28/11/2006 - 21:00

NLV's new age for retirement

28/11/2006 - 21:00

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The average age of the residents in standard retirement villages in Australia is 79 years, but at National Lifestyle Villages the residents’ average age is 59 years.

NLV's new age for retirement

The average age of the residents in standard retirement villages in Australia is 79 years, but at National Lifestyle Villages the residents’ average age is 59 years.

This key statistic indicates that NLV has developed a new concept in ‘retirement’ living that is markedly different from the traditional product.

The concept, developed by NLV founder and sole shareholder John Wood, is targeted at over 45s who want affordable, secure accommodation and an active, sociable lifestyle.

The company has developed five villages, has approval for a sixth in Rockingham, and three others are in the planning process.

Once completed, they will accommodate 2,775 households, or about 4,400 people.

With the ageing of Australia’s population, NLV is expecting plenty of growth in its core market.

The company is also making its first move into the interstate market, having bought a development project in Tamworth, where it will trial a slightly different, lower-cost brand.

Group turnover grew rapidly to $34 million in 2005-06 and is expected to more than double in the current financial year, with staff numbers also growing fast to a budgeted 136 people.

To support the rapid expansion, Mr Wood recruited former Wesfarmers executive John Pirie as chief executive about 12 months ago.

“I saw something really different and I thought I could add value,” Mr Pirie told WA Business News.

Mr Pirie has brought some of Wesfarmers management disciplines to the business and also endorsed NLV’s philosophy, which is based around a quadruple bottom-line – economic, social, environmental and governance.

Like many businesses in WA, Mr Pirie said a major focus was on managing expected growth.

“The biggest challenge is making sure we have the right people and the organisational capability,” he said.

To help meet this challenge, Mr Pirie set about developing a five-year strategic plan soon after joining the company.

This process took eight months but has put the business on a stronger footing and given staff a clear idea of where it is heading, he said.

The company also re-engineered all of its business processes, and introduced a performance development system that allows staff to set goals linked to the company’s objectives and identify training and development needs.

Mr Pirie said there was some initial scepticism about these changes, which were introduced with the assistance of consulting firms Momentum Capital and Outcome Consulting, but staff were now very positive.

“It was a relief for a lot of people,” he said, since many staff had enjoyed the company’s rapid expansion, but acknowledged the need for more management discipline.

Another step in the maturing of the company is the planned establishment of a board of directors.

Mr Pirie said these changes would support planned growth, which would also involve raising more capital, possibly through a public float.

“We are very keen to grow, and it’s a capital intensive business,” he told WA Business News. “The ownership will change, that is inevitable, and John [Wood] is comfortable with that.”

In the meantime, the company has had banks competing to supply its debt finance needs, and recently switched to National Australia Bank.

Mr Pirie said NLV continued to place a high priority on its environmental, social and governance objectives.

The group has pursued a wide range of environmental initiatives, including grey water recycling for every home, village-scale composting and vermiculture and a 10-bin recycling system.

It also prohibits the planting of exotics and lawn because they consume too many nutrients and too much water.

Murdoch University has estimated the Bridgewater village can achieve major savings: 50 per cent less energy use per household; 62 per cent less water and 82 per cent less waste to landfill.

Mr Pirie said the introduction of these practices “hasn’t been all smooth sailing” but was accepted by residents.

“Once you get to see it, you just get committed to it,” he said.

NLV’s next village in Rockingham will go a step further by introducing black water recycling.

In terms of governance, Mr Pirie said this related to both traditional corporate governance but also the running of the villages. The company runs open forums with its residents, who sign 60-year leases when they move in.

The long-term lease is designed to provide security of tenure while reducing costs for the residents, who do not have to buy their parcel of land.

Commenting on the company’s staff and the residents of its villages, Mr Pirie said: “There is a drive to build something that people have a real sense of belonging to”.

One of the challenges facing the group has been securing timely supplies of transportable homes for its villages.

Fleetwood Corporation, established by Mr Wood’s father and where John worked before he moved to NLV, has been the group’s sole supplier until recently, when NLV placed its first order with a start-up accommodation manufacturer.

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