2012 Annual General Meeting Address - Villa World Group

25 October 2012
ASX Announcement
ANNUAL GENERAL MEETING - ADDRESS
Please find attached address to shareholders to be delivered by the Chairman and Managing
Director at Villa World Group’s Annual General Meeting (“AGM”) today.
The results of the meeting will be communicated to the market shortly after the conclusion of the
AGM.
Enquiries to:
Louise Edwards
Company Secretary
Villa World Limited
securityholder@Villaworld.com.au
Villa World Group: Level 1 Oracle West, 19 Elizabeth Avenue, Broadbeach QLD 4218
Securityholder queries: Email: securityholder@villaworld.com.au; Website: www.villaworldgroup.com.au
Share Registry: Computershare Investor Services
Online: www.investorcentre.com; By mail: GPO Box 2975, Melbourne VIC 3001
Tel: (within Australia) 1300 651 684: (international) +61 3 9415 4000

CHAIRMAN AND MANAGING DIRECTOR’S ADDRESS
2012 ANNUAL GENERAL MEETING
This is my first AGM as Chairman and Managing Director and I am proud to have joined a Company with
such a strong history.
[SLIDE 4 – INTRODUCTION]
2012 marked Villa World’s 25 th year in developing land and creating contemporary family homes in
communities along Australia’s eastern states.
This year continued this proud history with 13 active projects across Queensland and Victoria and a future
development pipeline of over 4,600 lots.
[SLIDE 5 – 2012 OPERATING RESULTS]
During the 2012 financial year, Villa World continued to meet the challenges of a difficult market and
delivered a net profit after tax of $8.2 million. Whilst this result represents a 39% decrease on 2011, the
prior year benefited from a number of one-off adjustments. However, the underlying operating profit
before tax, based on core operations, was $9.6 million which was a 5.4% increase on 2011. This increase
was driven primarily by the settlement of sales at our Cascades on Clyde project in Victoria, together with
two new Queensland projects making a significant contribution to revenue for the first time.
Overall, revenue for the financial year was $146.5 million, a 32% increase on the prior year, with a total of
585 lot settlements. In total, 12 projects contributed to revenue in 2012.
This increase in settlements, revenue and underlying operating profit, at a time when Australia’s new
housing market is at a cyclical low point is testament to the quality of the people at Villa World and the
underlying strength and value of our business and product.
[SLIDE 6 – MARKET REVIEW]
Overall the total number of sales at our Queensland projects was up 58% on 2011. Villa World’s Little Creek
development in Gladstone performed extremely well, given that area’s exposure to the energy sector. Two
new Brisbane based projects also contributed positively, with the remaining Queensland projects performing
in line with last year.
Market conditions in Victoria were not as positive and continued to soften during the year, with revenue
performance primarily attributable to the Cascades on Clyde project and the large number of sales carried
forward from the previous year.
[SLIDE 7 – PROJECT DIVERSIFICATION]
It is precisely this geographic and project diversity that has enabled the Group to maintain consistent sales
levels across varying market conditions over the past few years. With projects stretching across multiple
markets and multiple states we have been able to ride the peaks and troughs better than some of our peers
who were exposed to just one or two markets of the residential property cycle in recent times.
Further, despite the extremely competitive environment we have been in, Villa World achieved a gross
margin of 25% for the year, down slightly from 28% in 2011.
Looking forward, Villa World has minimal project-based risk with all developments having achieved the
necessary approvals and there are no foreseeable issues around our ability to put product on the ground. At
30 June 2012, we had more than 4,600 lots in our development pipeline, representing more than 9 years of
supply at 2012 sales rates.
[SLIDE 8 – CAPITAL MANAGEMENT]
We continued our focus on capital management during the year, with a focus on maintaining a conservative
balance sheet as well as continuing the on-market share buy-back.
The financial results for the 2012 year were achieved while maintaining a conservative approach to debt,
with a year-end gearing ratio of just under 28%. With this modest gearing level, Villa World is in an excellent
position to take advantage of acquisition opportunities in the current soft market conditions.
The Board believes Villa World’s shares remain significantly undervalued at current market prices, trading at
less than 40% of their stated net tangible asset (‘NTA’) backing. Therefore, we continued the on-market
share buy-back during the year as we believe this is an appropriate use of capital at this time. Over 2012, the
shares bought back were accretive to NTA by 12.6 cents per share.

Managing Director’s Address – 2012 Annual General Meeting
Page 2
Therefore, whilst the trading price of the company’s shares remains at such a deep discount to NTA, the
Board believes continuation of the on-market buy-back represents greater medium term value to
shareholders than the payment of dividends. This is reflected in Item 6 on the agenda for today, where the
Board is seeking shareholder approval to buy-back up to a further 15 million shares over the next 12
months. As to whether the Company will in fact buy-back that many shares will depend on market
conditions, other investment opportunities and the trading price of the Company’s shares. However, the
Board is seeking approval to buy-back a maximum of 15 million shares to provide it with flexibility in its
approach to capital management over the next 12 months.
During the year we also sold the final investment asset held by the Group. The sale price was at a $650,000
discount to carrying value. This sale now allows completion of the final steps of the corporatisation which
was approved by shareholders at the last AGM and orients Villa World back to its core business of land, and
house and land products.
[SLIDE 9 – OUTLOOK]
Now turning to the outlook for the coming year, we have a well-balanced, diversified and mature portfolio of
projects. Our projects in Queensland provide us with the most confidence of consistent sales in the current
financial year while our Victorian projects are expected to provide us the greatest challenges. We have
developed strategies to address conditions in those markets we believe may continue to be challenging.
The overall recovery of the property market in terms of timeframe, volume and price is difficult to determine,
and there are currently too many variables to enable us to provide any profit guidance for the 2013 financial
year.
As part of our regular review of carrying values of the projects, we anticipate some level of impairment will be
required given the current state of the property market. However, it is too early in our review to provide any
guidance.
[SLIDE 10 – BOARD AND MANAGEMENT]
Since joining Villa World in February this year, I have been encouraged by the quality of the projects and the
strength of the management team.
I also want to express the Board’s sincerest appreciation to both John Potter and Richard Anderson, who
have retired in the last month, for their years of service to the Company.
John Potter served on the Board of Villa World for over 12 years, and was CEO from 2000 to 2003 and then
Managing Director from March 2011 to earlier this month. Through those years the Company successfully
navigated many significant shifts in the property market and John’s experience was a great asset to the
Group. I also want to acknowledge Richard Anderson’s 10 years of service to the Company, including his role
as Chairman for 5 of those years. Richard served the Company through some challenging times over that
decade.
With John’s retirement, I have been given the honour of being appointed Managing Director and Executive
Chairman. I am looking forward to continuing to build on the 25 year foundation that underpins Villa World’s
business.
I thank the Board for their support and guidance throughout the year and our staff for another outstanding
effort over the last 12 months.
I would also like to thank you, our shareholders, for your loyalty and ongoing support of the Villa World
Group.
ENDS