Villa World Group 2013 Full Year Results [] August 2013

villaworldgroup.com.au

Since 1986

villaworld.com.au

Since 1986

23 October 2013

Villa World Limited Experience | Agility | Efficiency

Presentation for Focus on Australian Property Forum

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• Introduction

• The Villa World Difference

• Our Business Model • Sales • Delivery • Acquisitions • Capital Management and Cash Flow

• In Summary

• Looking Forward

• Annexures

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INTRODUCTION Craig Treasure – Executive Chairman & Managing Director

• 30 years house and land development experience

• Licensed Surveyor

• Private development consultancy and development business

• Public development companies

• Joined Villa World Board 17 February 2012

Experience, agility and efficiency 3

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Residential property group positioned for growth 4

Introduction to Villa World

Villa World’s target market

Australia’s property pyramid

• Leading residential property company positioned

for growth, established in 1986.

• Lower risk profile as land and housing offering

only

• Consistent sales = reliable cash flow each week

• Quality contemporary family homes in popular

locations - fully constructed, landscaped, ready

to live in

• Affordable product offering (< ~$500,000)

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Strong financial platform for unlocking shareholder value 5

Introduction

$110.8 $146.5 $169.40

$-

$50.0

$100.0

$150.0

$200.0

FY11 FY12 FY13

Revenue

267 318 468 1 138 267

178

0200400600800

FY11 FY12 FY13

Accounting settlements by state

QLD NSW VIC

Financial Performance FY13

• 16% increase in revenue FY13 from $146.5M to $169.4M

• 17% increase in underlying operating profit for FY13 to $11.2M

• 10% increase in settlements in FY13 to 646

• NTA of $1.85 per share (31 Dec 2012: $1.76 per share)

• FY13 one-off impairments $25.6M

• Accurate reflection of group assets

• Eynesbury sale

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Shareholding • CVC’s shareholding - 21.98%1

• Top 20 shareholders – 62.43%1

• 80M shares on issue – Market Cap $142 million (as at 17 October 2013)

• Share price growth of $1.00 since 1 October 2012 (129%)

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VLW Share Price 1Jul 12 - 17 Oct 13

• Existing − Craig Treasure

Executive Chairman & Managing Director − Troy Harry Non-Executive Director − Sandy Beard

− Non-Executive Director

• Future Composition − Majority independent, property experience

Board

Strong corporate governance and leadership 1 as at 17 October 2013

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Capital raising to help find growth and drive shareholder returns 7

Introduction

23.5% 27.6% 24.7%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

FY11 FY12 FY13 (f)

Gearing

Actual Max Min

Debt Facility

• $110M facility extended to 1 Sept 2016

• Overall cost of debt FY13 of 7.7% (FY12: 8.5%)

• Net debt of $55.7M as at 30 June 2013 (31 Dec 2012: $65.6M)

• Net gearing of 24.7% as at 30 June 2013 (31 Dec 2012: 28.5%)

• Effective debt facility allowing projects to commence

• $44.7M headroom (cash on hand and facility) at 30 June 2013

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Affordable housing solutions 8

THE VILLA WORLD DIFFERENCE

• Australia’s housing affordability problem

• Affordable housing solutions • Contemporary family homes in low to

middle price bracket Mass market appeal Volume market price point Standardised inclusions and options

• “Model T Ford” of housing industry • Integrated land developer and home

builder • Wholesale or volume builder

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Talented team able to efficiently and flexibly develop and manage diverse projects

OUR BUSINESS MODEL

Delivery

Acquisitions

Capital Management

Sales

Streamlined and efficient

business Model

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Broad sales strategy with focus on each market segment 10

Sales Success

1064

731 923

497 496 610

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FY08 FY09 FY10 FY11 FY12 FY13

Sales

• FY13 total sales of 610; up 23% on FY12

• Broad sales strategy implemented in 2013 focusing on a number of market segments

• New marketing initiatives increased the mean rate of sale from 42 per month in 1H13 to 59 per month in 2H13

• Carried forward $80.8M sales (217 lots) into the 2014 financial year

• 231 sales, worth $82.5M, recorded in July to Sept 2013

• First home buyers • Traditional buyers • Empty nesters downsizing • Domestic and international

investors

Targeted national and international programs underpin sales success

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Broad sales strategy with focus on each market segment 11

Sales

• What’s Driving Sales • Diverse product mix and geographic

spread

• Lower interest rates

• Government’s First Home Buyer Grants

• Improving consumer confidence

• Well priced product

• Positive Momentum Expected to Continue

• Fundamentals not expected to change

• Target 1000 sales p/a (similar to 2008)

