was really stressful.

Over our years with Ingenia we
have seen many changes which
have improved the lives and
experiences of residents. It’s
been interesting watching the
way in which the villages are
managed now and the changes
are for the better. For example
it’s easier to get things done,
such as approvals for repairs
and the units being upgraded.
These really add to residents’
satisfaction.

What is the most rewarding
part of your role?
I like working with people, you
have to in this industry and this
role. I enjoy the residents – they
have a lot to teach us and it is
great to see them engaged and
enjoying themselves.

The Activate program is
wonderful – I wish I’d had a video
camera to record the ladies
playing croquet recently – they
laughed and laughed.

What is the hardest part
of your role?
Saying goodbye to residents who
have been in the Village for many
years if they really have to go to
Higher Care.

Where do you see
yourself in five years?
I would like to think I’ll still be
doing the same job for many
years yet, as I really enjoy
directly working with so many
wonderful residents.

Tell us a fun fact about
yourself that we’ll never guess?
When I was 20 I played
Netball for the New Zealand
National team for two years,
although my past-times now
are more leisurely - watching
my grandchildren grow up
and reading a good book with
a glass of red!

Ingenia Communities Group24

Investing in
our People

continued

Melanie Matthias
Contracts Administrator

What is your role
within Ingenia?
My role with Ingenia is
Contracts Administrator.
In addition, I oversee the
Call Centre where we receive
enquiries across the three
portfolios (Active Lifestyle
Estates, Settlers and
Garden Villages).

How long have you
worked for the Group?
I have been with Ingenia
for six years.

What attracted you to
your role? And Ingenia?
I commenced work with the
business in a Customer Service
role. The role involved being
the first point of contact
for enquiries for the Garden
Villages brand, distributing and
managing leads for the business
and supporting the marketing
department. The majority of my
day was spent listening to the
needs of seniors and explaining
the benefits of renting in our
retirement communities.

What interests you
about retirement?
When I tell my friends the
Retirement sector is an
exciting industry I usually get
some strange looks. Working
in this industry is extremely
rewarding, especially when
residents declare they love their
village and wish they made the
move so much sooner.

How has your
career progressed?
With the introduction of
Retirement Villages and
Residential Parks to the
portfolio, the role of Contracts
Administration for me was a
natural progression. The role
requires a solid understanding
of legislation across the
different states and Acts.

What’s the most rewarding
part of your role?
The most rewarding part of
my job is being able to support
our sales team and also present
to our clients the offer of a
quality lifestyle, no matter which
type of community they choose
to live in.

Where do you see yourself
in five years?
I see myself continuing to work
in the retirement sector in five
years with Ingenia and look
forward to being able to make a
positive mark on the way seniors
spend their retirement years.

Tell us a fun fact
about yourself that we’ll
never guess?
Amongst the menagerie of
pets I have at home, my latest
additions to the family are two
pet Barramundi named Barry
and Brian.

Securityholder Review 201525

Lance Barratt
Service Station Manager,
BP Noosa

What is your role within
Ingenia, and how long have
you worked for the Group?
I am manager of the BP Noosa
Service Station which was
acquired by Ingenia along
with the Big4 Noosa at Tewantin,
Queensland in February this
year. Prior to the acquisition
I have been an employee
of the business since 1997
and manager since 2005.

What attracted you
to your role?
Having worked for the same
business all my adult life it was
natural progression. My years
of service meant I had a good
knowledge of the day-to-
day operations and it was an
exciting step up in my career
and presented new ways to
challenge myself.

What excites about
our organisation?
Having a team behind me
providing the support and
assistance where and when
it is needed.

What interests you
about the petrol and
convenience sector?
It’s a competitive industry and
the challenge of finding ways
to keep loyal customers returning
is something I enjoy.

Where do you see
yourself in five years?
In five years time I’d love to
be happily working still in my
role or have broadened my
skill set and progressed up
the career ladder.

Tell us a fun fact
about yourself that we’ll
never guess?
Last year my fiancé and I bought
a 50 acre property which is
quickly becoming a hobby farm
with a couple of horses, two
border collie dogs, two miniature
goats and some rescued ex-
battery hens now living the
good life!

What’s the most rewarding
part of your role?
Getting positive feedback about
friendly staff interactions or in
store promotions. When sales
and profits are up and customers
leave smiling, everything is
running as it should be.

What’s the hardest part
of your role?
Remaining competitive in the
‘dog eat dog’ world of fuel
retailing is a nightmare. Being
an independent amongst a
world of corporate owned and
operated fuel sites means we
can’t play the price war head
to head but instead must find
alternate ways to keep a loyal
customer base. We achieve this
by offering a point of difference,
friendly driveway services and
competitive pricing on everyday
shop items for our largely
residential surrounds.

Ingenia Communities Group26

Board of
Directors

A dedicated and
focused Board with
significant industry
expertise and
strong professional
experience

1. Jim Hazel
Non-Executive Chairman
Mr Hazel was appointed to the Board in
March 2012.

Mr Hazel has had 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 current listed company directorships
include Bendigo and Adelaide Bank Limited,
Centrex Metals Limited and Impedimed
Limited. He also serves on the Boards of Motor
Accident Commission, Coopers Brewery
Limited, Adelaide Football Club and the
Council of the University of South Australia.
Mr Hazel holds a Bachelor of Economics and
is a Senior Fellow of the Financial Services
Institute of Australasia and a Fellow of the
Australian Institute of Company Directors.

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

2. Simon Owen
Chief Executive Officer and Managing Director
Mr Owen was appointed to the Board in
November 2011.

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 focus
on lifestyle parks. Mr Owen brings to the
Group in-depth experience in the retirement
sector and is a 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, a role he
held for four years.

Mr Owen has over 20 years experience
working in ASX listed groups with roles
across finance, funds management, mergers
and acquisitions, business development
and sales and marketing. Prior to joining
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.

Securityholder Review 201527

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.
She 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 Boards of Summerset
Group Holdings Limited, Estia
Health Limited, Vigil Monitoring
Limited, Lifetime Design Limited,
Evolve Education Group Limited
and Methven Limited. She also
serves as a member of the
New Zealand Government’s
National Advisory Council for
the Employment of Women.
Ms Barlow holds a Bachelor of
Commerce and Administration
and is a qualified Chartered
Accountant. Ms Barlow was
made an Officer of the New
Zealand Order of Merit for
services to business in 2014.

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

7. Leanne Ralph
Joint Company Secretary
Ms Ralph was appointed to the
position of Company Secretary
in April 2012.

She 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. She is the principal
of Boardworx Australia Pty
Ltd, which supplies bespoke
outsourced Company Secretarial
services to a number of listed
and unlisted companies.

3. Philip Clark AM
Non-Executive Director
Mr Clark was appointed to the
Board in June 2012.

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’s qualifications include
a Bachelor of Arts, Bachelor of
Law and a Masters of Business
Administration.

Mr Clark is Chair of the
Remuneration and Nomination
Committee.

4. Amanda Heyworth
Non-Executive Director
Ms Heyworth was appointed to
the Board in April 2012.

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 mergers
and acquisitions transactions.
She sits on a number of public
sector and private boards.

Ms Heyworth has a BA
(Accounting) with a major
in finance from the University
of South Australia and has
post graduate qualifications
in accounting and finance.
She also holds a MBA from
the Australian Graduate
School of Management.

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

5. Robert Morrison
Non-Executive Director
Mr Morrison was appointed
to the Board in February 2013.

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
a Non-Executive Director of
Mirvac Funds Management
Limited, an Executive Director
of AMP Capital Limited 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. Mr Morrison
holds a Bachelor of Town and
Regional Planning (Hons) and
a Master of Commerce.

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

6. Norah Barlow ONZM
Non-Executive Director
Ms Barlow was appointed
to the Board in March 2014.

Ingenia Communities Group28

Leadership
Team

A strong industry
experienced
leadership team

1. Simon Owen
Chief Executive Officer and Managing Director
Simon 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
focus on lifestyle parks. Simon brings to the
Group in-depth experience in the retirement
sector and is a 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, a role he
held for four years.

Simon has over 20 years experience
working in ASX listed groups with roles
across finance, funds management, mergers
and acquisitions, business development
and sales and marketing. Prior to joining
Ingenia Communities, Simon was the CEO
of Aevum, a formerly listed retirement
company. Simon is a qualified accountant
(CPA) with postgraduate diplomas in finance
and investment and advanced accounting.

2. Tania Betts
Chief Financial Officer
and Joint Company Secretary
Tania joined the Group in May 2012, after a
6-year career at Stockland Group where she
held various positions, including National
Finance Manager within their Retirement Living
Division. Tania’s previous experience includes
several years within the chartered accounting
profession as well as working for a leading
healthcare 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. Tania was the 2011 winner of the
Urban Development Institute of Australia NSW
and SMEC Urban Young Developers’ Award
for Excellence.

Securityholder Review 201529

Donna has over 15 years
experience in communications
and investor relations having
worked with The GPT Group,
Lend Lease US Office Trust, Lend
Lease, the Securities Institute of
Australia and Westpac Banking
Corporation. Prior roles include
Head of Investor Relations
and Corporate Affairs with
the GPT Group and a range
of communications, marketing
and investor relations roles at
Lend Lease. Donna’s experience
spans both listed and unlisted
investor markets.

Donna holds a Bachelor of
Economics and a Masters
of Education.

8. Kate Melrose
General Manager, Project Sales
Kate joined Ingenia in August
2014 and is responsible for
sales across the Group’s
Active Lifestyle Estate
development projects.

Kate brings over 20 years of
property experience to the role.

Kate spent 14 years at Lend
Lease in a range of roles
including Global Strategic
Marketing Manager, Project
Director, and roles focused on
product innovation and sales
management.

Kate has been at the leading
edge of innovation in the
retirement and integrated
aged care sector leading
design innovation and sales
at Mark Moran Vaucluse and
Greengate and is passionately
committed to “providing better
Retirement solutions”.

Kate holds a Bachelor of
Business (Land Economics)
and a Certificate in Corporate
Real Estate.

3. Nikki Fisher
Chief Operating Officer
Nikki is responsible for the
operations of Ingenia’s portfolio
of Rental and Deferred
Management Fee (DMF) Villages
and the Group’s growing Active
Lifestyle Estates & Holidays
business. She joined the Group
in 2010.

Nikki has 19 years’ experience
in the property and asset
management industry. Her
career spans multiple asset
classes including industrial,
commercial and retail. Prior to
Ingenia, Nikki spent 10 years
at Westfield Group where she
held the position of Regional
Manager QLD North, overseeing
a portfolio in excess of $2 billion.
She holds a Bachelor of Business
in Accounting and Industry
Economics.

4. Janene Eagleton
General Manager,
Care Development
Janene joined the Group
in August 2013 and has
responsibility for the
development and operation
of the Group’s care and re-
enablement program, Ingenia
Care Assist. Janene brings
to the Group extensive
experience in health, retirement
and aged care strategy and
operations, having held senior
management positions with
Australian Unity, Catholic
Healthcare and St Vincent’s
Private Hospital. Janene holds
an MBA (Macquarie) and is
a graduate member of the
Australian Institute of Company
Directors and the Governance
Institute of Australia. She has
substantial experience as a
Board Director for industry and
consumer associations, not-
for-profit companies and NSW
Government Councils.

5. Simon King
Chief Investment Officer
Simon is responsible for the
Group’s acquisitions and
divestments, asset allocation and
overall capital management. He
joined the Group in May 2015.

Simon has 20 years’ experience
in the property and funds
management industry having
worked at Mirvac, Stockland
and Lend Lease. Most recently,
Simon held the position of
Fund Manager in Lend Lease’s
Investment Management
business where he was
responsible for the operation
of three unlisted wholesale
Funds. Simon also has extensive
experience in asset management
and property development.
Simon holds a Bachelor of
Business (Land Economics).

6. Corrie Milne
General Manager,
Village Operations
Corrie oversees the day to
day operational management
of the Group’s villages. Corrie
joined the business in October
2008 as the Regional Manager
(Queensland) and in February
2009 moved into the role of
Senior Regional Manager across
the Australian portfolio. His
rapid growth within the business
has seen him promoted to his
current role in July 2013. Prior
to starting with Ingenia, Corrie
worked with Sunny Cove Villages
Group for two years in various
roles. Corrie has over 10 years
of experience in the hospitality
industry with Mirvac Hotels and
the Stamford Group, mainly in
senior management roles. Corrie
holds a Diploma in Business and
a Graduate Certificate in Asset
Management.

7. Donna Byrne
Group Investor Relations Manager
Donna joined the Group
in November 2014 and is
responsible for the Group’s
investor relations and corporate
affairs functions.

Ingenia Communities Group
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

2015

Annual Report

Ingenia Communities Holdings Limited
Annual Reports

for the year ended 30 June 2015

CONTENTS
Directors’ Report

Auditor’s Independence Declaration

Consolidated Statement of Comprehensive Income

Consolidated Balance Sheet

Consolidated Cash Flow Statement

Consolidated 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

9. Business combinations

10. Assets and liabilities held for sale

11. Cash and cash equivalents

12. Trade and other receivables

13. Inventories

14. Investment properties

15. Plant and equipment

16. Intangibles

17. Trade and other payables

18. Borrowings

19. Retirement village resident loans

20. Provisions

21. Derivatives

22. Deferred tax assets and liabilities

23. Issued securities

24. Reserves

25. Accumulated losses

26. Commitments

27. Contingent liabilities

28. Share-based payment transactions

29. Capital management

30. Financial instruments

31. Fair value measurement

32. Auditor’s remuneration

33. Related parties

34. Company financial information

35. Subsidiaries

36. Notes to the cash flow statement

37. Subsequent events

Directors’ Declaration

Independent Auditor’s Report

www.ingeniacommunities.com.au

Annual Report 2015Directors’ Report

for the year ended 30 June 2015

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 2015 (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)

Philip Clark AM

Amanda Heyworth

Robert Morrison

Norah Barlow ONZM

Executive Directors
Simon Owen (Managing Director and Chief Executive
Officer) (“MD” and “CEO”)

1.1 Qualifications, Experience and Special

Responsibilities

Jim Hazel - Chairman
Mr Hazel has had 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 current listed company directorships include
Bendigo and Adelaide Bank Limited, Centrex Metals
Limited and Impedimed Limited. He also serves on the
Boards of Motor Accident Commission, Coopers Brewery
Limited, Adelaide Football Club and the Council of the
University of South Australia. Mr Hazel holds a Bachelor of
Economics and is a Senior Fellow of the Financial Services
Institute of Australasia and a Fellow of the Australian
Institute of Company Directors.

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

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’s qualifications include
a Bachelor of Arts, Bachelor of Law and a Masters of
Business Administration.

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
Masters of Business Administration (“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 mergers and
acquisitions transactions. She sits on a number of public
sector and private boards. Ms Heyworth has a Bachelor
of Arts (Accounting) with a major in finance from the
University of South Australia and has postgraduate
qualifications in accounting and finance. She also holds a
MBA from the Australian Graduate School of Management.

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 a Non-Executive Director of
Mirvac Funds Management Limited, an Executive Director
of AMP Capital Limited 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. Mr Morrison holds a Bachelor of Town
and Regional Planning (Hons) and a Master of Commerce.

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

Ingenia Communities Holdings Limited2

Directors’ Report

for the year ended 30 June 2015 | continued

Norah Barlow ONZM
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. She 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 Boards of
Summerset Group Holdings Limited, Estia Health Limited,
Vigil Monitoring Limited, Lifetime Design Limited, Evolve
Education Group Limited and Methven Limited. She also
serves as a member of the New Zealand Government’s
National Advisory Council for the Employment of
Women. Ms Barlow holds a Bachelor of Commerce and
Administration and is a qualified Chartered Accountant.
Ms Barlow was made an Officer of the New Zealand Order
of Merit for services to business in 2014.

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

Simon Owen – MD and CEO
Simon 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
the Group’s focus on lifestyle parks. Simon 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, a role he held for four years.

Simon has over 20 years experience working in ASX listed
groups with roles across finance, funds management,
mergers and acquisitions, business development and
sales and marketing. Prior to joining Ingenia Communities
Group, Simon was the CEO of Aevum, a formerly listed
retirement company. Simon 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 or their associates as at 30 June 2015 were:

Jim Hazel

Philip Clark AM

Amanda Heyworth

Robert Morrison

Norah Barlow

Simon Owen

Issued stapled
securities

Performance
quantum rights

1,669,587

238,096

641,524

453,335

209,063

–

3,763,905

5,429,413

Annual Report 20153

2. COMPANY SECRETARIES

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 joined the Group 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 Urban Young Developers’ Award for
Excellence.

3. OPERATING AND FINANCIAL REVIEW

a. Ingenia Communities Group Overview
The Group is an active owner, manager and developer
of a diversified portfolio of retirement communities and
lifestyle parks across Australia. Its real estate assets are
valued at $392.8 million, being 20 lifestyle parks, 31 rental
villages and eight deferred management fee villages. The
Group is in the ASX 300 with a market capitalisation of
approximately $408 million.

The Group’s vision is to be a leading Australian
provider of affordable long-term and short-term rental
accommodation with a focus on the seniors demographic.
The Board is committed to delivering long-term earnings
and security price growth to securityholders and
providing a supportive community environment to both
its permanent and short-term residents.

b. Strategy
The Group’s strategy is primarily focused on improved
operational performance across its portfolio and continued
acceleration of development within its lifestyle parks
sector. Using a disciplined investment framework, the
Group will continue to acquire further lifestyle parks
through deployment of the balance of equity funds raised
in October 2014 as well as capital recycling, efficient
inventory management and sale of completed homes.

The Group finalised its strategic exit from the non-core
New Zealand Students portfolio in December 2014 and
is in the process of reducing its investment in DMF assets.

A key element to achieving growth is efficient operational
and capital management. In February 2015, the Group
completed a debt refinance which increased its facility
limit to $175.0 million, expanded its lender base, created
enhanced flexibility and lowered pricing to an “all in”
cost of debt currently of 4.6%. As at 30 June 2015, the
facility is drawn to $63.9 million, which represents a loan
to value ratio (“LVR”) of 22.6%, well below our target
range of 30-35%. This leaves the Group well positioned
to execute on further investment opportunities.

The key immediate business priorities of the Group are:

– Continue building velocity in the delivery and sale of new

homes within the Active Lifestyle Estates business;

– Acquire additional lifestyle parks in existing and new

market clusters;

– Grow occupancy rates within the Garden Villages

portfolio towards a new medium term target of 93%;

– Grow occupancy and average room rates for short-term

accommodation within Active Lifestyle Estates

– Continue sell down of completed homes within the

Settlers portfolio and explore opportunities to recycle
capital from Settlers assets into higher cash yielding
lifestyle park assets; and

– Focus on growing asset cash yields through operational

efficiencies including revenue optimisation and
disciplined cost management.

c. FY15 Financial Results
FY15 has been a year of significant investment in the Active
Lifestyle Estates portfolio, with the focus on building a
proven sales and development platform to deliver the
forecast development pipeline returns. Management has
also remained focused on increasing occupancy within
the Garden Villages portfolio, selling down available stock
within the Settlers portfolio and recycling capital from low
yielding assets as evidenced by the divestment of three
underperforming Garden Villages assets in June 2015.

Overall, FY15 has produced an Underlying Profit of
$17.5 million and a statutory profit of $25.7 million,
which respectively represents a significant increase of
$5.9 million (51.3%) and $14.2 million (123.3%) on prior
year. These results are underpinned by a significantly
higher contribution from the Active Lifestyle Estates of
$8.4 million, up 112.5% from prior year.

Operating cashflow for the year was $9.0 million,
down 36.6% from the prior year, reflecting growth in
recurring rental income offset by increased investment
in manufactured home production.

In October 2014, the Group raised $89.1 million from
an institutional placement and rights issue, which with
available debt facilities provided capacity to invest
approximately $120 million into the lifestyle parks
sector. Over the year the Group invested an additional
$71.1 million (excluding transaction costs) into lifestyle
parks acquiring a further five assets. To date, $87.0 million
has been deployed into six assets with a further acquisition
announced in August.

Ingenia Communities Holdings Limited4

Directors’ Report

for the year ended 30 June 2015 | continued

The Group has today announced a final distribution of 0.70 cents, which brings the full year distribution to 1.35 cents. The
dividend reinvestment plan will be available to securityholders and Board reaffirms its commitment to further growth in
securityholder returns over the medium term.

d. Key Metrics
– Full year distribution of 1.35 cents per security, up 17.4%.
– Underlying Profit was $17.5 million, up 51.3% from FY14.
– Underlying Profit per security was 2.1 cents, up 0.3 cents from FY14.
– Net asset value grew by 3.4 cents per security to 38.9 cents.
– Statutory profit was $25.7 million, up 123.3% from FY14.
– Statutory profit per security was 3.2 cents, up 1.5 cents from FY14.

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

Other

Discontinued operations (below Underlying Profit), net of tax

Tax benefit associated with items below Underlying Profit

Statutory profit

2015
$’000

18,050

(4,567)

3,319

16,802

705

17,507

111

(69)

16,404

164

(8,878)

(2,422)

503

(883)

3,285

25,722

2014
$’000

12,144

(4,077)

2,896

10,963

605

11,568

(147)

–

(341)

(616)

(3,320)

–

(35)

4,368

11,518

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.

Annual Report 2015

f. Segment Performance and Priorities

Active Lifestyle Estates
Active Lifestyle Estates was launched in March 2013 and the Group now owns 20 lifestyle parks. 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 2015
is $204.2 million.

i. Performance

Active Lifestyle Estates

New and refurbished home settlements #

Development profit $m

Permanent rental income $m

Annuals rental income $m

Short-term rental income $m

EBIT contribution

FY15

$5.7m

$8.3m

$1.0m

$10.3m

$8.4m

FY14

Change

$1.3m

$4.2m

$0.3m

$5.0m

$3.9m

$4.4m

$4.1m

$0.7m

$5.3m

$4.4m

Active Lifestyle Estates delivered an EBIT contribution of $8.4 million in FY15, of which $5.7 million was attributable to
development of new and refurbished manufactured homes. The momentum achieved in settlements during FY15 has been
strong and indicates a growing customer awareness and understanding of the lifestyle offering within our parks. Our two
key manufactured home builders have performed well under the supplier agreements established this year and further
council approvals has seen an increase in the volume of development ready approved sites. The rental accommodation
earnings of this segment have grown strongly both through acquisitions and improved performance from the short-term
tourism rental accommodation, despite taking some short-term sites off line to facilitate development. This strong result
reflects investment in a sales and development framework for new homes which is well progressed with further refinements
expected in FY16. We remain confident of building on this strong result during the coming financial year.

ii. Strategic priorities
The key strategic priorities for this business are continuing the sales and settlement momentum achieved during FY15,
securing further development approvals for new homes within our existing parks, optimising home designs for efficiency
and customer demand, growing rental returns and leveraging scale efficiencies. In FY16, the Group will assess expanding
into greenfield development.

