INGENIA COMMUNITIES GROUP

2015 Annual Report

Annual Report 2015

Ingenia Communities Holdings Limited Annual Reports

for the year ended 30 June 2015

CONTENTS	CONTENTS
Directors’ Report		1
Auditor’s Independence Declaration		29
Consolidated Statement of Comprehensive Income		30
Consolidated Balance Sheet		32
Consolidated Cash Flow Statement		33
Consolidated Statement of Changes in Equity		34
Notes to the Financial Statements		35
1.	Summary of signifcant accounting policies	35
2.	Accounting estimates and judgements	42
3.	Segment information	43
4.	Earnings per security	46
5.	Revenue	47
6.	Finance expense	47
7.	Income tax beneft	48
8.	Discontinued Operations	49
9.	Business combinations	50
10.	Assets and liabilities held for sale	50
11.	Cash and cash equivalents	51
12.	Trade and other receivables	51
13.	Inventories	51
14.	Investment properties	51
15.	Plant and equipment	58
16.	Intangibles	58
17.	Trade and other payables	59
18.	Borrowings	59
19.	Retirement village resident loans	60
20.	Provisions	61
21.	Derivatives	61
22.	Deferred tax assets and liabilities	61
23.	Issued securities	62
24.	Reserves	63
25.	Accumulated losses	63
26.	Commitments	64
27.	Contingent liabilities	64
28.	Share-based payment transactions	64
29.	Capital management	66
30.	Financial instruments	66
31.	Fair value measurement	72
32.	Auditor’s remuneration	73
33.	Related parties	73
34.	Company fnancial information	74
35.	Subsidiaries	75
36.	Notes to the cash fow statement	77
37.	Subsequent events	78
Directors’ Declaration		79
Independent Auditor’s Report		80

www.ingeniacommunities.com.au

Ingenia Communities Holdings Limited

Directors’ Report

for the year ended 30 June 2015

The directors of Ingenia Communities Holdings Limited (“ICH” or the “Company”) present their report together with the Company’s financial report for the year ended 30 June 2015 (the “current year”) and the Independent Auditor’s Report thereon. The Company’s financial report comprises the consolidated financial report of the Company and its controlled entities, including Ingenia Communities Fund (“ICF” or the “Fund”) and Ingenia Communities Management Trust (“ICMT”) (collectively, the “Trusts”).

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

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

1. DIRECTORS

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

Non-executive Directors (“NEDs”)

Jim Hazel (Chairman)

Philip Clark AM

Amanda Heyworth

Robert Morrison

Philip Clark AM

Mr Clark is the Chair of SCA Property Group Limited and Hunter Hall Global Value Limited. He is a member of the J.P. Morgan Advisory Council and also chairs a number of government and private company boards. He was Managing Partner and Chief Executive Officer of Minter Ellison and worked with that firm from 1995 until June 2005. Prior to joining Minter Ellison, Mr Clark was Director and Head of Corporate with ABN Amro Australia and prior to that he was Managing Partner with Mallesons Stephen Jaques for 16 years. Mr Clark’s qualifications include a Bachelor of Arts, Bachelor of Law and a Masters of Business Administration.

Mr Clark is Chair of the Remuneration and Nomination Committee.

Amanda Heyworth

Ms Heyworth is a professional company director. She previously served as Executive Director of Playford Capital Venture Capital Fund. She has a wealth of experience in the finance, technology and government sectors and teaches in the Australian Graduate School of Management’s Masters of Business Administration (“MBA”) program. Ms Heyworth brings a finance and growth focus to the Group, having worked on many product launches and geographic expansions and over 40 capital raisings and mergers and acquisitions transactions. She sits on a number of public sector and private boards. Ms Heyworth has a Bachelor of Arts (Accounting) with a major in finance from the University of South Australia and has postgraduate qualifications in accounting and finance. She also holds a MBA from the Australian Graduate School of Management.

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

Norah Barlow ONZM

Robert Morrison

Executive Directors

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

1.1 Qualifications, Experience and Special Responsibilities

Jim Hazel - Chairman

Mr Hazel has had an extensive corporate career in both the banking and retirement sectors. His retirement village operations experience includes being Managing Director of Primelife Corporation Limited (now part of Lend Lease). Other current listed company directorships include Bendigo and Adelaide Bank Limited, Centrex Metals Limited and Impedimed Limited. He also serves on the Boards of Motor Accident Commission, Coopers Brewery Limited, Adelaide Football Club and the Council of the University of South Australia. Mr Hazel holds a Bachelor of Economics and is a Senior Fellow of the Financial Services Institute of Australasia and a Fellow of the Australian Institute of Company Directors.

Mr Morrison has extensive experience in property investment and funds management. During his 21 years at AMP, Mr Morrison’s executive roles included Head of Property for Asia Pacific and Director of Asian Investments. Mr Morrison’s investment experience includes senior portfolio management roles where he managed both listed and unlisted property funds on behalf of institutional investors.

Mr Morrison was previously a Non-Executive Director of Mirvac Funds Management Limited, an Executive Director of AMP Capital Limited and a National Director of the Property Council of Australia. He is a founding partner and Executive Director of alternative investments firm, Barwon Investment Partners. Mr Morrison holds a Bachelor of Town and Regional Planning (Hons) and a Master of Commerce.

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

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

2 Annual Report 2015

Directors’ Report

for the year ended 30 June 2015 | continued

Norah Barlow ONZM

Ms Barlow is a professional company director. For the past 12 years, she served as the Chief Executive Officer of Summerset Group, the third largest retirement village operator and the second largest developer of villages in New Zealand. She is also a past President of Retirement Villages Association of New Zealand, a role she held for six years. Ms Barlow currently sits on the Boards of Summerset Group Holdings Limited, Estia Health Limited, Vigil Monitoring Limited, Lifetime Design Limited, Evolve Education Group Limited and Methven Limited. She also serves as a member of the New Zealand Government’s National Advisory Council for the Employment of Women. Ms Barlow holds a Bachelor of Commerce and Administration and is a qualified Chartered Accountant. Ms Barlow was made an Officer of the New Zealand Order of Merit for services to business in 2014.

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

Simon Owen – MD and CEO

Simon joined the Group in November 2009 as the Chief Executive Officer. He initiated the internalisation of management and exit from the ING Group as well as the Group’s focus on lifestyle parks. Simon brings to the Group in-depth experience in the retirement sector and is the immediate past National President of the Retirement Villages Association (now part of the Retirement Living Council), the peak industry advocacy group for the owners, operators, developers and managers of retirement communities in Australia, a role he held for four years.

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

1.2 Meetings

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

						Remuneration &	Remuneration &
		Board		Audit & Risk	Committee	Nomination	Committee
	A		B	A	B	A	B
Jim Hazel	21		20	–	–	3	3
Philip Clark AM	21		20	–	–	3	3
Amanda Heyworth	21		21	7	7	3	3
Robert Morrison	21		21	7	7	–	–
Norah Barlow	21		20	7	7	–	–
Simon Owen	21		21	–	–	–	–

A: Meetings eligible to attend B: Meetings attended

1.3 Interests of directors

Securities in the Group held by directors or their associates as at 30 June 2015 were:

	Issued stapled	Performance
	securities	quantum rights
Jim Hazel	1,669,587	–
Philip Clark AM	238,096	–
Amanda Heyworth	641,524	–
Robert Morrison	453,335	–
Norah Barlow	209,063	–
Simon Owen	3,763,905	5,429,413

Ingenia Communities Holdings Limited

2. COMPANY SECRETARIES

Leanne Ralph

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

Tania Betts

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

3. OPERATING AND FINANCIAL REVIEW

a. Ingenia Communities Group Overview

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

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

b. Strategy

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

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

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

The key immediate business priorities of the Group are:

Continue building velocity in the delivery and sale of new homes within the Active Lifestyle Estates business;
Acquire additional lifestyle parks in existing and new market clusters;
Grow occupancy rates within the Garden Villages portfolio towards a new medium term target of 93%;
Grow occupancy and average room rates for short-term accommodation within Active Lifestyle Estates
Continue sell down of completed homes within the Settlers portfolio and explore opportunities to recycle capital from Settlers assets into higher cash yielding lifestyle park assets; and
Focus on growing asset cash yields through operational efficiencies including revenue optimisation and disciplined cost management.

c. FY15 Financial Results

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

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

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

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

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Directors’ Report

for the year ended 30 June 2015 | continued

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

d. Key Metrics

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

e. Group Results Summary

Underlying Profit for the financial year has been calculated as follows:

	2015	2014
	$’000	$’000
EBIT – continuing operations	18,050	12,144
Net interest expense	(4,567)	(4,077)
Tax benefit associated to Underlying Profit	3,319	2,896
Underlying Profit – continuing operations	16,802	10,963
Underlying Profit – discontinued operations	705	605
Underlying Profit	17,507	11,568
Net foreign exchange gain/(loss)	111	(147)
Net loss on disposal of investment properties	(69)	–
Net gain/(loss) on change in fair value of:
Investment properties	16,404	(341)
Derivatives	164	41
Retirement village resident loans	(8,878)	(616)
Gain on revaluation of newly constructed retirement villages	(2,422)	(3,320)
Other	503	–
Discontinued operations (below Underlying Profit), net of tax	(883)	(35)
Tax benefit associated with items below Underlying Profit	3,285	4,368
Statutory profit	25,722	11,518

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

Ingenia Communities Holdings Limited

f. Segment Performance and Priorities

Active Lifestyle Estates

Active Lifestyle Estates was launched in March 2013 and the Group now owns 20 lifestyle parks. This business is the key focus of growth for the Group as it provides an affordable yield focused housing alternative for seniors and short-term residents with a capital light, low risk development cycle. The carrying value of these assets at 30 June 2015 is $204.2 million.

i. Performance

i. Performance
Active Lifestyle Estates	FY15	FY14	Change
New and refurbished home settlements #	56	15	41
Development profit $m	$5.7m	$1.3m	$4.4m
Permanent rental income $m	$8.3m	$4.2m	$4.1m
Annuals rental income $m	$1.0m	$0.3m	$0.7m
Short-term rental income $m	$10.3m	$5.0m	$5.3m
EBIT contribution	$8.4m	$3.9m	$4.4m

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

ii. Strategic priorities

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

Garden Villages

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

i. Performance metrics

i. Performance metrics
Garden Villages	FY15	FY14	Change
Like for like occupancy %	90.7%	87.9%	2.8%
Rental income $m	$24.4m	$21.0m	$3.4m
Catering income $m	$3.5m	$3.2m	$0.3m
EBIT $m	$11.0m	$9.9m	$1.1m

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

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

ii. Strategic priorities

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

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Directors’ Report

for the year ended 30 June 2015 | continued

Settlers Lifestyle

Settlers Lifestyle is comprised of eight deferred management fee villages, four of which are being converted from the rental to deferred management fee model. These villages are located in Queensland, New South Wales and Western Australia and accommodate more than 800 residents generating income from accrued deferred management fees, rental income from villages which are not yet fully converted and development income from unit conversions and village expansion. The carrying value of these assets at 30 June 2015, net of resident loans and lease liabilities is $62.9 million. The Group is exploring opportunities of reducing its exposure to this portfolio with five assets classified as held for sale at 30 June 2015.

i. Performance

i. Performance
Settlers Lifestyle	FY15	FY14	Change
Occupancy %	93%	92%	1%
New unit settlements #	43	57	(14)
Development income $m	$2.4m	$3.3m	($0.9m)
Accrued deferred management fee income $m	$6.8m	$5.3m	$1.5m
EBIT $m	$6.3m	$4.5m	$1.8m

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

ii. Strategic priorities

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

Discontinued Operations

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

g. Capital Management

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

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

h. Financial Position

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

$,000	30 June 2015 30 Jun 2014	30 June 2015 30 Jun 2014	Change
Cash and cash equivalents	15,117	12,894	2,223
Inventories	13,208	2,208	11,000
Investment properties	539,728	498,863	40,865
Assets held for sale	61,598	5,439	56,159
Assets of discontinued operations	–	47,657	(47,657)
Deferred tax asset	6,348	–	6,348
Other assets	9,308	7,863	1,445
Total assets	645,307	574,924	70,383
Borrowings	66,782	98,356	(31,574)
Retirement village resident loans	161,878	190,122	(28,244)
Liabilities held for sale	42,041	–	42,041
Liabilities from discontinued operations	–	30,449	(30,449)
Other liabilities	31,086	15,820	15,266
Total liabilities	301,787	334,747	(32,960)
Net assets/equity	343,520	240,177	103,343

Ingenia Communities Holdings Limited

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

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

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

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

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

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

i. Cashflow

i. Cashfow
$,000	30 June 2015	30 Jun 2014	Change
Operating cashflow	9,034	14,240	(5,206)
Investing cashflow	(24,232)	(126,084)	101,852
Financing cashflow	15,564	89,012	(73,448)
Net change in cash and cash equivalents	366	(22,832)	23,198

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

j. Distributions

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

On 24 February 2015, the directors declared an interim distribution of 0.65 cps (2014: 0.50 cps) amounting to $5,712,537 which was paid on 18 March 2015.
On 25 August 2015, the directors declared a final distribution of 0.70 cps (2014: 0.65 cps) amounting to $6,205,793, to be paid on 16 September 2015.

The distribution is 71.0% tax deferred and the dividend reinvestment plan will apply to the final distribution.

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

k. Outlook

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

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

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Directors’ Report

for the year ended 30 June 2015 | continued

4. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Changes in the state of affairs during the financial year are set out in the various reports in this Annual Report. Refer to Note 10 of the accompanying financial statements for Assets and liabilities held for sale, Note 14 for Australian investment properties acquired or disposed of during the year, Note 30 for details of Australian debt refinanced and Note 23 for Issued securities.

6. LIKELY DEVELOPMENTS

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

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

5. EVENTS SUBSEQUENT TO REPORTING DATE

a. Performance Quantum Rights Vesting

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

Simon Owen 2,260,000 Tania Betts 791,000 Nicole Fisher 791,000

7. ENVIRONMENTAL REGULATION

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

8. GROUP INDEMNITIES

b. Acquisition of Upstream Bethania

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

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

c. Execution of Hedging Contract

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

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

9. INDEMNIFICATION OF AUDITORS

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

10. AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 29.

d. Acquisition of Big 4 Conjola Lakeside

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

11. ROUNDING OF AMOUNTS

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

e. Final FY15 Distribution

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

Ingenia Communities Holdings Limited

12. MESSAGE FROM THE REMUNERATION AND NOMINATION COMMITTEE

Dear Securityholders

The Board of Ingenia Communities Group (“Ingenia”) is pleased to present the Remuneration Report for FY15.

12.1 Introduction

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

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

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

12.2 Ingenia’s Performance

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

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

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

12.4 Overview of 2015 Remuneration

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

FY15 STI award outcomes for Key Management Personnel (“KMP”) were broadly in line with Ingenia’s performance, above threshold but below target and well below maximum.
FY16 STI metrics have again been set at quite challenging levels and are substantially based on quantified targets including Underlying Profit and relevant operating targets.
The Board has approved modest increases in FY16 Total Fixed Remuneration for KMP: no increase for the CEO, a 2.5% increase for the CFO and a 5.0% increase for the Chief Operating Officer (“COO”).
The Board is proposing a change from last year in the mix of TFR, STI and LTI percentages for the CFO and COO, increasing the STI at risk component from 40% to 60% of TFR.
The structure of KMP remuneration also remains unchanged
STI will be paid 50% in cash and 50% in deferred equity which is subject to a vesting requirement that Underlying Profit must increase by at least 5% over the previous year for deferred STI to vest. This effectively operates as a performance gateway for vesting.
Both deferred STI and LTI are subject to a malus provision.
As noted above the Board has introduced an additional LTI hurdle which measures performance against Return on Equity targets. As with our TSR hurdle there will be zero LTI vesting at threshold.
The review of NED remuneration has been deferred until December 2015.

12.5 Conclusion

12.3 Ingenia’s Corporate Strategy

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

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

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

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

Yours sincerely

==> picture [150 x 46] intentionally omitted <==

Philip Marcus Clark AM Chairman – Remuneration and Nomination Committee

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13. REMUNERATION REPORT (AUDITED)

13.1 Introduction

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

13.2 Remuneration Governance

a. Remuneration and Nomination Committee (“RNC”)

The Board has an established RNC, which is directly responsible for reviewing and recommending remuneration arrangements for non-executive directors, the MD and CEO and senior executives who directly report to the CEO.

The RNC comprises the following non-executive directors (“NEDs”):

Philip Marcus Clark AM (Chairman);
Jim Hazel; and
Amanda Heyworth.

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

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

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

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

b. External Remuneration Advisers

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

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

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

The Board is satisfied that the remuneration advice from Guerdon Associates was made free from undue influence by the KMP to whom the advice related, due to there being no engagement with the remuneration advisors outside of the Chairman of the RNC. A declaration of independence from Guerdon Associates was received by the Board prior to the acceptance of their engagement and accompanied their report to the RNC.

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

Ingenia Communities Holdings Limited

13.3 Details of KMP

KMP for the year ended 30 June 2015 are those persons who are identified as having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, including any executive or NED of the Group.

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

	Position	Position
Non-executive directors
Jim Hazel	Chairman of the Board
	NED
	Member – Remuneration and Nomination Committee
Amanda Heyworth	NED
	Chairman – Audit and Risk Committee
	Member – Remuneration and Nomination Committee
Philip Clark AM	NED
	Chairman – Remuneration and Nomination Committee
Robert Morrison	NED
	Member – Audit and Risk Committee
Norah Barlow	NED
	Member – Audit and Risk Committee
Executive director
Simon Owen	Managing Director and CEO
Other executives
Tania Betts	CFO
Nicole Fisher	COO

13.4 Remuneration of Executive KMP

a. Remuneration Policy

The Group’s Remuneration Policy is to ensure remuneration packages properly reflect the person’s duties and responsibilities and that the remuneration is competitive in attracting, retaining and motivating people of suitable quality.

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

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

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

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b. Link between Remuneration and Performance

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

Remuneration component	Link to Group performance
Total Fixed Remuneration (“TFR”)	TFR is not directly linked to Group performance. It is set with reference to
	the individual’s role, responsibilities and performance and remuneration
	levels for similar positions in the market.
Short-term incentive (“STI”)	STIs are awarded to individuals whose achievements, behaviour and
	focus meet the Group’s business plan and individual Key Performance
	Indicators (“KPI”) measured over the financial year.
	The Board maintains sole discretion over the granting of STIs to eligible
	employees.
	For achievement of FY15 STIs, the payment will be 50% cash and a 50%
	deferred equity element linked to earnings growth sustainability. This
	mechanism will be continued in FY16.
Long-term incentive (“LTI”)	LTI is granted to individuals to align their focus with the Group’s required
	TSR and for FY16 Return on Equity (“ROE”) performance measured over
	three financial years.
	The Board maintains sole discretion over the granting of the LTI to
	eligible employees.
	Payment for achievement of LTIs will be made in equity for alignment
	with securityholders’ interests.
	LTIs are subject a malus provision.

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

	30 June 2015	30 June 2014	30 June 2013	30 June 2012	30 June 2011
Underlying Profit ($000)	17,507	11,568	5,867	7,434	6,889
Statutory profit/(loss) ($000)	25,722	11,518	(10,290)	33,627	13,051
EPS (cents)	3.1(3)	1.8(2)	(2.0)(1)	7.6	3.0
Net asset value per security (cents)	38.9(3)	35.5(2)	34.4(1)	34.3	25.9
Security price 30 June (cents)	43.0	50.5	34.5	19.5	11.5
Distributions (cents)	1.35	1.15	1.0	–	–

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

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

(3) During the year ended 30 June 2015, the Group issued 197,968,000 securities under the institutional placement and rights issue, 1,818,000 upon vesting of Retention Quantum Rights (“RQRs”) and 6,674,000 under the dividend reinvestment plan.

Ingenia Communities Holdings Limited

c. Mix of Remuneration Components

Executive remuneration packages include a mix of fixed remuneration, STIs and LTIs. The Group aims to reward executives with a mix of remuneration commensurate with their position and responsibilities and aligned with market practice.

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

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

	TFR	Maximum STI	Maximum LTI	Total remuneration
Target mix	(%)	(%)	(%)	(%)
CEO	43.5%	34.8%	21.7%	100.0%
CFO	62.5%	25.0%	12.5%	100.0%
COO	62.5%	25.0%	12.5%	100.0%

13.5 Total Fixed Remuneration of Executive KMP

TFR is a guaranteed annual salary, which is calculated on a total cost basis, which may include salary-packaged benefits grossed up for FBT payable, as well as employer contributions to superannuation funds and other non-cash benefits that may be agreed from time to time.

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

The table below details the TFR for each of the executives for the year ended 30 June 2015:

Executive	Position	TFR(2)
Simon Owen	Managing Director and CEO	$638,098
Tania Betts	CFO	$324,988
Nicole Fisher(1)	COO	$253,573

(1) Based on four days per week.

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

13.6 New Rights Plan

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

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

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

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13.7 Short-Term Incentive Plan (“STIP”)

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

	Maximum STIP	Maximum STIP Deferred	Total Maximum STIP
Executives	Cash	(STIP Rights)	Available
Simon Owen	40% of FY15 TFR	40% of FY15 TFR	80% of FY15 TFR
	$260,000	$260,000	$520,000
Tania Betts	20% of FY15 TFR	20% of FY15 TFR	40% of FY15 TFR
	$65,600	$65,600	$131,200
Nicole Fisher	20% of FY15 TFR	20% of FY15 TFR	40% of FY15 TFR
	$63,000	$63,000	$126,000

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

A ‘malus’ (forfeiture) provision during the deferral period, which means that some or all of the STIP Rights may lapse if:
the Board forms the view that Ingenia’s earnings growth is not sustainable (in general, this will require earnings growth to be equal to or above 5% on the prior year); or
any of the circumstances set out in the rules of the Rights Plan occur, such as fraud or dishonesty, a breach of obligations or material misstatement of Ingenia’s financial statements;
A one-year deferral period and are eligible to vest on or following 1 October 2016;
On the vesting date Ingenia will cause the relevant number of INA securities to be issued to the executive in accordance with a prescribed formula; and
No amount is payable by the executive for the issue or transfer of Ingenia securities to the executive.

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

In each case, the KPIs are set with ‘threshold’, ‘target’ and ‘stretch’ performance levels, with entitlements calculated on a prorata basis between these levels.

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

					People and
	Financial	Capital Management		Operational	Reporting
	%		%	%	%
CEO	40		30	20	10
CFO	40		–	50	10
COO	40		–	50	10

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

	Executives to which
KPI	KPI applied	KeyConsiderations in achievement
Financial	CEO, CFO, COO	Operating income (Underlying Profit) to exceed
		threshold level.
Capital management	CEO	Non-core asset divestment, access to debt to
		deliver strategic plan. Equity investors regard
		Ingenia as clear sector leader.
Operational	CEO, CFO, COO	Achievement of operational and sales metrics that
		deliver on business strategy, established for each
		KMP specific for their area of responsibility.
People and reporting	CEO, CFO, COO	Recruit and retain leading industry talent. Develop
		internal succession options.

Ingenia Communities Holdings Limited

For the year ended 30 June 2015, the Board assessed the performance of the CEO and the CEO assessed the performance of the CFO and COO, against their respective KPIs. The RNC then recommended and the Board approved STIP awards.

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

			Actual STI awarded as a
KMP	Position	Actual STI awarded $	% of maximum STI
Simon Owen	MD & CEO	273,000	52.5%
Tania Betts	CFO	62,976	48.0%
Nicole Fisher(1)	COO	64,980	51.6%

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

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

13.8 Long-Term Incentives

a. Long-Term Incentive Plan (“LTIP”)

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

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

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

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

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

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

The FY15 LTIP Rights will vest on the following basis:

	Growth rate in INA’s TSR	% of Rights that vest
At or Below Threshold	Equal to or less than Index + 1% CAGR	Nil
Between Threshold and Maximum	Between Index + 1% and Index +6% CAGR	10% plus an additional amount
		progressively vesting on a straight line basis
		between Threshold and Maximum
Maximum	Index + 6% CAGR	100%

CAGR: compound annual growth rate

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

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

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

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

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b. Performance Quantum Rights (“PQRs”) Issued in FY14

Prior to FY15, the Board adopted an LTI scheme that provided for the issue of PQRs rather than LTIP Rights. Subject to vesting conditions, each PQR entitles the holder to one Ingenia fully paid stapled security.