• Ambassadors Club

• Customer Service

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Customer Feedback

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Scalable business model – flexible, agile and disciplined approach to delivery 13

Delivery

• Strong delivery skills o Design and development approvals

o Civil construction

o Housing construction

• Systemised process of producing pre-built turnkey house and land packages

• Ability to scale delivery on demand

• Lean organisation o ~65 staff

o Sub-contract building underpinned by a strong collaborative culture

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Development Portfolio

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Case Study – Park Vista , Mango Hill • Park Vista is a 533 lot development which

was acquired1 in July 2010.

• The project is located in South-East Queensland, 27km from Brisbane CBD.

• The project consists of 425 predominately house and land lots and 108 townhouse lots. The project is forecast to be completed and sold out by June 2017.

• Six stages have been released since CY2012. Over the last 20 months, 70%2 of the lots released for sale have been sold.

• Average monthly sales rate has increased from 9 lots to11 per month with a strong last 6 months to August 2013.

• Project was Vendor financed with delayed payments to Vendor over time. Vendor has been paid in full effective July 2013. This allowed efficient use of capital for other acquisitions and working capital requirements. 1. Acquired being the date the sale contract became unconditional. 2. To date 243 lots have been released for sale and 171 lots have been sold. Cash settlements have been completed on 127 lots.

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Growing our pipeline through targeted acquisitions and joint ventures 16

Acquisitions

Portfolio • 2,647 lots under control as at 30 June 2013

• 3 to 4 year supply

• No long dated projects or land banking

• Low risk DAs in place

Acquisitions strategy • Detailed feasibilities - no escalation

• Focus on capital efficiency and maximising shareholder returns

• Targeting zoned land that has DA approval

• Targeting 2 to 5 year return of capital and profit

Current market opportunities

• Acquired 578 lots since July 2012 with DA’s

in place and short lead times.

• Targeting south east Queensland,

Townsville, Melbourne and Sydney

• Partnering through joint ventures

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Case Study

• 67 lot development acquired May 2013

• Released for sale in June 2013 • 47 lots sold and 10 EOI’s1

• Civil works started August 2013 • Cash settlements expected May/June

2014 • Good example of strategy to recycle

capital over a short term.

Efficient deployment of capital 17

1 As at 2 October 2013

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Strong, stable, regular cash flow diversified across 3 states and 14 projects 18

Capital Management and Cash Flow Equity

• Completed fully underwritten institutional placement to raise $27.2M in Sept 2013

• Completed non-underwritten Share Purchase Plan to eligible shareholders for up to $15,000 worth of shares per shareholder, capped at $5M

• Capital raising will help fund growth and drive enhanced shareholder returns

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$5m

$10m

$15m

$20mMonthly Cash Settlement Receipts

Cash Receipts

Average MonthlyReceipts

Cash flow • Net operating cash flow FY13 was

$17M

• Revenue received $169M FY13 and cash received $163M – regular sales, regular settlements, regular cash flow (average $13.5M per month and growing)

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IN SUMMARY

Villa World Difference

• Affordable housing

• Turnkey homes

• Wholesale building

Sales

• Broad sales program

• Market stimulus

• Strong results

Introduction

• House and land

• Low risk

• Experienced, agile

and efficient

Capital

• Strong equity

• Debt facility

• Target return 2-5 years

Acquisitions

• 578 lots acquired since

July 2012

• 3 state strategy

• Partnering opportunities

Delivery

• Land development

• House building

• Scalable business

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Investment in building and maintaining long-term relationships with stakeholders and suppliers 20

LOOKING FORWARD

• Guidance

− Assuming the positive momentum in general economic and company specific conditions continues, Villa World is targeting an operating profit before tax in the range of $12M to $14M

• Dividends

− Current intention of the Board to recommence dividends, with an interim dividend expected to be paid in April 2014

− $19.1M of franking credits

− Unused tax losses of $45.5M carried forward

• Annual General Meeting

− AGM scheduled for 30 October 2013

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QUESTIONS

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Annexures

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Board and Management • Strong corporate governance and proven industry

leadership at Board level:

— Craig Treasure — Managing Director and Executive Chairman

— Alexander (Sandy) Beard — Non-Executive Director

— Troy Harry — Non-Executive Director

• Talented and experienced team of property, legal and financial professionals able to efficiently develop and manage diverse projects: —Paulene Henderson