Garden Villages
Garden Villages comprises 31 rental villages located across the eastern seaboard and Western Australia. These villages
accommodate more than 1,600 residents, and generate $24.4 million in gross rental income per annum. The carrying value
of these assets at 30 June 2015 is $125.7 million.

i. Performance metrics

Garden Villages

Like for like occupancy %

Rental income $m

Catering income $m

EBIT $m

FY15

FY14

Change

90.7%

$24.4m

$3.5m

$11.0m

87.9%

$21.0m

$3.2m

$9.9m

2.8%

$3.4m

$0.3m

$1.1m

Garden Villages delivers a consistent stream of recurring cash income for the Group. The results are up $1.1 million on prior
year due to growing occupancy levels, which are up 2.8% on a like for like basis.

In June 2015, three ‘out of cluster’, management intensive villages were divested for $6.7 million. Two of these villages were
owned by the Group for eighteen months and were sold at 14% above their purchase price.

ii. Strategic priorities
The key strategic priorities of this business over the coming year are to continue increasing village occupancy, increasing
rents above CPI, growing cash margins, ensuring residents are actively engaged and maintaining affordability whilst
leveraging scale efficiencies across the portfolio.

Ingenia Communities Holdings Limited6

Directors’ Report

for the year ended 30 June 2015 | continued

Settlers Lifestyle
Settlers Lifestyle is comprised of eight deferred management fee villages, four of which are 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
from villages which are not yet fully converted and development income from unit conversions and village expansion.
The carrying value of these assets at 30 June 2015, net of resident loans and lease liabilities is $62.9 million. The Group is
exploring opportunities of reducing its exposure to this portfolio with five assets classified as held for sale at 30 June 2015.

i. Performance

Settlers Lifestyle

Occupancy %

New unit settlements #

Development income $m

Accrued deferred management fee income $m

EBIT $m

FY15

93%

$2.4m

$6.8m

$6.3m

FY14

Change

92%

$3.3m

$5.3m

$4.5m

(14)

($0.9m)

$1.5m

$1.8m

The Settlers Lifestyle result is up $1.8 million from prior year despite lower settlement volumes and development margins as
a result of several development projects nearing completion. These lower development earnings were offset by significant
growth in the Group’s share of capital growth in the underlying units and winding down of sales and marketing efforts on
near complete projects.

ii. Strategic priorities
The key strategic priorities of this business over the coming year are completing the sale of the five assets classified as held
for sale along with selling down any remaining stock across the portfolio.

Discontinued Operations
The Group completed its exit from the New Zealand Students portfolio in December 2014.

g. Capital Management
The Group adopts a prudent and considered approach to capital management. During the year, the Group strengthened
its capital position by undertaking an $89.1 million capital raising and negotiating a new $175.0 million Australian multilateral
debt facility; an increase of $45.5 million from the previous facility.

As at 30 June 2015, the current LVR is 22.6%, which is below our target LVR of 30-35%. Once the Group deploys remaining
proceeds from the capital raising and debt into further lifestyle parks, the LVR will move towards the lower end of the target
range.

h. Financial Position
The following table provides a summary of the Group’s financial position as at 30 June 2015:

$,000

Cash and cash equivalents

Inventories

Investment properties

Assets held for sale

Assets of discontinued operations

Deferred tax asset

Other assets

Total assets

Borrowings

Retirement village resident loans

Liabilities held for sale

Liabilities from discontinued operations

Other liabilities

Total liabilities

Net assets/equity

30 June 2015

30 Jun 2014

Change

15,117

13,208

12,894

2,208

539,728

498,863

61,598

–

6,348

9,308

5,439

47,657

–

7,863

2,223

11,000

40,865

56,159

(47,657)

6,348

1,445

645,307

574,924

70,383

66,782

161,878

42,041

98,356

190,122

(31,574)

(28,244)

–

42,041

–

30,449

(30,449)

31,086

301,787

15,820

15,266

334,747

(32,960)

343,520

240,177

103,343

Annual Report 20157

Inventories, up $11.0 million, include 53 completed homes, reflecting the Group’s growing investment in the lifestyle sector.
Development and sale of new manufactured homes is key to the Group’s strategy and as the number of active development
projects increases, this balance will grow however at a lesser rate than that in FY15.

Investment properties increased by $40.9 million due to acquisition of five lifestyle parks for $78.2 million (including
transaction costs), development expenditure, a $16.4 million fair value uplift offset by divestment of three Garden Villages
assets and a $61.6 million reclassification of five Settlers villages to assets held for sale.

Assets and liabilities held for sale relates to five Settlers villages which are currently subject to sale with settlement expected
within twelve months.

Assets and liabilities of discontinued operations decreased to nil reflecting the disposal of New Zealand operations in
December 2014, in line with the divestment strategy.

Borrowings fell by $31.6 million reflecting application of funds yet to be deployed from the October equity raising and
proceeds from the New Zealand Students divestment. Full deployment of these funds is anticipated within the coming
months which will see debt levels increase.

Other liabilities increased by $15.3 million due to recognition of deferred consideration associated with some of the lifestyle
park acquisitions during the year.

i. Cashflow

$,000

Operating cashflow

Investing cashflow

Financing cashflow

Net change in cash and cash equivalents

30 June 2015

30 Jun 2014

Change

9,034

14,240

(5,206)

(24,232)

(126,084)

101,852

15,564

366

89,012

(73,448)

(22,832)

23,198

Operating cash flow for the Group was $9.0 million reflecting growth recurring rental income contribution from the
Active Lifestyle Estates and Garden Villages segments offset by a net cash outflow of $3.6 million associated with the
manufactured homes. Over the last year, the Group has significantly ramped up its development activities and launched
several projects. The Group has settled 56 homes during the year with a further 53 completed homes and 44 under
construction homes included within inventory at June 2015.

j. Distributions
The following distributions were made during or in respect of the year:

– On 24 February 2015, the directors declared an interim distribution of 0.65 cps (2014: 0.50 cps) amounting to $5,712,537

which was paid on 18 March 2015.

– On 25 August 2015, the directors declared a final distribution of 0.70 cps (2014: 0.65 cps) amounting to $6,205,793, to be

paid on 16 September 2015.

The distribution is 71.0% 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.

k. Outlook
The Group is well positioned to continue growing its lifestyle parks business with a significant and accretive acquisition
pipeline in place and significant debt capacity. Further growth in sales and settlements volumes is expected in FY16 as
further projects are launched.

The Group will continue to regularly assess the performance of its existing assets and where appropriate recycle that capital
into other opportunities delivering superior returns.

Ingenia Communities Holdings Limited8

Directors’ Report

for the year ended 30 June 2015 | continued

4. 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 10 of the accompanying financial statements for
Assets and liabilities held for sale, Note 14 for Australian
investment properties acquired or disposed of during the
year, Note 30 for details of Australian debt refinanced
and Note 23 for Issued securities.

5. EVENTS SUBSEQUENT TO REPORTING DATE

a. Performance Quantum Rights Vesting
On 1 July 2015, 3,842,000 Performance Quantum Rights
(“PQRs”) granted to key management personnel (“KMP”)
in 2012 vested. As a result, 3,842,000 fully paid stapled
securities have been issued to the following KMP:

Simon Owen

2,260,000

Tania Betts

791,000

Nicole Fisher

791,000

b. Acquisition of Upstream Bethania
On 3 July 2015, the Group settled Upstream Bethania,
the Group’s second Active Lifestyle Estate in Brisbane,
complementing Chambers Pines Lifestyle Resort and
the Group’s existing Garden Villages in the region. The
acquisition price was $8.2 million (excluding transaction
costs) and was funded from the proceeds of the capital
raising in October 2014.

This park, now known as Active Lifestyle Estate Bethania,
is an existing manufactured home community outside
Brisbane and represents a significant development
opportunity that will grow the Group’s existing
rental stream.

c. Execution of Hedging Contract
On 31 July 2015, the Group entered into an interest rate
hedge collar for $16.0 million with an expiry date of
August 2017. The execution of this hedge means 23.2%
of the Group’s debt is currently hedged with the intention
to gradually increase the hedged exposure over the
coming months.

d. Acquisition of Big 4 Conjola Lakeside
On 13 August 2015, the Group announced it had exchanged
unconditional contracts for the acquisition of Big 4
Conjola Lakeside in Lake Conjola, NSW. The acquisition
price is $24.0 million (excluding transaction costs) and
will be funded from the proceeds of the capital raising
in October 2014.

e. Final FY15 Distribution
On 25 August 2015, the directors of the Group resolved
to declare a final distribution of 0.70 cps (2014: 0.65 cps)
amounting to $6,205,793 to be paid as 16 September 2015.
The distribution is 71.0% tax deferred and the dividend
reinvestment plan will apply to the final distribution.

6. LIKELY DEVELOPMENTS
The Group will continue to pursue strategies aimed at
improving its cash earnings, profitability and market share
within the rental property industry during the next financial
year, with a continuing focus on the development and
acquisition of lifestyle parks.

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

7. ENVIRONMENTAL REGULATION
The Group has policies and procedures in place to ensure
that, where operations are subject to any particular and
significant environmental regulation under the law of
Australia, those obligations are identified and appropriately
addressed. The directors have determined that there has
not been any material breach of those obligations during
the financial year.

8. GROUP 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.

9. INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed
to indemnify its auditors, Ernst & Young Australia, 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 29.

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.

Annual Report 2015
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 FY15.

12.1 Introduction
Ingenia undertook a thorough review and made significant
changes to its executive remuneration arrangements
between 30 June 2014 and the AGM in November
2014. Those changes were summarised last year in a
message from the Committee and detailed in the FY14
Remuneration Report under the section dealing with
FY15 remuneration. They are also detailed in the FY15
Remuneration Report which follows, so it is not necessary
for me to repeat them here.

We were very pleased by the strong support from
securityholders for those changes which was reflected in
a 99% vote in favour of the Remuneration Report at last
year’s AGM.

We are not proposing significant changes this year in
relation to FY16 executive remuneration. The few changes
that are proposed are highlighted below and detailed in
the Remuneration Report Section 13.13.

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

Ingenia was internalised in June 2012. Performance in
the first two years of operation, FY13 and FY14 was
exceptional.

Ingenia ran into some headwinds in the first half of FY15
and results were below expectations. However, Ingenia
had a strong second six months with results for the FY15
year above threshold but below target. This outcome
is reflected in the executive and NED remuneration
recommendations in the Remuneration Report.

12.3 Ingenia’s Corporate Strategy
Ingenia’s corporate strategy has not changed substantially
from last year. The strategy is highlighted in the CEO’s
Investor Presentation.

The Board has continued to closely align remuneration
objectives and strategy with corporate strategy. For
example, because the Board is focusing on medium to
long-term return on investment, we have decided to
introduce an additional LTI hurdle for performance against
Return on Equity targets.

12.4 Overview of 2015 Remuneration
We acknowledge that corporate governance requirements
are making remuneration reports more complex so key
outcomes from Ingenia’s FY15 and FY16 remuneration
are summarised below for the convenience of our
securityholders:

– FY15 STI award outcomes for Key Management

Personnel (“KMP”) were broadly in line with Ingenia’s
performance, above threshold but below target and well
below maximum.

– FY16 STI metrics have again been set at quite

challenging levels and are substantially based on
quantified targets including Underlying Profit and
relevant operating targets.

– The Board has approved modest increases in FY16 Total
Fixed Remuneration for KMP: no increase for the CEO,
a 2.5% increase for the CFO and a 5.0% increase for the
Chief Operating Officer (“COO”).

– The Board is proposing a change from last year in the
mix of TFR, STI and LTI percentages for the CFO and
COO, increasing the STI at risk component from 40%
to 60% of TFR.

– The structure of KMP remuneration also remains

unchanged

• STI will be paid 50% in cash and 50% in deferred
equity which is subject to a vesting requirement
that Underlying Profit must increase by at least 5%
over the previous year for deferred STI to vest. This
effectively operates as a performance gateway for
vesting.

• Both deferred STI and LTI are subject to a malus

provision.

– As noted above the Board has introduced an additional
LTI hurdle which measures performance against Return
on Equity targets. As with our TSR hurdle there will be
zero LTI vesting at threshold.

– The review of NED remuneration has been deferred until

December 2015.

12.5 Conclusion
My colleagues on the Remuneration and Nomination
Committee and I wish to acknowledge the valuable input
we received from our Board colleagues including the
Company Secretary, management, Guerdon Associates,
investors and proxy advisors.

We recommend Ingenia’s Remuneration Report to
investors and seek your support for the resolution to adopt
the Remuneration Report at Ingenia’s AGM on Tuesday
17 November 2015.

Yours sincerely

Philip Marcus Clark AM
Chairman – Remuneration and Nomination Committee

Ingenia Communities Holdings Limited10

Directors’ Report

for the year ended 30 June 2015 | continued

13. REMUNERATION REPORT (AUDITED)

13.1 Introduction
The Board presents the Remuneration Report for the Group for the year ended 30 June 2015, which forms part of
the Directors’ Report and has been prepared in accordance with section 300A of the Corporations Act 2001 (Cth)
(“Corporations Act”). The data provided in the Remuneration Report was audited as required under section 308(3C)
of the Corporations Act.

13.2 Remuneration Governance

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

The RNC comprises the following non-executive directors (“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 advisors.

The Board is ultimately responsible for decisions made on recommendations from the RNC. No director votes on
remuneration resolutions which directly impact on his or her remuneration.

b. External Remuneration Advisers
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.

Guerdon Associates were re-engaged in March 2015 to provide independent remuneration advice for KMP for FY16.

For the provision of the advice 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 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 advisors outside of the
Chairman of the RNC. A declaration of independence from Guerdon Associates was received by the Board prior to the
acceptance of their engagement and accompanied their report to the RNC.

While remuneration services were received, no remuneration recommendations as defined under Division 1, Part 1.2.98 (1)
of the Corporations Act, were made by Guerdon Associates.

Annual Report 201511

13.3 Details of KMP
KMP for the year ended 30 June 2015 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 2015 have been determined by the Board to be as follows:

Non-executive directors

Jim Hazel

Position

Chairman of the Board

NED

Amanda Heyworth

NED

Member – Remuneration and Nomination Committee

Philip Clark AM

Robert Morrison

Norah Barlow

Executive director

Simon Owen

Other executives

Tania Betts

Nicole Fisher

Chairman – Audit and Risk Committee

Member – Remuneration and Nomination Committee

NED

Chairman – Remuneration and Nomination Committee

NED

Member – Audit and Risk Committee

NED

Member – Audit and Risk Committee

Managing Director and CEO

CFO

COO

13.4 Remuneration of Executive KMP

a. Remuneration Policy
The Group’s Remuneration Policy is to ensure 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:

– Capability, skills and experience;
– Ability to impact achievement of the strategic objectives of the Group;
– Performance of the KMP in their roles;
– The Group’s overall performance;
– Remuneration levels being paid by competitors for similar positions; and
– The need to ensure continuity of executive talent.

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

Ingenia Communities Holdings Limited12

Directors’ Report

for the year ended 30 June 2015 | continued

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

Total Fixed Remuneration (“TFR”)

Short-term incentive (“STI”)

Long-term incentive (“LTI”)

TFR 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 meet the Group’s business plan and individual Key Performance
Indicators (“KPI”) measured over the financial year.

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

For achievement of FY15 STIs, the payment will be 50% cash and a 50%
deferred equity element linked to earnings growth sustainability. This
mechanism will be continued in FY16.

LTI is granted to individuals to align their focus with the Group’s required
TSR and for FY16 Return on Equity (“ROE”) performance measured over
three financial years.

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

Payment for achievement of LTIs will be made in equity for alignment
with securityholders’ interests.

LTIs are subject a malus provision.

The table below sets out summary information about the Group’s earnings and movement in securityholder wealth for the
five years to 30 June 2015:

Underlying Profit ($000)

Statutory profit/(loss) ($000)

EPS (cents)

Net asset value per security (cents)

Security price 30 June (cents)

Distributions (cents)

30 June 2015 30 June 2014 30 June 2013 30 June 2012 30 June 2011

17,507

25,722

3.1(3)

38.9(3)

43.0

1.35

11,568

11,518

1.8(2)

35.5(2)

50.5

1.15

5,867

7,434

(10,290)

33,627

(2.0)(1)

34.4(1)

34.5

1.0

7.6

34.3

19.5

–

6,889

13,051

3.0

25.9

11.5

–

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

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

(3) During the year ended 30 June 2015, the Group issued 197,968,000 securities under the institutional placement and rights issue, 1,818,000

upon vesting of Retention Quantum Rights (“RQRs”) and 6,674,000 under the dividend reinvestment plan.

Annual Report 201513

c. Mix of Remuneration Components
Executive remuneration packages include a mix of fixed remuneration, STIs and LTIs. 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.

The target remuneration mix for executives for the year ended 30 June 2015, expressed as a percentage of total
remuneration, is detailed in the table below:

Target mix

CEO

CFO

COO

TFR
(%)

43.5%

62.5%

Maximum STI
(%)

Maximum LTI
(%)

Total remuneration
(%)

34.8%

25.0%

21.7%

12.5%

100.0%

13.5 Total Fixed Remuneration of Executive KMP
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 2015:

Executive

Simon Owen

Tania Betts

Nicole Fisher(1)

Position

Managing Director and CEO

CFO

COO

TFR(2)

$638,098

$324,988

$253,573

(1) Based on four days per week.

(2) TFR increases for FY15 took effect on 1 October 2014, so they only applied for part of the year.

13.6 New Rights Plan
Guerdon Associates were engaged to review the rules of the STI and LTI plan and subsequently proposed rules for a
Rights Plan, which were endorsed by the RNC and approved by the Board. The new Rights Plan was also approved by
securityholders at the Annual General Meeting (“AGM”) held on 12 November 2014.

The Rights Plan provides for the issuance of Rights which, upon a determination by the Board that the performance
conditions attached to the Rights have been met, will result in the issue of stapled securities in the Group for each Right.

The Rights Plan provides for the issue of Rights to eligible employees for both STIs and LTIs.

Ingenia Communities Holdings Limited14

Directors’ Report

for the year ended 30 June 2015 | continued

13.7 Short-Term Incentive Plan (“STIP”)
Under the new Rights Plan, a structural change was implemented for the FY15 STIs 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

Maximum STIP
Cash

Maximum STIP Deferred
(STIP Rights)

Total Maximum STIP
Available

Simon Owen

40% of FY15 TFR

80% of FY15 TFR

Tania Betts

20% of FY15 TFR

40% of FY15 TFR

$260,000

$520,000

Nicole Fisher

20% of FY15 TFR

40% of FY15 TFR

$65,600

$131,200

$63,000

$126,000

The FY15 STIP Rights are subject to the following terms and conditions:

– A ‘malus’ (forfeiture) provision during the deferral period, which means that some or all of the STIP Rights may lapse if:

• the Board forms the view that Ingenia’s earnings growth is not sustainable (in general, this will require earnings growth

to be equal to or above 5% on the prior year); or

• any of the circumstances set out in the rules of the Rights Plan occur, such as fraud or dishonesty, a breach of

obligations or material misstatement of Ingenia’s financial statements;

– A one-year deferral period and are eligible to vest on or following 1 October 2016;
– On the vesting date Ingenia will cause the relevant number of INA securities to be issued to the executive in accordance

with a prescribed formula; and

– No amount is payable by the executive for the issue or transfer of Ingenia securities to the executive.

The STIP award is subject to STI performance conditions that focus on Board assessment areas of operating earnings,
capital management (for the CEO only), operational targets and people and reporting assessments. Each assessment area
is weighted to break down the award further. These KPIs have been chosen as they aim to focus individuals to meet the
Group’s business plan. The KPIs specific to the executive KMPs are outlined in the table below, together with what the Board
will consider in determining the achievement of the KPI.

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

Financial
%

Capital Management
%

Operational
%

–

People and
Reporting
%

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

KPI

Financial

Executives to which
KPI applied

CEO, CFO, COO

Capital management

CEO

Operational

CEO, CFO, COO

People and reporting

CEO, CFO, COO

Key Considerations in achievement

Operating income (Underlying Profit) to exceed
threshold level.

Non-core asset divestment, access to debt to
deliver strategic plan. Equity investors regard
Ingenia as clear sector leader.

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

Recruit and retain leading industry talent. Develop
internal succession options.

Annual Report 201515

For the year ended 30 June 2015, 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 STIP awards.

The Board approved STIP awards for the year ended 30 June 2015 for each executive KMP were as follows:

KMP

Simon Owen

Tania Betts

Nicole Fisher(1)

Position

Actual STI awarded $

Actual STI awarded as a
% of maximum STI

MD & CEO

CFO

COO

273,000

62,976

64,980

52.5%

48.0%

51.6%

(1) Actual amount awarded was calculated on a pro rata basis based on 4 days per week.

The FY15 deferred equity STIP component of the CEO’s remuneration was approved by securityholders at the AGM held
on 12 November 2014. Any STIP Rights deferred equity component of the CEO’s remuneration for FY16 will be subject to
securityholder approval at the 2015 AGM to be held on 17 November 2015.

13.8 Long-Term Incentives

a. Long-Term Incentive Plan (“LTIP”)
The objective of the Group’s LTIP 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.

On advice from Guerdon Associates, the RNC recommended, and the Board and securityholders approved significant
changes under the new Rights Plan commencing in FY15 to:

– The performance conditions for vesting of LTIP Rights; and
– The methodology used to convert dollar amount awards to LTIP Rights entitlements.

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

TSR is the growth in the security price plus distributions, assuming distributions are reinvested. To minimise the impact of
any short-term volatility, Ingenia’s TSR will be calculated using the volume 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.

The FY15 LTIP Rights will vest on the following basis:

Growth rate in INA’s TSR

% of Rights that vest

At or Below Threshold

Equal to or less than Index + 1% CAGR

Nil

Between Threshold and Maximum Between Index + 1% and Index +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 LTIP Rights.

The methodology used to calculate Rights entitlements in FY15 determines security value as the volume weighted average
price (“VWAP”) of Ingenia securities in the period of 30 trading days ending on the grant date (being, 1 October 2014 for the
CFO and COO, and 12 November 2014 for the CEO). The number of LTIP Rights granted in FY15 was calculated by dividing
the maximum LTIP Award by the VWAP.

Each LTIP Right vested equals one Ingenia security plus an additional number of Ingenia securities calculated on the basis of
the distributions that would have been paid during the relevant period being reinvested.

