More annual reports from Lifestyle Communities Limited:
2023 ReportPeers and competitors of Lifestyle Communities Limited:
M Winkworth PLCAnnual
Report
for the year ended 30 June 2023
Celebrating
20
years of Lifestyle
Our story
We’re champions for facilitating a
bigger life for our homeowners. A
cohort of like-minded retired, semi-
retired and working downsizers who
belong to a generation that’s seen more
change than any before; and possibly
any to come.
W e build communities because our homeowners
have worked hard for what they have, and
they deserve beautifully designed and low
maintenance homes in concert with best-in-class
amenities. We create communities because our
homeowners haven’t given up on returning to a time when
they built strong communities around their own homes.
We nurture the homeowners within our communities
because they seek a space that’s truly their own, that
strikes the perfect balance between connection and
privacy, independence, and activity.
Like us, our homeowners rail against an earnestly bland
existence or disappearing into a sea of sameness; the
one-size-fits all approach that places limitations on what’s
possible. Which is why we actively listen to them; to their
hopes for now and their dreams for the future, so the next
time they ask, “what’s next?” we’ve already been busy
reimagining.
But, most of all, we champion bigger, more enhanced lives
for our homeowners because we know that reducing their
property footprint takes a giant leap of faith. This is why
we believe it’s a privilege to walk alongside them as they
elevate the next phase of their lives.
After all, they’re the generation of change. And they’re
not done yet.
Sc an the QR c ode to
vi e w our ‘ Li fe sty le Story ’
Fishing on the public pier
at St Leonards
Contents
Chair and Managing Director’s Review . . . . . . . . . . . . . . . .1
Our business and strategy . . . . . . . . . . . . . . . . . . . . . . . . . 7
Our purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Our values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
How we create value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Our approach to Sustainability. . . . . . . . . . . . . . . . . . . . . 19
Our team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Our communities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Our partners and suppliers. . . . . . . . . . . . . . . . . . . . . . . . 52
Wider community impact. . . . . . . . . . . . . . . . . . . . . . . . . 54
Climate action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Our Board and governance . . . . . . . . . . . . . . . . . . . . . . . 63
Remuneration report . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Auditor’s Independence Declaration . . . . . . . . . . . . . . . . 111
Consolidated Statement of Profit or
Loss and Other Comprehensive Income. . . . . . . . . . . . . 115
Consolidated Statement of Financial Position . . . . . . . . 116
Consolidated Statement of Changes in Equity . . . . . . . . 117
Consolidated Statement of Cash Flows . . . . . . . . . . . . . 118
Notes to the Financial Statements. . . . . . . . . . . . . . . . . . 119
The Director’s Declaration . . . . . . . . . . . . . . . . . . . . . . . . 141
Independent auditor’s report . . . . . . . . . . . . . . . . . . . . . 143
ASX Additional Information . . . . . . . . . . . . . . . . . . . . . . .147
CHAIR AND MANAGING DIRECTOR’S REVIEW
Chair and
Managing Director’s Review
For the 2023 Financial Year
Dear fellow shareholders,
Lifestyle Communities celebrated 20 years of
operations in 2023 and it was a privilege to settle our
3,500th home and welcome our 5,000th homeowner
during the year. Reflecting on these milestones
we are immensely proud of what the business has
achieved in its 20 years, culminating in successfully
registering the “Lifestyle Communities” trademark and
protecting the substantial investment we have made
in developing our brand over many years. We continue
our unwavering commitment to our strategy of being
the most customer centric and innovative provider
of high-quality affordable housing for those looking
to downsize in Victoria. Whilst we have remained
disciplined with our strategy, the product and service
offering continue to evolve and improve, giving us
opportunities to do even more for our homeowners as
we continue to build scale.
Economic conditions in Australia have changed over
the last 12 months, and we have witnessed first hand
the impact Lifestyle Communities can have on the lives
of our homeowners. Downsizing their housing footprint
and releasing equity from the family home helps ease
financial pressures as our homeowners approach the
twilight of their careers and transition into retirement.
In addition to the equity released, the Lifestyle
Communities model offers lower living costs and a
substantial number of features and benefits that, if
utilised, can help to mitigate some of the cost-of-living
pressures being felt in this high inflation environment.
In addition to making use of the sporting facilities,
gyms and pools, homeowners can access computers,
wi-fi and streaming services, electric cars and bikes,
community buses, discounts on an increasing number
of products and services, and even free holidays. All
included as part of the weekly site fee. During the
year, we consolidated the energy contracts across all
our communities to utilise our scale and minimise the
impact on homeowners of the recent substantial price
rises in the energy market. As a core principle, our aim
is to utilise our increasing scale to deliver value back to
our homeowners which increases the attractiveness of
the offer, drives referral, and helps us to grow faster.
With the changing economic environment comes an
increase in demand from people seeking to make a
change and take advantage of the improvements in
financial position that can be gained by downsizing
into a Lifestyle Community. Increasingly we are seeing
younger customers looking to free-up time as well
as equity. We are well positioned to capitalise on this
increasing demand, having commenced construction
of seven new projects during the year, taking the total
number of communities currently in construction
to nine with a further four communities in planning.
Each of these new communities will include the latest
innovations and designs, including our solar micro-grid
and community batteries which help to further mitigate
rising energy costs. Our plan remains to prioritise
the social aspects of our model and we are naturally
bound by the limits of affordability. However, where
we can, we will seek to invest in new innovations and
technology, that provide cost of living and other co-
benefits to our homeowners.
Listening to our customers is at the heart of everything
we do, and we continued to evolve our feedback
processes during the year. Every community has
a homeowner’s committee which meets with
our management every month to share feedback
and advocate on behalf of homeowners. We also
conduct a comprehensive homeowner survey and a
town hall meeting every 6 months. During the year
we introduced a net promoter score (NPS) to help
measure our homeowner experience and customer
satisfaction. The net promoter score coupled with
the qualitative information we capture through the
bi-annual homeowner survey is crucial to helping us
understand the perspectives of our customers and
enables us to continue to improve our facilities and
service offering.
1
Lifestyle Communities Annual Report 2023 CHAIR AND MANAGING DIRECTOR’S REVIEW
With the changing economic
environment comes an increase
in demand from people seeking
to make a change and take
advantage of the improvements
in financial position that can
be gained by downsizing into a
Lifestyle Community.
Our core operating business continued to grow, and
we now have 21 communities in operation which
delivered annuity income of $47.2m. The increasing
scale in our operating business coupled with our
ongoing development activities resulted in operating
profit increasing by 15.8% to $71.2 million (FY22: $61.4
million) while valuation gains lifted statutory profit
after tax to $81.9 million (FY22: $88.9 million). Our
drawn debt increased from $245 million at the end of
FY22 to $371 million at the end of FY23. The additional
drawdown was used to settle on contracted land
purchases and commence construction at seven new
communities during the year.
The Lifestyle Communities model takes a longer-
term view on the management and running of the
community. As part of that approach, we have led
the market with a deferred management fee which
ensures that Lifestyle Communities are invested
alongside our homeowners to ensure both us and our
homeowners are incentivised to maintain and invest in
our communities for the long term. In FY23 we spent
over $1.6m on refurbishment of existing communities
including bathroom replacement at Casey Fields,
outdoor entertainment space at Chelsea Heights,
bowling green replacement at Shepparton, and
upgrades to games rooms, workshop and gardens at
Seasons and Warragul. We can see the value of this
approach coming through in the prices being achieved
for homes being resold within our communities,
achieving an average capital growth of 9% per annum.
All customers that sold during the year after staying for
more than 5 years, exited with more than the incoming
price, after paying the maximum 20% deferred
management fee.
Our IT transformation continued during the year with
a substantial effort made to embed the technology
upgrades implemented in the prior year. The
Salesforce system in particular is starting to add
substantial value as it interacts with our website and
other marketing activities, and provides insights to our
team regarding customer preferences, behaviour and
intent. In FY23 we also invested in a workplace health
and safety system to help us better track and manage
incidents, manage our contractors, and ongoing
compliance activities.
The Lifestyle Communities foundation continued
its commitment to support cancer-based charities
and match dollar-for-dollar any funds raised by
homeowners. During the year we donated over
$160,000. The foundation is funded through allocating
$50 for every home that we have under management
at the start of each year. Since inception, the
foundation has raised and donated over $1.4 million.
A highlight of the year was the inaugural “Tour de
Lifestyle” bike ride where homeowners rode to all
Lifestyle Communities over a period of 7 days raising
$72k for the Royal Children’s Hospital Foundation.
Our capital management strategy remains consistent,
seeking to deliver sustainable returns to shareholders
through measured growth, and recycling capital from
existing developments into future developments. As
we look forward to FY24, we remain conscious of
the challenges and risks that face us as the economy
navigates the macro conditions and monetary policy
settings continue to adjust. However, we remain
optimistic about the demand for our product in
times like these and the positive impact we can have
for homeowners to assist them in navigating these
challenging times. We have conviction in the medium
to long-term prospects at the affordable end of the
housing market, underpinned by the macro themes
of an ageing population, increasing immigration, a
2
CHAIR AND MANAGING DIRECTOR’S REVIEW
shortage of high-quality affordable housing, and strong
demand from first home buyers for the family homes
that our customers sell when they make the move
to Lifestyle Communities. A substantial proportion
of Victoria’s established housing stock is owned by
people over 50 and there is a huge opportunity for this
generation to free up equity by downsizing and at the
same time recycle their existing housing stock for first
home buyers.
We finished the year with 3,549 settled homes under
management across 21 operating communities. With
our most recent land acquisitions in Clifton Springs
and Yarrawonga, our total portfolio of completed
homes, homes under development, and homes yet
to be developed increased to 5,912, which gives us a
strong pipeline of undeveloped land to underpin the
growth of the business for years to come. We continue
to assess new land acquisition opportunities that meet
our investment criteria, and our land acquisition plan
remains focused in Victoria where we continue to build
on our brand and referral network.
Commencing construction on seven new projects
during the year required a substantial effort from
the team. As always, the team rose to the challenge
beautifully with teamwork, coordination, and
commitment across all facets of the business. We were
pleased to see the can-do attitude and hustle culture
established 20 years ago in 2003 is still alive and
present twenty years later. On behalf of the Board, we
would like to thank all our homeowners, our talented
team, our suppliers, and our shareholders for their great
support during the 2023 financial year.
Philippa Kelly
Chair
16 August 2023
James Kelly
Managing Director
16 August 2023
3
Lifestyle Communities Annual Report 2022
Progress at Lifestyle Riverfield, July 2023
CHAIR AND MANAGING DIRECTOR’S REVIEW
4
CHAIR AND MANAGING DIRECTOR’S REVIEW
Artist impression of Clubhouse at Lifestyle Riverfield
5
Lifestyle Communities Annual Report 2022
CHAIR AND MANAGING DIRECTOR’S REVIEW
6
OUR BUSINESS AND STRATEGY
Our business and strategy
Our business has thrived by providing affordable,
contemporary housing for our homeowners in
beautiful community settings. To maintain this
offering we consistently monitor all settings, including
local house prices, national economic indicators,
demographics, design trends, environmental advances
and customer expectations.
L ifestyle Communities’ land lease model allows
working, semi-retired, and retired people over
50, to downsize from their family home to free up
equity in retirement, whilst enjoying resort style living
including pools, gyms, clubhouse, cinema, lawn bowls,
tennis, and much more.
The Directors are pleased to present their report
together with the financial report of the consolidated
entity consisting of Lifestyle Communities Limited
and the entities it controlled (the Group), for the year
ended 30 June 2023 and the auditor’s report thereon.
There were no significant changes in the nature of the
Group’s principal activities during the financial year.
How we operate .
Communities -
21 in operation and
9 in planning or
development
Australian-based Board
50% women, 50% men
Affordable homes
under management
Homeowners
live in our
communities
Community portfolio snapshot
Occupied homes mix
1,624
417
46%
Single women
12%
Single men
Employees
70% women,
30% men
Gender split
3,132
62%
Women
1,508
42%
Couples
1,925
38%
Men
Homes in our
portfolio +
pipeline
7
301673,54950/505.9k +5,000+Lifestyle Communities Annual Report 2023 Model of living
OUR BUSINESS AND STRATEGY
How does the
Lifestyle Communities
model of living work?
Homeowners at Lifestyle Communities own
their own home and lease the land upon which
their homes are located, via a weekly site fee
and a deferred management fee.
The weekly site fee is approximately 20–25%
of the Aged Pension after receipt of the
Commonwealth Rental Assistance2.
75-80%
Average homes
typically priced at
75-80% of the median
house price in the
target catchment
A 90-year lease over
the land provides
security of tenure.
On average, release
of approximately
$240,0001 upon sale of
previous home.
Homeowners at Lifestyle
Communities are covered
by the Residential
Tenancies Act.
Homeowners control
price, presentation and
sales strategy at exit.
Notes
1. Calculated as the difference between the homeowners previous house sale price and the
homeowners Lifestyle house purchase price
2. Calculated in accordance with the formula used by the Department of Social Services. Which is:
Rent minus Commonwealth Rental Assistance divided by the Pension
8
OUR BUSINESS AND STRATEGY
Growing recurring
revenue stream
Lifestyle Communities’ business
has two core elements.
Creating communities
A mix of equity and debt capital
is used to develop greenfield
sites to create new communities.
Capital is recovered from one
community and is recycled into
the next project.
Recycling
capital pool
Current speed of capital
recycling allowing the
acquisition of at least two
new sites every year.
Managing communities
Completed communities generate revenue streams which are
growing as new communities are added to the portfolio.
Completed
communities build
a long-term
sustainable income
and future dividends.
s
n
o
i
l
l
i
M
Site rental fees
Deferred management fees (DMF)
50
40
30
20
10
0
2008 2009 2010 2011
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Total number of homes
settled (Cumulative)
202
305
412
546
695
906
1,146
1,348
1,626
1,947 2,284 2,537 2,792
3,193
3,549
Number of resales
4
11
8
11
10
23
34
52
73
59
53
80
105
156
178
DMF of 4% per annum on the resale price of the home, capped at 20% after 5 years.
9
Lifestyle Communities Annual Report 2023 OUR BUSINESS AND STRATEGY
The speed at which Lifestyle Communities
can create new communities is limited by
the size of the capital pool and the speed
at which it can recover its capital through
driving new home settlements.
The charts below show an example cash flow profile of a community throughout its life. The
charts use the same data set but the first chart shows cash flows per year whereas the second
chart show cumulative cash flows for the life of the project. As can be seen, development
costs are recovered through new home sales and ongoing cash flow is generated through site
rentals and deferred management fees.
Worked example — year-on-year cash flows
Development
Rent
DMF
)
0
0
0
$
(
25,000
20,000
15,000
10,000
5,000
0
(5,000)
(10,000)
(15,000)
(20,000)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19 20 21
22 23 24 25
Year
Worked example — cumulative cash flows
)
0
0
0
$
(
Development
Rent
DMF
80,000
60,000
40,000
20,000
0
(20,000)
(40,000)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19 20 21
22 23 24 25
Year
10
OUR BUSINESS AND STRATEGY
Macro themes
underpinning our strategy
Baby Boomers and
First Home Buyers
driven to action
regardless of the cycle.
Lifestyle Communities provides a credible option even in
falling market
• Downsizing releases equity to improve living standards
in retirement
• Design evolution delivers aspirational product – attracting
more customers from above the median house price (including
self-funded retirees)
• Transparent financial model provides certainty to homeowners
regarding future costs
• Cash cost recovery pricing model did not chase the market
during the upswing — leaves room to absorb inflation and
interest rate rises
11
Lifestyle Communities Annual Report 2023 OUR BUSINESS AND STRATEGY
Ageing population
• Shortage of Affordable Housing Options
• Working, semi-retired, or retired people impacted
First home buyers
• Typically buy the homes Lifestyle customers
are selling
by inflation
• Stage of life drives action regardless of the cycle –
Seize the Day!
• Low levels of superannuation - benefit from
equity free-up
• Stage of life drives action regardless of the cycle
• See an opportunity to enter the market
• Priced out of the new home market
• Supported by low unemployment
• Supported by Government incentives at both a state
• Desire for ownership, control, safety, security and
and federal level
social interaction
• Our buyers typically sell to first home buyers
Economic environment
• Increased cost of living affects the asset rich/cash
Property market — outer suburbs
• Affordable suburbs less sensitive to
poor cohort
• Creates necessity to downsize
• Increases the addressable market
• Doing nothing is less attractive
price movements
• Sales volumes reduce in down cycles – upgraders
and investors drop out of the market
• First home buyers underpin the remaining volume
• Correlation to unemployment
• Supported by immigration
12
OUR PURPOSE
Our purpose
Lifestyle Communities was born with a purpose to be
socially responsible in creating affordable, homeowner-
centric communities for Australians over 50.
Our product and operating model has been
deliberately designed to address inequality in housing
options for Australia’s ageing population. For those
members of society with limited superannuation and
savings, creating a high quality, yet affordable housing
option allows our homeowners to free up some of
the equity in their home and help fund an improved
standard of living.
During FY23, we re-examined this purpose through
engagement with stakeholders across the business.
Our understanding of our purpose has deepened over
the years, and we recognise that the positive impact
we can have on the lives of our homeowners through
our business activities extends beyond the affordability
of our offering.
The way we create and operate our communities has
wider impacts on the well-being of our homeowners,
financially but also through other dimensions: this
includes access to social connection and contribution
to a sense of purpose and empowerment.
Our purpose has and will continue to guide our
business activities and is the core driver of how we
create value for all our stakeholders.
Progress at Lifestyle Bellarine
13
Lifestyle Communities Annual Report 2023 OUR PURPOSE
14
OUR VALUES
Our values
Our purpose is embedded in our values-based culture, which drives and inspires our
people to innovate and create memorable customer experiences that drive the best
outcomes for our homeowners. Our values are the driving force behind all that we
do, reinforcing our culture and ultimately ensuring our continued success.
Our
customer
is our only
truth
Play as
a team
Be
constantly
curious
Deliver
Delight
Everyday
Do it from
the heart
Own it,
sort it
15
Lifestyle Communities Annual Report 2023 HOW WE CREATE VALUE
How we create value
Key operational metrics
Total settled homes (end of year)
Portfolio + pipeline (end of year)
New home settlements
Resale settlements
Income statement snapshot
Home settlement revenue
Annuity revenue (Rent + DMF)
Other revenue
Total revenue
Operating profit after tax
Reconciliation to statutory profit:
Statutory valuation adjustments
Statutory net profit after tax
Statement of financial position snapshot
Cash
Inventory/work in progress
Investment properties
Fair value of rental cash flows
Fair value of deferred management fees
Undeveloped land
Other assets
Total assets
Trade payables
Borrowings
Deferred tax
Other liabilities
Total liabilities
Net assets
Net assets excl. deferred tax
Contributed equity
Reserves
Retained profits
Total shareholders equity
Share information
Total shares on issue
Operating earnings per share
Basic earnings per share (statutory)
Diluted earnings per share (statutory)
Net assets per share
Measure
Homes
Homes
Homes
Homes
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
'000 of shares
cents per share
cents per share
cents per share
$ per share
Ratios
Operating profit margin
Weighted average rent capitalisation rate
%
%
Average DMF valuation
$'000 per home
Return on average shareholders equity
Net debt to net debt + equity
Net debt/assets less cash and land accruals
%
%
%
Interest cover
No. of times
FY23
3,549
5,912
356
178
180,827
47,164
4,302
232,293
71,129
10,771
81,900
1,233
193,555
529,971
204,254
227,925
34,502
FY22
3,193
5,391
401
156
180,291
40,618
3,497
224,406
61,430
27,441
88,871
1,893
135,679
448,300
172,700
229,247
18,392
1,191,440
1,006,211
115,849
371,000
171,954
7,779
666,583
524,857
696,812
55,925
9,354
459,578
524,857
159,904
245,000
144,770
3,080
552,754
453,457
598,227
57,726
6,028
389,703
453,457
FY21
2,792
5,094
255
121
102,716
32,385
3,602
138,703
36,388
54,723
91,111
2,300
125,243
355,400
143,100
137,955
17,278
781,276
94,023
190,000
115,365
3,793
403,181
378,095
493,460
63,859
3,472
310,764
378,095
FY20
2,537
4,494
253
102
96,105
28,129
3,902
128,136
31,400
11,418
42,818
16,381
73,931
256,100
114,100
123,402
12,739
596,653
75,217
145,000
82,799
2,264
305,280
291,373
374,172
63,784
2,188
225,401
291,373
FY19
2,284
3,563
337
71
119,270
22,435
2,537
144,242
41,400
13,663
55,063
4,982
50,980
212,900
104,100
82,750
10,072
465,784
36,919
100,000
69,371
4,803
211,093
254,691
324,062
63,641
2,196
188,854
254,691
104,545
104,545
104,545
104,545
104,545
68.1
78.3
78.0
5.0
30.6%
5.14%
61
16.9%
41.3%
33.2%
3.2x
58.7
85.4
85.1
4.3
27.4%
5.18%
58
21.9%
34.9%
27.5%
6.2x
34.8
87.3
87.1
3.6
26.2%
5.57%
56
26.5%
33.2%
26.7%
5.6x
30.0
41.0
41.0
2.8
24.5%
6.46%
50
15.7%
30.6%
24.6%
5.5x
39.6
52.8
52.8
2.4
28.7%
7.00%
51
43.2%
27.2%
22.0%
6.7x
16
HOW WE CREATE VALUE
How we create value
We re-imagine over 50s community living for those who want to live more, not less.
We are agents of meaningful change, creating long-term value for our homeowners,
team members, shareholders, suppliers and partners and the broader community.
Our Homeowners
Our Team
Our Partners
The 5,000+ homeowners that live
in a Lifestyle Community, everyone
that engages with our marketing
material and comes to a community
to inspect.
Our workforce of 160+ people, our
pipeline of emerging talent working
across our greenfield development
projects and operating
communities every day.
More than 1,000 suppliers and
partners that provide the goods
and services we rely on to
deliver amazing service to our
homeowners.
Important Issues
• Social inclusion, health,
and well-being
Important Issues
• Commitment to and connection
with our purpose
• Desire for ownership, control,
• Health, safety, flexibility, well-
Important Issues
• Financial instability in the
industry more broadly
• Responsible and ethical
supply chains
and engagement
• High quality service, ease and
convenience of interactions
• Value for money and
being and belonging
• Ongoing career development
• Visibility and confidence of long-
and opportunities
term pipeline
• Retention and attraction of
• Quality of relationships
transparency of financial model
key talent
Our approach to Sustainability
Our plan remains to prioritise the positive social impact of our model and business practices.
Affordable housing is our core, and we are bound by the limits of affordability. Where we can, we
will pursue initiatives and innovations that maximise value and benefits to our homeowners and
provide other sustainability co-benefits.
17
Lifestyle Communities Annual Report 2023 HOW WE CREATE VALUE
Our economic value creation
Suppliers
Team members
Shareholders
Government
Wider Community
$238.5m
$18.9m
$12m
$16.8m
$320k
suppliers and
services spend
payments and benefits
to team members
total dividends
paid
cash taxes paid
and collected
community
donations
The Communities
where we operate
Our Investors
and Banks
Government
and Industry
The communities of greater
Melbourne and regional
communities including Shepparton,
Warragul, and Phillip Island.
Important Issues
• Chronic shortage of
affordable housing
• Inflation and increasing cost
of living
• Built form and its impact on local
communities
• Climate change
The institutional, superannuation,
and retail investors and the
lenders that provide us with
the capital to deliver long-term
sustainable growth.
Important Issues
• Organisational culture and
capability, including Executive
Committee and Board
• Strategy, execution, risk
management and ESG
performance
• Capital strategy
and management
• Long-term value creation
Our partners in Federal, state and
local government and the urban
development community we are
active in.
Important Issues
• Chronic shortage of
affordable housing
• Innovative and sustainable
housing solutions
• Future ready communities
• Electrification, renewable energy,
and removal of gas
Commitment to install:
8 micro grids
4 MW of Solar Panels and
2 MW of community batteries
57%
women in
emerging leadership
positions
9
out of
10
Employee
Engagement
Score
Certified Employer
of Choice by the
Workplace Gender
Equality Agency
(WGEA)
18
OUR APPROACH TO SUSTAINABILITY
Our approach to
Sustainability
Lifestyle Communities was born with a purpose to be
socially responsible in creating affordable, homeowner-
centric communities for Australians over 50.
Our commitment to continuous improvement
and meaningful action
We are committed to continuous improvement
and learning when it comes to our sustainability
performance. In an ever-evolving field, we recognise
the importance of staying informed and proactive. We
actively seek meaningful opportunities to enhance our
sustainability practices, identify areas where we can do
better, and implement innovative solutions that align
with our compelling purpose.
By embracing a culture of learning and adaptation, we
strive to implement meaningful and impactful change.
We recognise that data and information are key to
effective decision making and prioritisation, and as
such are working to continuously improve our data
collection and reporting practices – especially in the
emerging field of social sustainability.
We engage with our stakeholders on a regular basis to
ensure that we are receiving feedback on the issues
that matter most to them.
A s our understanding of our purpose has
deepened, we recognise that the way we
create and operate our communities has
wider impacts on the well-being of our homeowners,
financially but also through other dimensions. This
understanding underpins our approach to sustainability.
We prioritise our impacts on and benefits to people,
especially our homeowners. We understand that as an
organisation, we have a role to play as part of a wider
ecosystem. We focus our efforts on areas where we
can have the biggest positive impact and provide the
most benefit to people.
We recognise that the well-being of people and the
health of the planet are connected and continue to
progress our efforts on climate change and other areas
of environmental sustainability, acknowledging that
where we come up against the limits of affordability,
we will stay true to our purpose and seek to use
innovation and design to find co-benefits for both
people and the environment.
19
Lifestyle Communities Annual Report 2023 OUR APPROACH TO SUSTAINABILITY
Actions we took in FY23
Health, Safety & Environment
System and IT infrastructure uplift
WGEA citation
NPS introduced and over 40 town
halls conducted
Developed partnerships to drive
value back to homeowners
Programs to uplift employee
engagement, including new office
Completed construction of our
first micro-grid
Cyber Risk Roadmap completed
and uplift to data management
practices and privacy policy
Committed to 7 additional
micro-grids with centralised
community batteries
Material issues
In FY21 we undertook a materiality assessment to
identify the sustainability topics that can impact our
ability to create value as a business, and matter most
to our stakeholders. This helped us focus and prioritise
our efforts and confirmed our commitment to the
social aspects of sustainability, a commitment which
aligns with our business model and our purpose.
We have continued to engage with our stakeholders
and listen to their feedback on a regular basis. Further
details on our approach to stakeholder engagement,
and our progress, can be found throughout the
upcoming sections.
During FY23, we conducted a review of the original
assessment against leading sustainability frameworks
and indicators. This allowed us to consider our impacts
within these areas, in addition to the importance of
these topics to our business and stakeholders.
This assessment and review resulted in an extended
program of work to address and uplift our performance
over the medium term and retarget some of our efforts
in the short term. Our focus on people is reflected
within our material topics and priority areas.
20
OUR APPROACH TO SUSTAINABILITY
Priority issues addressed during FY23
Material issues in FY23
Housing supply and
affordability
Relevant
stakeholder group
Homeowners
Wider Community
Alignment to UN SDGs
Relevant sections in
this report
Our business and strategy
Team engagement
and well-being
Our Team
Health and safety
Our Team
Homeowners
Our Partners
Employer of choice
Our Team
Diversity and inclusion
Our Team
Our team
Our team
Our team
Our team
Homeowners
Our communities
Homeowners
Our communities
Homeowner (customer)
engagement and
satisfaction
Homeowner health,
well-being and
social connection
Climate action
Wider Community
Homeowners
Investment Community
Local community impact
and partnerships
Local Communities
Our Partners
Privacy and
cyber security
Homeowners
Wider Community
Climate action
Our partners and suppliers,
wider community impact
Our company’s key
opportunities an risks
Responsible procurement Our Partners
Our partners and suppliers
Wider Community
Governance processes
and systems
Our Team
Investment Community
Our board and governance
21
Lifestyle Communities Annual Report 2023
OUR APPROACH TO SUSTAINABILITY
Sustainability governance
Board and Executive responsibility
The Board has overall responsibility for sustainability
governance.
Our Managing Director and Chief Financial Officer
oversee the strategic integration of sustainability goals
and metrics into the wider business.
The leadership team drive the implementation of
sustainability initiatives within their teams, with support
from subject matter experts, to meet targets and goals.
Security Holders
Board of Directors (including ESG and Risk)
Managing Director
Leadership Team
Our Team
22
OUR TEAM
Our team
We recognise our ability to impact people within three
spheres of influence — our team, our communities, and
the wider communities we operate in.
Our team is at the heart of everything we do. We look
to empower our team to embody our purpose and
values every day. The well-being, engagement and
development of our team is directly linked to our ability
to deliver positive outcomes for our homeowners. We
also acknowledge our power to positively impact our
team members’ individual well-being.
Adap+ framework
Our people experience team works to embed our
culture and values through our custom designed adap+
framework. Our framework is built upon three pillars
that deliver value to our team through finding new ways
to create true connections, providing opportunities
for development and growth, focusing on work-life
balance, tailoring our reward and recognition program
to the changing needs of our team, and moments of
surprise and delight.
Team Summit 2022
23
Lifestyle Communities Annual Report 2023
OUR TEAM
a
different
approach
people. pathways. perks.
+ much more!
people.
pathways
perks
• Culture and Values
• Engagement, Well-being
and Connection
• Diversity, Equity
and Inclusion
• Training and Future Skills
• Career Progression
• ROADMAP
• Emerging leader
development
Benefits including:
• Additional days off
• Share Scheme
• Surprise and Delight!
24
OUR TEAM
Team engagement survey
Drivers of our culture
Through our talent attraction and engagement
process, we identify candidates’ personal alignment
with our values, purpose of our business, and culture.
Our leadership team leads by example, creating a fun,
kind, and welcoming environment where teams feel
empowered, valued, and supported.