—CFO / Company Secretary —Scott Payten

—Chief Operating Officer —Bradley Scale

—General Counsel —Peter Tuttle

—National Building Manager

Left to Right – Sandy Beard, Craig Treasure, Troy Harry Left to Right - Peter Tuttle, Scott Payten, Craig Treasure,

Paulene Henderson, Bradley Scale

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Management Structure

Executive Chairman Managing Director

Craig Treasure

Chief Financial Officer/ Company Secretary Paulene Henderson

General Counsel Bradley Scale

Chief Operating Officer Scott Payten

Finance IT

Support staff QLD – 18 VIC – 1

Development Acquisitions

Sales & Marketing Support staff

QLD – 14 VIC – 5

National Building Manager Peter Tuttle

Designers Estimators

Support staff QLD – 6

Site Managers QLD – 10 VIC – 1

Efficient management structure with limited requirement for back office process / low fixed cost due to Villa World’s model of offering no build variations.

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Key Operational Metrics • Key operational metrics trending positively, driven by improved confidence in the residential

property market and the successful implementation of Villa World’s operational processes and marketing strategies.

FY13 FY12Group Group

Sales1 (lots) 610 496

Queensland remained Villa World's key market in FY13, with 525 sales. Queensland sales have grown 36% over the previous corresponding period benefitting from relatively new projects Park Vista and Brookside, as well as continued strong performance at Mt Cotton. Victoria recorded 78 sales, with a strengthening second half.New South Wales recorded 7 sales from the recently launched First Light (Casuarina) project.

23.0%

Settlements2 (lots) 646 585

Settlements remain weighted towards Queensland, with 468 settlements in Queensland versus 178 settlements in Victoria (inclusive of 50% share of Joint Venture settlements). Victorian settlements benefitted from significant sales in the prior year.31 contract build settlements contributed to profit for the first time.

10.4%

Revenue - property sales ($m) 169.4 146.5Improved revenue reflects the increase in accounting settlements due to $58 million in carried forward sales from FY12 and strong sales in FY13.Carried forward sales for FY13 has improved to $81million.

15.6%

Revenue - other ($m) 2.1 3.6 Decreased due to the completion of the Treeline Joint Venture in FY12. -41.8%

Gross margin ($m) 47.0 37.0 27.2%

Margin (%) 27.7% 25.2% 10.0%

Mean rate of sale pcm 50.8 41.3New marketing initiatives to the domestic and international investor market, as well as the First Home Buyer market saw the mean rate of sales rise from 42.2 per month in the 1H13 to 59.5 per month in the 2H13.

23.0%

Number of projects contributing to profit 13 12

13 projects contributing to profit, including new projects Brookside and Burpengary, and contract build.

Performance Key Drivers Change

The sell out of poor performing projects in FY12, and stable margins over the balance of the portfolio have resulted in an overall margin increase compared to prior year.

1. Sales – executed contract of sale 2. Accounting Settlements – In QLD and VIC, requires an unconditional contract and either the land is registered or where there is a house, a certificate of

completion is held. In NSW, when the land / house and land, cash settles.

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Financials FY13 ($m) CPS2

Statutory net loss after tax (13.5) (18.2)Underlying operating profit before tax1 11.2 15.2

Balance Sheet FY13 ($m) CPS3

Assets

Cash 15.4 20.9

Receivables 27.4 37.2

Inventories 169.3 230.2

Investments accounted for using the equity method 13.7 18.6

Other 14.9 20.3

Total Assets 240.6 327.2

Liabilities

Trade and other payables 26.1 35.4

Interest bearing liabilities 71.0 96.6

Other 7.4 10.1

Total Liabilities 104.5 142.1

Net Assets 136.1 185.1

Net tangible assets 136.1 185.1

Gearing4 24.7%

• Unused tax losses of $45.7 million carried forward

• $19.1 million franking credits

1. Underlying operating profit before tax, fair value write downs and impairments and non recurring one off discontinued operation expenses (unaudited), reflects the statutory profit as adjusted in order to present a figure which reflects the Director’s assessment of the result for the ongoing business activities of the Villa World Consolidated Group.

2. Based on weighted average shares on issue of 74,107,715 3. Based on shares on issue as at 30 June 2013 of 73,538,863 4. (Interest bearing liabilities – Cash) / (Total assets – Cash)

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DISCLAIMER _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Villa World Limited Villa World Limited (ABN 38 117 546 326) and its subsidiaries (‘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.

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