The FY15 LTIP components of Simon Owen’s remuneration were approved by securityholders at the Annual General Meeting
held on 12 November 2014. Any LTIP components of the CEO’s remuneration for FY16 will be subject to securityholder
approval at the 2015 Annual General Meeting to be held on 17 November 2015.

Ingenia Communities Holdings Limited16

Directors’ Report

for the year ended 30 June 2015 | continued

b. Performance Quantum Rights (“PQRs”) Issued in FY14
Prior to FY15, the Board adopted an LTI scheme that provided for the issue of PQRs rather than LTIP Rights. Subject to
vesting conditions, each PQR entitles the holder to one Ingenia fully paid stapled security.

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.

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.

In respect of FY14 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 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%

c. Summary of PQRs and LTIPs on Issue
The following table sets out the participation level of KMP in the past LTI Scheme (where PQRs were issued) and the new
Rights Plan (where LTIP Rights were issued), in terms of grant size, fair value, vesting date and the maximum amount to
be expensed in the future. PQRs were granted during the years ended 30 June 2013 and 30 June 2014. LTIP Rights were
granted during the year ended 30 June 2015.

KMP

Position

Simon Owen

CEO

Tania Betts

CFO

Nicole Fisher

COO

LTI Scheme
PQRs / LTIP
Rights

Number of
rights
granted

Grant date

Fair
value of
rights
$

Vesting date

Maximum to
expense in
future
years $

2013

2014

2015

2013

2014

2015

2013

2014

2015

2,260,000 31 May 2012

230,520

1 July 2015

–

2,460,000 19 November 2013

799,500

1 July 2016

266,986

709,413

12 November 2014

179,481

1 October 2017

134,775

791,000

14 May 2012

71,032

1 July 2015

–

641,000

19 November 2013

208,325

1 July 2016

69,568

139,544

1 October 2014

33,909

1 October 2017

25,463

791,000

4 June 2012

80,287

1 July 2015

–

615,000

19 November 2013

199,875

1 July 2016

66,747

134,014

1 October 2014

32,565

1 October 2017

24,453

No PQRs were granted during the year ended 30 June 2015, but LTIP Rights were granted in that year.

Annual Report 201517

The following PQRs vested on 1 July 2015.

KMP

Position

LTI Scheme - PQRs

Number of performance
rights vested

Simon Owen

Tania Betts

Nicole Fisher

CEO

CFO

COO

2013

2,260,000

791,000

Grant date

31 May 2012

14 May 2012

4 June 2012

d. Retention Quantum Rights (“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 and each right entitles the holder to one Ingenia fully paid stapled security
which is traded on the Australian Securities Exchange under the code INA.

RQRs were granted to the following employees during FY12 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 and the initial transition of the business as an ASX listed entity.

All the following RQR rights vested on 1 July 2014 and have been converted to Ingenia securities as at that date.

Grant date

Retention
period

Vesting date

Vesting
conditions

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

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 2015 or since then, and before the date of this
report.

e. LTIP – Termination of Employment
The following outlines the treatment of unvested LTIP Rights at the time of termination of employment. This treatment also
applies to unvested STIP Rights.

– Where a Participant holding unvested Rights ceases to be an employee of the Group, those Rights immediately lapse.
– Notwithstanding the above, where a Participant holding unvested Rights ceases to be an employee of the Group due to a

Qualifying Reason, the Board may, in its discretion, determine the treatment of those unvested Rights.

– Qualifying Reason means:

• the death, total and permanent disablement, retirement or redundancy of the Participant as determined by the Board

in its absolute discretion; or

• any other reason with the approval of the Board.

Ingenia Communities Holdings Limited18

Directors’ Report

for the year ended 30 June 2015 | continued

f. LTI Scheme (PQRs) – Termination of Employment
The following table outlines the treatment of unvested PQRs at the time of a termination of employment:

Termination circumstance

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.

13.9 KMP Employment Contracts
Managing Director and CEO – Simon Owen

Contract duration

Fixed remuneration

Commenced 4 June 2012, open-ended.

Total fixed remuneration includes cash salary, superannuation and other non-
cash benefits.

Variable remuneration eligibility

Eligible for STI of up to 30%(1) for any one year of the executive’s total cost fixed
annual remuneration.

Eligible for LTI of up to 50%(1) 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 201519

Chief Financial Officer – Tania Betts

Contract duration

Fixed remuneration

Commenced 14 May 2012, open-ended.

Total fixed remuneration includes cash salary, superannuation and other non-
cash benefits.

Variable remuneration eligibility

Eligible for STI of up to 30%(1) for any one year of the executive’s total cost fixed
annual remuneration.

Eligible for LTI of up to 30%(1) 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.

(1) The Board has varied the percentage of STI and LTI that executive KMP are eligible for in line with external remuneration consultant’s

advice on appropriate mix of total remuneration for executives. Refer to Section 13.7 for the FY15 applicable percentages.

Chief Operating Officer – Nicole Fisher

Contract duration

Fixed remuneration

Commenced 4 June 2012, open-ended.

Total fixed remuneration includes cash salary, superannuation and other non-
cash benefits.

Variable remuneration eligibility

Eligible for STI of up to 30%(1) for any one year of the executive’s total cost fixed
annual remuneration.

Eligible for LTI of up to 30%(1) 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.

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.

(1) The Board has varied the percentage of STI and LTI that executive KMP are eligible for in line with external remuneration consultant’s

advice on appropriate mix of total remuneration for executives. Refer to Section 13.7 for the FY15 applicable percentages.

Ingenia Communities Holdings Limited20

Directors’ Report

for the year ended 30 June 2015 | continued

13.10 Remuneration Tables
The following tables outline the remuneration provided to KMP excluding NEDs for the years ended 30 June 2015
and 30 June 2014.

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(1)
$

Total
Short-
Term
$

Other Long-

Term

Long Service

Leave

Performance

Quantum

Rights

LTI(2)

Retention

Quantum

Rights

Termination

Benefits

Performance Related

STI+LTI

Percent of

Total

LTI

Percent of

Total

Executive Director

Simon Owen

Managing
Director
and CEO 2015

Senior Executives

Tania Betts

CFO

Nicole Fisher

COO

Total Executive KMP

2014

2015

2014

2015

2014

2015

2014

618,592

588,915

305,482

279,989

234,067

225,780

1,158,141

1,094,684

–

19,506

273,000

23,831

205,200

911,098

817,946

19,506

17,644

62,976

387,964

70,875

368,508

19,506

64,980

318,553

17,609

56,160

299,549

58,518

400,956

1,617,615

59,084

332,235

1,486,004

(1) STIs were accrued in the year ended 30 June 2015 and 30 June 2014.

(2) 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 2015 was $590,928 (2014: 680,600).

–

91,085

30,222

29,630

150,937

–

387,803

343,097

101,555

93,108

101,570

93,458

590,928

529,663

–

1,298,901

1,252,128

489,519

491,838

420,123

422,637

2,208,543

2,166,604

Annual Report 201521

13.10 Remuneration Tables

and 30 June 2014.

hold the position.

The following tables outline the remuneration provided to KMP excluding NEDs for the years ended 30 June 2015

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

Key Management Personnel – Executive Remuneration

Executive Director

Managing

Director

Simon Owen

and CEO 2015

Senior Executives

Tania Betts

CFO

Nicole Fisher

COO

Total Executive KMP

618,592

588,915

305,482

279,989

234,067

225,780

1,158,141

1,094,684

2014

2015

2014

2015

2014

2015

2014

–

(1) STIs were accrued in the year ended 30 June 2015 and 30 June 2014.

(2) 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 2015 was $590,928 (2014: 680,600).

19,506

273,000

23,831

205,200

911,098

817,946

19,506

17,644

62,976

387,964

70,875

368,508

19,506

64,980

318,553

17,609

56,160

299,549

58,518

400,956

1,617,615

59,084

332,235

1,486,004

Short-Term

Non-

Monetary

Benefits

Other

Payments

Super-

Annuation

Benefits

STI(1)

Total

Short-

Term

Salary

Other Long-
Term

Long Service
Leave
$

Performance
Quantum
Rights
$

LTI(2)

Retention
Quantum
Rights
$

Termination
Benefits
$

Total
$

Performance Related

STI+LTI
Percent of
Total
%

LTI
Percent of
Total
%

–

387,803

343,097

101,555

93,108

101,570

93,458

590,928

529,663

–

91,085

–

30,222

–

29,630

–

150,937

–

1,298,901

1,252,128

489,519

491,838

420,123

422,637

2,208,543

2,166,604

Ingenia Communities Holdings Limited22

Directors’ Report

for the year ended 30 June 2015 | continued

13.11 Non-Executive Directors’ Remuneration

a. NED 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 and mandated superannuation. 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
Directors are eligible to participate in the existing Rights Plan, however there is no current intention to grant any Rights to
NEDs under this plan.

However, all NEDs have self funded the purchase of Ingenia securities on market thereby aligning their interests with
securityholders. Details are shown below in Section 13.12.

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

d. NED Remuneration Table
The following table outlines the remuneration provided to NEDs for the years ended 30 June 2015 and 30 June 2014:

Non-executive directors

Jim Hazel

Amanda Heyworth

Philip Clark

Robert Morrison

Norah Barlow

Total non-executive KMP

2015

2014

2015

2014

2015

2014

2015

2014

2015

2014

2015

2014

Directors’ fees
($)

170,000

93,000

90,000

93,000

90,000

93,000

90,000

93,000

22,500

542,000

462,500

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.

Annual Report 201523

13.12 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 2014

Acquisitions

Disposals

On exercise of
rights

Balance
30 June 2015

1,333,334

336,253

208,334

561,334

221,667

178,000

2,179,667

29,762

80,190

231,668

31,063

514,238

–

1,669,587

238,096

641,524

453,335

209,063

1,070,000

3,763,905

PQRs held by key management personnel were:

Directors

Simon Owen

Executives

Tania Betts

Nicole Fisher

Balance
1 July 2014

Granted

Vested

Balance
30 June 2015

4,720,000

1,432,000

–

4,720,000

1,432,000

3,842,000 PQRs vested on 1 July 2015 and 3,842,000 fully paid stapled securities were issued at that time.

RQRs held by key management personnel were:

Directors

Simon Owen

Executives

Tania Betts

Nicole Fisher

Balance
1 July 2014

Granted

Vested

Balance
30 June 2015

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.

LTIP Rights held by key management personnel were:

Directors

Simon Owen

Executives

Tania Betts

Nicole Fisher

Balance
1 July 2014

Granted

Vested

Balance
30 June 2015

–

709,413

139,544

134,014

–

709,413

139,544

134,014

Ingenia Communities Holdings Limited24

Directors’ Report

for the year ended 30 June 2015 | continued

13.13 FY16 Remuneration
This section of the Remuneration Report deals with the period from 1 July 2015 to the date of this report.

a. External Remuneration Advisors
Guerdon Associates were re-appointed by the Board to provide independent remuneration advice for KMP remuneration in
respect of FY16, 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 FY16:

i. Focus management on delivering outcomes in the short to medium term, particularly significant Underlying Profit growth;

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

iii. Attracting, retaining and motivating KMP.

c. Details of KMP
There have been no changes to the KMP since 30 June 2015 and before the date of this report.

d. Review Date
The review date for FY16 will remain 1 October 2016, 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 remuneration
mix for executives for FY16, expressed as a percentage of total remuneration, as detailed in the table below:

Target mix

CEO

CFO

COO

TFR

43.5%

55.6%

Maximum
STI

Maximum
LTI

Total
remuneration

34.8%

33.3%

21.7%

11.1%

100.0%

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

f. TFR
Based on market data from Guerdon Associates and recommendations from the RNC, the Board has set TFR for each of the
executives for FY16 as detailed in the table below:

CEO

CFO

COO(1)

(1) Based on five days per week.

TFR (p.a.)

$650,000

$336,200

$330,750

No increase on FY15 TFR will be made to the FY16 fixed remuneration for the CEO. The increase in FY16 TFR for the CFO
is 2.5% and COO is 5.0%. The Board considers these increases reasonable in the context of market remuneration levels for
matched positions in comparable companies.

Data for TFR ranges for the CFO and COO for FY16 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.

Annual Report 201525

g. STI
For FY16 STI 50% of the maximum STI for the executive KMP will be paid in cash and the remaining 50% will be a deferred
equity element. The deferred equity component is subject to forfeiture where earnings growth is not sustained. The deferral
is for 12 months and earnings growth sustainability has been defined as at least 5% Underlying Profit 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

Maximum STI
Cash

Maximum STI Deferred
(STI Rights)

Total Maximum
STI Available

40% of FY16 TFR

80% of FY16 TFR

$260,000

$520,000

Tania Betts

30% of FY16 TFR

60% of FY16 TFR

Nicole Fisher(2)

30% of FY16 TFR

60% of FY16 TFR

$100,860

$201,720

$99,225

$198,450

(1) Subject to securityholder approval at the Annual General Meeting to be held on 17 November 2015.

(2) Based on five days per week.

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 2017

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, capital management,
operational, systems and people and reporting metrics. In each case, the KPIs are further broken down to identify specific
measurements to monitor the achievement of performance. These are set with ‘threshold’, ‘target’ and ‘stretch’ performance
levels, with entitlements calculated on a pro-rata basis between these levels.

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

CEO

CFO

COO

Financial
%

Capital
Management
%

Operational
%

Systems
%

People and
Reporting
%

–

Ingenia Communities Holdings Limited26

Directors’ Report

for the year ended 30 June 2015 | continued

h. LTI
There were no PQRs or RQRs issued during the year ended 30 June 2015 or since then and before the date of this report,
but note the comment in Section 13.8(d) above in relation to RQRs which vested on 1 July 2014 and Section 13.8(c) in relation
to PQRs which vested on 1 July 2015.

i. Long-Term Incentive Plan – LTIP Rights offered
Since 1 July 2015 and before the date of this report, the value and number of LTIP Rights that have been offered to
executives are:

Simon Owen

Tania Betts

Nicole Fisher(2)

Value of LTIP Rights

Vesting Date

50% of FY16 TFR
$325,000(1)

20% of FY16 TFR
$67,240

20% of FY16 TFR
$66,150

30 September 2018

(1) Subject to securityholder approval at the Annual General Meeting to be held on 17 November 2015.

(2) Based on five days per week.

ii. LTIP Rights Performance Conditions
The LTIP Rights offered after 30 June 2015 and before the date of this report are subject to two LTIP Performance
Conditions:

a. 70% based on a Relative TSR; and

b. 30% based on a Return on Equity (“ROE”).

a. Relative TSR Performance Condition

The Relative TSR Hurdle is growth in Ingenia’s TSR relative to growth in the ASX 300 Industrials Index, measured over
the Rights Performance Period ending on 30 June 2018.

The 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, Ingenia’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.

Annual Report 2015

The Rights will vest on the following basis:

At or Below Threshold

Equal to or less than Index
+ 1% CAGR

Nil

Growth rate in INA’s TSR

% of Rights that vest

Between Threshold and Maximum Between Index + 1% and Index

+ 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 LTIP Rights.

b. ROE Performance Condition
The ROE Performance Condition has been added in FY16 because the Board is focused on improving medium to long-term
return on investment.

ROE is defined as Underlying Profit divided by net assets. The relevant metric is ROE achieved in FY18.

Vesting levels for FY18 are:

Threshold

ROE

> 8.0%

Target

ROE

= or > 9.0%

Maximum

ROE

= or > 10.0%

FY16 LTIP Rights will vest on the following basis:

At Threshold

Nil

Above Threshold and below Maximum 30% plus an additional amount of progressive vesting on a straight line basis to 100%

At or above Maximum

100%

iii. LTIP Methodology
The FY16 LTIP methodology determines security value as the VWAP of Ingenia securities in the period of 30 trading
days ending on the grant date (expected to be 1 October 2015 for the CFO and COO and within a week of approval from
securityholders at the annual general meeting on 17 November 2015 for the CEO). The number of LTIP Rights granted in
FY16 will be calculated by dividing the Rights by the 30 day VWAP of the INA security price. Each LTI Right vested equals
one Ingenia security plus an additional number of Ingenia securities calculated on the basis of the distributions that would
have been paid during the relevant period being reinvested.

iv. Entitlement to Distribution adjustment
FY16 LTIP Rights will be entitlements to Rights to stapled securities plus additional stapled securities equal to distributions
paid during the vesting period. The Board aims to have executive KMP incentivised to grow distributions to securityholders.

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2015 | continued

i. Total maximum FY16 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

$336,200

$330,750

$100,860

$99,225

$67,240

$66,150

$605,160

$595,350

(1) For Simon Owen, subject to securityholder approval at the Annual General Meeting to be held on 17 November 2015.

(2) Review date is 1 October 2015.

In accordance with the Board’s objective, a significant proportion of each executive KMP’s total maximum remuneration
in FY16 is performance based. The percentage of total maximum remuneration at risk for each executive KMP is:

CEO

CFO

COO

56.5%

44.4%

It is worth noting that the CEO’s total FY16 Maximum Total Remuneration remains unchanged from FY15 at $1,495,000
and 56.5% of that amount is at risk.

j. Non-Executive Directors’ Remuneration
The RNC has recommended that remuneration for the Chairman of the Board and non-executive directors remain
unchanged from FY15, at $170,000 and $93,000 respectively.

This position is to be re-assessed towards the end of calendar year 2015.

Signed in accordance with a resolution of the directors.

Jim Hazel
Chairman
Sydney, 9 September 2015

Annual Report 2015Auditor’s Independence Declaration

for the year ended 30 June 2015

Ingenia Communities Holdings Limited30

Consolidated Statement
of Comprehensive Income

for the year ended 30 June 2015

Continuing Operations

Revenue

Rental income

Accrued deferred management fee income

Manufactured home sales

Catering income

Other property income

Service station sales

Interest income

Property expenses

Employee expenses

Administration expenses

Operational, marketing and selling expenses

Cost of manufactured homes sold

Service station expenses

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

Depreciation and amortisation expense

Profit from continuing operations before income tax

Income tax benefit

Profit from continuing operations

Profit/(loss) from discontinued operations

Net profit 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

2015
$’000

2014
$’000

5(a)

19(b)

5(b)

19(b)

15, 16

44,984

6,788

14,937

3,538

3,235

2,359

180

76,021

(18,024)

(21,230)

(4,880)

(3,931)

(9,256)

(1,910)

(4,747)

111

(69)

16,404

164

(8,878)

(479)

19,296

6,604

31,643

5,333

3,442

3,178

1,819

–

369

45,784

(11,613)

(15,341)

(4,160)

(3,136)

(2,130)

–

(4,446)

(147)

–

(341)

(616)

(211)

3,684

7,264

25,900

10,948

(178)

25,722

570

11,518

1,339

(2,374)

269

–

24,687

11,787

Annual Report 2015

2015
$’000

2014
$’000

(850)

31,039

(4,467)

25,722

(1,942)

31,265

(4,636)

24,687

2015
Cents

1.3

3.2

(0.2)

3.1

(0.2)

2.0

(0.2)

2.0

–

(2,736)

15,313

(1,059)

11,518

(2,736)

15,533

(1,010)

11,787

2014
Cents

1.0

1.7

(0.4)

1.8

(0.4)

1.7

(0.4)

1.8

(0.4)

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(1)

Earnings per security:

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) Distributions relate to the amount paid during the financial year. Subsequent to the end of the year, a final distribution was declared for

0.70 cents for a total full year distribution of 1.35 cents.

Ingenia Communities Holdings Limited

Consolidated Balance Sheet

as at 30 June 2015

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

Intangibles

Deferred tax asset

Total non-current assets

Total assets

Current liabilities

Trade and other payables

Borrowings

Retirement village resident loans

Provisions

Derivatives

Liabilities held for sale

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

Accumulated losses

Ingenia Communities Fund

Ingenia Communities Management Trust

Net asset value per security (cents)

Note

2015
$’000

2014
$’000

10(a)

8(d)

10(b)

8(d)

15,117

4,327

13,208

61,598

–

94,283

12,894

3,745

2,208

960

5,439

47,657

72,903

2,649

2,168

539,728

498,863

720

1,579

6,348

551,024

645,307

15,073

291

161,878

992

42,041

–

220,278

14,770

66,491

248

–

81,509

301,787

343,520

517

473

–

502,021

574,924

10,409

283

190,122

718

–

30,449

232,065

4,000

98,073

249

276

102,682

334,747

240,177

657,214

1,334

569,116

2,023

(315,028)

(330,962)

343,520

240,177

8,900

1,334

(3,175)

7,059

315,951

20,510

343,520

38.9

7,377

988

(2,659)

5,706

224,254

10,217

240,177

35.5

Annual Report 2015

Consolidated Cash Flow Statement

for the year ended 30 June 2015

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

Proceeds from sale of service station inventory

Purchase of service station inventory

Distributions received from formerly equity accounted investments

Interest received

Borrowing costs paid

Income tax received/(paid)

Cash flows from investing activities

Purchase and additions of plant and equipment

Purchase and additions of intangibles

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

Payments for derivatives

Finance lease payments

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

Cash and cash equivalents at the end of the year

Note

2015
$’000

2014
$’000

58,085

43,274

–

(29)

(51,225)

(34,847)

19,815

22,021

(10,544)

(10,361)

15,736

3,511

(19,358)

(4,035)

2,359

(1,936)

–

198

(4,902)

806

9,034

–

301

358

(5,811)

(142)

14,240

(446)

(1,371)

(57)

(386)

(64,423)

(113,255)

(14,112)

56,161

(209)

168

–

(18,724)

1,200

5,811

(745)

(24,232)

(126,084)

91,968

(3,870)

(444)

(126)

(10,105)

(1,867)

61,707

(2,771)

–

(81)

(5,885)

(216)

65,205

104,258

(125,197)

(68,000)

15,564

89,012

366

14,551

200

15,117

(22,832)

37,550

(167)

14,551

19(b)

Ingenia Communities Holdings Limited34

Consolidated Statement of Changes in Equity

for the year ended 30 June 2015

Attributable to Securityholders

Ingenia Communities Holdings Limited

Note

Issued
capital
$’000

Reserves
$’000

Retained
earnings
$’000

Carrying amount at
1 July 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

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

Transfer from reserves to
retained earnings

Carrying amount at
30 June 2015

6,078

308

–

1,299

–

680

–

678

–

1,523

–

Total
$’000

6,463

(2,736)

ICF and
ICMT
$’000

Total
equity
$’000

168,189

174,652

14,254

11,518

(2,736)

–

269

(2,736)

14,523

11,787

–

1,299

57,676

58,975

680

–

680

–

(5,917)

(850)

26,572

25,722

–

(1,035)

(850)

25,537

24,687

7,377

988

(2,659)

5,706

234,471

240,177

–

1,523

86,575

88,098

678

–

678

–

(10,120)

–

(332)

332

8,900

1,334

(3,177)

7,057

336,463

343,520

Annual Report 2015Notes to the Financial Statements

for the year ended 30 June 2015

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 2015 was authorised for issue by the directors
on 9 September 2015.