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

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

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

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

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

Where Group’s actual TSR over the 3 year	Percentage of employee’s PQRs that may	Percentage of employee’s PQRs that may
vesting period is:	vest in respect of the Scheme Year:
Below 26% - below threshold performance.	0%
26% (approximately 8%pa compound),	25%
on threshold performance.
At or above 26% but below 33% performance,	25%-50%, in the same proportion as the Group’s actual TSR bears
between threshold and target performance.	to the threshold and target performance.
33% (approximately 10%pa compound),	50%
on target performance.
Above 33% but below 40% performance,	50%-100%, in the same proportion as the Group’s actual TSR
between target and stretch performance.	bears to the target TSR and stretch performance.
40% or above (approximately 12%pa compound),	100%
stretch performance.

c. Summary of PQRs and LTIPs on Issue

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

					Fair		Maximum to
		LTI Scheme	Number of		value of		expense in
		PQRs / LTIP	rights		rights		future
KMP	Position	Rights	granted	Grant date	$	Vestingdate	years $
Simon Owen	CEO	2013	2,260,000	31 May 2012	230,520	1 July 2015	–
		2014	2,460,000	19 November 2013	799,500	1 July 2016	266,986
		2015	709,413	12 November 2014	179,481	1 October 2017	134,775
Tania Betts	CFO	2013	791,000	14 May 2012	71,032	1 July 2015	–
		2014	641,000	19 November 2013	208,325	1 July 2016	69,568
		2015	139,544	1 October 2014	33,909	1 October 2017	25,463
Nicole Fisher	COO	2013	791,000	4 June 2012	80,287	1 July 2015	–
		2014	615,000	19 November 2013	199,875	1 July 2016	66,747
		2015	134,014	1 October 2014	32,565	1 October 2017	24,453

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

Ingenia Communities Holdings Limited

The following PQRs vested on 1 July 2015.

			Number of performance
KMP	Position	LTI Scheme - PQRs	rights vested	Grant date
Simon Owen	CEO	2013	2,260,000	31 May 2012
Tania Betts	CFO	2013	791,000	14 May 2012
Nicole Fisher	COO	2013	791,000	4 June 2012

d. Retention Quantum Rights (“RQRs”)

These are rights that were granted at the time the Group was internalised, to encourage the retention of key executives and were subject to the holder remaining an employee of the Group until the end of the retention period, which was two years. An employee is not required to pay for a RQR and each right entitles the holder to one Ingenia fully paid stapled security which is traded on the Australian Securities Exchange under the code INA.

RQRs were granted to the following employees during FY12 as a one off retention bonus of between 25% and 50% of the Executive’s total fixed annual remuneration in FY13 only. They were aimed at incentivising them to remain with the business during the important transitional phase of Internalisation and the initial transition of the business as an ASX listed entity.

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

		Retention		Vesting		Number of
	Grant date	period	Vesting date	conditions	Value of RQRs	RQRs
Simon Owen	31 May 2012	2 years	1 July 2014	Remaining	50% of TFR in	1,070,000
				employed at	year 1, $200,000
				vesting date
Tania Betts	14 May 2012	2 years	1 July 2014	Remaining	25% of TFR in	374,000
				employed at	year 1, $70,000
				vesting date
Nicole Fisher	4 June 2012	2 years	1 July 2014	Remaining	25% of TFR in	374,000
				employed at	year 1, $70,000
				vesting date

There have been no additional RQRs issued during the year ended 30 June 2015 or since then, and before the date of this report.

e. LTIP – Termination of Employment

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

Where a Participant holding unvested Rights ceases to be an employee of the Group, those Rights immediately lapse.
Notwithstanding the above, where a Participant holding unvested Rights ceases to be an employee of the Group due to a Qualifying Reason, the Board may, in its discretion, determine the treatment of those unvested Rights.
Qualifying Reason means:
the death, total and permanent disablement, retirement or redundancy of the Participant as determined by the Board in its absolute discretion; or
any other reason with the approval of the Board.

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f. LTI Scheme (PQRs) – Termination of Employment

The following table outlines the treatment of unvested PQRs at the time of a termination of employment:

Termination circumstance	Rights
Dismissal (termination for cause)	All are forfeited.
Resignation	All are forfeited unless and to the extent otherwise determined by the Board.
Other circumstance	Rights granted in the financial year of termination of employment are forfeited
	in the same proportion as the remainder of the financial year bears to the full
	financial year.
	Rights that do not lapse at the termination of employment will continue to
	be held by participants with a view to testing for vesting at the end of the
	measurement period.
	If the security price at the end of the measurement period is less than the
	security price at the date of cessation of employment then:
	PQR – the rights will lapse and an amount up to the value of the Rights that
	would otherwise have vested will be paid in cash.
	If the security price at the end of the measurement period is not less than the
	security price at the date of termination of employment then:
	PQR – the rights will be tested for vesting in accordance with the terms of rights.

13.9 KMP Employment Contracts

Managing Director and CEO – Simon Owen

Contract duration	Commenced 4 June 2012,open-ended.
Fixed remuneration	Total fixed remuneration includes cash salary, superannuation and other non-
	cash benefits.
Variable remuneration eligibility	Eligible for STI of up to 30%(1)for any one year of the executive’s total cost fixed
	annual remuneration.
	Eligible for LTI of up to 50%(1)for any one year of the executive’s total cost of
	fixed annual remuneration.
	The Board may withdraw or vary the STI and LTI schemes at any time by
	written notice to the executive, provided that the scheme will not be varied or
	withdrawn part way through a financial year in respect of that same financial
	year.
Non-compete period	12 months.
Non-solicitation period	12 months.
Notice by Ingenia	12 months.
Notice by executive	12 months.
Treatment on termination	Payment in lieu of notice: Payment may be made in lieu of notice, which would
	include pro rata fixed remuneration and statutory entitlements.
	Treatment of Incentives: As outlined above.

Ingenia Communities Holdings Limited

Chief Financial Officer – Tania Betts

Chief Financial Ofcer – Tania Betts
Contract duration	Commenced 14 May2012,open-ended.
Fixed remuneration	Total fixed remuneration includes cash salary, superannuation and other non-
	cash benefits.
Variable remuneration eligibility	Eligible for STI of up to 30%(1)for any one year of the executive’s total cost fixed
	annual remuneration.
	Eligible for LTI of up to 30%(1)for any one year of the executive’s total cost of
	fixed annual remuneration.
	The Board may withdraw or vary the STI and LTI schemes at any time by
	written notice to the executive, provided that the scheme will not be varied or
	withdrawn part way through a financial year in respect of that same financial
	year.
Non-compete period	12 months.
Non-solicitation period	12 months.
Notice by Ingenia	6 months.
Notice by executive	6 months.
Treatment on termination	Payment in lieu of notice: Payment may be made in lieu of notice, which would
	include pro rata fixed remuneration and statutory entitlements.
	Treatment of Incentives: As outlined above.

(1) The Board has varied the percentage of STI and LTI that executive KMP are eligible for in line with external remuneration consultant’s advice on appropriate mix of total remuneration for executives. Refer to Section 13.7 for the FY15 applicable percentages. Chief Operating Officer – Nicole Fisher

Chief Operating Ofcer – Nicole Fisher
Contract duration	Commenced 4 June 2012,open-ended.
Fixed remuneration	Total fixed remuneration includes cash salary, superannuation and other non-
	cash benefits.
Variable remuneration eligibility	Eligible for STI of up to 30%(1)for any one year of the executive’s total cost fixed
	annual remuneration.
	Eligible for LTI of up to 30%(1)for any one year of the executive’s total cost of
	fixed annual remuneration.
	The Board may withdraw or vary the STI and LTI schemes at any time by
	written notice to the executive, provided that the scheme will not be varied
	or withdrawn part way through a financial year in respect of that same
	financial year.
Non-compete period	12 months.
Non-solicitation period	12 months.
Notice by Ingenia	6 months.
Notice by executive	6 months.
Treatment on termination	Payment in lieu of notice: Payment may be made in lieu of notice, which would
	include pro rata fixed remuneration and statutory entitlements.
	Treatment of Incentives: As outlined above.

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13.10 Remuneration Tables

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

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

Key Management Personnel – Executive Remuneration

					Short-Term	Short-Term
				Non-			Super-		Total
				Monetary	Other	Annuation			Short-
			Salary	Benefits	Payments	Benefits		STI(1)	Term
			$	$	$		$	$	$
Executive Director
	Managing
	Director
Simon Owen	and CEO	2015	618,592	–	–	19,506		273,000	911,098
		2014	588,915	–	–		23,831	205,200	817,946
Senior Executives
Tania Betts	CFO	2015	305,482	–	–	19,506		62,976	387,964
		2014	279,989	–	–		17,644	70,875	368,508
Nicole Fisher	COO	2015	234,067	–	–	19,506		64,980	318,553
		2014	225,780	–	–		17,609	56,160	299,549
Total Executive KMP		2015	1,158,141	–	–		58,518	400,956	1,617,615
		2014	1,094,684	–	–	59,084		332,235	1,486,004

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

(2) The RQRs vested on 1 July 2014 and 1,818,000 fully paid stapled securities were issued at that time. LTI expense for the year ended 30 June 2015 was $590,928 (2014: 680,600).

Ingenia Communities Holdings Limited

	Other Long- Term	LTI(2)	Performance Related
	Long Service Leave	Performance Quantum Rights Retention Quantum Rights Termination Benefits Total	STI+LTI Percent of Total LTI Percent of Total
	$ $ $ $ $		% %
– 387,803 – – 1,298,901 51 30 – 343,097 91,085 – 1,252,128 51 35 – 101,555 – – 489,519 34 21 – 93,108 30,222 – 491,838 39 25 – 101,570 – – 420,123 40 24 – 93,458 29,630 – 422,637 42 29
– 590,928 – – 2,208,543 45 27 – 529,663 150,937 – 2,166,604 47 31

22 Annual Report 2015

Directors’ Report

for the year ended 30 June 2015 | continued

13.11 Non-Executive Directors’ Remuneration

a. NED Fees

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

b. Performance-Based Remuneration

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

c. Equity-Based Remuneration

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

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

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

d. NED Remuneration Table

The following table outlines the remuneration provided to NEDs for the years ended 30 June 2015 and 30 June 2014:

		Directors’ fees
Non-executive directors		($)
Jim Hazel	2015	170,000
	2014	170,000
Amanda Heyworth	2015	93,000
	2014	90,000
Philip Clark	2015	93,000
	2014	90,000
Robert Morrison	2015	93,000
	2014	90,000
Norah Barlow	2015	93,000
	2014	22,500
Total non-executive KMP	2015	542,000
	2014	462,500

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

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

Ingenia Communities Holdings Limited

13.12 KMP Interests

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

	Balance			On exercise of	Balance
	1 July2014	Acquisitions	Disposals	rights	30 June 2015
Directors
Jim Hazel	1,333,334	336,253	–	–	1,669,587
Philip Clark AM	208,334	29,762	–	–	238,096
Amanda Heyworth	561,334	80,190	–	–	641,524
Robert Morrison	221,667	231,668	–	–	453,335
Norah Barlow	178,000	31,063	–	–	209,063
Simon Owen	2,179,667	514,238	–	1,070,000	3,763,905

PQRs held by key management personnel were:

	Balance			Balance
	1 July2014	Granted	Vested	30 June 2015
Directors
Simon Owen	4,720,000	–	–	4,720,000
Executives
Tania Betts	1,432,000	–	–	1,432,000
Nicole Fisher	1,432,000	–	–	1,432,000

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

RQRs held by key management personnel were:

	Balance			Balance
	1 July2014	Granted	Vested	30 June 2015
Directors
Simon Owen	1,070,000	–	(1,070,000)	–
Executives
Tania Betts	374,000	–	(374,000)	–
Nicole Fisher	374,000	–	(374,000)	–

The retention quantum rights vested on 1 July 2014 and 1,818,000 fully paid stapled securities were issued at that time. LTIP Rights held by key management personnel were:

	Balance		Balance
	1 July2014	Granted	Vested 30 June 2015
Directors
Simon Owen	–	709,413	– 709,413
Executives
Tania Betts	–	139,544	– 139,544
Nicole Fisher	–	134,014	– 134,014

24 Annual Report 2015

Directors’ Report

for the year ended 30 June 2015 | continued

13.13 FY16 Remuneration

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

a. External Remuneration Advisors

Guerdon Associates were re-appointed by the Board to provide independent remuneration advice for KMP remuneration in respect of FY16, including latest market practices and a review of the STI and LTI scheme rules.

b. Remuneration Drivers

The following are considered key drivers in dictating the direction of the remuneration structures for FY16:

i. Focus management on delivering outcomes in the short to medium term, particularly significant Underlying Profit growth;
ii. Provide long-term value creation for securityholders and strong alignment between management and securityholders; and iii. Attracting, retaining and motivating KMP.

c. Details of KMP

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

d. Review Date

The review date for FY16 will remain 1 October 2016, to ensure that remuneration reviews are based on final audited results and equity grants for deferred STI and LTI are based on an informed market.

e. Target Mix of Remuneration Components

Based on market data from Guerdon Associates and recommendations from the RNC, the Board has set the remuneration mix for executives for FY16, expressed as a percentage of total remuneration, as detailed in the table below:

		Maximum	Maximum	Total
Target mix	TFR	STI	LTI	remuneration
CEO	43.5%	34.8%	21.7%	100.0%
CFO	55.6%	33.3%	11.1%	100.0%
COO	55.6%	33.3%	11.1%	100.0%

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

f. TFR

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

	TFR(p.a.)
CEO	$650,000
CFO	$336,200
COO(1)	$330,750

(1) Based on five days per week.

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

Data for TFR ranges for the CFO and COO for FY16 were provided by Guerdon Associates. The RNC used an element of judgement to determine the appropriate positioning within this range and arrived at the TFR amounts set out above. Those recommendations were approved by the Board.

Ingenia Communities Holdings Limited

g. STI

For FY16 STI 50% of the maximum STI for the executive KMP will be paid in cash and the remaining 50% will be a deferred equity element. The deferred equity component is subject to forfeiture where earnings growth is not sustained. The deferral is for 12 months and earnings growth sustainability has been defined as at least 5% Underlying Profit growth in the following year to be equal to or above a set threshold on prior year. The deferral is to be rights to INA stapled securities, plus additional stapled securities equal to distributions during the deferral period on a reinvestment basis.

	Maximum STI	Maximum STI Deferred	Total Maximum
Executives	Cash	(STI Rights)	STI Available
Simon Owen	40% of FY16 TFR	40% of FY16 TFR	80% of FY16 TFR
	$260,000	$260,000	$520,000
Tania Betts	30% of FY16 TFR	30% of FY16 TFR	60% of FY16 TFR
	$100,860	$100,860	$201,720
Nicole Fisher(2)	30% of FY16 TFR	30% of FY16 TFR	60% of FY16 TFR
	$99,225	$99,225	$198,450

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

(2) Based on five days per week.

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

a ‘malus’ (forfeiture) provision during the deferral period
a one-year deferral period and are eligible to vest on or following 1 October 2017
on the vesting date Ingenia will cause the relevant number of INA securities to be issued to the executive in accordance with a prescribed formula
no amount is payable by the executive for the issue or transfer of INA securities to the executive.

The STI award is subject to STI performance conditions (KPIs) that focus on Underlying Profit, capital management, operational, systems and people and reporting metrics. In each case, the KPIs are further broken down to identify specific measurements to monitor the achievement of performance. These are set with ‘threshold’, ‘target’ and ‘stretch’ performance levels, with entitlements calculated on a pro-rata basis between these levels.

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

		Capital			People and
	Financial	Management	Operational	Systems	Reporting
	%	%	%	%	%
CEO	40	25	20	–	15
CFO	30	15	–	15	40
COO	30	–	40	10	20

26 Annual Report 2015

Directors’ Report

for the year ended 30 June 2015 | continued

h. LTI

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

i. Long-Term Incentive Plan – LTIP Rights offered

Since 1 July 2015 and before the date of this report, the value and number of LTIP Rights that have been offered to executives are:

	Value of LTIP Rights	VestingDate
Simon Owen	50% of FY16 TFR	30 September 2018
	$325,000(1)
Tania Betts	20% of FY16 TFR	30 September 2018
	$67,240
Nicole Fisher(2)	20% of FY16 TFR	30 September 2018
	$66,150

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

(2) Based on five days per week.

ii. LTIP Rights Performance Conditions

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

a. 70% based on a Relative TSR; and

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

a. Relative TSR Performance Condition

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

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

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

Ingenia Communities Holdings Limited

The Rights will vest on the following basis:

	Growth rate in INA’s TSR	% of Rights that vest
At or Below Threshold	Equal to or less than Index	Nil
	+ 1% CAGR
Between Threshold and Maximum	Between Index + 1% and Index	10% plus an additional amount progressively vesting
	+ 6% CAGR	on a straight line basis between Threshold and
		Maximum
Maximum	Index + 6% CAGR	100%

CAGR: compound annual growth rate

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

b. ROE Performance Condition

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

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

Vesting levels for FY18 are:

Threshold ROE > 8.0% Target ROE = or > 9.0% Maximum ROE = or > 10.0%

FY16 LTIP Rights will vest on the following basis:

At Threshold Nil

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

iii. LTIP Methodology

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

iv. Entitlement to Distribution adjustment

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

28 Annual Report 2015

Directors’ Report

for the year ended 30 June 2015 | continued

i. Total maximum FY16 Remuneration

	Fixed	Maximum STI	Maximum STI	Maximum	Maximum Total
Executive	Remuneration	Cash	Deferred(1)	LTI(1)	Remuneration
Simon Owen	$650,000	$260,000	$260,000	$325,000	$1,495,000
Tania Betts	$336,200	$100,860	$100,860	$67,240	$605,160
Nicole Fisher	$330,750	$99,225	$99,225	$66,150	$595,350

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

(2) Review date is 1 October 2015.

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

CEO 56.5% CFO 44.4% COO 44.4%

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

j. Non-Executive Directors’ Remuneration

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

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

Signed in accordance with a resolution of the directors.

==> picture [103 x 39] intentionally omitted <==

Jim Hazel Chairman Sydney, 9 September 2015

Ingenia Communities Holdings Limited 29

Auditor’s Independence Declaration

for the year ended 30 June 2015

==> picture [496 x 678] intentionally omitted <==

30 Annual Report 2015

Consolidated Statement of Comprehensive Income

for the year ended 30 June 2015

	2015	2014
	Note $’000	$’000
Continuing Operations
Revenue
Rental income	5(a) 44,984	31,643
Accrued deferred management fee income	19(b) 6,788	5,333
Manufactured home sales	14,937	3,442
Catering income	3,538	3,178
Other property income	5(b) 3,235	1,819
Service station sales	2,359	–
Interest income	180	369
Property expenses	76,021 (18,024)	45,784 (11,613)
Employee expenses	(21,230)	(15,341)
Administration expenses	(4,880)	(4,160)
Operational, marketing and selling expenses	(3,931)	(3,136)
Cost of manufactured homes sold	(9,256)	(2,130)
Service station expenses	(1,910)	–
Finance expenses	6 (4,747)	(4,446)
Net foreign exchange gain/(loss)	111	(147)
Net loss on disposal of investment properties	(69)	–
Net gain/(loss) on change in fair value of:
Investment properties	16,404	(341)
Derivatives	164	41
Retirement village resident loans	19(b) (8,878)	(616)
Depreciation and amortisation expense	15, 16 (479)	(211)
Profit from continuing operations before income tax	19,296	3,684
Income tax benefit	7 6,604	7,264
Profit from continuing operations	25,900	10,948
Profit/(loss) from discontinued operations	8 (178)	570
Net profit for the year	25,722	11,518
Other comprehensive income, net of income tax
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences arising during the year	24 1,339	269
Release of foreign currency translation reserve on disposal of foreign operations	24 (2,374)	–
Total comprehensive income for the year, net of tax	24,687	11,787

Ingenia Communities Holdings Limited

		2015	2014
		$’000	$’000
Profit/(loss) attributable to securityholders of:
Ingenia Communities Holdings Limited		(850)	(2,736)
Ingenia Communities Fund		31,039	15,313
Ingenia Communities Management Trust		(4,467)	(1,059)
		25,722	11,518
Total comprehensive income attributable to securityholders of:
Ingenia Communities Holdings Limited		(1,942)	(2,736)
Ingenia Communities Fund		31,265	15,533
Ingenia Communities Management Trust		(4,636)	(1,010)
		24,687	11,787
		2015	2014
	Note	Cents	Cents
Distributions per security(1)		1.3	1.0
Earnings per security:
Basic earnings from continuing operations
Per security	4	3.2	1.7
Per security attributable to parent	4	(0.2)	(0.4)
Basic earnings
Per security	4	3.1	1.8
Per security attributable to parent	4	(0.2)	(0.4)
Diluted earnings from continuing operations
Per security	4	2.0	1.7
Per security attributable to parent	4	(0.2)	(0.4)
Diluted earnings
Per security	4	2.0	1.8
Per security attributable to parent	4	–	(0.4)

(1) Distributions relate to the amount paid during the financial year. Subsequent to the end of the year, a final distribution was declared for 0.70 cents for a total full year distribution of 1.35 cents.

