ANNUAL
FINANCIAL
REPORT
FOR THE YEAR ENDED
30 JUNE 2015
SUCCESS
THROUGH
PROPERTY
VILLA WORLD LIMITED ABN 38 117 546 326
SHAREHOLDERS INFORMATION
VILLA WORLD LIMITED
Villa World Limited ABN 38 117 546 326
Level 1 Oracle West, 19 Elizabeth Avenue, Broadbeach QLD 4218
Mailing address: PO Box 1899, Broadbeach QLD 4218
Telephone: +61 7 5588 8888
Facsimile: +61 7 5588 8800
Website: villaworld.com.au
Email: info@villaworld.com.au
Shareholder information and enquiries
All enquiries and correspondence regarding shareholdings should
be directed to Villa World’s share registry provider:
Computershare Investor Services Pty Limited
Mailing address: GPO Box 2975EE, Melbourne VIC 3000
Telephone: 1300 651 684 or +61 3 9415 4000 (outside Australia)
Fax: +61 3 9473 2500 (within & outside Australia)
Website: computershare.com.au
Email: web.queries@computershare.com.au
Villa World Info line
Inside Australia: 1300 552 434
Outside Australia: +61 7 5588 8851
Company Secretary: Paulene Henderson
CONTENTS
Villa World Vision, Mission and Values
Key Highlights
Chairman’s Report
Managing Director and Chief Executive Officer’s Review
Operating Financial Review
Current Portfolio
Directors’ Report
Auditor’s Independent Declaration
Financial Statements
Directors’ Declaration
Independent Auditor’s Report to the Members of Villa World Limited
ASX Additional Information
2
3
4
6
8
14
24
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38
76
77
79
VILLA WORLD VISION,
MISSION AND VALUES
VISION
MISSION
Villa World’s vision is to be the Company of
choice for people to achieve success
through property.
Villa World’s mission is to create property
solutions where demand meets opportunity
as we deliver value and positive experiences
across all our relationships.
VALUES
PERFORMANCE
We efficiently deliver effective
and quality outcomes to achieve financial objectives.
AGILITY
We are agile in how we run the business, we adapt
quickly and initiate change.
INTEGRITY
Our people are accountable,
make ethical decisions and are socially responsible.
KNOWLEDGE
Our team applies high level skills
to achieve positive outcomes.
UNITY
We are a team – we care for and empower our people,
support each other and recognise achievements.
RESPECT
We value and appreciate our people, partners
and customers.
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VILL A WORLD LIMITED ANNUAL REPORT 2015
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KEY HIGHLIGHTS
REVENUE
NET PROFIT
BEFORE TAX
MARKET
CAPITALISATION
DEVELOPMENT
LOTS
32%
40%
Portfolio of 5,191 lots representing
5 years sales diversified across
and within east coast states
20%1
30%
60% 40%
QUEENSLAND
6 CORRIDORS
VICTORIA
3 CORRIDORS
843 SALES FY 2015
Over the last 3 years:
DOUBLED
HOUSE
PRODUCTION
BANKING FACILITY
INCREASED TO
$180M
Unused
facility ($m)
Net Debt (ex bank
guarantee) ($m)
CONSERVATIVE
GEARING OF
With significant headroom / unused capacity
16.9%
FY
15
FY
14
FY
12
FY
13
276
279
425
654
FY
14
75
57
FY
14
FY
15
75
69
FY
15
FY
12
25
71
FY
12
27.6%
FY
13
30
55
FY
13
24.4%
18.7%
Gearing (%)
16.9%
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VILL A WORLD LIMITED ANNUAL REPORT 2015
1 At closing price of $2.24 on 12 August 2015
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3
CHAIRMAN’S
REPORT
2015 has been a year of success and the
Company is now benefitting from the
strategies and vision formulated over the past
three years.
A continued focus on implementation of these
strategies has cemented Villa World’s platform for
delivering strong sustainable performance in the years
to come.
Villa World is entering its 30th year in 2016 and there is
no doubt that we have now come of age. The Company
has a strong stable balance sheet and a five year
project pipeline centred on high demand locations,
setting it up for performance through the property
cycles.