Our organisational structure is designed to be relatively
flat, allowing team members direct access to the
leadership team, as well as to other team members
throughout the business.
Engagement Survey
most loved benefits
1. Lifestyle long weekends
2. Employee share scheme
3. Wellness dollars
4. Flexibility
5. Culture
6. Additional paid days off
7. New support office
9 out of 10
employee experience ranking
from our team in our most
recent engagement survey.
97%
of our team felt supported
through life transitions/
experiences (i.e. parenting,
caregiving, mental health,
chronic illness, etc.).
over 80%
of our team shared their views in
this year’s survey.
Zero
fatalities and life changing
injuries in FY23
Health and Safety uplift program
Our team’s health, safety and well-being are of the
utmost importance to us as a people-first business.
This also extends to our wider team, including
contractors and sub-contractors, as well as our
homeowners and visitors.
In FY22 we undertook an assessment of our existing
health, safety and well-being processes and systems.
This resulted in a program of work to be delivered in
FY23 to uplift our performance across a number of
areas, to ensure that we are creating and operating
places where harm to people is minimised.
Our commitment to safer and healthier people, places
and supporting processes underpins this program of
work. Our team is also empowered to constructively
raise issues and to intervene or stop work if they feel
unsafe or witness unsafe practices.
25
Lifestyle Communities Annual Report 2023 OUR TEAM
We are committed to
the health, safety and
well-being of our people
We design, create and
operate healthy and safe
places (communities)
Key highlights from our FY23
program of work
Implementation of IT infrastructure
We have migrated many of our existing processes
and systems into a fully integrated and modular
workforce management system that will allow
us to holistically manage our health, safety and
environmental performance. This system will help
streamline how we manage incidents, hazards,
inspections and audits, as well as our contractor
management and site induction processes. We
have also reviewed our internal processes, to
ensure that the right information is in the right
place, at the right time.
The system will allow us to oversee and regularly
report on our performance through several
metrics, and has already begun providing us with
important insights into how we work. We plan to
complete the implementation and further embed
the system in FY24.
Revised contractor management and oversight
We have conducted a revision of our contractor
management model and processes. We have
been working with our contractors and partners
to implement this revised model, to uplift and
streamline our collective performance across
health, safety and environment, to ensure that
risks are proactively managed and mitigated.
Continuous learning — incident and hazard
management
Our teams are trained on how to identify, manage,
and respond to different hazards and incidents.
During this uplift process, we have been working
with our team on how to identify key learnings
and how to integrate these into processes moving
forward, to ensure a culture of proactivity. We
have also reviewed our hazard management and
emergency response processes, to ensure that
potential harm to people is mitigated.
People
Places
Processes
We implement health,
safety and well-being
focused processes
Curious conversations around Health and Safety
A key part of our uplift program is engagement and
collective upskilling across the business around health
and safety.
Our HSE champions group is at the heart of this,
a multi-disciplinary team that help facilitate open
conversations around health and safety, as well as
distribute key learnings to the rest of the business.
Psychosocial safety
The health and well-being, including psychological
safety of our team is a continual focus for Lifestyle
Communities.
We work to create opportunities for open
conversation, launching initiatives to raise awareness
within our business and across our communities,
focused on topics of wellness and connection.
Our Employee Assistance Program (EAP) supports our
team members and their loved ones in times of need.
The program is free for all team members and available
24 hours per day, 7 days per week Additionally, our
EAP provides research, tools, management training
and team workshops through their online portal.
Our policies and procedures, such as our code of
conduct, ensure that team members enjoy a working
environment which protects human rights, prohibits
discrimination, promotes inclusion, grants rights of
freedom of association, and aligns with Australian
employment laws and regulations. We regularly
provide training in these areas to our team and the
people leaders within the business.
26
OUR TEAM
Team Summit 2022
27
Lifestyle Communities Annual Report 2023
OUR TEAM
Connection and well-being
Connecting a growing team
Maintaining our unique culture and social connection
between team members is pivotal to the continued
well-being of our team, and success of our business.
Our culture and relatively flat organisation structure
mean that communication is free to flow between
all levels of the business and that all team members,
regardless of their role and title, are able to easily
connect across the business.
Our goal is to create a fun, kind, and
welcoming environment where teams feel
empowered, valued, and supported.
There are more formal channels through which we
encourage communication, connection and sharing
including:
• Fortnightly all team calls/town halls
• New starter lunches
• All team summits
• Annual employee engagement survey
• Regular pulse surveys on specific topics
• Team social events
• Fundraising events
Since FY18, we have
Tripled
Since FY18 we have tripled
the size of our team to
support our growth.
28
OUR TEAM
A commitment to purpose
AFR Best Places to Work
Supporting our
team’s well-being
Wellness dollars
which can be spent on activities,
adventures or products that will
benefit team members’ health
and well-being.
Lifestyle long
weekends and
additional paid days off
a quarterly well-being leave
day to proactively support
work-life balance, as well as
other paid days off including
birthday leave.
Lifestyler Magazine
a dedicated health and
wellness e-magazine that
features programs, content
and resources to drive
awareness and engagement.
Flexible working
we support individuals to find
ways of working that can
accommodate their different
life circumstances, through our
‘flex’ policy.
Lifestyle Communities was recognised as one
of Australia’s Best Places to Work following
the release of the Australian Financial Review’s
annual list.
The award assessment is underpinned by the
‘Workplaces of the Future’ framework which
is designed to assess the ten key factors that
are critical to employees feeling motivated and
engaged at work.
In comparison to all other entrants of similar size
and within our industry, Lifestyle Communities
ranked highest in the ‘Purpose’ element of the
framework.
Our team feel that our organisation makes
valuable contributions to society that go
beyond generating economic value, whilst also
connecting individuals to our overall purpose.
Surprise and delight
We believe that experiencing joy and feeling valued
are important contributors to well-being, and so we
look to create moments of ‘surprise and delight’ for our
team members.
Whether it’s a fun surprise to celebrate a life
milestone, or a small gesture of gratitude for being a
supportive team member, we look to inject moments
of connection and fun into the day to day lives
of our team.
Financial well-being
Following our most recent survey, we identified the
need for a focus on financial well-being. Lifestyle
Communities engaged with a banking partner to
provide the team with access to financial wellness
webinars. This was especially well received in the
current economic climate.
29
Lifestyle Communities Annual Report 2023 OUR TEAM
Our new space for
Connection, Collaboration and Choice
Working from home and the ability to ‘flex’
the various office-based and customer-
facing roles post-pandemic is embedded
in our everyday ways of working. However,
we recognise the role of office spaces in
driving social connection and well-being,
as well as business outcomes.
Lifestyle Communities invested in a new Support
Office environment, to provide more opportunities for
collaboration, connection and choice with team well-
being at front of mind.
This innovative space incorporates areas for all types of
work styles and lifestyle amenities throughout.
Our Support Office was listed as one of our ‘most
loved benefits’ in our most recent engagement survey.
Natural light
Outdoor terraces with an
abundance of natural light and
stunning 360-degree views.
Pet friendly and indoor/outdoor greenery
Plants and pets within the work environment have been
shown to reduces stress levels, boost productivity and
can improve mental and physical health outcomes.
Ergonomic design
Top-class building facilities
Tailored workspaces
Standup desks and curved
monitors reduce eye strain and
fatigue whilst also creating a
better field of view, improving
mood and energy levels.
End of trip facilities, gym,
basketball court and
golf simulator.
A variety of areas throughout our level
providing choice whilst catering to all
work styles. i.e. meeting rooms, indoor
and outdoor quiet areas, collaboration
spaces of all sizes, large training and
breakout zones.
30
OUR TEAM
Our partnership with
Mother’s Day Classic
For the past 5 years, we have been participating in the
Mother’s Day Classic fundraising event. This is part of
our wider commitment to supporting cancer-based
charities through the Lifestyle Communities Foundation.
Our participation in the classic is a collective endeavour, this year
we had over 390 team members, homeowners and partners walk
the Tan, supporting life-saving breast cancer research.
This event is a great space for our team to connect with each
other, our business partners and our homeowners, contributing to
our combined sense of belonging, purpose and well-being.
$60,928
raised from our community
for breast cancer research.
Australia’s highest
fundraising team.
Victoria’s largest
participating group
31
Lifestyle Communities Annual Report 2023
OUR TEAM
Recognised as
Employer of choice
for Gender Equality
by the Workplace Gender
Equality Agency (WGEA) in
our first year of application.
Age diversity
We are in a unique position to contribute to age
diversity outcomes and seek to drive positive
opportunities for our more mature team members. We
actively look for opportunities for knowledge sharing
between generations, enhancing innovation, and
encouraging diverse perspectives and problem solving.
This diversity contributes to improved customer
understanding and satisfaction.
A summary breakdown of our employees by age can be found in the
remuneration report.
Policies supporting diversity
and inclusion
Lifestyle Communities does not tolerate
discrimination, vilification, harassment, or
victimisation within its workforce, and has
developed an Employee Code of Conduct to
provide guidance on the expected behaviours of
all employees.
Our Diversity and Inclusion policy reinforces
our values and culture and aligns with our
mission to work as a connected, respectful and
supportive team and to operate from the heart in
everything we do.
Diversity and inclusion
We recognise the importance of diversity and
inclusion to our people’s well-being, as well as being
an important driver for our business. Respect, dignity
and kindness are an important part of our culture,
and critical in the way we treat each other, our
homeowners, and our partners.
We are committed to the principles of diversity and
inclusion and are constantly striving to provide an
environment in which recruitment, appointments,
advancement and opportunities are considered on a
fair and equitable basis. As our team grows, we are
learning more about the specific needs of and how to
best drive positive outcomes for all our people.
Our commitment to gender equality
WGEA citation
Lifestyle Communities was awarded an Employer of
Choice for Gender Equality Citation (EOCGE) by the
Workplace Gender Equality Agency (WGEA) in our
first year of application.
The citation highlights the meaningful programs and
initiatives that Lifestyle Communities has created and
embedded within the organisation.
Over 70% of our team are female and we are proud
to be recognised for our commitment in leading the
way and accelerating change for gender equality in the
property/construction industry.
Gender equality is also of particular importance
to Lifestyle Communities as over 46% of homes
are single female households, and over 62% of our
homeowners are female.
Targets
We have developed targets for female representation
on the leadership team, across our entire workforce,
and for board representation. These targets are
meant to reflect an appropriate gender balance that is
reflective of Lifestyle Communities’ customer base.
Employee
group
Target
Actual at
30 June 2023
Board
50% female, 50% male
50% female, 50% male
Executive Team 40% female, 40% male,
50% female, 50% male
20% any gender
Entire
Workforce
40% female, 40% male,
20% any gender
70% female, 30% male
32
OUR TEAM
Focus on family
With a high proportion of parents and caregivers on
our team, we are committed to supporting them,
acknowledging the important role that balancing work
with caregiving responsibilities has to an individual’s
sense of well-being.
Last year, we introduced the Circle-In
benefits program.
Circle-In is a support hub for parents, grandparents,
and care givers within the team. It provides access to
resources and knowledge articles, and allows team
members to connect with others at a similar life stage
to share knowledge and provide support.
Grow your family
At Lifestyle Communities we think of our team as
our family. And we want to support them as they
grow their own family.
Key features of our Growing your Family Policy:
• 10 keeping in touch days at full pay
• 20 days paid transition leave if transitioning back
after paid leave ends
• Continued payment of superannuation whilst on
leave (paid or unpaid)
Primary carer
• No minimum service period
• 18 weeks paid leave at full pay
• Option to apply for unpaid leave of up
to 24 months
Secondary carer
• No minimum service period
• 8 weeks paid leave at full pay
• Option to apply for unpaid leave of up
to 24 months
33
Lifestyle Communities Annual Report 2023 The Fatherhood Trap
Supporting research to drive better outcomes for caregivers.
OUR TEAM
In recognition of the important role that fathers play in family
life, and to encourage shared caregiving duties, Lifestyle
Communities is always on the lookout for new and innovative
ways to support the team - be it through flexibility, the support
offered by managers or generous policies and benefits.
Together with Circle In, we conducted a research
project — ‘The Fatherhood Trap: Why Australian Dads
Want To Take Parental Leave But Don’t (Or Can’t)’ —
focused on understanding and unpacking why more
dads are not taking parental leave. Furthermore, we
hosted a panel discussion at our Support Office to
‘Continue the Conversation’ with some of our working
parents where we heard some real stories from the
panel and attendees, reaffirming how important
workplace culture is to support your team through life
journeys like parenthood.
Our Managing Director was part of a panel discussion
where other dads shared their experiences, the
importance of role-modelling, and practical examples
for organisations to step up.
We know what’s possible when workplace culture
keeps up and shifts to accommodate changing
social norms.
When we encourage, empower and role model dads
taking parental leave, everyone wins.
While this research focused on fathers, we acknowledge that there are many other family constructs and hope these findings and
recommendations are seen within that broad prism. At Lifestyle Communities, we support and celebrate all parents and caregivers.
34
OUR TEAM
Training and career progression
Our approach to training caters to the individual needs
of team members, supporting their success in their
roles, as well as their future career aspirations.
Our learning and development program includes a
mix of online, in-classroom, and on-the-job training
facilitated by both internal and external subject
matter experts.
All teams are regularly trained in core skills relevant
to their role as well as core competencies required
for any role. These include the homeowner journey,
company policies, core systems, cyber security, and
modern slavery.
We also support team members in building their
knowledge and upskilling in areas that support their
future career growth.
Emerging leaders
Emerging leaders are those individuals who
demonstrate current and future leadership
capability. They are given focused training
and mentoring to accelerate their leadership
capabilities. The pool presently comprises 57%
women and 43% men, helping to secure a strong
pipeline of leadership talent for the future
Our Emerging Leaders program has empowered
our leaders to develop skills and strategies to
influence change and support team members.
They are provided with the tools and resources
to be proactive, empower and guide their teams,
understand their experiences and the challenges
they face, both professionally and personally.
11,100+
training hours. An average of
67.7 hours invested into each
of our team members.
On-demand
access to over
5,000
online learning programs.
Spent over $240,000
on over 115 training and
development programs
for our team.
Our employee share scheme
Our unique employee share scheme applies to all
employees and sets consistent targets for all team
members. This creates alignment across all functional
teams and focuses the entire business on the
company’s strategic and business objectives.
All team members are subject to a behavioural
gateway which reinforces our values based culture
and desire to deliver amazing experiences for our
homeowners.
Details of our employee share scheme can be found in the
remuneration report .
35
Lifestyle Communities Annual Report 2023 Our communities
OUR COMMUNITIES
Our business purpose and operating model centre our
homeowners in everything we do. We pride ourselves
on our homeowner and purpose centric culture and
operating model, created from the ground up and
nurtured through 20 years of organic growth.
Our work does not end once a homeowner has moved
into our communities. We continue to actively support
and empower homeowners in a number of ways, most
importantly through our on-site community managers,
who live alongside homeowners and are key to how we
enable and empower communities.
unitie
m
m
o
C
s
M
a
n
a
g
i
n
g
Homeowners
C
o
m
g
n
i
t
a
re
C
s
munitie
We look to engage, empower and contribute to the
well-being of our homeowners throughout the entire
lifecycle of creating and managing communities. Our
communities are the physical spaces through which
our purpose comes to life.
Homeowner journey
We engage and empower homeowners on every
step of their journey with us, from their first enquiry,
throughout the sales process, move-in day, and
throughout their time living in their community. We
focus on building lasting relationships and personalising
our homeowners’ experiences.
We understand that transitioning to a new lifestyle
can be a big step for prospective homeowners, so
we ensure that our enquiry and sales processes are
thoughtful, considered and not pressured. We ensure
that our recruitment and training of teams aligns to
this approach.
n q u i ry & Sales
E
Homeowner
Journey
L
v
i
i
n
g
i
n
t
h
e
C
o
m
munity
&
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C
o
o
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o
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n
i
g In
n
n
s
s
t
t
r
r
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u
c
c
tio
tio
n
n
Community well-being framework
Developing greenfield communities gives us a unique
opportunity to consider the homeowner experience
from the ground up. Using feedback from homeowners
in our established communities and our team, we adapt
each new community to ensure we facilitate positive
outcomes for homeowners in how they live, socialise
and engage with the spaces that we create.
36
OUR COMMUNITIES
Engagement &
Satisfaction
n
o
i
t
c
e
n
n
o
C
Homeowners
Empowerment &
Purpose
W
e
l
l
n
e
s
s
Engaging with our homeowners
We are committed to actively listening to and
learning from homeowners and are always looking for
ways to improve their experience with us and meet
their evolving expectations. We want to make sure
that homeowners feel supported and heard in an
empathetic, fair, and timely manner.
We live by the adage: A customer may forget
what you told them, but they will never forget
how you made them feel.
We conduct two “Voice of the Homeowner” surveys
annually, where we seek honest feedback on our
performance from homeowners. The surveys are
anonymised to allow us to build an accurate picture of
how homeowners feel.
37
We have started introducing NPS scores into our
surveys, to assist us in measuring homeowner
satisfaction. We are early on our journey, but are
looking forward to the insights these scores will give
us across our community portfolio. They will also
allow us to understand individual communities, to
better address their needs and tailor our approach to
improving their experience.
Community Town Halls
A key component of our unique and highly engaged
homeowner experience approach are the twice-yearly
community town hall meetings.
During FY23, we conducted 42 all community town
hall meetings, visiting all of our operating communities
every 6 months. These meetings are an open forum
for direct conversation and interaction between
homeowners and our Managing Director, leadership
team and other team members. At the town hall
meetings we share insights and feedback gained
through our homeowner survey and address hot
topics and themes. We also provide an open Q&A
with homeowners free to express anything that is on
their minds.
This is part of our commitment to be readily accessible
to our homeowners through different avenues.
Empowered Homeowners
Homeowner committees
Each of our communities has its own Homeowner
Committee (HOC), composed solely of
homeowners. HOC members are elected by their
community to engage with Lifestyle Communities
and advocate on their behalf.
HOCs are an important component of
homeowner engagement and allow us to
be constantly communicating and receiving
feedback from homeowners. They are also
a space or homeowners to come together
and contribute to the collective well-being of
their community.
Lifestyle Communities Annual Report 2023 OUR COMMUNITIES
Our commitment to transparency and empowered
decision making
We work to empower homeowners throughout their
journey with us. During the enquiry and purchasing
process, we empower prospective homeowners in a
number of ways:
Transparent materials
Our marketing materials are transparent and reinforced
through a comprehensive set of Q&As.
Our homeowner agreements use positive, easy to
understand language, and avoid legal jargon.
We have shared our contracts with others in the
industry and actively encourage them to adopt similar
approaches to promote transparency and readability.
Copies of our agreements are available on our website.
Empowered decision making
To ensure our homeowners fully understand what they
are committing to, we sit down with every prospective
homeowner to explain our agreements in detail and
answer any questions before signing.
During the purchasing process, we encourage all our
prospective homeowners to engage with their families
to talk through their options; we won’t take deposits at
the first meeting.
38
OUR COMMUNITIES
Complaints and continuous learning
Whilst we strive for excellence always, we understand
and acknowledge that from time to time, things may
not always go to plan. Therefore, we have created a
unique homeowner engagement process to ensure
complaints and issues are heard and dealt with in a fair,
consistent, timely, and courteous manner.
As outlined above, the different mechanisms we use
to engage and empower homeowners are also spaces
where complaints and concerns can be raised.
Community Managers
Available on-site.
Regional Operations
Managers
Head of Homeowner
Experience
Managing Director
Available by phone/email and attend
Homeowner Committee meetings at each
community quarterly or by invitation of the
committee.
Available by phone/email and attends
Homeowner Committee meetings
quarterly for all communities.
Available by phone/email and attends
every community every 6 months to host a
meeting of all homeowners.
These include:
• Homeowner committees
• Community town hall meetings
• Engagement surveys
We actively seek honest feedback to ensure we learn
from our mistakes and improve as a result.
At any time, the following avenues are available for
homeowners to raise issues or complaints:
Each of the team members noted above share their
contact details with all homeowners and in addition
to the above structured engagements, are available
to meet and discuss homeowner issues on an ad-hoc
basis as required.
All complaints are recorded in the complaints register
which is reviewed by management on a monthly basis.
The Board receives regular reporting on homeowner
complaints including periodic themes and trends, and
specific updates on any material matters.
The Source
The Source is an information and connection hub that is available to all of our
homeowners once they join our communities.
It is a one stop shop for homeowners to raise maintenance issues, book facilities and
access important information. It is another avenue for homeowners to interact with the
team, and the way it is set up ensures that all requests and issues are attended to by our
team in a timely manner.
The Source is part of our ongoing digital transformation journey and our commitment to
continuous improvement.
39
Lifestyle Communities Annual Report 2023 OUR COMMUNITIES
Cultivating empowered
community living
We create and manage our communities with the
well-being of homeowners in mind; crucial to this
sense of well-being is a sense of connection, purpose
and choice.
Our approach to cultivating empowered
community living
Our approach to co-creating community with
homeowners is one where we plant the seed by setting
communities up for success, and then nurturing them
at key moments where we can add value and support.
We believe that this empowered approach contributes
to the well-being of homeowners and their sense
of purpose.
Space to connect
We create spaces where homeowners can easily
connect with each other, themselves and the space
they are in. We strive for homeowners to consider
the rest of the community as an extension of their
home and continue to actively cultivate this sense of
connection in how we manage communities.
Enabling connection
We work to empower and nurture communities by
setting them up for success from the start.
Social Committee
Along with a Homeowner Committee, each
community has a dedicated Social Committee that is
run by volunteer homeowners. The social committee
is responsible for arranging a wide range of activities
for fellow homeowners within the community, based
on community interests. Social Committees are
empowered to run independently, but they work
closely with our on-site community managers to
collectively work towards increased connection,
inclusiveness, and physical and mental well-
being outcomes.
Ambassador Program
We understand it can be daunting moving into a new
community and form new friendships and connections.
Our ambassador program matches new homeowners
with volunteers within the community, to help ease the
transition for homeowners and enable them to form
connections with their neighbours.
Eye on design
Our approach to community design supports
connection and cultivates community
living through:
• Inclusion of multipurpose common spaces
(Clubhouses) where, homeowners can
come together to socialise or to use as a
restful retreat
• A variety of recreation and sporting facilities
where homeowners, their families and friends
can come together
• Landscaping and design features that can
help homeowners connect to their natural
surroundings and each other
• Pet-friendly facilities that recognise the
importance of bonds between pet owners
and their pets
40
OUR COMMUNITIES
Getting around
Transportation
We offer homeowners a range of
transportation services including shuttle
buses, vans and cars to make it easier for
them to get around, attend to errands
and appointments, connect to other
communities and explore the wider
community they live in.
All Lifestyle Communities come with a
fully electric town car, a mini-bus, and
electric bikes free for homeowner use at
no additional charge. This helps reduce
cost of living for our homeowners,
and promotes car-pooling and
shared transport.
Electric cars at
Lifestyle Bittern
Building social connection
Our empowered on-site community managers actively work, alongside
our homeowners, to build connection and a sense of community between
homeowners through:
Helping to build relationships by
getting to know homeowners
and connecting them with like
minded individuals.
Directly organising, or
supporting the organisation of,
ongoing social events with
the social committee, such as
monthly morning teas and live
entertainment.
Organising activities around
special events, such a sporting
events and holidays.
Many of our communities use a monthly morning tea to bring together homeowners
and our community management team.
These are a great forum to:
• Connect new and existing homeowners with each other
• Share important information and updates – including upcoming events and activities
• Connect homeowners with the community management team
• And celebrate special occasions!
41
Lifestyle Communities Annual Report 2023 OUR COMMUNITIES
Eye on design
Living at our communities also includes access to:
• Electric bikes for recreation and active transport
• Access to recreational vehicles such as boats and
We look to create spaces that contribute to different
dimensions of homeowner well-being.
motor homes
Active living
Our community designs encourage active living
through the inclusion of:
• Swimming pools and specialised sports courts
• Walkways and paths that encourage active
movement throughout the community
• Indoor specialised wellness spaces, such as
spas and gyms
Well-being
Our community designs include elements that
contribute to emotional and mental, as well as physical
well-being.
One great example of this is the Sensory Garden at
Ocean Grove.
The sensory garden is a space that is designed to
support well-being through exploration, connection to
nature and a sense of tranquility.
Sensory Garden at Ocean Grove
42
OUR COMMUNITIES
The power of choice:
Space to explore and find purpose
To encourage homeowners to explore their
hobbies, interests, and purpose, each community
includes access to a workshop or maker’s studio.
This a space where homeowners can choose to explore their hobbies and
interests, and has led to many homeowners finding new passions and purpose.
Many of our communities also
include dedicated community
gardens run by homeowners.
Here, homeowners can reap
the well-being benefits of
gardening, connect and support
their fellow homeowners, and
find purpose in growing their
own produce.
43
Lifestyle Communities Annual Report 2023 OUR COMMUNITIES
Poolside at Lifestyle Meridian
44
OUR COMMUNITIES
Health and
Well-being
Health and Well-being
Our dedicated wellness team delivers a variety of
activities, events and talks throughout our communities
that aim to contribute to the sense of connection, physical
and mental health and holistic well-being of homeowners.
Our on-site community managers also organise regular
activities at individual communities based on the interests
and needs of that community.
Some health and wellness activity highlights from
FY23 include:
• Homeowner book clubs
• Group fitness classes including yoga, Tai Chi, Pilates,
dance-fit, salsa, line dancing, Zumba, strength and
conditioning and aqua aerobics
• Workshops focused on mental and emotional well-
being, including mindfulness and meditation
• Autumn and spring inter-community sporting carnivals
Inter-community sporting carnivals
One of the highlights of our wellness program are our
Spring and Autumn sporting carnivals, events that bring
together homeowners from across all our communities.
These hotly contested sporting carnivals see hundreds of
homeowners competing across a range of sports including
lawn bowls, darts, croquet, pool, and much more. Teams
from each community compete, proceeding to regional
finals and ultimately the grand final.
This year, over 770 homeowners participated across 83
teams from all of our communities.
These carnivals contribute to:
• Encouraging active living amongst our homeowners
• Creating connections between homeowners
• Wider inter-community connection between
homeowners at different communities
• Engendering a sense of purpose and pride within
homeowners for their community
45
Lifestyle Communities Annual Report 2023 OUR COMMUNITIES
46
OUR COMMUNITIES
Empowering homeowners through knowledge
Our community managers and wellness team are
always looking for ways to empower and support
homeowners by enabling access to information and
knowledge that is relevant to their needs.
Guest speakers, seminars and knowledge sharing
events are regularly organised by our team
throughout the year.
Some of the topics covered and speakers this past
year included:
• Resilience with 3 time paralympic gold medallist
Carole Cook
• Financial literacy and health
• Living life to the fullest with Kevin Sheedy
Empowered to connect and benefit the
wider community
Many of our homeowners have an active interest in
contributing to the well-being of people outside of
their immediate community. We empower and support
homeowners to achieve this facet of discovering and
living their purpose.
Fundraising events are one of the great interests of
many of our homeowners, and we organise or actively
support these initiatives where we can. We believe this
contributes to the sense of purpose, connection and
well-being of homeowners.
Tour de Lifestyle
The Tour de Lifestyle was the brainchild of lifestyle
homeowner Paul Walton, who was looking to
raise funds for the Royal Children’s Hospital
Foundation (RCHF) by riding his bicycle to all of our
communities across Victoria.
We actively supported this initiative by helping
organise different aspects of the journey, holding
fundraising events at each community and
encouraging homeowners from other communities
to join Paul on different legs of the journey. We
event invited our team members to participate in
this epic tour!
The tour was a resounding success with:
• $71,606 raised for the Royal Children’s
Hospital Foundation
• 80 cyclists participated across 16 stages over
7 days, 2 cyclists rode the full distance!
• Over 600kms ridden
47
Lifestyle Communities Annual Report 2023 OUR COMMUNITIES
Creating value for our homeowners
We strive to create value for our homeowners in all
of our offerings. Whether that is looking for ways to
alleviate cost of living pressures by lowering their utility
bills or expanding our offerings at no extra cost, we are
always on the lookout for new and innovative ways to
create value.
Partnering with RACV
This year, we partnered with RACV to introduce their
suite of products to our homeowners. The intent
of this partnership is simply to deliver additional
options and value to our homeowners. There is no
financial incentive or arrangement between Lifestyle
Communities and RACV.
We use our collective purchasing power to develop
partnerships that can give our homeowners discounts
and access to the products and services they regularly
use or need. We look to align with organisations and
vendors who share our purpose and ethos.
48
OUR COMMUNITIES
Lowering bills by up to 50%*
through our innovate solar micro-grids with battery storage
We are always on the lookout for innovations that
can bring the greatest benefit to our homeowners,
and our integrated solar micro-grids are a great
example of this.
We were looking for a way to bring the benefits of
community wide solar generation and power sharing
to our homeowners, and with it provide a reliable, less
emissions intensive form of energy that can buoy our
homeowners against electricity price shocks.
Our first trial at our Meridian community includes
a 450 kW solar PV system with 150 kW integrated
battery storage.
These systems are connected through an embedded
network and allow us to:
• Lower energy bills for all homeowners through the
management of our embedded networks and by
using our collective purchasing power
• Generate and store renewable solar energy,
minimizing the amount of power drawn
from the grid
• Battery storage means that homeowners can
benefit from the excess energy generated
throughout the day that might otherwise be lost
• Provide a steady and resilient supply of power
to homeowners
• Efficiency of these systems contributes to lowered
energy consumption, and allows for better
monitoring of energy use
We have committed to scaling up and replicating this
system within 7 of our developing communities.
Up to
50% saving for
homeowners
Over 3,900 MWh
of solar power
will be generated
annually
across 7 sites
* Based on modelled outcomes and usage profiles. Full savings will be assessed once the system is completed and fully operational.
