Villa World Limited Group

Transcription

1 Villa World Limited Group 2013 Roadshow Full Year Presentation Results [] August 2013 March 2014 villaworldgroup.com.au villaworld.com.au Since 1986 Since 1986

2 Introduction Statutory Net Profit after Tax for 1H14 of $7.6 million, attributed to delivery of carried forward sales from FY13 and strong sales and production over the current period across most projects. Statutory Profit before Tax of $9.4 million, in line with guidance provided in January Sales in 1H14 have averaged 79 per month, due to strong demand across a number of projects, with Park Vista, (North Brisbane, QLD) and Cascades on Clyde (VIC) as the stand outs. Volumes were also driven by the near sell out of recently acquired projects Astonbrook, (Carindale, QLD) and First Light, (Tweed Coast, NSW). $153.2 million 1 in sales are being carried forward and underpin second half performance. $116m to settle in 2H14 and balance in FY15. FY14 Profit Before Tax guidance lifted to $20 million $22 million with execution of the product delivery plan now the key determinant. Outlook for 2H14: There will be a focus in 2H14 to deliver and settle carried forward sales. Existing projects are expected to continue at the strong first half sales rate. With FY14 NPAT largely in place, the sales rate at existing projects will be tempered with a renewed focus on margin. Recently acquired Bayside QLD projects ERA and Waterline are due to be marketed for sale from 4Q14. The Victorian acquisitions are expected to be released for sale in FY15. While Circa II (North Brisbane, QLD) and Eynesbury (VIC) are anticipated to sell out in 2H14, they will be replaced with the marketing of townhouses at Circa Metro (Nudgee, QLD) and Orana at Park Vista (North Brisbane, QLD). First settlements from the newly established Victorian building business are expected in 2H14. Fully franked interim dividend of 6 cents per share declared 2. Strong balance sheet and prudent gearing; capacity and resolve to fund further acquisitions. 1 Lots are included on the basis of 100% for Villa World projects and 50% of Joint Venture projects (4 lots worth $1.0 million). Represents gross sales price including GST Based on carried forward contracts as at 31 December Ex Dividend date 3 March 2014; Record date 7 March 2014; Payment date 2 April 2014 Success through property 2

3 Key Highlights Sales momentum continues 475 lot sales 1 recorded in 1H lots 2 carried forward, valued at $153.2 million. $116 million to settle in 2H14, balance FY15 Recently acquired sites to commence sales in 4Q14/1Q15 Profit 1H14 Statutory Net Profit After Tax $7.6 million 1H14 Statutory Profit Before Tax $9.4 million, in line with guidance issued January Guidance FY14 NPBT $20 million $22 million underpinned by carried forward sales Capital management $32.2 million capital raising 3 Debt facility extended until 1 September 2016 and facility limit increased 4 to $155 million Net Debt $55.9 million Gearing 20.7% 5 Strong balance sheet NTA of $1.87 per share $47.6 million carried forward unused tax losses $19.1 million franking credits Acquisitions 926 lots over 8 projects and 3 states since July 12 2 projects near completed. 1 under production. 2 to commence in 2H14. 3 Contracted in December ,052 lots over 19 projects under control at balance date 3.7 years supply 6 Interim dividend Fully franked interim dividend of 6 cents per share declared 7 Dividend Policy full year payout ratio of 50% 75% of NPAT, paid semi annually. Board intention to pay a final dividend in excess of 6 cents per share for FY14, pending the Company s results for the full year. 1 Executed contract of sale, not necessarily unconditional. 4 Negotiated in October 2013; formal documentation executed 24 January Lots are included on the basis of 100% for Villa World projects and 50% of Joint 5 (Interest bearing liabilities cash)/ (total assets cash). Venture projects (4 lots worth $1.0 million). Represents gross sales price including GST. 6 At the 12 month rolling sales rate Based on carried forward contracts as at 31 December Ex Dividend date 3 March 2014; Record date 7 March 2014; Payment date 2 April At $1.60 per share in September Residential property company positioned for growth 3