On behalf of the Board, I am pleased to report a
statutory after tax profit of $25.6 million for the year, up
34% from $19.1 million last year. This result comes off the
back of a 40% increase in revenue to $322 million.
The Company has a market capitalisation of $247
million1, around four times that of three years ago.
This strengthening was acknowledged in March 2015
with Villa World’s inclusion in the S&P/ASX300 index.
Villa World’s credibility and reliability continues to
translate to steadily growing dividends. The Board has
declared a total dividend of 16 cents per share fully
franked for the year, representing an attractive yield
for shareholders of 7.1%1.
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“
The Company has a market capitalisation of $247 million1, around four
times that of three years ago. This strengthening was acknowledged in
March 2015 with Villa World’s inclusion in the S&P/ASX300 index. ”
The strategic direction outlined by the Board and led
capably by Managing Director and Chief Executive
Officer Craig Treasure has been successfully
delivered by Villa World’s experienced and proven
senior management team. We have continued to be
disciplined and focussed on our core business of low
risk development of lots and housing in the affordable
to mid-market range.
This approach has delivered strong sales in FY15,
particularly in South-East Queensland, and
established an increasingly diverse market platform
encompassing first home and traditional buyers,
investors and a growing down-sizer market. Coupled
with a continued positive market outlook, Villa World
is well positioned through its strategically located
portfolio, strong balance sheet and prudent gearing
to be resilient to cyclical market factors.
As the oldest Queensland founded ASX-listed housing
development company and one of Australia’s largest
land and housing providers, Villa World looks forward
to celebrating 30 years as a listed company
in 2016 by reaching for the next level.
We have the fundamentals in place to maintain
earnings momentum and the capacity to fund value
accretive acquisitions and restock in key growth
locations, underpinning our future profitability.
I would like to acknowledge the valuable contribution
of my co-independent directors David Rennick and
Gerry Lambert, along with our Managing Director and
Chief Executive Officer Craig Treasure and his team.
As more and more Australian families choose Villa
World to deliver their new homes, we look forward to
sharing success through property in the years ahead.
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Mark Jewell
Chairman
1 At closing price of $2.24 on 12 August 2015
MANAGING DIRECTOR
AND CHIEF EXECUTIVE
OFFICER’S REVIEW
Villa World is proud to be a part of the lives
of more than 35,000 Australians and to
share success through property.
Our strong financial performance in FY15 stems from
a clear and deliberate focus on the key principles
of relationships – delivering a positive experience,
performance – sustained sales, a balanced portfolio
and a disciplined approach to delivery, and growth
– achieving a step change, underpinned by a strong
development pipeline and targeted acquisitions.
I acknowledge the work of the Villa World team in
supporting the Company’s direction through their
dedication and enthusiasm. We have been working
hard behind the scenes to create the right culture and
structure to reflect our customer focused attitude.
We are now seeing the benefits of this approach
across the four pillars of our business:
PORTFOLIO
Our acquisitions strategy has been a success.
We have more product across more markets and a
broader price point. Our portfolio of 5,191 lots is up
from 2,647 two years ago and an increase of 32% on
lot numbers from last year. Importantly, these lots are
located within strong growth corridors in Victoria and
in the buoyant Queensland market where our housing
production doubled over the last three year.
DELIVERY
Through the strength of our operations and our
long-term relationship with subcontractors, we
have successfully ramped up our outputs, delivering
24% more product in FY15 than we have on average
over the three previous years. Importantly, we have
doubled our house production over that time.
In FY15, we delivered 840 new home sites and
built 654 new homes.
Our eight projects released in FY15 attracted strong
demand, particularly in Queensland which accounted
for 81% of sales this year. Continuing supportive
market conditions will reflect the success of our
projects in Brisbane’s north and bayside and in the
south-eastern and northern growth corridors
of Melbourne.
SALES
We have put in place a number of strategic initiatives
to stretch the price offering and better target
customers. This refocussed sales growth strategy has
centred on meeting the needs of a diverse customer
mix across all ages and stages of life.
We are selling more properties and converting those
sales into settlements, resulting in a 40% increase in
revenue and contributing to our 30% increase in net
profit before tax (FY15:$29.4 million).