49
Lifestyle Communities Annual Report 2023 OUR COMMUNITIES
50
OUR COMMUNITIES
Club Lifestyle
Club Lifestyle is officially open! For months now, our homeowners
have been enjoying exclusive access to luxurious villas, furnished
motorhomes and serviced van sites at our waterfront Bellarine site,
at no extra cost*.
This is part of our ongoing commitment to creating more value for our
homeowners and helping alleviate cost of living pressure where we can, by
making holidays and mini-breaks more accessible to all homeowners.
Club Lifestyle is also part of our unique value proposition that will continue
to drive referrals for years to come.
Access to Club Lifestyle Bellarine includes:
Scan here to learn more
about Club Lifestyle
Private
beach
Indoor/
Outdoor Pool
Other fitness
and recreational
facilities
Access to e-bikes
and buggies to
explore the beautiful
surroundings
We have committed to replicating the Club Lifestyle model within a number of our
new communities, and will continue to innovate to drive value for our stakeholders.
* Not including a nominal cleaning fee for villas and motorhomes on checkout
51
Lifestyle Communities Annual Report 2023 OUR PARTNERS AND SUPPLIERS
Our partners and suppliers
W e pride ourselves on our approach to
engaging with our partners and suppliers.
We recognise our ability to influence
outcomes for our partners, suppliers and their supply
chains, as well as the local economies they operate in.
Over the past 20 years, we have taken a considered
approach to procurement, where we have built long-
term relationships with local partners and suppliers
who align with our strong organisational values
and ethos.
This approach is underpinned by eight core principles
that set out how we should behave, how we expect our
business partners to behave and how we expect them
to treat partners along their own value chain.
We are proud of the many small and local businesses
we work with, and many of our key partners have
grown with us over the years.
Local economies
We recognise our ability to impact the local economies
in which our communities are located, and take a
considered approach to creating local economic and
community value through:
76%
We pay 76% of small
suppliers in less than 20 days
These principles are:
• We treat people with dignity and respect;
• We act with honesty and integrity, upholding
ethical standards;
• We comply with laws and regulations;
• We are committed to safety;
• We are committed to true and fair,
transparent, financial dealings;
• We undertake responsible sourcing activities
and consider sourcing solutions that minimise
social and environmental impacts;
• We have a responsibility to safeguard
our reputation, property, assets, and
information; and
• We pro-actively manage risk
Our recruitment processes that prioritise
employment of individuals local to the
area our community is located in. This
is across different functions including
sales, community management and other
support functions.
Procurement for events and ongoing
operations from local businesses.
Engaging local small businesses for
ongoing operations support, such as
maintenance.
We are committed to the principles of responsible and
ethical procurement and acknowledge that we are on
a journey of continuous improvement to embed these
principles into our processes.
Embedding responsible procurement
During FY23 we revised our contractor management
and oversight model and processes, and are working to
integrate them into our new contractor onboarding and
management system.
Responsible procurement
We base our approach to procurement on an
alignment of values with our partners and suppliers,
including those around socially responsible business
practices and human rights.
This system will allow us to manage and ensure the
ongoing compliance of our suppliers and partners
around responsible procurement. This includes
embedded questions around responses to modern
slavery, environmental compliance, and local
procurement – along with health and safety.
52
OUR PARTNERS AND SUPPLIERS
This work also includes engagement with our partners
and suppliers to implement this model, which will allow
us to uplift our collective performance.
Our approach to Modern Slavery risks
We lodge our Modern Slavery Statement annually, and
within it outline the actions we have taken to mitigate
the risks of modern slavery within our operations and
supply chain. This is in line with our commitment that
we are opposed to modern slavery in all its forms.
Actively engaging with our partners and suppliers is a
key action we take to uplift our collective knowledge
and understand risks within our supply chains, we have
worked closely with our key partners during this year
to support their modern slavery reporting and to share
knowledge on this topic.
Policies* and practices
supporting responsible
procurement
• Procurement Policy
• Supplier Code of Conduct
• Employee Code of Conduct
• Modern Slavery Statement
• Whistle-Blower Policy – this includes details
on how to report a suspected incident to
our confidential whistle-blower hotline and
other channels.
* Copies of all our policies can be found on our website
53
Lifestyle Communities Annual Report 2023
WIDER COMMUNITY IMPACT
Wider community impact
A s a business for purpose, we recognise
our ability to impact the wider community
outside of our boundaries, whether locally or
on a wider scale.
Supporting and meeting our neighbours
When we move into a new neighbourhood, our
teams get to know the local community and actively
look for ways to support local clubs, businesses and
community initiatives.
As we’ve outlined, we also work to contribute to
the local economy through our recruitment and
procurement practices.
Some of the ways we’ve connected with and
supported community during this last year include:
Supporting Connected Women, a fun
community initiative for women over 50.
We hosted and supported the 1st meeting
of the Geelong chapter free of charge in
our Bellarine Community clubhouse.
Sponsoring the Daytime Music Theatre
program at Bunjil Place, an arts and
entertainment facility in the City of
Casey that works to bring the community
together.
Sponsorship of and partnerships with local bowls and golf
clubs, including sponsoring a ladies over 50 golf event.
And many other events to bring together homeowners and
members of the community such as My Pension Manager
information sessions and guest speaker events.
54
WIDER COMMUNITY IMPACT
The Lifestyle Communities
Foundation
In 2014, one of the founding directors of Lifestyle
Communities, Dael Perlov, passed away from
pancreatic cancer at the age of 46.
In 2015, we set up the Lifestyle Communities
Foundation in his memory. The Foundation supports
fundraising activities across all communities, focused
on raising funds for cancer-based charities.
Lifestyle Communities contributes $50 for each
occupied home in our communities at the start of each
year and matches dollar for dollar funds raised by our
homeowners for cancer based charities.
We are proud of how we work collectively with
our team and homeowners to host, support or
fund activities. Events such as the Tour de Lifestyle
demonstrate that collective effort towards a
common goal.
Across our communities, major events such as The
Biggest Morning Tea, World’s Greatest Shave, and
Movember, have been hosted with amazing results.
Equally, individuals have raised funds by taking part
in external events such as Relay for Life, Good Friday
Appeal, The Mother’s Day Classic, and the Starlight
Children’s Foundation.
Other charities supported include the Cancer Council,
Peter MacCallum Cancer Centre, Monash Children’s
Cancer Centre, Royal Children’s Hospital, the National
Breast Cancer Foundation and many more.
In FY23, Lifestyle Communities donated a total of
$160,000 to cancer-based charities.
Our homeowners and the Lifestyle team raised a
further $160,000, taking total donations to $320,000,
a fantastic effort.
Since the program started a total of over $1.4 million
has been donated.
Donations to Cancer-based charities
)
s
0
0
0
$
(
320
280
240
200
160
120
80
40
0
55
160.0
121.5
64.9
76.2
42.0
25.4
57.2
33.4
67.4
42.0
47.3
99.1
114.2
126.9
138.2
160.0
2016
2017
2018
2019
2020
2021
2022
2023
Lifestyle
Homeowners
Lifestyle Communities Annual Report 2023 Clubhouse at Lifestyle Meridian
WIDER COMMUNITY IMPACT
56
CLIMATE ACTION
Climate action
We recognise that climate change impacts the well-
being of people and planet, and so have committed
to a course of action to embed, adapt to and mitigate
climate action where possible.
Climate change risk
As with all Australian sites, we recognise that our
sites and homeowners are vulnerable to the physical
impacts of climate change.
Therefore, in FY22, we undertook a high-level climate
change risk screening to better understand the current
and future exposure of our sites to the physical risks
of climate change. This screening assumed the ‘worst
case scenario’ of a mean global temperature rise of
3.7 degrees by 2100. This has allowed us to identify
opportunities to mitigate and adapt to long-term risks
and impacts through influencing the location, design
and management of existing and future communities.
We also recognise that there are a number of
transition risks (from a global transition to a low-carbon
economy) that may impact our business in the long-
term. While we are working to better understand these
risks, our initial high-level assessment through the lens
of warming kept below 2 C has identified a number of
risks which are outlined below:
How we’re working to mitigate and adapt to
physical risks
• Screen potential site acquisitions to avoid sites
most at risk
• Direct our maintenance capital spend towards
communities most at risk
• Regularly reviewing our emergency management
procedures and partnering with specialised
agencies such as fire authorities
Physical
Drought
Riverine/rainfall
flood
Storms and
large hail
Extreme heat
Bushfires
Coastal
inundation
Transition
Market
Policy and Legal
Reputation
Technology
Cost of retrofitting/changing
consumer demands
Potential policy changes,
including land use policy change
Energy supply risks/Cost
of raw materials
(low carbon/other)
Climate policy changes around
emissions reductions targets/
carbon pricing
Changing consumer and
stakeholder preferences around
sustainability and climate
resilience
Substitution of existing carbon
intensive technologies with lower
carbon ones
Investing in new technologies
Policy changes around
reporting/disclosures
Risk of litigation for climate
related damages
57
Lifestyle Communities Annual Report 2023 CLIMATE ACTION
How we’re working to address transition risks
During FY23 we recruited a dedicated Sustainability
Lead to actively monitor changes to policy or
legislation, and proactively consider these throughout
our business. We have set out our Net Zero
operational emissions target and have been rolling
out progressively more sophisticated solar PV and
microgrid technology (on-site renewables) to each new
development.
We actively monitor developments in national and
international reporting legislation and frameworks,
taking the lead from larger organisations who will be at
the forefront of legislative changes and are working to
gradually improve our reporting, disclosures and data
collection regimes and mechanisms.
We will continue to monitor developments in these
spaces and utilise our dynamic approach to address
challenges as they arise.
Net Zero operational
emissions by 2035
What we mean by ‘Net Zero Operational Emissions’
Net Zero
An absolute reduction in greenhouse gas emissions by
90-95% percent, with the remaining 5-10% emissions
that are not possible to cut, neutralised through
carbon removals. This is aligned to 1.5 C aligned
warming pathways.
Operational Emissions
We remain committed to our target to achieve net zero
operational emissions by 2035.
Traditionally this means a reduction in our Scope 1 and
2 emissions.
We believe that through our solar PV and microgrid
program of work, we can provide access to renewables
for our homeowners, which means that we can directly
influence their emissions profile at the source. We can
also influence the type of grid electricity being drawn
into our communities through our embedded network/
microgrid configurations.
Therefore, our target encompasses:
Scope 1 Direct emissions: On-site gas use by LIC for
common facilities, fuel used for LIC vehicles
Scope 2 Purchased electricity: Electricity used by LIC
managed facilities
Scope 3 Indirect emissions: Energy used by
homeowners in LIC Communities.
These categories align with the boundaries of what we
currently measure in our Greenhouse Gas Inventory
(GHG Inventory).
A smaller footprint
The size and configuration of our communities,
as well as the modular nature of our homes,
lends itself to a decreased footprint of both our
communities and individual homes.
Our higher density community configurations
contribute less to urban sprawl than a typical
sub-division.
Average density of a typical subdivision in Victoria
= 14 to 16 homes per hectare
Average density of a Lifestyle Community = 26
homes per hectare
Compared to the emissions footprint of a typical
home in Melbourne’s outer suburbs, our homes
have a smaller operational emissions footprint.
58
CLIMATE ACTION
Journey to
Net Zero 2035
Operational emissions
We remain committed to our target to achieve net
zero operational emissions by 2035.
Improve efficiency
Use latest technology to make new communities
more efficient, and influence behaviour change
where we can.
Progressively upgrade equipment at
older communities to improve
efficiency over time.
All electric new
developments
New developments are 100%
electric. Continued focus on
innovation and design changes to
improve efficiency.
* We recognise that we may have left over emissions that are difficult to reduce.
We will work to fund high quality offsets for those emissions.
59
Lifestyle Communities Annual Report 2023 CLIMATE ACTION
Traditionally this means a reduction in our Scope 1 and 2 emissions. However, due
to the unique nature of our communities and our operational control of the energy
procurement mix, we have expanded this target to include the Scope 3 emissions
generated by our homeowners’ energy use.
We believe that through our solar PV and microgrid program of work, we can
provide access to renewables for our homeowners – which means that we can
directly influence their emissions profile at the source.
Generate
where we can*
Buy where we
can’t generate
Measure, report
and track
Optimise on-site
solar generation in all
communities.
Buy an increasing amount
of green power (from
renewables) from the grid
over time.
Measure and report
on emissions every year,
improving as we
go along.
60
CLIMATE ACTION
Greenhouse Gas (GHG) inventory
Since 2019, we have measured our Greenhouse Gas Inventory annually. We align our reporting
with the Green House Gas (GHG) Protocol.
(Tonnes of carbon)
Scope 1 (direct emissions)
Scope 2 (Lifestyle electricity)
Total Lifestyle emissions
Scope 3 (homeowner electricity)
Total Lifestyle and homeowner emissions
Homes under management (end of year)
GHG emissions per home (Established Communities) (tonnes)
1 May include unaccounted for construction emissions
2. Average across established communities
Baseline
CY 2022
Change
vs. baseline
Relative to %
growth in homes
400
1,938
2,338
6,069
8,407
2,284
3.68 1
823
2,344
3,167
8,494
11,662
3,167
3.02 2
105.8%
20.9%
35.5%
39.9%
38.7%
38.7%
A note on challenges affecting data collection
and continuous improvement
Our developments in progress involve a mix of
construction usage and homeowner usage. As such,
we acknowledge that some of the data from our
developing sites may not provide an accurate picture
of our emissions split between development and
operations.
Our reported total emissions are accurate to the best
of our knowledge and based on metered data. We
are working to develop more accurate reporting and
monitoring systems across our communities and will
learn from the challenges of applying our boundaries to
developing communities.
Average
Lifestyle House *
Typical
1-person house
in the suburbs
Typical 2-person
house in the
suburbs
3.02 tonnes
5.2 tonnes
8.1 tonnes
of carbon per annum
of carbon per annum
of carbon per annum
* Established Community
The “typical” house above refers to an average home in Broadmeadows Victoria with no pool, using gas for heating and cooking,
modelled using the Governments energy made easy website: energymadeeasy.gov.au.
61
Lifestyle Communities Annual Report 2023 CLIMATE ACTION
62
OUR BOARD AND GOVERNANCE
Our Board and governance
L ifestyle Communities’ governance framework
plays a critical role in helping the business deliver
on its strategy. It provides the structure through
which business objectives are set, performance
is monitored, and risks are managed. It includes a
framework for decision making across the business
and provides guidance on the standards of behaviour
expected of Lifestyle Communities’ people.
The Board is accountable to securityholders and
responsible for demonstrating leadership and oversight
so that the operations of Lifestyle Communities
are managed effectively. The Board’s governance
objectives are to:
• Uphold and support the culture and values of
Lifestyle Communities;
• Positively contribute to the performance
of the Company, including the creation of
shareholder value; and
• Increase the confidence of all stakeholders
including homeowners, securityholders, employees,
suppliers, and the broader community
Reporting suite
Lifestyle Communities’ reporting suite for FY23 includes the following documents:
FY23 Annual Report
A review of Lifestyle Communities’ financial and operational performance for FY23, the Group’s
remuneration report and its financial statements.
FY23 Results Presentation
An overview of Lifestyle Communities’ operational and financial performance for the financial year.
Corporate Governance Statement
An overview of Lifestyle Communities’ governance framework and practices.
Modern Slavery Statement
An overview of Lifestyle Communities’ approach to Modern Slavery risks in its supply chain.
Copies of all of the above reports are available for download at: lifestylecommunities.com.au
63
Lifestyle Communities Annual Report 2023 OUR BOARD AND GOVERNANCE
Philippa Kelly (Chair)
Non-Executive Director
(LLB, F Fin, FAICD)
James Kelly
Managing Director
(BBldg)
Term of office: James was appointed
Managing Director in September 2007
and is one of the founders of Lifestyle
Communities Limited.
Independent: No
Age: 64
Experience: Experience: With over
40 years’ experience in property
development and construction, James
brings to Lifestyle Communities a
wealth of knowledge and experience in
the property industry.
Prior to establishing Lifestyle
Communities, James held several
senior management roles in property
and related sectors, including CEO
of Dennis Family Corporation and
roles at Coles Myer and Lend Lease
Corporation.
Committee memberships: James
attends Board and Committee
meetings.
Current directorships/other
interests: James is the founding Chair
of the Residential Land Lease Alliance,
the peak body for the land lease
industry. He is also the Chair of the
Blue Sky Foundation, a foundation he
set up to research and focus on youth
mental health.
Past Directorships of other listed
entities within the last 3 years:: Nil
Term of office: Philippa was appointed
to the Board of Lifestyle Communities
Limited as a Non Executive Director
on 18 September 2013, re-election
required at the AGM in 2024.
Independent: Yes
Age: 62
Experience: Philippa has more
than 20 years’ experience in senior
operational and leadership roles within
the property sector. She was formerly
Chief Operating Officer of the Juilliard
Group, one of Melbourne’s largest
private property owners. Previously
she was Head of Institutional Funds
Management of Centro Properties
Group (now Vicinity Centres).
Philippa has a background in law and
investment banking, specialising in
IPOs and mergers and acquisitions.
She has extensive experience across
governance and risk management,
property, and finance.
Committee memberships: Member
of the Audit Committee and the
Remuneration and Nominations
Committee.
Current directorships/other
interests: Philippa is currently
an independent director of
AustralianSuper and Chair of its
Investment Committee. She is also a
Non-executive Director of oOh!media
(ASX:OML) and Hub Australia.
Past Directorships of other listed
entities within the last 3 years: Nil
Philippa is not related to James Kelly,
Managing Director.
Directors have been in office since the start of the financial year to the date
of this report unless otherwise stated.
The Honourable Nicola Roxon
Non-Executive Director
(BA/LLB (Hons), GAICD)
Term of office: The Honourable
Nicola Roxon was appointed to the
Board of Lifestyle Communities
Limited as a Non-Executive Director on
1 September 2017, re-election required
at the AGM in 2025.
Independent: Yes
Age: 56
Experience: Ms Roxon started
her professional life as an industrial
lawyer and has more than 20 years’
experience in law and the public sector,
with deep industry knowledge of the
health, government and professional
services sector.
Prior to her non-executive director
career, she spent 15 years in federal
politics, including serving as Federal
Attorney General and Federal Minister
for Health and Ageing in the Rudd &
Gillard Governments.
Ms Roxon has been a non-executive
director for the last decade, serving on
boards of not-for-profits, unlisted and
ASX listed companies.
Her previous Non-Executive roles
include Chair of Cancer Council
Australia, the Accounting Professional
and Ethical Standards Board and the
Sir Zelman Cowen Centre at Victoria
University and Director of BUPA, UTA
and Health Justice Australia.
Committee memberships: Nicola is
a member of the Remuneration and
Nomination Committee.
Current directorships/other
interests: Nicola’s current roles are
as Chair of HESTA Superannuation
Fund and VicHealth, and as a Director
of Dexus and the Murdoch Children’s
Research Institute. Ms Roxon also
chairs the ESG Committee of Dexus.
Past Directorships of other listed
entities within the last 3 years:: Nil.
64
OUR BOARD AND GOVERNANCE
David Blight
Non-Executive Director
(BAppSC)
Mark Blackburn
Non-Executive Director
(Dip of Bus (Acc) GAICD)
Claire Hatton
Non-Executive Director
(BSc (BA), MBA, GAICD)
Term of office: David Blight was
appointed to the Board of Lifestyle
Communities Limited as a Non-
Executive Director on 15 June 2018, re-
election required at the AGM in 2024.
Term of office: Mark was appointed
to the Board of Lifestyle Communities
Limited as a Non-Executive Director on
1 December 2019. Re-election required
at the AGM in 2023.
Independent: Yes
Independent: Yes
Age: 61
Age: 66
Experience: Mark has 23 years’
experience as a CFO in both listed and
unlisted companies in the financial
services, manufacturing, and mining
sectors.
In particular, Mark has expertise in
financial management and advice, the
management of financial risks, capital
management as well as leading key
strategic projects including acquisitions
and divestures.
Mark retired as Group CFO and
Company Secretary of McMillan
Shakespeare in December 2020.
Committee memberships: Mark
is currently Chair of the Audit
Committee.
Current directorships/other
interests: Mark is currently a
Non-Executive Director of Pro-Pac
Packaging Limited where he is also the
Chair of the Audit, Business Risk, and
Compliance committee.
Past Directorships of other listed
entities within the last 3 years: Nil
Experience: David Blight was
appointed to the Board of Lifestyle
Communities Limited as a Non-
Executive Director on 15 June 2018. He
is also Chair of the Remuneration and
Nomination Committee.
David has over 40 years of experience
in property investment, development
and fund management in Australia
and globally. He is currently the Chief
Investment Officer of ARA Private
Funds, the private equity real estate
business of the ESR Group.
Prior to this he was the CEO and
co- founder of ARA Australia, the
Australian business of Singapore based
ARA Asset Management, prior to it
being acquired by the ESR Group in
January 2022.
David’s previous roles include Vice
Chairman of ING Real Estate and
Global Chairman and CEO of ING
Real Estate Investment Management
based in The Netherlands. He has also
held senior executive positions with
Armstrong Jones, Mirvac Group and
APN Property Group.
Committee memberships: David
is the Chair of the Remuneration and
Nomination Committee.
Current directorships/other
interests: Nil.
Past Directorships of other listed
entities within the last 3 years: Non-
Executive Director of Japara Limited.
Term of office: Claire Hatton was
appointed to the Board of Lifestyle
Communities Limited as a Non-
Executive Director on 1st May 2022,
re-election required at the AGM
in 2025.
Independent: Yes
Age: 52
Experience: Claire has 23 years of
experience working in digital business
and 28 years of senior international
business experience in travel and
technology industries across Australia,
Asia, and the U.K.
Most recently, as an executive, Claire
spent seven years on the Google
Australia and New Zealand commercial
leadership team.
Committee memberships: Claire is a
member of the audit committee.
Current directorships/other
interests: Claire is a Non-Executive
Director of Farleigh Holdings Pty Ltd
(formerly Australian Pacific Travel
Group), and a Non-Executive Director
of ASX-listed company Tyro Payments
Ltd (ASX: TYR). She is also the Co-
Founder and Director of Full Potential
Labs, a leadership development
company working with global
technology firms.
Past Directorships of other listed
entities within the last 3 years:
Non- Executive Director of 3P Learning
Limited.
Directors have been in office since the start of the financial year to the date
of this report unless otherwise stated.
65
Lifestyle Communities Annual Report 2023 OUR BOARD AND GOVERNANCE
Company Secretaries
Darren Rowland
(B Bus (Acc), CA, GAICD)
Anita Addorisio
(MPA, FCPA, FGIA)
Term of office: Darren was appointed as Company
Secretary on 9 July 2018.
Term of office: Anita joined the Lifestyle Communities team
as Company Secretary in December 2021.
Age: 43
Age: 48
Experience: Darren joined the Lifestyle Communities team
as Chief Financial Officer in May 2018. He has over 20 years’
experience as a Chartered Accountant and has previously
held a number of senior finance and commercial roles with
Toll Holdings Limited predominantly in the resources and
marine logistics industries. Prior to joining Toll, Darren gained
valuable experience in commercial and finance roles based
in Dublin and London and professional services in Brisbane.
Experience: Anita is an experienced finance professional
with 20 years’ experience in senior finance roles within
public and private entities across IT technology, mining,
industrial and public practice sectors, including 7+ years ASX
listed company secretary experience.
Anita specialises in corporate governance, secretarial
support and statutory financial reporting. Her expertise also
extends to IPO’s, capital raisings, acquisitions, takeovers and
restructures.
Director’s interests
Director
James Kelly
Philippa Kelly
The Honourable Nicola Roxon
David Blight
Mark Blackburn
Claire Hatton
Fully paid
ordinary shares
7,077,001
75,000
7,000
11,000
8,000
1,760
There are no outstanding options over ordinary shares issued to Directors.
Non-Executive Directors’ Share Holding Policy
Lifestyle Communities introduced the Minimum Non-
Executive Director Shareholding Policy in FY20 which
requires all Non-Executive Directors to hold a minimum
shareholding in Lifestyle Communities equivalent to
100% of their annual base fee.
Non-Executive Directors are required to acquire their
target shareholding independently. The shareholding
does not comprise part of the remuneration package.
Non-Executive Directors have five years in which to
purchase their shareholding requirement. The five-
year period will commence from the later of the date
the policy is adopted, or the Non-Executive Director
takes up their position. Once the equivalent of a Non-
Executive Director’s annual base fee has been acquired
in shares, the Non-Executive Director does not need
to adjust shareholdings when there is an adjustment
of the share price. On reappointment to the Lifestyle
Communities board, each Non-Executive Director
must reassess their shareholding and top up to the
new base fee.
Directors have been in office since the start of the financial year to the date
of this report unless otherwise stated.
66
OUR BOARD AND GOVERNANCE
Our approach to corporate
governance and risk
In recognising the need for the highest standards
of corporate behaviour and accountability, the
Directors of Lifestyle Communities Ltd support
and have adhered to the ASX principles of
corporate governance. The Company’s Corporate
Governance Statement is published on its website at
lifestylecommunities.com.au.
Corporate governance framework
The roles, responsibilities and accountabilities of
the Board and Board Committees are articulated
in the Board and Board Committee Charters,
which are available on the Company’s website at
lifestylecommunities.com.au. The framework is
summarised below:
The Board meets as often as necessary to
discharge its responsibilities. This requires
Board members to attend Board meetings
each year, the Annual General Meeting,
Committee meetings and unscheduled
meetings as required.
Board meetings are typically held in
our South Melbourne office but also
include scheduled visits to projects under
development and established communities.
The Board also regularly meets with the
Executive Leadership team including
functional deep dive presentations and bi-
annual strategy sessions.
In addition to these meetings, Directors also
attend regular community visits outside of
the scheduled Board program. This includes
community events, town halls, and charity
functions. These visits enable Directors to
maintain the required deep understanding of
the activities and operations of the Company.
These events present further opportunities
for engagement with our homeowners
and our team.
Security Holders
Board of Directors (including ESG and Risk)
Audit Committee
Remuneration and
Nomination
Committee
Independent
Assurance
(external audit, legal
and other professional
advice)
Board reserved powers and delegation of authority
Managing Director
Leadership Team
Our Team
67
Lifestyle Communities Annual Report 2023 OUR BOARD AND GOVERNANCE
68
OUR BOARD AND GOVERNANCE
Key Board activities during FY23
Key matters considered by the Board during FY23 are outlined below:
Chair’s matters
Board composition, succession planning,
performance and culture
Strategic matters
Portfolio and strategy
People, culture, social value and other
significant items
Capital allocation and funding
Monitoring and assurance matters
Includes matters and/or documents
required by the Group’s constitutional
documents, statute or by other external
regulation
Committee succession;
Board composition, evaluation and succession;
Board evaluation;
Director training and development;
Corporate governance updates;
Employee indemnification policy; and
Managing Director’s performance review.
Approving land acquisitions and commencement of construction at new
developments;
Approving the strategic roadmap, 5-year plan and core business settings;
Risk Management Framework and risk appetite;
Quarterly reviews of each development in progress;
Climate change – external landscape and risk exposure;
Capital management framework and alternatives;
Economic and geopolitical landscape;
Innovation and technology update; and
Cyber resilience and risk review.
Culture and capability, including capability deep dives;
Succession planning;
Employee share scheme;
Employee Engagement Survey results, including actions that will be taken
based on the findings;
Inclusion and diversity update;
Payroll review;
Supplier payment terms; and
Gender pay gap review and reporting.
Dividend policy and dividend recommendations;
Capital prioritisation and portfolio development options;
Capital execution watch list;
Balance sheet and liquidity management;
Finance and business performance reports;
Annual group and individual project budgets;
5-year capital requirements; and
Funding updates and cash flow reporting.
Investor relations reports;
MD and CFO reports, including updates on safety and sustainability,
financial and operational performance, external affairs, markets, people and
projects
Risk review session;
Non-financial risk management;
Approval of the MD’s remuneration;
Review and approval of half-year and full-year financial results;
Review and approval of the Annual Reporting suite;
Physical site visits;
Regular development updates; and
Director evaluations.
69
Lifestyle Communities Annual Report 2023 OUR BOARD AND GOVERNANCE
Board Committees
The Board has established two standing Committees, each operating under a separate Charter which sets out
their responsibilities. Copies of the charters are available on our website.
Board of Directors
Audit Committee
Areas of focus during FY23 included
Responsibilities
To assist the Board in fulfilling its
corporate governance and oversight
responsibilities relating to the integrity
of Lifestyle Communities’ financial
reporting and external audit functions.
Remuneration and Nomination
Committee
Responsibilities
To assist the Board in fulfilling
its responsibilities relating to the
composition and performance of
the Board, Board appointments and
succession planning.
To assist the Board in fulfilling its
responsibilities in relation to the
remuneration of the Chair and other
Non-executive Directors, performance
and remuneration of, and incentives for,
the Managing Director and Executive
Leadership Team, remuneration
strategies, practices and disclosures,
and management programs to
optimise the contributions of Lifestyle
Communities’ people and to support
and further corporate objectives.
Ensuring the integrity and reliability of financial reports and financial statements;
Ensuring that adequacy of the internal control framework of the Company and
that appropriate internal controls are implemented by management, including the
appropriateness of accounting judgments or choices;
Considering and reviewing the scope of work, reports and activities of the
external auditor, including the recommendations for the appointment of the
external auditor and the fees payable to the external auditor for audit and non-
audit work;
Overseeing and appraising the quality and effectiveness of the external audit
function, including the performance and independence of the external auditor;
Considering and reviewing the scope of work, reports and activities of
independent investment property valuers;
Complying with applicable legal and regulatory requirements;
Considering the requirement for any internal audit activities;
Reviewing the annual Corporate Insurance program and give consideration to the
level of cover required; and
Overseeing the tax governance framework and its application to manage
compliance with tax laws.
