How Did VLW Perform In The First Half Of FY2019?

Villa World Limited (ASX:VLW), a company from the real estate industry group and into the business of developing affordable residential communities within Queensland, New South Wales and Victoria, has announced its half-yearly results to 31 December 2018.

During the period, the company reported a statutory net profit after tax of $17.6 million. The earnings per share stood at 13.9 cents per share. The company declared a fully franked interim dividend of 8 cents per share (FY18 Final dividend: 10.5 cents per share).

The company highlighted that there were only 611 wholly owned settlements in the first half of FY2019 which generated a revenue of $232.7 million. The gross margin reported during the period was $57.2 million or 24.6% which was within its guidance range of 23-25%, as compared to $48 million or 23.7% in 1 HFY18.Â

During the first half of the FY2019, the company organize development management skills into joint venture arrangements where it received $1.2 million in the form of fee income.

During the period, the total sales (517) were down by 30%. In the first quarter, the demand for the core products of the company which included affordable land and housing in the growth corridors were as per the expectations. However, in the second quarter, the residential housing market conditions and customer sentiment declined as the customers experienced a shortage in the availability of the finance. There was a delay in the finance approvals due to stringent assessment criteria followed, which coupled with reduced borrowing capacity was the reason for fall in the sales and enquiries in late 2018.

Based on the previous sales results, the company has strengthened its sales strategy in 2H FY2019 which aims value offering in the affordable housing sector.

In 2H FY2019, the company will carry forward a sales contract worth $340.4 million. Amongst them, 30% of the contracts are expected to settle in the second half of FY2019, and the remaining 59% will be settling in FY2020.

By the end of half a year of FY2019, VLW made a profit of A$17.623 million. The net asset base during the period was A$289.996 million. The accumulated losses during the period were A$429.516 million. The total shareholders’ equity was worth A$289.996 million.

During the period, the company generated a cash inflow of A$85.360 million through its trading activities. Here, the cash inflow was through the receipts from customers. However, it also made payment to suppliers and employees. The company also made payment for land acquisition, paid interest, GST and corporate tax. As a result, the net cash inflow from the operating activities was $46.677 million.

The company made payment for property, plant and equipment as well as on equity accounted investments. It also received distributions from equity accounted investments, and sale of property, plant and equipment. It resulted in the net cash outflow of $7.751 million from the investing activities.

There was a net cash outflow of $41.809 from the financing activities. By the end of first half of FY2019 on 31 December 2018, the net cash and cash equivalent with VLW was $9.762 million.

By the closure of the trading session on 13 February 2019, the closing price of the share was A$1.940, which was up by 5.435% as compared to previous trading day’s closing price. The stock is currently trading at A$1.950 (as at 1:00 PM AEST, 14 February 2019) with a market capitalization of $243.57 million and approximately 125.55 million outstanding shares and a PE ratio of 5.640 x.

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