Asset Sale Masks Villa World Performance
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Medium sized east coast housing developer, Villa World claimed yesterday it is on track to top guidance for the 2017-18 financial year of a 10% rise in earnings, thanks to a recent property sale.
The news came close to the end of trading yesterday and had no real impact on the share price which closed unchanged at $2.18.
The shares are down more than 23% year to date as investors fret about the housing boom cooling into a dangerous slide.
They could go further.
Have a close watch of the shares today because the way the 2017-18 profit target was met looks a bit rubbery and involves a surprise sale of a parcel of land.
Villa World said yesterday in a statement to the ASX that “it was targeting FY18 net profit after tax of $41.6 million, with a number of factors being closely monitored at that time.”
That was after it said with the interim results in February that it was “on track to deliver a full-year forecast profit growth of at least 10% and has set the scene for even stronger performances ahead.”
No mention yesterday of the “stronger performances ahead” but director told the ASX that Villa World “is now pleased to advise that it is expecting FY18 NPAT to be in the range of $42 million to $44 million (subject to audit), inclusive of ~$2.6 million contribution from the recent strategic sale of an englobo parcel (of land).
That is the key - without the $2.6 million from the land sale the company’s profit range would have been a less flattering $39.4 million and $41.8 million. In other worlds guidance would have been missed rather unconvincingly.
"Product delivery and land title registrations were in line with expectations in June 2018. Sales momentum has continued across the house and land sector in which it operates. 1,678 sales were recorded for the full year, with projects selling ahead of expectations particularly during Q418.
"Purchasers continue to gain unconditional finance, albeit over a longer timeframe. As a result, the Company will carry forward significant pre-sales into FY19 and FY20,” directors said.
"The Company continues to target a FY18 dividend of at least 18.5cps fully franked (1H: 8cps; 2H: expected at least 10.5cps).
Vila World said audited results, including full details of the Company’s operational performance for the year and outlook, will be released to the market on Wednesday 15 August 2018.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.