Our human resources and remuneration strategies, policies and practices;
The remuneration framework for all team members including in particular,
benefits and recognition;
The contract terms, incentive arrangements, retirement and termination
entitlements for the Executive Leadership Team;
Approval and governance of the equity incentive scheme;
Review and oversight of performance management and learning and development
plans under our bespoke ROADMAP framework;
The appointment of remuneration consultants;
The criteria for Board membership and identify specific individuals for nomination;
The processes for the review of the performance of individual Directors and the
Board as a whole;
The appointment and re-election of Directors;
Plans to manage the succession of the Managing Director and the Executive
Leadership Team;
Monitoring legislative and corporate governance developments in relation to
employment and remuneration matters relevant to Lifestyle Communities
Wage and award compliance review;
Shareholder engagement;
Workforce planning, including gender diversity targets; and Workplace Gender
Equality Agency (WGEA) reporting.
See Remuneration Report on pages 89 to 107 for further information.
70
OUR BOARD AND GOVERNANCE
Meetings of Directors
The number of meetings of Directors (including meetings of committees of the Board)
held during the time the Director held office or was a member of the committee during the
financial year and the number of meetings attended by each of the Directors are:
Director’s Meetings
Audit Committee
Remuneration and
Nomination Committee
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
13
13
13
13
13
13
13
12
13
12
13
13
4
–
–
–
4
4
4
–
–
–
4
4
5
–
5
5
–
–
5
–
5
5
–
–
Philippa Kelly
James Kelly
The Honourable Nicola Roxon
David Blight
Mark Blackburn
Claire Hatton
71
Lifestyle Communities Annual Report 2023 OUR BOARD AND GOVERNANCE
72
OUR BOARD AND GOVERNANCE
Our approach to risk
At Lifestyle Communities, we recognise we have a
duty of care to our homeowners, employees, investors,
and the wider community to ensure all risks in our
communities and business are appropriately managed.
At the forefront of our approach is our culture. As a
‘Business for Purpose’ we are focused on exceeding
expectations and maintaining a level of professional
and personal conduct that delights our customers,
teammates, investors and the broader community.
Lifestyle Communities recognises that making business
decisions which involve calculated risks, and managing
these risks within sensible tolerances, is fundamental
to creating long term value for security holders and
meeting commitments to Lifestyle Communities’
homeowners, employees, business partners and
the communities in which it does business. Lifestyle
Communities conducts risk assessments at critical
decision points during the investment and operational
phases of our business to identify, manage and monitor
risks in meeting target returns.
We will take commercial risks where we have the
capability to manage those risks and we recognise
the importance of building and fostering a risk
aware culture. Through setting standards, adopting
processes and undertaking training, we aim to develop
a disciplined and constructive control environment in
which all team members understand their roles and
obligations and take responsibility for risks and controls
in their area of authority.
Lifestyle Communities’ risk management framework
consists of multiple layers:
1. Our Culture: All employees are responsible
for managing risk through identification,
assessment, and treatment of risks. This includes
the implementation, active management
and compliance with appropriate processes,
procedures, checklists and other controls.
2. Our Leadership Team: Responsible for developing
the risk management framework and for adapting
it to changes in the business and the external
environment in which the Group operates
(including physical and regulatory changes which
might impact our social and environmental
performance). Members of the Leadership
Team are jointly responsible for building risk
management capabilities throughout the business
through actively engaging with Employees in risk
management processes and supporting training
initiatives.
3. Internal Controls and Reporting: The Group’s
internal control processes are in place to ensure
that information is reported to the Leadership
Team, and the Board of Directors of the Company
(“Board”) if appropriate, on a regular basis.
4. The Board and Board Committees: The Board
oversees our risk management framework and
delegates particular focus areas to the respective
committees.
5. External Audit: Our external auditor provides
regular and independent assessment on the
effectiveness of financial controls and processes
in connection with the preparation of Lifestyle
Communities’ financial statements and governance
disclosures. External Audit also provides an opinion
on the accuracy, validity and reliability of disclosed
data and information.
73
Lifestyle Communities Annual Report 2023 OUR BOARD AND GOVERNANCE
Board effectiveness
Lifestyle Communities is committed to having a
Board whose members have the capacity to act
independently of management and have the collective
skills and diversity of experience necessary to optimise
the long-term performance of Lifestyle Communities
to deliver long term sustainable profitable returns to
shareholders. The Board undertakes an annual review
of its effectiveness across a range of dimensions to
identify strengths and areas for development.
The Board models its activity on the best practice
guidance set out in the ASX Principles and
Recommendations, as described in the Company’s
Corporate Governance Statement available on the
Company website at lifestylecommunities.com.au.
Board composition
The Board currently comprises one Executive Director
and five Non-Executive Directors. The membership of
the Board is reviewed periodically having regard to the
ongoing and evolving needs of Lifestyle Communities.
The Board considers a number of factors when
filling vacancies including qualifications, skills and
experience, independence, tenure and diversity.
Board skills matrix
The Board has identified a range of core skills and
experience that will assist the Board collectively to fulfil
its oversight role effectively. The Board believes that it
has the right experience and skills currently to oversee
the high standard of corporate governance, integrity
and accountability required of a professional and
ethical organisation as shown in the diagram below:
E
C
N
R I E
E
P
X
E
People
D
N
S A
L
IL
K
S
Leadership
Customer
Engagement
Sales and Consumer
Marketing
Property
Development
Property
Investment and
Management
Average tenure is 6.9 years
Finance
and Capital
Management
Mergers and
Acquisition
Technology
including Digital
Legal and
Compliance
Workplace Health
and Safety
Government Affairs
and Public Policy
25%
50%
75%
100%
Risk
Management
Strategy
Sustainability
Corporate
Governance
74
OUR BOARD AND GOVERNANCE
The Company’s key
opportunities and risks
Lifestyle Communities has 10 key
enterprise risks and opportunities. These
are identified through application of
our Risk Management Framework and
are reviewed and stress tested on a
quarterly basis. Each one has a cascade
of operational, market based, and
financial risks and opportunities which
are consolidated into these key themes
to allow for a portfolio view to be placed
across the business.
Why it’s important
Commentary
Although the risks have been described individually,
there is a high level of interdependency between them.
This means an increased exposure for one material risk
can drive elevated levels of exposure in other areas of
our risk profile.
In addition to these material risks, our performance
may be impacted by risks that apply generally to
Australian businesses and the property development
and management industry, as well as by the
emergence of new material risks not reported in the
following table.
Our Homeowners
It is important our homeowners have a
high level of satisfaction and safety, and
our communities are well managed
Well managed communities provide a safe and connected living environment
for our homeowners, generate new sales from homeowner referrals, add
to the Lifestyle Communities brand, assist in facilitating resales of existing
homes; and improve the profitability of the community management business.
We maintain a transparent marketing, sales, and contract process, undertake
careful selection of our community management teams, and maintain our
community facilities, common areas, and gardens to a high standard. We have
a governance process set up at every community to receive regular feedback
from our homeowners.
We continue to evolve our product offering including the recent launch of
Club Lifestyle which provides free holidays to all homeowners at our purpose-
built facility on the Bellarine Peninsula.
Our Team’s Health, Safety and Well-being
If we expect our team to deliver the
highest levels of customer service and
experience to our homeowners it is crucial
that we retain, reward, and invest in our
team and provide them with a workplace
that is happy, healthy, and safe.
We regularly engage with our team and provide multiple forums for them
to share their feedback including employee engagement surveys and pulse
surveys on specific topics.
Our salaries and benefits are regularly benchmarked to ensure our team are
paid market rates.
We are growing our core capabilities through active talent management and
targeted professional employee development programs. We continue to invest
in our core systems and design processes that serve the business as we grow
without over-burdening the team with bureaucracy.
Our Corporate Culture
Our unique culture is critical to our
success. We must maintain and nurture
our culture as we grow.
Lifestyle Communities has built a strong customer centric culture throughout
the business. This has been achieved through a clearly defined set of values
that we use for recruiting, and for measuring the performance of our team. We
are a long-term business, and our team are empowered and encouraged to
make decisions and act in the best interests of Lifestyle Communities and our
homeowners for the long term.
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Lifestyle Communities Annual Report 2023 OUR BOARD AND GOVERNANCE
Why it’s important
Commentary
Site Selection
We select the best sites located close to
infrastructure and other public amenities.
We are patient in waiting for sites that
meet our investment criteria.
Sales and Settlements
As an affordable housing provider, our
financial model relies on the rate of sales
of new and existing homes, the sales price
of new homes (and to a lesser extent
the sales price of existing homes) and
the timing of settlements of new homes
(revenue is only recorded when a sale of a
home is settled).
Community Development
Our homeowners are trusting us to build
them an amazing community and meet the
commitments we make to them during the
sales process.
Financing and Capital Management
Our capital is precious and scarce. We
maintain a disciplined approach to capital
management and use a mix of debt
and our existing equity pool to fund our
growth strategy.
We maintain a comprehensive land pipeline. Our land acquisition strategy
incorporates extensive due diligence on potential new sites which incorporates
population demographics, local amenities, public transport and environmental
factors. We rely on the significant experience we have gained from acquiring
30 sites and developing most of these during the past 20 years.
Our approach is to price our homes at an average selling price less than 80%
of the median house price for the catchment and this helps us mitigate risk
during property cycles. This pricing strategy is a critical determiner in the site
selection process and the acquisition case.
Our customer centric focus helps us generate strong referral rates from
existing homeowners and this helps drive the speed of sales and settlements.
Effective management of the construction program and multiple stakeholders
is important to ensure our customer promises are kept; high quality product is
delivered; cash flow is managed efficiently, and appropriate financial returns
are achieved. We manage our projects using a robust governance framework,
working with a panel of trusted suppliers, and taking a stage-by-stage
approach to construction. This includes close monitoring and management
of price and cost pressures (e.g. commodities, labour, energy), the potential
for further interest rate rises, and changes in consumer spending and
housing choices.
We maintain our balance sheet settings with a margin of safety over and above
the requirements in our funding documents. Our goal is to maintain debt
facilities that have sufficient facility size, headroom and tenure to meet our
committed development plans. We closely monitor our cash flow forecasts
and tightly manage the commencement and rate of development of new
communities to ensure we have sufficient funds to meet our commitments as
and when they fall due.
Due to the capital recycling nature of our business model, we are reliant
on continuing sales and settlements to fund our development pipeline and
remain compliant with the financial covenants in our funding agreements. If
we experience a sustained slowdown in sales and settlements we may need to
slow down our speed of development or undertake other capital management
activities.
Regulatory Compliance and Governance
It’s important to us to do the right thing
and have transparent and productive
relationships in the broader communities
where we operate. We pro-actively
engage with regulators and other
stakeholders to ensure our operating
and financial model is sustainable for
the long term.
We seek to avoid reputational and compliance incidents by implementing a
strong operating and control environment and seeking professional advice in
relation to the management of our legal compliance and tax affairs.
The Company’s operations, business, and financial model are specifically
impacted by how the provisions of the Residential Tenancies Act 1997
(Vic), the Social Security Act 1991 (Commonwealth) and a number of other
legislative schemes are currently interpreted and administered by the relevant
regulatory authorities.
The Company takes an active role in engaging with, and providing submissions
to, the relevant regulatory bodies through its membership and participation
in the Victorian Caravan Parks Association and the Residential Land
Lease Alliance.
76
OUR BOARD AND GOVERNANCE
Why it’s important
Commentary
Cyber Risk, Data Governance, and Business Continuity
It’s important we properly plan for and
appropriately respond to events which
might disrupt our service to homeowners
or our business more broadly.
Our cyber-security framework is aligned to the Australian Essential 8, and
also to the internationally recognised National Institute of Standards and
Technology (NIST) Cybersecurity Framework. Our cyber security posture and
mitigations are regularly reported to and monitored by the Board.
We continued to provide mandatory training for all Employees and undertook
a series of phishing simulations to educate our team on the important role they
play in helping to mitigate cyber risks. We will continue to undertake cyber risk
mitigation activities and system improvements on a rolling basis.
Our technology systems utilise dual data centres and cloud services to
make sure critical business systems have high levels of redundancy with
resiliency embedded across our ecosystem. In the event of a disruption, we
have information technology recovery plans in place for critical systems.
We have also retained industry experts to be on call in the event of a cyber-
security incident.
Our product and operating model have been deliberately designed to address
inequality in housing options for Australia’s ageing population. For those
members of society with limited superannuation and savings, creating a high
quality, yet affordable housing option allows our homeowners to free up some
of the equity in their home and help fund an improved standard of living in
retirement.
We are committed to achieving this by integrating sustainability strategies into
our business and adopting innovative techniques and new technology where it
is commercially feasible to help us meet the expectations of the communities
in which we operate and our stakeholders more broadly.
Corporate Sustainability
We’re a business for purpose. It’s
important we comply with regulatory,
societal and investor expectations
of corporate and environmental
sustainability, such as social responsibility
and climate change, to ensure our
business is sustainable for the long term.
77
Lifestyle Communities Annual Report 2023 OUR BOARD AND GOVERNANCE
Governance policies
• Code of Conduct — articulates the behaviour
expected of Lifestyle Communities’ Directors
and employees, who are expected to align their
actions with the code and Lifestyle Communities’
values whenever they are representing Lifestyle
Communities.
• Procurement Policy and Supplier Code of
Conduct — defines the standard required
from third parties when working with Lifestyle
Communities, and confirms Lifestyle Communities’
commitment to a sound culture of compliance and
ethical behaviour.
• Communications and Continuous Disclosure
• Enterprise Risk Management Framework —
Policy — establishes our procedure for compliance
with Lifestyle Communities’ continuous disclosure
obligations and provides guidance for the
identification of material information and timely
disclosure of Lifestyle Communities’ activities to
the market.
• Diversity Policy — Contains our commitment to
creating and maintaining an inclusive workplace
that embraces and celebrates diversity and to
create positive experiences for all.
• Securities Trading Policy — prohibits Lifestyle
Communities Directors, employees, contractors
and their related parties from dealing in Lifestyle
Communities securities if they are in possession of
inside information and provides for open periods
during which Directors and employees may trade,
subject to any required approvals being obtained.
• Fraud, Corruption and Bribery (Prevention and
Awareness) Policy — Contains our commitment to
achieving the highest corporate standards and will
not tolerate unethical or unprofessional behaviour
including fraud, bribery and corruption.
provides guidance and direction on the
management of risk in Lifestyle Communities and
states Lifestyle Communities’ commitment to the
effective management of risk.
• Tax Governance Framework — provides
guidance and direction on the management of tax
governance in Lifestyle Communities and states
Lifestyle Communities’ commitment to manage
its tax affairs in a transparent, equitable and
commercially responsible manner, whilst having full
regard to all relevant tax laws, regulations and tax
governance processes.
• Whistleblower Policy — encourages Lifestyle
Communities Directors, employees, contractors
and suppliers who have witnessed, or know about,
any misconduct or suspected misconduct to speak
up without fear of intimidation, disadvantage
or reprisal.
78
OUR BOARD AND GOVERNANCE
Our approach to tax
Lifestyle Communities manages its tax affairs in a
transparent, equitable and commercially responsible
manner, whilst having full regard to all relevant tax
laws, regulations and tax governance processes.
Our Tax Governance Framework sets out the key
principles adopted by Lifestyle Communities’ which
are summarised as follows:
• Maintain compliance with all relevant tax laws,
regulations, and tax governance processes, to
demonstrate good corporate citizenship;
• A low tax risk appetite that ensures Lifestyle
Communities remains a sustainable business and a
reputable and attractive investment proposition;
• A commitment to engage and maintain relationships
with tax authorities that are open, transparent and
co operative; and
• An operating and trading business based in
Australia, with no strategic intentions of engaging
in any tax planning involving the use of offshore
entities or low tax jurisdictions.
Tax Contribution Summary
In addition to providing affordable housing solutions to
Australia’s ageing population, Lifestyle Communities
contributes to the Australian economy, through various
taxes levied at federal, state and local government
level. In FY23 these totalled more than $16.8 million
and were either borne by Lifestyle Communities as a
cost of our business or collected and remitted as part
of our broader contribution to the Australian Taxation
System. Detailed below are the taxes paid and/or
collected and remitted for the 2023 financial year:
Income Tax
Net GST
PAYG Withholding
State Taxes
Fringe Benefits Tax
Local council rates
FY23
$ million
FY22
$ million
9.3
(3.5)
5.0
4.6
0.2
1.2
16.8
9.6
2.9
3.9
13.5
0.2
1.2
31.3
Note: State Taxes (including Payroll Tax, Land Tax, Stamp Duty, and Growth
Area Infrastructure Contribution)
Commitment to shareholders and
an informed market
Lifestyle Communities is committed to ensuring that
the market as a whole is relevantly and consistently
informed by providing securityholders and the
market with timely, balanced, direct and equal access
to information issued by Lifestyle Communities,
to promote investor confidence in the integrity
of Lifestyle Communities and in the trading of its
securities.
Lifestyle Communities has a Communication and
Continuous Disclosure Policy that has adopted
practices that reflect the intent of the law, corporate
governance best practices, regulatory requirements,
and which best serve the interest of its shareholders
and other stakeholders.
All external communications that include any price
sensitive material are provided to the Board for
approval. In accordance with the Communication and
Continuous Disclosure Policy, all announcements will:
• Be factual;
• Don’t omit material information; and
• Be timely and expressed in a clear and
objective manner.
Lifestyle Communities’ Communication and
Continuous Disclosure Policy is available at
lifestylecommunities.com.au/corporategovernance.
Forward-looking statements
This annual report contains forward-looking
statements, which include all matters that are not
historical facts. Without limitation, indications of, and
guidance on, future earnings, performance and future
operational outcomes, are examples of forward-looking
statements. Forward-looking statements, including
projections or guidance on future earnings and
estimates, are provided as a general guide only and
should not be relied upon as an indication or guarantee
of future performance.
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Lifestyle Communities Annual Report 2023 OUR BOARD AND GOVERNANCE
Proceedings against
the Company
The Directors are not aware of any current or
threatened Court proceedings of a material nature in
which the Company is directly or indirectly concerned
which are likely to have a material adverse effect on
the business or financial position of the Company.
Non-audit services
The Company’s auditor, PricewaterhouseCoopers
was appointed on the 18th November 2019. During
FY23, the Company spent an additional $36,000 with
PricewaterhouseCoopers on advice in relation to the
Company’s tax affairs and equity incentive scheme.
The Directors are satisfied that the provision of these
non-audit services is compatible with the general
standard of independence for auditors imposed by
the Corporations Act 2001. The nature, scope and
timing of these non-audit services means that auditor
independence was not compromised.
Indemnification and insurance of
directors and officers
During the financial year the Company paid premiums
in respect of a Directors’ and Officers’ insurance policy.
The directors have not included details of the
nature of the liabilities covered or the amount of the
premium paid in respect of the directors’ and officers’
liability and legal expenses insurance contracts as
such disclosure is prohibited under the terms of
the contract.
Executive confirmations
(c)
(b) the financial statements and associated notes
of the consolidated entity for the financials
year comply with the accounting standards as
required by section 296 of the Act;
the financial statements and associated
notes for the financial year give a true and
fair view of the financial position of the
consolidated entity as at 30 June 2023 and of
its performance for the period as required by
section 297 of the Act;
(d) there are reasonable grounds to believe that
the Company will be able to pay its debts as
and when they become due and payable; and
(e) any other matters that are prescribed by the
regulation for the purposes of this declaration
in relation to the financial statements and the
associated notes of the consolidated entity
for the financial year are also satisfied.
2. Also, in accordance with ASX Corporate
Governance Council Best Practice
Recommendations 4.2 and 7.2, with regard to
the system of risk management and internal
compliance and control of the consolidated entity
for the year, to the best of our knowledge and
belief, and in each of our opinions:
i.
ii.
the statements given in paragraph (1)
above are founded on a sound system of
risk management and internal compliance
and control which, in all material respects,
implements the policies adopted by the
Board of Directors of the Company;
the risk management and internal compliance
and control systems of the consolidated
entity are operating effectively, in all material
respects; and
iii. subsequent to 30 June 2023, no changes or
other matters have arisen that would have a
material effect on the operation of the risk
management and internal compliance and
control system of the consolidated entity.
The Managing Director and the Chief Financial Officer
have provided a written statement to the Board that:
Events after reporting date
1.
In accordance with the Corporations Act 2001
(“the Act”) section 295A, we, the undersigned,
declare that to the best of our knowledge and
belief, and in each of our opinions:
(a)
the financial records of the consolidated
entity for the financial year have been
properly maintained in accordance with
section 286 of the Act;
The Group had no other matters or circumstances
since the end of the financial year which significantly
affected or may significantly affect the operations of
the Group, the results of those operations or the state
of affairs of the Group in future financial years.
80
OUR BOARD AND GOVERNANCE
FY23 Operating and financial review
Overview
The Company continued to successfully develop and manage its portfolio of affordable
communities during the 2023 financial year. Profit after tax attributable to shareholders was
$81.9 million (2022: $88.9 million).
Financial and Operating Highlights
Key financial data
Revenue
Operating profit after tax
Statutory profit after tax
Cash Flow from Community Operations1
Cash Flow from Development Activities
Operating Earnings per share
Statutory Earnings per share
Total dividend per share
Homes settled
Homes sold2
A$ millions
A$ millions
A$ millions
A$ millions
A$ millions
A$ cents
A$ cents
A$ cents
No. of homes
No. of homes
Average realised sales price new homes (GST incl)
A$’000
Total number of homes (gross)
Total number of homes (after NCI)3
Total number of homeowners
Average age of homeowners
Number of resales settled
No. of homes
No. of homes
No. of homes
Years
No. of homes
Average realised sales price resales (GST incl)4
A$’000
FY23
FY22
Change
Change (%)
232.3
71.1
81.9
29.8
(34.0)
68.1
78.3
11.5
356
443
613
3,549
3,348
5,060
73
178
486
224.4
61.4
88.9
25.8
37.9
58.7
85.4
10.5
401
424
529
3,193
2,992
4,552
73
156
438
7.9
9.7
(7.0)
4.0
(71.9)
9.4
(7.1)
1.0
(45)
19
84
356
356
508
0
22
48
3.5%
15.8%
(7.9)%
15.5%
(190)%
16.0%
(8.3)%
9.5%
(11.2)%
4.5%
15.9%
11.1%
11.9%
11.2%
0.0%
14.1%
11.0%
1. Cash flow from community operations comprises cash flows received from homeowner rentals and deferred management fees
less community operating costs and the net surplus/deficit from providing utilities.
2. Net sales represent deposits on new homes less cancellations.
3. Gross number of homes adjusted for share of communities owned by non controlling interests (NCI).
4. Average realised sales price of resales attracting a deferred management fee.
5.
Included in the table above are several non IFRS measures including operating profit, cash flow from community operations,
cash flow from development activities, and operating earnings per share. These figures have not been subject to audit but have
been provided to give a better understanding of the performance of the Company during the 2023 financial year.
81
Lifestyle Communities Annual Report 2023 OUR BOARD AND GOVERNANCE
Fair value adjustments
At Lifestyle Communities our homeowners purchase
a proportionate share of the clubhouse, recreational
facilities, and all associated infrastructure when they
purchase their home. This helps us build a sense of
community, shared ownership, and pride in where our
homeowners live. Due to this operating model, the
cost of this infrastructure is capitalised to inventory
during development and then classified as costs of
goods sold upon settlement. The initial addition to
the Lifestyle Communities Balance Sheet is the cost
of the underlying land and this is classified as an
investment property.
The Company’s Investment Property Valuation
Policy requires that each asset in the portfolio must
be externally valued at least every two years by an
independent external valuer who is considered an
industry specialist in valuing these types of investment
properties. The independent valuer can only value an
investment property on three consecutive occasions.
For FY23, ten of twenty-three operating communities
have been externally valued by independent
valuers Colliers, M3, and CBRE. For the remaining
communities, the Directors have estimated the fair
value internally utilising inputs from the independent
valuations.
Uplift in value arising from settled
homes during the year (356 new home
settlements FY22: 401)
The uplift created as a result of the
contractual rent increase
Movements as a result of changes to
valuation assumptions
Total Fair Value Adjustment
FY23
$ million
FY22
$ million
43.0
41.9
26.5
15.4
84.9
11.5
39.2
92.6
A combination of new home settlements achieved
in FY23, annual rental increases linked to inflation
and movements in the residential property market,
has resulted in an $84.9m uplift in the value of the
company’s property portfolio (FY22: $92.6m). $69.5m
of this relates to the company’s core operating
activities of converting greenfield land into completed
communities that generate rental annuities. The
balance of $15.4m relates to changes in assumptions
used by the independent valuers to measure the value
of the annuities. The weighted average capitalisation
rate remained steady at 5.14% (FY22: 5.18%). Demand
for high quality land lease assets remains strong as the
sector continues to mature and institutionalise.
The chart below shows the different components of
the investment property balance over the last 5 years.
The fair value adjustment typically comprises three
components:
Investment properties breakdown
1. The value uplift created when a customer settles
on their home and acquires their share of the
infrastructure, which in turn delivers an ongoing
annuity income stream in the form of the land
rental and deferred management fee;
2. The uplift created as a result of the contractual
rent increase applied to settled homes each year;
3. Changes in fair market values due to changes
in valuation assumptions used by independent
valuers and Directors. These typically include
external market factors outside of Lifestyle
Communities’ control such as rent capitalisation
rates, external market price growth assumptions
and other available market data.
In FY23, the Company recorded a fair value increase of
$84.9 million pre-tax and $59.5 million post tax. The
breakdown of the fair value increase for FY23 into the
components above is as follows:
1,200
1,000
800
600
400
200
0
227.9
204.3
229.3
172.7
488.3
530.0
138.0
143.1
355.4
82.7
104.1
212.9
123.4
114.1
256.1
FY19
FY20
FY21
FY22
FY23
Rental stream
Deferred management fee
Undeveloped land
82
OUR BOARD AND GOVERNANCE
The table below shows the average value of settled homes under management compared to the average value of
undeveloped land in the development pipeline. As the undeveloped land is developed and a new home is settled,
a fair value adjustment will be realised as the undeveloped land valuation is replaced by the value of rental and
DMF annuities in the year of settlement.
Homes under management
Value of homes under management (rent + DMF valuation)
Average value per home under management
No. of homes
$000
$000
FY23
3,549
FY22
3,193
FY21
2,792
FY20
2,537
FY19
2,284
734,225
620,959
498,500
370,240
317,092
207
194
179
146
139
Homes in the development pipeline
No. of homes
2,044
2,198
2,302
1,957
Value of land in the development pipeline
Average value per home in the development pipeline
$000
$000
227,925
229,288
138,000
123,362
111
104
60
63
1,279
82,659
65
More information on the valuation of the Company’s investment properties is contained in Note 3.1 of the
financial statements.
Capital management
As part of its continued focus on capital management, in October 2022 the Company agreed terms with its
lending group, The Commonwealth Bank of Australia, National Australia Bank and HSBC Bank Australia, to extend
the headroom in its debt facility by $150 million. The combined facility limit was increased to $525 million. All
other material terms and covenants remained unchanged. The additional headroom will be used to fund the
continued acquisition and development of new sites. The group’s next debt maturity is a $110 million tranche due
in June 2025 with the balance expiring in October 2027.
June 2025
August 2026
October 2027
Debt maturities
$110 million
$265 million
$150 million
83
Lifestyle Communities Annual Report 2023 OUR BOARD AND GOVERNANCE
Debt covenants and key metrics
Lifestyle has three main debt and lending covenants which are regularly stress tested. They are:
LVR<65%
FY23: 45.2%
ICR>2x
FY23: 3.2x
Secured
property %
>85%
FY23: 100%
Key debt metrics
Gross Assets
Interest bearing liabilities
Total debt facilities
Undrawn debt
Net debt/assets less cash and land accruals
Net Debt to debt plus equity
$ millions
$ millions
$ millions
$ millions
%
%
Cash interest paid on drawn debt
$ millions
Weighted average cost of debt
Weighted average debt maturity
Annual interest coverage ratio
Annual loan to value ratio
% of debt fixed
Debt providers
%
Years
Times
%
%
No.
FY23
1,191
371
525
154
33.2%
41.3%
14.7
4.4%
3.3
3.2
45.2
64.8%
3
FY22
1,006
245
375
130
27.5%
34.9%
5.3
2.2%
3.8
6.2
36.9
–
3
Change
Change (%)
185
126
150
24
5.7%
6.4%
9.4
2.2%
(0.5)
(3)
8.3
–
–
18.4%
51.4%
40.0%
18.5%
20.6%
18.3%
177.4%
100%
(13.2)%
(48.4)%
22.5%
64.8%
–
The Company recovers the majority of its interest costs through its development projects and allocates interest
to each project based on its respective debt draw during the construction phase. Sales prices are set using
forward estimates for interest rates which includes an allowance for upward movement as interest rates normalise
following their pandemic lows. These interest rate assumptions are reviewed and retested every 3 months.
Dividends
A fully franked dividend of 6.0 cents per share was
paid on 6 October 2022 (representing the 2022 final
dividend). A fully franked dividend of 5.5 cents per
share was paid on 5 April 2023 (representing the 2023
interim dividend).
The dividend has a record date of 5 September 2023
and a payment date of 6 October 2023. As at 30
June 2023 the franking account balance was $31.3
million (after allowing for the final dividend and tax
payable for FY23).
Since the end of the financial year the Directors
have resolved to pay a fully franked dividend of 6.0
cents per ordinary share (representing the 2023
final dividend).
