Lifestyle Communities (LIC) H1 2025 earnings summary

Executive summary

• Net profit after tax for 1HFY25 was $22.7m, up from $20.8m in 1HFY24, driven by increased settlements and more homes under management, despite a subdued Victorian property market and lower consumer confidence.

• New home settlements increased to 137 in 1HFY25 from 124 in 1HFY24, but net new home sales dropped sharply to 41 from 197, reflecting a challenging sales environment and adverse media coverage related to VCAT proceedings.

• Dividend was paused to preserve capital amid slow sales and uncertain outlook.

• Debt facility was refinanced, reducing the ICR covenant and extending maturities for greater flexibility.

• Henry Ruiz appointed as new CEO, effective March 2025, following the retirement of James Kelly.

Financial highlights

• Revenue from home settlements increased to $84.9m (1HFY24: $70.3m); gross margin declined to 14.9% (1HFY24: 18.8%) due to product and community mix.

• Annuity revenue (rent + DMF) reached $27.7m, up from $26.9m in 1HFY24; rental revenue grew to $22.6m (1HFY24: $20.5m) with 3,997 homes under management.

• Deferred management fee revenue was $5.1m (1HFY24: $6.4m) on 58 resales (1HFY24: 75); average DMF paid to company was $85,187.

• Total assets at 31 Dec 2024 were $1,578.1m (1HFY24: $1,440.7m); net debt $355.5m; net debt to assets less unsettled land 24.6%.

• Community operating margin was 54.2%, slightly up from 53.9% in 1HFY24.

Outlook and guidance

• Management expects gradual recovery in sales momentum, supported by improved lead indicators in early 2025.

• Focus remains on inventory and land bank management, cost control, and reducing balance sheet gearing.

• FY26 settlements expected to be subdued unless sales rates improve; guidance will be reinstated when visibility increases.

• VCAT hearing on DMF model scheduled for May 2025, with resolution expected within 3-6 months post-hearing.

• 168 new home settlements completed YTD (to 23 Feb 2025); 281 new home sale deposits in hand.