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 2015, the Group recorded a net current asset
deficiency of $125,995,000. This deficiency includes
retirement village resident loans of $161,878,000 and
liabilities held for sale of $42,041,000. 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.
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
including AASB 2012-3 Offsetting Financial Assets and
Financial Liabilities.

The impact of application of the Standard is as follows:

Accounting Standard

Impact on the Group

AASB 2012-3

This amendment clarifies that
the right of set off must be
available today and must be
legally enforceable in the normal
course of business as well as in
the event of default, insolvency or
bankruptcy.

The application of this Standard
did not have any impact on the
Group as retirement village loans
are already offset.

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.

Ingenia Communities Holdings Limited36

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

1. SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES (CONTINUED)

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.

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 and liabilities
held for sale are given at Notes 8 and 10.

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.

Annual Report 2015i. 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
shortterm deposits that are readily convertible to known
amounts of cash and are subject to an insignificant risk of
changes in value.

Ingenia Communities Holdings Limited38

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

1. SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES (CONTINUED)

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 and service station
fuel and supplies both 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,
tourism cabins and associated amenities.

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. In determining
the fair value of assets held for sale, recent market offers
have been taken into consideration.

It is the Group’s policy to have all investment properties
independently valued at intervals of not more than two
years. It is the policy of the Group 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 investment property are
recorded in the statement of comprehensive income.

In determining fair values, the Group considers relevant
information including the capitalisation of rental streams
using market assessed capitalisation rates, expected net
cash flows discounted to their present value using market
determined risk adjusted discount rates and other available
market data such as recent comparable transactions. The
assessment of fair value of investment properties does not
take into account potential capital gains tax assessable.

r. Intangible Assets
An intangible asset arising from development expenditure
related to software is recognised only when the Group
can demonstrate the technical feasibility of completing
the intangible asset so that it will be available for use,
how the asset will generate future economic benefits,
the availability of resources to complete the asset and
the ability to measure reliably the expenditure during
its development. Costs capitalised include external
direct costs of materials and service, and direct payroll
and payroll related costs of employees’ time spent on
the project.

Following the initial recognition of expenditure, the asset
is carried at cost less any accumulated amortisation and
accumulated impairment losses. Amortisation of the asset
begins when the development is complete and the asset
is available for use. Amortisation is over the period of
expected future benefit.

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.

The Group’s policy applied to capitalised development
costs is as follows:

Software and associated development to capitalised
development costs (assets in use)

– Useful life: Finite Amortisation method using 7 years on

a straight line basis; and

–

Impairment test: Amortisation method reviewed at
each financial year end; closing carrying value reviewed
annually for indicators of impairment.

Subsequent expenditure on capitalised intangible
assets is capitalised only when it increases the future
economic benefits embodied in the specific asset to
which it relates. All other expenditure is expensed as
incurred. Gains or losses arising from de-recognition of an
intangible asset are measured as the difference between
the net disposal proceeds and the carrying amount of
the asset and are recognised in profit or loss when the
asset is de-recognised.

Annual Report 201539

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 corporate bonds with terms to maturity
and currencies that match, as closely as possible, the
estimated future cash outflows.

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 30(k), 27(j) 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.

Service station sales revenue represents the revenue
earned from the provision of products to external parties.
Sales revenue is only recognised when the significant
risks and rewards of ownership of the products including
possession are passed 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.

Ingenia Communities Holdings Limited40

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

1. SUMMARY OF SIGNIFICANT ACCOUNTING

z. Income Tax

POLICIES (CONTINUED)

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.

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

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,
the head entity of 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.

Annual Report 201541

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 30.

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.

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 within
Note 30.

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 securities, adjusted for any bonus
element.

Diluted EPS is calculated as net profit attributable to
the Group divided by the weighted average number
of ordinary securities and dilutive potential ordinary
securities, 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, measurement and
de-recognition of financial assets and financial liabilities.
Changes in the Group’s credit risk, which affect the value
of liabilities designated at fair value through profit and
loss, can be presented in other comprehensive income.
The application of the Standard is not expected to have
any material impact on the Group’s financial reporting in
future periods.

AASB 15 Revenue from Contracts with Customers is
applicable to reporting periods beginning on or after
1 January 2018. The Group has not early adopted this
standard. The standard is based on the principle that
revenue is recognised when control of a good or service is
transferred to a customer. It contains a single model that
applies to contracts with customers and two approaches
to recognising revenue; at a point in time or over time.
The model features a contract-based five-step analysis
of transactions to determine whether, how much and
when revenue is recognised. It applies to all contracts
with customers except leases, financial instruments and
insurance contracts. It requires reporting entities to provide
users of financial statement with more informative and
relevant disclosures. The application of the Standard is
not expected to have any material impact on the Group’s
financial reporting in future periods.

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 in
future reporting periods.

Ingenia Communities Holdings Limited42

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

1. SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES (CONTINUED)

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.

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 and assets held
for sale with a carrying amount of $601,326,000 (2014:
$504,302,000) (refer Note 10 and Note 14), and retirement
village residents’ loans and liabilities held for sale with a
carrying amount of $203,919,000 (2014: $190,122,000)
(refer Note 10 and Note 19), which together represent the
estimated fair value of the Group’s property business.

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. The valuation assumption for
properties to be developed reflect assumptions around
sales prices for new homes, sales rates, new rental tariffs,
estimates of capital expenditure, discount rates and
projected property growth rates.

In forming these assumptions, the Group 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 and service station fuel and supplies, 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 for long-term incentive performance
rights and the security price at grant date of short-term
incentive rights. Refer to Note 28 for assumptions used
in determining the fair value.

Annual Report 201543

3. SEGMENT INFORMATION

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

– Garden Villages – rental villages;
– Settlers Lifestyle – deferred management fee villages;

and

– Active Lifestyle Estates – comprising long-term and

short-term accommodation 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”.

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 Limited44

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

3. SEGMENT INFORMATION (CONTINUED)

b. 30 June 2015

i. Segment revenue

External segment revenue

Interest income

Reclassification of gain on revaluation of newly
constructed villages

Active
Lifestyle
Estates
$’000

38,810

–

Settlers
Lifestyle
$’000

Garden
Villages
$’000

Corporate/
Unallocated
$’000

11,132

–

(2,422)

28,162

–

Total revenue

38,810

8,710

28,162

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

Service station expenses

Finance expense

Income tax benefit

Depreciation and amortisation expense

Other

38,810

–

(7,918)

(8,514)

(979)

(1,794)

(9,256)

(1,910)

–

(113)

–

11,132

–

(1,694)

(1,786)

(191)

(608)

–

(46)

(503)

28,162

–

(8,042)

(7,450)

(959)

(591)

–

(101)

–

Total
$’000

78,263

180

(2,422)

76,021

78,263

180

159

180

–

339

159

180

(370)

(18,024)

(3,480)

(21,230)

(2,751)

(938)

–

(4,747)

3,319

(219)

–

(4,880)

(3,931)

(9,256)

(1,910)

(4,747)

3,319

(479)

(503)

Underlying Profit/(loss) – continuing operations

8,326

6,304

11,019

(8,847)

16,802

Reconciliation of Underlying Profit to profit from
continuing operations:

Net foreign exchange gain

Net gain/(loss) disposal of investment property

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

Investment properties

Retirement village resident loans

Derivatives

Gain on revaluation of newly constructed villages

Other

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

Total assets

–

(23)

(2,818)

–

(365)

3,269

(8,878)

–

(2,422)

503

–

319

15,953

–

111

–

164

–

111

(69)

16,404

(8,878)

164

(2,422)

503

3,285

5,485

(1,589)

27,291

(5,287)

25,900

228,329

205,357

129,604

20,419

583,709

61,598

645,307

Annual Report 2015

c. 30 June 2014

Active
Lifestyle
Estates
$’000

Settlers
Lifestyle
$’000

Garden
Villages
$’000

Corporate/
Unallocated
$’000

i. Segment revenue

External segment revenue

Interest income

Reclassification of gain on revaluation of newly
constructed villages

13,589

10,575

24,571

–

(3,320)

–

Total revenue

13,589

7,255

24,571

–

369

–

369

Total
$’000

48,735

369

(3,320)

45,784

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

Depreciation expense

13,589

10,575

24,571

–

48,735

–

(2,640)

(4,096)

(384)

(421)

(2,130)

–

(1,900)

(2,173)

(208)

(1,801)

–

(6,798)

(6,365)

(947)

(512)

–

(18)

(49)

369

(275)

(2,707)

(2,621)

(402)

–

369

(11,613)

(15,341)

(4,160)

(3,136)

(2,130)

(4,446)

2,896

(144)

2,896

(211)

Underlying Profit/(loss) – continuing operations

3,918

4,475

9,900

(7,330)

10,963

Reconciliation of Underlying Profit to profit from
continuing operations:

Net foreign exchange loss

–

(147)

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

Investment properties

(2,124)

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

(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

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

4. EARNINGS PER SECURITY(1)

a. Per security

Profit 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

2015

2014

25,722

25,900

(178)

11,518

10,948

570

821,653

646,603

470

–

2,310

1,818

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

822,123

650,731

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

3.2

(0.2)

3.1

2.0

–

2.0

1.7

0.1

1.8

1.7

0.1

1.8

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

(850)

(2,734)

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)

821,653

646,603

470

–

2,310

1,818

822,123

650,731

(0.2)

–

(0.4)

(1) The weighted average number of securities on issue for FY14, prior to the rights issue in September 2013, has been adjusted in

accordance with AASB 133 Earnings per Share.

Annual Report 2015

5. REVENUE

a. Rental income

Residential rental income – Garden Villages

Residential rental income – Settlers Lifestyle

Residential rental income – Active Lifestyle Estates

Annuals rental income – Active Lifestyle Estates

Short-term tourism rental income – Active Lifestyle Estates

Commercial 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

2015
$’000

2014
$’000

24,367

21,032

707

8,329

1,020

10,323

238

44,984

301

758

152

–

1,222

802

3,235

2015
$’000

4,483

264

4,747

1,025

4,231

302

4,990

31,643

219

239

170

622

263

306

1,819

2014
$’000

4,189

257

4,446

(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 18(c).

Ingenia Communities Holdings Limited48

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

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% (2014: 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 deductible expenses

Income tax benefit

2015
$’000

2014
$’000

–

6,604

19,296

(31,901)

(12,605)

3,781

–

263

1,516

1,683

(143)

(496)

6,604

7,180

7,264

3,684

(14,741)

(11,057)

3,317

2,823

613

1,163

(1,232)

580

–

7,264

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
during the year ended 30 June 2014.

Annual Report 2015
49

8. DISCONTINUED OPERATIONS

a. Details of Discontinued Operations
The Group’s investment in its 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
property business. The Group held 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 completed the sale of these
assets in December 2014. Funds remain in New Zealand to facilitate the final stages of exit.

b. 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

Interest expense

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/(loss) on sale of discontinued operations (net of tax)

Release of foreign currency translation reserve on disposal of foreign operations

Profit/(loss) from discontinued operations for the year

2015
$’000

2,182

–

(1,038)

(715)

(799)

–

(324)

(214)

(538)

(2,014)

2,374

(178)

2014
$’000

3,210

(1,630)

1,557

–

(1,231)

(1,633)

274

(290)

257

(14)

243

327

–

570

Profit/(loss) from discontinued operations attributable to the Company for years ended 30 June 2015 and 30 June 2014
is $nil.

c. 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

2015
$’000

223

43,966

–

(4)

(45,381)

(461)

(1,657)

2014
$’000

1,135

(120)

(9,081)

(745)

11,449

–

2,638

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

8. DISCONTINUED OPERATIONS (CONTINUED)

d. 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

Payables

Borrowings

Total liabilities

Net assets of disposal groups

2015
$’000

2014
$’000

–

1,657

45,902

47,657

368

30,081

30,449

17,208

e. Capitalisation Rate
The weighted average capitalisation rate of the New Zealand Students internal valuation within discontinued operations
at 30 June 2014 was 8.6%.

9. BUSINESS COMBINATIONS
On 18 February 2015, Group acquired Active Lifestyle Estates & Holiday Noosa in Tewantin, Queensland, and after
considering the accounting treatment for the acquisition of this business combination, the Group has determined the
components acquired from the business combination are investment property of $13,648,000, service station inventory
of $268,000 and no goodwill.

10. ASSETS AND LIABILITIES HELD FOR SALE

a. Summary of carrying values
The following are the carrying values of assets held for sale:

Deferred management fee receivable – Settlers Lifestyle(1)

Investment properties – Settlers Lifestyle(2)

Note

2015
$’000

–

61,598

2014
$’000

5,439

–

5,439

(1) This relates to Settlers Noyea which was sold in July 2014.

(2) These properties are presented as held for sale in view of the intention and expectation of management to sell these properties during
the twelve months ended 30 June 2016. These properties have been reclassified from investment property to assets held for sale.

b. Summary of carrying amounts - loans
The following is a summary of the carrying amounts of the loans associated with investment properties held for sale:

Gross resident loans

Accrued deferred management fee

Net resident loans

Note

2015
$’000

44,271

(2,230)

42,041

2014
$’000

–

Annual Report 201511. 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

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

12. TRADE AND OTHER RECEIVABLES

Current

Trade and other receivables

Prepayments and deposits

Total current trade and other receivables

Non-current

Other receivables

2015
$’000

2014
$’000

15,117

12,894

15,117

–

15,117

12,894

1,657

14,551

2015
$’000

2014
$’000

960

3,367

4,327

1,105

2,640

3,745

2,649

2,168

Rental amounts due are typically paid in advance and other amounts due are receivable within 30 days.

13. INVENTORIES

Current assets

Manufactured homes

Service station fuel and supplies

Total Inventories

2015
$’000

2014
$’000

12,875

333

13,208

2,208

–

2,208

The manufactured homes balance represents 53 completed homes of $8.0 million (2014: nil), 44 homes under construction
of $3.8 million (2014: 24 homes of $1.7 million), and 41 site buybacks of $1.1 million (2014: 20 homes of $0.5 million).

14. INVESTMENT PROPERTIES

a. Summary of Carrying Amounts

Completed properties

Properties under development

2015
$’000

514,125

25,603

2014
$’000

482,618

16,245

539,728

498,863

Ingenia Communities Holdings Limited52

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

14. INVESTMENT PROPERTIES (CONTINUED)

b. Individual Valuations and Carrying Amounts

Property

Completed properties

Garden Villages

Yakamia, Yakamia, WA

Mardross, Albury, NSW

Seville Grove, Seville Grove, WA

Hertford, Sebastopol, VIC

Carey Park, Bunbury, WA

Jefferis, Bundaberg North, QLD

Claremont, Claremont, TAS

Taloumbi, Coffs Harbour, NSW

Devonport, Devonport, TAS

Wheelers, Dubbo, NSW

Elphinwood, Launceston, TAS

Glenorchy, Glenorchy, TAS

Chatsbury, Goulburn, NSW

Grovedale, Grovedale, VIC

Horsham, Horsham, VIC

Sea Scape, Erskine, WA

Marsden, Marsden, QLD

Coburns, Brookfield, VIC

Brooklyn, Brookfield, VIC

Oxley, Port Macquarie, NSW

Townsend, St Albans Park, VIC

St Albans Park, St Albans Park, VIC

Swan View, Swan View, WA

Date of
purchase

Latest
external
valuation
date

Valuation
$’000

2015
$’000

2014
$’000

Carrying amount

Jun 04

Jun 05

Jun 04

Jun 05

Jun 04

Jun 05

Jun 04

Jan 06

Jun 15

4,750

–

Dec 14

Jun 14

Jun 15

Dec 13

Dec 14

Dec 13

Jun 15

Dec 13

Jun 15

Dec 14

Jun 15

Jun 14

Dec 14

–

3,200

3,770

4,300

3,320

4,300

1,700

3,800

3,750

3,160

2,940

4,700

3,900

4,000

8,500

3,300

4,100

4,200

4,400

4,140

6,000

4,750

–

3,400

3,910

4,300

3,420

4,500

1,785

4,680

3,750

3,780

3,760

4,700

3,900

4,330

8,640

3,490

4,100

4,200

4,400

4,620

6,480

2,730

2,400

3,390

3,770

3,520

3,480

3,230

4,170

2,100

4,300

2,910

3,370

3,430

4,010

3,300

4,170

8,380

3,290

3,270

3,120

3,800

4,140

5,990

Annual Report 201553

Date of
purchase

Latest
external
valuation
date

Valuation
$’000

2015
$’000

2014
$’000

Carrying amount

Dec 04

Dec 12

Feb 13

Mar 13

Jun 13

Jan 14

Nov 05

Jun 04

Apr 07

Jul 12

Jun 15

Dec 13

Jun 15

Jun 14

Jun 15

–

3,350

3,290

3,280

4,100

3,100

3,930

3,850

3,300

–

Jun 15

2,500

3,350

2,940

3,290

4,100

3,130

4,000

3,850

3,300

–

2,500

125,655

–

Jun 13

Dec 13

Dec 14

–

Jun 13

Dec 14

75,672

75,866

–

17,066

2,455

105,104

–

16,648

2,455

109,114

–

204,083

259,325

2,320

2,670

3,100

2,040

3,100

3,930

2,580

2,510

1,780

2,170

1,800

114,270

14,194

12,534

750

14,314

6,009

77,242

–(3)

16,510

2,455

103,552

11,765

Property

Completed properties (continued)

Garden Villages (continued)

Taree, Taree, NSW

Dubbo, Dubbo, NSW

Ocean Grove, Mandurah, WA

Peel River, Tamworth, NSW

Sovereign, Ballarat, VIC

Wagga, Wagga Wagga, NSW

Bathurst, Bathurst, NSW

Launceston, Launceston, TAS

Shepparton, Shepparton, VIC

Murray River, Mildura, VIC

Warrnambool, Warrnambool, VIC

Settlers Lifestyle

Forest Lake, Forest Lake, QLD(3)

Gladstone, South Gladstone, QLD(3)

Gladstone, South Gladstone, QLD - Land(3)

Rockhampton, Rockhampton, QLD(3)

Cessnock, Cessnock, NSW(3)

Lakeside, Ravenswood, WA

Noyea Riverside, Mt Warren Park, QLD(4)

Meadow Springs, Mandurah, WA

Meadow Springs, Mandurah, WA – Land

Ridgewood Rise, Ridgewood, WA

Ridge Estate, Gillieston Heights, NSW(3)

Ingenia Communities Holdings Limited54

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

14. INVESTMENT PROPERTIES (CONTINUED)

Property

Active Lifestyle Estates

The Grange, Morisset, NSW

Ettalong Beach, Ettalong Beach, NSW(1)

Albury, Lavington, NSW

Nepean River, Emu Plains, NSW

Mudgee Valley, Mudgee, NSW

Mudgee, Mudgee, NSW

Kingscliff, Kingscliff, NSW

Lake Macquarie, Morisset, NSW

Chain Valley Bay, Chain Valley Bay, NSW

One Mile Beach, One Mile, NSW(2)

Hunter Valley, Cessnock, NSW

Wine Country, Cessnock, NSW

Sun Country, Mulwala, NSW

Stoney Creek, Marsden Park, NSW

Rouse Hill, Rouse Hill, NSW(5)

White Albatross, Nambucca Heads, NSW

Noosa, Tewantin, QLD

Chambers Pines, Chambers Flat, QLD

Mannering Park, Mannering Park, NSW

Sydney Hills, Dural, NSW

Total completed properties

Date of
purchase

Latest
external
valuation
date

Valuation
$’000

2015
$’000

2014
$’000

Carrying amount

Mar 13

Apr 13

Aug 13

Sep 13

Oct 13

Nov 13

Dec 13

Feb 14

Apr 14

May 14

Jun 14

Dec 14

Feb 15

Mar 15

Apr 15

Dec 13

Jun 14

Dec 14

Jun 15

–

9,400

2,200

1,725

11,000

4,250

6,393

10,500

5,010

3,700

10,500

7,500

1,000

6,610

14,740

16,125

25,500

13,000

–

Jun 15

6,800

–

11,072

5,583

2,275

13,317

3,662

5,934

11,734

4,212

247

12,769

7,589

1,000

6,514

10,940

16,125

25,500

13,000

14,114

6,800

12,000

184,387

514,125

10,761

5,811

1,510

11,000

3,710

6,403

10,991

5,693

–

13,349

8,282

1,109

6,858

16,184

7,362

–

109,023

482,618

Annual Report 201555

Carrying amount

Date of
purchase

2015
$’000

2014
$’000

Mar 13

Apr 13

Aug 13

Sep 13

Oct 13

Nov 13

Dec 13

Feb 14

Apr 14

May 14

Mar 15

1,291

–

1,993

–

775

430

444

3,279

3,700

–

2,133

556

1,300

7,064

2,638

1,387

310

490

–

797

540

520

1,990

4,045

–

1,500

556

850

3,260

–

25,603

16,245

539,728

498,863

Property

Properties to be developed

Active Lifestyle Estates

The Grange, Morisset, NSW

Ettalong Beach, Ettalong Beach, NSW(1)

Albury, Lavington, NSW

Nepean River, Emu Plains, NSW

Mudgee Valley, Mudgee, NSW

Mudgee, Mudgee, NSW

Kingscliff, Kingscliff, NSW

Lake Macquarie, Morisset, NSW

Chain Valley Bay, Chain Valley Bay, NSW

One Mile Beach, One Mile, NSW(2)

Hunter Valley, Cessnock, NSW

Wine Country, Cessnock, NSW

Sun Country, Mulwala, NSW

Stoney Creek, Marsden Park, NSW

Chambers Pines, Chambers Flat, QLD

Properties to be developed

Total investment properties

(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) 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.

(3) Classified as assets held for sale at 30 June 2015.

(4) Classified as assets held for sale at 30 June 2014.

(5) Rouse Hill has been independently valued at 30 June 2015 on a highest and best use basis as a medium density residential development.

Investment property that has not been valued by external valuers at reporting date is carried at the Group’s estimate of fair
value in accordance with the accounting policy detailed at Note 1(q).

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.