84
OUR BOARD AND GOVERNANCE
As a general principle, Lifestyle Communities intends to pay dividends out of post-tax operating cashflow
generated from community management including:
• Operating cash flow generated from community management (net rental and DMF)
• Apportionment of corporate overheads attributable to management of the communities (currently 50%)
• Interest on average pre-development debt
• Tax attributed to the above
The chart below shows the growth in full year dividends over time:
Update on communities
Established Communities
15 fully completed Communities
Communities under construction
Wollert
Deanside
St Leonards - The Waves
St Leonards - The Shores
Meridian
Woodlea
Phillip Island
Bellarine
Riverfield (Clyde)
Ridgelea (Pakenham)
Merrifield
New Communities - awaiting commencement
Ocean Grove II 2
Warragul II 2
Clifton Springs 2
Yarrawonga
Total 3
Total homes in
communities
Homes sold
and occupied
Homes sold and
awaiting settlement
Homes occupied or sold
and awaiting settlement
2,864
2,864
2,864
100%
165
134
195
0
161
2
28
32
33
4
27
41
33
62
57
29
12
197
167
199
27
202
35
62
85
29
12
80%
63%
100%
17%
74%
19%
24%
52%
13%
7%
246
266
199
159
274
180
255
164
230
174
187
190
205
210
109
5,912
3,549
330
3,879
66%
1. Represents 100% of the development of which Lifestyle Communities shares 50%
2. Commencement of construction subject to planning approval
3. Lifestyle Communities will have an economic interest in 5,711 home sites
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Lifestyle Communities Annual Report 2023 OUR BOARD AND GOVERNANCE
An update on each of the communities in planning or development at 30 June 2023 is as follows:
Wollert
Deanside
St Leonards
- The Waves
St Leonards
- The Shores
Meridian
Bellarine
Ridgelea
(Pakenham)
Riverfield
(Clyde)
Woodlea
Phillip Island
Merrifield
Wollert commenced construction in October 2019 and welcomed first homeowners in
November 2020. The construction of the clubhouse and community facilities is complete
and was opened in May 2021. Wollert is 80% sold.
Commenced construction in February 2020 and welcomed first homeowners
in February 2021. Construction of the clubhouse and community was opened to
homeowners in June 2021. Deanside is 63% sold.
The Waves was acquired in November 2019 and construction commenced in August
2020. We welcomed first homeowners in June 2021. The Waves is fully completed and
have four homes left to settle.
In June 2021 we acquired the site next door which allowed to create Lifestyle St
Leonards – The Shores. The Shores is due to commence construction in August 2023.
Lifestyle Meridian was acquired in May 2020 and launched for sale in September 2021.
We welcomed first homeowners in May 2022 and The Meridian clubhouse opened in
May 2023. Meridian is 74% sold.
The contract for Lifestyle Bellarine was signed in May 2022 and settled in September
2022. The community had an existing planning permit in place and had some civil works
and clubhouse construction in progress. Lifestyle has taken over the development
including redesign of the site. Settlements commenced in the fourth quarter of FY23 as
well as the launch of our Club Lifestyle short stay proposition.
The land for the future Lifestyle Community in Pakenham was acquired in February
2020. Construction commenced in May 2023 with first customer homes settlements
expected in FY25.
The land for the future community at Clyde Riverfield was acquired in June 2020 on
3-year settlement terms. Given the strong performance of Lifestyle Meridian we brought
forward the settlement date to October 2022 and have commenced construction.
First settlements in the first half of FY24.
The land for the future community at Woodlea was settled in April 2022. Sales were
launched in September 2022 and first homeowners settled in June 2023.
The contract for the future community on Phillip Island was signed in August 2021 and
settled in September 2021. Construction has commenced and first homeowners are
expected to settle in the second half of FY24.
Lifestyle Merrifield is located within the Merrifield estate, one of Melbourne’s flagship
master-planned communities. Construction has commenced and first homeowners are
expected to settle in the first quarter of FY25.
Ocean Grove
A contract of sale to purchase a new site located in Ocean Grove was executed in
December 2021. Land settlement is expected in the first quarter of FY25.
Warragul
The contract for the future Lifestyle Community in Warragul was signed in November
2022. Settlement is expected in first half of FY25 with construction to commence
soon after.
86
The Company’s balance sheet and debt position is
robust. The Company has access to over $155 million
in cash and undrawn facilities. The next refinancing is
due in June 2025. Operating cash flow is underpinned
by the ongoing rental annuities from our 3,549 homes
under management.
We are excited to see the seven new projects launched
in FY23 welcome their first homeowners in the second
half of FY24. These projects are a key catalyst to
deliver the step up in settlements and underpin the
forecast settlement ranges.
OUR BOARD AND GOVERNANCE
Outlook for FY24 and beyond
The Company has a focused strategy to service the
niche of providing high quality affordable housing
to the downsizer market. The Company continues
to focus on Melbourne’s growth corridors as well
as key Victorian regional centres. We are currently
considering a range of opportunities but will remain
disciplined in our assessment of these opportunities.
Under our contracts with customers, homeowners
are provided with a six-month window to settle into
their new home. This can make predicting settlements
difficult in the short term as the move-in date is
selected by the homeowner and outside of Lifestyle
Communities direct control. Due to the long term
nature of our business the company provides guidance
in 3-year ranges which are influenced by the number
of projects in development. The ranges for the relevant
periods are shown below
FY22
FY23
FY24
FY25
FY26
New home settlements
FY22 — 3 year range
1,100 to 1,300
FY23 — 3 year range
FY24 — 3 year range
1,400 to 1,700
1,400 to 1,700
Actual results achieved
401
356
tbc
tbc
tbc
Established home settlements
FY22 — 3 year range
450 to 550
FY23 — 3 year range
FY24 — 3 year range
550 to 750
550 to 750
Actual results achieved
156
178
tbc
tbc
tbc
87
Lifestyle Communities Annual Report 2023 OUR BOARD AND GOVERNANCE
Lifestyle Woodlea
88
REMUNERATION REPORT
Remuneration report
Remuneration Report
Lifestyle Communities Team Summit 2022
89
Lifestyle Communities Annual Report 2022
Remuneration Report
REMUNERATION REPORT
90
REMUNERATION REPORT
Our culture
IN N O VATIO
IN N O VATIO
N
N
E M
E M
P OWER
P OWER
M
M
E
E
N
N
T
T
N S I V ENES
N S I V ENES
O
O
P
P
S
S
E
E
S
S
R
R
C
C
A
A
R
R
E
E
Led from the top, our culture is
shaped by the team living and
breathing these behavioural
traits, allowing us to deliver an
amazing place to work and provide
a wonderful experience to our
homeowners.
E
E
M
M
P
P
A
A
T
T
H
H
Y
Y
K
K
I
I
N
N
D
D
N
N
ESS
ESS
GE
GE
A
A
U
U
G
G
N
N
A
A
POSITIVE L
POSITIVE L
Y
Y
T
T
I
I
A
A
L
L
I
I
B
B
PPROACHA
PPROACHA
T
T
A
A
K
K
IN
IN
G R
G R
ISKS
ISKS
LIST
LIST
ENING
ENING
SIO N
SIO N
S
S
A
A
P
P
UC C E SSES
UC C E SSES
S
S
G
G
N
N
I
I
T
T
A
A
CELEBR
CELEBR
N
N
IO
IO
T
T
I
I
N
N
G
G
O
O
REC
REC
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Lifestyle Communities Annual Report 2023
How we operated
70% women
REMUNERATION REPORT
167
otal Emp l o y
T
e s
e
Gender split for emerging leaders
57%
43%
Women
Men
30% men
Final Employee
engagement score of
9
out
of
10
Breakdown of
employees by age
Gender split for executive team
18–25
4
2% of the workforce
50%
50%
Women
Men
26–35
36–45
46–55
56–65
40
24%
37
22%
23%45
27%
36
22%
Gender split for the Board
66+
5
3%
50%
50%
Women
Men
92
REMUNERATION REPORT
Remuneration report
Dear Shareholders,
On behalf of the Board, I am pleased to present the
Lifestyle Communities Remuneration Report for FY23.
FY23 was a busy year for the team as we commenced
construction on seven new projects. The increase
in construction volume required an uplift in activity
levels right across the business including a 39%
increase in the size of the team. We onboarded new
projects teams which consist of project managers
and customer delivery coordinators, sales and
marketing professionals, and homeowner experience
delivery roles. All these roles needed to be recruited,
onboarded, trained and embedded into the Lifestyle
Communities culture. Alignment with the purpose
and values of our business delivers high performance
and exceptional customer experience outcomes for
our homeowners. It’s a credit to the team that this has
been delivered whilst at the same time increasing the
employee engagement score from 8.7 last year to 9
(out of 10) this year.
The Board continues to recognise Lifestyle
Communities’ strong culture and clear purpose as
a competitive advantage and a key differentiator in
attracting and retaining the best talent in our industry.
In line with this, the Board approved a range of benefits
for the team which included:
• Industry competitive total fixed remuneration
• Lifestyle Communities’ unique employee
share scheme which is available to all
permanent employees
• Lifestyle long weekends, birthday leave, and a
Christmas shopping day
• A new support office located in South Melbourne
• “Wellness dollars” to spend on team well-being
• Flexible working policy
• Growing your family policy
The Board remains committed to a remuneration
framework designed to attract, motivate, and retain
the best talent with capabilities that enable our
customer-centric proposition, and align with our
culture and behavioural expectations. We regularly
review the settings to ensure the framework continues
to support the delivery of the business strategy, as well
as strengthening the alignment of short-term results
and long-term value creation.
The key enhancements to the framework implemented
through the year included:
• An update to the peer group and review of
remuneration settings for senior executive and non-
executive Director roles
• Adjustments to the Short-Term Incentive (STI)
framework to better align outcomes with
performance
• Resetting of the targets for the Long-Term Incentive
(LTI) for the executive team
The Board believes that these enhancements will
further strengthen the alignment of executive and
stakeholder interests.
In FY22 we reviewed our Diversity and Inclusion Policy
and our Parental Leave policy. We stated our intention
to meet or exceed the recommendations of the
Workplace Gender Equality Agency (WGEA). In FY23
we applied for and were successful in being certified
by WGEA as an “employer of choice” for gender
equality. We were also recognised by the Australian
Financial Review as an AFR Top Place to work. We are
very proud of these achievements which are a great
recognition of the focus and effort being applied in this
space right across the business.
In FY23 we made two key executive leadership team
appointments that align to our key strategic priorities,
including Fiona Lloyd, Executive General Manager –
Design and Delivery and Cate Wellington, Executive
General Manager – Experience.
93
Lifestyle Communities Annual Report 2023 REMUNERATION REPORT
In determining the remuneration
outcomes for FY23, the Board
took into consideration business
progress and achievements against
FY23 strategic priorities, the
performance of management as
well as market conditions.
Our focus as a Board is on balancing the delivery of
returns to investors with long-term sustainable business
performance. In determining the remuneration
outcomes for FY23, the Board took into consideration
business progress and achievements against FY23
strategic priorities, the performance of management as
well as market conditions. The outcomes are outlined
in this report and in the Board’s judgment, fairly
reflect the performance of the Lifestyle Communities
business in the current environment.
When reviewing the actual results, the Board carefully
scrutinised the drivers and quality of the results,
summarised as follows:
• Delivery of 356 new home settlements
• Increased annuity income from a higher number
of homes under management, increased resale
settlements, and disciplined cost control
• Disciplined management of project
development budgets
• Maintaining and improving the culture and team
engagement during a period of substantial growth
As in previous years we have maintained a values and
behaviour gateway for our team to meet before any
entitlement to performance incentives. The Board also
retains ultimate discretion in awarding any incentive
payments highlighting the importance the Board places
on our team continuing to deliver for our customers in
the right way.
The committee is in the process of finalising the
remuneration framework for FY24. We will be
maintaining most of the elements of the current
framework, but we will also be reviewing the key
elements of the STI and LTI to ensure the framework
remains fit for purpose and aligned to the business
priorities as we substantially increase production over
the next three years.
In closing, I’d like to thank the team for their
commitment and efforts during the year. After 20
years of consistent and steady growth, it’s impressive
to see the company has not only maintained its values-
based culture but has been successful in embedding
this culture during a period of substantial growth in the
size of the team. As we grow, continuing to live these
values every day and delivering amazing homeowner
experiences consistently will be a key differentiator for
the business for years to come.
David Blight
Chair, Remuneration and Nomination Committee
16 August 2023
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REMUNERATION REPORT
1.
Introduction
1.1 About this report
The Remuneration Report forms part of the Directors’
Report. It outlines the overall remuneration strategy,
framework and practices adopted by Lifestyle
Communities Ltd (the Company) and has been
prepared in accordance with Section 300A of the
Corporations Act 2001 and its regulations. This entire
remuneration report is audited.
Remuneration and Nomination Committee
2.
2.1 Role of the Remuneration and
Nomination Committee
The objective of the Committee is to ensure that
remuneration policies and structures are fair,
competitive, and aligned with the long-term interests
of the Company. A copy of the Committee’s charter is
available on the Lifestyle Communities website.
The Remuneration and Nomination Committee’s key
responsibilities are to make recommendations to
the Board on:
• The Company’s remuneration framework;
• Formulation and operation of Employee
incentive plans;
• Oversight of the selection, appointment and
reappointment of Directors to the Board;
• Remuneration levels of the Managing Director and
other KMP; and
• The level of Non Executive Director fees.
Please refer to page 70 for focus areas of the
Committee during FY23.
2.2 Corporate Governance Practices Specifically
Related to Remuneration
2.2.1 Securities Trading policy
Lifestyle Communities has adopted a Securities
Dealing Policy that applies to all team members
including Non-executive Directors, Executive Key
Management Personnel (KMP), the Executive
Leadership Team (ELT) and their connected persons,
as defined within the policy. This policy sets out the
insider trading laws all team members must comply
with, including specific restrictions with which KMP
must comply. This includes obtaining approval prior
to trading in Lifestyle Communities’ securities and
not trading within blackout periods, other than with
approval in exceptional circumstances as detailed
within the policy. The policy aims to protect the
95
reputation of Lifestyle Communities and maintain
confidence in trading in its securities. It prohibits
specific types of transactions being made which are
not in accordance with market expectations or may
otherwise give rise to reputational risk.
2.2.2 Minimum Shareholding Policy
Lifestyle Communities’ Minimum Non-Executive
Director Shareholding Policy requires all Non-Executive
Directors to hold a minimum shareholding in Lifestyle
Communities equivalent to 100% of their annual base
fee. The shareholding does not comprise part of the
remuneration package and Non-Executive Directors
are required to acquire their target shareholding
independently. Non-Executive Directors have five years
in which to purchase their shareholding requirement
which commences from the later of the date the policy
is adopted, or the Non-Executive Director takes up
their position. Once the equivalent of a Non-Executive
Director’s annual base fee has been acquired in shares,
the Non-Executive Director does not need to adjust
shareholdings when there is an adjustment of the share
price. On reappointment to the Lifestyle Communities
board, each Non-Executive Director must reassess
their shareholding and top up.
2.3 The use of external advisors
Remuneration consultants are engaged from time to
time to provide independent information and guidance
on remuneration for Directors and the Executive Team.
The independent consultants facilitate discussion,
conduct external benchmarking, and provide
commentary on a number of remuneration issues
and structures. Any advice provided by independent
consultants is used as a guide and is not a substitute
for the considerations and procedures of the Board and
the Remuneration and Nominations committee.
During FY23, an independent Remuneration Consultant
was engaged to conduct external benchmarking
for Director fees, Managing Director and executive
team remuneration packages, together with market
insights and trends for consideration by the Board and
Remuneration and Nomination Committee.
Lifestyle Communities Annual Report 2023 REMUNERATION REPORT
3. Details of key management personnel
Commencement
date
18 September 2013
1 September 2017
15 June 2018
1 December 2019
Our Recruitment
Our People
To find, attract, and imbed
market-leading senior talent
who embody our culture and
values, delivering business
priorities aligned to strategy.
Our recruitment ensures our
talent have the required skills,
experience, behaviours and
commitment to purpose—
allowing homeowners to live
a bigger life. We will never
compromise on this strategy.
Our thoughtful investment
in nurturing our people
directly results in our team
delivering impactful and
meaningful experiences to
our homeowners.
We are focused on attracting,
engaging, nurturing,
growing, retaining and
rewarding our team.
We create an environment
where individuals feel valued
for their contribution to
business outcomes.
Directors
Position
Chair of the Board
(appointed 14 August 2019)
Non-Executive Director
Member Audit Committee
Member Remuneration and
Nomination Committee
Non-Executive Director
Member Remuneration and
Nomination Committee
Non-Executive Director
Chair Remuneration and
Nomination Committee
Non-Executive Director
Chair Audit Committee
Philippa Kelly
The Honourable
Nicola Roxon
David Blight
Mark Blackburn
Claire Hatton
Executive
Director
Non-Executive Director
Member of Audit Committee
1 May 2022
James Kelly
Managing Director
Founder, 2003
Other Executive KMP
Darren Rowland
Chief Financial Officer and
Company Secretary
21 May 2018
4. Our People and Culture Strategy
Lifestyle Communities has built a strong customer
centric culture throughout the business. This has
been achieved through a clearly defined set of
values that we use for recruiting, and for measuring
the performance of our team. The 4 pillars of this
strategy are:
Our Remuneration
Our Performance
Our complete remuneration
process keeps us competitive
in the market—retaining
leading talent and rewarding
and recognising the
performance and behaviours
of our team and individual
performance towards
the overall achievement
of company targets and
sustainable value for
stakeholders.
In addition to our individual
performance measures
through our ROADMAP
process, we closely and
continually monitor our
customer referral rate, our
team engagement survey
results and our recruitment
and retention outcomes.
Each of these areas provide
a complete snapshot of the
achievement of our People
and Culture Strategy.
5. Capability and performance
The capability and performance of our team is
assessed using the internal ROADMAP process. The
process includes six-monthly reviews and quarterly
check-ins. Our team are measured equally on their
competency and performance as well as their
demonstrated values and behaviours. Their overall
result in the annual appraisal is mapped on the
performance matrix shown below.
• A result in red requires immediate performance or
behaviour intervention and a clear action plan;
• A result in the orange indicates moderate
performance overall or a team member taking on
new learning objectives; and
• A result in the green indicates a team member who
is delivering outcomes to the highest standards
consistently and delivers further value.
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REMUNERATION REPORT
The ROADMAP process ensures that performance
concerns are identified, addressed, and rectified to
ensure optimum capability of all team members driven
and managed by our Executive Leadership Team (ELT).
This ROADMAP process is used as a behavioural gate
for the equity incentive scheme.
6.2 Managing Director’s Remuneration Strategy
Our Managing Director, James Kelly is a co-founder of
the business and a substantial shareholder in Lifestyle
Communities Ltd. Each year the Committee reviews
his overall remuneration package and conducts
external benchmarking at least every two years.
James has elected not to participate in either the short-
term incentive plan or the long-term incentive plan by
virtue of his significant shareholding in the business.
As a result, the Managing Director’s compensation
comprises of only base salary, superannuation
contributions and a modest car allowance, and remains
significantly below market levels for comparable
businesses and roles. The Board made an adjustment
to James’ base salary in FY23, as detailed in Section 7.1.
The Committee and the Board remain comfortable
that James is fully aligned to the success of the
business due to his substantial shareholding in Lifestyle
Communities.
6.3 Components of Executive Remuneration
Our ELT remuneration is an annual scheme, delivered
through a simple, three element structure using both
fixed and variable (at risk) components (see diagram on
next page).
Performance Matrix
6.
Structure of Managing Director’s and
Executive Leadership Team Remuneration
6.1 Framework
In determining Executive remuneration, the Board aims
to ensure that remuneration practices are:
• Competitive and reasonable, enabling the Company
to attract and retain key talent;
• Aligned to the Company’s strategic and
business objectives and the creation of
shareholder value; and
• Transparent, straightforward, and acceptable to
shareholders.
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Lifestyle Communities Annual Report 2023 REMUNERATION REPORT
Components of executive remuneration
Fixed elements
Variable elements
1. Total Fixed Remuneration (TFR)
2. Short-term incentive
3. Long-term incentive
Cash
Zero exercise price options
Zero exercise price options
How it is delivered
• Consists of base salary and
superannuation
• Fixed remuneration is
benchmarked against market
data from comparable roles,
industry peers and similarly sized
publicly listed companies. A
formal benchmarking exercise is
undertaken every second year, or
sooner where there is a material
role change
Fixed remuneration is structured
to ensure that high quality talent
is attracted and retained, and is
suitably motivated to meet Lifestyle
Communities strategic, cultural and
business objectives.
How it works
• Paid as options to purchase equity
in the company after performance
and vesting conditions met
• Paid as options to purchase equity
in the company after performance
and vesting conditions met
• Team members are required to
• Team members are required to
continuously demonstrate values
and behaviours throughout
the performance and deferred
vesting periods
continuously demonstrate values
and behaviours throughout
the performance and deferred
vesting periods
• 40% of TFR at maximum pro-rated
• 80% of TFR at maximum
(straight line basis)
• Measured against a balance
scorecard consisting of
– new home settlements: 30%
– cash flow from community
operations: 30%
– Team engagement
score: 20%
– Capital recovery: 20%
What it does
Incentivises strong individual and
company performance, based on
strategically aligned deliverables,
through variable, at risk payments.
pro-rated (straight line basis)
• Measured against a balance
scorecard consisting of
– 3-year new home
settlements: 50%
– 3-year average return on
equity: 50%
Aligns reward with creation
of sustainable, long-term
shareholder value.
What are the time horizons of the awards?
FY23
FY24
FY25
FY26
R
F
T
I
T
S
I
T
L
Salary paid during the year
Performance period (1 year)
Vesting period - 50% in Sep 2024
Vesting period - 50% in Jun 2025
Performance period (3 years)
Vesting period - 50% in Sep 2025
Vesting period - 50% in Jun 2026
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REMUNERATION REPORT
6.4 Structure of the Equity Incentive Scheme for the Balance of our Team
In addition to the Executive Incentive Scheme, the Company operates two additional incentive schemes as shown
below. The Employee Incentive Scheme and the Emerging Leaders Incentive Scheme are both short term annual
incentives. The schemes are designed to focus team members on achieving and exceeding various measures
which are critical to the success and growth of Lifestyle Communities.
Each year the Board determines a target range for each of the performance measures and the amount of equity
that will be made available.
Performance measures
Employee Incentive Scheme
STI
STI
Emerging Leaders Incentive Scheme
New Home Settlements
50%
New Home Settlements
100%
Cashflow from Community Operations
50%
The Emerging Leaders Incentive Scheme vests 50% in September 2023 after finalisation of the year end audit,
and 50% in June 2024 which assists with retention. The Employee Incentive Scheme vests in September 2023
after finalisation of the end of year audit and approval by the Board.
6.5 Other governance practices that apply to the equity incentive scheme
Issuance
to Team
Members
Values and
Behaviours
Fair Value
Employee
Share Trust
• Equity is issued to qualifying team members in the form of zero-priced conditional rights to receive ordinary shares (“options”).
• To be eligible to fully participate in the incentive scheme, team members must have been employed by the Company on 1 July of
the performance year and remain employed when the options vest.
• Options are typically issued in the first quarter of each financial year to existing team members, any team members commencing
employment with the Company after 1 July and before 1 April of the performance year are entitled to a pro-rata incentive. ELT
members employed after 1 April in a financial year are not eligible for the Executive Incentive Scheme for that particular year
The Values and Behaviours gateway as a pre-qualification to the entitlement to participate in the Equity Incentive Scheme (EIS)
reinforces the Board and Executive Team’s commitment to maintaining our customer centric culture, demonstrating appropriate
behaviours, and managing risk, compliance, and reputational matters.
For accounting purposes, the fair value has been determined at the grant date for Employees employed prior to 1 July and at
commencement date of Employees that joined the Company during the year. The expense will be recognised over the vesting
periods noted above.
The company currently has two employee share trusts which are administered by independent third parties:
1. FY17 and FY18 Equity Incentive Schemes – Smart Equity Pty Ltd
2. FY19, FY20, FY21, FY22, & FY23 Equity Incentive Schemes – Link Market Services
Board
Discretion
The Board has absolute discretion to determine how options are awarded. The Board also has absolute discretion as to who will
participate, the quantum, the conditions attaching to the award, whether vesting occurs or not (regardless of if and how the
performance conditions have been satisfied) and the treatment of the options in specific circumstances over the life of the options.
Amendment
The Board retains discretion to suspend or terminate the program at any time or amend all or any elements of the program up until
the date of payment.
Clawback
The Board can apply clawback on vested and unvested options or forfeit these awards.
Change of
Control
Dealing in
Securities
Vesting
Cessation of
Employment
The Board has the ability to determine, if a Change of Control Event has occurred or is likely to occur, the manner in which a
Participant’s Awards (whether vested or unvested) will be dealt with.
A participant may not sell, assign, transfer, grant a security interest over or otherwise deal with options that have been granted to
them, unless the Board approves.
Participants are also prohibited entering into any derivative or margin lending arrangements over Lifestyle Communities securities
at any time.
Following testing and completion of the annual audit, the Board will determine the number of Options to vest, which is expected to
occur in late August 2023.
Details regarding the vesting of any Options will be included in the FY24 Remuneration Report.
Following testing, any Options that do not vest will lapse.
In the event of resignation all unvested Options will lapse unless the Board determines otherwise.
99
Lifestyle Communities Annual Report 2023 REMUNERATION REPORT
6.6 The relationship between remuneration and company performance
The remuneration framework has been designed to reward the entire Lifestyle Communities team for their
contribution to the collective performance of Lifestyle Communities and to support the alignment between
the remuneration of the team and shareholder returns. The following table demonstrates the link between the
Company’s remuneration framework and its performance over the last 5 years.
Performance measure
Statutory profit after tax
Dividends declared and paid
Closing share price (30 June)
Share price increase / (decrease)
Employee share scheme expense1
New home settlements in the year
Total homes settled
Total portfolio (settled and unsettled)
Unit
$m
cps
$
%
$m
Homes
Homes
Homes
FY23
81.9
11.5
15.66
15.1%
1.4
356
3,549
5,912
FY22
91.1
10.5
13.6
(13.0)%
2.9
401
3,193
5,391
FY21
88.9
8
15.6
64.2%
1.4
255
2,792
4,834
FY20
42.8
5.5
9.5
43.9%
0.3
253
2,537
4,494
FY19
55.1
5.5
6.6
11.9%
0.9
337
2,284
3,563
Note:
1. Due to the Covid pandemic, the share options issued for FY21 were reduced by 40%. This, coupled with share price growth, is the main driver of the
increase in share scheme expense for FY22 relative to FY21. The new home settlement targets were not met in FY23 resulting in a lower expense
for this year.
The chart below shows the total shareholder returns for Lifestyle Communities relative to the ASX200
accumulation index over the last 5 years
LIC total shareholder return (TSR) from 1 July 2018 to 30 June 2023
330%
280%
230%
180%
130%
80%
30%
(20)%
164.79%
42.80%
Jun-18
Dec-18
Jan-19
Dec-19
Jun-20
Dec-20
Jun-21
Dec-21
Jun-21
Dec-21
Jun-21
LIC
ASX 200 Acc Index
100
REMUNERATION REPORT
Remuneration details for FY23
7.
7.1 Managing Director
The total remuneration for the Managing Director
(inclusive of superannuation) in FY23 was
$900,000 and included a $20,000 car allowance
as compensation for the extensive travel required
between the Company’s communities. The Managing
Director does not participate in any short term or long-
term incentive plans.
External benchmarking indicates that the Managing
Director’s remuneration remains low relative to peers
in the market. To address this, and to minimise the
one-off impact on the business in a particular year,
the Managing Director’s salary has been progressively
increased to bring it into line with market over time.
The table below demonstrates the movement in salary
for FY22, FY23, and the approved salary for FY24.
$000’s
Total fixed compensation
FY22
750
FY23
900
FY24
1,050
As noted in section 6.2, due to his substantial
shareholding, the Managing Director does not
participate in either the short-term or long-term
incentive plans. The Board will continue to monitor
the Managing Director’s total fixed compensation and
adjust as appropriate.
the contract at any time without notice if serious
misconduct has occurred. The Managing Director
has a three-month restrictive period post termination.
There are no other termination payments provided for
in the Managing Director’s contract.
7.2 Executive Team (ELT)
Fixed remuneration for the executive team is reviewed
in the annual ROADMAP process. Increases to fixed
remuneration take into account performance and
external market and role benchmarking. The Executive
Incentive Scheme is a percentage of TFR for each ELT
member. This is detailed in section 6.3.
There were no other material changes to Senior
Management service agreements during FY23.
Significant conditions
Under the terms of all agreements, the contracts
may be terminated by either party giving three
months written notice. The Company may terminate
the contracts at any time without notice if serious
misconduct has occurred.
FY23 Executive Leadership Team (ELT) Short Term
Incentive (STI) Remuneration Outcomes
Following a market review, the Board enhanced the
structure of the ELT STI to ensure the following:
There were no other material changes to the Managing
Director’s service agreement during FY23
• We can retain our leading talent in a highly
competitive environment;
Significant conditions
Under the terms of the agreement, the contract
may be terminated by either party giving three
months written notice. The Company may terminate
• Reward for effort and outcomes closely aligned to
our business outcomes; and
• Recognition of the strong business performance led
by the ELT to date.
The STI had a 1-year performance period and the following performance metrics
Description
Weighting Target
New Home Settlements continues as one of the
main operational performance metrics as it is a key
driver of earnings growth and shareholder value.
Cashflow from Community Operations (CCO) is an
important operational metric focused on the efficient
management of our communities, costs and resales.
Capital recovery focuses on recovery of capital
deployed into development projects.
Team Engagement Survey is an important metric
focused on the team culture and engagement
which is critical to delivering amazing customer
experiences.
30% Achievement of 400 or above
new home settlements
Result
356 Settlements
Weighting
achieved
0%
Outcome
Not
Achieved
30% Budgeted FY23 CCO or above
Underlying CCO
above budget
Partly
Achieved1
22.5%
20% Net capital recovery aggregated
across all projects meets or
exceeds commencement case
Net surplus to
commencement case
across all projects
Achieved
20%
20% Rating 8–9 = 50%
Rating of 9 achieved Achieved
20%
Rating 9 & Above = 100%
Note
1. The cash flow from community operations target was met on an underlying basis but there were one-off items outside of the team’s control which meant
the targets were not met in accordance with the way CCO was defined in the ESS plan. The Board felt it was important to recognise this, and also the
important role the STI plays in both reward and retention of the senior leaders in the business.
