Villa World (ASX:VLW) talks FY17 results and outlook

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by Jessica Amir

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Last Updated: 19/06/2019 3:28 PM

Villa World (ASX:VLW) Managing Director & CEO Craig Treasure talks FY17 results, project sales and the company's eastern seaboard pipeline of developments.


Jessica Amir:
Hello I’m Jessica Amir for the Finance News Network. Joining me from Villa World (ASX:VLW) is Managing Director and CEO, Craig Treasure. Craig, welcome back.

Craig Treasure: Thanks Jessica, great to be back again.

Jessica Amir: Thanks for coming, so first up your FY17 results, stellar results. What were some of the highlights?

Craig Treasure: It was great to deliver another terrific outcome for our shareholders; net profit after tax of $37.8 million, which was up 12 per cent on the previous year. Our revenue was up to $387 million. And when we look at those results over a four-year period, as the graphs in our presentation show, you can really see that our profit has doubled over that time and our revenue is up 70 per cent. In the same period the earnings per share were 32.5 cents, which is a great outcome for the shareholders.

Jessica Amir: How was the dividend?

Craig Treasure: We declared a full year dividend of 18.5 cents; the final dividend for the second half was 10.5 cents. And that gives our shareholders around an eight per cent fully franked deal, which is a really great outcome.

Jessica Amir: Now to sales, can you tell us about your FY17 sales and margins?

Craig Treasure: We’ve delivered another great outcome with 1,207 sales for the full year period. And those sales were delivered a margin of 27 per cent, and came from a spread of projects right across the business. Also our joint venture and project management revenue was $5.4 million for the period, which we flagged that to be increasing for sometime for shareholders. So it was great to deliver that as well.

Jessica Amir: Tell us about your market share?

Craig Treasure: We’re now operating across the three East Coast States. Queensland is still our dominant market with close to 70 per cent of our sales. Victoria is strong with near 30 per cent of our sales and we’re now growing within the New South Wales market. As we’ve always said, we’ve got great customer diversity within our business. We’re selling 25 to 30 per cent of our product into the first homebuyer market, around 20 per cent into the investor market and the balance is across the owner-occupier market, people zwho are upgrading and downsizing in the housing market.

Jessica Amir: Now to your project pipeline, tell us about your established projects?

Craig Treasure: This year we’ve had a great range of longer-term established projects contributing to profit. So in Queensland we’ve had things like the Killara project at Logan, Seascape in the Redland Bay and Arundel Springs on the Gold Coast, all come online contributing well to the business. In Victoria, we’ve had some terrific projects running there, Sienna projects in the Plumpton area and also Cardinia Views down in the southeast of Melbourne. And in Sydney, we commenced our house building operations and it’s now been selling housing strongly in this marketplace for sometime. So again, really strong projects right across the three States.

Jessica Amir: In terms of the pipeline in development, what can you tell us?

Craig Treasure: We’ve got some exciting new launches to come in FY18 and rolling into FY19. So we’ve had a lot of projects that started in the last 12 months, but we have something like eight or nine new ones to come. And to highlight a couple of those, a project at Clyde in Pattersons Road in Melbourne is really a replacement for the Cardinia Views project. That will be coming online. And we have a new flagship project at Logan in Brisbane, called Covella at the suburb of Greenbank. So they’re two of the key ones. Plus a return to housing on the north side of Brisbane with The Meadows project at Strathpine. So we’ve got some great new launches coming that will drive those sales and profits, through the coming years.

Jessica Amir: A more general question now. Tell us about the operating environment?

Craig Treasure: The markets that we operate in Jessica, in the greenfield growth corridors of the cities have all continued to be really strong. You have to look at the things that are driving our sales. And that’s first homebuyer grants, low interest rates, employment - people have to feel confident about their job to buy a property. We see strength in a lot of those markets across the board at the moment. There’ve been some incentives delivered in the form of stamp duty for first homebuyers. So all of that has combined to give us good strong sales in our conditions. We see the Queensland market as strengthening, the New South Wales market as being steady and the Victorian market is extremely strong, being driven by the population growth coming into that State.

Jessica Amir: Last question now Craig. How does that growth flow into your FY18 guidance?

Craig Treasure: We’re looking forward very strongly to the FY18 year. So we’ve been able to deliver a forecast NPAT of $41.6 million. We’re also forecasting a continuation of the dividend of at least 18.5 cents per share, in line with this year. And the EPS number per share will be 32.8 cents in the financial year 18. But we have given the market guidance post that into 19 as well, to achieve double-digit EPS growth from 17 to 19. And that’s largely flat through to 18, given the additional shares on offer after we raised equity recently. So you’ll see a major step change in our business going from FY18 into FY19, which we’ll be pleased to deliver that to shareholders.

Jessica Amir: Craig Treasure, thank you so much for the update.

Craig Treasure: Thank you. It’s great to be back and we look forward to coming back and updating again, at our half-year results.


Ends

Jessica Amir

Finance News Network
Jessica joined FNN in January 2017 after having worked in financial advising for seven years and in TV journalism for seven years, specialising in finance, equities and analysis. She has interviewed former Prime Ministers of Australia, Tony Abbott, Julia Gillard and Kevin Rudd and ex Treasurer Jo Hockey. Jessica has worked as a journalist with Sky News Business, ABC 1, ABC's The Business, ABC24 and has also been a regional Channel 7 and 9 TV reporter with Prime7 and Win News.