4 Financial Performance 1HY14 1HY13 ($m) ($m) Revenue Statutory net profit before tax 9.4 (21.6) EPS (NPBT) (cps) (29.1) Tax (1.8) 2.0 Statutory profit after tax 7.6 (19.7) EPS (cps) (26.4) Dividend (cps) Unused Tax Losses Villa World has $47.6 million carried forward unused tax losses Of these, $25.6 million (with a DTA of $7.68 million) have been recognised at 31 December 2013 This includes the additional recognition in 1H14 of $6.32 million of unused tax losses (DTA $1.89 million) $22.0 million (with a DTA of $6.6 million) will be recognised through Board assessment and in accordance with accounting standards in due course Implications: Villa World s effective tax rate is 30% going forward Cash tax will not be paid until the $47.6 million in carried forward tax losses have been utilised When the whole or a portion of the remaining $22.0 million in carried forward tax losses are recognised, Villa Worlds effective tax rate will be less than 30%; as such, benefitting NPAT. Strong financial platform for unlocking shareholder value Balance Sheet 1HY14 ($m) FY13 ($m) Assets Cash Receivables Inventories Investments accounted for using the equity method Other Total Assets Liabilities Trade and other payables Interest bearing liabilities Other Total Liabilities Net Assets Net tangible assets NTA ($ / Share) Net Debt Net Debt : Equity (%) 31.9% 40.9% Gearing % 24.7% Interest Cover n/a 1 Based on weighted average shares on issue of 81,391, Ex Dividend date 3 March 2014; Record date 7 March 2014; Payment date 2 April Based on shares on issue as at 31 December 2013 of 93,663, (Interest bearing liabilities cash) / (total assets cash). 5 EBITDA/Net Cash Interest 4

5 Operational Performance Performance 1H14 1H13 Key Drivers Change Sales (lots) Strong sales across all three eastern seaboard states. Queensland was the dominant contributor to 1H14 sales; its 61% share of sales reflect 12 projects. The two Victorian projects made up 27% of sales, and First Light in New South Wales represented 12% of sales lots ($153.2 million) carried forward. $116 million to settle in 2H14, balance FY15. 88% Settlements (lots) Similar to prior year. 1% Revenue property sales ($m) Revenue other ($m) Gross margin ($m) Revenue growth due to shift in product mix towards house and land. Other revenue includes mainly project management fees and commissions received from Eynesbury. Margins continue to be maintained in SE Victoria, North Brisbane and Bayside projects, however additional warranty costs are impacting overall margin. 13% 133% 1% Margin (%) 26.4% 29.4% As above 10% Mean rate of sale pcm Sales momentum continuing as a result of the implemetation of a broad sales platform in FY13, and assisted by successful release of new projects Astonbrook and First Light. 88% Number of projects contributing to profit % Broad sales strategy with focus on each market segment 5

6 Outlook Outlook FY14 Guidance Targeting a profit before tax in the range of $20 million to $22 million. The key determinant is the execution of the product delivery plan. Sales Sales have risen from an average of 42 per month a year ago, to 79 per month in the current period Market fundamentals will remain: Low interest rates First home buyer grants Low level of unemployment Improved customer confidence Continued strength in capital cities Well positioned to capitalise on improving residential market conditions, with efficient operating processes and marketing strategies in place. Several projects near sold out in 1H14. Management focus on moving recently acquired projects to the sales and marketing stage from 4Q14 onwards Delivery With 356 carried forward sales worth $153 million, management focus is on delivering and settling. Restocking Well progressed on a range of opportunities across several states. We are benefitting from quick decision making process and ability to make cash offers given our recent capital raising and our strong operational cash flow. We are making sure that acquisitions are value accretive. Our target is to build a 5 year development pipeline comprising a mix of short and long term projects. $66 million cash spent on project acquisitions since July Dividend Policy Fully franked interim dividend of 6 cents per share declared 1. Full year payout ratio of 50% 75% of NPAT, paid semi annually. Board intention to pay a final dividend in excess of 6 cents per share for FY14. Board Composition Welcomed Mark Jewell in 1H14. Farewelling Troy Harry in 2H14. Looking to strengthen Board with the appointment of a further Non Executive Director and the separation of the role of Managing Director and Chairman. 1 Ex Dividend date 3 March 2014; Record date 7 March 2014; Payment date 2 April 2014 Well positioned to take advantage of promising opportunities 6

7 Timetable 13 February H14 results released to ASX 6 7, March 2014 Presentations to Institutional Shareholders and Stock Brokers May 2014 Institutional investor site tour Queensland Projects Park Vista, Circa, Mt Cotton Release of Investor Insight 27 August 2014 FY14 results released to ASX Nov/Dec 2014 Institutional investor site tour new Queensland Projects 7