32 Annual Report 2015

Consolidated Balance Sheet

as at 30 June 2015

	2015	2014
	Note $’000	$’000
Current assets
Cash and cash equivalents	11 15,117	12,894
Trade and other receivables	12 4,327	3,745
Inventories	13 13,208	2,208
Income tax receivable	33	960
Assets held for sale	10(a) 61,598	5,439
Assets of discontinued operations	8(d) –	47,657
Total current assets	94,283	72,903
Non-current assets
Trade and other receivables	12 2,649	2,168
Investment properties	14 539,728	498,863
Plant and equipment	15 720	517
Intangibles	16 1,579	473
Deferred tax asset	22 6,348	–
Total non-current assets	551,024	502,021
Total assets	645,307	574,924
Current liabilities
Trade and other payables	17 15,073	10,409
Borrowings	18 291	283
Retirement village resident loans	19 161,878	190,122
Provisions	20 992	718
Derivatives	21 3	84
Liabilities held for sale	10(b) 42,041	–
Liabilities of discontinued operations	8(d) –	30,449
Total current liabilities	220,278	232,065
Non-current liabilities
Trade and other payables	17 14,770	4,000
Borrowings	18 66,491	98,073
Provisions	20 248	249
Derivatives	21 –	84
Deferred tax liabilities	22 –	276
Total non-current liabilities	81,509	102,682
Total liabilities	301,787	334,747
Net assets	343,520	240,177
Equity
Issued securities	23 657,214	569,116
Reserves	24 1,334	2,023
Accumulated losses	25 (315,028)	(330,962)
Total equity	343,520	240,177
Attributable to securityholders of:
Ingenia Communities Holdings Limited
Issued securities	23 8,900	7,377
Reserves	24 1,334	988
Accumulated losses	25 (3,175)	(2,659)
Ingenia Communities Fund	7,059 315,951	5,706 224,254
Ingenia Communities Management Trust	20,510	10,217
	343,520	240,177
Net asset value per security (cents)	38.9	35.5

Ingenia Communities Holdings Limited

Consolidated Cash Flow Statement

for the year ended 30 June 2015

	2015	2014
	Note $’000	$’000
Cash flows from operating activities
Rental and other property income	58,085	43,274
Payment of management fees	–	(29)
Property and other expenses	(51,225)	(34,847)
Proceeds from resident loans	19(b) 19,815	22,021
Repayment of resident loans	19(b) (10,544)	(10,361)
Proceeds from sale of manufactured homes	15,736	3,511
Purchase of manufactured homes	(19,358)	(4,035)
Proceeds from sale of service station inventory	2,359	–
Purchase of service station inventory	(1,936)	–
Distributions received from formerly equity accounted investments	–	301
Interest received	198	358
Borrowing costs paid	(4,902)	(5,811)
Income tax received/(paid)	806	(142)
	36 9,034	14,240
Cash flows from investing activities
Purchase and additions of plant and equipment	(446)	(57)
Purchase and additions of intangibles	(1,371)	(386)
Payments for investment properties	(64,423)	(113,255)
Additions to investment properties	(14,112)	(18,724)
Proceeds from sale of investment properties	56,161	1,200
Proceeds from sale of equity accounted investments	(209)	5,811
Amounts received from/(advanced to) villages	168	72
Payments for lease arrangements	–	(745)
	(24,232)	(126,084)
Cash flows from financing activities
Proceeds from issue of stapled securities	91,968	61,707
Payments for security issue costs	(3,870)	(2,771)
Payments for derivatives	(444)	–
Finance lease payments	(126)	(81)
Distributions to securityholders	(10,105)	(5,885)
Payments for debt issue costs	(1,867)	(216)
Proceeds from borrowings	65,205	104,258
Repayment of borrowings	(125,197)	(68,000)
	15,564	89,012
Net increase/(decrease) in cash and cash equivalents	366	(22,832)
Cash and cash equivalents at the beginning of the year	14,551	37,550
Effects of exchange rate fluctuation on cash held	200	(167)
Cash and cash equivalents at the end of the year	11 15,117	14,551

34 Annual Report 2015

Consolidated Statement of Changes in Equity

for the year ended 30 June 2015

Note	Attributable to Securityholders
	Ingenia Communities Holdings Limited Issued capital $’000 Reserves $’000 Retained earnings $’000 Total $’000 ICF and ICMT $’000 Total equity $’000
Carrying amount at 1 July 2013 Net profit/(loss) for the year Other comprehensive income	6,078 308 77 6,463 168,189 174,652 – – (2,736) (2,736) 14,254 11,518 – – – – 269 269
Total comprehensive income for the year	– – (2,736) (2,736) 14,523 11,787
Transactions with securityholders in their capacity as securityholders: Issue of securities 23 Share-based payment transactions 24 Payment of distributions to securityholders 25	1,299 – – 1,299 57,676 58,975 – 680 – 680 – 680 – – – – (5,917) (5,917)
Carrying amount at 30 June 2014	7,377 988 (2,659) 5,706 234,471 240,177
Net profit/(loss) for the year Other comprehensive income
	– – (850) (850) 26,572 25,722
	– – – – (1,035) (1,035)
Total comprehensive income for the year	– – (850) (850) 25,537 24,687
Transactions with securityholders in their capacity as securityholders: Issue of securities 23 Share-based payment transactions 24 Payment of distributions to securityholders 25 Transfer from reserves to retained earnings
	1,523 – – 1,523 86,575 88,098
	– 678 – 678 – 678
	– – – – (10,120) (10,120)
	– (332) 332 – – –
Carrying amount at 30 June 2015	8,900 1,334 (3,177) 7,057 336,463 343,520

Ingenia Communities Holdings Limited 35

Notes to the Financial Statements

for the year ended 30 June 2015

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. The Group

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

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

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

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

The financial report as at and for the year ended 30 June 2015 was authorised for issue by the directors on 9 September 2015.

b. Basis of Preparation

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

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

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

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

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

At 30 June 2015, the Group recorded a net current asset deficiency of $125,995,000. This deficiency includes retirement village resident loans of $161,878,000 and liabilities held for sale of $42,041,000. Resident loans obligations of the Group are classified as current liabilities due to the demand feature of these obligations despite the unlikely possibility that the majority of the loans will be settled within the next twelve months. Furthermore, if required, the proceeds from new resident loans could be used by the Group to settle its existing loan obligations should those incumbent residents vacate their units. Accordingly, there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable; and the financial report of the Group has been prepared on a going concern basis.

c. Adoption of New and Revised Accounting Standards

The Group has adopted all of the new and revised standards and interpretations issued by the Australian Accounting Standards Board that are relevant to its operations and effective for the current period including AASB 2012-3 Offsetting Financial Assets and Financial Liabilities.

The impact of application of the Standard is as follows:

Accounting Standard	Impact on the Group
AASB 2012-3	This amendment clarifies that
	the right of set off must be
	available today and must be
	legally enforceable in the normal
	course of business as well as in
	the event of default, insolvency or
	bankruptcy.
	The application of this Standard
	did not have any impact on the
	Group as retirement village loans
	are already offset.

d. Principles of Consolidation

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

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

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

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

36 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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

e. Business Combinations and Goodwill

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

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

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

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

f. Discontinued Operations and Assets Held for Sale

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

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

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

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

Details of discontinued operations and assets and liabilities held for sale are given at Notes 8 and 10.

g. Dividends and Distributions

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

h. Foreign Currency

i. Functional and presentation currencies

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

ii. Translation of foreign currency transactions

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

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

iii. Translation of financial statements of foreign subsidiaries

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

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

Ingenia Communities Holdings Limited

i. Leases

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

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

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

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

j. Plant and Equipment

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

k. Financial Assets and Liabilities

Current and non-current financial assets and liabilities within the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as fair value through profit or loss; loans and receivables; held-tomaturity investments or as available-for-sale. The Group determines the classification of its financial assets and liabilities at initial recognition with the classification depending on the purpose for which the asset or liability was acquired or issued. Financial assets and liabilities are initially recognised at fair value, plus directly attributable transaction costs unless their classification is at fair value through profit or loss. They are subsequently measured at fair value or amortised cost using the effective interest method. Changes in fair value of available-for-sale financial assets are recorded directly in equity. Changes in fair values of any other financial assets and liabilities classified as at fair value through profit or loss are recorded in the income statement.

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

l. Impairment of Non-Financial Assets

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

m. Cash and Cash Equivalents

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

38 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

n. Trade and Other Receivables

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

o. Inventories

The Group holds inventory in relation to the acquisition and development of manufactured homes and service station fuel and supplies both within its Active Lifestyle Estates segment.

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

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

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

p. Derivative Financial Instruments

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

q. Investment Property

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

Investment property includes property under construction, tourism cabins and associated amenities.

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

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal market for the asset or liability or in its absence, the most advantageous market. In determining the fair value of assets held for sale, recent market offers have been taken into consideration.

It is the Group’s policy to have all investment properties independently valued at intervals of not more than two years. It is the policy of the Group to review the fair value of each investment property every six months and to cause investment properties to be revalued to fair values whenever their carrying value materially differs to their fair values.

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

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

r. Intangible Assets

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

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

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

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

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

Useful life: Finite Amortisation method using 7 years on a straight line basis; and
Impairment test: Amortisation method reviewed at each financial year end; closing carrying value reviewed annually for indicators of impairment.

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

Ingenia Communities Holdings Limited

s. Payables

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

t. Provisions, Including Employee Benefits

i. General

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

ii. Wages, salaries, annual leave and sick leave

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

iii. Long service leave

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

u. Retirement Village Resident Loans

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

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

Refer to Notes 30(k), 27(j) and 1(aa) for information regarding the valuation of retirement village resident loans.

v. Borrowings

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

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

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

w. Issued Equity

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

x. Revenue

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

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

Deferred management fee income is calculated as the expected fee to be earned on a resident’s ingoing loan, allocated pro-rata over the resident’s expected tenure, together with any share of capital appreciation that has occurred at reporting date. Revenue from the sale of manufactured homes within the Active Lifestyle Estate segment is recognised when the significant risks, rewards of ownership and effective control has been transferred to the buyer.

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

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

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

40 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

y. Share-Based Payment Transactions

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

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

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

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

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

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

z. Income Tax

i. Current income tax

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

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

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

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

ii. Deferred income tax

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

iii. Tax Consolidation

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

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

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

Ingenia Communities Holdings Limited

aa. Fair Value Measurement

The Group measures financial instruments, such as derivatives, and non-financial assets, such as investment properties, at fair value at each balance sheet date. Also, fair values of financial instruments measured at amortised cost are disclosed in Note 30.

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

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

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

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

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

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

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

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

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

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

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained within Note 30.

bb. Goods and Services Tax (“GST”)

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

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

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

cc. Earnings Per Share (“EPS”)

Basic EPS is calculated as net profit attributable to members of the Group, divided by the weighted average number of ordinary securities, adjusted for any bonus element.

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

dd. Pending Accounting Standards

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

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

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

42 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ee. Current Versus Non-Current Classification

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

Expected to be realised or intended to be sold or consumed in the normal operating cycle
Held primarily for the purpose of trading
Expected to be realised within twelve months after the reporting period, or
Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after reporting period.

All other assets are classified as non-current.

A liability is current when:

It is expected to be settled in the normal operating cycle
It is held primarily for the purpose of trading
It is due to be settled within twelve months after the reporting period, or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

The Group classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.

2. ACCOUNTING ESTIMATES AND JUDGEMENTS

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

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

a. Critical Accounting Estimates and Assumptions

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

i. Valuation of investment property

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

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

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

ii. Valuation of inventories

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

iii. Fair value of derivatives

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

iv. Valuation of share-based payments

Valuation of share-based payment transactions is performed using judgements around the fair value of equity instruments on the date at which they are granted. The fair value is determined using a Monte Carlo based simulation method for long-term incentive performance rights and the security price at grant date of short-term incentive rights. Refer to Note 28 for assumptions used in determining the fair value.

Ingenia Communities Holdings Limited

v. Valuation of assets acquired in business combinations

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

vi. Valuation of retirement village resident loans

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

3. SEGMENT INFORMATION

a. Description of Segments

The Group invests predominantly in rental properties located in Australia with three reportable segments:

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

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

vii. Calculation of deferred management fee (“DMF”)

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

b. Critical Judgements in Applying the Entity’s Accounting Policies

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

44 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

3. SEGMENT INFORMATION (CONTINUED)

b. 30 June 2015
	Active
	Lifestyle	Settlers	Garden	Corporate/
	Estates	Lifestyle	Villages	Unallocated	Total
	$’000	$’000	$’000	$’000	$’000
i. Segment revenue
External segment revenue	38,810	11,132	28,162	159	78,263
Interest income	–	–	–	180	180
Reclassification of gain on revaluation of newly
constructed villages	–	(2,422)	–	–	(2,422)
Total revenue	38,810	8,710	28,162	339	76,021
ii. Segment Underlying Profit
External segment revenue	38,810	11,132	28,162	159	78,263
Interest income	–	–	–	180	180
Property expenses	(7,918)	(1,694)	(8,042)	(370)	(18,024)
Employee expenses	(8,514)	(1,786)	(7,450)	(3,480)	(21,230)
Administration expenses	(979)	(191)	(959)	(2,751)	(4,880)
Operational, marketing and selling expenses	(1,794)	(608)	(591)	(938)	(3,931)
Manufactured home cost of sales	(9,256)	–	–	–	(9,256)
Service station expenses	(1,910)	–	–	–	(1,910)
Finance expense	–	–	–	(4,747)	(4,747)
Income tax benefit	–	–	–	3,319	3,319
Depreciation and amortisation expense	(113)	(46)	(101)	(219)	(479)
Other	–	(503)	–	–	(503)
Underlying Profit/(loss) – continuing operations	8,326	6,304	11,019	(8,847)	16,802
Reconciliation of Underlying Profit to profit from
continuing operations:
Net foreign exchange gain	–	–	–	111	111
Net gain/(loss) disposal of investment property	(23)	(365)	319	–	(69)
Net gain/(loss) on change in fair value of:
Investment properties	(2,818)	3,269	15,953	–	16,404
Retirement village resident loans	–	(8,878)	–	–	(8,878)
Derivatives	–	–	–	164	164
Gain on revaluation of newly constructed villages	–	(2,422)	–	–	(2,422)
Other	–	503	–	–	503
Income tax benefit associated with reconciliation
items	–	–	–	3,285	3,285
Profit from continuing operations per the
consolidated statement of comprehensive
income	5,485	(1,589)	27,291	(5,287)	25,900
iii. Segment assets
Segment assets	228,329	205,357	129,604	20,419	583,709
Assets held for sale					61,598
Total assets					645,307

Ingenia Communities Holdings Limited

c. 30 June 2014

c. 30 June 2014
	Active
	Lifestyle	Settlers	Garden	Corporate/
	Estates	Lifestyle	Villages	Unallocated	Total
	$’000	$’000	$’000	$’000	$’000
i. Segment revenue
External segment revenue	13,589	10,575	24,571	–	48,735
Interest income	–	–	–	369	369
Reclassification of gain on revaluation of newly
constructed villages	–	(3,320)	–	–	(3,320)
Total revenue	13,589	7,255	24,571	369	45,784
ii. Segment Underlying Profit
External segment revenue	13,589	10,575	24,571	–	48,735
Interest income	–	–	–	369	369
Property expenses	(2,640)	(1,900)	(6,798)	(275)	(11,613)
Employee expenses	(4,096)	(2,173)	(6,365)	(2,707)	(15,341)
Administration expenses	(384)	(208)	(947)	(2,621)	(4,160)
Operational, marketing and selling expenses	(421)	(1,801)	(512)	(402)	(3,136)
Manufactured home cost of sales	(2,130)	–	–	–	(2,130)
Finance expense	–	–	–	(4,446)	(4,446)
Income tax benefit	–	–	–	2,896	2,896
Depreciation expense	–	(18)	(49)	(144)	(211)
Underlying Profit/(loss) – continuing operations	3,918	4,475	9,900	(7,330)	10,963
Reconciliation of Underlying Profit to profit from
continuing operations:
Net foreign exchange loss	–	–	–	(147)	(147)
Net gain/(loss) on change in fair value of:
Investment properties	(2,124)	(599)	2,382	–	(341)
Derivatives	–	–	–	41	41
Retirement village resident loans	–	(616)	–	–	(616)
Gain on revaluation of newly constructed villages	–	(3,320)	–	–	(3,320)
Income tax benefit associated with reconciliation
items	–	–	–	4,368	4,368
Profit from continuing operations per the
consolidated statement of comprehensive
income	1,794	(60)	12,282	(3,068)	10,948
iii. Segment assets
Segment assets	130,243	262,498	115,293	13,794	521,828
Assets held for sale					5,439
Discontinued operations					47,657
Total assets					574,924

46 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

4. EARNINGS PER SECURITY[(1)]

4. EARNINGS PER SECURITY(1)
	Note	2015	2014
a. Per security
Profit attributable to securityholders ($’000)		25,722	11,518
Profit from continuing operations ($’000)		25,900	10,948
Profit/(loss) from discontinued operations ($’000)		(178)	570
Weighted average number of securities outstanding (thousands):
Issued securities		821,653	646,603
Dilutive securities
Performance quantum rights	28	470	2,310
Retention quantum rights		–	1,818
Weighted average number of issued and dilutive potential securities outstanding
(thousands)		822,123	650,731
Basic earnings per security from continuing operations (cents)		3.2	1.7
Basic earnings per security from discontinued operations (cents)		(0.2)	0.1
Basic earnings per security (cents)		3.1	1.8
Dilutive earnings per security from continuing operations (cents)		2.0	1.7
Dilutive earnings per security from discontinued operations (cents)		–	0.1
Dilutive earnings per security (cents)		2.0	1.8
b. Per security attributable to parent
Profit/(loss) attributable to securityholders ($’000)		(850)	(2,734)
Weighted average number of securities outstanding (thousands):
Issued securities		821,653	646,603
Dilutive securities
Performance quantum rights	28	470	2,310
Retention quantum rights		–	1,818
Weighted average number of issued and dilutive potential securities outstanding
(thousands)		822,123	650,731
Basic earnings per security (cents)		(0.2)	(0.4)
Dilutive earnings per security (cents)		–	(0.4)

(1) The weighted average number of securities on issue for FY14, prior to the rights issue in September 2013, has been adjusted in accordance with AASB 133 Earnings per Share .

Ingenia Communities Holdings Limited

5. REVENUE

5. REVENUE
2015	2014
$’000	$’000
a. Rental income Residential rental income – Garden Villages 24,367	21,032
Residential rental income – Settlers Lifestyle 707	1,025
Residential rental income – Active Lifestyle Estates 8,329	4,231
Annuals rental income – Active Lifestyle Estates 1,020	302
Short-term tourism rental income – Active Lifestyle Estates 10,323	4,990
Commercial rental income – Active Lifestyle Estates 238	63
Total rental income 44,984	31,643
b. Other property income Government incentives 301	219
Commissions and administrative fees 758	239
Linen fees 152	170
Land transfer duty refund –	622
Sundry income 1,222	263
Utility recoveries 802	306
Total other property income 3,235	1,819

6. FINANCE EXPENSE

6. FINANCE EXPENSE
2015	2014
$’000	$’000
Interest paid or payable 4,483	4,189
Finance lease interest paid or payable(1) 264	257
Total finance expense 4,747	4,446

(1) Finance lease interest relates to a long-term lease with Gosford City Council for the land and facilities of Ettalong Holiday Village and long-term Crown leases in relation to One Mile Beach Holiday Park. Refer to Note 18(c).

48 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

7. INCOME TAX BENEFIT

7. INCOME TAX BENEFIT
	2015	2014
	$’000	$’000
a. Income tax benefit
Current tax	–	84
Decrease in deferred tax liabilities	6,604	7,180
Income tax benefit	6,604	7,264
b. Reconciliation between tax expense and pre-tax profit
Profit before income tax	19,296	3,684
Less amounts not subject to Australian income tax	(31,901)	(14,741)
Income tax at the Australian tax rate of 30% (2014: 30%)	(12,605) 3,781	(11,057) 3,317
ICMT tax consolidation impact	–	2,823
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Prior period income tax return true-ups	263	613
Movements in carrying value and tax cost base of investment properties	1,516	1,163
Movements in carrying value and tax cost base of DMF receivables	1,683	(1,232)
Other timing differences	(143)	580
Non deductible expenses	(496)	–
Income tax benefit	6,604	7,264

c. Tax consolidation

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

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

Upon entering into the ICMT tax consolidated group, the tax cost bases for certain assets were reset resulting in income tax benefits being recorded. In addition, unrecognised losses incurred by entities within the ICMT tax consolidated group are now available for utilisation by the ICMT tax consolidated group resulting in an additional income tax benefit being recorded during the year ended 30 June 2014.

Ingenia Communities Holdings Limited

8. DISCONTINUED OPERATIONS

a. Details of Discontinued Operations

The Group’s investment in its New Zealand Students business has been classified as a discontinued operation since 30 June 2011, which is consistent with the previously announced strategy to focus on transitioning to an actively managed Australian property business. The Group held a 100% interest in three facilities in Wellington, New Zealand that are primarily leased for 15 years to Victoria University of Wellington and Wellington Institute of Technology. The Group completed the sale of these assets in December 2014. Funds remain in New Zealand to facilitate the final stages of exit.

b. Financial Performance

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

2015	2014
$’000	$’000
Revenue 2,182	3,210
Net loss on change in fair value of investment properties –	(1,630)
Unrealised net foreign exchange gain/(loss) (1,038)	1,557
Other income 46	–
Expenses (715)	(1,231)
Interest expense (799)	(1,633)
Distributions from formerly equity accounted investments –	274
Disposal costs associated with overseas investments –	(290)
Profit/(loss) from operating activities before income tax (324)	257
Income tax expense (214)	(14)
Profit/(loss) from operating activities (538)	243
Gain/(loss) on sale of discontinued operations (net of tax) (2,014)	327
Release of foreign currency translation reserve on disposal of foreign operations 2,374	–
Profit/(loss) from discontinued operations for the year (178)	570

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

c. Cash Flows

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

2015	2014
$’000	$’000
Net cash flow from operating activities 223	1,135
Net cash flows from investing activities: (Payments)/proceeds on sale of discontinued operations 43,966	(120)
Additions to investment properties –	(9,081)
Payments for lease arrangements (4)	(745)
Net cash flow from financing activities (45,381)	11,449
Transfer to continuing operations (461)	–
Net cash flows from discontinued operations (1,657)	2,638

50 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

8. DISCONTINUED OPERATIONS (CONTINUED)

d. Assets and Liabilities

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

	2015	2014
	$’000	$’000
Assets
Cash and cash equivalents	–	1,657
Trade and other receivables	–	98
Investment properties	–	45,902
Total assets	–	47,657
Liabilities
Payables	–	368
Borrowings	–	30,081
Total liabilities	–	30,449
Net assets of disposal groups	–	17,208

e. Capitalisation Rate

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

9. BUSINESS COMBINATIONS

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

10. ASSETS AND LIABILITIES HELD FOR SALE

a. Summary of carrying values

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

		2015	2014
	Note	$’000	$’000
Deferred management fee receivable – Settlers Lifestyle(1)	19	–	5,439
Investment properties – Settlers Lifestyle(2)		61,598	–
		61,598	5,439

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

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

b. Summary of carrying amounts - loans

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

		2015	2014
	Note	$’000	$’000
Gross resident loans		44,271	–
Accrued deferred management fee		(2,230)	–
Net resident loans	19	42,041	–

Ingenia Communities Holdings Limited

11. CASH AND CASH EQUIVALENTS

11. CASH AND CASH EQUIVALENTS
2015	2014
$’000	$’000
Cash at bank and in hand 15,117	12,894
Reconciliation to statements of cash flows Cash and cash equivalents attributable to: Continuing operations - cash at bank 15,117	12,894
Discontinued operations - cash at bank –	1,657
Cash at the end of the year as per cash flow statement 15,117	14,551

12. TRADE AND OTHER RECEIVABLES

12. TRADE AND OTHER RECEIVABLES
2015	2014
$’000	$’000
Current Trade and other receivables 960	1,105
Prepayments and deposits 3,367	2,640
Total current trade and other receivables 4,327	3,745
Non-current Other receivables 2,649	2,168

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

13. INVENTORIES

13. INVENTORIES
2015	2014
$’000	$’000
Current assets Manufactured homes 12,875	2,208
Service station fuel and supplies 333	–
Total Inventories 13,208	2,208

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

14. INVESTMENT PROPERTIES

a. Summary of Carrying Amounts

14. INVESTMENT PROPERTIES a. Summary of Carrying Amounts
2015	2014
$’000	$’000
Completed properties 514,125	482,618
Properties under development 25,603	16,245
539,728	498,863

52 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

14. INVESTMENT PROPERTIES (CONTINUED)

b. Individual Valuations and Carrying Amounts

14. INVESTMENT PROPERTIES (CONTINUED) b. Individual Valuations and Carrying Amounts
Property Date of purchase Latest external valuation date Valuation $’000	Carryingamount
	2015 $’000 2014 $’000
Completed properties *Garden Villages* Yakamia, Yakamia, WA Jun 04 Jun 15 4,750 Mardross, Albury, NSW Jun 04 – – Seville Grove, Seville Grove, WA Jun 04 Dec 14 3,200 Hertford, Sebastopol, VIC Jun 04 Jun 14 3,770 Carey Park, Bunbury, WA Jun 04 Jun 15 4,300 Jefferis, Bundaberg North, QLD Jun 04 Jun 15 4,300 Claremont, Claremont, TAS Jun 04 Dec 13 3,320 Taloumbi, Coffs Harbour, NSW Jun 04 Dec 14 4,300 Devonport, Devonport, TAS Jun 04 Dec 14 1,700 Wheelers, Dubbo, NSW Jun 04 Dec 13 3,800 Elphinwood, Launceston, TAS Jun 04 Jun 15 3,750 Glenorchy, Glenorchy, TAS Jun 05 Dec 13 3,160 Chatsbury, Goulburn, NSW Jun 04 Dec 13 2,940 Grovedale, Grovedale, VIC Jun 05 Jun 15 4,700 Horsham, Horsham, VIC Jun 04 Jun 15 3,900 Sea Scape, Erskine, WA Jun 04 Dec 14 4,000 Marsden, Marsden, QLD Jun 05 Dec 14 8,500 Coburns, Brookfield, VIC Jun 04 Dec 14 3,300 Brooklyn, Brookfield, VIC Jun 04 Jun 15 4,100 Oxley, Port Macquarie, NSW Jun 04 Jun 15 4,200 Townsend, St Albans Park, VIC Jun 04 Jun 15 4,400 St Albans Park, St Albans Park, VIC Jun 04 Jun 14 4,140 Swan View, Swan View, WA Jan 06 Dec 14 6,000	4,750 2,730 – 2,400 3,400 3,390 3,910 3,770 4,300 3,520 4,300 3,480 3,420 3,230 4,500 4,170 1,785 2,100 4,680 4,300 3,750 2,910 3,780 3,370 3,760 3,430 4,700 4,010 3,900 3,300 4,330 4,170 8,640 8,380 3,490 3,290 4,100 3,270 4,200 3,120 4,400 3,800 4,620 4,140 6,480 5,990