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

14. INVESTMENT PROPERTIES (CONTINUED)

c. Movements in Carrying Amounts

Carrying amount at beginning of year

Acquisitions

Expenditure capitalised

Sale of units – Strata title

Transferred from plant and equipment

Transferred to inventory

Net gain/(loss) on change in fair value

Transferred to assets held for sale

Carrying amount at end of year

2015
$’000

498,863

78,152

14,356

–

(6,290)

(159)

16,404

(61,598)

2014
$’000

370,931

118,303

10,336

(492)

320

(194)

(341)

–

539,728

498,863

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 31.

d. Reconciliation of Fair Value

Garden
Villages
$’000

Settlers

Active
Lifestyle
Estates
$’000

Total
$’000

Carrying amount at 1 July 2014

114,270

259,325

125,268

498,863

Acquisitions

Expenditure capitalised

Assets sold

Transferred to inventory

–

1,739

(6,290)

–

320

2,729

–

77,832

9,888

–

(159)

78,152

14,356

(6,290)

(159)

Net gain/(loss) on change in fair value(1)

15,934

3,303

(2,833)

16,404

Transferred to assets held for sale

Carrying amount at 30 June 2015

–

(61,598)

–

(61,598)

125,653

204,079

209,996

539,728

(1) Includes $13,288,000 of transaction costs relating to Active Lifestyle Estates acquisitions written off during the year.

Annual Report 201557

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

Valuation technique

Significant
unobservable inputs

Range
(weighted average)

Garden Villages

Capitalisation method

Stabilised occupancy

70%-100% (92%)

Capitalisation rate

9%-12%

Settlers Lifestyle

Discounted cash flow Current market value

$125,000-$475,000

per unit

Long-term property
growth rate

Average length of
stay – future residents

11.4 years

Average length of
stay – current residents

15.0-17.6 years

Discount rate

14.5%-15.0%

Active Lifestyle Estates Capitalisation method

Short-term occupancy 15%-30% for powered

(for existing rental
streams)

and camp sites;

45%-70% for tourism
and short term rental

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.

Average length of stay
projection is based on
life expectancy and
other factors.

Parameters exclude
assets that are subject
to a sale agreement.

Assets that are subject
to a sale agreement are
carried at fair value.

Higher the occupancy,
the greater the value.

Residential occupancy 100%

Operating profit
margin

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

Higher the profit margin,
the greater the value.

Capitalisation rate

8.2%-17.5%

Discounted cash
flow (for future
development)

Discount rate

13%-16%

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 and applying a capitalisation rate
into perpetuity. The capitalisation rate is based on current market evidence. Future income projections take into account
occupancy, rental income and operating expenses.

Ingenia Communities Holdings Limited58

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

14. INVESTMENT PROPERTIES (CONTINUED)

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 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.

15. 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

Assets written off

Transferred to investment property

Transferred to intangibles

Additions

Depreciation expense

Carrying amount at end of year

16. INTANGIBLES

a. Summary of carrying amounts

Software & development

Less: accumulated amortisation

Total Intangibles

b. Movements in carrying amount

Carrying amount at beginning of year

Assets written off

Transferred from plant and equipment

Additions

Amortisation expense

Carrying amount at end of year

2015
$’000

2014
$’000

1,895

(1,175)

720

517

(118)

–

643

(322)

720

1,407

(890)

517

1,034

(82)

(320)

(473)

569

(211)

517

2015
$’000

2014
$’000

1,736

(157)

1,579

473

–

1,263

(157)

1,579

473

–

473

–

473

–

473

Annual Report 201517. TRADE AND OTHER PAYABLES

Current liabilities

Trade payables and accruals

Deposits and other unearned income

Deferred acquisition consideration

Total current liabilities

Non-current liabilities

Deferred acquisition consideration

18. BORROWINGS

Current liabilities

Finance leases

Non-current liabilities

Bank debt

Prepaid borrowing costs

Finance leases

Total non-current borrowings

2015
$’000

2014
$’000

10,047

1,526

3,500

15,073

8,814

1,595

–

10,409

14,770

4,000

Note

2015
$’000

2014
$’000

18(c)

291

283

18(a)

63,900

94,000

18(c)

(1,681)

4,272

66,491

(312)

4,385

98,073

a. Bank Debt
On 13 February 2015, the Group refinanced its Australian dollar denominated bank debt facility to a $175.0 million multi-
lateral debt facility with three Australian banks. $100 million of the facility expires on 12 February 2018 with the remainder
expiring on 12 February 2020. The facility has the following principal financial covenants:

LVR (excluding Settlers) is less than or equal to 55%;

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

–
–
– Total Interest Cover Ratio of at least 2x;
– Core Interest Cover Ratio (adjusted to exclude development income and associated costs) of at least 1.50x in financial year

ending 2015 increasing to at least 2.0x in FY2016;

– Net debt to adjusted EBITDA ratio not more than 6x up to 30 June 2015, 5.5x up to 31 December 2015, 5x up to 30 June

2016, 4x after 30 June 2016.

As at 30 June 2015, the facility has been drawn to $63,900,000 (2014: $94,000,000). The carrying value of investment
property net of resident liabilities at reporting date for the Group’s Australian properties pledged as security is
$363,720,000 (2014: $290,375,000).

b. Bank Guarantees
The Group has the ability to utilise its $175.0 million bank facility to provide bank guarantees. Bank guarantees at 30 June
2015 were $28.8 million (2014: $4.4 million). Refer to Note 27.

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 the Active Lifestyle Estates Ettalong Beach acquisition. The lease is for an initial three years
commencing September 2012 with two renewal options of seven years each. The first option period was exercised on 1 July
2015 for seven years to June 2022. The below table is based on the expectation that the last lease option will be exercised.

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

Ingenia Communities Holdings Limited60

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

18. BORROWINGS (CONTINUED)

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

2015
$’000

2014
$’000

299

1,273

3,431

5,003

(1,579)

3,424

291

1,082

2,051

3,424

292

1,242

3,761

5,295

(1,765)

3,530

283

1,056

2,191

3,530

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 applicable at the time of acquisition 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.

19. 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

Proceeds from resident loans

Repayment of resident loans

Transfer to assets and liabilities held for sale

Other

Carrying amount at end of year

Fair value hierarchy disclosures for retirement village resident loans have been provided in Note 31.

Note

2015
$’000

2014
$’000

192,898

218,639

(31,020)

161,878

(28,517)

190,122

175,703

8,878

(6,788)

2,056

19,815

(10,544)

(42,041)

380

616

(5,333)

1,811

22,021

(10,361)

5,439

226

161,878

190,122

Annual Report 201520. PROVISIONS

Current liabilities

Employee liabilities

Non-current liabilities

Employee liabilities

21. DERIVATIVES

Current liabilities

Interest rate swap contracts

Non-current liabilities

Interest rate swap contracts

22. DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax assets

Tax losses

Other

Deferred tax liabilities

DMF receivable

Investment properties

Net deferred tax asset

2015
$’000

2014
$’000

992

248

718

249

Note

2015
$’000

2014
$’000

–

2015
$’000

2014
$’000

17,496

1,401

(7,982)

(4,567)

6,348

–

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

7,500

7,488

Deferred tax liabilities

Tax losses

Other

Deferred tax liabilities

DMF receivable

Investment properties

Net deferred tax liabilities

–

14,228

1,081

8,176

7,409

276

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.

Ingenia Communities Holdings Limited62

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

23. ISSUED SECURITIES

a. Carrying values

At beginning of year

Issued during the year:

Dividend Reinvestment Plan issues

Institutional placement

Rights issue

Institutional Placement and 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:

Retention Quantum Rights

Dividend Reinvestment Plan

Institutional Placement and Rights Issue

At end of year

2015
$’000

2014
$’000

569,116

510,141

2,884

45,315

43,769

(3,870)

–

61,707

(2,732)

657,214

569,116

8,900

619,286

29,028

657,214

7,377

547,642

14,097

569,116

2015
Thousands

2014
Thousands

676,240

–

1,818

6,674

197,968

507,179

169,061

–

882,700

676,240

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.

Annual Report 2015

24. 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 operation

Balance at end of year

Share-based payment reserve

Balance at beginning of year

Transfer from reserves to retained earnings

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

2015
$’000

2014
$’000

1,035

1,339

(2,374)

766

269

–

1,035

988

(332)

678

1,334

–

308

–

680

988

2,023

988

866

169

1,334

2,023

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 28.

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

25. ACCUMULATED LOSSES

Balance at beginning of year

Net profit/(loss) for the year

Transfer from reserves to retained earnings

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

2015
$’000

2014
$’000

(330,962)

(336,563)

25,722

332

11,518

–

(10,120)

(5,917)

(315,028)

(330,962)

(3,175)

(2,659)

(303,335)

(324,254)

(8,518)

(4,049)

(315,028)

(330,962)

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

26. COMMITMENTS

a. Capital Commitments
There were commitments for capital expenditure on investment property and inventory contracted but not provided for at
reporting date of $7,048,000 (2014: $3,266,000), all payable within one year.

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

2015
$’000

2014
$’000

362

744

1,106

482

1,106

1,588

c. Finance Lease Commitments
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 Holiday Village acquisition. The lease is for an initial three years commencing
September 2012 with two renewal options of seven years each. The first option period was exercised on 1 July 2015 for
seven years to June 2022.

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.

Refer to Note 18 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.

27. CONTINGENT LIABILITIES
There are no known contingent liabilities other than the bank guarantees totalling $28.8 million provided for under the
$175.0 million bank facility (refer to Note 18).

Bank guarantees of $18.8 million primarily related to deferred acquisition consideration recognised as current and
non-current payables (refer to Note 17). These guarantees will not be called by the counterparties unless the deferred
consideration is not paid in accordance with the terms of the agreement.

There is a $10 million bank guarantee in favour of Ingenia Communities RE Limited issued to satisfy the Responsible Entity’s
AFSL capital requirements.

28. SHARE-BASED PAYMENT TRANSACTIONS
The Group has established rights plans, which provide for the grant of conditional rights to receive securities in the Group.
The intention of these plans 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 to sustain earnings growth.

These plans encompass various types of security rights, being:

– Performance Quantum rights (“PQRs”) which 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 (“TSR”). On vesting, each PQR entitles the
employee to receive one security of the Group for no consideration.

– Retention Quantum Rights (“RQRs”) issued as a one off grant in 2012 to ensure stability during the internalisation transition.
These rights were subject to the employee remaining with the Group for a two year retention period. These rights vested on
1 July 2014 and RQRs will not be issued in the future.

–

Long-Term Incentive Rights (“LTIPs”) which vest subject to a performance condition based on growth in the Group’s TSR
relative to the ASX 300 Industrials Index return over the performance period.

– Short-Term Incentive Rights (“STIPs”) which are awarded based on agreed performance conditions as part of the

executive’s short-term incentive remuneration. The value of the rights awarded is conditional based on executives meeting
pre-agreed Key Performance Indicators (KPIs). Once performance against the KPIs has been assessed, the value of the
STIPs to be issued is determined. These STIPs are then subject to a one year vesting deferral period from the issue date.
The STIP allows for certain lapsing conditions within the deferral period, should certain conditions occur.

Annual Report 2015Movements in rights during the year were:

PQRs & LTIPs

Outstanding at beginning of year(1)

Granted during the year

Outstanding at end of year

Exercisable at end of year

Weighted average remaining contractual life of outstanding rights (years)

RQRs

Outstanding at beginning of year(2)

Granted during the year

Outstanding at end of year

Exercisable at end of year

Weighted average remaining contractual life of outstanding rights (years)

(1) 3,842,000 PQRs vested on 1 July 2015 and 3,842,000 fully paid stapled securities were issued at that time.

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

2015
Thousands

2014
Thousands

7,558

983

8,541

–

0.70

1,818

–

3,842

3,716

7,558

–

1.5

1,818

–

1,818

–

During the year, 982,971 LTIPs were granted to senior executives of the Group. The number of LTIPs that will vest
depends on the TSR achieved and is conditional on the individual being in employment of the Group on the vesting date
(30 September 2017). The measurement period for these LTIPs is 1 October 2014 to 30 September 2017 and full rights vest
based on TSR growth relative to growth in the ASX 300 Industrial Index. A sliding scale applies for lower TSRs with the
number of rights vesting being nil for a TSR at or below 1%. One right equates to one security in the Group.

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

Grant Date

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

1 October
2014

12 November
2014

$0.445

30.0%

2.24%

2.53%

$0.455

30.0%

2.28%

2.56%

2.9 years

$0.243

$0.253

The fair value of PQRs and LTIPs 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
$590,928 (2014: $680,600).

The total value of STIP rights is conditional based on KMPs meeting pre-agreed Key Performance Indicators (“KPIs”)
and is subject to adjustment through to 1 October 2015 once the full year audited result is known and the KPIs can be
reliably measured. An estimate based on the current period performance and KMP performance against these KPIs has
been recognised at 30 June 2015. However, the total number of rights to be issued will be determined by 1 October 2015.
The deferred expense for STIPs recognised for the year was $86,356 (2014: nil).

Ingenia Communities Holdings Limited66

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

29. 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, 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 primarily monitors its capital position through the Loan to Value Ratio (LVR) which is a key covenant under the
Group’s $175.0 million multilateral debt facility. LVR is calculated as the sum of bank debt, bank guarantees and finance
leases net of cash at bank as a percentage of the value of properties pledged as security. The Group’s strategy is to maintain
an LVR range of 30-35%. As at 30 June 2015, LVR is 22.6% compared to 33.9% at 30 June 2014.

In addition the Group also monitors Interest Cover Ratio and Net Debt: Adjusted EBITDA as defined under the multilateral
debt facility. At 30 June 2015, the Total Interest Cover Ratio was 2.96%; the Core Interest Cover Ratio was 2.68% and Net
Debt: Adjusted EBITDA was 4.58.

30. 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 the forecast is unlikely 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.

Annual Report 201567

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 2015, after taking into account the effect of interest rate swaps, approximately 28% of the Group’s borrowings
are at a fixed rate of interest (2014: 47%).

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 2015

Principal amounts $’000

Financial assets

Cash at bank

Financial liabilities

Bank debt denominated in AUD

30 June 2014

Principal amounts $’000

Financial assets

Cash at bank

Financial liabilities

Bank debt denominated in AUD

15,117

63,900

–

Finance leases (excluding perpetual lease)

–

291

1,082

2,051

Interest rate swaps:

denominated in AUD; Group pays fixed rate

(18,000)

18,000

–

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:

Fixed interest maturing in:

Floating
interest rate

Less than
1 year

1 to
5 Years

More than
5 years

Total

12,894

94,000

–

Finance leases (excluding perpetual lease)

–

283

1,056

2,191

Interest rate swaps:

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.

15,117

63,900

3,424

12,894

94,000

3,530

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

30. FINANCIAL INSTRUMENTS (CONTINUED)

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

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)

2015
$’000

2014
$’000

(639)

(940)

Effect on profit after tax
higher/(lower)

2015
$’000

2014
$’000

–

417

Effect on profit after tax
higher/(lower)

2015
$’000

2014
$’000

639

940

Effect on profit after tax
higher/(lower)

2015
$’000

2014
$’000

–

(297)

Annual Report 201569

e. Foreign Exchange Risk
The Group’s exposure to foreign exchange risk is limited to foreign denominated cash balances and receivables following the
divestment of its final overseas operations in December 2014. These amounts are unhedged as cash will be used to cover
final costs to wind up the companies and receivables relate to escrows.

f. Net Foreign Currency Exposure
The Group’s net foreign currency monetary exposure 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

New Zealand dollars

Total net foreign currency assets

Net foreign currency assets

2015
$’000

2014
$’000

3,491

473

3,964

157

1,657

1,814

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

New Zealand dollars

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

Foreign exchange risk exposures denominated in:

United States dollars

New Zealand dollars

Effect on profit after tax
higher/(lower)

2015
$’000

2014
$’000

(317)

(43)

(16)

(166)

Effect on profit after tax
higher/(lower)

2015
$’000

2014
$’000

388

166

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.

Ingenia Communities Holdings Limited70

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

30. FINANCIAL INSTRUMENTS (CONTINUED)

h. 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.

i. 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 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.

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.

2015

Trade and other payables

Retirement village residents loans

Borrowings

Provisions

Finance leases (excluding perpetual lease)

Finance lease (perpetual lease)(1)

Liabilities held for sale

Less than
1 year
$’000

15,073

161,878

1 to
5 Years
$’000

14,770

–

2,731

68,344

992

299

121

42,041

177

1,273

483

–

More than
5 years
$’000

–

3,431

–

Total
$’000

29,843

161,878

71,075

1,240

5,003

604

42,041

223,135

85,047

3,502

311,684

Annual Report 2015
71

2014

Trade and other payables

Retirement village residents loans

Borrowings

Provisions

Finance leases (excluding perpetual lease)

Finance lease (perpetual lease)(1)

Less than
1 year
$’000

10,409

190,122

1 to
5 Years
$’000

4,000

–

4,521

99,653

718

292

121

249

1,242

483

More than
5 years
$’000

–

3,761

–

Total
$’000

14,409

190,122

104,174

967

5,295

604

206,183

105,627

3,761

315,571

(1) For purposes of the table above, the lease payments are included for five years for the perpetual lease. Refer to Note 18(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.

2015

Liabilities
Derivative liabilities – net settled

2014

Liabilities
Derivative liabilities – net settled

Less than
1 year
$’000

1 to
5 Years
$’000

More than
5 years
$’000

Total
$’000

–

168

j. 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)

2015
$’000

2014
$’000

(19,290)

(21,864)

19,290

21,864

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.

k. Fair Value
The Group uses 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.

Ingenia Communities Holdings Limited
72

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

30. FINANCIAL INSTRUMENTS (CONTINUED)
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

Derivative interest rate
swaps

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.

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 longer the length of stay,
the higher the DMF accrued,
capped at a predetermined
period of time.

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 19.

The carrying amounts of the Group’s other financial instruments approximate their fair values.

31. 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 2015

Investment properties

Date of valuation

30 June 2015
Refer to Note 14

Assets held for sale – investment
property

30 June 2015
Refer to Note 10(a)

30 June 2014

Date of valuation

Investment properties

30 June 2014
Refer to Note 14

Discontinued operations- investment
property

30 June 2014
Refer to 8(d)

Assets held for sale – deferred
management fee receivable

30 June 2014
Refer to Notes 10(a) and 19

Fair value measurement using

Quoted
prices in
active
markets
(Level 1)
$’000

–

Significant
observable
inputs
(Level 2)
$’000

Significant
unobservable
inputs
(Level 3)
$’000

–

539,715

61,598

–

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

Total
$’000

539,715

61,598

Total
$’000

498,863

45,902

5,439

Annual Report 201573

b. Liabilities Measured at Fair Value

30 June 2015

Date of valuation

Retirement village resident loans

Derivatives

30 June 2015
Refer to Note 19

30 June 2015

Liabilities held for sale

Refer to Note 10(b)

30 June 2014

Date of valuation

Retirement village resident loans

Derivatives

30 June 2014
Refer to Note 19

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

–

42,041

161,878

–

Fair value measurement using

Quoted
prices in
active
markets
(Level 1)
$’000

Significant
observable
inputs
(Level 2)
$’000

Significant
unobservable
inputs
(Level 3)
$’000

–

168

190,122

–

Total
$’000

161,878

42,041

Total
$’000

190,122

168

There have been no transfers between Level 1 and Level 2 during the year.

32. AUDITOR’S REMUNERATION

Amounts received or receivable by EY for:

Audit or review of the financial reports

Other audit related services

Non-audit related services

2015
$

2014
$

469,524

333,355

140,738

–

34,450

27,295

610,262

395,100

33. 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 payments

Note

2015
$

2014
$

542,000

462,500

1,158,141

1,094,684

400,956

332,235

58,518

59,084

590,928

680,600

2,750,543

2,629,103

The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key
management personnel.

Ingenia Communities Holdings Limited74

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

33. RELATED PARTIES (CONTINUED)
The aggregate PQRs and RQRs (refer to Note 28) of the Group held directly, by KMP, are as follows:

Issue date

Rights

Expiry date

2012

2013

2014

RQR

PQR

2014

2015

2016

2017

34. 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

Loss from continuing operations

Net loss attributable to securityholders

Total comprehensive income

Number outstanding

2015

2014

–

1,818,000

3,842,000

3,716,000

982,971

–

2015
$’000

2014
$’000

177

5,315

5,747

4,014

1,301

8,900

1,334

(8,933)

1,301

(1,118)

–

7,870

7,320

550

7,377

988

(7,815)

550

(4,771)

The Company is a joint guarantor of the $175.0 million multi-lateral debt facility, which has been drawn to $63,900,000 at
30 June 2015 (2014: $94,000,000).

Annual Report 2015

35. 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 CC 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 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. 3

INA Operations Pty Ltd

INA Operations Trust No. 1

INA Operations Trust No. 2

INA Operations Trust No. 3

Country of
residence

Ownership interest

2015
%

2014
%

Australia

100

Ingenia Communities Holdings Limited76

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

35. SUBSIDIARIES (CONTINUED)

Ownership interest

Name

Country of
residence

2015
%

INA Operations Trust No. 4 (formerly INA Subsidiary Trust No. 2)

Australia

INA Operations Trust No. 6

INA Operations Trust No. 7

Noyea Pty Ltd

Noyea Operations Pty Ltd

INA Operations No. 2 Pty Limited

INA Operations No. 3 Pty Limited

IGC NZ Student Holdings Ltd

INA NZ Subsidiary Unit Trust No. 1

CSH Lynbrook GP LLC

CSH Lynbrook LP

Lynbrook Freer Street Member LLC

Lynbrook Management, LLC

Australia

New Zealand

United States of America

INA Community Living LLC (formerly ING Community Living LLC) United States of America

INA Community Living II LLC (formerly ING Community
Living II LLC)

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.

100

–

100

2014
%

100

–

100

–

100

Annual Report 201536. 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 - discontinued

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

Share-based payments expense

Amortisation of borrowing costs

Other non-cash items

2015
$’000

25,722

2014
$’000

11,518

927

(1,410)

(2,374)

2,014

–

(16,404)

–

(164)

8,878

–

290

(327)

341

1,630

(41)

616

(6,604)

(7,264)

214

678

536

479

681

369

211

Operating profit for the year before changes in working capital

13,971

6,628

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

(2,599)

(11,750)

12,446

(3,034)

9,034

5,237

(1,923)

6,327

(2,029)

14,240

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

37. SUBSEQUENT EVENTS

a. Performance Quantum Rights Vesting
On 1 July 2015, 3,842,000 Performance Quantum Rights (“PQRs”) granted to KMP in 2012 vested. As a result, 3,842,000
fully paid stapled securities have been issued to the following KMP:

Simon Owen

Tania Betts

Nicole Fisher

2,260,000

791,000

b. Acquisition of Upstream Bethania
On 3 July 2015, the Group settled Upstream Bethania, the Group’s second Active Lifestyle Estate in Brisbane,
complementing Chambers Pines Lifestyle Resort and the Group’s existing Garden Villages in the region. The acquisition
price was $8.15 million (excluding transaction costs) and was funded from the proceeds of the capital raising in October
2014.