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Lifestyle Communities Annual Report 2023 REMUNERATION REPORT
The maximum STI available in FY23 was 40% of
total fixed remuneration (TFR) for each ELT member.
The actual outcome achieved based on the above
performance outcomes was 25%. The Board applied
its discretion to award 75% of the cashflow from
community operations metric due to factors impacting
the reported outcomes which were outside of the
team’s control. Had this discretion not been applied,
the total STI achieved would have been 16%.
Update on ELT Long Term Incentives
At the end of FY23 there were two long term incentive
plans in operation. An update on each of the respective
schemes is shown in the tables below.
Result
FY23
356
FY22
401
FY24
Outcome
tbc
In Progress - 1 Year
Remaining
40% 1,100 to 1,300 new
home settlements
(pro-rata) between
FY22 and FY24
40% 14% to 18% average
16%
12.9%
tbc
ROE (pro-rata) for
FY22, FY23, and
FY24
In Progress - 1 Year
Remaining
When setting the performance metrics for FY23,
Management and the Board considered ESG metrics in
addition to other strategic short-term projects critical
to FY23 performance outcomes. Although there are
many strategic priorities, the Team Engagement Survey
overall result was determined as the most appropriate
business priority for the FY23 scheme and replaced
the Salesforce project implementation metric which
was included in the FY22 scheme. Ensuring optimum
performance whilst fostering a great work culture is
key to retaining our team and continuing to attract the
best talent in the market
The metrics are independent of each other, and
failure of one metric does not impact achievement of
the others.
FY22 Scheme
Metric
Weighting
Target
New Home Settlements remain as one of
the key drivers of business performance and
shareholder value. Lifestyle Communities
provides guidance to the market on a rolling
3-year forward basis.
Adjusted Return on Equity (ROE) measures
the business’s efficiency in deploying capital.
Lifestyle Communities uses an adjusted
ROE measure to remove the volatility of
movements in property valuations driven by
external market factors which are outside of
management’s control
FY23 Scheme
New Home Settlements remain as one of
the key drivers of business performance and
shareholder value. Lifestyle Communities
provides guidance to the market on a rolling
3-year forward basis.
Adjusted Return on Equity (ROE) measures
the business’s efficiency in deploying capital.
Lifestyle Communities uses an adjusted
ROE measure to remove the volatility of
movements in property valuations driven by
external market factors which are outside of
management’s control
Metric
Weighting
Target
Result
FY24
tbc
FY23
356
FY25
Outcome
tbc
In Progress - 2 Years
Remaining
40% 1,400 to 1,700 new
home settlements
between FY23 and
FY25
40% 14% to 18% average
11.8%
tbc
tbc
ROE (pro-rata) for
FY23, FY24, and
FY25
In Progress - 2 Years
Remaining
Note: The Adjusted ROE target is set at the start of each scheme period. As such, the opening equity and property valuation adjustments are different for
each scheme. This is the reason for the variation in outcomes for the FY23 year between the FY22 and FY23 schemes.
102
REMUNERATION REPORT
The metrics are independent of each other, and
failure of one metric does not impact achievement
of the other.
The maximum LTI achievable in FY23 equates to 80%
of TFR for each ELT member
The Remuneration and Nomination Committee
regularly reviews the level of fees paid to Non-
Executive Directors and the Managing Director.
External benchmarking occurs every two years.
9.
Remuneration Details of Key
Management Personnel
8. Non Executive Directors’ remuneration
All Non-Executive Directors receive fixed fees for
their services to the Company. The level of fees is
set to enable the Company to attract and retain
Directors of high calibre, whilst incurring a cost that is
reasonable having regard to the size and complexity of
the Company.
In this Annual report, remuneration outcomes are
presented based on the requirements of accounting
standards (which has the benefit of being readily
comparable with other companies) as well as the actual
“take-home” pay received by KMP personnel (being
cash, other benefits and the value of equity exercised
during the relevant financial year).
Differences can arise based on options which carry
a deferred vesting and exercise period. Options are
expensed over the vesting period based on their fair
value when originally granted to the Executive. This
may be significantly different to their value, if and
when, the incentive vests to that Executive.
The following tables disclose the remuneration of the
KMP of the Company for the 2023 financial year and
for the previous financial year.
The aggregate amount of fees paid to Non-
Executive Directors is within the overall amount
approved by shareholders in a general meeting.
The last determination was made at the Annual
General Meeting held in November 2007 at which
shareholders approved an aggregate amount of
$1,000,000 per annum.
In 2022 independent benchmarking confirmed that
current fees payable are low. As a result, the fee
levels have been aligned with comparable firms while
having consideration for the company’s performance
and external environment. The fees for FY23 and the
approved increase effective 1st July 2023 are detailed
in the following table:
Current Director and Committee Fees (per annum)
are set out below
$000’s
Board fees
Chair
Member
Audit Committee
Chair
Member
Remuneration and Nomination Committee
Chair
Member
FY23
FY24
210
90
15
10
15
10
240
110
22
10
22
10
103
Lifestyle Communities Annual Report 2023 REMUNERATION REPORT
2023
$000’s
Directors
James Kelly
Philippa Kelly
David Blight
Nicola Roxon
Mark Blackburn
Claire Hatton
Consolidated remuneration
Key management personnel
Darren Rowland
Consolidated remuneration
2022
$000’s
Directors
James Kelly
Philippa Kelly
David Blight
Nicola Roxon
Georgina Williams
Resigned 31 August 2021
Mark Blackburn
Claire Hatton
Appointed 1 May 2022
Consolidated remuneration
Key management personnel
Darren Rowland
Consolidated remuneration
Salary
and fees
Annual and
long service
leave (1)
Super
Equity-based
payments (2)
Performance
related
Take
home pay (3)
Total
8724
208
105
100
95
90
1,470
429
1,899
(30)
(30)
41
11
28
22
0
0
10
10
70
28
98
870
230
105
100
105
100
1,510
658
2,168
–
–
–
–
–
–
–
24.3%
7.4%
900
230
105
100
105
100
1,540
457
1,997
0
160
160
Salary
and fees
Annual and
long service
leave (1)
Super
Equity-based
payments (2)
Performance
related
Take
home pay (3)
Total
725
191
93
104
16
95
7
1,231
383
1,614
84
84
19
103
25
19
0
0
2
10
1
57
28
85
834
210
93
104
18
105
8
1,372
717
2,089
–
–
–
–
–
–
–
750
210
93
104
18
105
8
–
1,288
40.0%
13.7%
411
1,699
0
287
287
1. Annual leave and long service leave represents movements in provisions.
2. Equity based payments represents the fair value of the options granted to key management personnel in FY21, FY22 and FY23 determined by allocating the
grant date value on a straight-line basis over the period from the grant date to the vesting date.
3. Take home pay is a non-IFRS measure which includes salary and fees, super, and the cash value of any options exercised during the year (measured at
the closing share price on the day of exercise or the termination date for anyone that departs during the year). These figures have been audited and are
provided to give a better understanding of remuneration of Directors and Key Management Personnel.
4.
Included in James Kelly’s salary and fees is a $20,000 car allowance.
104
REMUNERATION REPORT
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M
Lifestyle Communities Annual Report 2023
REMUNERATION REPORT
Shares
$000
Directors
James Kelly
Philippa Kelly
David Blight
Nicola Roxon
Claire Hatton
Mark Blackburn
Management
Darren Rowland
Shares held at the
beginning of the year
Purchased
on market
Options
exercised
Sold
Shares held at the
end of the year
7,077,001
75,000
11,000
7,000
760
8,000
2,500
1,000
7,077,001
75,000
11,000
7,000
1,760
8,000
2,500
11. Remuneration report voting at Annual General Meeting
Lifestyle Communities Limited received 98.39% of votes in support of its remuneration report at the
2022 Annual General Meeting.
106
REMUNERATION REPORT
Additional Remuneration Data
Job classification
Managing Director
Key Management Personnel
Executive Leadership Team
Managers
Team / Subject Matter Leader
All other Team Members
Total
Women
Average
of TFR
Men
1
1
2
12
2
32
50
351,066
165,553
135,612
90,214
4
9
12
92
117
Average
of TFR
900,000
448,000
400,000
166,497
137,895
84,001
Total
Average
TFR
Women
(%)
Men
(%)
1
1
6
21
14
124
167
367,377
166,092
135,938
88,611
67%
43%
86%
74%
70%
33%
57%
14%
26%
30%
Note: Our remuneration process uses external benchmarking to ensure we are competitive in the market as well as recognising an individual’s experience,
education, effort, and contribution to our culture
Kelly, James MR
Ratio of MD total annual compensation to median employee TFR
900,000
9.9x
Employee tenure
107
Lifestyle Communities Annual Report 2023 REMUNERATION REPORT
Cycling the trails near Lifestyle St Leonards
108
REMUNERATION REPORT
REMUNERATION REPORT
Club Lifestyle Villas
109109
Lifestyle Communities Annual Report 2022
Lifestyle Communities Annual Report 2023 REMUNERATION REPORT
110110
AUDITOR’S INDEPENDENCE DECLARATION
Auditor’s Independence
Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Lifestyle Communities Limited for the year ended 30 June 2023, I
declare that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Lifestyle Communities Limited and the entities it controlled during the
period.
Andrew Cronin
Partner
PricewaterhouseCoopers
Melbourne
16 August 2023
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331 MELBOURNE VIC 3001
T: +61 3 8603 1000, F: +61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
111
Lifestyle Communities Annual Report 2023
AUDITOR’S INDEPENDENCE DECLARATION
Lifestyle Riverfield (July 2023)
112
AUDITOR’S INDEPENDENCE DECLARATION
Artist impression of courtyard at
Lifestyle St Leonards
113
Lifestyle Communities Annual Report 2022
AUDITOR’S INDEPENDENCE DECLARATION
114
CONSOLIDATED STATEMENT OF PROFIT ORLOSS AND OTHER COMPREHENSIVE INCOME
Consolidated Statement of Profit or
Loss and Other Comprehensive Income
For the year ended 30 June 2023
$000’s
Development revenue
Home settlement revenue
Cost of sales
Gross profit from home settlements
Management and other revenue
Rental revenue
Deferred management fees
Utilities revenue
Finance revenue
Total management and other revenue
Fair value adjustments
Less expenses
Development expenses (sales and marketing)
Community Operating Expenses
Deferred management fee expenses
Utilities expenses
Corporate overheads
Employee share scheme
IT Implementation costs
Facility fees and interest on non-development debt
Other costs
Statutory profit before income tax
Income tax expense
Statutory profit from continuing operations
Earnings per share for profit attributable to the ordinary
equity holders of the parent entity:
Basic earnings per share (cents)
Diluted earnings per share (cents)
Note
2.1
2.1
2.1
2.1
2.1
2.1
2.1
2.2
2.1
2.1
2.1
2.1
2.1
2.1
2.1
2.4
2023
180,827
(142,837)
37,990
34,244
12,921
4,061
240
51,466
84,946
(13,111)
(15,219)
(2,061)
(4,160)
(17,148)
(1,404)
–
(2,919)
(1,156)
117,224
(35,324)
81,900
78.3
78.0
2022
180,291
(142,844)
37,447
29,712
10,906
3,311
186
44,115
92,600
(8,619)
(12,694)
(1,985)
(3,436)
(13,245)
(2,876)
(1,595)
(1,600)
(1,086)
127,026
(38,155)
88,871
85.4
85.1
The above statement should be read in conjunction with the accompanying notes.
115
Lifestyle Communities Annual Report 2023 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Consolidated Statement of
Financial Position
For the year ended 30 June 2023
Note
2023
2022
$000’s
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Assets held for sale
Other assets
Total current assets
Non current assets
Inventories
Other assets
Property, plant and equipment
Investment properties
Derivative financial instrument
Right of use assets
Total non current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Lease liabilities
Current tax liabilities
Provisions
Total current liabilities
Non current liabilities
Trade and other payables
Interest bearing loans and borrowings
Lease liabilities
Provisions
Deferred tax liabilities
Total non current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained earnings
TOTAL EQUITY
4.3
2.6
3.3
3.5
2.7
3.3
2.7
3.4
3.1
3.6
3.7
2.8
3.7
2.4
5.2
2.8
4.4
3.7
5.2
2.4
4.5
4.6
4.6
1,233
955
136,833
3,426
1,674
144,121
56,722
1,329
20,770
962,150
2,884
3,464
1,047,319
1,191,440
62,002
1,095
1,020
1,259
65,376
53,847
371,000
3,962
443
171,954
601,206
666,583
524,857
55,925
9,354
459,578
524,857
1,893
963
86,755
–
1,230
90,841
48,924
1,275
14,610
850,247
–
314
915,370
1,006,211
104,756
269
1,404
961
107,390
55,148
245,000
136
310
144,770
445,364
552,754
453,457
57,726
6,028
389,703
453,457
116
The above statement should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Consolidated Statement of
Changes in Equity
For the year ended 30 June 2023
2023
$000’s
Balance at 1 July 2022
Profit for the year
Total comprehensive income for the year
Transactions with owners in their capacity as owners
Treasury shares purchased
Vesting of treasury shares
Hedge reserve
Employee share scheme expense
Employee share trust contribution
Dividends paid or provided for
Balance at 30 June 2023
2022
$000’s
Balance at 1 July 2021
Profit for the year
Total comprehensive income for the year
Transactions with owners in their capacity as owners
Treasury shares purchased
Vesting of treasury shares
Employee share scheme expense
Employee share trust contribution
Dividends paid or provided for
Balance at 30 June 2022
Note
Contributed
equity
Reserves
Hedging
reserve
Retained
earnings
Total
equity
57,726
6,028
–
–
(1,902)
101
–
–
–
–
–
–
–
(101)
–
1,404
–
–
–
–
–
–
–
2,023
–
–
–
389,703
453,457
81,900
81,900
81,900
81,900
–
–
–
–
–
(1,902)
–
2,023
1,404
–
(12,025 )
(12,025)
55,925
7,331
2,023
459,578
524,857
Contributed
equity
63,859
Reserves
3,472
–
–
(6,256)
123
–
–
–
57,726
–
–
–
(123)
2,876
(197)
–
6,028
Retained
earnings
310,764
88,871
88,871
–
–
–
–
(9,932)
389,703
Total
equity
378,095
88,871
88,871
(6,256)
–
2,876
(197)
(9,932)
453,457
4.7
Note
4.7
The above statement should be read in conjunction with the accompanying notes.
117
Lifestyle Communities Annual Report 2023 CONSOLIDATED STATEMENT OF CASH FLOWS
Consolidated Statement of
Cash Flows
For the year ended 30 June 2023
Note
2.4
2.5
$000’s
Cash flow from operating activities
Receipts from customers
Payments to suppliers and Employees 1
Income tax paid
Interest received
Interest paid
Net cash provided by/(used in) operating activities
Cash flow from investing activities
Purchase of property, plant and equipment
Purchase of investment properties
Net cash provided by/(used in) investing activities
Cash flow from financing activities
Principal elements of lease payments
Purchase of treasury shares for employee share scheme
Proceeds from external borrowings
Dividends paid
Net cash provided by/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents held
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at end of financial year
2023
250,898
(257,441)
(9,389)
241
(14,723)
(30,414)
(8,525)
(73,519)
(82,044)
(275)
(1,902)
126,000
(12,025)
111,798
(660)
1,893
1,233
2022
243,346
(187,306)
(9,059)
35
(5,284)
41,732
(3,067)
(77,599)
(80,666)
(285)
(6,256)
55,000
(9,932)
38,527
(407)
2,300
1,893
1. Due to Lifestyle Communities’ accounting policies and legal structure, payments to suppliers and Employees includes all gross costs of infrastructure
construction (i.e. civil works, clubhouse and other facilities). Under some other structures these costs may be classified as investing cash flows. Therefore,
cash flows from operations will be negatively impacted when Lifestyle Communities is in the cash-intensive development phase of a community’s
construction. In FY23 payments to suppliers and Employees includes $62.4 million of such costs (FY22: $43.5m).
The above statement should be read in conjunction with the accompanying notes.
118
NOTES TO THE FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 30 June 2023
How we have prepared this report
Basis of Preparation
1.
1.1
This financial report is a general purpose financial
report, that has been prepared in accordance with
Australian Accounting Standards, Interpretations
and other authoritative pronouncements of the
Australian Accounting Standards Board and the
Corporations Act 2001.
The financial report covers Lifestyle Communities
Limited and controlled entities as a consolidated entity.
Lifestyle Communities Limited is a company limited
by shares, incorporated and domiciled in Australia.
Lifestyle Communities Limited is a for-profit entity for
the purpose of preparing the Financial Statements.
The financial report was authorised for issue by the
Directors as at the date of the Director’s report.
Significant accounting policies adopted in the
preparation of these financial statements are
consistent with prior reporting periods.
Compliance with IFRS
The financial report complies with the International
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
Historical cost convention
The financial report has been prepared under the
historical cost convention, as modified by revaluation
to fair value for certain classes of assets as described
in the accounting policies.
Rounding of amounts
The parent entity and the consolidated entity have
applied the relief available under ASIC Corporations
(Rounding in Financial / Directors’ Reports) Instrument
2016/191 and accordingly, the amounts in the
Consolidated Financial Statements and in the Directors’
Report have been rounded to the nearest thousand
dollars or in certain cases, to the nearest dollar.
1.2 Principles of consolidation
The consolidated Financial Statements are those
of the consolidated entity, comprising the Financial
Statements of the parent entity and of all entities
which the parent entity controls. The Group controls
an entity when it is exposed, or has rights, to variable
returns from its involvement with the entity and has the
ability to affect those returns through its power over
the entity.
The Financial Statements of subsidiaries are prepared
for the same reporting period as the parent entity,
using consistent accounting policies. Adjustments
are made to bring into line any dissimilar accounting
policies, which may exist.
All inter-company balances and transactions, including
any unrealised profits and losses have been eliminated
on consolidation. Subsidiaries are consolidated from
the date on which control is established and are
de-recognised from the date that control ceases.
Equity interests in a subsidiary not attributable,
directly or indirectly, to the Group are presented as
non-controlling interests.
Where necessary, comparative information has been
reclassified and repositioned for consistency with
current year disclosures.
1.3 Significant accounting estimates
and judgements
The preparation of the Financial Statements requires
management to make estimates and assumptions
that affect the reported amounts in the Financial
Statements. Management continually evaluates its
estimates in relation to assets, liabilities, contingent
liabilities, revenue and expenses. Management bases
its estimates on historical experience and on other
various factors it believes to be reasonable under the
circumstances.
119
Lifestyle Communities Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS
The estimates and assumptions based on future events
have a significant inherent risk, and where future
events are not anticipated there could be a material
impact on the carrying amounts of the assets and
liabilities in future periods, as discussed below.
(a) Significant accounting judgments
(i)
Income tax
Deferred tax assets and liabilities are based on the
assumption that no adverse change will occur in
the income tax legislation and the anticipation that
the Group will derive sufficient future assessable
income to enable the benefit to be realised
and comply with the conditions of deductibility
imposed by the law.
1.5 Derivative financial instruments
The group holds an interest rate swap as a derivative
instrument.
In order to qualify for hedge accounting, prospective
hedge effectiveness testing must meet all of the
following criteria:
• An economic relationship exists between the
hedged item and hedging instrument;
• The effect of credit risk does not dominate the
value changes resulting from the economic
relationship; and
• The hedge ratio is the same as that resulting from
actual amounts of hedged items and hedging
instruments for risk management.
Deferred tax assets are recognised for deductible
temporary differences as management considers
that it is probable that future taxable profits will be
available to utilise those temporary differences.
(b) Critical accounting estimates and judgements
(i) Valuation of investment properties
The Group values investment properties at fair
value. Fair value is determined by a combination
of the discounted annuity streams associated with
the completed and settled home units and the fair
value of the undeveloped land. Inputs for the fair
value of investment properties are derived from
independent and Directors’ valuations.
(ii) Share based payment transactions
The Group measures the cost of equity-settled
transactions with Employees by reference to the
fair value of the equity instruments at the date
at which they are granted. Refer to Note 5.3 for
further detail. The accounting estimates and
assumptions relating to equity-settled share-based
payments would have no impact on the carrying
amounts of assets and liabilities within the next
annual reporting period but may impact expenses
and equity.
1.4 Joint Arrangement
Under AASB 11 Joint Arrangement investments in joint
arrangements are classified as either joint operations
or joint ventures. The classification depends on the
contractual rights and obligations of each investor,
rather than the legal structure of the joint arrangement.
The Group recognises its direct right to the assets,
liabilities, revenues and expenses of joint operations
and its share of any jointly held or incurred assets,
liabilities, revenues and expenses. These have been
incorporated in the financial statements under the
appropriate headings. Details of the joint operation are
set out in note 6.2.
Derivative financial instruments are recognised initially
at fair value and remeasured at each balance date.
The valuation of derivatives is an area of accounting
estimation and judgement for the Company.
Third party valuations are used to determine fair value
and consider inputs such as forward yield curves.
The interest rate swap qualifies for hedge accounting,
recognition of any resultant gain or loss depends on
the nature of the item being hedged.
Documentation for hedge accounting
At the inception of the transaction, the company
designates and documents these derivative
instruments into a hedging relationship with the
hedged items, as well as its risk management
objective and strategy for undertaking various hedge
transactions.
The company documents its assessment, both at
hedge inception and on an ongoing basis, of whether
the derivatives used in hedging transactions have been
and will continue to be effective in offsetting the cash
flows of hedged items.
Cash flow hedge
The cash flow hedge has been adopted to hedge the
exposure of variability in cash flows attributable to the
interest rate fluctuations.
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash flow
hedges are recognised in equity in the cash flow hedge
reserve. The gain or loss relating to the ineffective
portion is recognised immediately in profit or loss
within finance income or expense.
120
NOTES TO THE FINANCIAL STATEMENTS
Amounts in the cash flow hedge reserve are
recognised in profit or loss in the periods when the
hedged item is recognised in profit or loss.
Hedge accounting is discontinued when the hedging
instrument matures or is sold, terminated or exercised,
no longer qualifies for hedge accounting, or when
the group revokes designation. Any cumulative gain
or loss recognised in equity at that time remains in
equity and is recognised when the forecast transaction
is ultimately recognised in profit or loss. When a
forecast transaction is no longer expected to occur, the
cumulative gain or loss that was recognised in equity is
recognised immediately in profit or loss.
economic environment with similar terms, security and
conditions. The group is exposed to potential future
increases in variable lease payments based on an index
or rate, which are not included in the lease liability until
they take effect. When adjustments to lease payments
based on an index or rate take effect, the lease liability
is reassessed and adjusted against the right-of-use
asset. Lease payments are allocated between principal
and finance cost. The finance cost is charged to
profit or loss over the lease period so as to produce
a constant periodic rate of interest on the remaining
balance of the liability for each period. Right-of-use
assets are measured at cost comprising the following:
• The amount of the initial measurement of
Reconciliation of cash flow hedge reserve
lease liability
$000’s
Opening cash flow hedge reserve
Net change in fair value of cash flow hedges
Closing cash flow hedge reserve
2023
–
2,884
2,884
2022
–
–
–
1.6 Leases
The group leases it’s support office at 101 Moray St,
South Melbourne and also a retail space at Fountain
gate shopping centre.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities
include the net present value of the following
lease payments:
• Fixed payments (including in-substance fixed
payments), less any lease incentives receivable
• Variable lease payment that are based on an index
or a rate, initially measured using the index or rate
as at the commencement date
• Amounts expected to be payable by the group
under residual value guarantees
• The exercise price of a purchase option if the group
is reasonably certain to exercise that option, and
• Payments of penalties for terminating the lease,
if the lease term reflects the group exercising
that option.
• Any lease payments made at or before
the commencement date less any lease
incentives received
• Any initial direct costs, and restoration costs.
Right-of-use assets are generally depreciated over the
shorter of the asset’s useful life and the lease term on
a straight-line basis. If the group is reasonably certain
to exercise a purchase option, the right of-use asset
is depreciated over the underlying asset’s useful life.
While the group revalues its land and buildings that are
presented within property, plant and equipment, it has
chosen not to do so for the right-of-use buildings held
by the group
1.7 Provisions
Short‑term employee benefit obligations
Liabilities arising in respect of wages and salaries,
annual leave, long service leave and any other
employee benefits expected to be settled within
12 months of the reporting date are measured at
the amounts based on remuneration rates that are
expected to be paid when the liability is settled. The
expected cost of short-term employee benefits in the
form of compensated absences such as annual leave
and long service leave is recognised in the provision
for employee benefits. All other short-term employee
benefit obligations are presented as payables.
Lease payments to be made under reasonably
certain extension options are also included in the
measurement of the liability. The lease payments
are discounted using the interest rate implicit in
the lease. If that rate cannot be readily determined,
which is generally the case for leases in the group,
the lessee’s incremental borrowing rate is used, being
the rate that the individual lessee would have to pay
to borrow the funds necessary to obtain an asset
of similar value to the right-of-use asset in a similar
Other long‑term employee benefit obligations
The provision for other long-term employee benefits,
including obligations for long service leave and annual
leave, which are not expected to be settled wholly
before 12 months after the end of the reporting period
are measured at the present value of the estimated
future cash outflow to be made in respect of the
services provided by employees up to the reporting
date. Expected further payments incorporate
anticipated future wage and salary levels, durations of
121
Lifestyle Communities Annual Report 2023 service and employee turnover, and are discounted at
rates determined by reference to market yields at the
end of the reporting period on high-quality corporate
bonds that have maturity dates that approximate
the terms of the obligations. Any re-measurements
for changes in assumptions of obligations for other
long-term employee benefits are recognised in profit
or loss in the periods in which the change occurs.
Other long-term employee benefit obligations are
presented as current liabilities in the consolidated
statement of financial position if the entity does not
have an unconditional right to defer settlement for at
least 12 months after the reporting date, regardless
of when the actual settlement is expected to occur.
All other long-term employee benefit obligations are
presented as non-current liabilities in the consolidated
statement of financial position.
2. How we have performed this year
2.1 Profit from continuing operations
Profit from continuing operations before income tax
has been determined after the following specific
revenues and expenses:
Revenues
The Group has three main revenue streams including
Home Settlement Revenue, Rental Revenue, Deferred
Management Fee revenue, and two ancillary revenue
streams, Utilities revenue and Interest revenue.
(i) Home settlement revenue
The Group develops and sells homes including a
share of the community infrastructure. Revenue
from home settlement is recognised at a point in
time with each home purchase agreement treated
as a single performance obligation to transfer
control of the home and community infrastructure
to the homeowner. Revenue is recognised for
the amount specified in the home purchase
agreement upon receipt of final settlement. The
owner has legal title, physical control of the asset,
exposure to the majority of the risk and rewards
of ownership and the Group does not hold any
obligation to repurchase on exit. Deposits received
in advance from customers are recognised as
a contract liability until the ownership transfers
to the homeowner. The construction cost of
the homes and infrastructure is capitalised to
inventory during development and then classified
as costs of goods sold upon settlement.
NOTES TO THE FINANCIAL STATEMENTS
$000’s
Number of settlements
Home settlement revenue
Cost of sales
Gross profit from home settlements
Gross profit margin (%)
Development expenses (sales,
marketing, and project management)
2023
356
2022
401
180,827
180,291
(142,837)
(142,844)
37,990
21.0%
(13,111)
37,447
20.8%
(8,619)
New home settlements were 356 in FY23 (FY22:
401) and this, combined with a change in home
and project mix, has translated into higher
revenue and gross profit from home settlements.
Development expenses is higher due more
communities under development in FY23. Cost of
sales includes $47.6m for the share of community
infrastructure sold to each homeowner and
expensed upon settlement (FY22: $52.1m).
(ii) Community Operations
Rental revenue is derived under the Site Lease
Agreement granting the homeowners a right to
use the Land for their property for 90 years. The
rent is calculated on a weekly basis per tenant as
per the contract. Rental revenue is recognised as
it is earned. Rental revenue meets the definition of
a lease arrangement and falls outside the scope
of AASB 15 and is therefore accounted for in
accordance with AASB 16 Leases. Community
operating expenses include salaries of onsite
community managers and all costs necessary to
ensure the efficient operation of the communities.
$000’s
Number of homes under management
at 30 June
2023
3,549
2022
3,193
Rental revenue
34,244
29,712
Community operating expenses
(15,219)
(12,694)
Net Community surplus
Margin
19,025
55.6%
17,018
57.3%
Rental revenue and community operating
expenses both increased during FY23 due to an
increased number of homes under management
as new communities commence operation and
homes progressively settle. Rental revenue is
contractually fixed to increase by the greater
of CPI or 3.5% annually. The gross margin
decreased due to the mix of new and established
communities. Rent does not commence
until the clubhouse opens however costs
commence earlier.
122
NOTES TO THE FINANCIAL STATEMENTS
(iii) Deferred management fee
The deferred management fee is a deferred
contribution to the operating costs of the
community and assists in keeping the weekly site
fees affordable during the homeowners’ tenure.
The deferred management fee is considered
highly susceptible to factors outside the Group’s
influence until realised, including the timing and
the amount of consideration received, which is
based on a percentage of the resale value at the
time the home is sold, the value of which is at the
homeowners discretion and subject to prevailing
market conditions. These factors result in a degree
of variability in the timing and quantum of the
expected consideration, and as such revenue from
deferred management fee is recognised at a point
in time upon the resale settlement of the home
when the vendor transfers control of the home
and community infrastructure to the incoming
homeowner. Revenue for deferred management
fees are recognised under AASB 15.
For all contracts entered into prior to 1 January
2009, the fee payable is 15% on the resale value of
the unit and after a period of occupation of a year
and one day.
For all contracts entered into post 1 January 2009,
the fee payable is up to 20% (the fee accumulates
by 4% per year over 5 years up to 20%) on the
resale value of the unit.
$000’s
Number of resales
Deferred management fees
Deferred management fee expenses
2023
178
12,921
(2,061)
2022
156
10,906
(1,985)
178 resale settlements were achieved in FY23
(FY22:156).