Ingenia Communities Holdings Limited

Property Date of purchase Latest external valuation date Valuation $’000	Carryingamount
	2015 $’000 2014 $’000
Completed properties (continued) *Garden Villages (continued)* Taree, Taree, NSW Dec 04 Jun 15 3,350 Dubbo, Dubbo, NSW Dec 12 Dec 13 3,290 Ocean Grove, Mandurah, WA Feb 13 Dec 13 3,280 Peel River, Tamworth, NSW Mar 13 Jun 15 4,100 Sovereign, Ballarat, VIC Jun 13 Jun 14 3,100 Wagga, Wagga Wagga, NSW Jun 13 Jun 14 3,930 Bathurst, Bathurst, NSW Jan 14 Jun 15 3,850 Launceston, Launceston, TAS Jan 14 Jun 15 3,300 Shepparton, Shepparton, VIC Jan 14 – – Murray River, Mildura, VIC Jan 14 – – Warrnambool, Warrnambool, VIC Jan 14 Jun 15 2,500	3,350 2,320 2,940 2,670 3,290 3,100 4,100 2,040 3,130 3,100 4,000 3,930 3,850 2,580 3,300 2,510 – 1,780 – 2,170 2,500 1,800
	125,655 114,270
*Settlers Lifestyle* Forest Lake, Forest Lake, QLD(3) Nov 05 Jun 13 – Gladstone, South Gladstone, QLD(3) Nov 05 Jun 13 – Gladstone, South Gladstone, QLD - Land(3) Nov 05 Jun 13 – Rockhampton, Rockhampton, QLD(3) Nov 05 Dec 13 – Cessnock, Cessnock, NSW(3) Jun 04 Dec 14 – Lakeside, Ravenswood, WA Apr 07 Dec 14 75,672 Noyea Riverside, Mt Warren Park, QLD(4) Apr 07 – – Meadow Springs, Mandurah, WA Apr 07 Jun 13 17,066 Meadow Springs, Mandurah, WA – Land Apr 07 Jun 13 2,455 Ridgewood Rise, Ridgewood, WA Apr 07 Jun 13 105,104 Ridge Estate, Gillieston Heights, NSW(3) Jul 12 Dec 14 –	– 14,194 – 12,534 – 750 – 14,314 – 6,009 75,866 77,242 – –(3) 16,648 16,510 2,455 2,455 109,114 103,552 – 11,765
	204,083 259,325

54 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

14. INVESTMENT PROPERTIES (CONTINUED)

14. INVESTMENT PROPERTIES (CONTINUED)
Property Date of purchase Latest external valuation date Valuation $’000	Carryingamount
	2015 $’000 2014 $’000
*Active Lifestyle Estates* The Grange, Morisset, NSW Mar 13 Dec 13 9,400 Ettalong Beach, Ettalong Beach, NSW(1) Apr 13 Dec 13 2,200 Albury, Lavington, NSW Aug 13 Jun 14 1,725 Nepean River, Emu Plains, NSW Aug 13 Jun 14 11,000 Mudgee Valley, Mudgee, NSW Sep 13 Jun 14 4,250 Mudgee, Mudgee, NSW Oct 13 Jun 14 6,393 Kingscliff, Kingscliff, NSW Nov 13 Dec 14 10,500 Lake Macquarie, Morisset, NSW Nov 13 Dec 14 5,010 Chain Valley Bay, Chain Valley Bay, NSW Dec 13 Dec 14 3,700 One Mile Beach, One Mile, NSW(2) Dec 13 Dec 14 10,500 Hunter Valley, Cessnock, NSW Feb 14 Dec 14 7,500 Wine Country, Cessnock, NSW Feb 14 Dec 14 1,000 Sun Country, Mulwala, NSW Apr 14 Dec 14 6,610 Stoney Creek, Marsden Park, NSW May 14 Dec 14 14,740 Rouse Hill, Rouse Hill, NSW(5) Jun 14 Jun 15 16,125 White Albatross, Nambucca Heads, NSW Dec 14 Jun 15 25,500 Noosa, Tewantin, QLD Feb 15 Jun 15 13,000 Chambers Pines, Chambers Flat, QLD Mar 15 – – Mannering Park, Mannering Park, NSW Apr 15 Jun 15 6,800 Sydney Hills, Dural, NSW Apr 15 – –	11,072 10,761 5,583 5,811 2,275 1,510 13,317 11,000 3,662 3,710 5,934 6,403 11,734 10,991 4,212 5,693 247 – 12,769 13,349 7,589 8,282 1,000 1,109 6,514 6,858 10,940 16,184 16,125 7,362 25,500 – 13,000 – 14,114 – 6,800 – 12,000 –
	184,387 109,023
Total completed properties	514,125 482,618

Ingenia Communities Holdings Limited

Property Date of purchase	Carryingamount
	2015 $’000 2014 $’000
Properties to be developed *Active Lifestyle Estates* The Grange, Morisset, NSW Mar 13 Ettalong Beach, Ettalong Beach, NSW(1) Apr 13 Albury, Lavington, NSW Aug 13 Nepean River, Emu Plains, NSW Aug 13 Mudgee Valley, Mudgee, NSW Sep 13 Mudgee, Mudgee, NSW Oct 13 Kingscliff, Kingscliff, NSW Nov 13 Lake Macquarie, Morisset, NSW Nov 13 Chain Valley Bay, Chain Valley Bay, NSW Dec 13 One Mile Beach, One Mile, NSW(2) Dec 13 Hunter Valley, Cessnock, NSW Feb 14 Wine Country, Cessnock, NSW Feb 14 Sun Country, Mulwala, NSW Apr 14 Stoney Creek, Marsden Park, NSW May 14 Chambers Pines, Chambers Flat, QLD Mar 15	1,291 1,387 – 310 1,993 490 – – 775 797 430 540 444 520 3,279 1,990 3,700 4,045 – – 2,133 1,500 556 556 1,300 850 7,064 3,260 2,638 –
Properties to be developed	25,603 16,245
Total investment properties	539,728 498,863

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

(2) One Mile Beach land component is leased from the Crown under 40 year and perpetual leases and is recognised as investment property with an associated finance lease.

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

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

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

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

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

56 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

14. INVESTMENT PROPERTIES (CONTINUED)

c. Movements in Carrying Amounts

14. INVESTMENT PROPERTIES (CONTINUED) c. Movements in Carrying Amounts
	2015	2014
	$’000	$’000
Carrying amount at beginning of year	498,863	370,931
Acquisitions	78,152	118,303
Expenditure capitalised	14,356	10,336
Sale of units – Strata title	–	(492)
Transferred from plant and equipment	(6,290)	320
Transferred to inventory	(159)	(194)
Net gain/(loss) on change in fair value	16,404	(341)
Transferred to assets held for sale	(61,598)	–
Carrying amount at end of year	539,728	498,863

The net change in fair value is recognised in profit or loss as net gain/(loss) on change in fair value of investment properties. Fair value hierarchy disclosures for investment properties have been provided in Note 31.

d. Reconciliation of Fair Value

d. Reconciliation of Fair Value
			Active
	Garden		Lifestyle
	Villages		Estates	Total
	$’000	Settlers	$’000	$’000
Carrying amount at 1 July 2014	114,270	259,325	125,268	498,863
Acquisitions	–	320	77,832	78,152
Expenditure capitalised	1,739	2,729	9,888	14,356
Assets sold	(6,290)	–	–	(6,290)
Transferred to inventory	–	–	(159)	(159)
Net gain/(loss) on change in fair value(1)	15,934	3,303	(2,833)	16,404
Transferred to assets held for sale	–	(61,598)	–	(61,598)
Carrying amount at 30 June 2015	125,653	204,079	209,996	539,728

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

Ingenia Communities Holdings Limited

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

				Relationship of
		Significant	Range	unobservable
	Valuation technique	unobservable inputs	(weighted average)	input to fair value
Garden Villages	Capitalisation method	Stabilised occupancy	70%-100% (92%)	As costs are fxed in
				nature, occupancy has
				a direct correlation to
				valuation (ie. the higher
				the occupancy, the
				greater the value).
		Capitalisation rate	9%-12%	Capitalisation has an
				inverse relationship to
				valuation.
Settlers Lifestyle	Discounted cash fow	Current market value	$125,000-$475,000	Market value and growth
		per unit		in value have a direct
		Long-term property growth rate	4%	correlation to valuation, while length of stay and discount rate have an
				inverse relationship to
				valuation.
		Average length of	11.4 years	Average length of stay
		stay – future residents		projection is based on
				life expectancy and
				other factors.
		Average length of	15.0-17.6 years	Parameters exclude
		stay – current residents		assets that are subject
				to a sale agreement.
		Discount rate	14.5%-15.0%	Assets that are subject
				to a sale agreement are
				carried at fair value.
Active Lifestyle Estates	Capitalisation method	Short-term occupancy	15%-30% for powered	Higher the occupancy,
	(for existing rental		and camp sites;	the greater the value.
	streams)		45%-70% for tourism
			and short term rental
		Residential occupancy	100%
		Operating proft	50%-70% dependent	Higher the proft margin,
		margin	upon short-term	the greater the value.
			and residential
			accommodation mix
		Capitalisation rate	8.2%-17.5%	Capitalisation has an
				inverse relationship to
				valuation.
	Discounted cash	Discount rate	13%-16%	Discount rate has an
	fow (for future			inverse relationship to
	development)			valuation.

Capitalisation Method

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

58 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

14. INVESTMENT PROPERTIES (CONTINUED)

Discounted Cash Flow Method

Under the discounted cash flow method, fair value is estimated using assumptions regarding the benefits and liabilities of ownership over the asset’s life including an exit or terminal value. This method involves the projection of a series of cash flows on a real property interest. To this projected cash flow series, a market-derived discount rate is applied to establish the present value of the income stream associated with the asset. The exit yield normally reflects the exit value expected to be achieved upon selling the asset and is a function of the risk adjusted returns of the asset and expected capitalisation rate.

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

15. PLANT AND EQUIPMENT

15. PLANT AND EQUIPMENT
	2015	2014
	$’000	$’000
a. Summary of carrying amounts
Plant and equipment	1,895	1,407
Less: accumulated depreciation	(1,175)	(890)
Total plant and equipment	720	517
b. Movements in carrying amount
Carrying amount at beginning of year	517	1,034
Assets written off	(118)	(82)
Transferred to investment property	–	(320)
Transferred to intangibles	–	(473)
Additions	643	569
Depreciation expense	(322)	(211)
Carrying amount at end of year	720	517

16. INTANGIBLES

16. INTANGIBLES
	2015	2014
	$’000	$’000
a. Summary of carrying amounts
Software & development	1,736	473
Less: accumulated amortisation	(157)	–
Total Intangibles	1,579	473
b. Movements in carrying amount
Carrying amount at beginning of year	473	–
Assets written off	–	–
Transferred from plant and equipment	–	473
Additions	1,263	–
Amortisation expense	(157)	–
Carrying amount at end of year	1,579	473

Ingenia Communities Holdings Limited

17. TRADE AND OTHER PAYABLES

17. TRADE AND OTHER PAYABLES
2015	2014
$’000	$’000
Current liabilities Trade payables and accruals 10,047	8,814
Deposits and other unearned income 1,526	1,595
Deferred acquisition consideration 3,500	–
Total current liabilities 15,073	10,409
Non-current liabilities Deferred acquisition consideration 14,770	4,000

18. BORROWINGS

		2015	2014
	Note	$’000	$’000
Current liabilities
Finance leases	18(c)	291	283
Non-current liabilities
Bank debt	18(a)	63,900	94,000
Prepaid borrowing costs		(1,681)	(312)
Finance leases	18(c)	4,272	4,385
Total non-current borrowings		66,491	98,073

a. Bank Debt

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

Loan to value ratio (“LVR”) is less than or equal to 50%;
LVR (excluding Settlers) is less than or equal to 55%;
Total Interest Cover Ratio of at least 2x;
Core Interest Cover Ratio (adjusted to exclude development income and associated costs) of at least 1.50x in financial year ending 2015 increasing to at least 2.0x in FY2016;
Net debt to adjusted EBITDA ratio not more than 6x up to 30 June 2015, 5.5x up to 31 December 2015, 5x up to 30 June 2016, 4x after 30 June 2016.

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

b. Bank Guarantees

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

c. Finance Leases

On 23 April 2013, the Group was assigned a commercial lease with 16.5 years remaining with the Gosford City Council for land and facilities as part of the Active Lifestyle Estates Ettalong Beach acquisition. The lease is for an initial three years commencing September 2012 with two renewal options of seven years each. The first option period was exercised on 1 July 2015 for seven years to June 2022. The below table is based on the expectation that the last lease option will be exercised.

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

60 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

18. BORROWINGS (CONTINUED)

i. Minimum lease payments – excluding perpetual lease

18. BORROWINGS (CONTINUED) i. Minimum lease payments – excluding perpetual lease
	2015	2014
	$’000	$’000
Minimum lease payments:
Within one year	299	292
Later than one year but not later than five years	1,273	1,242
Later than five years	3,431	3,761
Total minimum lease payments	5,003	5,295
Future finance charges	(1,579)	(1,765)
Present value of minimum lease payments	3,424	3,530
Present value of minimum lease payments:
Within one year	291	283
Later than one year but not later than five years	1,082	1,056
Later than five years	2,051	2,191
	3,424	3,530

ii. Minimum lease payments – perpetual lease

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

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

19. RETIREMENT VILLAGE RESIDENT LOANS

19. RETIREMENT VILLAGE RESIDENT LOANS
		2015	2014
	Note	$’000	$’000
a. Summary of carrying amounts
Gross resident loans		192,898	218,639
Accrued deferred management fee		(31,020)	(28,517)
Net resident loans		161,878	190,122
b. Movements in carrying amounts
Carrying amount at beginning of year		190,122	175,703
Net (gain)/loss on change in fair value of resident loans		8,878	616
Accrued deferred management fee income		(6,788)	(5,333)
Deferred management fee cash collected		2,056	1,811
Proceeds from resident loans		19,815	22,021
Repayment of resident loans		(10,544)	(10,361)
Transfer to assets and liabilities held for sale	10	(42,041)	5,439
Other		380	226
Carrying amount at end of year		161,878	190,122

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

Ingenia Communities Holdings Limited

20. PROVISIONS

20. PROVISIONS
2015	2014
$’000	$’000
Current liabilities Employee liabilities 992	718
Non-current liabilities Employee liabilities 248	249

21. DERIVATIVES

21. DERIVATIVES
		2015	2014
	Note	$’000	$’000
Current liabilities
Interest rate swap contracts	30	3	84
Non-current liabilities
Interest rate swap contracts	30	–	84

22. DEFERRED TAX ASSETS AND LIABILITIES

22. DEFERRED TAX ASSETS AND LIABILITIES
2015	2014
$’000	$’000
Deferred tax assets Tax losses 17,496 Other 1,401 Deferred tax liabilities DMF receivable (7,982) Investment properties (4,567)	– – – – –
Net deferred tax asset 6,348	–
Deductible temporary differences and carried forward losses tax effected for which no deferred tax asset has been recognised 7,500	7,488
Deferred tax liabilities Tax losses – Other – Deferred tax liabilities – DMF receivable – Investment properties –	14,228 1,081 8,176 7,409
Net deferred tax liabilities –	276

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

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

62 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

23. ISSUED SECURITIES

23. ISSUED SECURITIES
	2015	2014
	$’000	$’000
a. Carrying values
At beginning of year	569,116	510,141
Issued during the year:
Dividend Reinvestment Plan issues	2,884	–
Institutional placement	45,315	–
Rights issue	43,769	61,707
Institutional Placement and Rights issue costs	(3,870)	(2,732)
At end of year	657,214	569,116
The closing balance is attributable to the securityholders of:
Ingenia Communities Holding Limited	8,900	7,377
Ingenia Communities Fund	619,286	547,642
Ingenia Communities Management Trust	29,028	14,097
	657,214	569,116
	2015	2014
	Thousands	Thousands
b. Number of issued securities
At beginning of year	676,240	507,179
Issued during the year:	–	169,061
Retention Quantum Rights	1,818	–
Dividend Reinvestment Plan	6,674	–
Institutional Placement and Rights Issue	197,968	–
At end of year	882,700	676,240

c. Terms of Securities

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

Ingenia Communities Holdings Limited

24. RESERVES

24. RESERVES
2015	2014
$’000	$’000
Foreign currency translation reserve Balance at beginning of year 1,035	766
Translation differences arising during the year 1,339	269
Amounts transferred to profit and loss on disposal of foreign operation (2,374)	–
Balance at end of year –	1,035
Share-based payment reserve Balance at beginning of year 988	308
Transfer from reserves to retained earnings (332)	–
Share-based payment transactions 678	680
Balance at end of year 1,334	988
Total reserves at end of year 1,334	2,023
The closing balance is attributable to the securityholders of: Ingenia Communities Holding Limited 1,334	988
Ingenia Communities Fund –	866
Ingenia Communities Management Trust –	169
1,334	2,023

The share-based payment reserve records the value of equity-settled share-based payment transactions provided to employees, including key management personnel, as part of their remuneration. Refer Note 28.

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

25. ACCUMULATED LOSSES

25. ACCUMULATED LOSSES
2015	2014
$’000	$’000
Balance at beginning of year (330,962)	(336,563)
Net profit/(loss) for the year 25,722	11,518
Transfer from reserves to retained earnings 332	–
Distributions (10,120)	(5,917)
Balance at end of year (315,028)	(330,962)
The closing balance is attributable to the securityholders of: Ingenia Communities Holding Limited (3,175)	(2,659)
Ingenia Communities Fund (303,335)	(324,254)
Ingenia Communities Management Trust (8,518)	(4,049)
(315,028)	(330,962)

64 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

26. COMMITMENTS

a. Capital Commitments

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

b. Operating Lease Commitments

The Group has two non-cancellable operating leases for its Sydney and Brisbane offices. These leases have remaining lives of six months and five years respectively.

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

	2015	2014
	$’000	$’000
Within one year	362	482
Later than one year but not later than five years	744	1,106
	1,106	1,588

c. Finance Lease Commitments

On 23 April 2013, the Group was assigned a commercial lease with 16.5 years remaining with the Gosford City Council for land and facilities as part of its Ettalong Holiday Village acquisition. The lease is for an initial three years commencing September 2012 with two renewal options of seven years each. The first option period was exercised on 1 July 2015 for seven years to June 2022.

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

Refer to Note 18 for future minimum lease payments payable and the present value of minimum lease payments payable at reporting date for the finance leases at Ettalong Holiday Village and One Mile Beach Holiday Park.

27. CONTINGENT LIABILITIES

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

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

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

28. SHARE-BASED PAYMENT TRANSACTIONS

The Group has established rights plans, which provide for the grant of conditional rights to receive securities in the Group. The intention of these plans is to align long-term securityholder returns with the ‘at-risk’ compensation potentially payable to executive level employees and to reward managers who remain in employment and perform at the required levels of performance to sustain earnings growth.

These plans encompass various types of security rights, being:

Performance Quantum rights (“PQRs”) which vest on completion of a period of service, with the number of rights vesting based on the Group’s performance, as measured by total securityholder returns (“TSR”). On vesting, each PQR entitles the employee to receive one security of the Group for no consideration.
Retention Quantum Rights (“RQRs”) issued as a one off grant in 2012 to ensure stability during the internalisation transition. These rights were subject to the employee remaining with the Group for a two year retention period. These rights vested on 1 July 2014 and RQRs will not be issued in the future.
Long-Term Incentive Rights (“LTIPs”) which vest subject to a performance condition based on growth in the Group’s TSR relative to the ASX 300 Industrials Index return over the performance period.
Short-Term Incentive Rights (“STIPs”) which are awarded based on agreed performance conditions as part of the executive’s short-term incentive remuneration. The value of the rights awarded is conditional based on executives meeting pre-agreed Key Performance Indicators (KPIs). Once performance against the KPIs has been assessed, the value of the STIPs to be issued is determined. These STIPs are then subject to a one year vesting deferral period from the issue date. The STIP allows for certain lapsing conditions within the deferral period, should certain conditions occur.

Ingenia Communities Holdings Limited

Movements in rights during the year were:

2015	2014
Thousands	Thousands
PQRs & LTIPs Outstanding at beginning of year(1) 7,558	3,842
Granted during the year 983	3,716
Outstanding at end of year 8,541	7,558
Exercisable at end of year –	–
Weighted average remaining contractual life of outstanding rights (years) 0.70	1.5
RQRs Outstanding at beginning of year(2) 1,818	1,818
Granted during the year –	–
Outstanding at end of year –	1,818
Exercisable at end of year –	–
Weighted average remaining contractual life of outstanding rights (years) –	–

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

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

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

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

	1 October	12 November
Grant Date	2014	2014
Price of stapled securities at grant date	$0.445	$0.455
Volatility of security price	30.0%	30.0%
Distribution yield	2.24%	2.28%
Risk-free rate at grant date	2.53%	2.56%
Expected remaining life at grant date	2.9 years	2.9 years
Fair value of each right	$0.243	$0.253

The fair value of PQRs and LTIPs is recognised as an employee benefit expense with a corresponding increase in reserves. The fair value is expensed on a straight-line basis over the vesting period. The expense recognised for the financial year was $590,928 (2014: $680,600).

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

66 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

29. CAPITAL MANAGEMENT

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

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

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

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

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

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

30. FINANCIAL INSTRUMENTS

a. Introduction

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

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

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

Ingenia Communities Holdings Limited

b. Interest Rate Risk

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

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

At 30 June 2015, after taking into account the effect of interest rate swaps, approximately 28% of the Group’s borrowings are at a fixed rate of interest (2014: 47%).

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

c. Interest Rate Risk Exposure

The Group’s exposure to interest rate risk and the effective interest rates on financial instruments at reporting date was:

30 June 2015 Floating interest rate	Fixed interest maturing in: Less than 1year 1 to 5 Years More than 5years Total
Principal amounts $’000 Financial assets Cash at bank 15,117 – – – 15,117 Financial liabilities Bank debt denominated in AUD 63,900 – – – 63,900 Finance leases (excluding perpetual lease) – 291 1,082 2,051 3,424 Interest rate swaps: denominated in AUD; Group pays fixed rate (18,000) 18,000 – – –

	– – – 15,117

	– – – 63,900
	291 1,082 2,051 3,424

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

30 June 2014 Floating interest rate	Fixed interest maturing in: Less than 1year 1 to 5 Years More than 5years Total
Principal amounts $’000 Financial assets Cash at bank 12,894 – – – 12,894 Financial liabilities Bank debt denominated in AUD 94,000 – – – 94,000 Finance leases (excluding perpetual lease) – 283 1,056 2,191 3,530 Interest rate swaps: denominated in AUD; Group pays fixed rate (45,000) 45,000 – – –

	– – – 12,894

	– – – 94,000
	283 1,056 2,191 3,530

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

68 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

30. FINANCIAL INSTRUMENTS (CONTINUED)

d. Interest Rate Sensitivity Analysis

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

i. Increase in average interest rates of 1%

The effect on net interest expense for one year would have been:

	Effect on profit after tax higher/(lower)
	2015 $’000 2014 $’000
Variable interest rate instruments denominated in: Australian dollars	(639) (940)

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

	Effect on profit after tax higher/(lower)
	2015 $’000 2014 $’000
Interest rate swaps denominated in: Australian dollars	– 417

ii. Decrease in average interest rates of 1%

The effect on net interest expense for one year would have been:

	Effect on profit after tax higher/(lower)
	2015 $’000 2014 $’000
Variable interest rate instruments denominated in: Australian dollars	639 940

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

	Effect on profit after tax higher/(lower)
	2015 $’000 2014 $’000
Interest rate swaps denominated in: Australian dollars	– (297)

Ingenia Communities Holdings Limited

e. Foreign Exchange Risk

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

f. Net Foreign Currency Exposure

The Group’s net foreign currency monetary exposure as at reporting date is shown in the following table. The net foreign currency exposure reported is of foreign currencies held by entities whose functional currency is the Australian dollar. It excludes assets and liabilities of entities, including equity accounted investments, whose functional currency is not the Australian dollar.

