$150M THROWN AT VILLA WORLD, BUT IT ONLY WANTED $30M

Written on the 30 January 2015 by Nick Nichols

$150M THROWN AT VILLA WORLD, BUT IT ONLY WANTED $30M

VILLA World has found a sweet spot with investors who have thrown $150 million at the company, even though it only wanted a little over $30 million.

The Broadbeach-based housing developer has secured $31.7 million through a share issue that has closed five times oversubscribed and paved the way for the company to capitalise on a surge in residential sales across south-east Queensland and Victoria.

The pot was also sweetened today with Villa World upgrading its full-year profit forecast to at least $28.5 million. This comes just two months after lifting its profit target by 14 per cent to $27 million.

Villa World today reported an unaudited after-tax profit of $13 million for the December half, almost double the $7.6 million recorded a year earlier.

Villa World raised $26.7 million from the share issue, pitched at $1.90 a share, with all of the company's biggest shareholders topping up. About $6 million of that was secured from a retail offering managed by Morgans.

A further $5 million will come via a share purchase plan for eligible shareholders.

Villa World CEO Craig Treasure says the share purchase plan has yet to be finalised, but he expects this to be around three times oversubscribed.

The overwhelming response has left investors to rush to the open market to top up after missing out on a bigger allocation, and more than 3.3 million shares changed hands in Villa World today.

"This is a huge vote of confidence in Villa World as a company and our whole team," says Treasure. "All our major shareholders took up their allocation, plus there are some new institutional investors."

Treasure says the funds will be used to finalise acquisitions as Villa World targets sales volumes it last recorded prior to the GFC.

"This is about us having the ability to continue to grow and restock the business," he says. "We are seeing a lot of continuing opportunity in south-east Queensland and Victoria, and raising these funds let us take advantage of some of these opportunities."

Treasure says Villa World is working on a number of deals around Brisbane and in the Brisbane-Gold Coast corridor markets that he says have been "kind" to Villa World in the past.

"We will now move to finalise our negotiations on different sites. We always have quite a few that we're working through and looking at, but this now means we can progress those a little faster than we may have otherwise done.

"This year we're on track to sell and deliver around 850 to 900 lots. We have enough stock and projects to deliver in excess of 1000 in 2016 already. It will just depend on how strong the market is.

"Villa World sold 1000 products a year prior to the GFC and we'll easily get back to that range with the new projects we have coming along."

The new sites are expected to be delivered in 2017-18 and come on the heels of $103 million in site acquisitions this financial year.

Villa World has affirmed it is on target to pay a 6c interim dividend.

Despite the issue of 14 million new share, Villa World's share price held above $2 after resuming trading following a two-day halt. The company, traditionally a yield driven stock for investors, has affirmed its policy of paying out dividends at the rate of 50 to 75 per cent of net profit after tax.


Author: Nick Nichols

Latest News

WHY VIDEO IS A "GIVEN" FOR BUSINESS

IN TODAY's digital-driven world, video is king and if used right, it can push a company's brand and brand ...

BRAMBLES TUMBLES AFTER REDUCING GUIDANCE

BRAMBLES (ASX: BXB) will miss its first-half guidance due to cost pressures at its North America business.

The com...

VILLAGE ROADSHOW PARKS HURT BY DREAMWORLD TRAGEDY

QUEENSLAND visitors to Village Roadshow (ASX: VRL) theme parks have declined 12 per cent in the wake of four deaths a...

ASF UNVEILS TRAFFIC PLANS FOR THE SPIT

A SECOND bridge over the Nerang River is the centrepiece of the ASF Consortium's plan to improve traffic flow ...

Related News

CARSALES CEO RETIRES AS NEW COMPETITOR COX FINALISES MERGER

CARSALES will have a new CEO as it takes on a fresh challenger to its crown as the dominant online car sales portal i...

BUSINESS CONFIDENCE AT A SIX-YEAR HIGH

SMALL and medium businesses have entered 2017 with their confidence at a six-year high, building on strong gains m...

CONSUMERS PESSIMISTIC ENTERING 2017

CONSUMER confidence remains at its weakest point since April 2016, according to the latest Westpac Melbourne Institut...

RISE OF STARTUP SUPPORT PROGRAMS NOT AS ROSY AT IT SEEMS

ENTREPRENEURIAL cultivation companies in Australia are appearing quickly, but questions have been raised about whe...

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter