ACCT20080 Ethics & Governance

Executive Summary

The report of Ingenia Communities Group was seemed to be quite flourishing and enhancing with time. The company is running its business in the travel and tourism sector as well as it has multiple community groups in the Western Australian. To name a few of the community groups are- Holiday homes, Ingenia Care, Ingenia Gardens and others. The communities are focusing on the well-being of the tenants as well as the friendly environment maintenance is also in their forte. The report will be focusing on the company’s 2018 Financial Year and how the company has performed in the all over business of the year 2018.

Introduction

The report is based on the Ingenia Communities Group and its the most recent Financial Year’s report. The report consists of the research that is done on the Ingenia Group’s various communities and how the company is all set to help the seniors and provide them with homes. However, not only the company focuses on senior citizens’ retirement houses, the company is also focused on the tourism sector of Australia and running business in holiday homes in various parts of Australia. The purpose of the report is to keep an eye on the company ethics and transparency in its business report. The report is focusing on the ethical side of the company, means whether the stakeholders and shareholders of the company are properly informed about the company’s business or not. The essential outcomes will be seen based on the priorities of the company and the fields where the company is all set to flourish its business.

Summarization of the Company

Ingenia Communities is one of the leading property groups of Australia, which operates, develops and owns the ever-growing lifestyle community in the Australian coastal and urban area or markets. The company is operating various businesses in the Australia’s lifestyle and holiday package sector and developing senior community groups in all over Australia in affordable price. The lifestyle community was formed just a few years ago, in 2013. The communities are situated in the most picturesque parts of Australia, which consist of more than twenty lifestyle communities, which are facilitated with modern equipments and attractive inner decoration. The community centers are placed throughout the country’s eastern sides and states. The communities provide the members with freedom of lifestyle, total independence to interact with people who are quite similar to them and making friends. The specially prepared home offers the people with the least upkeep and more time to get the scent of life (Creating Australia’s best lifestyle communities | Ingenia Communities, 2018). Ingenia Lifestyle not only provides with like-minded people to be in each other’s company, but also provides with peace-of-mind as the residents own their houses. They do not need to pay for the land or council rate and can spend their precious money and time with investing into gardening and maintenance of the , which makes the retirement affordable (Westermann, Niblock & Kortt, 2018).

The company also has other community group named as Ingenia Care. This community program is taking care of the seniors since the time of its establishment. The free of charge service program plays the role of ‘care concierge’ for the older residents. The care program also supports the residents in their wish of independent living and well-being (Dalen et. al. 2017).

Another community group of the company is Ingenia Holidays. The Ingenia Holidays group offers living places in vineyard settings, supreme waterfront locations as well as in the major routes of transit locations and in other places also. The company provides with a variety of accommodations, for example, camping, cabin and caravan accommodations. Not only that the company also has multiple parks located in throughout inland New South Wales, Queensland as well as in coastal areas. The holiday community is the best fit for holiday, stop over or short break. The community offers a very pleasant environment, which is fun and relaxing as well as the families, can cater safely in the social community (Towart, 2018).

After Ingenia lifestyle, care and holiday communities, next comes the Ingenia Gardens, which is focused on to bringing life in the community living and making the period after retirement enjoyable and social to keep away the elders from depression and loneliness. The Ingenia group has 26 communities and the services that are provided by them, numerous which is obvious that at least one community must be able to meet with one’s lifestyle choice. The company has built the homes in a specific architectural design, which offers comfortable and safe homes around private gardens and greenery. The leisure facilities, planned activities and community centers let the people have an option at least to choose among all of them (Halse et al., 2018).

Summary of Corporate Governance of the Company

The company Ingenia is holding good corporate governance because of the critical importance and fundamental component of the company’s commitment to the security holders and stakeholders. The ASX Corporate Governance Council’s ‘Corporate Governance Principles and Recommendations’ (ASX Recommendations), are provided with the framework for proper corporate governance. The Ingenia Board believes that the Group is functioning accordingly the recommendations and principles of the ASX Corporate Governance Council. The Board is continuing the governance framework’s review as well as practices proper frameworks to meet the security holders’ interests. The company’s latest annual report with the financial report is published and the financial year of the company is ending on June 30, 2018. The non-executive directors of the company are Jim Hazel (Chairman), Robert Morrison (Deputy Chairman), Valerie Lyons, Amanda Heyworth, Andrew McEvoy and Philip Clark AM (resigned on December 4, 2017). The Executive Director is Simon Owen. The company is following the strategy of growing recurring revenue streams, enhancing the investment properties’ operational performance and developing the lifestyle communities. The immediate priorities of the company’s business are-