	Net foreign currencyassets
	2015 $’000 2014 $’000
Net foreign currency exposure: United States dollars New Zealand dollars	3,491 473 157 1,657
Total net foreign currency assets	3,964 1,814

g. Foreign Exchange Sensitivity Analysis

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

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

i. Efect of appreciation in Australian dollar of 10%:
	Effect on profit after tax higher/(lower)
	2015 $’000 2014 $’000
Foreign exchange risk exposures denominated in: United States dollars New Zealand dollars	(317) (43) (16) (166)

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

ii. Efect of depreciation in Australian dollar of 10%:
	Effect on profit after tax higher/(lower)
	2015 $’000 2014 $’000
Foreign exchange risk exposures denominated in: United States dollars New Zealand dollars	388 53 16 166

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

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

70 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

30. FINANCIAL INSTRUMENTS (CONTINUED)

h. Credit Risk

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

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

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

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

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

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

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

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

i. Liquidity Risk

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

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

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

10% reduction in value of assets for LVR covenants; and
2% nominal increase in interest rates combined with a 5% fall in income for ICR covenants.

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

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

	Less than	1 to	More than
	1 year	5 Years	5 years	Total
2015	$’000	$’000	$’000	$’000
Trade and other payables	15,073	14,770	–	29,843
Retirement village residents loans	161,878	–	–	161,878
Borrowings	2,731	68,344	–	71,075
Provisions	992	177	71	1,240
Finance leases (excluding perpetual lease)	299	1,273	3,431	5,003
Finance lease (perpetual lease)(1)	121	483	–	604
Liabilities held for sale	42,041	–	–	42,041
	223,135	85,047	3,502	311,684

Ingenia Communities Holdings Limited

	Less than	1 to	More than
	1 year	5 Years	5 years	Total
2014	$’000	$’000	$’000	$’000
Trade and other payables	10,409	4,000	–	14,409
Retirement village residents loans	190,122	–	–	190,122
Borrowings	4,521	99,653	–	104,174
Provisions	718	249	–	967
Finance leases (excluding perpetual lease)	292	1,242	3,761	5,295
Finance lease (perpetual lease)(1)	121	483	–	604
	206,183	105,627	3,761	315,571

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

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

		Less than	1 to	More than
		1 year	5 Years	5 years	Total
2015		$’000	$’000	$’000	$’000
Liabilities
Derivative	liabilities – net settled	3	–	–	3
2014
Liabilities
Derivative	liabilities – net settled	84	84	–	168

j. Other Financial Instrument Risk

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

	Effect on profit after tax higher/(lower)
	2015 $’000 2014 $’000
Increase in market prices of investment properties of 10% Decrease in market prices of investment properties of 10%	(19,290) 19,290 (21,864) 21,864

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

k. Fair Value

The Group uses the following fair value measurement hierarchy:

Level 1: fair value is calculated using quoted prices in active markets for identical assets or liabilities; Level 2: fair value is calculated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and

Level 3: fair value is calculated using inputs for the asset or liability that are not based on observable market data.

Quoted market price represents the fair value determined based on quoted prices on active markets as at the reporting date without any deduction for transaction costs.

72 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

30. FINANCIAL INSTRUMENTS (CONTINUED)

The following table presents the Group’s financial instruments that were measured and recognised at fair value at reporting date:

Financial assets/	Valuation technique(s)	Significant	Relationship of unobservable
financial liabilities	and keyinputs	unobservable inputs	inputs to fair value
Retirement village	Loans measured as the ingoing	Long-term capital	The higher the appreciation,
resident loans	resident’s contribution plus	appreciation rates for	the higher the value of
	the resident’s share of capital	residential property between	resident loans. The longer the
	appreciation to reporting date,	0-4%.	length of stay, the lower the
	less DMF accrued to reporting date.	Estimated length of stay of residents based on life tables.	value of resident loans.
Deferred management	DMF measured using the initial	Estimated length of stay of	The longer the length of stay,
fee accrued	property price, estimated	residents based on life tables.	the higher the DMF accrued,
	length of stay, various contract		capped at a predetermined
	terms and projected property		period of time.
	price at time of re-leasing.
Derivative interest rate	Net present value of future	N/A	N/A
swaps	cash flows discounted at
	market rates adjusted for the
	Group’s credit risk.

There has been no movement from Level 3 to Level 2 during the current period.

Changes in the Group’s retirement village resident loans which are Level 3 instruments are presented in Note 19. The carrying amounts of the Group’s other financial instruments approximate their fair values.

31. FAIR VALUE MEASUREMENT

The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities:

a. Assets Measured at Fair Value

a. Assets Measured at Fair Value
30 June 2015 Date of valuation Total $’000	Fair value measurement using
	Quoted prices in active markets (Level 1) $’000 Significant observable inputs (Level 2) $’000 Significant unobservable inputs (Level 3) $’000
Investment properties 30 June 2015 Refer to Note 14 539,715 Assets held for sale – investment property 30 June 2015 Refer to Note 10(a) 61,598	– – 539,715
	– 61,598 –

30 June 2014 Date of valuation Total $’000	Fair value measurement using
	Quoted prices in active markets (Level 1) $’000 Significant observable inputs (Level 2) $’000 Significant unobservable inputs (Level 3) $’000
Investment properties 30 June 2014 Refer to Note 14 498,863 Discontinued operations- investment property 30 June 2014 Refer to 8(d) 45,902 Assets held for sale – deferred management fee receivable 30 June 2014 Refer to Notes 10(a) and 19 5,439	– – 498,863 – – 45,902 – – 5,439

Ingenia Communities Holdings Limited

b. Liabilities Measured at Fair Value

b. Liabilities Measured at Fair Value
30 June 2015 Date of valuation Total $’000	Fair value measurement using
	Quoted prices in active markets (Level 1) $’000 Significant observable inputs (Level 2) $’000 Significant unobservable inputs (Level 3) $’000
Retirement village resident loans 30 June 2015 Refer to Note 19 161,878 Derivatives 30 June 2015 3 Liabilities held for sale Refer to Note 10(b) 42,041	– – 161,878
	– 3 –
	– 42,041 –

30 June 2014 Date of valuation Total $’000	Fair value measurement using
	Quoted prices in active markets (Level 1) $’000 Significant observable inputs (Level 2) $’000 Significant unobservable inputs (Level 3) $’000
Retirement village resident loans 30 June 2014 Refer to Note 19 190,122 Derivatives 30 June 2014 168	– – 190,122 – 168 –

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

32. AUDITOR’S REMUNERATION

32. AUDITOR’S REMUNERATION
2015	2014
$	$
Amounts received or receivable by EY for: Audit or review of the financial reports 469,524	333,355
Other audit related services 140,738	34,450
Non-audit related services –	27,295
610,262	395,100

33. RELATED PARTIES

a. Key Management Personnel

The aggregate compensation paid to Key Management Personnel (“KMP”) of the Group is as follows:

	2015	2014
	Note $	$
Directors fees	542,000	462,500
Salaries and other short-term benefits	1,158,141	1,094,684
Short-term incentives	400,956	332,235
Superannuation benefits	58,518	59,084
Share-based payments	28 590,928	680,600
	2,750,543	2,629,103

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

74 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

33. RELATED PARTIES (CONTINUED)

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

Issue date Rights Expiry date	Number outstanding
	2015 2014
2012 RQR 2014 2012 PQR 2015 2013 PQR 2016 2014 PQR 2017	– 1,818,000 3,842,000 3,842,000 3,716,000 3,716,000 982,971 –

34. COMPANY FINANCIAL INFORMATION

Summary financial information about the Company is:

34. COMPANY FINANCIAL INFORMATION Summary fnancial information about the Company is:
	2015	2014
	$’000	$’000
Current assets	177	–
Total assets	5,315	7,870
Current liabilities	5,747	7,320
Total liabilities	4,014	7,320
Net assets	1,301	550
Securityholders’ equity
Issued securities	8,900	7,377
Reserves	1,334	988
Accumulated losses	(8,933)	(7,815)
Total securityholders’ equity	1,301	550
Loss from continuing operations	(1,118)	(4,771)
Net loss attributable to securityholders	(1,118)	(4,771)
Total comprehensive income	(1,118)	(4,771)

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

Ingenia Communities Holdings Limited

35. SUBSIDIARIES

a. Names of Subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in Note 1(d):

Name
Country of
residence

Ownershipinterest

2015
%
2014
%

Bridge Street Trust
Australia
Browns Plains Road Trust
Australia
Casuarina Road Trust
Australia
Edinburgh Drive Trust
Australia
Garden Villages Management Trust
Australia
INA CC Holdings Pty Ltd
Australia
INA CC Pty Ltd
Australia
INA Community Living Lynbrook Trust
Australia
INA CC Trust
Australia
INA Community Living Subsidiary Trust
Australia
INA Community Living Subsidiary Trust No. 2
Australia
INA Garden Villages Pty Ltd
Australia
INA Kiwi Communities Pty Ltd
Australia
INA Kiwi Communities Subsidiary Trust No. 1
Australia
INA Management Pty Ltd
Australia
INA Regency Co Pty Ltd
Australia
INA Settlers Co Pty Ltd
Australia
INA Sunny Communities Pty Ltd
Australia
INA Sunny Trust
Australia
Ingenia Communities RE Limited
Australia
Jefferis Street Trust
Australia
Lovett Street Trust
Australia
ILF Regency Operations Trust
Australia
ILF Regency Subsidiary Trust
Australia
Settlers Operations Trust
Australia
Settlers Subsidiary Trust
Australia
SunnyCove Gladstone Unit Trust
Australia
SunnyCove Rockhampton Unit Trust
Australia
Ridge Estate Trust
Australia
Taylor Street (2) Trust
Australia
INA Subsidiary Trust No. 1
Australia
INA Subsidiary Trust No. 3
Australia
INA Operations Pty Ltd
Australia
INA Operations Trust No. 1
Australia
INA Operations Trust No. 2
Australia
INA Operations Trust No. 3
Australia

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

76 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

35. SUBSIDIARIES (CONTINUED)

35. SUBSIDIARIES (CONTINUED)
Name Country of residence	Ownershipinterest
	2015 % 2014 %
INA Operations Trust No. 4 (formerly INA Subsidiary Trust No. 2) Australia INA Operations Trust No. 6 Australia INA Operations Trust No. 7 Australia Noyea Pty Ltd Australia Noyea Operations Pty Ltd Australia INA Operations No. 2 Pty Limited Australia INA Operations No. 3 Pty Limited Australia IGC NZ Student Holdings Ltd New Zealand INA NZ Subsidiary Unit Trust No. 1 New Zealand CSH Lynbrook GP LLC United States of America CSH Lynbrook LP United States of America Lynbrook Freer Street Member LLC United States of America Lynbrook Management, LLC United States of America INA Community Living LLC (formerly ING Community Living LLC) United States of America INA Community Living II LLC (formerly ING Community Living II LLC) United States of America INA US Community Living Fund LLC (formerly ING US Community Living Fund LLC) United States of America	100 100 100 – 100 – – 100 – 100 100 – 100 – 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

The Group’s voting interest in its subsidiaries is the same as its ownership interest.

Ingenia Communities Holdings Limited

36. NOTES TO THE CASH FLOW STATEMENT

Reconciliation of profit to net cash flow from operating activities

36. NOTES TO THE CASH FLOW STATEMENT Reconciliation of proft to net cash fow from operating activities
2015	2014
$’000	$’000
Net profit for the year 25,722 Adjustments for: Net foreign exchange (gain)/loss 927 Release of FCTR on disposal of foreign operations (2,374) Net loss on disposal of investment properties - continuing 69 Net loss on disposal of investment properties - discontinued 2,014 Disposal costs associated with overseas investments - discontinued – Gain on disposal of equity accounted investments – Net (gain)/loss on change in fair value of: Investment properties – continuing (16,404) Investment properties – discontinued – Derivatives (164) Retirement village residents’ loan 8,878 Income tax expense/(benefit): Continuing (6,604) Discontinued 214 Share-based payments expense 678 Amortisation of borrowing costs 536 Other non-cash items 479	11,518 (1,410) – – – 290 (327) 341 1,630 (41) 616 (7,264) 14 681 369 211
Operating profit for the year before changes in working capital 13,971 Changes in working capital: (Increase)/decrease in receivables (2,599) Increase in inventory (11,750) Increase in retirement village residents’ loans 12,446 Increase/(decrease) in other payables and provisions (3,034)	6,628 5,237 (1,923) 6,327 (2,029)
Net cash provided by operating activities 9,034	14,240

Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

37. SUBSEQUENT EVENTS

a. Performance Quantum Rights Vesting

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

Simon Owen	2,260,000
Tania Betts	791,000
Nicole Fisher	791,000

b. Acquisition of Upstream Bethania

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

c. Execution of Hedging Contract

d. Acquisition of Big 4 Conjola Lakeside

e. Final FY15 distribution

Ingenia Communities Holdings Limited

Directors’ Declaration

for the year ended 30 June 2015

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

In the opinion of the directors:
a. the financial statements and notes of Ingenia Communities Holdings Limited for the financial year ended 30 June 2015 are in accordance with the Corporations Act 2001 , including:
- i. giving a true and fair view of its financial position as at 30 June 2015 and of its performance for the year ended on that date; and
- ii. complying with Accounting Standards (including Australian Accounting Interpretations) and Corporations Regulations 2001 ; and
b. there are reasonable grounds to believe that Ingenia Communities Holdings Limited will be able to pay its debts as and when they become due and payable.
The financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1(b).
This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the Corporations Act 2001 .

On behalf of the Board

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Jim Hazel Chairman Sydney, 9 September 2015

80 Annual Report 2015

Independent Auditor’s Report

for the year ended 30 June 2015

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Ingenia Communities Holdings Limited 81

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82 Annual Report 2015

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Ingenia Communities Holdings Limited

Ingenia Communities Fund & Ingenia Communities Management Trust Annual Reports

for the year ended 30 June 2015

CONTENTS	CONTENTS
Directors’ Report		84
Auditor’s Independence Declaration		87
Consolidated Statements of Comprehensive Income		88
Consolidated Balance Sheets		90
Consolidated Cash Flow Statements		91
Statements of Changes in Unitholders’ Interest		92
Notes to the Financial Statements		94
1.	Summary of signifcant accounting policies	94
2.	Accounting estimates and judgements	100
3.	Segment information	102
4.	Earnings per unit	106
5.	Finance expense	106
6.	Income tax beneft	107
7.	Discontinued operations	108
8.	Business combinations	109
9.	Assets and liabilities held for sale	110
10.	Cash and cash equivalents	110
11.	Trade and other receivables	110
12.	Inventories	111
13.	Investment properties	111
14.	Plant and equipment	113
15.	Intangibles	113
16.	Trade and other payables	114
17.	Borrowings	114
18.	Retirement village resident loans	115
19.	Provisions	116
20.	Derivatives	116
21.	Deferred tax assets and liabilities	116
22.	Issued units	117
23.	Reserves	117
24.	Accumulated losses	118
25.	Commitments	118
26.	Contingencies	118
27.	Capital management	119
28.	Financial instruments	119
29.	Fair value measurement	125
30.	Auditor’s remuneration	127
31.	Related parties	128
32.	Parent fnancial information	130
33.	Subsidiaries	131
34.	Notes to the cash fow statements	132
35.	Subsequent events	133
Directors’ Declaration		134
Independent Auditor’s Report		135
Securityholder Information		137
Investor Relations		139
Corporate Directory		140

84 Annual Report 2015

Directors’ Report

for the year ended 30 June 2015

The Ingenia Communities Fund (“ICF” or the “Fund”) (ARSN 107 459 576) and the Ingenia Communities Management Trust (“ICMT”) (ARSN 122 928 410) (together the “Trusts”) are Australian registered schemes. Ingenia Communities RE Limited (ACN 154 464 990; Australian Financial Services Licence number 415862), the Responsible Entity of the Trusts, is incorporated and domiciled in Australia.

The parent company of Ingenia Communities RE Limited (“ICRE” or “Responsible Entity”) is Ingenia Communities Holdings Limited (the “Company” or “ICH”). The shares of the Company and the units of the Trusts are “stapled” and trade on the Australian Securities Exchange (“ASX”) as a single security. The Company and the Trusts along with their subsidiaries are collectively referred to as the Group in this report.

The directors’ report is a combined directors’ report that covers both Trusts for the full year ended 30 June 2015 (the “current period”).

DIRECTORS

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

Non-executive directors

Jim Hazel (Chairman)

Philip Clark AM

Amanda Heyworth

Robert Morrison Norah Barlow ONZM

Executive director

Simon Owen (Managing Director and CEO)

PRINCIPAL ACTIVITY

The principal activity of ICF is investment in seniors living communities in Australia. The principal activities of ICMT are the development, management and operation of seniors living communities in Australia. There was no significant change in the nature of either Trust’s activities during the financial year.

OPERATING AND FINANCIAL REVIEW

a. ICF and ICMT Overview

ICF and ICMT are two of the entities forming part of the Ingenia Communities Group (the “Group”) which is a triple stapled structure traded on the ASX.

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

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

b. Strategy

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

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

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

The key immediate business priorities of the Group are:

Continue building velocity in the delivery and sale of new homes within the Active Lifestyle Estates business;
Acquire additional lifestyle parks in existing and new market clusters;
Grow occupancy rates within the Garden Villages portfolio towards a new medium term target of 93%;
Grow occupancy and average room rates for short term accommodation within Active Lifestyle Estates
Continue sell down of completed homes within the Settlers portfolio and explore opportunities to recycle capital from Settlers assets into higher cash yielding lifestyle park assets; and
Focus on growing asset cash yields through operational efficiencies including revenue optimisation and disciplined cost management

c. FY15 financial results

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

Ingenia Communities Holdings Limited 85

d. Key metrics

Net profit for the year of $34.5 million for ICF, up 124% from FY14
Net loss from ICMT of $7.9 million (2014: $1.2 million loss)
Full year distribution of 1.35 cent per security by ICF, nil from ICMT

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

e. Continuing operations

The key strategic priorities of the continuing operations are:

Continuing the sales and settlement momentum achieved in Active Lifestyle Estates during FY15,
Securing further development approvals for new homes within our existing lifestyle parks;
Optimising home designs for efficiency and customer demand;

i. Outlook

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

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

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Changes in the state of affairs during the financial year are set out in the various reports in this Annual Report. Refer to Note 7 of the accompanying financial statements for Discontinued operations, Note 9 for Assets and liabilities held for sale, Note 13 for Investment properties acquired or disposed of during the year, Note 17 for details of Australian debt refinanced and Note 22 for Issued units.

Growing rental returns and leveraging scale efficiencies;
Assessing expansion into greenfield lifestyle park development;
Continuing to grow Garden Villages occupancy, increasing rents above CPI and improving cash margins;
Completing the sale of the five Settlers assets classified as held for sale.

f. Discontinued operations and assets held for sale

ICF and ICMT completed their exit from the New Zealand Students portfolio in December 2014.

g. Capital management

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

EVENTS SUBSEQUENT TO REPORTING DATE

a. Performance Quantum Rights vesting

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

Simon Owen	2,260,000
Tania Betts	791,000
Nicole Fisher	791,000

b. Acquisition of Upstream Bethania

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

h. Distributions

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

On 24 February 2015, the directors declared an interim distribution of 0.65 cps (2014: 0.50 cps) amounting to $5,712,537 which was paid on 18 March 2015.
On 25 August 2015, the directors declared a final distribution of 0.70 cps (2014: 0.65 cps) amounting to $6,205,793, to be paid on 16 September 2015.

The distribution is 71.0% tax deferred and the dividend reinvestment plan will apply to the final distribution.

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

c. Execution of Hedging Contract

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

d. Acquisition of Big 4 Conjola Lakeside

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

86 Annual Report 2015

Directors’ Report

for the year ended 30 June 2015

e. Final FY15 distribution

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

LIKELY DEVELOPMENTS

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

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

ENVIRONMENTAL REGULATION

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

INDEMNITIES

The Trusts have not indemnified, nor paid any insurance premiums for, a person who is or has been an officer of the Responsible Entity or an auditor of either Trust.

INTERESTS OF DIRECTORS OF THE RESPONSIBLE ENTITY

Units in each Trust held by directors of the Responsible Entity or associates of the directors as at 30 June 2015 were:

		Performance	Retention
	Number of	quantum	quantum
	units	rights	rights
Jim Hazel	1,669,587	–	–
Philip Clark AM	238,096	–	–
Amanda Heyworth	641,524	–	–
Robert Morrison	453,335	–	–
Norah Barlow	209,063	–	–
Simon Richard Owen	3,763,905	4,720,000	–

OTHER INFORMATION

Fees paid to the Responsible Entity and its associates, and the number of units in each Trust held by the Responsible Entity and its associates as at the end of the financial year are set out in Note 31 in the financial report.

AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 87.

ROUNDING OF AMOUNTS

The Trusts are of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the ‘’rounding off’’ of amounts in this report and in the financial report. Amounts in these reports have been rounded off in accordance with that Class Order to the nearest thousand dollars, unless otherwise stated.

Signed in accordance with a resolution of the directors of the Responsible Entity.