8 Wrap Up Sales momentum continues Sales have risen from an average of 42 per month a year ago, to 79 per month in 1H lots carried forward, valued at $153.2 million With FY14 largely in place, renewed focus now achieving the right balance of price growth with the volume of sales Profit Guidance FY14 NPBT $20 million $22 million underpinned by carried forward sales Strong balance sheet Strong balance sheet and prudent gearing Capacity and resolve to fund further acquisitions Acquisitions Target is to build a 5 year development pipeline comprising a mix of short and long term projects Dividend Fully franked interim dividend of 6 cents per share declared Board intention to pay a final dividend in excess of 6 cents per share for FY14, pending the Company s results for the full year Residential property company positioned for growth 8

9 Annexures Cash flow Results Overview Settlements Results Overview Sales Development Portfolio Map Acquisitions Development Portfolio Table Active Projects 2H14 Share Register Other Revenue & Share of Profit Villa Worlds Competitive Advantage 9

10 Cash flow 1HY14 ($m) Cash flows from operating activities Receipts from customers (inc. of GST) 99.2 Payments to suppliers and employees (inc. GST) (86.9) Cas h generated from operating activities 12.3 Payments for land acquired (40.9) Interest received 0.3 Interest paid (2.4) Borrowing costs (0.1) Net cash (outflow) / inflow from operating activities (30.8) Cash flows from investing activities Payments for PPE (0.4) Loans to related parties (0.5) Net cash (outflow) / inflow from investing activities (0.9) Cash flows from financing activities Proceeds from borrowings 7.0 Repayments of borrowings (8.0) Proceeds from issue of share capital 32.2 Transaction costs of issue of shares (1.4) Net cash inflow / (outflow) from investing activities 29.8 Net (decrease) / increase in cash and cash equivalents (1.9) Cas h and cash equivalents at the beginning of the financial year 15.4 Cash and cash equivalents at the end of the half year

11 Results Overview Settlements Accounting Settlements (% lots by Project) Accounting Settlements (% lots by Product) Other 23% Cascades 25% East Ridge 5% Augustus 6% Mt Cotton 7% Brookside 15% Park Vista 19% Land Only 42% Contract Build 4% House and Land 54% In the previous corresponding period, 67% of accounting settlements were Land Only, 27% were House and Land and the balance was contract build. 11

12 Results Overview - Sales Sales by State Sales by Half FY11 FY12 FY13 1HY14 0 FY11 FY12 FY13 1HY14 QLD VIC NSW 1H 2H Sales have been strong in 1H14 as a result of the continued execution of the sales and marketing strategy introduced in FY13, combined with the general increase in consumer activity in the property sector. Sales were strong across all three states. Queensland remained the dominant contributor to 1H14 sales, it s 61% share of sales derived from 12 projects The two Victorian projects accounted for 27% of sales (up from 13% in FY13). First Light project in New South Wales represented 12% of sales. Cascades on Clyde (VIC) and Park Vista (North Brisbane, QLD) continued to be the strongest performing projects in 1H14. New projects at First Light (Tweed Coast, NSW) and Astonbrook (Carindale, QLD) also greatly benefited sales. Queensland projects Brookside (Ormeau), Circa (Nudgee), Mount Cotton Estate, (Mount Cotton) and recently acquired East Ridge (Thornlands) continued to perform consistently well, however regional projects remained subdued. Sales at Little Creek (Gladstone) continue to be weak with new sales strategies (though in early stages of implementation), achieving limited success, as the Gladstone market has reacted to a slowdown in the broader resource sector. Sales levels at Cascades on Clyde remain at a pleasing level, as a result of increased demand from the retail market for the traditional land only product. Some success has been experienced at the Eynesbury project in Victoria s west in recent months, principally through the implementation of a revised pricing strategy. 12

13 Development Villa World s portfolio is diversified across: State (QLD, NSW, VIC); Product (land only, house and land, and integrated housing); Ownership (wholly owned, joint ventures and vendor terms). Minimal project based risk all developments with planning approval no foreseeable issues around ability to put product on the ground. 13

