Villa World delivers $13m half-year profit

Leading Queensland residential developer Villa World has announced a statutory net profit after tax of $13.0million (13.9 cps) for the half year ended 31 December 2014 off the back of positive market fundamentals in thecompany’s key markets of South East Queensland and Melbourne.The half‐year result represents an increase on the company’s net profit after tax of $7.6 million (9.3 cps loss) forthe period ended 31 December 2013.Villa World’s statutory net profit before tax of $11.1 million for the first half of FY15 is at the top end of itsearlier guidance.Managing director Craig Treasure said Villa World’s revenue increased by 43 per cent to $134.1 million (1H14:$93.8 million) as a result of strong sales during the first half of the 2015 financial year, combined with thedelivery of carried forward sales contracts from the year prior.“Sales momentum has strengthened in the most recent quarter with the average sales rate rising from 44.7 permonth in the first quarter of the 2015 financial year, to 72.7 per month in the second quarter,” he said.“Three new projects were released in Queensland ‐ Era, Waterline and Park Vista ‐ and two new projects werereleased in Victoria ‐ Cardinia Views and Roxburgh Park.“Further, new stages were released at the strong selling projects of Mt Cotton, Circa Metro and Orana.”Strong market conditions, sales momentum and clarity on delivery allowed Villa World to recently upgrade itsguidance for FY15 net profit before tax to at least $28.5 million (FY14: $22.6 million).Mr Treasure said 364 sales contracts with a gross value of $138.7 million are being carried forward with 334contracts ($127.0 million) anticipated to settle in 2H15, and the balance of 30 contracts ($11.7 million) in 1H16.He said Villa World had acquired 2,049 new lots in 1H15, doubling the size of the company’s workbookcompared to FY13, which now comprises 5354 lots.“We have ramped up our portfolio and our business to a point where we are able to sell 1000‐1200 lotsannually,” said Mr Treasure.“Our focus in 2H15 will remain on delivering and settling carried forward sales while continuing ourcommitment and capacity to acquire new land.”Mr Treasure said the company was now well capitalised to take advantage of acquisition opportunities afterconducting a $26.7 million capital raising on January 28, 2015.“We continue to see attractive acquisition opportunities in our target markets and will look to further grow ourdevelopment pipeline during 2015 to build future earnings, and capitalise on positive market conditions,” hesaid.“The focus will remain on the continued replenishment of the portfolio in South East Queensland, the SouthEastern and Northern growth corridors of Melbourne, and infill sites in both Melbourne and Brisbane.“Projects with three to five year durations will be targeted, as well as appropriately structured larger projects.”Subsequent to Villa World’s strong financial results, the company has declared a fully franked interim dividendof 6.0 cents per share. The ex‐dividend date is March 5 2015, the record date for this dividend is March 9 2015,and payment scheduled for April 2 2015. The company anticipates paying a full year dividend of at least 15 centsper share representing a 6.9% dividend yield on the last close price of $2.18.Villa World’s January 2015 capital raising was five times over‐subscribed and delivered the company $26.7million. Its Share Purchase Plan, seeking to raise a further $5 million, will close on February 25.Net tangible assets at year end were $183.7 million (FY14: $180.2 million), representing $1.96 per share (FY14:$1.92) before the declaration of the interim dividend and recent capital raising. The gearing level was 24.8 percent compared to 18.7 per cent as at 30 June 2014. Net debt as at 31 December 2014 was $98.0 million.Established in 1986, Villa World is Queensland’s longest‐established ASX‐listed housing developer and one ofAustralia’s largest integrated housing providers.