==> picture [103 x 39] intentionally omitted <==

Jim Hazel Chairman Sydney, 9 September 2015

Ingenia Communities Holdings Limited 87

Auditor’s Independence Declaration

for the year ended 30 June 2015

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Annual Report 2015

Consolidated Statements of Comprehensive Income

for the year ended 30 June 2015

Note	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Revenue Rental income Accrued deferred management fee income 18 Manufactured home sales Catering income Other property income Service station sales Interest income	9,720 9,354 44,984 31,643 – – 6,788 5,333 – – 14,937 3,442 – – 3,538 3,178 – – 3,076 1,819 – – 2,359 – 14,564 10,339 7 16
Property expenses Employee expenses Administration expenses Operational, marketing and selling expenses Manufactured home cost of sales Service station expenses Finance expense 5 Net foreign exchange gain/(loss) Net gain/(loss) on disposal of investment properties Net gain/(loss) on change in fair value of: Investment properties Derivatives Retirement village resident loans Responsible Entity’s fees and expenses 31(b) Depreciation and amortisation expense 14,15	24,284 19,693 75,689 45,431 (327) (274) (27,372) (20,693) – – (17,061) (11,131) (506) (582) (2,689) (1,983) (648) (295) (3,150) (2,734) – – (9,256) (2,130) – – (1,910) – (3,601) (3,955) (15,144) (10,145) 107 (147) – – (1,689) – 1,620 – 15,922 1,530 482 (1,871) 164 41 – – – – (8,878) (616) (1,676) (1,170) (2,165) (1,626) (117) (100) (259) (67)
Profit/(loss) from continuing operations before income tax Income tax benefit 6	31,913 14,741 (10,093) (7,565) – – 6,019 6,506
Profit/(loss) from continuing operations Profit/(loss) from discontinued operations 7	31,913 14,741 (4,074) (1,059) 2,587 681 (3,854) (111)
Net profit/(loss) for the year	34,500 15,422 (7,928) (1,170)
Net profit/(loss) for the year Other comprehensive income, net of income tax: Items that may be reclassified subsequently to profit or loss: Foreign currency translation differences arising during the year 23 Release of foreign currency translation reserve on disposal of foreign operations 23	34,500 15,422 (7,928) (1,170) 1,846 (226) (169) 495 (1,620) – – –
Total comprehensive income for the year, net of tax	34,726 15,196 (8,097) (675)

Ingenia Communities Holdings Limited 89

Note	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Attributable to unitholders of: Ingenia Communities Fund Ingenia Communities Management Trust	34,500 15,422 (3,461) (111) – – (4,467) (1,059)
	34,500 15,422 (7,928) (1,170)
Total comprehensive income/(loss) for the year is attributable to: Ingenia Communities Fund Ingenia Communities Management Trust	34,726 15,196 (3,461) 335 – – (4,636) (1,010)
	34,726 15,196 (8,097) (675)
Note	2015 Cents 2014 Cents 2015 Cents 2014 Cents
Distributions per unit(1) Earnings per unit: Basic earnings from continuing operations 4 Basic earnings 4 Diluted earnings from continuing Operations 4 Diluted earnings 4	1.3 1.0 – – 3.9 2.3 (0.5) (0.2) 4.2 2.4 (1.0) (0.2) 2.5 2.3 (0.3) (0.2) 2.7 2.4 (0.6) (2.2)

90 Annual Report 2015

Consolidated Balance Sheets

as at 30 June 2015

Note	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Current assets Cash and cash equivalents 10 Trade and other receivables 11 Inventories 12 Income tax receivable Assets of discontinued operations 7(d) Assets held for sale 9(a)	8,966 2,658 6,094 3,893 2,643 4,280 4,104 3,131 – – 13,208 2,208 16 975 16 – – 3,874 – 47,657 – – 61,598 5,439
Total current assets	11,625 11,787 85,020 62,328
Non-current assets Trade and other receivables 11 Receivable from related party 31 Investment properties 13 Plant and equipment 14 Intangibles 15 Investments Deferred tax asset 21	31,401 39,334 110 40 185,798 135,805 – – 153,434 134,488 386,294 364,375 122 239 459 180 2 – 1,577 – 3,874 – – – – – 4,606 –
Total non-current assets	374,631 309,866 393,046 364,595
Total assets	386,256 321,653 478,066 426,923
Current liabilities Trade and other payables 16 Borrowings 17 Retirement village resident loans 18 Provisions 19 Derivatives 20 Provision for income tax Payable to related party 31 Liabilities of discontinued operations 7(d) Liabilities held for sale 9(b)	1,200 1,210 12,785 8,480 – – 2,817 3,461 – – 161,878 190,122 – – 830 590 3 84 – – – – – 29 – – 189,635 133,249 – – – 30,449 – – 42,041 –
Total current liabilities	1,203 1,294 409,986 366,380
Non-current liabilities Trade and other payables 16 Borrowings 17 Provisions 19 Derivatives 20 Deferred tax liabilities 21	– – 14,770 4,000 62,217 93,688 33,252 41,883 – – 248 249 – 84 – – – – – 1,433
Total non-current liabilities	62,217 93,772 48,270 47,565
Total liabilities	63,420 95,066 458,256 413,945
Net assets	322,836 226,587 19,810 12,978
Equity Issued units 22 Reserves 23 Accumulated losses 24	619,285 547,642 29,028 14,097 – (226) – 169 (296,449) (320,829) (8,518) (4,049)
Unitholders’ interest Non-controlling interest	322,836 226,587 20,510 10,217 – – (700) 2,761
Total equity	322,836 226,587 19,810 12,978
Attributable to unitholders of: Ingenia Communities Fund Ingenia Communities Management Trust	322,836 226,587 (700) 2,761 – – 20,510 10,217
	322,836 226,587 19,810 12,978

Ingenia Communities Holdings Limited

Consolidated Cash Flow Statements

for the year ended 30 June 2015

Note	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Cash flows from operating activities Rental and other property income Payment of management fees Property and other expenses Proceeds from resident loans Repayment of resident loans Proceeds from manufactured home sales Payments for manufactured homes Purchase of service station inventory Proceeds from sale of service station inventory Distributions received from equity accounted investments Interest received Borrowing costs paid Income taxes received/(paid)	– – 57,922 43,274 – – – (29) (998) (51) (45,256) (30,286) – – 19,815 22,021 – – (10,543) (10,361) – – 15,735 3,511 – – (19,358) (4,035) – – (1,936) – – – 2,362 – – 295 – 6 167 205 17 12 (3,132) (4,123) (1,771) (1,689) 800 (125) (5) 4
34	(3,163) (3,799) 16,982 22,428
Cash flows from investing activities Purchase & additions of plant & equipment Purchase & additions of intangibles Additions to investment properties Proceeds/(costs) from sale of investment properties Payments for investment properties Amounts received from villages Payments for lease arrangements Proceeds/(costs) of equity accounted investments	(2) – (415) (150) – – (1,364) – (1,292) (2) (12,820) (18,723) 6,650 1,321 49,511 (120) – (10,452) (64,423) (102,803) – – 168 72 – – – (745) (207) 5,695 (2) 116
	5,149 (3,438) (29,345) (122,353)
Cash flows from financing activities Proceeds from the issue units Payment of unit issue costs Distributions to unitholders Finance lease payments (Repayment of)/proceeds from borrowings with related parties Proceeds from borrowings Repayment of borrowings Payment of borrowing costs Payments for debt issue costs Payments for derivatives	74,787 61,707 15,587 – (3,143) (2,528) (656) (243) (8,794) (5,885) (1,311) – – – (126) (81) 3,147 (100,124) (237) 108,231 65,205 94,000 – – (125,197) (68,000) – (2,581) – (142) – (75) (1,789) – – – – – (444) –
	4,216 (20,972) 12,813 105,251
Net increase/(decrease) in cash Cash at beginning of the year Effects of exchange rate changes on cash	6,202 (28,209) 450 5,326 2,658 31,014 5,550 248 106 (147) 94 (24)
Cash at the end of the year 10	8,966 2,658 6,094 5,550

Annual Report 2015

Statements of Changes in Unitholders’ Interest

for the year ended 30 June 2015

Note	Ingenia Communities Fund
	Attributable to unitholders Non- controlling interest $’000 Total equity $’000 Issued capital $’000 Reserves $’000 Retained earnings $’000 Total $’000
Carrying amounts at 1 July 2013 Net profit for the year Other comprehensive income 23	497,956 – (330,334) 167,622 – 167,622 – – 15,422 15,422 – 15,422 – (226) – (226) – (226)
Total comprehensive income for the year	– (226) 15,422 15,196 – 15,196
Transactions with unitholders in their capacity as unitholders: Issue of securities 22 Payment of distributions to securityholders 24	49,686 – – 49,686 – 49,686 – – (5,917) (5,917) – (5,917)
Carrying amounts at 30 June 2014	547,642 (226) (320,829) 226,587 – 226,587
Net profit for the year Other comprehensive income 23	– – 34,500 34,500 – 34,500
	– 226 – 226 – 226
Total comprehensive income for the year	– 226 34,500 34,726 – 34,726
Transactions with unitholders in their capacity as unitholders: Issue of securities 22 Payment of distributions to securityholders 24
	71,643 – – 71,643 – 71,643
	– – (10,120) (10,120) – (10,120)
Carrying amounts at 30 June 2015	619,285 – (296,449) 322,836 – 322,836

Ingenia Communities Holdings Limited 93

Note	Ingenia Communities Management Trust
	Attributable to unitholders Non- controlling interest(1) $’000 Total equity $’000 Issued capital $’000 Reserves $’000 Retained earnings $’000 Total $’000
Carrying amounts at 1 July 2013 Net loss for the year Other comprehensive income	6,106 120 (2,990) 3,236 2,426 5,662 – – (1,059) (1,059) (111) (1,170) – 49 – 49 446 495
Total comprehensive income for the year	– 49 (1,059) (1,010) 335 (675)
Transactions with unitholders in their capacity as unitholders: Issue of securities 22	7,991 – – 7,991 – 7,991
Carrying amounts at 30 June 2014	14,097 169 (4,049) 10,217 2,761 12,978
Net loss for the year Other comprehensive income 23	– – (4,467) (4,467) (3,461) (7,928)
	– (169) – (169) – (169)
Total comprehensive income for the year	– (169) (4,467) (4,636) (3,461) (8,097)
Transactions with unitholders in their capacity as unitholders: Issue of securities 22
	14,929 – – 14,929 – 14,929
Carrying amounts at 30 June 2015	29,026 – (8,516) 20,510 (700) 19,810

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

94 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. The Trusts

The parent company of Ingenia Communities RE Limited is Ingenia Communities Holdings Limited (the “Company”). The shares of the Company and the units of the Trust are “stapled” and trade on the Australian Securities Exchange (“ASX”) as a single security. The Company and the Trust along with their subsidiaries are collectively referred to as the Group in this report.

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

As at 30 June 2015, ICMT recorded a net current asset deficiency of $322,440,000. This deficiency includes retirement village resident loans of $161,878,000, liabilities held for sale of $42,041,000 and payables to other entities within the Group of $189,635,000. Resident loan obligations of the Trusts are classified as current liabilities due to the demand feature of these obligations despite the unlikely possibility that the majority of the loans will be settled within the next twelve months. Furthermore, if required, the proceeds from new resident loans could be used by the Group to settle its existing loan obligations should those incumbent residents vacate their units. Intercompany loan balances are payable on demand, however ICF has undertaken not to call its loan receivable from ICMT within twelve months of the date of this report, if calling the loan would result in ICMT being unable to pay its debts as and when they are due and payable. Accordingly, there are reasonable grounds to believe that ICMT will be able to pay its debts as and when they become due and payable; and the financial report of ICMT has been prepared on a going concern basis.

c. Adoption of new and revised accounting standards

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

b. Basis of preparation

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

As permitted by Class Order 05/642, issued by the Australian Securities and Investments Commission, this financial report is a combined financial report that presents the financial statements and accompanying notes of both ICF and ICMT. The financial statements and accompanying notes of the Trusts have been presented in the attached associated financial report.

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

The Trusts have adopted all of the new and revised standards and interpretations issued by the Australian Accounting Standards Board that are relevant to its operations and effective for the current period including AASB 2012-3 Offsetting Financial Assets and Financial Liabilities .

The impact of application of this Standard is as follows:

Accounting Standard Impact on the Group

AASB 2012-3 This amendment clarifies that the right of set off must be available today and must be legally enforceable in the normal course of business as well as in the event of default, insolvency or bankruptcy.

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

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

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

Ingenia Communities Holdings Limited

d. Principles of consolidation

ICF’s consolidated financial statements comprise the parent and its subsidiaries. ICMT’s consolidated financial statements comprise ICMT and its subsidiaries. Subsidiaries are all those entities (including special purpose entities) whose financial and operating policies a trust has the power to govern, so as to obtain benefits from their activities.

The financial statements of the subsidiaries are prepared for the same reporting period as the parent, using consistent accounting policies. Adjustments are made to bring into line dissimilar accounting policies. Inter-company balances and transactions including unrealised profits have been eliminated.

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

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

e. Business combinations and goodwill

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

When the Trusts acquire a business, they assess the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.

f. Discontinued operations and assets held for sale

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

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

Details of discontinued operations and assets and liabilities held for sale are given at Notes 7 and 9.

g. Distributions

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

h. Foreign currency

i. Functional and presentation currencies

The functional currency and presentation currency of the Trusts and their subsidiaries, other than foreign subsidiaries, is the Australian dollar.

ii. Translation of foreign currency transactions

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

96 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

iii. Translation of financial statements of foreign subsidiaries

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

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

i. Leases

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

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

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

j. Financial assets and liabilities

Current and non-current financial assets and liabilities within the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as at fair value through profit or loss; loans and receivables; heldto-maturity investments; or as available-for-sale. The Trusts determine the classification of their financial assets and liabilities at initial recognition with the classification depending on the purpose for which the asset or liability was acquired or issued. Financial assets and liabilities are initially recognised at fair value, plus directly attributable transaction costs unless their classification is at fair value through profit or loss. They are subsequently measured at fair value or amortised cost using the effective interest method. Changes in fair value of available-for-sale financial assets are recorded directly in equity. Changes in fair values of financial assets and liabilities classified as at fair value through profit or loss are recorded in the income statement.

k. Impairment of non-financial assets

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

l. Cash and cash equivalents

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

m. Trade and other receivables

Ingenia Communities Holdings Limited 97

n. Inventories

The Trusts hold inventory in relation to the acquisition and development of manufactured homes and service station fuel and supplies both within its Active Lifestyle Estates segment.

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

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

o. Derivative financial instruments

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

p. Investment property

Investment property includes property under construction, tourism cabins and associated amenities.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal market for the asset or liability or in its absence, the most advantageous market. In determining the fair value of assets held for sale recent market offers have been taken into consideration.

It is the Trusts’ policy to have all investment properties externally valued at intervals of not more than two years. It is the policy of the responsible trust to review the fair value of each investment property every six months and to cause investment properties to be revalued to fair values whenever their carrying value materially differs to their fair values.

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

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

q. Intangible assets

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

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

Useful life: Finite Amortisation method using 7 years on a straight line basis; and
Impairment test: Amortisation method reviewed at each financial year end; closing carrying value reviewed annually for indicators of impairment.

r. Payables

Trade and other payables are carried at amortised cost and due to their short-term nature are not discounted. They represent liabilities for goods and services provided to the Trusts prior to the end of the financial year that are unpaid and are recognised when the Trusts become obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 60 days of recognition.

98 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

s. Retirement village resident loans

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

This liability is stated net of deferred management fee accrued to reporting date, because the Trusts contracts with residents require net settlement of those obligations.

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

t. Borrowings

Borrowings are classified as current liabilities unless the Trusts do not have an unconditional right to defer settlement to more than twelve months after reporting date.

u. Issued units

Issued and paid up units are recognised at the fair value of the consideration received by the Trusts. Any transaction costs arising on issue of ordinary units are recognised directly in unitholders’ interest as a reduction of the units proceeds received.

v. Revenue

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

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

w. Provisions, including for employee benefits

i. General

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

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

iii. Long service leave

Ingenia Communities Holdings Limited 99

x. Income tax

i. Current income tax

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

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

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

ii. Deferred income tax

y. Goods and services tax (“GST”)

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

z. Fair value measurement

The Trusts measure financial instruments, such as derivatives, and non-financial assets, such as investment properties, at fair value at each balance sheet date. Also, fair values of financial instruments measured at amortised cost are disclosed in Note 28.

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

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

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

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

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

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

For the purpose of fair value disclosures, the Trusts have determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained in Note 29.

100 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

aa. Pending Accounting Standards

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

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

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

bb. Current versus non-current classification

The Trusts present assets and liabilities in the balance sheet based on current/non-current classification. An asset is current when it is:

Expected to be realised or intended to be sold or consumed in the normal operating cycle
Held primarily for the purpose of trading
Expected to be realised within twelve months after the reporting period, or
Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after reporting period.

All other assets are classified as non-current.

A liability is current when:

It is expected to be settled in the normal operating cycle
It is held primarily for the purpose of trading
It is due to be settled within twelve months after the reporting period, or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

The Trusts classify all other liabilities as non-current.

Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.

2. ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires the Responsible Entity to exercise its judgement in the process of applying the Trusts’ accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed below.

a. Critical accounting estimates and assumptions

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

i. Valuation of investment property

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

Ingenia Communities Holdings Limited

101

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

ii. Fair value of derivatives

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

iii. Valuation of assets acquired in business combinations

iv. Valuation of retirement village resident loans

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

v. Calculation of deferred management fee (“DMF”)

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

b. Critical judgements in applying the entity’s accounting policies

102 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

3. SEGMENT INFORMATION

a. Description of segments

The Trusts invest predominantly in rental properties located in Australia with three reportable segments:

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

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

b. Ingenia Communities Fund – 30 June 2015

b. Ingenia Communities Fund – 30 June 2015
	Active
	Lifestyle	Settlers	Garden	Corporate/
	Estates	Lifestyle	Villages	Unallocated	Total
	$’000	$’000	$’000	$’000	$’000
i. Segment revenue
External segment revenue	384	–	9,336	–	9,720
Interest income	–	–	–	14,564	14,564
Total revenue	384	–	9,336	14,564	24,284
ii. Segment Underlying Profit
External segment revenue	384	–	9,336	–	9,720
Interest income	–	–	–	14,564	14,564
Property expenses	–	–	(2)	(325)	(327)
Administration expenses	–	–	–	(506)	(506)
Operational, marketing and selling expenses	–	–	–	(648)	(648)
Finance expense	–	–	–	(3,601)	(3,601)
Income tax expense	–	–	–	–	–
Depreciation expense	–	–	–	(117)	(117)
Underlying Profit – continuing operations	384	–	9,334	9,367	19,085
Reconciliation of Underlying Profit to profit from
continuing operations:
Net foreign exchange gain	–	–	–	107	107
Net gain/(loss) on disposal of investment property	–	(2,013)	324	–	(1,689)
Net gain/(loss) on change in fair value of:
Investment properties	(7)	(5)	15,934	–	15,922
Derivatives	–	–	–	164	164
Responsible Entity fees	–	–	–	(1,676)	(1,676)
Profit from continuing operations per the
consolidated statement of comprehensive income	377	(2,018)	25,592	7,962	31,913
iii. Segment assets
Segment assets	7,301	51,983	125,657	201,315	386,256

Ingenia Communities Holdings Limited

103

c. Ingenia Communities Fund – 30 June 2014

c. Ingenia Communities Fund – 30 June 2014
	Active
	Lifestyle	Settlers	Garden	Corporate/
	Estates	Lifestyle	Villages	Unallocated	Total
	$’000	$’000	$’000	$’000	$’000
i. Segment revenue
External segment revenue	–	–	9,354	–	9,354
Interest income	–	–	–	10,339	10,339
Total revenue	–	–	9,354	10,339	19,693
ii. Segment Underlying Profit
External segment revenue	–	–	9,354	–	9,354
Interest income	–	–	–	10,339	10,339
Property expenses	–	–	–	(274)	(274)
Administration expenses	–	–	–	(582)	(582)
Operational, marketing and selling expenses	–	–	–	(295)	(295)
Finance expense	–	–	–	(3,955)	(3,955)
Depreciation expense	–	–	–	(100)	(100)
Underlying Profit – continuing operations	–	–	9,354	5,133	14,487
Reconciliation of Underlying Profit to profit from
continuing operations:
Net foreign exchange gain	–	–	–	(147)	(147)
Net gain/(loss) on change in fair value of:
Investment properties	(852)	–	2,382	–	1,530
Derivatives	–	–	–	41	41
Responsible Entity fees	–	–	–	(1,170)	(1,170)
Profit from continuing operations per the
consolidated statement of comprehensive income	(852)	–	11,736	3,857	14,741
iii. Segment assets
Segment assets	6,904	53,992	114,286	142,597	317,779
Discontinued operations					3,874
Total assets					321,653

104 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

3. SEGMENT INFORMATION (CONTINUED)

d. Ingenia Communities Management Trust – 30 June 2015

	Active
	Lifestyle	Settlers	Garden	Corporate/
	Estates	Lifestyle	Villages	Unallocated	Total
	$’000	$’000	$’000	$’000	$’000
i. Segment revenue
External segment revenue	38,797	11,124	28,183	–	78,104
Interest income	–	–	–	7	7
Reclassification of gain on revaluation of newly
constructed villages	–	(2,422)	–	–	(2,422)
Total revenue	38,797	8,702	28,183	7	75,689
ii. Segment Underlying Profit
External segment revenue	38,797	11,124	28,183	–	78,104
Interest income	–	–	–	7	7
Property expenses	(8,089)	(1,562)	(17,721)	–	(27,372)
Employee expenses	(6,657)	(779)	(9,599)	(26)	(17,061)
Administration expenses	(746)	(57)	(1,317)	(569)	(2,689)
Operational, marketing and selling expenses	(1,559)	(283)	(1,306)	(2)	(3,150)
Manufactured home cost of sales	(9,256)	–	–	–	(9,256)
Service station expenses	(1,910)	–	–	–	(1,910)
Finance expense	–	–	–	(15,144)	(15,144)
Income tax benefit	–	–	–	2,734	2,734
Depreciation and amortisation expense	(34)	–	(226)	–	(260)
Underlying Profit/(loss) – continuing operations	10,546	8,443	(1,986)	(13,000)	4,003
Reconciliation of Underlying Profit to profit from
continuing operations:
Net gain/(loss) disposal of investment property	(23)	1,648	(5)	–	1,620
Net loss on change in fair value of:
Investment properties	(2,812)	3,277	17	–	482
Retirement village resident loans	–	(8,878)	–	–	(8,878)
Loss on revaluation of newly constructed villages	–	(2,422)	–	–	(2,422)
Responsible Entity fees	–	–	–	(2,165)	(2,165)
Income tax benefit associated with reconciliation items	–	–	–	3,286	3,286
Profit from continuing operations per the
consolidated statement of comprehensive income	7,711	2,068	(1,974)	(11,879)	(4,074)
iii. Segment assets
Segment assets	220,961	184,880	5,429	5,198	416,468
Assets held for sale					61,598
Total assets					478,066

Ingenia Communities Holdings Limited

105

e. Ingenia Communities Management Trust – 30 June 2014

	Active
	Lifestyle	Settlers	Garden	Corporate/
	Estates	Lifestyle	Villages	Unallocated	Total
	$’000	$’000	$’000	$’000	$’000
i. Segment revenue
External segment revenue	13,589	10,576	24,570	–	48,735
Interest income	–	–	–	16	16
Reclassification of gain on revaluation of newly
constructed villages	–	(3,320)	–	–	(3,320)
Total revenue	13,589	7,256	24,570	16	45,431
ii. Segment Underlying Profit
External segment revenue	13,589	10,576	24,570	–	48,735
Interest income	–	–	–	16	16
Property expenses	(2,570)	(1,738)	(16,385)	–	(20,693)
Employee expenses	(2,367)	(851)	(7,913)	–	(11,131)
Administration expenses	(320)	(139)	(1,080)	(444)	(1,983)
Operational, marketing and selling expenses	(377)	(3)	(2,354)	–	(2,734)
Manufactured home cost of sales	(2,130)	–	–	–	(2,130)
Finance expense	–	–	–	(10,145)	(10,145)
Income tax expense	–	–	–	2,137	2,137
Depreciation expense	–	(18)	(49)	–	(67)
Underlying Profit – continuing operations	5,825	7,827	(3,211)	(8,436)	2,005
Reconciliation of Underlying Profit to profit from
continuing operations:
Net gain/(loss) on change in fair value of:
Investment properties	(1,273)	(598)	–	–	(1,871)
Retirement village resident loans	–	(616)	–	–	(616)
Gain on revaluation of newly constructed villages	–	(3,320)	–	–	(3,320)
Responsible Entity fees	–	–	–	(1,626)	(1,626)
Income tax benefit associated with reconciliation items	–	–	–	4,369	4,369
Profit from continuing operations per the
consolidated statement of comprehensive income	4,552	3,293	(3,211)	(5,693)	(1,059)
iii. Segment assets
Segment assets	122,955	249,183	1,420	269	373,827
Assets held for sale					5,439
Discontinued operations					47,657
Total assets					426,923

106 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

4. EARNINGS PER UNIT

4. EARNINGS PER UNIT
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 2014 2015 2014
Earnings per unit Profit/(loss) from continuing operations ($’000) Profit/(loss) from discontinued operations ($’000) Net profit/(loss) for the year ($’000)	31,913 14,741 (4,074) (1,059) 2,587 681 (3,854) (111) 34,500 15,422 (7,928) (1,170)
Weighted average number of units outstanding (thousands) Dilutive securities: Performance quantum rights (thousands) Retention quantum rights (thousands)	821,653 646,603 821,653 646,603 470 2,310 470 2,310 – 1,818 – 1,818
Weighted average number of issued and dilutive potential securities outstanding (thousands)	822,123 650,731 822,123 650,731
Basic earnings per unit from continuing operations (cents)(1) Basic earnings per unit from discontinued operations (cents)(1) Basic earnings per unit (cents)(1) Diluted earnings per unit from continuing operations (cents)(1) Diluted earnings per unit from discontinued operations (cents)(1) Diluted earnings per unit (cents)(1)	3.9 2.3 (0.5) (0.2) – 0.1 – – 4.2 2.4 (1.0) (0.2) 2.5 2.3 (0.3) (0.2) – 0.1 – – 2.7 2.4 (0.6) (0.2)

(1) The weighted average number of units on issue for FY14, prior to the rights issue in September 2013, has been adjusted in accordance with AASB 133 Earnings per Share.

5. FINANCE EXPENSE

5. FINANCE EXPENSE
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Interest paid or payable	3,601 3,955 15,144 10,145

Ingenia Communities Holdings Limited 107

6. INCOME TAX BENEFIT

6. INCOME TAX BENEFIT
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
a. Income tax benefit/(expense) Current tax Decrease in deferred tax liabilities	– – – 83 – – 6,019 6,423
Income tax benefit/(expense)	– – 6,019 6,506
b. Reconciliation between tax expense and pre-tax net profit Profit/(loss) before income tax Less amounts not subject to Australian income tax	31,913 14,741 (10,093) (7,565) (31,913) (14,741) – –
Income tax at the Australian tax rate of 30% (2014: 30%) ICMT tax consolidation impact Tax effect of amounts which are not (deductible)/ taxable in calculating taxable income Prior period income tax return true-ups Movement in carrying value and tax cost base of investment properties Movements in carrying value and tax cost base of DMF receivables Other timing differences Recognition of Australian tax losses Non deductible expenses	– – (10,093) (7,565) – – 3,028 2,270 – – – 2,823 – – 173 588 – – 1,516 1,163 – – 1,683 (1,232) – – (131) 406 – 488 – – (250) –
Income tax benefit/(expense)	– – 6,019 6,506

c. Tax consolidation

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

108 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

7. DISCONTINUED OPERATIONS

a. Details of discontinued operations

The Trust’s investment in its New Zealand Students business has been classified as a discontinued operation since 30 June 2011, which is consistent with the previously announced strategy to focus on transitioning to an actively managed Australian property business. The Trusts held a 100% interest in three facilities in Wellington, New Zealand that are primarily leased for 15 years to Victoria University of Wellington and Wellington Institute of Technology. The Trust completed the sale of these assets in December 2014. Funds remain in New Zealand to facilitate the final stages of exit.

b. Financial performance

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

	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Revenue Net loss on change in fair value of investment properties Unrealised net foreign exchange gain/(loss) Other income Expenses Interest expense Gain on disposal of equity investments Distributions from formerly equity accounted investments Disposal costs associated with overseas investments	– – 2,182 3,211 – – – (1,630) 1,184 104 (2,222) 1,453 – – 46 – (5) (5) (710) (1,226) – – (799) (1,633) – 320 – 7 – 268 – 5 – – – (290)
Profit/(loss) from operating activities before income tax Income tax expense	1,179 687 (1,503) (103) (212) (6) (2) (8)
Profit/(loss) from operating activities Gain/(loss) on sale of discontinued operations Release of foreign currency translation reserve on disposal of foreign operations	967 681 (1,505) (111) – – (2,014) – 1,620 – (335) –
Profit/(loss) from discontinued operations for the year	2,587 681 (3,854) (111)

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

c. Cash flows

The cash flows of components of the Trusts disposed of or classified as discontinued operations at each reporting date were:

	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Net cash flow from operating activities Net cash flow from investing activities: Proceeds/(payments) on sale of discontinued operations Additions to investment properties Payments for lease arrangements Net cash flow from financing activities Transfer to continuing operations	– – 223 1,135 – – 43,966 (120) – – – (9,081) – – (4) (745) – – (45,381) 11,449 – – (461) –
Net cash flows from discontinued operations	– – (1,657) 2,638

Ingenia Communities Holdings Limited 109

d. Assets and liabilities

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

	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Assets Cash and cash equivalents Trade and other receivables Investment properties Equity accounted investments	– – – 1,657 – – – 98 – – – 45,902 – 3,874 – –
Total assets	– 3,874 – 47,657
Liabilities Payables Borrowings	– – – 368 – – – 30,081
Total liabilities	– – – 30,449
Net assets of disposal groups	– 3,874 – 17,208

e. Capitalisation rate

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

8. BUSINESS COMBINATIONS

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

110 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

9. ASSETS AND LIABILITIES HELD FOR SALE

a. Summary of carrying values

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

	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Deferred management fee receivable – Settlers Lifestyle(1) Investment properties – Settlers Lifestyle(2)	– – – 5,439 – – 61,598 –
	– – 61,598 5,439

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

b. Summary of carrying amounts – loans

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

	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Gross resident loans Accrued deferred management fee	– – 44,271 – – – (2,230) –
Net resident loans	– – 42,041 –

10. CASH AND CASH EQUIVALENTS

10. CASH AND CASH EQUIVALENTS
Note	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Cash at bank and in hand 28	8,966 2,658 6,094 3,893
Reconciliation to statements of cash flows Cash and cash equivalents attributable to: Continuing operations – cash at bank Discontinued operations – cash at bank	8,966 2,658 6,094 3,893 – – – 1,657
Cash at end of the year as per cash flow statement	8,966 2,658 6,094 5,550

11. TRADE AND OTHER RECEIVABLES

11. TRADE AND OTHER RECEIVABLES
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Current Rental and other amounts due Finance lease receivable from stapled entity Other receivables	– 866 3,772 1,648 2,643 3,322 – – – 92 332 1,483
Total current trade and other receivables	2,643 4,280 4,104 3,131
Non-current Finance lease receivable from stapled entity Other receivables	28,862 37,356 – – 2,539 1,978 110 40
Total non-current trade and other receivables	31,401 39,334 110 40

Ingenia Communities Holdings Limited

111

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

ICF has leased a number of its properties to ICMT under leases that are classified as finance leases. The remaining term of each agreement varies between 92 and 115 years. There are no purchase options. Minimum payments under the agreements and their present values are:

	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Minimum lease payments receivable: Not later than one year Later than one year and not later than five years Later than five years	2,643 3,322 – – 10,573 13,287 – – 240,091 301,540 – –
Unearned finance income	253,307 318,149 – – (221,802) (277,471) – –
Net present value of minimum lease payments	31,505 40,678 – –
Net present value of minimum lease payments receivable: Not later than one year Later than one year and not later than five years Later than five years	2,526 3,178 – – 8,222 10,399 – – 20,757 27,101 – –
	31,505 40,678 – –
Finance income recognised and included in interest income in the income statement	2,642 3,320 – –

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

12. INVENTORIES

12. INVENTORIES
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Current assets Manufactured homes Service station fuel and supplies	– – 12,875 2,208 – – 333 –
Total Inventories	– – 13,208 2,208

13. INVESTMENT PROPERTIES

a. Summary of carrying amounts

13. INVESTMENT PROPERTIES a. Summary of carrying amounts
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Completed properties Properties under development	152,142 133,101 361,984 349,517 1,292 1,387 24,310 14,858
Total investment properties	153,434 134,488 386,294 364,375

112 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

13. INVESTMENT PROPERTIES (CONTINUED)

b. Movements in carrying amounts

13. INVESTMENT PROPERTIES (CONTINUED) b. Movements in carrying amounts
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Completed investment property Carrying amount at beginning of year Acquisitions Expenditure capitalised Transferred from plant and equipment Disposals Sale of units – Strata title Transfer to inventory Net gain/(loss) on change in fair value(1) Transferred to assets held for sale	134,488 120,167 364,375 250,764 – 10,616 78,152 108,300 2,149 2,175 12,207 7,551 – – – 320 875 – (7,165) – – – – (495) – – (159) (186) 15,922 1,530 482 (1,871) – – (61,598) –
Carrying amount at end of year	153,434 134,488 386,294 364,375

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

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

	Valuation	Significant	Range	Relationship of unobservable input
	technique	unobservable inputs	(weighted average)	to fair value
Garden	Capitalisation	Stabilised	70%-100% (92%)	As costs are fixed in nature,
Villages	method	occupancy		occupancy has a direct correlation
				to valuation (ie. the higher the
				occupancy, the greater the value).
		Capitalisation rate	9%-12%	Capitalisation has an inverse
				relationship to valuation.
Settlers	Discounted cash	Current market	$125,000-$475,000	Market value and growth in value
Lifestyle	flow	value per unit		have a direct correlation to valuation,
		Long term property growth rate	4%	while length of stay and discount rate have an inverse relationship to valuation.
		Average length	11.4 years	Average length of stay projection is
		of stay – future		based on life expectancy and other
		residents		factors.
		Average length	15.0-17.6 years	Parameters exclude assets that are
		of stay – current		subject to a sale agreement.
		residents
		Discount rate	14.5%-15.0%	Assets that are subject to a sale

Assets that are subject to a sale agreement are carried at fair value. Higher the occupancy, the greater the value.

Active Capitalisation Short-term 15%-30% for powered and Lifestyle method (for existing occupancy camp sites; 45%-70% for Estates rental streams) tourism and short term rental Residential 100% occupancy Operating profit 50%-70% dependent upon margin short-term and residential accommodation mix
Capitalisation rate 8.2%-17.5%
Discounted cash Discount rate 13%-16% flow (for future development)

Higher the profit margin, the greater the value.

Capitalisation has an inverse relationship to valuation Discount rate has an inverse relationship to valuation.

Ingenia Communities Holdings Limited

113

Capitalisation method

Discounted cash flow method

14. PLANT AND EQUIPMENT

14. PLANT AND EQUIPMENT
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
a. Summary of carrying amounts Plant and equipment Less: accumulated depreciation	423 423 1,169 824 (301) (184) (710) (644)
Total plant and equipment	122 239 459 180
b. Movements in carrying amount Carrying amount at beginning of year Assets written off Transferred to investment property Additions Depreciation expense	239 339 180 547 – – (118) (82) – – – (320) – – 499 102 (117) (100) (102) (67)
Carrying amount at end of year	122 239 459 180

15. INTANGIBLES

15. INTANGIBLES
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
a. Summary of carrying amounts Software & development Less: accumulated amortisation	2 – 1,734 – – – (157) –
Total intangibles	2 – 1,577 –
b. Movements in carrying amount Carrying amount at beginning of year Additions Amortisation expense	– 2 – 1,734 – – – (157) –
Carrying amount at end of year	2 – 1,577 –

114 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

16. TRADE AND OTHER PAYABLES

16. TRADE AND OTHER PAYABLES
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Current liabilities Trade and other payables	1,200 1,210 12,785 8,480
Non-current liabilities Deferred acquisition consideration	– – 14,770 4,000

17. BORROWINGS

Note	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Current liabilities Finance leases 17(c)	– – 2,817 3,461
Non-current liabilities Bank debt 17(a) Prepaid borrowing costs Finance leases 17(c)	63,900 94,000 – – (1,683) (312) – – – – 33,252 41,883
Total non-current borrowings	62,217 93,688 33,252 41,883

a. Bank debt

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

Loan to value ratio (“LVR”) is less than or equal to 50%;
LVR (excluding Settlers) is less than or equal to 55%;
Total Interest Cover Ratio of at least 2x;
Core Interest Cover Ratio (adjusted to exclude development income and associated costs) of at least 1.50x in financial year ending 2015 increasing to at least 2.0x in FY2016;
Net debt to adjusted EBITDA ratio not more than 6x up to 30 June 2015, 5.5x up to 31 December 2015, 5x up to 30 June 2016, 4x after 30 June 2016.

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

b. Bank guarantees

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

c. Finance leases

Subsidiaries of ICMT have entered into agreements with subsidiaries of ICF. The subject of each agreement is to lease a retirement village. The remaining term of each agreement varies between 91 and 114 years. There are no purchase options.

On 23 of April 2013, ICMT was assigned a commercial lease with 16.5 years remaining with the Gosford City Council for land and facilities as part of its Active Lifestyle Estates Ettalong Beach acquisition. The lease is for an initial three years commencing September 2012 with two renewal options of seven years each. The first option period was exercised on 1 July 2015 for seven years to June 2022. The below table is based on the expectation that the last lease option will be exercised.

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

Ingenia Communities Holdings Limited 115

i. Minimum lease payments – excluding perpetual lease

i. Minimum lease payments – excluding perpetual lease
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Minimum lease payments: Within one year Later than one year but not later than five years Later than five years	– – 2,942 3,613 – – 11,846 14,530 – – 243,522 305,301
Total minimum lease payments Future finance charges	– – 258,310 323,444 – – (223,380) (279,237)
Present value of minimum lease payments	– – 34,930 44,207
Present value of minimum lease payments: Within one year Later than one year but not later than five years Later than five years	– – 2,817 3,461 – – 9,305 11,456 – – 22,808 29,290
	– – 34,930 44,207

ii. Minimum lease payments – perpetual lease

18. RETIREMENT VILLAGE RESIDENT LOANS

18. RETIREMENT VILLAGE RESIDENT LOANS
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
a. Summary of carrying amounts Gross resident loans Accrued deferred management fee	– – 192,898 218,639 – – (31,020) (28,517)
Net resident loans	– – 161,878 190,122
b. Movements in carrying amounts Carrying amount at beginning of year Net (gain)/loss on change in fair value of resident loans Accrued deferred management fee income Deferred management fee cash collected Proceeds from resident loans Repayment of resident loans Transfer to assets and liabilities held for sale Other	– – 190,122 175,703 – – 8,878 616 – – (6,788) (5,333) – – 2,056 1,811 – – 19,815 22,021 – – (10,544) (10,361) – – (42,041) 5,439 – – 380 226
Carrying amount at end of year	– – 161,878 190,122

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

116 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

19. PROVISIONS

19. PROVISIONS
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Current liabilities Employee liabilities	– – 830 590
Non-current liabilities Employee liabilities	– – 248 249

20. DERIVATIVES

20. DERIVATIVES
Note	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Current liabilities Interest rate swap contracts 28	3 84 – –
Non-current liabilities Interest rate swap contracts 28	– 84 – –

21. DEFERRED TAX ASSETS AND LIABILITIES

	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Deferred tax assets Tax losses Other Deferred tax liabilities DMF receivable Investment properties	– – 15,938 – – – 1,205 – – – 7,970 – – – 4,567 –
Net deferred tax asset	– – 4,606 –
Deductible temporary differences and carried forward losses tax effected for which no deferred tax asset has been recognised	– – 7,500 7,488

	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Deferred tax assets Tax losses Other Deferred tax liabilities DMF receivable Investment properties	– – – 13,269 – – – 883 – – – 8,176 – – – 7,409
Net deferred tax liabilities	– – – 1,433

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

Ingenia Communities Holdings Limited 117

22. ISSUED UNITS

a. Carrying amounts

22. ISSUED UNITS a. Carrying amounts
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
At beginning of year Dividend reinvestment plan Institutional placement Rights issue Institutional placement and rights issue costs	547,642 497,956 14,097 6,106 2,374 – 464 – 36,835 – 7,693 – 35,578 51,985 7,430 8,364 (3,144) (2,299) (656) (373)
At end of year	619,285 547,642 29,028 14,097
The closing balance is attributable to the unitholders of: Ingenia Communities Fund Ingenia Communities Management Trust	619,285 547,642 – – – – 29,028 14,097
	619,285 547,642 29,028 14,097

b. Number of issued units

b. Number of issued units
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 Thousands 2014 Thousands 2015 Thousands 2014 Thousands
At beginning and end of year Retention Quantum Rights Dividend Reinvestment Plan Institutional Placement and Rights Issue	676,240 507,179 676,240 507,179 1,818 – 1,818 – 6,674 – 6,674 – 197,968 169,061 197,968 169,061
At end of year	882,700 676,240 882,700 676,240

c. Terms of units

All units are fully paid and rank equally with each other for all purposes. Each unit entitles the holder to one vote, in person or by proxy, at a meeting of unitholders.

23. RESERVES

23. RESERVES
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Foreign currency translation reserve Balance at beginning of year Translation differences arising during the year Amounts transferred to profit and loss on disposal of foreign operations	(226) – 1,261 766 1,846 (226) (926) 495 (1,620) – (335) –
Balance at end of a year	– (226) – 1,261
The closing balance is attributable to the unitholders of: Ingenia Communities Fund Ingenia Communities Management Trust	– (226) – 1,092 – – – 169
	– (226) – 1,261

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

118 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

24. ACCUMULATED LOSSES

	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Balance at beginning of year Net profit/(loss) for the year Distributions	(320,829) (330,334) (7,474) (6,304) 34,500 15,422 (7,928) (1,170) (10,120) (5,917) – –
Balance at end of year	(296,449) (320,829) (15,402) (7,474)
The closing balance is attributable to the unitholders of: Ingenia Communities Fund Ingenia Communities Management Trust	(296,449) (320,829) (6,886) (3,425) – – (8,516) (4,049)
	(296,449) (320,829) (15,402) (7,474)

25. COMMITMENTS

a. Capital commitments

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

b. Operating lease commitments

A subsidiary of ICMT has entered into a non-cancellable operating lease for its Brisbane office. The lease has a remaining life of five years.

Future minimum rentals payable under this lease as at reporting date were:

	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Within one year Later than one year but not later than five years	– – 229 220 – – 744 973
	– – 973 1,193

c. Finance lease commitments

On 23 April 2013, a subsidiary of ICMT was assigned a commercial lease with 16.5 years remaining with the Gosford City Council for land and facilities as part of its Ettalong Holiday Village acquisition. The lease is for an initial three years commencing September 2012 with two renewal options of seven years each. The first option period was exercised on 1 July 2015 for seven years to June 2022.

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

Refer to Note 17 for future minimum lease payments payable and the present value of minimum lease payments payable at reporting date for the finance leases at Ettalong Holiday Village and One Mile Beach Holiday Park.

For commitments for inter-staple related party finance leases refer to Notes 11, 17 and 28.

26. CONTINGENCIES

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

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

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

Ingenia Communities Holdings Limited 119

27. CAPITAL MANAGEMENT

The capital management of ICF and ICMT is not managed separately, but rather, is managed at a consolidated Group level (ICH and subsidiaries).

At the Group level, the aim is to meet strategic objectives and operational needs and to maximise returns to security holders through the appropriate use of debt and equity, while taking account of the additional financial risks of higher debt levels.

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

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

28. FINANCIAL INSTRUMENTS

a. Introduction

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

The main risks arising from the Trusts’ financial instruments are interest rate risk, foreign exchange risk, credit risk and liquidity risk. The Trusts manage the exposure to these risks primarily through the Treasury Policy. The policy sets out various targets aimed at restricting the financial risk taken by the Trusts. Management reviews actual positions of the Trusts against these targets on a regular basis. If the target is not achieved, or the forecast is unlikely to

be achieved, a plan of action is, where appropriate, put in place with the aim of meeting the target within an agreed timeframe. Depending on the circumstances of the Trusts at a point in time, it may be that positions outside of the Treasury Policy are accepted and no plan of action is put in place to meet the treasury targets, because, for example, the risks associated with bringing the Trusts into compliance outweigh the benefits. The adequacy of the Treasury Policy in addressing the risks arising from the Trust’s financial instruments is reviewed on a regular basis.

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

The main risks arising from ICMT’s financial instruments are interest rate risk, foreign exchange risk, credit risk and liquidity risk. These risks are not separately managed. Management of these risks for the ICF may result in consequential changes for ICMT.

b. Interest rate risk

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

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

At 30 June 2015, after taking into account the effect of interest rate swaps, approximately 28% of ICF’s borrowings are at a fixed rate of interest (2014: 47%).

Annual Report 2015

120

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

28. FINANCIAL INSTRUMENTS (CONTINUED)

c. Interest rate risk exposure

ICF’s exposure to interest rate risk and the effective interest rates on financial instruments at reporting date were:

30 June 2015		Ingenia Communities Fund
	Floating interest rate	Fixed interest maturingin: Total Less than 1year One to five Years More than 5years
Principal amounts $’000 Financial assets Cash at bank Financial liabilities Bank debt denominated in AUD Interest rate swaps: denominated in AUD; Fund pays fixed rate

	8,966	– – – 8,966

	63,900	– – – 63,900

	(18,000) 18,000 – – –
30 June 2014		Ingenia Communities Fund
	Floating interest rate	Fixed interest maturingin: Total Less than 1year One to five Years More than 5years
Principal amounts $’000 Financial assets Cash at bank Financial liabilities Bank debt denominated in AUD Interest rate swaps: denominated in AUD; Fund pays fixed rate	2,658 – – – 2,658 94,000 – – – 94,000 (45,000) 45,000 – – –

ICMT’s exposure to interest rate risk and the effective interest rates on financial instruments at reporting date were:

30 June 2015		Ingenia Communities Management Trust
	Floating interest rate	Fixed interest maturingin: Total Less than 1year One to five Years More than 5years
Principal amounts $’000 Financial assets Cash at bank Financial liabilities Finance leases (excluding perpetual lease)

	6,094	– – – 6,094

	–	2,817 9,305 22,808 34,930

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

fnancial year were:
30 June 2014		Ingenia Communities Management Trust
	Floating interest rate	Fixed interest maturingin: Total Less than 1year One to five Years More than 5years
Principal amounts $’000 Financial assets Cash at bank Financial liabilities Finance leases (excluding perpetual lease)	3,893 –	– – – 3,893 3,461 11,456 29,290 44,207

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

Ingenia Communities Holdings Limited

121

d. Interest rate sensitivity analysis

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

i. Increase in average interest rates of 1%

The effect on net interest expense for one year would have been:

	Effect onprofit after tax
	Ingenia Communities Fund Ingenia Communities Management Trust Higher/(lower) Higher/(lower)
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Variable interest rate instruments denominated in: Australian dollars	(639) (940) – –
The efect on change in fair value of derivatives would have been:	Effect onprofit after tax
	Ingenia Communities Fund Ingenia Communities Management Trust Higher/(lower) Higher/(lower)
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Interest rate swaps denominated in: Australian dollars	– 417 – –
ii. Decrease in average interest rates of 1% The efect on net interest expense for one year would have been:	Effect onprofit after tax
	Ingenia Communities Fund Ingenia Communities Management Trust
	Higher/(lower) Higher/(lower)
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Variable interest rate instruments denominated in: Australian dollars	639 940 – –
The efect on change in fair value of derivatives would have been:	Effect onprofit after tax
	Ingenia Communities Fund Ingenia Communities Management Trust
	Higher/(lower) Higher/(lower)
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Interest rate swaps denominated in: Australian dollars	– (297) – –

122 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

28. FINANCIAL INSTRUMENTS (CONTINUED)

e. Foreign exchange risk

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

	Net foreign currencyasset/(liability)
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Net foreign currency exposure: United States dollars New Zealand dollars	3,491 157 – – 473 1,657 – –
Total net foreign currency assets	3,964 1,814 – –

f. Foreign exchange sensitivity analysis

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

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

	Effect onprofit after tax
	Ingenia Communities Fund Ingenia Communities Management Trust
	Higher/(lower) Higher/(lower)
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Foreign exchange risk exposures denominated in: United States dollars New Zealand dollars	(317) (16) – – (43) (166) – –

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

ii. Efect of depreciation in Australian dollar of 10%:
	Effect onprofit after tax
	Ingenia Communities Fund Ingenia Communities Management Trust
	Higher/(lower) Higher/(lower)
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Foreign exchange risk exposures denominated in: United States dollars New Zealand dollars	388 16 – – 53 166 – –

Ingenia Communities Holdings Limited

123

g. Credit risk

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

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

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

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

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

The Responsible Entity believes that the Trusts’ receivables that are neither past due nor impaired do not give rise to any significant credit risk.

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

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

h. Liquidity risk

The main objective of liquidity risk management is to reduce the risk that the Trusts do not have the resources available to meet their financial obligations and working capital and committed capital expenditure requirements. The Trust’s Treasury Policy sets a target for the level of cash and available undrawn debt facilities to cover future committed expenditure in the next year, loan maturities within the next year and an allowance for unforeseen events such as tenant default.

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

The Trusts monitor the debt expiry profile and aims to achieve debt maturities below a target level of total committed debt facilities, where possible, to reduce refinance risk in any one year.

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

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

2015	Ingenia Communities Fund
	Less than 1 year $’000 1 to 5 years $’000 More than 5 years $’000 Total $’000
Trade and other payables Borrowings	1,200 – – 1,200
	2,731 68,344 – 71,075
	3,931 68,344 – 72,275
2014
Trade and other payables Borrowings	1,210 – – 1,210 4,521 99,653 – 104,174
	5,731 99,653 – 105,384

124 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

28. FINANCIAL INSTRUMENTS (CONTINUED)

28. FINANCIAL INSTRUMENTS (CONTINUED)
2015	Ingenia Communities Management Trust
	Less than 1 year $’000 1 to 5 years $’000 More than 5 years $’000 Total(1) $’000
Trade and other payables Retirement village resident loans Borrowings (excluding perpetual lease) Finance lease (perpetual lease)(2) Provisions Liabilities held for sale	12,785 14,770 – 27,555
	161,878 – – 161,878
	2,942 11,846 243,522 258,310
	121 483 – 604
	830 177 71 1,078
	42,041 – – 42,041
	220,597 27,276 243,593 491,466
2014
Trade and other payables Retirement village resident loans Borrowings (excluding perpetual lease) Finance lease (perpetual lease) Provisions	8,480 4,000 – 12,480 190,122 – – 190,122 3,613 14,530 305,301 323,444 121 483 – 604 590 249 – 839
	202,926 19,262 305,301 527,489

(1) Excludes related party loans.