Deferred management fee expenses are expenses
incurred to assist with sales and marketing of
resale homes.
intention to utilise its increasing scale to negotiate
favourable commercial outcomes for homeowners
and pass on the lowest possible cost of utilities
to homeowners. The Company does not seek to
make a profit from utilities.
$000’s
Utilities revenue
Utilities expenses
2023
4,061
2022
3,311
(4,160)
(3,436)
(v) Finance revenue and costs
Interest income is recognised in the income
statement as it accrues, using the effective
interest method.
$000’s
Finance revenue
2023
240
2022
35
(a) Finance costs expensed
Borrowing costs are expensed as incurred,
except for borrowing costs incurred as part of
the cost of the construction of a qualifying asset
which are capitalised until the asset is ready for
its intended use or sale. Lifestyle Communities’
developments are classified as qualifying assets.
Establishment fees are amortised over the life of
the facility. The average interest rate paid in FY23,
including commitment fees, was 4.44% up from
2.23% in FY22.
$000’s
Interest on secured loans
Amortisation of loan facility fees
2023
2,487
432
2022
1,218
382
(b) Finance costs capitalised
Finance costs capitalised refers to interest
capitalised at the prevailing facility interest rate
as part of inventory during development and then
classified as costs of goods sold as a pro-rata
amount upon settlement of each home:
$000’s
Interest on secured loans
2023
12,582
2022
4,620
(iv) Utilities revenue and expenses
(vi) Corporate overheads
Lifestyle Communities operates embedded
networks for electricity and water. Gas (where
applicable) is provided by third party retailers.
Electricity and Water usage is individually
metered, billed to homeowners monthly, and
recorded as revenue in the respective month.
Lifestyle Communities adjusts its rates to
homeowners on a regular basis based on usage
and the price Lifestyle Communities pays to
the relevant wholesalers. It is the Company’s
Corporate overheads include the Company’s
support functions such as the Executive Team,
People Experience, Finance, Information
Technology and Legal. It also includes regulatory
and other compliance costs, the cost of the
Employee equity incentive plan, and the support
office located in South Melbourne.
$000’s
Corporate overheads
Employee share scheme
2023
17,148
1,404
2022
13,245
2,876
123
Lifestyle Communities Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS
Corporate costs increased compared to the
prior year due to increased resources, new
leases and computer costs required to support
business growth.
2.3 Earning per share
The following reflects the income and weighted
average number of shares used in the basic and diluted
earnings per share computations:
The cost of the employee share scheme
decreased in FY23 due to the new home
settlement target not being achieved.
The reported expense relates to the other
performance metrics being achieved and the
phased vesting of prior year schemes. Further
details on the employee incentive scheme can be
found in the remuneration report.
(viii) Depreciation, amortisation and impairment
Assets with an indefinite useful life are not
amortised but are tested annually for impairment
in accordance with AASB 136 Impairment of
Assets. Assets subject to annual depreciation
or amortisation are reviewed for impairment
whenever events or circumstances arise that
indicate that the carrying amount of the asset may
be impaired.
(a) Earnings used in calculating earnings per share
$000’s
Net profit
2023
81,900
2022
88,871
(b) Weighted average number of shares
$000’s
Ordinary shares
Treasury shares
Weighted average number of ordinary
shares for basic earnings per share
Effect of dilution
Options
Weighted average number
of ordinary shares adjusted
for dilution
2023
104,545
(570)
103,975
2022
104,545
(484)
104,061
491
424
105,036
104,969
An impairment loss is recognised where the
carrying amount of the asset or cash generating
unit exceeds its recoverable amount. The
recoverable amount of an asset cash generating
unit is defined as the higher of its fair value less
costs of disposal and value in use.
There have been no transactions involving ordinary
shares or potential ordinary shares that would
significantly change the number of ordinary shares
or potential ordinary shares outstanding between the
reporting date and the date of completion of these
Financial Statements.
2.2 Fair Value Adjustments
Uplift in value arising from settled
homes during the year (356 new home
settlements FY22: 401)
The uplift created as a result of the
contractual rent increase
Movements as a result of changes to
valuation assumptions
FY23
($000)
43,028
FY22
($000)
41,900
26,531
11,500
15,387
39,200
Treasury shares are purchased and held in an employee
share trust to satisfy options issued to employees
under the employee share scheme. It remains the
company’s intention to settle all outstanding options
with equity purchased on market rather than issue
new equity.
The total number of securities purchased during the
reporting period was 120,000. The average price per
security at which the security was purchased during
the reporting period was $15.85.
Total Fair Value Adjustment
84,946
92,600
(a) Fair value adjustments—Investment Properties
Fair value adjustment results from valuing communities
at their fair value at balance date. This income
represents incremental adjustments to the fair value
of investment properties upon settlement of units
and reflects the discounted value of future rental and
deferred management fee revenues net of expenses
as well as the fair value of undeveloped land. More
information on fair value adjustments is contained
in note 3.1.
Income Tax Expense
2.4
Current income tax expense is the tax payable on
the current period’s taxable income based on the
applicable income tax rate adjusted by changes in
deferred tax assets and liabilities.
The over provision of $0.3m relates to the change in
tax legislation during the Covid period which allowed
for an instant asset write-off for the period March
2020 until 31 December 2020.
124
NOTES TO THE FINANCIAL STATEMENTS
Deferred tax balances
Deferred tax assets and liabilities are recognised for
temporary differences at the applicable tax rates
when the assets are expected to be recovered or
liabilities are settled. No deferred tax asset or liability
is recognised in relation to temporary differences
if they arose in a transaction, other than a business
combination, that at the time of the transaction did not
affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only
when it is probable that future taxable amounts will
be available to utilise those temporary differences
and losses.
Current and deferred tax balances attributable
to amounts recognised directly in equity are also
recognised directly in equity.
Tax consolidation
The parent entity and its wholly owned subsidiaries
have implemented tax consolidation and have formed
an income tax-consolidated Group from 18 March
2011. This means that: each entity recognises their
own current and deferred tax amounts in respect
of the transactions, events and balances of the
entity; and the parent entity assumes the current tax
liabilities and deferred tax assets arising in respect of
tax losses, arising in the subsidiary, and recognises a
contribution to (or distribution from) the subsidiaries.
The tax consolidated Group also has a tax sharing
agreement in place to limit the liability of subsidiaries
in the tax-consolidated Group, arising under the joint
and several liability provisions of the tax consolidation
system, in the event of default by the parent entity to
meet its payment obligations.
(a) The major components of tax expense
(income) comprise:
$000’s
Current tax
Deferred income tax
2023
9,311
26,013
35,324
(b) Deferred income tax expense included in
income tax expense comprises
$000’s
Decrease / (increase) in deferred
tax assets
Increase in deferred tax liabilities
2023
(2,506)
29,997
27,491
2022
9,581
28,574
38,155
2022
(280)
29,854
29,574
125
Deferred tax liabilities increased in line with the
increased fair value adjustment. This tax liability will
only be realised should an investment property be
disposed of on an individual basis, which the Company
views as unlikely.
(c) Reconciliation of income tax to
accounting profit:
$000’s
Accounting profit before tax
Tax
Add / (less):
Tax effect of:
Entertainment
Prior years – (unders)/overs
Income tax expense
2023
117,224
30%
35,167
2022
127,026
30%
38,108
66
91
47
0
35,324
38,155
(d) Current tax liabilities
Current tax relates to the following:
$000’s
Opening balance
Income tax payable
Tax payments
Prior years – (unders)/overs
Current tax liabilities
(e) Deferred tax
Deferred tax relates to the following:
$000’s
Deferred tax assets
The balance comprises
Lease liability
Deferred deductions
Provision for employee entitlements
Accruals and business expenses
Superannuation
Deferred tax liabilities
Interest capitalised
Investment property fair value
adjustments
Employee share scheme
Hedging reserve
Fixed assets
Right of use asset
Net deferred tax liability
2023
1,404
9,311
(9,389)
(306)
1,020
2022
1,712
9,581
(9,059)
(830)
1,404
2023
2022
1,626
335
511
1,634
22
4,128
3,613
168,446
865
858
1,261
1039
176,082
171,954
121
–
381
1,110
10
1,622
1,904
142,963
709
–
722
94
146,392
144,770
Lifestyle Communities Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS
2.5 Cash Flow Information
(a) Reconciliation of result for the year to cashflows
from operating activities
$000’s
Statutory Operating Profit
Cash flows excluded from profit
attributable to operating activities
Non cash flows in profit:
depreciation
amortisation
share based payments
fair value adjustment
Changes in assets and liabilities:
(increase)/decrease in trade and
other receivables
(increase)/decrease in other assets
(increase)/decrease in inventories
increase/(decrease) in trade and
other payables
increase/(decrease) in provisions
increase/(decrease) in current tax
increase/(decrease) in deferred tax
Net cash flow from operating
activities and development
2023
81,900
2022
88,871
2,365
946
1,404
1,709
591
2,876
(84,946)
(92,600)
8
(497)
(57,876)
(87)
(431)
(384)
27,184
(30,414)
123
434
(10,437)
21,262
(194)
(308)
29,405
41,732
2.6 Trade and other receivables
$000’s
Other receivables
2023
955
2022
963
2.8 Trade and other payables
$000’s
Trade payables
Customer deposits
GST payable
Other payables and accruals
Contracted land-current
Contracted land-non current
Total
Note
(a)
(b)
(c)
(d)
(e)
(e)
2023
2,272
880
528
36,725
21,597
53,847
2022
20
1,377
496
37,842
65,021
55,148
115,849
159,904
(a) Trade payables
Trade payables are non-interest bearing and are
normally settled on 7 to 30 day terms. Due to the short
term nature of trade payables, their carrying amount is
assumed to approximate their fair value.
(b) Customer deposits
These represent deposits received from customers
that are recognised as revenue upon home settlement.
(c) Goods and services tax (GST)
Revenues, expenses and assets are recognised net
of the amount of GST, except where the amount of
GST incurred is not recoverable from the Australian
Taxation Office. In these circumstances the GST is
recognised as part of the cost of acquisition of the
asset or as part of an item of the expense. Where
applicable receivables and payables in the Statement
of Financial Position are shown inclusive of GST.
Other receivables includes unbilled rental revenue
which is deducted from final resale settlements
together with a revenue accrual booked to account for
the timing of utility income.
Cash flows are presented in the Statement of Cash
Flows on a gross basis, except for the GST component
of investing and financing activities, which are
disclosed as operating cash flows.
(a) Fair value and credit risk
Due to the short term nature of other receivables, their
carrying amount is assumed to approximate their fair
value. The maximum exposure to credit risk is the fair
value of receivables.
(d) Other payables
Other payable includes accruals for works completed
or commitments made prior to the end of the
year where the invoices will be paid after the end
of the year.
2.7 Other assets
$000’s
Security deposits
Other assets
Prepayments
Total
2023
556
1,752
695
3,003
(e) Contracted land
Includes amounts payable on four parcels of land
for contracts entered into prior to the reporting date
(including stamp duty). Two of the four contracts,
totalling $22 million, are expected to settle in FY24
with the balance expected to settle in FY25. All
purchases will be funded from existing debt facilities.
2022
372
1,508
625
2,505
(a) Fair value and credit risk
Due to the short-term nature of other current assets,
their carrying amount is assumed to approximate their
fair value. The maximum exposure to credit risk is the
fair value of other current assets.
2.9 Segment Information
Operating segments are reported based on internal
reporting provided to the Managing Director who is the
Group’s chief operating decision maker.
126
NOTES TO THE FINANCIAL STATEMENTS
The consolidated entity operates within one operating
segment, being the property management and
development industry. As a result, disclosures in the
Consolidated Financial Statements and notes are
representative of this segment.
Investment properties
3. Our business assets
3.1
The valuation of the Company’s investment
properties comprise:
• Capitalisation of the rental revenue
• Capitalisation of the deferred management fees
• Undeveloped land
The undeveloped land is converted to capitalised
rental and deferred management fees upon settlement
of each home.
At 30 June 2023, the fair value has been determined
by a combination of the discounted annuity streams
associated with completed home units and the fair
value of the undeveloped land. The gain arising from
the change in the fair value of investment properties
has been recognised in the profit or loss.
(a) Reconciliation of carrying amounts at the
beginning and end of the period
$000’s
Opening balance
Uplift in value arising from settled
homes during the year (356 new home
settlements FY22: 401)
The uplift created as a result of the
contractual rent increase
Movement as a result of changes to
valuation assumptions
Additions (Contracted land and
capitalised costs)
2023
850,247
43,028
2022
636,455
41,911
26,531
11,489
14,318
39,200
28,026
121,192
Closing balance
962,150
850,247
The Company’s Investment Property Valuation
Policy requires that the programme for independent
valuations is signed off by the Board and aims to
value a minimum of 50% of the portfolio each year.
Valuations are to be conducted by independent
external valuers who are considered industry
specialists in valuing these types of investment
properties. The independent valuer can only value an
investment property on three separate occasions.
For FY23, ten of twenty one operating communities
have been externally valued by independent
valuers Colliers, M3, and CBRE. For the remaining
communities, the Directors have estimated the fair
value internally utilising inputs from the independent
valuations.
Fair Value Measurement, Valuation
Techniques, and Inputs
The fair value represents the amount at which the
assets could be exchanged between a knowledgeable
willing buyer and a knowledgeable willing seller in an
arm’s length transaction at the date of the valuation,
in accordance with Australian Accounting Standards.
In determining fair value, the expected net cash flows
applicable to each property have been discounted
to their present value using a market determined,
risk adjusted, discount rate applicable to the
respective asset.
The expected net cash flows applicable to each
property comprise of rental revenue and deferred
management fee.
Rental revenue is valued using the rent
capitalisation approach
Rental capitalisation rates are derived from a
combination of independent and Directors’ valuations.
The rates were taken directly from independent
valuations for the ten communities independently
valued in the current year. In the remaining
communities (independently valued in the prior years)
the directors have adjusted the rental capitalisation
rates to reflect the conservative rate adopted by
valuers m3 for the properties that were valued in the
current year.
Weekly rental rates were taken directly from the
valuations for the ten communities independently
valued in the current year using contract weekly rates.
In relation to the remaining communities
(independently valued in the prior years) the Directors
have adjusted the rental rate adopted in the prior year
to take into account the 6.6% rental increase that was
applied on 1 July 2023. This approach is consistent
with the approach adopted by the independent valuers.
Deferred management fee revenue is valued using
the discounted cash flow approach
Deferred management fee valuations are derived
from a combination of independent and Directors’
valuations. Inputs, including discount rates, deferred
management fee annuity value, and management
expense rates are derived from independent valuations.
For the ten communities independently valued in
the current year, the valuation per home was taken
directly from the independent valuations and multiplied
by the number of settled homes per community
at 30 June 2023. For the remaining communities
not independently valued this year, the deferred
management fee valuations remained consistent with
the prior year noting the independent valuations and
127
Lifestyle Communities Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS
other market evidence supported that the valuations
had not materially changed.
All rental income and deferred management fee
income disclosed in the Statement of Profit or Loss
was generated from investment properties. All
management operating expenses relate to investment
properties that generated rental income.
Investment properties, other than those owned as
part of a joint operations, are subject to a first charge,
forming in part the security of the Group’s loans as
disclosed in Note 4.4(d).
The investment properties are at various stages of
completion and are subject to further development
until fully completed.
The following table shows the valuation assumptions
used in measuring the fair value of the investment
properties.
Weekly rentals ($)
FY23
223.1 – 233.3
Anticipated % expenses (as a percentage of rental income)
33.0% – 51.3%
Rental capitalisation rate (%)
Rental values per unit ($)
5.0% – 5.25%
121,241 – 173,512
114,394 – 161,884
Deferred management fee discount rates (%)
12.00% – 14.00%
12.00% – 13.75%
Deferred management fee values per unit ($)
44,500 – 98,988
36,000 – 88,172
Valuation of undeveloped land (per hectare) ($'million)
1.3 – 5.4
1.3 – 5.4
FY22
209.3 – 218.8
33.0% – 51.3%
4.9% – 5.25%
Impact on fair value
as at 30-Jun-23
Increase
Nil
Increase
Increase
Decrease
Increase
Increase
Last
independent
valuation date
Jun-22
Jun-22
Jun-22
Jun-22
Jun-23
Jun-23
Jun-21
Jun-22
Jun-22
Jun-21
Jun-23
Jun-23
Jun-22
Jun-23
Jun-23
Jun-21
Jun-21
Jun-23
Aug-21
Dec-23
Oct-22
Mar-23
Valuation summary
Brookfield
Seasons
Warragul
Casey Fields
Shepparton
Chelsea Heights
Hastings
Lyndarum
Geelong
Officer
Berwick Waters
Bittern
Ocean Grove
Mt Duneed
Kaduna Park
Wollert North
Deanside
St Leonards
Meridian
Bellarine 1
Woodlea
Riverfield (Clyde)
Phillip Island
Ridgelea (Pakenham)
Merrifield
Ocean Grove II
Warragul II
Cap rate (%)
DMF discount rate (%) Net rental per home
Valuation ($m)
FY23
5.25%
5.25%
5.25%
5.25%
5.00%
5.00%
5.25%
5.25%
5.25%
5.25%
5.00%
5.00%
5.25%
5.00%
5.00%
5.25%
5.25%
5.00%
5.25%
5.25%
5.25%
5.25%
FY22
FY23
FY22
5.25% 12.00% 12.00%
5.25% 12.00% 12.00%
5.25% 12.00% 12.00%
4.87% 13.50% 13.50%
5.25% 13.75% 13.80%
5.25% 13.75% 13.00%
5.25% 13.75% 13.80%
5.25% 13.00% 13.00%
4.87% 13.50% 13.50%
5.25% 13.75% 13.80%
5.25% 13.75% 13.00%
5.25% 13.75% 13.00%
4.87% 13.50% 13.50%
5.25% 14.00% 13.80%
5.25% 13.75% 13.00%
5.25% 13.00% 13.00%
5.25% 13.00% 13.00%
5.25% 13.75% 13.00%
5.25% 14.00% 14.00%
13.00%
13.00%
13.00%
FY23
8,347
6,365
7,663
8,364
8,229
7,473
8,069
7,258
8,123
7,836
8,079
8,676
8,251
8,461
7,673
8,733
7,629
8,149
7,636
7,536
7,671
7,805
FY22
7,881
6,011
7,235
7,884
8,235
7,107
7,618
6,810
7,662
7,400
7,865
8,014
7,782
7,799
7,391
8,235
7,157
7,644
7,163
FY23
47.8
23.6
36.9
29.2
61.7
27.1
31.1
31.4
35.7
31.5
49.6
52.0
49.2
43.6
37.8
41.0
39.9
57.6
41.1
24.2
16.9
22.2
31.1
15.6
21.9
42.9
19.7
FY22
Land cost
45.7
22.7
35.4
29.6
57.9
26.3
29.9
30.1
36.2
30.2
46.1
45.1
49.8
37.6
32.7
30.4
34.0
42.5
26.0
11.9
16.6
22.2
31.1
15.6
21.9
42.9
0
6.8
3.7
2.5
3.4
3.2
6.2
7.4
7.1
5.5
7
12.1
7.4
17.6
11.1
14.5
14.7
25.1
29.5
23
21.0
16.6
22.2
31.1
15.6
21.9
42.9
19.7
1. The purchase of land at Bellarine included $8.7m (excl. GST) of infrastructure which had been constructed on-site prior to acquisition. This pre-constructed
infrastructure has been included as part of the land acquisition cost and will not be sold to homeowners.
128
NOTES TO THE FINANCIAL STATEMENTS
Capitalisation rate
Capitalisation rate refers to the rate at which the
annual free cash flow from weekly rental, net of costs,
is capitalised to ascertain its present value at a given
date. The weekly rental is contracted under the Site
Lease Agreement. The capitalisation rate reflects the
nature, location and tenancy profile of the property
together with current market evidence and sale of
comparable properties.
Generally, a change in the assumption made for
the adopted capitalisation rate is accompanied by
a directionally opposite change in the investment
property value. The adopted capitalisation rate forms
part of the income capitalisation approach.
Capitalisation approach
When calculating the income capitalisation approach,
the weekly rent has a strong interrelationship with the
adopted capitalisation rate given the methodology
involves assessing the total weekly income receivable
from the property and capitalising this in perpetuity
to derive a capital value. The below summary shows
the impact on valuation of movement in the various
key inputs:
Key input
Increase in weekly rent
Decrease in weekly rent
Increase (softening) of the
capitalisation rate
Decrease (tightening) of the
capitalisation rate
Impact on valuation
Increase in valuation
Decrease in valuation
Decrease in valuation
Increase in valuation
In theory, it is possible for the effects of movements
in these key inputs to add to or offset each other
depending on which way the assumptions move.
Deferred Management Fee Discount rate
The discount rate is determined using a number of
risk-based assumptions to reflect the risk profile of
deferred management fee income stream.
derived from the deferred management fees less
expenses using probability factors on the homeowners
length of time in the community and also the property
market growth rates.
When assessing a discounted cash flow valuation, the
adopted discount rate has a strong interrelationship
in deriving a fair value given the discount rate will
determine the rate in which the deferred management
fee is discounted to the present value.
Fair value measurements
3.2
(a) Fair value hierarchy
Assets and liabilities measured and recognised at fair
value have been determined by the following fair value
measurement hierarchy:
Level 1: Quoted prices (unadjusted) in active markets
for identical assets and liabilities.
Level 2: Input other than quoted prices included within
Level 1 that are observable for the asset or liability,
either directly or indirectly.
Level 3: Inputs for the asset or liability that are not
based on observable market data.
000’s
30 Jun 23
Recurring Fair Value
Measurements
Investment properties
Total assets
measured at fair value
30 Jun 22
Recurring Fair Value
Measurements
Investment properties
Total assets
measured at fair value
Level 1
Level 2
Level 3
Total
–
–
–
–
–
–
–
–
962,150
962,150
962,150
962,150
850,247
850,247
850,247
850,247
Discounted cash flow approach
The discounted cash flow approach involves
formulating a projection of the net cash flow from
deferred management fees over a specified time
horizon and discounting this cash flow at the end of the
projection period at an appropriate rate. The present
value of this discounted cash flow represents the fair
value of the property.
In assessing the value of the discounted cash flow,
a forecast model projects the likely cash flows to be
(b) Valuation techniques and inputs used in level 3
(i)
fair value measurements
Investment properties
Investment properties have been classified as
level 3 as it is an internally generated calculation
that contains some non-observable market inputs.
The Company does not adjust some of the major
inputs obtained from the independent valuations
such as discount rates, the deferred management
fee annuity values, and the management
expense rates.
129
Lifestyle Communities Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS
(c) Significant unobservable inputs used in level 3
(i)
fair value measurements
Investment properties
Rental capitalisation rates – rates were
taken directly from the valuations for the ten
communities independently valued in the current
year. In relation to the remaining eleven operating
communities (independently valued in the prior
years) the Directors have adjusted the rental
capitalisation rates to reflect the conservative rate
adopted by valuers M3 for the properties that
were valued in the current year.
Deferred management fee annuity - the valuation
for this component is taken directly from
independent valuations for the ten properties
independently valued in the current year. For the
remaining eleven communities not independently
valued this year, the deferred management fee
valuations remained consistent with the prior
year noting the independent valuations and other
market evidence supported that the valuations had
not materially changed.
Rental annuity - for all communities the Directors
have increased the rent by 6.6% to reflect the
increase that was applied on 1 July 2023. The next
rent increase is due on 1 July 2024.
Post Tax Profit
Higher/(Lower)
Equity
Higher/(Lower)
$000’s
2023
2022
2023
2022
Rental expense rate
+2%
–2%
Rental capitalisation rate
(11,819)
(9,970)
(11,819)
(9,970)
11,819
9,970
11,819
9,970
+0.50%
–0.50%
(32,890)
(27,415)
(32,890)
(27,415)
39,984
33,287
39,984
33,287
Deferred management fee
per unit
+5%
–5%
Land prices
(undeveloped land)
+10%
–10%
7,585
6,507
7,585
6,507
(7,585)
(6,507)
(7,585)
(6,507)
15,955
16,050
15,955
16,050
(15,955)
(16,050)
(15,955)
(16,050)
Inventories
3.3
Inventories are measured at the lower of cost and
net realisable value. Inventories include housing units
built but not sold as well as capitalised civils and
infrastructure, wages and holding costs. Inventories
are classified as either current or non-current assets
pursuant to the timing of their anticipated sale.
For land not yet settled, the value is accrued if
the contract is unconditional. Refer to note 2.8 for
more information.
$000’s
Current
Housing
(d) Valuation processes used for level 3 fair value
(i)
measurements
Investment properties
The Company obtains independent valuations of
each community at least every three years, refer
to Note 3.1.
Civils and infrastructure
Non current
Housing
Civils and infrastructure
2023
2022
93,812
43,021
136,833
9,436
47,286
56,722
48,561
38,194
86,755
4,136
44,788
48,924
(e) Sensitivity analysis for recurring level 3 fair
Total
193,555
135,679
(i)
value measurements
Investment properties
The impact of changes to the inputs that
affect the valuation of investment properties is
as follows:
Inventory expense
(a)
Inventories recognised as an expense for the year
ended 30 June 2023 totalled $142.8 million for the
Group (2022: $142.8 million). The expense has been
included in the cost of sales line item.
3.4 Property, plant and equipment
Property, plant and equipment are stated at cost
less accumulated depreciation and any accumulated
impairment losses.
130
NOTES TO THE FINANCIAL STATEMENTS
Depreciation is calculated on a straight-line basis over
the estimated useful life of the assets as follows:
(a) Movements in carrying amounts of property,
plant and equipment
Movement in the carrying amounts for each class of
property, plant and equipment between the beginning
and the end of the current financial year:
$000’s
Buildings
2023
40 years
2022
40 years
Plant and equipment
4 to 25 years
4 to 25 years
Computer equipment
2 to 3 years
2 to 3 years
Motor vehicles
4 to 12 years
4 to 12 years
The assets’ residual values, useful lives and
amortisation methods are reviewed, and adjusted if
appropriate, at each financial year end.
$000’s
Year ended 30 June 2023
Balance at the beginning of the year
Additions
Depreciation
Balance at the end of the year
At 30 June 2023 cost
Accumulated depreciation
Net carrying amount
$000’s
Year ended 30 June 2022
Balance at the beginning of the year
Additions
Depreciation
Balance at the end of the year
At 30 June 2022 cost
Accumulated depreciation
Net carrying amount
Buildings
Plant and
Equipment
Motor Vehicles
Computer
Equipment
4,608
3,614
(150)
8,072
8,889
(817)
8,072
7,315
2,814
(1,347)
8,782
12,850
(4,068)
8,782
1,720
977
(295)
2,402
3,759
(1,357)
2,402
967
1,120
(573)
1,514
3,158
(1,644)
1,514
Buildings
Plant and
Equipment
Motor Vehicles
Computer
Equipment
4,462
275
(129)
4,608
5,276
(668)
4,608
6,275
2,040
(1,000)
7,315
10,452
(3,137)
7,315
1,819
134
(233)
1,720
2,782
(1,062)
1,720
696
618
(347)
967
2,090
(1,123)
967
Total
14,610
8,525
(2,365)
20,770
28,656
(7,886)
20,770
Total
13,252
3,067
(1,709)
14,610
20,600
(5,990)
14,610
3.5 Assets held for sale
3.6 Derivative financial instrument
$000’s
Assets held for sale
2023
3,426
2022
$000’s
–
Hedge receivable
2023
2,884
2022
–
Investment property classified as held for sale during
the half year was measured at the fair value less costs
to sell at the time of the reclassification, resulting
in the recognition of a fair value gain of $1.1m in
the statement of profit or loss. The fair value was
determined using the prices of comparable properties
for the 10 residential lots adjacent to our St Leonards
Community currently being marketed for sale.
131
Lifestyle Communities Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS
At 30 June 2023 the fair value of the swap was a gain
of $2.9m pre-tax and $2m post tax. The gain has been
recorded in equity.
3.7 Leases
$000’s
Non current assets
Right of use assets
Current liabilities
Lease liabilities
Non current liabilities
Lease liabilities
2023
2022
3,464
1,095
3,962
314
269
136
In February 2023 the support office moved to a new
premises, 101 Moray St, South Melbourne. The lease
term is 5 years with a termination date of 31st March
2028. The Company also entered into a lease with a
retail outlet at Fountain gate shopping centre on 30th
June 2023 and the termination date is 30 June 2028.
The right of use liability has $0.2m remaining
to be paid monthly until February 2024 for the
Raglan St office.
Capital Management
4. How we fund the business and manage risks
4.1
When managing capital, management’s objective is
to ensure the entity continues as a going concern as
well as to maintain optimal returns to shareholders and
benefits for other stakeholders. Management also aims
to maintain a capital structure that ensures the lowest
cost of capital available to the entity by assessing the
cost of equity (share issue), cost of debt (borrowings)
or a combination of both.
We maintain our balance sheet settings with a margin
of safety over and above the requirements in our
funding agreements. Our goal is to maintain debt
facilities that have sufficient facility size, headroom,
and tenure to meet our committed development plans.
We closely monitor our cash flow forecasts and tightly
manage the commencement and rate of development
of new communities to ensure we have sufficient funds
to meet our commitments as and when they fall due.
Due to the capital recycling nature of our business
model, we are also reliant on continuing sales and
settlements to fund our development pipeline and
remain complaint with the financial covenants in our
funding agreements. If we experience a sustained
slowdown in sales and settlements, we may need to
slow down our speed of development, or undertake
other capital management activities.
4.2 Financial Risk Management Objectives
and Policies
The Group’s principal financial instruments comprise
bank loans, cash, trade and other receivables and
trade payables.
(i) Classification
The consolidated entity classifies its financial
assets in the following measurement categories:
• those to be measured subsequently at fair value
(through profit and loss), and
• those to be measured at amortised cost.
The classification depends on the entity’s business
model for managing the financial assets and the
contractual terms of the cash flows.
