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THE shadow of failed funds manager MFS Ltd may still be haunting Gold Coast housing developer Villa World, but shareholders didn’t pay it much mind at the company’s annual general meeting held this week.
Buoyant trading in the affordable housing sector over the past year had investors in good spirits at the meeting held at Broadbeach.
The only sour note came from a question by one investor regarding legal action Villa World is facing over alleged defects in Tweed Heads apartment building Silverstone which was built in 2009.
The claim, brought by the body corporate and apartment owners, is understood to involve rectification work totalling $14.5 million.
Villa World has denied liability, alleging the defects largely related to the walling system which was supplied by a third party and installed by an independent sub-contractor.
The investor was concerned whether the court action would affect the company’s profits.
Villa World chairman Mark Jewell says he can say little more on the matter as it is still before the courts and that the company has made provisions for legal fees at this stage.
“We cannot make any other provisions because of the uncertainty of the claim,” he says.
Managing director Craig Treasure says the company is working through the issue.
“We want to get the matter resolved and behind us as quickly as we can. We are constrained by the formal processes.”
Treasure says the project was conceived at a time when Villa World was controlled by the now liquidated MFS Ltd (later named Octaviar Ltd).
“It’s not the kind of project Villa World historically did or does any more,” he says. “It’s one of those legacy issues that we’ve got to deal with.”
Villa World posted a net profit of $19.1 million in the 2014 financial year, up from a $13.1 million loss a year earlier.
It also resumed dividend payments to shareholders, totalling 15c a share for the full year.
The company has a development pipeline of 3925 lots and is focusing its efforts on Melbourne and south-east Queensland where it sees greater growth opportunities.
Treasure says the company is increasing prices in some markets to adjust to growing demand and the company is forecasting profit growth of at least 5 per cent this financial year.
Villa World conducted a roadshow earlier this year, tapping into an appetite for housing companies by fund managers.
“There’s been really strong support for the housing sector from the investment community,” says Treasure.
“They’re looking for people with a track record and that’s where we’re getting some traction.”
Villa World has announced two new projects for the Gold Coast, at Coomera and Jacobs Well, their first Gold Coast developments in five years.
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