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

The contractual maturities of ICF’s derivative financial liabilities at reporting date are reflected in the following table. It shows the undiscounted contractual cash flows required to discharge the instruments at market rates.

2015	Ingenia Communities Fund
	Less than 1 year $’000 1 to 5 years $’000 More than 5 years $’000 Total $’000
Liabilities Derivative liabilities – net settled
	3 – – 3
2014
Liabilities Derivative liabilities – net settled	84 84 – 168

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

i. Other financial instrument risk

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

	Effect onprofit after tax
	Ingenia Communities Fund Ingenia Communities Management Trust
	Higher/(lower) Higher/(lower)
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Increase in market prices of investment properties of 10% Decrease in market prices of investment properties of 10%	– – (19,290) (21,864) – – 19,290 21,864

However, these effects are largely offset by corresponding changes in the fair value of the Trusts’ investment properties. The effect on unitholders’ interest would have been the same as the effect on profit.

Ingenia Communities Holdings Limited

125

j. Fair value

The Trusts use the following fair value measurement hierarchy:

Level 1: fair value is calculated using quoted prices in active markets for identical assets or liabilities;

Level 2: fair value is calculated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and

Level 3: fair value is calculated using inputs for the asset or liability that are not based on observable market data.

Quoted market price represents the fair value determined based on quoted prices on active markets as at the reporting date without any deduction for transaction costs.

The following table presents the Trusts’ financial instruments that were measured and recognised at fair value at reporting date:

	Valuation	Significant	Relationship of	Sensitivity to
Financial assets/	technique(s) and	Unobservable	unobservable	the input to
financial liabilities	key inputs	Inputs	inputs to fair value	fair value
Retirement village resident loans	Loans measured as	Long-term capital	The higher the	The higher the
	the ingoing resident’s	appreciation rates	appreciation, the	appreciation, the
	contribution plus the	for residential	higher the value of	higher the value of
	resident’s share of	property between	resident loans. The	resident loans. The
	capital appreciation	0% - 4%.	longer the length of	longer the length of
	to reporting date, less DMF accrued to reporting date	Estimated length of stay of residents based on life tables	stay, the lower the value of resident loans.	stay, the lower the value of resident loans.
Derivative interest rate swaps	Net present value	N/A	N/A	The longer the length
	of future cash flows			of stay, the higher the
	discounted at market			DMF accrued, capped
	rates adjusted for the			at a predetermined
	Trusts’ credit risk			period of time.

There has been no movement from Level 3 to Level 2 during the current period. Changes in ICMT’s retirement village resident loans which are Level 3 instruments are presented in Note 29.

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

29. FAIR VALUE MEASUREMENT

a. Ingenia Communities Fund

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

1. Assets measured at fair value

30 June 2015 Date of valuation Total	Fair value measurement using
	Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3)
Investment properties 30 June 2015 Refer to Note 13(a) 153,434	– – 153,434
30 June 2014 Date of valuation Total	Fair value measurement using
	Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3)
Investment properties 30 June 2014 Refer to Note 13(a) 134,488	– – 134,488

126 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

29. FAIR VALUE MEASUREMENT (CONTINUED)

ii. Liabilities measured at fair value

29. FAIR VALUE MEASUREMENT (CONTINUED) ii. Liabilities measured at fair value
30 June 2015 Date of valuation Total	Fair value measurement using
	Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3)
Derivatives 30 June 2015 Refer to Note 20 3	– – 3
30 June 2014 Date of valuation Total	Fair value measurement using
	Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3)
Derivatives 30 June 2014 Refer to Note 20 168	– 168 –

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

b. Ingenia Communities Management Trust

The following table provides the fair value measurement hierarchy of Ingenia Communities Management Trust assets and liabilities:

i. Assets measured at fair value

i. Assets measured at fair value
30 June 2015 Date of valuation Total	Fair value measurement using
	Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3)
Investment properties 30 June 2015 Refer to Note 13 386,294 Assets held for sale – investment property 30 June 2015 Refer to Note 9 61,598	– – 386,294
	– 61,598 –

30 June 2014 Date of valuation Total	Fair value measurement using
	Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3)
Investment properties 30 June 2015 Refer to Note 13 364,375 Discontinued operations-investment property 30 June 2014 Refer to Note 7 45,902 Assets held for sale – deferred management fee receivable 30 June 2015 Refer to Note 9 5,439	– – 364,375 – – 45,902 – 5,439 –

Ingenia Communities Holdings Limited 127

ii. Liabilities measured at fair value

ii. Liabilities measured at fair value
30 June 2015 Date of valuation Total	Fair value measurement using
	Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3)
Retirement village resident loans 30 June 2015 Refer to Note 18 161,878 Liabilities held for sale 30 June 2015 Refer to Note 9(b) 42,041	– – 161,878
	– 42,041 –
30 June 2014 Date of valuation Total	Fair value measurement using
	Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3)
Retirement village resident loans 30 June 2014 Refer to Note 18 190,122	– – 190,122

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

30. AUDITOR’S REMUNERATION

30. AUDITOR’S REMUNERATION
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Amounts received or receivable by EY for: Audit or review of financial reports Other audit related services	202,455 146,025 202,455 146,025 39,514 9,350 84,514 9,350
	241,969 155,375 286,969 155,375

128 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

31. RELATED PARTIES

a. Responsible Entity

The Responsible Entity for both Trusts from 4 June 2012 is Ingenia Communities RE Limited (“ICRE”). ICRE is an Australian domiciled company and is a wholly owned subsidiary of ICH.

b. Fees of the Responsible Entity and its related parties

b. Fees of the Responsible Entity and its related parties
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Ingenia Communities RE Limited: Asset management fees	1,676,496 1,170,374 2,164,618 1,625,516

The Responsible Entity is entitled to a fee of 0.5% of total assets. In addition, it is entitled to recover certain expenses.

The amount accrued and recognised but unpaid at reporting date was:

	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Current trade payables	2,716,671 2,340,175 5,332,190 3,167,572

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

c. Holdings of the Responsible Entity and its related parties

There were no holdings of the Responsible Entity and its related parties (including managed investment schemes for which a related party is the Responsible Entity) as at 30 June 2015 and 30 June 2014.

d. Other related party transactions

Subsidiaries of ICMT have entered into agreements with subsidiaries of ICF for the leases of land that retirement villages are operated on. The remaining term of each agreement varies between 91 and 114 years. There are no purchase options. Rental villages have been classified as operating leases and DMF villages have been classified as finance leases.

Intercompany loans are subject to a loan deed dated 29 June 2012 encompassing ICH, ICF and ICMT and their respective subsidiaries. The deed stipulates that on the last business day of each month intercompany balances are set off within each of the ICH, ICF and ICMT sub-groups and the balances between ICH, ICF and ICMT incur interest at 8.5%pa. Intercompany loan balances are payable on demand, however ICF has undertaken not to call its loan receivable from ICMT within twelve months of the date of this report, if calling the loan would result in ICMT being unable to pay its debts as and when they are due and payable.

There are a number of other transactions and balances that occur between the Trusts, which are detailed below:

Note

Ingenia Communities
Fund
Ingenia Communities
Management Trust

2015
$
2014
$
2015
$
2014
$

Finance lease fees received or accrued/(paid or
payable) for the year between ICF and ICMT
Finance lease balance receivable/(payable)
between ICF and ICMT
11
Finance lease commitments
11
Operating lease fees received or accrued/(paid or
payable) for the year between ICF and ICMT
Interest on intercompany loans received or accrued/
(paid or payable) between stapled entities
Intercompany loan balances between stapled
entities

2,698,453
3,319,833
(2,698,453)
(3,319,833)
31,505,116
40,677,551
(31,505,116)
(40,677,551)
253,307,008
318,149,045
(253,307,008)
(318,149,045)
9,719,788
9,354,036
(9,719,788)
(9,354,036)
11,693,024
6,807,133
11,323,052
6,335,522
185,799,420
135,805,451
(189,634,511)
(133,249,024)

Ingenia Communities Holdings Limited

129

e. Key management personnel

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director of the Responsible Entity.

The names of the directors of ICRE, and their dates of appointment or resignation if they were not directors for all of the financial year, are:

Jim Hazel (Chairman)

Philip Clark AM

Amanda Heyworth

Robert Morrison

Norah Barlow ONZM

Simon Owen (Managing Director and CEO)

The names of other key management personnel, and their dates of appointment or resignation if they did not occupy their position for all of the financial year, are:

Nicole Fisher Chief Operating Officer

Tania Betts Chief Financial Officer

Key management personnel do not receive any remuneration directly from the Trusts. They receive remuneration from ICH in their capacity as Directors or employees of ICH. Consequently, the Trusts do not pay any compensation as defined in Accounting Standard AASB 124 Related Parties to its key management personnel.

The aggregate compensation paid to Key Management Personnel (“KMP”) of the Group is as follows:

	2015	2014
	$	$
Directors fees	542,000	462,500
Salaries and other short-term benefits	1,158,141	1,094,684
Short-term incentives	400,956	332,235
Superannuation benefits	58,518	59,084
Share-based payment	590,928	680,600
	2,750,543	2,629,103

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

The aggregate PQRs and RQRs of the Group held directly, by KMP, are as follows:

Issue date Rights Expiry date	Number outstanding
	2015 2014
2012 RQR 2014 2012 PQR 2015 2013 PQR 2016 2014 PQR 2017	– 1,818,000 3,842,000 3,842,000 3,716,000 3,716,000 982,971 –

130 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

32. PARENT FINANCIAL INFORMATION

Summary financial information about the parent of each Trust is:

	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Current assets Total assets Current liabilities Total liabilities	126,322 134,675 (5,744) 178 335,348 253,843 (2,908) 3,165 1,171 1,379 (1,579) 8,108 63,389 95,067 (5,579) 5,772
Net assets/(liabilities) Unitholders’ equity: Issued units Accumulated losses	271,959 158,776 2,671 (2,607) 619,288 547,643 29,024 14,092 (347,329) (388,867) (26,353) (16,699)
Total unitholders’ equity	271,959 158,776 2,671 (2,607)
Profit/(loss) from continuing operations	27,700 460 (9,653) (4,252)
Net profit/(loss) attributable to unitholders of each Trust	27,700 460 (9,653) (4,252)
Total comprehensive income/(loss)	27,700 460 (9,653) (4,252)

Ingenia Communities Holdings Limited

131

33. SUBSIDIARIES

a. Names of subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in Note 1(d):

with the accounting policy described in Note 1(d):
Name Country of residence	Ownershipinterest
	2015 % 2014 %
Subsidiaries of Ingenia Communities Fund Bridge Street Trust Australia Browns Plains Road Trust Australia Casuarina Road Trust Australia Edinburgh Drive Trust Australia INA CC Trust Australia INA Community Living Subsidiary Trust No. 2 Australia INA Community Living Subsidiary Trust Australia INA Kiwi Communities Subsidiary Trust No. 1 Australia INA Sunny Trust Australia Jefferis Street Trust Australia Lovett Street Trust Australia ILF Regency Subsidiary Trust Australia Settlers Subsidiary Trust Australia SunnyCove Gladstone Unit Trust Australia SunnyCove Rockhampton Unit Trust Australia Taylor Street (2) Trust Australia INA Subsidiary Trust No.1 Australia INA Operations Trust No.4 (formerly INA Subsidiary Trust No. 2)(1) Australia Noyea Pty Ltd Australia INA Community Living LLC (formerly ING Community Living LLC) United States of America INA US Community Living Fund LLC (formerly ING US Community Living Fund LLC) United States of America Subsidiaries of Ingenia Communities Management Trust Garden Villages Management Trust Australia INA Community Living Lynbrook Trust Australia ILF Regency Operations Trust Australia Settlers Operations Trust Australia INA Operations Trust No.1 Australia INA Operations Trust No.2 Australia INA Operations Trust No.3 Australia INA Operations Trust No.4 (formerly INA Subsidiary Trust No. 2)(2) Australia INA Operations Trust No.6 Australia INA Operations Trust No.7 Australia Noyea Operations Pty Ltd Australia Ridge Estate Trust Australia INA Subsidiary Trust No.3 Australia INA NZ Subsidiary Unit Trust No. 1 New Zealand CSH Lynbrook GP LLC United States of America CSH Lynbrook LP United States of America Subsidiaries of Ingenia Communities Management Trust INA Community Living II (formerly ING Community Living II) United States of America Lynbrook Freer Street Member LLC United States of America Lynbrook Management, LLC United States of America	100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 – 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 – 100 – 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

(1) The units were transferred from Ingenia Communities Fund to the Ingenia Communities Management Trust during the year ended 30 June 2015.

(2) The units were transferred from Ingenia Communities Management Trust to Ingenia Communities Fund during the year ended 30 June 2014.

132 Annual Report 2015

Notes to the Financial Statements

for the year ended 30 June 2015 | continued

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

34. NOTES TO THE CASH FLOW STATEMENTS

a. Reconciliation of profit to net cash flows from operations

34. NOTES TO THE CASH FLOW STATEMENTS a. Reconciliation of proft to net cash fows from operations
	Ingenia Communities Fund Ingenia Communities Management Trust
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Net profit for the year Adjustments for: Net foreign exchange (gain)/loss Release of foreign currency translation reserve on disposal of foreign operations Net loss on disposal of investment properties Net (gain)/loss on change in fair value of: Investment properties – continuing Investment properties – discontinued Derivatives Retirement village resident loans Disposal costs associated with overseas investments Income tax expense/(benefit) Depreciation and amortisation expense Amortisation of borrowing costs	34,500 15,422 (7,928) (1,170) (1,291) 42 2,222 (1,453) (1,620) – 338 – 1,689 320 377 – (15,922) (1,530) (482) 1,871 – – 1,630 (164) (41) – – – – 8,878 616 – – – 290 212 6 (6,017) (6,498) 117 101 260 67 322 369 – –
Operating profit/(loss) for the year before changes in working capital Changes in working capital: (Increase)/decrease in receivables (Increase)/decrease in other assets Increase in retirement village resident loans Increase/(decrease) in other payables and provisions	17,843 14,689 (2,352) (4,647) 5,133 (18,310) (2,677) 20,710 – – (11,749) (1,923) – – 12,326 6,327 (26,139) (178) 21,435 1,961
Net cash provided by operating activities	(3,163) (3,799) 16,982 22,428

Ingenia Communities Holdings Limited

133

35. SUBSEQUENT EVENTS

a. Performance Quantum Rights vesting

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

Simon Owen 2,260,000 Tania Betts 791,000 Nicole Fisher 791,000

b. Acquisition of Upstream Bethania

c. Execution of Hedging Contract

d. Acquisition of Big 4 Conjola Lakeside

e. Final FY15 distribution

134 Annual Report 2015

Directors’ Declaration

for the year ended 30 June 2015

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

In the opinion of the directors:
(a) the financial statements and notes of Ingenia Communities Fund and of Ingenia Communities Management Trust are in accordance with the Corporations Act 2001 , including:
- (i) giving a true and fair view of each Trust’s financial position as at 30 June 2015 and of their performance for the year ended on that date; and
- (ii) complying with Accounting Standards and Corporations Regulations 2001 ; and
(b) there are reasonable grounds to believe that Ingenia Communities Fund and Ingenia Communities Management Trust will be able to pay their debts as and when they become due and payable.
The notes to the financial statements include an explicit and unreserved statement of compliance with international financial reporting standards at Note 1(b).
This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2015.

On behalf of the Board

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Jim Hazel Chairman Sydney, 9 September 2015

Ingenia Communities Holdings Limited 135

Independent Auditor’s Report

for the year ended 30 June 2015

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136 Annual Report 2015

Independent Auditor’s Report

for the year ended 30 June 2015

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Ingenia Communities Holdings Limited

137

Securityholder Information

for the year ended 30 June 2015

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

The information set out below was prepared at 18 September and applies equally to units in the trusts and shares in the company under the terms of the joint quotation on the Australian Securities Exchange.

Twenty Largest Securityholders as at 18 September 2015

Twenty Largest Securityholders as at 18 September 2015
		Number of	Percentage
		securities	of issued
Securityholder		held	capital
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED		204,507,916	22.70
J P MORGAN NOMINEES AUSTRALIA LIMITED		194,014,025	21.53
NATIONAL NOMINEES LIMITED		100,601,689	11.17
CITICORP NOMINEES PTY LIMITED		72,640,410	8.06
BNP PARIBAS NOMS PTY LTD		44,909,083	4.98
MERCANTILE INVESTMENT COMPANY LTD		16,514,519	1.83
AMP LIFE LIMITED		15,243,547	1.69
MERCANTILE INVESTMENT COMPANY LTD		13,103,817	1.45
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED		11,682,895	1.30
BNP PARIBAS NOMS (NZ) LTD		11,346,716	1.26
CITICORP NOMINEES PTY LIMITED		11,289,384	1.25
MCNEIL NOMINEES PTY LIMITED		10,400,531	1.15
BOND STREET CUSTODIANS LIMITED		6,023,905	0.67
CUSTODIAL SERVICES LIMITED		5,233,963	0.58
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED		4,586,533	0.51
GWYNVILL TRADING PTY LTD		4,547,619	0.50
FORSYTH BARR CUSTODIANS LTD		3,378,332	0.37
BODIAM PROPERTIES PTY LTD		3,123,000	0.35
MRS MONIKA BATKIN		3,100,000	0.34
UBS NOMINEES PTY LTD		2,446,708	0.27
Total	738,694,592		81.99

Distribution of Securityholders at 18 September 2015
	Number of	Number of	Percentage of
Holding (securities)	securityholders	securities	securityholders
100,001 and Over	306	827,624,684	7.09
10,001 to 100,000	2,077	64,601,162	48.16
5,001 to 10,000	761	5,981,335	17.64
1,001 to 5,000	885	2,696,830	20.52
1 to 1,000	284	69,619	6.58
Total	4,313	900,973,630	100.00

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

138 Annual Report 2015

Securityholder Information

for the year ended 30 June 2015

Distribution of Performance Quantum Rights Holders

Distribution of Performance Quantum Rights Holders
	Number of	Number of	Percentage of
Holding (securities)	securityholders	securities	securityholders
100,001 and Over	3	3,716,000	100.00
10,001 to 100,000		0	0.00
5,001 to 10,000		0	0.00
1,001 to 5,000		0	0.00
1 to 1,000		0	0.00
Total	3	3,716,000	100.00

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

Distribution of Long Term Incentive Plan Rights Holders

Distribution of Long Term Incentive Plan Rights Holders
	Number of	Number of	Percentage of
Holding (securities)	securityholders	securities	securityholders
100,001 and Over	3	982,971	100.00
10,001 to 100,000		0	0.00
5,001 to 10,000		0	0.00
1,001 to 5,000		0	0.00
1 to 1,000		0	0.00
Total	3	982,971	100.00

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

Substantial holders in INA at 18 September 2015

Substantial holders in INA at 18 September 2015
	Number of
Securityholder	securities
Cohen & Steers, Inc.	87,100,659
Daiwa Securities Group, Inc.	55,506,751
The Vanguard Group, Inc.	54,185,072
AMP Limited	50,154,782

VOTING

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

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

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

ON-MARKET BUYBACK

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

Ingenia Communities Holdings Limited

139

Investor Relations

for the year ended 30 June 2015

Enquiries relating to Ingenia Communities Group (ASX code: INA) can be directed to the Link Market Services Investor Information line on 1300 554 474 (or from outside Australia +61 1300 554 474). This service is available from 8:30am to 5:30pm (Sydney time) on all business days.

Link Market Services can assist with:

Change of address details
Requests to receive communications online
Provision of tax file numbers
Changes to payment instructions
General enquiries about your securityholding.

www.ingeniacommunities.com.au

Ingenia’s corporate website provides investors with extensive information about the Group. You can visit the website to find: information on Ingenia and its property portfolios; the latest financial information; reports; announcements; and corporate governance information. Securityholders can access their investment details, including holding balance and payment history, from the site.

Distribution Payments

Distribution payments are made twice a year, for the six months ending 30 June and the six months ending 31 December. Distributions are declared and paid in Australian dollars.

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

Period Ended	Date Paid	Total Amount
June 2015	16 Sept 2015	$0.0070
December 2014	18 March 2015	$0.0065

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

Ingenia Communities Group operates a Distribution Reinvestment Plan through which securityholders can elect to reinvest all or part of their distributions in additional Ingenia securities. The rules of the Plan and how to apply can be found on the website or obtained from the Registry, Link Market Services.

Annual Taxation Statement

Annual Taxation Statements, which summarise payments made during the year and include information required to complete an Australian tax return, are dispatched each September. Details of past distributions and relevant tax information are available on Ingenia’s website.

Annual General Meeting

The Annual General Meeting will be held on 17 November 2015 in Sydney.

2015/2016 Securityholder Calendar*

16 September 2015 Final FY15 distribution paid 16 September 2015 Annual Tax Statement dispatched 17 November 2015 Annual General Meeting February 2016 1H16 Result announced March 2016 Interim FY16 distribution paid

*Dates are indicative.

Privacy Policy

Ingenia Communities Group is committed to ensuring the confidentiality and security of your personal information. The Group’s Privacy Policy, detailing our handling of personal information, is available online at www.ingeniacommunities.com.au.

Complaints

Any securityholder wishing to register a complaint should direct it to Investor Relations in the first instance, at the Responsible Entity’s address listed in this Report.

Ingenia Communities RE Limited is a member of an independent dispute resolution scheme, the Financial Ombudsman Service (FOS). If a securityholder feels that a complaint remains unresolved or wishes it to be investigated further, FOS can be contacted as detailed below:

By telephone: 1300 780 808

In writing: Financial Ombudsman Service Limited GPO Box 3, Melbourne VIC 3001 Website: www.fos.org.au

Corporate Governance Statement

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

Annual Report 2015

140

Corporate Directory

for the year ended 30 June 2015

Ingenia Communities Holdings Limited ACN 154 444 925

Ingenia Communities Management Trust ARSN 122 928 410

Ingenia Communities Fund ARSN 107 459 576

Responsible Entity

Ingenia Communities RE Limited ACN 154 464 990 (AFSL 415862)

Registered Office

Level 5, 151 Castlereagh Street Sydney NSW 2000 Telephone: 1300 132 946 Facsimile: +61 2 8263 0500

Email: [email protected] Website: www.ingeniacommunities.com.au

Directors of INA (as at 18 September 2015)

J Hazel (Chairman) A Heyworth N Barlow NZOM P Clark AM R Morrison S Owen

Secretary

L Ralph T Betts

Security Registry

Link Market Services Limited

Level 12, 680 George Street Sydney NSW 2000 Locked Bag A14 Sydney South NSW 1235

Telephone: 1300 554 474 (local call cost) or from outside Australia: +61 1300 554 474 Facsimile: +61 2 9287 0303

Email: [email protected]

Auditors

EY

680 George Street Sydney NSW 2000

Stock Exchange Quotation

Ingenia Communities Group is listed on the Australian Securities Exchange under ASX listing code: INA.

Ingenia Communities Holdings Limited

141

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Disclaimer

This report was prepared by Ingenia Communities Holdings Limited (ACN 154 444 925) and Ingenia Communities RE Limited (ACN 154 464 990) as responsible entity for Ingenia Communities Fund (ARSN 107 459 576) and Ingenia Communities Management Trust (ARSN 122 928 410) (together Ingenia Communities Group, INA or the Group). Information contained in this report is current as at 30 June 2015. This report is provided for information purposes only and has been prepared without taking account of any particular reader’s financial situation, objectives or needs. Nothing contained in this report constitutes investment, legal, tax or other advice. Accordingly, readers should, before acting on any information in this report, consider its appropriateness, having regard to their objectives, financial situation and needs, and seek the assistance of their financial or other licensed professional adviser before making any investment decision. This report does not constitute an offer, invitation, solicitation or recommendation with respect to the subscription for, purchase or sale of any security, nor does it form the basis of any contract or commitment.

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