14 Acquisitions Project Name Location State Product Acquisition Size First First Date 1 (# Lots) Production Sales Status Astonbrook Carindale QLD LO Jul H15 1H14 Cash recycled within 11 months First Light Casuarina NSW LO May H14 2H13 Cash recycled within 11 months East Ridge Thornlands QLD H&L Nov H14 2H13 Stage 1 being sold and produced Waterline Thornlands QLD LO Aug H15 2H14 Acquisition settled Sep 13 ERA Capalaba QLD H&L Aug H15 2H14 Acquisition settled Dec 13 Cardinia Views Pakenham VIC H&L Dec H15 1H15 Acquisition to settle 2H14 Park View Emerson Park VIC H&L Dec H15 2H14 Sales commenced Jan 14 TBA Roxburgh Park VIC H&L Dec H15 1H15 Product development phase Acquisition date is the date the contract became unconditional. 14

15 Development Portfolio Location 31 Dec 13 1 Project Name Region Status Year Acquired Suburb State Total Lots Lots Remaining Contri bute to FY14 Profit Price Point Land Ca scades on Cl yde 2 S E Melbourne Clyde VIC Construction LO $180k+; H&L $380k Little Creek 2 Gladstone Kirkwood QLD Construction LO $220k+; H&L $420k+ Longhill Rise 3 S E Queensland Gilston QLD Mature to be sold englobo First Light N NSW Casuarina NSW Construction $360k+ Astonbrook S E Queensland Carindale Construction $485k+ Waterline S E Queensland Thornlands QLD Development Approval $300k+ Subtotal House and Land Augustus 5 Hervey Bay Hervey Bay QLD Construction $310k+ Bay Road S E Queensland Burpengary QLD Construction $375k+ Mt Cotton Village 4 S E Queensland Mt Cotton QLD Construction LO $220k+; H&L $420k+ Ci rca S E Queensland Nudgee QLD Construction $540k Brookside 4,6 S E Queensland Ormeau QLD Construction ex nursery LO $180k+; H&L $360k+ Park Vista 4 S E Queensland Mango Hill QLD Construction LO $195k+; H&L $380k+ East Ridge 4 S E Queensland Thornlands QLD Construction LO $255k+; H&L $470k+ ERA 4 S E Queensland Capalaba QLD Construction LO $250k+; H&L $450k+ TBA 8 N Melbourne Roxburgh Park VIC Development Approval TBA Parkview 8 W Melbourne Truganina VIC Development Approval TBA Cardinia Views 7 S E Melbourne Pakenham VIC Development Approval TBA Subtotal

16 Development Portfolio Project Name Region Location Status Year Acquired 31 Dec 13 1 Contribute to Price Point Suburb State Total Lots Lots Remaining FY14 Profit Integrated Housing The Domain Hervey Bay Hervey Bay QLD Mature $260k Circa Metro S E Queensland Nudgee QLD Construction $400k Little Creek Parkside Gladstone Kirkwood QLD Construction $200k Park Vista Orana S E Queensland Mango Hill QLD Construction $350k Subtotal Total (wholly owned projects) Joint Ventures (50% share) Eynesbury 9 W Melbourne Eynesbury VIC Mature Subtotal Total (all categories) Lots remaining at 31 December are amended for the Eynesbury sale. 2 Predominantly land only. 3 To be sold englobo. 4 Predominantly house and land. 5 Weak current and forecast trading conditions have prompted a change in the long term strategy at this project. Stages 6 13 to be sold as an englobo parcel. 6 Brookside was originally operated as a nursery to supply plants to VW projects. In August 2011 development commenced. 7 Contracted in December Settlement due in 2H Contracted in December 2013 under Put and Ca ll. Land paid out of settlement proceeds. 9 50% of Stock on Hand in current stages at 31 December 2013, which are excluded from the Eynesbury sale. 16

17 Active Projects in 2H14 Delivery of sold out projects Ongoing sales and construction First Light Project (67 lots) largely sold out. Production and settlements due 2H14. Cascades on Clyde Current stages to sell out in 2H14. Production in 2H14/1H15. Last stage 31& 33 (43 lots) to be released 2H15. Astonbrook Project (47 lots) largely sold out. Production and settlements due 1H15. Brookside Project (107 lots) largely sold out. Project fully settled 2H14. The Domain Project (81 lots) largely sold out. Project fully settled 2H14. Eynesbury Selling remaining stock on hand. Stock on Hand fully settled 1H15. Park Vista Existing stages (4, 8 & 9) (108 lots) selling well; Production ongoing through to 1Q15. Remaining stage 5 7 (148 lots) to be released FY15 & 16. Mt Cotton Village Selling out existing stages. Production of stage 10 due 2H14/1H15. Stage 11 (43 lots) to be released 4Q14. East Ridge Now selling stage 1 (31 lots). Stock largely on the ground. Stage 2 (34 lots) to be released 2H14. Production 1H15. Circa Existing stages 5& 7 (63 lots) largely sold out. Production due 2H14. Final stage 6 (32 lots) to be released 2H14. Production due 2H14/1H15. Circa Metro Stage 1 (26 townhouse lots) released for sale 2H14. Production due 1H15. Augustus Now selling Stage 14 (49 lots). Production due 2H14/1H15. ERA Stage 1 (37lots) selling commence 4Q14. Production due 1H15. Waterline Stage 1 (35 lots) sales commence 4Q14. Production due 1H15. Bay Road Now selling Stage 3 (26 lots). Production due 2H14/1H15. Little Creek Continuing to market existing land only and house and land stages. Little Creek Parkside Park Vista Orana Future development pending demand. Stage 1 (22 townhouse lots) released for sale 4Q14. Production due 1H15. 17

18 Share Register Shareholders (28 Feb 2014) Directors, 1.4% CVC, 15.6% Other, 32.1% Unisuper, 5.7% Contango, 5.1% (1) As at 28 February 2014, 68% of shares are held by the top twenty shareholders. Leaver, 5.5% Other Top 20(1), 34.7% 18

19 Other Revenue & Share of Net Profit from Equity Accounted Investments 1HY14 ($m) Revenue 93.8 Other Revenue: 2.8 Revenue from related joint ventures Rental revenue 0.0 Interest revenue 0.3 Rebates received Other revenue 0.1 Other Share of net profit / (loss) of associates and joint ventures accounted for using the equity method As the project manager, Villa World receives a project management fee of 2.2% (inclusive of GST) plus a commission on the sales price of 100% of lots sold at this project. This amounted to $0.36 million for the half year. The sale of Eynesbury allowed Villa World to record a one off project management fee on the contract of sale of the Eynesbury project ($1.32 million plus GST), as well as record the unwind of a fair value adjustment ($0.56 million). 2 This is a rebate from Telstra. There may be a small rebate in 2H14 and negligible thereafter. 3 Comprises the reversal of the previous impairment of $0.7million in the equity accounted investment in the Eynesbury Township joint venture. This impairment reversal is based on a review undertaken of the net realisable value of the stock on hand of the Eynesbury Project. The balance is the operating profit generated by the Eynesbury development through the development and sale of stock on hand. 19

20 Villa World s Competitive Advantage Systematic build out of complete stages Buying and selling within one cycle Projects typically short to medium term Not exposed to large movements in underlying value of inventory Maintains cashflow and ability to recycle capital Core product in low to mid price point Fully constructed and landscaped homes at an attractive price point Land in growth areas, close to transport, employment and amenities Results in less variability in demand and more downturn resilient buyers Villa World speculatively builds out complete stages of a project, therefore selling a completed community feel, significantly benefiting sales Controlled build able to stop/start Large reduction in construction cost Strong cashflow, high growth business Efficient marketing process Broad and diverse sales platforms Strong presence within target markets Pricing and product design continually reviewed to meet needs of individual market segments No variations offered to base product Far more efficient planning and build process No requirement for additional back office staff significant reduction in fixed overhead costs Acquiring only zoned land in established markets Villa World only acquires zoned land that in majority of cases is DA approved Minimises risk and allows faster project completion/capital recycling 20

21 DISCLAIMER Villa World Limited (ABN ) and its subsidiaries (collectively Villa World ) has made every effort to ensure the accuracy of information contained in this presentation. The presentation has been prepared based on information available to Villa World at the date of this presentation. No responsibility or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of Villa World, its related bodies corporate or any of its directors, employees, agents or advisers accept any liability for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it, including, without limitation, any liability arising from fault or negligence on the part of Villa World, its related bodies corporate or any of its directors, employees, agents or advisers. The material contained in this presentation is for information purposes only and does not constitute financial product advice. The information contained in this presentation has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. Before making any investment decision, you should consider, with or without the assistance of a financial adviser, whether an investment is appropriate in light of your particular investment needs, objectives and financial circumstances. Nothing in this presentation is a promise or representation as to the future. Statements or assumptions in this presentation as to future matters may prove to be incorrect and the differences may be material. 21