  • Growth of tourism sites through investing into new cabins and developing them
  • Growth of rental income at a rate above CPI
  • Delivering the development projects within time and budget
  • Achievement of more than 300 new homes within financial year of 2019
  • The focus must be fixed on coastal and metropolitan locations through the acquisitions and development of portfolio as well as remixing them
  • Improvement of the existing assets’ performance through repositioning, leveraging sales platform of the group as well as driving the revenue growth
  • Development of business through creative home designs as well as building efficiencies

To achieve the priorities the company must follow proper plans and invest in proper fields from where the highest amount of return can be expected. The Chairman’s report focuses on the continuation of the pursuing process of the growth of the company’s cash earnings, market share and profitability with the rental property of the seniors as well as the tourism industry in the upcoming financial year. The Chairman’s report also talks about the insurance policies that the company has bought to lower the risk of the company. The major policies include professional indemnity insurance, directors and officers insurance and management liability insurance.

The remuneration policy of the company talks about the aim of the company about ensuring remuneration packages rightly so that the report reflects the duties and responsibilities of the person and the remuneration is able to attract, motivate and retain the customers and employees of right quality. The long term incentive (LTI) is provided to the executive KMP to keep aligned the focus of the company’s strategy. The CEO Simon Owen’s maximum total remuneration amount is $1,842,750. A range of factors are taken into account of the remuneration structure, for example, Skill, Capability and experience, each executive KMP’s performance and many other factors are included in the list.

Board Orientation

The values of the Ingenia Company are respect and integrity, creating environment and places to live where people can feel the connection with nature and the sense of belonging. The company is always focused onto its guest, visitor and resident service to make sure that the seniors receive 24*7 support and attention and experience everyday as the best day of their life. The time can be of anything from staying to playing but the freedom must be there for everyone. The current annual report consists of the amount of the delivered statutory profit of $34.2 million. The Group was able to build and sell almost 280 turnkey homes as well as enhanced the rental income from annual, tourism and permanent clients to $61.5 million. Ingenia was able to grow the investment amount in its lifestyle community with the continuation of the focus on the Group’s progress in the pipeline development to ensure the further growth in the recurring rental base through the creation and expansion of high quality communities. In 2018’s June 30th the company comprised more than 30 communities that provide the guests and seniors with a community which is not only affordable but also focuses on their well being. In the financial year of 2018, the Group kept expanding its business and rental assets and from the development, business delivered 287 settlements. In 2018, Financial Year the permanent rental income’s growth was 46%.

The reasons behind this were new homes’ settlement, in FY17 and FY18 new acquisitions were completed, the portfolio’s rental growth and investment into brand new rental cabins. Key Metrics of the annual report are $34.2 million is the statutory profit, $36.8 million is underlying profit, basic earnings on per statutory share is 16.5 cps, basic earnings on per underlying share is 17.7 cps, $47.2 million is the operating cash flow amount, 10.75 cps is full year distribution amount and $2.57 is net asset value on per security. The strategic priorities of the company are delivering the projects within time and budget and continuing the settlement momentum and sales achieved in 2018 as well as securing the further development and approvals of the new homes in the existing communities. The company is continuing the identification of the upcoming development programs and opportunities and seeking to enhance margins through efficiency building and innovation. The Ingenia Gardens have more than 25 rental communities all around the Western Australia and eastern seaboard. In the 2018 Financial Year Ingenia decided to divest the Tasmanian Ingenia Gardens program consist of almost 5 properties. The divestment decision of the company affected the results of the FY18, though the portfolio performs well and the occupancy is closing at 92.4% (Balu et al., 2017).

The report discloses the projects the company had undertaken in the past is able to perform them successfully and completed almost 93 homes. The whole scenario reflects the growing community of the Ingenia company and the business development as well as the development is increasing with the launching of new projects. The value of Investment property book is increased by $37 million in compared to the last year. The reasons were-

  • Capitalized expenditure
  • New development sites’ acquisitions
  • Fair value decrement

The company has already set up its FY19 outlook. The company is able to increase its business in lifestyle sector in the upcoming Financial Year with the sector that is focused on pipeline development and increased debt capacity to facilitate the growth of the projects that are launching. Ingenia Gardens is still the key contributor in the rental cash flow of the group. Ingenia has prioritized the growth of the rent and occupancy as well as delivering the best support to the residents of the houses. The company made the divestment in the second half of the Financial Year 2018. The divestment is possible to impact the upcoming Financial Year’s result because of lost earnings. However, the reinvested capital proceeds are leading to development of the long term recurring revenue streams in the major locations.