For assets measured at fair value, gains and losses
will be recorded in the profit or loss.
(ii) Recognition and derecognition
The regular way purchases and sales of financial
assets are recognised on trade date, being the date
on which the Group commits to purchase or sell
the asset. Financial assets are derecognised when
the rights to receive cash flows from the financial
assets have expired or have been transferred and
the Group has transferred substantially all the risks
and rewards of ownership.
(iii) Measurement
At initial recognition, the Group measures a
financial asset at its fair value plus, in the case of
a financial asset not at fair value through profit
or loss (FVPL), transaction costs that are directly
attributable to the acquisition of the financial
assets. Transaction costs of financial assets carried
at FVPL are expensed in profit and loss.
Non derivative financial instruments
Non-derivative financial instruments consist of trade
and other receivables, cash and cash equivalents, loans
and borrowings, and trade and other payables.
Non-derivative financial instruments are initially
recognised at fair value, plus directly attributable
transactions costs (if any). After initial recognition,
non-derivative financial instruments are measured as
described below.
Loans and receivables
Loans and receivables are measured at fair value at
inception and subsequently at amortised cost using the
effective interest rate method.
132
NOTES TO THE FINANCIAL STATEMENTS
Interest bearing loans and borrowings
Interest bearing loans and borrowings are initially
recognised at the fair value of the consideration
received less directly attributable transaction costs.
If interest rates had moved and been effective for the
period, as illustrated in the table below, with all other
variables held constant, post tax profit and equity
would have been affected as follows:
After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised
cost using the effective interest method.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement
of the liability for at least 12 months after the balance
sheet date.
Financial liabilities
Financial liabilities include trade payables, other
creditors and loans from third parties.
Non-derivative financial liabilities are recognised at
amortised cost, comprising original debt less principal
payments and amortisation.
The Group manages its exposure to key financial
risk, including interest rate risk in accordance with
the Group’s financial risk management policy. The
objective of the policy is to support the delivery of
the Group’s financial targets whilst protecting future
financial security.
The main risks arising from the Group’s financial
instruments are interest rate risk, market risk, credit
risk and liquidity risk. The Group uses different
methods to measure and manage different types of
risks to which it is exposed. These include market
forecasts for interest rates. Liquidity risk is monitored
through the development of future rolling cash flow
forecasts. These procedures are sufficient to identify
when mitigating action might be required. The Board
reviews and agrees policies for managing each of these
risks as summarised as follows:
Interest rate risk
The Group’s exposure to the risk of changes in market
interest rates relates primarily to the Group’s long-term
debt obligations. The level of debt is disclosed
in Note 4.4.
Long term debt obligations
As at balance date, the Group had the following
mix of financial assets and liabilities exposed to
Australian variable interest rate risk (being the bank bill
business rate):
Post Tax Profit
Higher/(Lower)
Equity
Higher/(Lower)
2023
2022
2023
2022
$000s
Consolidated
+1% (100 basis points)
(1,067)
(1,835)
(1,067)
(1,835)
−1% (100 basis points)
1,067
1,835
1,067
1,835
When determining the parameters for a possible
change in interest rate risk, management has taken into
consideration the current economic environment at
balance sheet date and historical movements.
A proportion of the impact on post tax profit is
deferred due to the capitalisation of interest to
inventory which is recognised when units are sold.
Market risk
At balance date, the Group has no financial
instruments exposed to material market risks other
than interest rate risk.
Credit risk
There are no significant concentrations of credit risk
within the Group.
Credit risk arises from the financial assets for the
Group, which comprise cash and cash equivalents,
and trade and other receivables. The Group’s exposure
to credit risk arises from potential default of the
counterparty, with a maximum exposure equal to the
carrying amount of these instruments. Exposure at
balance date has been assessed as minimal as the
financial assets have been assessed as having a high
likelihood of being received.
Liquidity risk
The Group’s objective is to maintain a balance between
continuity of funding and flexibility through the use of a
bank facility. The Group ensures that there is sufficient
liquidity within the bank facility by maintaining internal
credit requirements that are more conservative than
the financier.
$000’s
Financial assets
Cash and cash equivalents
Financial liabilities
Secured loans—bank finance
Net exposure
2023
2022
The Group’s debt as at balance date is outlined
at Note 4.4.
1,233
1,893
(371,000)
(369,767)
(245,000)
(243,107)
The table below represents the undiscounted
contractual settlement terms for financial instruments
and management expectation for settlement of
undiscounted maturities.
133
Lifestyle Communities Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS
The remaining contractual maturities of the Group’s
financial liabilities are:
$000’s
6 months or less1
6–12 months2
1–2 years3
3–4 years4
2023
52,627
35,273
81,069
408,947
577,916
2022
71,253
19,987
64,430
255,829
411,499
(1) This amount is represented by the following financial liabilities:
• $40.9 million relates to trade and other payables, refer to Note 2.8 for
further detail (2022: $21.7 million);
• $11 million relates to expected interest on the secured loan;
• $0.9 million relates to customer deposits which typically convert to
settlement within six months or less (2022: $1.4 million); and
• $0.3m relates to lease liabilities at Raglan St, Moray St and
Fountain gate.
(2) $22 million relates to two parcels of land for contracts entered into prior
to the reporting date (including stamp duty) expected to settle within 6-
12 months of the reporting date
$13 million relates to expected interest on the secured loan; and
$0.4m relates to lease liabilities at Moray St and Fountain Gate.
(3) $54 million relates to amounts payable on two parcels of land for
contracts entered into prior to the reporting date (including stamp duty)
expected to settle within 1 - 2 years of the reporting date. $26.6 million
relates to expected interest on the secured loan
$0.7m relates to lease liabilities at Moray St and Fountain Gate.
(4) $35.7 million relates to expected interest on the secured loan, the
balance of $371m relates to future principal repayments
$2.3m relates to lease liabilities at Moray St and Fountain Gate.
The above commitments will be funded using cash
received from new home sales and the company’s
existing debt facilities. The Group has met all required
covenants since the arrangements commenced and
therefore expects that all current arrangements will
continue until the sooner of repayment or expiry.
4.3 Cash and cash equivalents
Cash and cash equivalents include cash on hand and
at banks, bank overdrafts and short-term deposits with
an original maturity of three months or less held at call
with financial institutions.
$000’s
Cash and cash equivalents
2023
1,233
2022
1,893
4.4
Interest bearing loans and borrowings
$000’s
Secured loans—bank finance
2023
371,000
2022
245,000
(a) Secured loans bank finance maturity
In October 2022, the Company extended its contracts
with The Commonwealth Bank of Australia, National
Australia Bank and HSBC Bank Australia to secure an
additional $150 million of senior debt facilities and
extend the tenor. The total facility now comprises $525
million of senior debt facilities under a common terms
deed. The facilities comprise of the following:
• $110 million tranche with a maturity of June 2025,
• $265 million tranche with a maturity of
August 2026
• $150 million tranche with a maturity of
October 2027.
As at reporting date the Company has drawn $371
million of the $525 million facility.
There is also a $2 million facility for bank guarantees
used during developments held with The
Commonwealth Bank of Australia.
(b) Fair values
Unless disclosed below, the carrying amount of
the Group’s current and non-current borrowings
approximate their fair value.
(c) Assets pledged as security
The $525 million facility is secured by the following:
General Security Deeds between The Commonwealth
Bank of Australia, National Australia Bank, HSBC Bank
Australia and:
• Lifestyle Communities Limited
• Lifestyle Investments 1 Pty Ltd
• Lifestyle Management 1 Pty Ltd
• Lifestyle Developments 1 Pty Ltd
• Lifestyle Investments 2 Pty Ltd
• Lifestyle Management 2 Pty Ltd
• Lifestyle Developments 2 Pty Ltd
• Lifestyle Communities Investments
Cranbourne Pty Ltd
• Brookfield Village Management Pty Ltd; and
• Brookfield Village Development Pty Ltd.
Mortgage granted by Lifestyle Investments 1 Pty Ltd
over the properties at Melton (Brookfield), Tarneit
(Seasons) and Warragul.
Mortgage granted by Lifestyle Investments 2 Pty Ltd
over the properties at Shepparton, Hastings, Wollert
(Lyndarum), Geelong, Officer, Berwick Waters, Bittern,
Ocean Grove, Mount Duneed, Kaduna Park, Wollert
North, Deanside, St Leonards, Meridian, Woodlea,
Clyde (Riverfield), Bellarine (Leopold) and Phillip Island.
(d) Defaults and breaches
During the current or prior year there have been no
defaults or breaches of any banking covenants as set
out in the Business Finance Agreements with The
Commonwealth Bank of Australia, National Australia
Bank and HSBC Bank Australia.
134
• $240m from 19th December 2023 until 19th
(b) Reserves
NOTES TO THE FINANCIAL STATEMENTS
Interest rate swap
(e)
In December 2022, the Company entered into an
interest rate swap with the National Australia Bank with
a maturity of December 2026.
The interest rate swap is fixed over the
following periods:
• $340m from 19th December 2022 until 19th
December 2023
December 2026
4.5 Contributed equity
$000’s
2023
2022
104,545,131 Ordinary shares
(30 June 2022: 104,545,131)
Ordinary Shares - Contributed Equity
540,386 Treasury shares
(30 June 2022: 484,212)
Total
64,523
(8,598)
64,523
(6,797)
55,925
57,726
(i) Reconciliation of Ordinary shares
2023
2022
Number
$000
Number
$000
Opening balance
104,545,131
64,523
104,545,131
64,523
(a) Ordinary shares
Fully paid ordinary shares carry one vote per share and
carry the right to dividends.
Treasury shares represent shares purchased by an
Employee Share Trust to satisfy obligations under the
employee incentive scheme that have not been issued
to Employees at balance date pursuant to the Equity
Incentive Scheme.
135
4.6 Retained earnings and reserves
(a) Movements in retained earnings were as follows
$000’s
Opening balance
Profit for the year
Dividends paid
$000’s
Opening balance
Share based payments expense
Vesting of employee shares
Employee share trust contribution
Hedge reserve
Closing balance
2023
389,703
81,900
(12,025)
459,578
2023
6,028
1,404
(101)
–
2,023
9,354
2022
310,764
88,871
(9,932)
389,703
2022
3,472
2,876
(123)
(197)
–
6,028
4.7 Dividends
(a) Dividend considerations
As a general principle, the Directors of Lifestyle
Communities intend to declare dividends out of
post-tax, operating cash flow generated from
community management after an appropriate
allowance for a share of the corporate overheads. In
FY23 community management cash flows delivered
a sufficient surplus to declare and pay an interim fully
franked dividend of 6.0 cents per share ($6.3 million)
and declare a final fully franked dividend of 5.5 cents
per share ($5.8 million).
Considerations in determining the level of free cash
flow from which to pay dividends include: operating
cash flow generated from community management;
the projected tax liability of Lifestyle Communities
Limited; the level of corporate overheads attributable
to community roll out; the level of interest to be funded
from free cash flow; and additional capital needs of the
development business.
The Group is not subject to externally imposed capital
requirements.
(b) Dividends
Type
Paid during the year
2022 final dividend
2023 interim dividend
Cents per
share
Total
($000)
Franked
%
Payment
date
6.0
5.5
6,273
5,751
100% 6-Oct-22
100% 5-Apr-23
To be paid after end of year
2023 final dividend
6.0
6,273
100% 5-Oct-23
Lifestyle Communities Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS
(c) Franking account balance
$000’s
Franking account balance
2023
33,753
2022
29,519
Balance of franking account on a tax paid basis at
balance date adjusted for franking credits arising from
payment of current tax payable and franking debits
arising from the payment of dividends declared at
balance date.
Franked dividends declared or paid during the year
were franked at the tax rate of 30%.
(iv) Share based payments
The consolidated entity operates an equity incentive
scheme (EIS). The Equity Incentive Scheme is explained
in section 6.3 of the Remuneration Report and
additional information is contained in Note 5.3 below.
$000’s
Employee number
Wages and salaries
Defined contribution superannuation expense
Share based payments expense
Movement in employee provisions
2023
167
15,606
1,455
1,404
431
2022
120
12,141
1,015
2,876
(194)
5. How we remunerate our Employees
Total
18,896
15,838
5.2 Employee provisions
$000’s
Current
Annual leave
Long service leave
Non current
Long service leave
2023
2022
935
324
443
643
318
310
5.3 Share based payments
(a) Recognised share based payment expenses
$000’s
Expenses arising pursuant to the EIS
2023
1,404
2022
2,876
(b) Equity Incentive Scheme, ‘EIS’
The Equity Incentive Scheme is explained in section
6.3 of the Remuneration Report.
and auditors
5.1 Employee benefits expense
(i) Short term Employee benefit obligations
Liabilities arising in respect of wages and salaries,
annual leave and any other Employee benefits
expected to be settled wholly within twelve months
of the reporting date are measured at their nominal
amounts based on remuneration rates which are
expected to be paid when the liability is settled. The
expected cost of short-term Employee benefits in the
form of compensated absences such as annual leave
is recognised in the provision for Employee benefits.
All other short-term Employee benefit obligations are
presented as payables.
(ii) Long term Employee benefit obligations
The provision for Employee benefits in respect of
long service leave and annual leave which are not
expected to be settled wholly within twelve months
of reporting date, are measured at the present value
of the estimated future cash outflow to be made in
respect of services provided by Employees up to the
reporting date.
Employee benefit obligations are presented as current
liabilities in the Statement of Financial Position if
the entity does not have an unconditional right to
defer settlement for at least twelve months after
the reporting date, regardless of when the actual
settlement is expected to occur.
(iii) Retirement benefit obligations
The consolidated entity makes contributions to
defined contribution superannuation plans in respect
of Employee services rendered during the year. These
superannuation contributions are recognised as an
expense in the same period when the Employee
services are received.
136
NOTES TO THE FINANCIAL STATEMENTS
(c) Shares granted pursuant to the EIS
The following table outlines shares granted pursuant
to the EIS:
(Maximum potential)
Forfeited/
lapsed
Granted as
compensation
Value at
grant date ($)
No.
149,000
864,200
(18,405)
%
–
Value at
grant
date (final
entitlement)
Final
entitlement
Vested
Balance at
30 June 2023
Vested &
No.
%
Exercised
exercisable Unvested
149,000
864,200
149,000 100% (87,231)
43,364
166,734
1,879,092
(43,515)
(26)%
166,734
– 143,984
86% (46,537)
76,682
300,481
6,558,159
(81,523)
(27)%
226,918
4,954,503
147,634 49% (19,208)
120,466
79,284
418,675
6,510,396
(190,076)
(45)%
57,289
890,844
–
–
–
–
171,310
440,618
(152,976)
240,512
250,594
–
–
FY19 Options -
granted Nov 2019
FY21 Options –
granted Nov 2020
FY22 Options –
granted Nov 2021
FY23 Options –
granted Nov 2022
2022
5.4 Auditors remuneration
$000’s
2023
2022
Amounts received or due and receivable for
current auditors:
An audit or review of the financial report of the entity
and any other entity in the consolidated group.
Other services in relation to the entity and any other
entity in the consolidated group – tax compliance,
general tax advice, GST advice and other agreed upon
procedures.
230
185
36
41
266
226
The auditor of Lifestyle Communities Limited is
PricewaterhouseCoopers who were appointed on the
18th November 2019.
6. How we structure the business
6.1 Related party disclosures
(a) Ultimate parent
Lifestyle Communities Limited is the ultimate
Australian parent entity.
All options issued in relation to the employee incentive scheme for FY20 have
lapsed as the performance hurdles were not met.
$000’s
Opening balance
Issued during the year
Exercised during the year
Forfeited/lapsed during the year
Closing balance
2023
424
419
(41)
(311)
491
283
300
(79)
(80)
424
Of the 250,594 unvested options, 27,895 are planned
to vest in September 2023 and 27,895 are planned to
vest on 30 June 2024. The remainder unvested options
relate to the LTI scheme.
All unvested options have ongoing service,
competency and behavioural requirements and vesting
is at the discretion of the Board.
The weighted average exercise price of options is
nil. The weighted average share price at the date
of exercise for share options exercised during the
period was $17.53 and the expiry date for all options
outstanding at the end of the year is 10 years from the
date of grant.
137
Lifestyle Communities Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS
(b) Subsidiaries
The percentage of ownership interest held is
equivalent to the percentage voting rights for all
subsidiaries.
Lifestyle Investments 1 Pty Ltd
Lifestyle Developments 1 Pty Ltd
Lifestyle Management 1 Pty Ltd
Brookfield Management Trust (Trustee: Brookfield Village Management Pty Ltd)
Brookfield Development Trust (Trustee: Brookfield Village Development Pty Ltd)
Lifestyle Communities Investments
Cranbourne Pty Ltd
Lifestyle Investments 2 Pty Ltd
Lifestyle Developments 2 Pty Ltd
Lifestyle Management 2 Pty Ltd
2023
%
2022
%
2023
$
2022
$
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
8,751,551
8,751,551
–
–
–
–
–
2
2
2
–
–
–
–
–
2
2
2
8,751,557
8,751,557
(c) Loans from related parties
There are no loans from related parties.
(d) Transactions with related parties
There were no transactions with related parties in the
current or prior years.
6.2 Joint Operations
The Group has a 50% interest in the joint arrangement
at Chelsea Heights and Casey Fields together with
BGDU Pty Ltd. and Tradewynd Pty Ltd respectively to
develop and manage the communities.
The principal place of business of the joint operation is
in Victoria, Australia.
The agreements related to the joint arrangements
require unanimous consent from all parties for all
relevant activities. The two partners have direct
rights to the assets of the partnership and are jointly
and severally liable for the liabilities incurred by the
partnership. This entity is therefore classified as a
joint operation and the Group recognises its direct
right to the jointly held assets, liabilities, revenues
and expenses.
6.3 Deed of Cross Guarantee
Pursuant to ASIC Corporations (Wholly-owned
Companies) Instrument 2016/785 dated 17 December
2016, the wholly-owned subsidiaries listed below
are relieved from the Corporations Act 2001
requirements for preparation, audit and lodgement
of financial reports, and Directors’ reports as they
are part of a Closed Group as defined by the
Corporations Act 2001:
• Lifestyle Communities Limited
• Lifestyle Investments 2 Pty Ltd
• Lifestyle Developments 2 Pty Ltd
• Lifestyle Management 2 Pty Ltd
• Lifestyle Communities Investments
Cranbourne Pty Ltd
• Lifestyle Investments 1 Pty Ltd
• Lifestyle Management 1 Pty Ltd
• Lifestyle Developments 1 Pty Ltd
• Brookfield Village Management Pty Ltd
• Brookfield Village Development Pty Ltd
Pursuant to the above-mentioned legislative
instrument, the Company and each of the subsidiaries
entered into a Deed of Cross Guarantee on the 19th
of June 2015 or have been added as parties to the
Deed of Cross Guarantee by way of an Assumption
Deed dated the 4th of June 2019. The effect of the
Deed is that the Company guarantees to each creditor
payment in full of any debt in the event of winding
up of any of the subsidiaries under certain provisions
of the Corporations Act 2001. If a winding up occurs
under other provisions of the Act, the Company will
only be liable in the event that after six months any
creditor has not been paid in full. The subsidiaries
have also given similar guarantees in the event that the
Company is wound up.
The Consolidated Statement of Profit and Loss and
Other Comprehensive Income and Consolidated
Statement of Financial Position for the Closed Group
are the same as the financial statements for Lifestyle
Communities Limited and its controlled entities.
138
NOTES TO THE FINANCIAL STATEMENTS
6.4 Parent entity
Required disclosures relating to Lifestyle Communities
Limited as a parent entity:
Future minimum rentals receivable under
non-cancellable operating leases as at balance date
were as follows:
$000’s
No later than 1 year
Between 1 year and 5 years
2023
42,096
168,386
2022
35,551
142,204
Greater than 5 years
3,342,565
2,836,150
Total minimum lease payments
3,553,047
3,013,905
Minimum lease payments were determined by
measuring the current year’s rentals and measuring this
over the standard 90 year lease agreement.
7.2 Commitments
Commitments for future development costs not
recognised in the financial statements at balance date
are $483 million.
These commitments include future construction
costs committed for Wollert, Deanside, St Leonards,
Meridian, Bellarine, Woodlea, Riverfield, Phillip Island
and Ridgelea.
7.3 Contingencies
The company’s sites are exempt from land tax once
fully completed and settled. The Company is holding a
provision for land tax which is payable on a proportion
of its development sites whilst they are under
construction. Discussions are ongoing with the State
Revenue Office of Victoria regarding the appropriate
apportionment methodology. The Company has
formed its position after taking independent advice
from relevant subject matter experts, including
senior counsel.
7.4 Events Occurring After the Reporting Date
The Group had no others matters or circumstances
since the end of the financial year which significantly
affected or may significantly affect the operations of
the Group, the results of those operations or the state
of affairs of the Group in future financial years.
In August 2023 the Company signed contracts to
purchase a site in Clifton Springs. Construction is
expected to commence in 18–24 months subject
to planning.
Consolidated Statement of Financial Position
$000’s
Assets
Current assets
Total Assets
Liabilities
Current liabilities
Total Liabilities
Equity
Issued capital
Reserves
Retained earnings
Total Equity
Consolidated Statement of Profit
or Loss and Other Comprehensive
Income
Net profit/(loss)
Profit for the year
Other comprehensive income
Total comprehensive income
2023
2022
400,448
405,415
47,534
311,847
54,697
10,320
28,551
93,568
–
19,853
–
19,853
262,450
264,570
262,450
264,570
57,727
6,028
9,359
73,114
–
13,751
–
13,751
7.
Information not recognised in the
financial statements
Lessor Commitments
7.1
Operating lease commitments receivable
The Group has entered into commercial property
leases with its residents in relation to its investment
property portfolio, consisting of the Group’s land.
The residential site leases provide for future lease
commitments receivable as disclosed below.
These non-cancellable leases have remaining terms of
between 81 and 90 years. All leases include a clause
to enable upward revision of the rental charge on an
annual basis according to prevailing market conditions.
139
Lifestyle Communities Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS
140
THE DIRECTOR’S DECLARATION
The Director’s Declaration
The directors of the Company declare that:
1. The consolidated financial statements and notes for the year ended 30 June 2023 are in
accordance with the Corporations Act 2001 and:
a. Comply with Accounting Standards, which, as stated in basis of preparation Note
1.1 to the consolidated financial statements, constitutes explicit and unreserved
compliance with International Financial Reporting Standards (IFRS); and
b. Give a true and fair view of the financial position and performance of the
consolidated Group;
2. The Managing Director and Chief Finance Officer have given the declarations required by
Section 295A that:
a. The financial records of the Company for the financial year have been properly
maintained in accordance with section 286 of the Corporations Act 2001;
b. The consolidated financial statements and notes for the financial year comply with
the Accounting Standards; and
c. The consolidated financial statements and notes for the financial year give a true
and fair view.
3.
In the directors’ opinion, there are reasonable grounds to believe that the Company will
be able to pay its debts as and when they become due and payable.
The Company has entered into a deed of cross guarantee under which the Company and its
subsidiaries guarantee the debts of each other, refer to Note 6.3.
At the date of this declaration, there are reasonable grounds to believe that the companies
which are party to this deed of cross guarantee will be able to meet any obligations or
liabilities to which they are, or may become subject to, by virtue of the deed.
Signed in accordance with a resolution of the Board of Directors.
Philippa Kelly
Chair
James Kelly
Managing Director
Melbourne, 16 August 2023
141
Lifestyle Communities Annual Report 2023 THE DIRECTOR’S DECLARATION
Independent auditor’s report
To the members of Lifestyle Communities Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Lifestyle Communities Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 30 June 2023 and of its financial
performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
●
●
●
●
●
●
the consolidated statement of financial position as at 30 June 2023
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331 MELBOURNE VIC 3001
T: +61 3 8603 1000, F: +61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
142
INDEPENDENT AUDITOR’S REPORT
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
Audit scope
● For the purpose of our audit we used overall
● Our audit focused on where the Group made
subjective judgements; for example, significant
accounting estimates involving assumptions and
inherently uncertain future events.
Group materiality of $5.1 million, which represents
approximately 5% of the Group’s profit before tax,
adjusted for the impact of items as described
below.
● We applied this threshold, together with qualitative
considerations, to determine the scope of our audit
and the nature, timing and extent of our audit
procedures and to evaluate the effect of
misstatements on the financial report as a whole.
● We adjusted profit before tax for the impact of the
fair value gain caused by the changes in market
based assumptions used in the valuation of the
Group’s investment properties, because of the
volatility in results arising from such changes. We
chose Group profit before tax adjusted for the
above items, because in our view, it is most
representative of the Group’s performance from
ongoing operating activities.
● We utilised a 5% threshold based on our
professional judgement, noting it is within the
range of commonly acceptable thresholds.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit Committee.
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Lifestyle Communities Annual Report 2023
INDEPENDENT AUDITOR’S REPORT
Key audit matter
How our audit addressed the key audit matter
Fair valuation of investment properties
(Refer to note 3.1) [$962.2 m]
We performed the following procedures, amongst
others:
The fair value of investment properties comprises the
discounted income streams consisting of rental income
and deferred management fees associated with
completed home units and the fair value of
undeveloped land.
The fair valuation of investment property is inherently
subjective and impacted by, among other factors,
prevailing market conditions, the individual nature and
condition of each property, its location and the
expected future income for each property. The
following key assumptions are used in the valuation of
investment properties, amongst others:
capitalisation rate
●
● discount rate
●
● deferred management fee values per unit.
operating and capital expenditure
The Group’s valuation policy requires properties to be
valued by external valuation experts in accordance with
the Board approved programme. In the period between
external valuations, the Directors perform internal
valuations.
This was a key audit matter because of the:
●
●
financial significance of the investment
property balance in the Consolidated
Statement of Financial Position and of the
impact of changes in the fair value of
investment properties on the Group’s profit or
loss.
subjectivity and sensitivity of valuations to key
input assumptions, specifically capitalisation
and discount rates and deferred management
fee values per unit.
● Developed an understanding of the relevant
internal controls associated with the Group’s
approach to fair valuation of investment
properties and assessed compliance with its
policy on external valuations and rotation of
valuation firms.
● For properties subject to external valuations,
we agreed the fair values recognised in the
financial report to the external valuations and
assessed the competency, capability and
objectivity of the relevant valuers.
● Together with PwC real estate valuation
experts, conducted enquiries with the external
valuation experts to develop an understanding
of the approach and methodology applied to
the valuations and the risk factors considered
applicable to the Group.
● Assessed the methodology used in the internal
valuations and agreed them to the values
adopted in the financial report.
● Performed tests to assess appropriateness of
certain input data used in the valuations.
These tests included, amongst others:
o For a sample of contracts with
residents across the portfolio,
comparing the rental income used in
the valuation to underlying
contracts.
o For a sample, comparing data for
operating and capital expenditure
and resident data used in the
valuations to observable historic data
maintained by the Group.
● Together with input from PwC real estate
valuation experts, assessed the
appropriateness of key assumptions used in
the valuations by reference to available
market and other evidence, as relevant.
● Evaluated the reasonableness of related
disclosures made in Note 3.1 in light of the
requirements of Australian Accounting
Standards.
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INDEPENDENT AUDITOR’S REPORT
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2023, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
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Lifestyle Communities Annual Report 2023
INDEPENDENT AUDITOR’S REPORT
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 95 to 106 of the directors’ report for the
year ended 30 June 2023.
In our opinion, the remuneration report of Lifestyle Communities Limited for the year ended 30 June
2023 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Andrew Cronin
Partner
Melbourne
16 August 2023
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146
ASX ADDITIONAL INFORMATION
ASX Additional Information
Additional information required by the Australian Stock
Exchange Limited and not shown elsewhere in this
report is as follows. The information is current as at
1 August 2023.
On-Market Buyback
There is no current on-market buy-back in relation to
the Company’s securities.
Restricted Securities
There is no restricted securities on issue at
1 August 2023.
(c) The number of shareholders by range of units
and unmarketable parcel holders
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,000 and over
Total
Total
holders
% of issued
capital
Units
2,475
1,069
213
220
35
816,886
2,597,044
1,527,832
6,279,676
93,323,693
4,012
104,545,131
0.8%
2.5%
1.5%
6%
89.3%
100.0%
(a) Distribution of equity securities
(i) Ordinary share capital
104,545,131 fully paid ordinary shares are held
by 3,625 individual shareholders
(b) Substantial shareholders
The number of substantial shareholders and
their associates are set out below:
Fully paid ordinary
shareholders
Number
%
Current at (last
notification date)
Australian Super
9,971,488
9.54% 23-Feb-23
Brahman Capital
Management Pty Ltd
9,363,012
8.96% 09-Jul-21
Challenger Limited
7,153,197
6.84% 19-Jan-23
James Kelly
7,077,001
6.77% 14-Sep-21
Vanguard Group
5,227,441
5.00% 17-Feb-23
Voting rights
At meeting of members or classes of members :
(a) each member entitled to vote may vote in person
or by proxy, attorney or respective:
(b) on a show of hands, every person present who is a
member or proxy, attorney or representative of a
member has one vote; and
(c) on a poll, every person present who is a member
or a proxy, attorney or representative of a
member has:
(i) for each fully paid share held by person, or
in respect of which he/she is appointed a
proxy, attorney or representative, one vote
for the share;
(ii) for each partly paid share, only the fraction of
one vote which the amount paid ( not credited)
on the share bears to the total amounts
paid and payable on the share ( excluding
amounts credited).
Subject to any rights or restrictions attached to any
shares or class of shares.
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Lifestyle Communities Annual Report 2023
ASX ADDITIONAL INFORMATION
(d) Twenty largest holders of quoted equity securities
1
2
3
4
5
JP Morgan Nominees Australia PTY Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees PTY Limited
Brahman Pure Alpha Pte Ltd
National Nominees Limited
6 Masonkelly PTY Limited
7
8
9
10
11
12
13
14
15
BNP Paribas Noms PTY Limited
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