This park, now known as Active Lifestyle Estate Bethania, is an existing manufactured home community outside Brisbane
and represents a significant development opportunity that will grow the Group’s existing rental stream.

c. Execution of Hedging Contract
On 31 July 2015, the Group entered into an interest rate hedge collar for $16.0 million with an expiry date of August
2017. The execution of this hedge means 23.2% of the Group’s debt is currently hedged with the intention to gradually
increase the hedged exposure over the coming months.

d. Acquisition of Big 4 Conjola Lakeside
On 13 August 2015, the Group announced it had exchanged unconditional contracts for the acquisition of Big 4 Conjola
Lakeside in Lake Conjola, NSW. The acquisition price is $24.0 million (excluding transaction costs) and will be funded from
the proceeds of the capital raising in October 2014.

e. Final FY15 distribution
On 25 August 2015, the directors of the Group resolved to declare a final distribution of 0.70 cps (2014: 0.65 cps) amounting
to $6,205,793 to be paid as 16 September 2015. The distribution is 71.0% tax deferred and the dividend reinvestment plan
will apply to the final distribution.

Annual Report 2015Directors’ Declaration

for the year ended 30 June 2015

In accordance with a resolution of the directors of Ingenia Communities Holdings Limited, I state that:

In the opinion of the directors:

a. the financial statements and notes of Ingenia Communities Holdings Limited for the financial year ended 30 June 2015

are in accordance with the Corporations Act 2001, including:

i. giving a true and fair view of its financial position as at 30 June 2015 and of its performance for the year ended on

that date; and

ii. complying with Accounting Standards (including Australian Accounting Interpretations) and Corporations

Regulations 2001; and

b. 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.

2. The financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1(b).

3. 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, 9 September 2015

Ingenia Communities Holdings Limited80

Independent Auditor’s Report

for the year ended 30 June 2015

Annual Report 201581

Ingenia Communities Holdings Limited88
82

Ingenia Communities Holdings Limited

Annual Report 2015Ingenia Communities Fund & Ingenia Communities
Management Trust Annual Reports
for the year ended 30 June 2015

CONTENTS
Directors’ Report

Auditor’s 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

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

8. Business combinations

9. Assets and liabilities held for sale

10. Cash and cash equivalents

11. Trade and other receivables

12. Inventories

13. Investment properties

14. Plant and equipment

15. Intangibles

16. Trade and other payables

17. Borrowings

18. Retirement village resident loans

19. Provisions

20. Derivatives

21. Deferred tax assets and liabilities

22. Issued units

23. Reserves

24. Accumulated losses

25. Commitments

26. Contingencies

27. Capital management

28. Financial instruments

29. Fair value measurement

30. Auditor’s remuneration

31. Related parties

32. Parent financial information

33. Subsidiaries

34. Notes to the cash flow statements

35. Subsequent events

Directors’ Declaration

Independent Auditor’s Report

Securityholder Information

Investor Relations

Corporate Directory

100

102

106

107

108

109

110

111

113

114

115

116

117

118

119

125

127

128

130

131

132

133

134

135

137

139

140

Ingenia Communities Holdings Limited84

Directors’ Report

for the year ended 30 June 2015

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
(“ICRE” or “Responsible Entity”) is Ingenia Communities
Holdings Limited (the “Company” or “ICH”). 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 for the full year ended 30 June 2015
(the “current period”).

DIRECTORS
The directors of Ingenia Communities RE Limited at any
time during or since the end of the financial year were:

Non-executive directors
Jim Hazel (Chairman)

Philip Clark AM

Amanda Heyworth

Robert Morrison

Norah Barlow ONZM

Executive director
Simon Owen (Managing Director and CEO)

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 the
Ingenia Communities Group (the “Group”) which is a triple
stapled structure traded on the ASX.

The Group is an active owner, manager and developer of a
diversified portfolio of retirement communities and lifestyle
parks across Australia. Its real estate assets are valued
at $393.0 million, being twenty lifestyle parks, thirty-one
rental villages and eight deferred management fee villages.
The Group is in the ASX 300 with a market capitalisation of
approximately $408 million.

The Group’s vision is to be a leading Australian provider of
affordable long term and short term rental accommodation
with a focus on the seniors demographic. The Board is
committed to delivering long term earnings and security
price growth to securityholders and providing a supportive
community environment to both its permanent and short
term residents.

b. Strategy
The strategies of ICF and ICMT are aligned with the
Group’s strategy of being primarily focused on improved
operational performance across its portfolio and continued
acceleration of development within its lifestyle parks
sector. Using a disciplined investment framework, the
Group will continue to acquire further lifestyle parks
through deployment of the balance of equity funds raised
in October 2014 as well as capital recycling, efficient
inventory management and sale of completed homes.

The Group finalised its strategic exit from the non-core
New Zealand Students portfolio in December 2014 and is
in the process of reducing its investment in DMF assets.

A key element to achieving growth is efficient operational
and capital management. In February 2015, the Group
completed a debt refinance which increased its facility limit
to $175 million, expanded its lender base, created enhanced
flexibility and lowered pricing to an “all in” cost of debt
currently of 4.6%. As at 30 June 2015, the facility is drawn
to $63.9 million, which represents a loan to value ratio
(“LVR”) of 22.6%, well below our target range of 30-35%.
This leaves the Group well positioned to execute on further
investment opportunities.

The key immediate business priorities of the Group are:

– Continue building velocity in the delivery and sale of

new homes within the Active Lifestyle Estates business;

– Acquire additional lifestyle parks in existing and new

market clusters;

– Grow occupancy rates within the Garden Villages

portfolio towards a new medium term target of 93%;

– Grow occupancy and average room rates for short term

accommodation within Active Lifestyle Estates

– Continue sell down of completed homes within the

Settlers portfolio and explore opportunities to recycle
capital from Settlers assets into higher cash yielding
lifestyle park assets; and

– Focus on growing asset cash yields through operational

efficiencies including revenue optimisation and
disciplined cost management

c. FY15 financial results
FY15 has been a year of significant investment in the
Active Lifestyle Estates portfolio, with the focus on building
a proven sales and development platform to deliver the
forecast development pipeline returns. Management has
also remained focused on increasing occupancy within
the Garden Villages portfolio, selling down available stock
within the Settlers portfolio and recycling capital from low
yielding assets as evidenced by the divestment of three
underperforming Garden Villages assets in June 2015.

In October 2014, the Group raised $89.1 million from
an institutional placement and rights issue, which with
available debt facilities provided capacity to invest
approximately $120 million into the lifestyle parks sector.
Over the year ICMT invested an additional $71.1 million
(excluding transaction costs) into lifestyle parks
acquiring a further five assets. To date, $87.0 million
has been deployed into six assets with a further
acquisition announced in August.

Annual Report 201585

d. Key metrics
– Net profit for the year of $34.5 million for ICF, up

124% from FY14

– Net loss from ICMT of $7.9 million (2014: $1.2 million loss)
– Full year distribution of 1.35 cent per security by ICF,

nil from ICMT

These results are reflective of execution of divestment
of its overseas operations and deployment of capital
into the Australian market to generate strong returns
for unitholders.

e. Continuing operations
The key strategic priorities of the continuing
operations are:

– Continuing the sales and settlement momentum
achieved in Active Lifestyle Estates during FY15,

– Securing further development approvals for new homes

within our existing lifestyle parks;

– Optimising home designs for efficiency and customer

demand;

– Growing rental returns and leveraging scale efficiencies;
– Assessing expansion into greenfield lifestyle park

development;

– Continuing to grow Garden Villages occupancy,

increasing rents above CPI and improving cash margins;

– Completing the sale of the five Settlers assets classified

as held for sale.

f. Discontinued operations and assets held for sale
ICF and ICMT completed their exit from the New Zealand
Students portfolio in December 2014.

g. Capital management
The Group adopts a prudent and considered approach
to capital management. During the year, the Group
strengthened its capital position by undertaking an
$89.1 million capital raising and negotiating a new
$175 million Australian multilateral debt facility; an
increase of $45.5 million from the previous facility.

As at 30 June 2015, the current LVR is 22.6%, which is
below our target LVR of 30-35%. Once the Group deploys
remaining proceeds from the capital raising and debt
into further lifestyle parks, the LVR will move towards the
target range.

h. Distributions
The following distributions were made by ICF during or in
respect of the year:

– On 24 February 2015, the directors declared an interim
distribution of 0.65 cps (2014: 0.50 cps) amounting to
$5,712,537 which was paid on 18 March 2015.

– On 25 August 2015, the directors declared a final

distribution of 0.70 cps (2014: 0.65 cps) amounting to
$6,205,793, to be paid on 16 September 2015.

The distribution is 71.0% 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.

i. Outlook
The Trusts are well positioned to continue growing their
lifestyle parks business with a significant and accretive
acquisition pipeline in place and significant debt capacity.
Further growth in sales and settlements volumes is
expected in FY16 as further projects are launched.

The Trusts will continue to regularly assess the
performance of their existing assets and where appropriate
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 9 for Assets and liabilities
held for sale, Note 13 for Investment properties acquired or
disposed of during the year, Note 17 for details of Australian
debt refinanced and Note 22 for Issued units.

EVENTS SUBSEQUENT TO REPORTING DATE

a. Performance Quantum Rights vesting
On 1 July 2015, 3,842,000 Performance Quantum Rights
(“PQRs”) granted to Key Management Personnel (“KMP”)
in 2012 vested. As a result, 3,842,000 fully paid stapled
securities have been issued to the following KMP:

Simon Owen

2,260,000

Tania Betts

791,000

Nicole Fisher

791,000

b. Acquisition of Upstream Bethania
On 3 July 2015, ICMT settled Upstream Bethania, ICMT’s
second Active Lifestyle Estate in Brisbane, complementing
Chambers Pines Lifestyle Resort and ICMT’s existing
Garden Villages in the region. The acquisition price was
$8.15 million (excluding transaction costs) and was funded
from the proceeds of the capital raising in October 2014.

c. Execution of Hedging Contract
On 31 July 2015, ICF entered into an interest rate hedge
collar for $16.0 million with an expiry date of August
2017. The execution of this hedge means 23.2% of ICF’s
debt is currently hedged with the intention to gradually
increase the hedged exposure over the coming months.

d. Acquisition of Big 4 Conjola Lakeside
On 13 August 2015, ICMT announced it had exchanged
unconditional contracts for the acquisition of Big 4
Conjola Lakeside in Lake Conjola, NSW. The acquisition
price is $24.0 million (excluding transaction costs) and
will be funded from the proceeds of the capital raising
in October 2014.

Ingenia Communities Holdings Limited
86

Directors’ Report

for the year ended 30 June 2015

e. Final FY15 distribution
On 25 August 2015, the directors of ICF resolved to declare a final distribution of 0.70 cps (2014: 0.65 cps) amounting to
$6,205,793 to be paid as 16 September 2015. The distribution is 71.0% tax deferred and the dividend reinvestment plan will
apply to the final distribution.

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 have policies and procedures in place to ensure that, where operations are subject to any particular and
significant environmental regulation under the law of Australia, those obligations are identified and appropriately addressed.
The directors have determined that there has not been any material breach of those obligations during the financial year.

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.

INTERESTS OF DIRECTORS OF THE RESPONSIBLE ENTITY
Units in each Trust held by directors of the Responsible Entity or associates of the directors as at 30 June 2015 were:

Jim Hazel

Philip Clark AM

Amanda Heyworth

Robert Morrison

Norah Barlow

Simon Richard Owen

Number of
units

1,669,587

238,096

641,524

453,335

209,063

Performance
quantum
rights

Retention
quantum
rights

–

3,763,905

4,720,000

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 31 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 87.

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, 9 September 2015

Annual Report 2015Auditor’s Independence Declaration

for the year ended 30 June 2015

Ingenia Communities Holdings Limited88

Consolidated Statements
of Comprehensive Income

for the year ended 30 June 2015

Ingenia Communities Fund

Ingenia Communities
Management Trust

Note

2015
$’000

2014
$’000

2015
$’000

2014
$’000

Revenue

Rental income

Accrued deferred management fee income

Manufactured home sales

Catering income

Other property income

Service station sales

Interest income

Property expenses

Employee expenses

Administration expenses

Operational, marketing and selling expenses

Manufactured home cost of sales

Service station expenses

Finance expense

Net foreign exchange gain/(loss)

Net gain/(loss) on disposal of investment properties

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

Investment properties

Derivatives

Retirement village resident loans

Responsible Entity’s fees and expenses

Depreciation and amortisation expense

Profit/(loss) from continuing operations
before income tax

Income tax benefit

Profit/(loss) 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

9,720

9,354

44,984

31,643

–

14,564

24,284

10,339

19,693

6,788

14,937

3,538

3,076

2,359

5,333

3,442

3,178

1,819

–

75,689

45,431

(327)

–

(506)

(648)

–

(274)

(27,372)

(20,693)

–

(582)

(295)

–

(17,061)

(2,689)

(3,150)

(9,256)

(1,910)

(11,131)

(1,983)

(2,734)

(2,130)

–

(3,601)

(3,955)

(15,144)

(10,145)

107

(1,689)

(147)

–

1,620

15,922

1,530

164

–

(1,676)

(117)

–

(1,170)

(100)

482

–

(8,878)

(2,165)

(259)

31,913

14,741

(10,093)

–

6,019

31,913

2,587

34,500

14,741

681

15,422

(4,074)

(3,854)

(7,928)

–

(1,871)

–

(616)

(1,626)

(67)

(7,565)

6,506

(1,059)

(111)

(1,170)

1,846

(226)

(169)

495

(1,620)

34,726

–

15,196

(8,097)

–

(675)

31(b)

14,15

Annual Report 2015

Ingenia Communities Fund

Ingenia Communities
Management Trust

Note

2015
$’000

2014
$’000

2015
$’000

2014
$’000

Attributable to unitholders of:

Ingenia Communities Fund

Ingenia Communities Management Trust

Total comprehensive income/(loss) for the year is
attributable to:

Ingenia Communities Fund

Ingenia Communities Management Trust

Distributions per unit(1)

Earnings per unit:

Basic earnings from continuing operations

Basic earnings

Diluted earnings from continuing Operations

Diluted earnings

Note

34,500

15,422

–

34,500

15,422

34,726

–

34,726

2015
Cents

1.3

3.9

4.2

2.5

2.7

15,196

–

15,196

2014
Cents

1.0

2.3

2.4

2.3

2.4

(3,461)

(4,467)

(7,928)

(3,461)

(4,636)

(8,097)

2015
Cents

–

(0.5)

(1.0)

(0.3)

(0.6)

(111)

(1,059)

(1,170)

335

(1,010)

(675)

2014
Cents

–

(0.2)

(2.2)

(1) Distributions relate to the amount paid during the financial year. Subsequent to the end of the year, a final distribution was declared for

0.70 cents for a total full year distribution of 1.35 cents.

Ingenia Communities Holdings Limited

Consolidated Balance Sheets

as at 30 June 2015

Current assets

Cash and cash equivalents

Trade and other receivables

Inventories

Income tax receivable

Assets of discontinued operations

Assets held for sale

Total current assets

Non-current assets

Trade and other receivables

Receivable from related party

Investment properties

Plant and equipment

Intangibles

Investments

Deferred tax asset

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

Liabilities held for sale

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

Note

7(d)

9(a)

7(d)

9(b)

Ingenia Communities Fund

Ingenia Communities
Management Trust

2015
$’000

2014
$’000

2015
$’000

2014
$’000

8,966

2,643

–

11,625

31,401

185,798

153,434

122

3,874

–

2,658

4,280

–

975

3,874

–

11,787

39,334

135,805

134,488

239

–

374,631

386,256

309,866

321,653

1,200

1,210

–

6,094

4,104

13,208

–

61,598

85,020

110

–

3,893

3,131

2,208

–

47,657

5,439

62,328

–

386,294

364,375

459

1,577

–

4,606

393,046

478,066

12,785

2,817

161,878

830

–

189,635

–

42,041

180

–

364,595

426,923

8,480

3,461

190,122

590

–

133,249

30,449

–

1,203

1,294

409,986

366,380

–

62,217

93,688

–

62,217

63,420

322,836

–

93,772

95,066

226,587

14,770

33,252

248

–

48,270

458,256

19,810

619,285

547,642

29,028

–

(226)

(296,449)

(320,829)

322,836

226,587

–

322,836

226,587

322,836

226,587

–

322,836

226,587

–

(8,518)

20,510

(700)

19,810

(700)

20,510

19,810

4,000

41,883

249

–

1,433

47,565

413,945

12,978

14,097

169

(4,049)

10,217

2,761

12,978

2,761

10,217

12,978

Annual Report 2015

Consolidated Cash Flow Statements

for the year ended 30 June 2015

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 manufactured home sales

Payments for manufactured homes

Purchase of service station inventory

Proceeds from sale of service station inventory

Distributions received from equity accounted investments

Interest received

Borrowing costs paid

Income taxes received/(paid)

Cash flows from investing activities

Purchase & additions of plant & equipment

Purchase & additions of intangibles

Additions to investment properties

Proceeds/(costs) from sale of investment properties

Payments for investment properties

Amounts received from villages

Payments for lease arrangements

Proceeds/(costs) of equity accounted investments

Cash flows from financing activities

Proceeds from the issue units

Payment of unit issue costs

Distributions to unitholders

Finance lease payments

Ingenia Communities Fund

Ingenia Communities
Management Trust

Note

2015
$’000

2014
$’000

2015
$’000

2014
$’000

–

57,922

43,274

–

(29)

(998)

(51)

(45,256)

(30,286)

–

167

(3,132)

800

(3,163)

(2)

–

(1,292)

6,650

–

(207)

5,149

74,787

(3,143)

(8,794)

–

295

205

(4,123)

(125)

(3,799)

19,815

22,021

(10,543)

(10,361)

15,735

3,511

(19,358)

(4,035)

(1,936)

2,362

–

(1,771)

(1,689)

(5)

16,982

22,428

–

(415)

(1,364)

(150)

–

(2)

(12,820)

(18,723)

1,321

49,511

(120)

(10,452)

(64,423)

(102,803)

–

5,695

168

–

(2)

(745)

116

(3,438)

(29,345)

(122,353)

61,707

(2,528)

(5,885)

–

15,587

(656)

(1,311)

(126)

–

(243)

–

(81)

(Repayment of)/proceeds from borrowings with related
parties

3,147

(100,124)

(237)

108,231

Proceeds from borrowings

Repayment of borrowings

Payment of borrowing costs

Payments for debt issue costs

Payments for derivatives

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

65,205

94,000

(125,197)

(68,000)

–

(142)

(1,789)

–

4,216

(20,972)

6,202

2,658

106

8,966

(28,209)

31,014

(147)

2,658

–

(444)

12,813

450

5,550

6,094

–

(2,581)

(75)

–

105,251

5,326

248

(24)

5,550

Ingenia Communities Holdings Limited92

Statements of Changes
in Unitholders’ Interest

for the year ended 30 June 2015

Ingenia Communities Fund

Attributable to unitholders

Issued
capital
$’000

Reserves
$’000

Retained
earnings
$’000

Non-
controlling
interest
$’000

Total
$’000

Note

Carrying amounts at
1 July 2013

Net profit for the year

Other comprehensive
income

Total comprehensive
income for the year

Transactions with unitholders
in their capacity as
unitholders:

Issue of securities

Payment of distributions
to securityholders

Carrying amounts at
30 June 2014

Net profit for the year

Other comprehensive
income

Total comprehensive
income for the year

Transactions with unitholders
in their capacity as
unitholders:

Issue of securities

Payment of distributions
to securityholders

Carrying amounts at
30 June 2015

497,956

–

(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

–

34,500

226

–

226

34,500

34,726

71,643

–

619,285

–

71,643

(10,120)

(296,449)

322,836

–

Total
equity
$’000

167,622

15,422

(226)

15,196

49,686

(5,917)

226,587

34,500

226

34,726

71,643

(10,120)

322,836

Annual Report 2015

Ingenia Communities Management Trust

Attributable to unitholders

Reserves
$’000

Retained
earnings
$’000

Total
$’000

3,236

(1,059)

(2,990)

(1,059)

–

(1,059)

(1,010)

Non-
controlling
interest(1)
$’000

2,426

(111)

446

335

Total
equity
$’000

5,662

(1,170)

495

(675)

–

7,991

–

7,991

(4,049)

(4,467)

10,217

(4,467)

2,761

(3,461)

12,978

(7,928)

(169)

–

(169)

–

(169)

(4,467)

(4,636)

(3,461)

(8,097)

Note

Carrying amounts at
1 July 2013

Net loss for the year

Other comprehensive
income

Total comprehensive
income for the year

Transactions with unitholders
in their capacity as
unitholders:

Issued
capital
$’000

6,106

–

Issue of securities

7,991

Carrying amounts at
30 June 2014

Net loss for the year

Other comprehensive
income

Total comprehensive
income for the year

Transactions with unitholders
in their capacity as
unitholders:

14,097

–

120

–

169

–

Issue of securities

14,929

Carrying amounts at
30 June 2015

29,026

–

14,929

–

14,929

(8,516)

20,510

(700)

19,810

(1) Non-controlling interest relates to the portion in which ICF owns subsidiaries consolidated within ICMT.

Ingenia Communities Holdings Limited

Notes to the Financial Statements

for the year ended 30 June 2015

As at 30 June 2015, ICMT recorded a net current asset
deficiency of $322,440,000. This deficiency includes
retirement village resident loans of $161,878,000, liabilities
held for sale of $42,041,000 and payables to other
entities within the Group of $189,635,000. 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.
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
The Trusts have 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 including
AASB 2012-3 Offsetting Financial Assets and Financial
Liabilities.

The impact of application of this Standard is as follows:

Accounting Standard Impact on the Group

AASB 2012-3

The application of this Standard
did not have any impact on the
Trusts as retirement village loans
are already offset.

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
ICF and ICMT. 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.

Annual Report 2015d. 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.

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 and liabilities
held for sale are given at Notes 7 and 9.

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.

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.

Ingenia Communities Holdings Limited96

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

1. SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES (CONTINUED)

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.

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.

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.

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.

Annual Report 201597

n. Inventories
The Trusts hold inventory in relation to the acquisition and
development of manufactured homes and service station
fuel and supplies both within its 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.

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,
tourism cabins and associated amenities.

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. In determining
the fair value of assets held for sale recent market offers
have been taken into consideration.

It is the Trusts’ policy to have all investment properties
externally valued at intervals of not more than two years.
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.

