VILLA WORLD FINALLY REAPS REWARDS
Written on the 27 August 2014 by Nick Nichols
GOLD Coast housing company Villa World made an emphatic return to the black over the 2014 financial year with a net profit of $19.1 million, boosting returns for shareholders in the process.
The profit compares with a $13.1 million loss last year, while the pre-tax result of $22.6 million is higher than the company had expected just three months ago.The result has bolstered shareholders’ pockets with the company paying a 9c final dividend, bringing the full-year payout to 15c fully franked and pitching Villa World’s yield around 7 per cent.
Villa World CEO Craig Treasure (pictured) says he is pleased to see strong returns for shareholders, with the company having built a loyal investor base prior to the GFC when it was known as a high-dividend stock for 20 years.“Villa World is back to the strength it was pre-GFC,” Treasure says.
“It’s made a great profit and paid a good dividend to shareholders. It has really low gearing and plenty of capacity to deliver its projects and to acquire more.”Treasure says there are “good trading conditions” in the markets in which it operates with the company forecasting at least a 5 per cent improvement on the FY14 result this financial year.
Shareholders also have also seen a 79 per cent increase in the value of their stock over the past year as the company’s fortunes began turning for the better early last year.“This is a great result for our company and a great result for our shareholders,” says Treasure.
“Our strategy of growth has underpinned much of this success, with a 36 per cent increase in sales for the year.”Villa World recorded 829 sales in FY14, compared with 610 a year earlier.
“While our Queensland-based projects account for the majority of our sales, the share of sales in both Victoria and NSW is increasing in line with our strategy to restock in each of the three states,” he says.The southern states accounted for 37 per cent of the company’s sales.
Villa World’s revenue surged 35 per cent to $229.5 million, boosted by $80.8 million in sales carried forward from FY13.The company has 335 contracts worth $141.5 million carried forward from FY14.
Villa World has 17 projects across the eastern seaboard, reporting strong demand across most projects.Only two of those projects are located on the Gold Coast, at Gilston and Ormeau, but Villa World has laid plans for new projects at Jacobs Well and Coomera.
Acquisitions have boosted the number of lots in the company’s portfolio to 3925, from 2647 a year ago, giving it about 4.7 years of sales at current levels.“Our strategy is to grow our Victorian land bank to match our already substantial Queensland land bank, with each of these states representing an equal weighting in our portfolio,” says Treasure.
“We anticipate that our acquisition strategy will replenish our inventory levels by the middle of the current financial year to meet projected market demand. This will see profit and sales weighted towards the last half of the year.“The release of new projects to support or replace existing projects, combined with strong pre-sales should result in another year of strong performance for Villa World this financial year.”
Treasure says Villa World is targeting profit growth of at least 5 per cent this financial year, providing consumer confidence remains strong, interest rates remain low and the home-buyers grants remain in place.Villa World has conservative gearing of 18.7 per cent and had net debt of $57 million at the end of June.
The company spent $89.5 million on acquisitions during the year, aided by $67.7 million in cash generated from operating activities.
Author: Nick Nichols