The Remuneration report of the Board is prepared for the 2018 Financial Year and the report forms Director’s Report’s part as well as the report is been prepared according to the section 300A of the Corporation Act 2001 (Cth). The Remuneration report’s data was audited according to the section 308(3C) of the Corporations Act. However, the Financial Instruments of the company have faced risks also. The risks are listed below:

Credit Risk: The company Trusts’ major Credit Risk is the tenants’ default. The loss results into rental income’s loss during the secured state of a replacement tenant and the loss grows when the replacement tenant is paying less than the default tenant.

Liquidity Risks: Liquidity risk management team’s objective is reducing the risk of the financial situation where the Trusts are lacking resources to meet the financial obligations.

The findings of the report are highlighting the risks the company might face or generally face, the laws, which the company has followed to prepare the report and remuneration report of the company (Shimeld & Williams, 2017).

Interpretation of Company Communications using Legitimacy Theory

The concept of organizational legitimacy is the birth-theory place from where Legitimacy theory is prepared and explained by Pfeffer and Dowling (1975, p. 122). The theory states as: A company’s value system is in balance with the whole sector’s value system of which the company is a part- this is the situation known as Legitimacy Theory. If an actual or potential disparity occurs between the value systems then the threat for the company’s legitimacy occurs. Under this circumstance, it can be seen that the company’s value system is quite in proportion or balance with the entire tourism sector’s value system. The tourism sector focuses on providing services for the comfort of the people when they are visiting somewhere and the company Ingenia is also focusing on the more comfortable accommodation providing business and how the senior citizens of Australia can be happy and be in comfort in the housing estates. The company is also growing their business and providing with houses to the more numbers of people in the upcoming times (Haque et al., 2017).

Conclusion

The report was based highly on the Ingenia Group’s business and the sector where the company is performing the business as well as the Group’s financial report of 2018 Financial Year. The focal point of the report was the tourism sector where the company is developing the business and the rental house sector, which the company is enhancing for the senior citizens of Australia. The remuneration report of the company got enlightened in the report. The company’s orientation got determined in the report. The Chairperson and the executives’enlightened names and their decisions regarding the company’s Financial Year and the future plans are getting disclosed in the report. The latest annual report is based on the overall company’s performance in the tourism and leisure sector of Australia and how the company is able to maintain and broaden its reputation in the business.

Reference List

Creating Australia’s best lifestyle communities | Ingenia Communities. (2018). Retrieved from http://www.ingeniacommunities.com.au/

Towart, L. C. (2018). Evaluating the investment performance of Australian retirement living and aged care assets. Pacific Rim Property Research Journal, 24(1), 35-48.

Towart, L. C. (2018). The balance sheet and valuation treatment of retirement living and aged care assets. Pacific Rim Property Research Journal, 1-13.

Westermann, S., Niblock, S. J., & Kortt, M. (2017). Does it pay to be responsible? An empirical investigation of corporate social responsibility and REITs in Australia.

Westermann, S., Niblock, S., & Kortt, M. (2018). Corporate social responsibility and the performance of Australian REITs: a rolling regression approach. Journal of Asset Management, 1-13.

van Dalen, J. W., Moll van Charante, E. P., Caan, M. W., Scheltens, P., Majoie, C. B., Nederveen, A. J., … & Richard, E. (2017). Effect of long-term vascular care on progression of cerebrovascular lesions: Magnetic resonance imaging substudy of the PreDIVA Trial (Prevention of Dementia by Intensive Vascular Care). Stroke, 48(7), 1842-1848.

Balu, N., Zhou, Z., Mossa-basha, M., & Yuan, C. (2017). Abstract WP125: Accelerated 3d Isotropic High-resolution Multi-contrast Intracranial Vessel Wall MRI For Large Artery Stroke Evaluation. Stroke, 48(suppl_1), AWP125-AWP125.

Haque, M. E., Gabr, R. E., Zhao, X., Hasan, K. M., Narayana, P. A., Nghiem, D. M., … & Aronowski, J. (2017). Abstract TP348: Quantitative Serial Neuroimaging of Iron in the Intracerebral Hemorrhage Pig Model. Stroke, 48(suppl_1), ATP348-ATP348.

Shimeld, S., Williams, B., & Shimeld, J. (2017). Diversity ASX corporate governance recommendations: a step towards change?. Sustainability Accounting, Management and Policy Journal, 8(3), 335-357.

Hulse, K., Martin, C., James, A., & Stone, W. (2018). Private rental in transition: institutional change, technology and innovation in Australia.

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