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

In determining fair values, the group considers relevant
information including the capitalisation of rental streams
using market assessed capitalisation rates, expected net
cash flows discounted to their present value using market
determined risk adjusted discount rates and other available
market data such as recent comparable transactions. The
assessment of fair value of investment properties does not
take into account potential capital gains tax assessable.

q. Intangible assets
An intangible asset arising from development expenditure
related to software is recognised only when the Group
can demonstrate the technical feasibility of completing
the intangible asset so that it will be available for use,
how the asset will generate future economic benefits,
the availability of resources to complete the asset and
the ability to measure reliably the expenditure during its
development. Costs capitalised include external direct
costs of materials and service, and direct payroll and
payroll related costs of employees’ time spent on the
project.

The Group’s policy applied to capitalised development
costs is as follows:

Software and associated development to capitalised
development costs (assets in use)

– Useful life: Finite Amortisation method using 7 years on

a straight line basis; and

–

Impairment test: Amortisation method reviewed at
each financial year end; closing carrying value reviewed
annually for indicators of impairment.

Subsequent expenditure on capitalised intangible assets
is capitalised only when it increases the future economic
benefits embodied in the specific asset to which it relates.
All other expenditure is expensed as incurred. Gains
or losses arising from de-recognition of an intangible
asset are measured as the difference between the net
disposal proceeds and the carrying amount of the
asset and are recognised in profit or loss when the asset
is de-recognised.

r. 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.

Ingenia Communities Holdings Limited98

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

1. SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES (CONTINUED)

s. 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 28(j) and 1(z) for information regarding the
valuation of retirement village resident loans.

t. 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.

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.

u. 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.

v. 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.

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.

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

w. 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.

Annual Report 2015x. 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.

However, ICMT and its subsidiaries are subject to Australian
income tax.

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.

y. 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.

z. 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 28.

–
–

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 Trusts.

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.

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 in
Note 29.

Ingenia Communities Holdings Limited100

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

1. SUMMARY OF SIGNIFICANT ACCOUNTING

A liability is current when:

POLICIES (CONTINUED)

aa. Pending Accounting Standards
AASB 9 Financial Instruments is applicable to reporting
periods beginning on or after 1 January 2018. The Trusts
have not early adopted this standard. This standard
provides requirements for the classification, measurement
and de-recognition of financial assets and financial
liabilities. Changes in the Trusts’ credit risk, which affect the
value of liabilities designated at fair value through profit
and loss, can be presented in other comprehensive income.
The application of the Standard is not expected to have
any material impact on the Trusts’ financial reporting in
future periods.

AASB 15 Revenue from Contracts with Customers is
applicable to reporting periods beginning on or after
1 January 2018. The Trusts have not early adopted this
standard. The standard is based on the principle that
revenue is recognised when control of a good or service is
transferred to a customer. It contains a single model that
applies to contracts with customers and two approaches
to recognising revenue; at a point in time or over time.
The model features a contract-based five-step analysis
of transactions to determine whether, how much and
when revenue is recognised. It applies to all contracts
with customers except leases, financial instruments and
insurance contracts. It requires reporting entities to provide
users of financial statement with more informative and
relevant disclosures. The application of the Standard is
not expected to have any material impact on the Trust’s
financial reporting in future periods.

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 Trusts’ financial reporting in future reporting
periods.

bb. 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.

–
–
–

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 Trusts classify all other liabilities as non-current.

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

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 and assets held for
sale with a combined carrying amount of $601,326,000
(2014: $504,302,000) (refer Note 9 and Note 13), and
combined retirement village residents’ loans and liabilities
held for sale with a carrying amount of $203,919,000
(2014: $190,122,000) (refer Note 18) which together
represent the estimated fair value of the Trusts interest in
retirement villages.

Annual Report 2015101

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

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

Ingenia Communities Holdings Limited102

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

3. SEGMENT INFORMATION

a. Description of segments
The Trusts invest predominantly in rental properties located in Australia with three reportable segments:

– Garden Villages – rental villages;
– Settlers Lifestyle – deferred management fee villages; and
– Active Lifestyle Estates – comprising long-term and short-term accommodation within lifestyle parks and sale of

manufactured 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 2015

Active
Lifestyle
Estates
$’000

Settlers
Lifestyle
$’000

Garden
Villages
$’000

Corporate/
Unallocated
$’000

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

Income tax expense

Depreciation expense

384

–

384

–

Underlying Profit – continuing operations

384

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

–

(7)

–

Total
$’000

9,720

14,564

24,284

9,720

14,564

(327)

(506)

(648)

–

14,564

–

14,564

(325)

(506)

(648)

–

(2,013)

9,336

–

9,336

–

(2)

–

324

(3,601)

–

(117)

–

(117)

9,334

9,367

19,085

107

–

164

107

(1,689)

15,922

164

(1,676)

(5)

15,934

–

Profit from continuing operations per the
consolidated statement of comprehensive income

377

(2,018)

25,592

7,962

31,913

iii. Segment assets

Segment assets

7,301

51,983

125,657

201,315

386,256

Annual Report 2015
103

Total
$’000

9,354

10,339

19,693

9,354

10,339

(274)

(582)

(295)

Active
Lifestyle
Estates
$’000

Settlers
Lifestyle
$’000

Garden
Villages
$’000

Corporate/
Unallocated
$’000

–

(852)

–

(852)

–

10,339

–

10,339

(274)

(582)

(295)

9,354

–

9,354

–

9,354

(3,955)

(100)

5,133

(100)

14,487

–

(147)

2,382

–

(1,170)

1,530

(1,170)

11,736

3,857

14,741

6,904

53,992

114,286

142,597

317,779

3,874

321,653

c. 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

Depreciation 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

Ingenia Communities Holdings Limited

104

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

3. SEGMENT INFORMATION (CONTINUED)

d. Ingenia Communities Management Trust – 30 June 2015

Active
Lifestyle
Estates
$’000

Settlers
Lifestyle
$’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

Service station expenses

Finance expense

Income tax benefit

Depreciation and amortisation expense

38,797

–

38,797

–

(8,089)

(6,657)

(746)

(1,559)

(9,256)

(1,910)

–

(34)

11,124

–

(2,422)

8,702

11,124

–

(1,562)

(779)

(57)

(283)

–

28,183

–

28,183

–

(17,721)

(9,599)

(1,317)

(1,306)

–

(226)

Reconciliation of Underlying Profit to profit from
continuing operations:

Net gain/(loss) disposal of investment property

(23)

1,648

(5)

Net loss on change in fair value of:

Investment properties

(2,812)

3,277

(8,878)

(2,422)

–

Retirement village resident loans

Loss 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

Total assets

Total
$’000

78,104

(2,422)

75,689

78,104

(27,372)

(17,061)

(2,689)

(3,150)

(9,256)

(1,910)

–

(26)

(569)

(2)

–

(15,144)

2,734

–

2,734

(260)

–

(2,165)

3,286

1,620

482

(8,878)

(2,422)

(2,165)

3,286

7,711

2,068

(1,974)

(11,879)

(4,074)

220,961

184,880

5,429

5,198

416,468

61,598

478,066

Underlying Profit/(loss) – continuing operations

10,546

8,443

(1,986)

(13,000)

4,003

Annual Report 2015

105

Total
$’000

48,735

(3,320)

45,431

48,735

(20,693)

(11,131)

(1,983)

(2,734)

(2,130)

e. Ingenia Communities Management Trust – 30 June 2014

Active
Lifestyle
Estates
$’000

Settlers
Lifestyle
$’000

Garden
Villages
$’000

Corporate/
Unallocated
$’000

i. Segment revenue

External segment revenue

Interest income

Reclassification of gain on revaluation of newly
constructed villages

13,589

10,576

24,570

–

(3,320)

–

Total revenue

13,589

7,256

24,570

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

Depreciation expense

13,589

10,576

24,570

–

(2,570)

(2,367)

(320)

(377)

(2,130)

–

(1,738)

(16,385)

(851)

(139)

(3)

–

(7,913)

(1,080)

(2,354)

–

(18)

(49)

–

(444)

–

(10,145)

2,137

–

2,137

(67)

Underlying Profit – continuing operations

5,825

7,827

(3,211)

(8,436)

2,005

Reconciliation of Underlying Profit to profit from
continuing operations:

Net gain/(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

(1,871)

(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

Ingenia Communities Holdings Limited

106

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

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)

Weighted average number of units outstanding (thousands)

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)

Ingenia Communities Fund

Ingenia Communities
Management Trust

2015

2014

2015

2014

31,913

2,587

34,500

821,653

14,741

681

15,422

(4,074)

(3,854)

(7,928)

(1,059)

(111)

(1,170)

646,603

821,653

646,603

470

–

2,310

1,818

470

–

2,310

1,818

822,123

650,731

822,123

650,731

3.9

–

4.2

2.5

–

2.7

2.3

0.1

2.4

2.3

0.1

2.4

(0.5)

–

(1.0)

(0.3)

–

(0.6)

(0.2)

–

(0.2)

–

(0.2)

(1) The weighted average number of units on issue for FY14, prior to the rights issue in September 2013, has been adjusted in accordance

with AASB 133 Earnings per Share.

5. FINANCE EXPENSE

Interest paid or payable

Ingenia Communities Fund

Ingenia Communities
Management Trust

2015
$’000

3,601

2014
$’000

3,955

2015
$’000

15,144

2014
$’000

10,145

Annual Report 2015

107

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

2015
$’000

2014
$’000

2015
$’000

2014
$’000

–

6,019

6,423

6,506

b. Reconciliation between tax expense and pre-tax net profit

Profit/(loss) before income tax

31,913

14,741

(10,093)

(7,565)

Less amounts not subject to Australian income tax

(31,913)

(14,741)

–

Income tax at the Australian tax rate of 30% (2014: 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

Recognition of Australian tax losses

Non deductible expenses

Income tax benefit/(expense)

–

(10,093)

(7,565)

3,028

–

173

1,516

2,270

2,823

588

1,163

1,683

(1,232)

(131)

–

(250)

6,019

406

488

–

6,506

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.

Ingenia Communities Holdings Limited

108

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

7. DISCONTINUED OPERATIONS

a. Details of discontinued operations
The Trust’s investment in its 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
property business. The Trusts held 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 Trust completed the sale of these
assets in December 2014. Funds remain in New Zealand to facilitate the final stages of exit.

b. Financial performance
The financial performance of components of the Trusts disposed of or classified as discontinued operations at each
reporting date were:

Ingenia Communities
Management Trust

Revenue

Net loss on change in fair value of investment properties

Ingenia Communities Fund

2015
$’000

2014
$’000

–

2015
$’000

2,182

–

Unrealised net foreign exchange gain/(loss)

1,184

104

(2,222)

Other income

Expenses

Interest expense

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 expense

Profit/(loss) from operating activities

Gain/(loss) on sale of discontinued operations

Release of foreign currency translation reserve on disposal of
foreign operations

Profit/(loss) from discontinued operations for the year

–

(5)

–

1,179

(212)

967

–

1,620

2,587

–

(5)

–

320

268

–

687

(6)

681

–

681

(710)

(799)

–

(1,503)

(2)

(1,505)

(2,014)

(335)

(3,854)

2014
$’000

3,211

(1,630)

1,453

–

(1,226)

(1,633)

(290)

(103)

(8)

(111)

–

(111)

Net profit attributable to the parent of ICF is $2,587,000 (2014: $681,000), and net loss attributable to the parent of ICMT is
$385,400 (2014: $11,100).

c. 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

Transfer to continuing operations

Net cash flows from discontinued operations

Ingenia Communities Fund

2015
$’000

2014
$’000

–

Ingenia Communities
Management Trust

2015
$’000

223

43,966

–

(4)

(45,381)

(461)

(1,657)

2014
$’000

1,135

(120)

(9,081)

(745)

11,449

–

2,638

Annual Report 2015

109

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

Assets

Cash and cash equivalents

Trade and other receivables

Investment properties

Equity accounted investments

Total assets

Liabilities

Payables

Borrowings

Total liabilities

Net assets of disposal groups

Ingenia Communities Fund

Ingenia Communities
Management Trust

2015
$’000

2014
$’000

2015
$’000

2014
$’000

–

3,874

–

3,874

–

1,657

45,902

–

47,657

368

30,081

30,449

17,208

e. Capitalisation rate
The weighted average capitalisation rate of the New Zealand Students internal valuation within discontinued operations at
30 June 2014 was 8.6%.

8. BUSINESS COMBINATIONS
On 18 February 2015, ICMT acquired Active Lifestyle Estates & Holiday Noosa in Tewantin, Queensland, and after considering
the accounting treatment for the acquisition of this business combination, ICMT has determined the components acquired
from the business combination are investment property of $13,648,000, service station inventory of $268,000 and no
goodwill.

Ingenia Communities Holdings Limited110

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

9. ASSETS AND LIABILITIES HELD FOR SALE

a. Summary of carrying values
The following are the carrying values of assets held for sale:

Deferred management fee receivable – Settlers Lifestyle(1)

Investment properties – Settlers Lifestyle(2)

Ingenia Communities Fund

2015
$’000

2014
$’000

–

Ingenia Communities
Management Trust

2015
$’000

–

61,598

2014
$’000

5,439

–

5,439

(1) This relates to Settlers Noyea which was sold in July 2014.

b. Summary of carrying amounts – loans
The following is a summary of the carrying amounts of the loans associated with investment properties held for sale:

Gross resident loans

Accrued deferred management fee

Net resident loans

10. 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

Cash at end of the year as per cash flow statement

11. TRADE AND OTHER RECEIVABLES

Current

Rental and other amounts due

Finance lease receivable from stapled entity

Other receivables

Total current trade and other receivables

Non-current

Finance lease receivable from stapled entity

Other receivables

Total non-current trade and other receivables

Ingenia Communities Fund

2015
$’000

2014
$’000

–

Ingenia Communities
Management Trust

2015
$’000

44,271

(2,230)

42,041

2014
$’000

–

Ingenia Communities Fund

Ingenia Communities
Management Trust

Note

2015
$’000

8,966

2014
$’000

2,658

2015
$’000

6,094

2014
$’000

3,893

8,966

–

8,966

2,658

–

2,658

6,094

–

6,094

3,893

1,657

5,550

Ingenia Communities Fund

Ingenia Communities
Management Trust

2015
$’000

2014
$’000

2015
$’000

2014
$’000

–

2,643

–

2,643

28,862

2,539

31,401

866

3,322

4,280

37,356

1,978

39,334

3,772

–

332

4,104

–

110

1,648

–

1,483

3,131

–

Annual Report 2015111

Rental amounts due are typically paid in advance and other amounts due are receivable within 30 days. There are no
receivables which are either past due or 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

2015
$’000

2014
$’000

2015
$’000

2014
$’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

2,643

10,573

240,091

253,307

3,322

13,287

301,540

318,149

(221,802)

(277,471)

31,505

40,678

2,526

8,222

20,757

31,505

3,178

10,399

27,101

40,678

Finance income recognised and included in interest income in
the income statement

2,642

3,320

Information about the related finance lease payable by ICMT is given in Note 17.

–

12. INVENTORIES

Current assets

Manufactured homes

Service station fuel and supplies

Total Inventories

Ingenia Communities Fund

Ingenia Communities
Management Trust

2015
$’000

2014
$’000

2015
$’000

2014
$’000

–

12,875

333

13,208

2,208

–

2,208

13. INVESTMENT PROPERTIES

a. Summary of carrying amounts

Completed properties

Properties under development

Total investment properties

Ingenia Communities Fund

Ingenia Communities
Management Trust

2015
$’000

152,142

1,292

2014
$’000

133,101

1,387

2015
$’000

361,984

24,310

2014
$’000

349,517

14,858

153,434

134,488

386,294

364,375

Ingenia Communities Holdings Limited112

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

13. INVESTMENT PROPERTIES (CONTINUED)

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 inventory

Net gain/(loss) on change in fair value(1)

Transferred to assets held for sale

Carrying amount at end of year

Ingenia Communities
Fund

Ingenia Communities
Management Trust

2015
$’000

2014
$’000

2015
$’000

2014
$’000

134,488

120,167

364,375

–

2,149

–

875

–

15,922

–

10,616

2,175

–

1,530

–

78,152

12,207

–

(7,165)

–

(159)

482

(61,598)

250,764

108,300

7,551

320

–

(495)

(186)

(1,871)

–

153,434

134,488

386,294

364,375

(1) For ICMT this includes $13,288,000 of transaction costs relating to Active Lifestyle Estates acquisitions written off during the 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 29.

c. Description of valuation techniques used and key inputs to valuation of investment properties:

Valuation
technique

Significant
unobservable inputs

Range
(weighted average)

Relationship of unobservable input
to fair value

Garden
Villages

Capitalisation
method

Stabilised
occupancy

70%-100% (92%)

Capitalisation rate

9%-12%

Settlers
Lifestyle

Discounted cash
flow

Current market
value per unit

$125,000-$475,000

Long term property
growth rate

Average length
of stay – future
residents

Average length
of stay – current
residents

11.4 years

15.0-17.6 years

Discount rate

14.5%-15.0%

Active
Lifestyle
Estates

Capitalisation
method (for existing
rental streams)

Short-term
occupancy

15%-30% for powered and
camp sites; 45%-70% for
tourism and short term rental

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.

Average length of stay projection is
based on life expectancy and other
factors.

Parameters exclude assets that are
subject to a sale agreement.

Assets that are subject to a sale
agreement are carried at fair value.

Higher the occupancy, the greater
the value.

Residential
occupancy

Operating profit
margin

100%

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

Higher the profit margin, the greater
the value.

Capitalisation rate

8.2%-17.5%

Discount rate

13%-16%

Capitalisation has an inverse
relationship to valuation

Discount rate has an inverse
relationship to valuation.

Discounted cash
flow (for future
development)

Annual Report 2015113

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 and applying a capitalisation
rate into perpetuity. 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 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.

14. 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

Assets written off

Transferred to investment property

Additions

Depreciation expense

Carrying amount at end of year

15. INTANGIBLES

a. Summary of carrying amounts

Software & development

Less: accumulated amortisation

Total intangibles

b. Movements in carrying amount

Carrying amount at beginning of year

Additions

Amortisation expense

Carrying amount at end of year

Ingenia Communities Fund

Ingenia Communities
Management Trust

2015
$’000

2014
$’000

2015
$’000

2014
$’000

423

(301)

122

423

(184)

239

339

–

(117)

122

–

(100)

239

1,169

(710)

459

180

(118)

–

499

(102)

459

824

(644)

180

547

(82)

(320)

102

(67)

180

Ingenia Communities Fund

Ingenia Communities
Management Trust

2015
$’000

2014
$’000

2015
$’000

2014
$’000

–

1,734

(157)

1,577

1,734

(157)

1,577

–

Ingenia Communities Holdings Limited114

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

16. TRADE AND OTHER PAYABLES

Current liabilities

Trade and other payables

Non-current liabilities

Ingenia Communities Fund

Ingenia Communities
Management Trust

2015
$’000

2014
$’000

2015
$’000

2014
$’000

1,200

1,210

12,785

8,480

Deferred acquisition consideration

–

14,770

4,000

17. BORROWINGS

Current liabilities

Finance leases

Non-current liabilities

Bank debt

Prepaid borrowing costs

Finance leases

Total non-current borrowings

Ingenia Communities Fund

Ingenia Communities
Management Trust

2015
$’000

2014
$’000

2015
$’000

2014
$’000

–

2,817

3,461

Note

17(c)

17(a)

63,900

94,000

17(c)

(1,683)

–

(312)

–

62,217

93,688

–

33,252

–

41,883

a. Bank debt
On 13 February 2015, ICF refinanced its Australian dollar denominated bank debt facility to a $175.0 million multi-lateral debt
facility with three Australian banks. $100 million of the facility expires on 12 February 2018 with the remainder expiring on
12 February 2020. The facility has the following principal financial covenants:

LVR (excluding Settlers) is less than or equal to 55%;

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

–
–
– Total Interest Cover Ratio of at least 2x;
– Core Interest Cover Ratio (adjusted to exclude development income and associated costs) of at least 1.50x in financial year

ending 2015 increasing to at least 2.0x in FY2016;

– Net debt to adjusted EBITDA ratio not more than 6x up to 30 June 2015, 5.5x up to 31 December 2015, 5x up to 30 June

2016, 4x after 30 June 2016.

As at 30 June 2015, the facility has been drawn to $63,900,000 (2014: $94,000,000). The carrying value of investment
property net of resident liabilities at reporting date for the Trusts’ Australian properties pledged as security is $363,720,000
(2014: $290,375,000).

b. Bank guarantees
ICF has the ability to utilise a portion of its $175.0 million bank facility to provide bank guarantees. Bank guarantees at
30 June 2015 were $28.8 million (2014: $4.4 million). Refer to Note 26.

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 91 and 114 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 Active Lifestyle Estates Ettalong Beach acquisition. The lease is for an initial three years
commencing September 2012 with two renewal options of seven years each. The first option period was exercised on 1 July
2015 for seven years to June 2022. The below table is based on the expectation that the last lease option will be exercised.

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

Annual Report 2015115

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

2015
$’000

2014
$’000

2015
$’000

2014
$’000

–

2,942

11,846

243,522

258,310

3,613

14,530

305,301

323,444

(223,380)

(279,237)

34,930

44,207

2,817

9,305

22,808

34,930

3,461

11,456

29,290

44,207

18. 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

Proceeds from resident loans

Repayment of resident loans

Transfer to assets and liabilities held for sale

Other

Carrying amount at end of year

Ingenia Communities Fund

Ingenia Communities
Management Trust

2015
$’000

2014
$’000

2015
$’000

2014
$’000

–

192,898

218,639

(31,020)

161,878

(28,517)

190,122

175,703

8,878

(6,788)

2,056

19,815

(10,544)

(42,041)

380

616

(5,333)

1,811

22,021

(10,361)

5,439

226

161,878

190,122

Fair value hierarchy disclosures for retirement village resident loans have been provided in Note 29.

Ingenia Communities Holdings Limited116

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

19. PROVISIONS

Current liabilities

Employee liabilities

Non-current liabilities

Employee liabilities

20. DERIVATIVES

Current liabilities

Interest rate swap contracts

Non-current liabilities

Interest rate swap contracts

21. DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax assets

Tax losses

Other

Deferred tax liabilities

DMF receivable

Investment properties

Net deferred tax asset

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

Deferred tax assets

Tax losses

Other

Deferred tax liabilities

DMF receivable

Investment properties

Net deferred tax liabilities

Ingenia Communities Fund

Ingenia Communities
Management Trust

2015
$’000

2014
$’000

2015
$’000

2014
$’000

–

830

590

248

249

Ingenia Communities Fund

Ingenia Communities
Management Trust

Note

2015
$’000

2014
$’000

2015
$’000

2014
$’000

–

Ingenia Communities Fund

Ingenia Communities
Management Trust

2015
$’000

2014
$’000

2015
$’000

2014
$’000

–

15,938

1,205

7,970

4,567

4,606

–

7,500

7,488

Ingenia Communities Fund

Ingenia Communities
Management Trust

2015
$’000

2014
$’000

2015
$’000

2014
$’000

–

13,269

883

8,176

7,409

1,433

The Trusts offset 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.

Annual Report 2015117

22. ISSUED UNITS

a. Carrying amounts

At beginning of year

Dividend reinvestment plan

Institutional placement

Rights issue

Institutional placement and 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

Retention Quantum Rights

Dividend Reinvestment Plan

Ingenia Communities Fund

Ingenia Communities
Management Trust

2015
$’000

2014
$’000

2015
$’000

547,642

497,956

14,097

2,374

36,835

35,578

(3,144)

–

51,985

(2,299)

464

7,693

7,430

(656)

619,285

547,642

29,028

619,285

547,642

–

619,285

547,642

–

29,028

2014
$’000

6,106

–

8,364

(373)

14,097

–

14,097

Ingenia Communities Fund

Ingenia Communities
Management Trust

2015
Thousands

2014
Thousands

2015
Thousands

2014
Thousands

676,240

507,179

676,240

507,179

1,818

6,674

–

1,818

6,674

–

Institutional Placement and Rights Issue

197,968

169,061

197,968

169,061

At end of year

882,700

676,240

882,700

676,240

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.

23. 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 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

2015
$’000

2014
$’000

2015
$’000

2014
$’000

(226)

1,846

(1,620)

–

(226)

–

(226)

–

(226)

1,261

(926)

(335)

–

766

495

–

1,261

1,092

169

1,261

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

Ingenia Communities Holdings Limited

118

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

24. 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

2015
$’000

2014
$’000

(320,829)

(330,334)

34,500

(10,120)

15,422

(5,917)

Ingenia Communities
Management Trust

2015
$’000

(7,474)

(7,928)

–

2014
$’000

(6,304)

(1,170)

–

(296,449)

(320,829)

(15,402)

(7,474)

(296,449)

(320,829)

–

(6,886)

(8,516)

(296,449)

(320,829)

(15,402)

(3,425)

(4,049)

(7,474)

25. COMMITMENTS

a. Capital commitments
ICMT had commitments for capital expenditure on investment property and inventory contracted but not provided for at
reporting date amounting to $7,048,000 (2014: $3,266,000), 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

Ingenia Communities Fund

Ingenia Communities
Management Trust

2015
$’000

2014
$’000

2015
$’000

2014
$’000

–

229

744

973

220

973

1,193

c. Finance lease commitments
On 23 April 2013, 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 Village acquisition. The lease is for an initial three years
commencing September 2012 with two renewal options of seven years each. The first option period was exercised on 1 July
2015 for seven years to June 2022.

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 17 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 11, 17 and 28.

26. CONTINGENCIES
There are no known contingent liabilities other than the bank guarantees totalling $28.8 million provided for under ICF’s
$175.0 million bank facility (refer to Note 17).

Bank guarantees of $18.8 million primarily related to deferred acquisition consideration within ICMT recognised as current
and non-current payables (refer to Note 16). These guarantees will not be called by the counterparty unless the payable is
not paid per the terms of the agreement.

There is a $10 million bank guarantee in favour of Ingenia Communities RE Limited issued to satisfy the Responsible Entity’s
AFSL capital requirements.

Annual Report 2015

119

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 2015, after taking into account the effect of
interest rate swaps, approximately 28% of ICF’s borrowings
are at a fixed rate of interest (2014: 47%).

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.

27. 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 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 income flows, the predictability of
expenses, 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, 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 primarily monitors its capital position through
the Loan to Value Ratio (LVR) which is a key covenant
under the Group’s $175m multilateral debt facility. LVR
is calculated as the sum of bank debt, bank guarantees
and finance leases net of cash at bank as a percentage
of the value of properties pledged as security. The
Group’s strategy is to maintain an LVR range of 30-35%.
As at 30 June 2015, LVR is 22.6% compared to 33.9% at
30 June 2014.

In addition the Group also monitors Interest Cover Ratio
and Net Debt: Adjusted EBITDA as defined under the
multilateral debt facility. At 30 June 2015, the Total Interest
Cover Ratio was 2.96%; the Core Interest Cover Ratio was
2.68% and Net Debt: Adjusted EBITDA was 4.58.

28. 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 the forecast is unlikely to

Ingenia Communities Holdings Limited120

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

28. FINANCIAL INSTRUMENTS (CONTINUED)

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 2015

Principal amounts $’000

Financial assets

Cash at bank

Financial liabilities

Bank debt denominated in AUD

Interest rate swaps:

Floating
interest
rate

8,966

63,900

denominated in AUD; Fund pays fixed rate

(18,000)

18,000

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

–

8,966

63,900

–

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:

30 June 2015

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

6,094

–

6,094

Finance leases (excluding perpetual lease)

–

2,817

9,305

22,808

34,930

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 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

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.

Annual Report 2015

121

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)

2015
$’000

2014
$’000

2015
$’000

2014
$’000

Variable interest rate instruments denominated in:

Australian dollars

(639)

(940)

–

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

Interest rate swaps denominated in:

Australian dollars

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)

2015
$’000

2014
$’000

2015
$’000

2014
$’000

–

417

–

Effect on profit after tax

Ingenia Communities
Fund
Higher/(lower)

Ingenia Communities
Management Trust
Higher/(lower)

2015
$’000

2014
$’000

2015
$’000

2014
$’000

Variable interest rate instruments denominated in:

Australian dollars

639

940

–

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)

2015
$’000

2014
$’000

2015
$’000

2014
$’000

–

(297)

–

Ingenia Communities Holdings Limited122

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

28. FINANCIAL INSTRUMENTS (CONTINUED)

e. Foreign exchange risk
The Trusts’ exposure to foreign exchange risk is limited to foreign denominated cash balances and receivables following the
divestment of its final overseas operations in December 2014. These amounts are unhedged as cash will be used to cover
final costs to wind up the companies and receivables relate to escrows.

Net foreign currency exposure:

United States dollars

New Zealand dollars

Total net foreign currency assets

Net foreign currency asset/(liability)

Ingenia Communities
Fund

Ingenia Communities
Management Trust

2015
$’000

2014
$’000

2015
$’000

2014
$’000

3,491

473

3,964

157

1,657

1,814

–

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%:

Foreign exchange risk exposures denominated in:

United States dollars

New Zealand dollars

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

Foreign exchange risk exposures denominated in:

United States dollars

New Zealand dollars

Effect on profit after tax

Ingenia Communities
Fund
Higher/(lower)

Ingenia Communities
Management Trust
Higher/(lower)

2015
$’000

2014
$’000

2015
$’000

2014
$’000

(317)

(43)

(16)

(166)

–

Effect on profit after tax

Ingenia Communities
Fund
Higher/(lower)

Ingenia Communities
Management Trust
Higher/(lower)

2015
$’000

2014
$’000

2015
$’000

2014
$’000

388

166

–

Annual Report 2015123

g. 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 Trusts’ 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 Trusts’ 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.

h. 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 Trusts’ 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.

2015

Trade and other payables

Borrowings

2014

Trade and other payables

Borrowings

Ingenia Communities Fund

Less than
1 year
$’000

1 to 5
years
$’000

More than
5 years
$’000

1,200

2,731

3,931

1,210

4,521

5,731

–

68,344

–

99,653

–

Total
$’000

1,200

71,075

72,275

1,210

104,174

105,384

Ingenia Communities Holdings Limited
124

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

28. FINANCIAL INSTRUMENTS (CONTINUED)

2015

Trade and other payables

Retirement village resident loans

Borrowings (excluding perpetual lease)

Finance lease (perpetual lease)(2)

Provisions

Liabilities held for sale

2014

Trade and other payables

Retirement village resident loans

Borrowings (excluding perpetual lease)

Finance lease (perpetual lease)

Provisions

(1) Excludes related party loans.

Ingenia Communities Management Trust

Less than
1 year
$’000

12,785

161,878

2,942

121

830

42,041

1 to 5
years
$’000

14,770

–

More than
5 years
$’000

–

Total(1)
$’000

27,555

161,878

11,846

243,522

258,310

483

177

–

604

1,078

42,041

220,597

27,276

243,593

491,466

8,480

190,122

3,613

121

590

4,000

–

12,480

190,122

14,530

305,301

323,444

483

249

–

604

839

202,926

19,262

305,301

527,489

(2) For purposes of the table above, the lease payments are included for five years for the perpetual lease. Refer to Note 17(c)(ii).

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 at market rates.

2015

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

–

2014

Liabilities

Derivative liabilities – net settled

ICMT did not have any derivative financial liabilities at either 30 June 2015 or 30 June 2014.

–

168

i. 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)

2015
$’000

2014
$’000

2015
$’000

2014
$’000

Increase in market prices of investment properties of 10%

Decrease in market prices of investment properties of 10%

–

(19,290)

(21,864)

19,290

21,864

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.

Annual Report 2015

125

j. 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
Trusts’ 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.

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 29.

The carrying amounts of the Trusts’ other financial instruments approximate their fair values.

29. FAIR VALUE MEASUREMENT

a. Ingenia Communities Fund
The following table provides the fair value measurement hierarchy of Ingenia Communities Fund assets and liabilities:

1. Assets measured at fair value

30 June 2015

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 2015
Refer to Note 13(a)

153,434

–

153,434

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 13(a)

134,488

–

134,488

Ingenia Communities Holdings Limited
126

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

29. FAIR VALUE MEASUREMENT (CONTINUED)

ii. Liabilities measured at fair value

30 June 2015

Derivatives

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)

30 June 2015
Refer to Note 20

–

30 June 2014

Derivatives

Date of valuation

30 June 2014
Refer to Note 20

Total

168

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 2015

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

Assets held for sale –
investment property

30 June 2015
Refer to Note 13

30 June 2015
Refer to Note 9

386,294

61,598

–

386,294

61,598

–

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 2015
Refer to Note 13

Discontinued
operations-investment property

30 June 2014
Refer to Note 7

Assets held for sale – deferred
management fee receivable

30 June 2015
Refer to Note 9

364,375

45,902

5,439

–

364,375

45,902

5,439

–

Annual Report 2015127

ii. Liabilities measured at fair value

30 June 2015

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

Liabilities held for sale

30 June 2015
Refer to Note 18

30 June 2015
Refer to Note 9(b)

161,878

42,041

–

161,878

42,041

–

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 18

190,122

–

190,122

There have been no transfers between Level 1 and Level 2 during the year.

30. AUDITOR’S REMUNERATION

Ingenia Communities
Fund

Ingenia Communities
Management Trust

2015
$’000

2014
$’000

2015
$’000

2014
$’000

Amounts received or receivable by EY for:

Audit or review of financial reports

202,455

146,025

202,455

146,025

Other audit related services

39,514

9,350

84,514

241,969

155,375

286,969

9,350

155,375

Ingenia Communities Holdings Limited128

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

31. RELATED PARTIES

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

2015
$’000

2014
$’000

2015
$’000

2014
$’000

1,676,496

1,170,374

2,164,618

1,625,516

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:

Ingenia Communities
Fund

Ingenia Communities
Management Trust

2015
$’000

2014
$’000

2015
$’000

2014
$’000

Current trade payables

2,716,671

2,340,175

5,332,190

3,167,572

These are included in current trade payables in the balance sheet.

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 2015 and 30 June 2014.

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 91 and 114 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

2015
$

2014
$

2015
$

2014
$

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

Finance lease commitments

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

Intercompany loan balances between stapled
entities

2,698,453

3,319,833

(2,698,453)

(3,319,833)

31,505,116

40,677,551

(31,505,116)

(40,677,551)

253,307,008

318,149,045 (253,307,008)

(318,149,045)

9,719,788

9,354,036

(9,719,788)

(9,354,036)

11,693,024

6,807,133

11,323,052

6,335,522

185,799,420

135,805,451

(189,634,511)

(133,249,024)

Annual Report 2015129

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 ONZM

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:

Nicole Fisher

Tania Betts

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

2015
$

2014
$

542,000

462,500

1,158,141

1,094,684

400,956

58,518

332,235

59,084

590,928

680,600

2,750,543

2,629,103

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:

Issue date

Rights

Expiry date

2015

2014

Number outstanding

2012

2013

2014

RQR

PQR

2014

2015

2016

2017

–

1,818,000

3,842,000

3,716,000

982,971

–

Ingenia Communities Holdings Limited

130

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

32. 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

2015
$’000

2014
$’000

126,322

335,348

1,171

63,389

271,959

134,675

253,843

1,379

95,067

158,776

Ingenia Communities
Management Trust

2015
$’000

(5,744)

(2,908)

(1,579)

(5,579)

2,671

2014
$’000

178

3,165

8,108

5,772

(2,607)

619,288

547,643

29,024

14,092

(347,329)

(388,867)

(26,353)

(16,699)

271,959

158,776

27,700

460

2,671

(9,653)

(2,607)

(4,252)

Annual Report 2015
131

33. 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

Country of residence

Subsidiaries of Ingenia Communities Fund

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 Operations Trust No.4 (formerly INA Subsidiary Trust No. 2)(1)
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
INA Operations Trust No.4 (formerly INA Subsidiary Trust No. 2)(2)
INA Operations Trust No.6
INA Operations Trust No.7
Noyea Operations Pty Ltd
Ridge Estate Trust
INA Subsidiary Trust No.3
INA NZ Subsidiary Unit Trust No. 1
CSH Lynbrook GP LLC
CSH Lynbrook LP

Subsidiaries of Ingenia Communities Management Trust
INA Community Living II (formerly ING Community Living II)
Lynbrook Freer Street Member LLC
Lynbrook Management, LLC

Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United States of America

United States of America

Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
United States of America
United States of America

United States of America
United States of America
United States of America

Ownership interest

2015
%

2014
%

100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
–
100

100

100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100

100
100
100

100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100

100

100
100
100
100
100
100
100
–
–
–
100
100
100
100
100
100

100
100
100

(1) The units were transferred from Ingenia Communities Fund to the Ingenia Communities Management Trust during the year ended

30 June 2015.

(2) The units were transferred from Ingenia Communities Management Trust to Ingenia Communities Fund during the year ended

30 June 2014.

Ingenia Communities Holdings Limited132

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

The Trusts’ voting interest in all other subsidiaries is the same as the ownership interest.

34. NOTES TO THE CASH FLOW STATEMENTS

a. Reconciliation of profit to net cash flows from operations

Ingenia Communities Fund

Ingenia Communities
Management Trust

Net profit for the year

Adjustments for:

Net foreign exchange (gain)/loss

Release of foreign currency translation reserve on disposal
of foreign operations

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)

Depreciation and amortisation expense

Amortisation of borrowing costs

2014
$’000

15,422

2015
$’000

(7,928)

2014
$’000

(1,170)

2,222

(1,453)

2015
$’000

34,500

(1,291)

(1,620)

1,689

–

320

(15,922)

(1,530)

(482)

338

377

–

8,878

–

1,871

1,630

–

616

290

(6,017)

(6,498)

260

–

(164)

–

212

117

322

–

(41)

–

101

369

Operating profit/(loss) for the year before changes
in working capital

17,843

14,689

(2,352)

(4,647)

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

Net cash provided by operating activities

5,133

(18,310)

–

(26,139)

(3,163)

(178)

(3,799)

(2,677)

(11,749)

12,326

21,435

16,982

20,710

(1,923)

6,327

1,961

22,428

Annual Report 2015

133

35. SUBSEQUENT EVENTS

a. Performance Quantum Rights vesting
On 1 July 2015, 3,842,000 Performance Quantum Rights (“PQRs”) granted to KMP in 2012 vested. As a result, 3,842,000
fully paid stapled securities have been issued to the following KMP:

Simon Owen

2,260,000

Tania Betts

791,000

Nicole Fisher

791,000

b. Acquisition of Upstream Bethania
On 3 July 2015, ICMT settled Upstream Bethania, ICMT’s second Active Lifestyle Estate in Brisbane, complementing
Chambers Pines Lifestyle Resort and ICMT’s existing Garden Villages in the region. The acquisition price was $8.15 million
(excluding transaction costs) and was funded from the proceeds of the capital raising in October 2014.

This park, now known as Active Lifestyle Estate Bethania, is an existing manufactured home community outside Brisbane
and represents a significant development opportunity that will grow the Group’s existing rental stream.

c. Execution of Hedging Contract
On 31 July 2015, ICF entered into an interest rate hedge collar for $16.0 million with an expiry date of August 2017. The
execution of this hedge means 23.2% of ICF’s debt is currently hedged with the intention to gradually increase the hedged
exposure over the coming months.

d. Acquisition of Big 4 Conjola Lakeside
On 13 August 2015, ICMT announced it had exchanged unconditional contracts for the acquisition of Big 4 Conjola Lakeside
in Lake Conjola, NSW. The acquisition price is $24.0 million (excluding transaction costs) and will be funded from the
proceeds of the capital raising in October 2014.

Ingenia Communities Holdings Limited
134

Directors’ Declaration

for the year ended 30 June 2015

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 2015 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 2015.

On behalf of the Board

Jim Hazel
Chairman
Sydney, 9 September 2015

Annual Report 2015

Independent Auditor’s Report

for the year ended 30 June 2015

135

Ingenia Communities Holdings Limited136

Independent Auditor’s Report

for the year ended 30 June 2015

Annual Report 2015Securityholder Information

for the year ended 30 June 2015

137

Additional information required under ASX Listing Rule 4.10 and not shown elsewhere in this Annual Report is as follows.
This information is current as at 18 September 2015.

The information set out below was prepared at 18 September 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 18 September 2015

Securityholder

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

J P MORGAN NOMINEES AUSTRALIA LIMITED

NATIONAL NOMINEES LIMITED

CITICORP NOMINEES PTY LIMITED

BNP PARIBAS NOMS PTY LTD

MERCANTILE INVESTMENT COMPANY LTD

AMP LIFE LIMITED

MERCANTILE INVESTMENT COMPANY LTD

RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED

BNP PARIBAS NOMS (NZ) LTD

CITICORP NOMINEES PTY LIMITED

MCNEIL NOMINEES PTY LIMITED

BOND STREET CUSTODIANS LIMITED

CUSTODIAL SERVICES LIMITED

RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED

GWYNVILL TRADING PTY LTD

FORSYTH BARR CUSTODIANS LTD

BODIAM PROPERTIES PTY LTD

MRS MONIKA BATKIN

UBS NOMINEES PTY LTD

Total

Distribution of Securityholders at 18 September 2015

Holding (securities)

100,001 and Over

10,001 to 100,000

5,001 to 10,000

1,001 to 5,000

1 to 1,000

Total

Number of
securities
held

Percentage
of issued
capital

204,507,916

194,014,025

100,601,689

72,640,410

44,909,083

16,514,519

15,243,547

13,103,817

11,682,895

11,346,716

11,289,384

10,400,531

6,023,905

5,233,963

4,586,533

4,547,619

3,378,332

3,123,000

3,100,000

2,446,708

22.70

21.53

11.17

8.06

4.98

1.83

1.69

1.45

1.30

1.26

1.25

1.15

0.67

0.58

0.51

0.50

0.37

0.35

0.34

0.27

738,694,592

81.99

Number of
securityholders

Number of
securities

Percentage of
securityholders

306

827,624,684

2,077

64,601,162

761

885

284

5,981,335

2,696,830

69,619

7.09

48.16

17.64

20.52

6.58

4,313

900,973,630

100.00

There were 321 securityholders holding less than a marketable parcel on 18 September 2015.

Ingenia Communities Holdings Limited138

Securityholder Information

for the year ended 30 June 2015

Distribution of Performance Quantum Rights Holders

Holding (securities)

100,001 and Over

10,001 to 100,000

5,001 to 10,000

1,001 to 5,000

1 to 1,000

Total

Number of
securityholders

Number of
securities

Percentage of
securityholders

3,716,000

100.00

0.00

3,716,000

100.00

The Performance Quantum Rights on issue are unquoted and issued under the Ingenia Long Term Incentive Scheme.

Distribution of Long Term Incentive Plan Rights Holders

Holding (securities)

100,001 and Over

10,001 to 100,000

5,001 to 10,000

1,001 to 5,000

1 to 1,000

Total

Number of
securityholders

Number of
securities

Percentage of
securityholders

982,971

100.00

0.00

982,971

100.00

The Long Term Incentive Plan Rights on issue are unquoted and issued under the Ingenia Rights Plan.

Substantial holders in INA at 18 September 2015

Securityholder

Cohen & Steers, Inc.

Daiwa Securities Group, Inc.

The Vanguard Group, Inc.

AMP Limited

Number of
securities

87,100,659

55,506,751

54,185,072

50,154,782

VOTING
Securityholders in Ingenia Communities Group are entitled to 1 vote for each security they hold in the Group.

In accordance with the Constitution each member present at a meeting whether in person, or by proxy, or by power of
attorney, or in a duly authorised representative in the case of a corporate member, shall have one vote on a show of hands,
and one vote for each fully paid stapled security, on a poll.

Holders of Long Term Incentive Plan Rights and Performance Quantum Rights have no voting rights.

ON-MARKET BUYBACK
There is no current on-market buy-back in relation to the Company’s securities.

Annual Report 2015Investor Relations

for the year ended 30 June 2015

139

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 2014/2015 financial year. A history of distribution payments made since
2005 is available from the Group’s website www.ingeniacommunities.com.au.

Period Ended

June 2015

December 2014

Date Paid

Total Amount

16 Sept 2015

18 March 2015

$0.0070

$0.0065

* Information on the tax components of distributions can be found on Ingenia’s website or the Annual Tax Statement.

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 17 November 2015 in Sydney.

2015/2016 Securityholder Calendar*
16 September 2015
16 September 2015
17 November 2015
February 2016
March 2016

Final FY15 distribution paid
Annual Tax Statement dispatched
Annual General Meeting
1H16 Result announced
Interim FY16 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

Corporate Governance Statement
The Corporate Governance Statement was approved by the Board of Directors on 5 August 2015 and can be found at
http://www.ingeniacommunities.com.au/wp-content/uploads/2015/09/INA_Appendix-4G-and-Corporate-Governance-
Statement.pdf

Ingenia Communities Holdings Limited140

Corporate Directory

for the year ended 30 June 2015

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 415862)

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 18 September 2015)
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.

Annual Report 2015141

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 2015. 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.

Ingenia Communities Holdings LimitedI

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