Villa World’s ability to achieve delivery efficiencies
and increase sales momentum is reflected in this
year’s underlying gross margin1 of 27% ($86.7 million),
which was within the targeted 26% to 29%. Strength in
monthly average sales figures – up from 59 per month
in the first half year to 82 per month in the second
half year – signals growing demand for the Villa World
product, with 843 sales during FY15 and a continued
upward trajectory towards target 1000 and beyond.
The Company will carry forward 364 sales contracts,
worth $134.1 million into FY16. Of these, 349 or $131
million are expected to settle in 1H16, with the balance
to settle in the second half. This strong carry forward
will be complemented by the release of new projects
mid-year to meet sales targets of 1,000 to 1,200 lots
in FY16.
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“
We are selling more properties and converting those sales into
settlements, resulting in a 40% increase in revenue and contributing to
our 30% increase in net profit before tax (FY15:$29.4 million).
”
The FY15 profit result included provision of
$8.9 million for legacy litigation issues, as
announced in May 2015, reducing future balance
sheet uncertainty.
OUTLOOK
Assuming that consumer confidence is maintained,
interest rates remain low and first home buyer
incentives remain in place, the outlook for FY16 is
one of increased sales strength and the opportunity
to achieve strong profit levels.
Our first half result is already looking positive with
364 carried forward sales valued at $134.1 million
to contribute to our FY16 result. We will have seven
new projects for release - a similar number to
FY15 – and expect a strong second half-year sales
performance. We will continue to strategically
restock the business, spending between $135 - $150
million depending on opportunities available, funded
through existing debt and working capital.
Villa World is positioned for consistent, through-the-
cycle performance. We will extend our operational
performance through further efficiency gains and
by maintaining our focus on delivering value for
customers. Combined with continued prudent
management of our balance sheet, we look forward
to welcoming more families to their Villa World
home and delivering success through property to
our shareholders.
Craig Treasure
CEO and Managing Director
1 Underlying gross margin is exclusive of provision for litigation.
Reported gross margin of $77.8 million (24.2%).
CAPITAL STRUCTURE
We have recapitalised to bolster our financial strength
and provide the financial agility to take advantage of
market opportunities. Our successful capital raising
in January 2015, coupled with strong operating cash
flows, enabled the Company to continue to acquire
land, with outlays of $102.1 million in FY15, while
remaining in a strong cash and debt position.
Net tangible assets at year end were $220.6 million,
up from $180.2 million, representing $2.00 per share
(FY14: $1.92) before the declaration of the final
dividend. The Company has a prudent gearing level at
16.9%, compared to 24.8% as at 31 December 2014.
Net debt as at 30 June 2015 was $69.5 million.
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OPERATING FINANCIAL
REVIEW
During 2015, the Company continued to build on its
previous successes and this year has achieved strong
earnings growth, improved shareholder returns and
outstanding operating performance.
The Company finished the 2015 financial year with a
strong full year result, reporting a statutory net profit
after tax of $25.6 million (25.6 cps), a 34% increase
on net profit after tax of $19.1 million (21.8 cps)
reported for the period ended 30 June 2014. This
statutory profit was achieved after making a provision
for legacy litigation issues of $8.9 million (FY14:
$5.8 million), comprising a provision of $2.4 million
incurred in 1H15 largely related to Thornleigh, and a
$6.5 million provision for Silverstone incurred in 2H15.
Revenue increased by 40% to $321.6 million
(FY14:$229.5 million) as a result of strong sales during
the year, particularly in 2H15, combined with $141.5
million1 of carried forward sales from FY14. 80%
of revenue was generated through house and land
product. 90% of revenue came from Queensland
projects.
At an operational level, sales momentum gathered
through the year and exceptional delivery of land and
housing resulted in 816 accounting settlements in
FY15 (FY14: 721).
The Company delivered 840 lots of land, up 36%
on the 618 lots delivered in FY14. Pleasingly, the
Company’s housing operations have increased
production to deliver 654 homes across both
Queensland and Victoria, up 54% on the 425 homes
delivered in FY14.
The average revenue per house and land lot increased
from $402,000 to $414,000, largely due to a high
level of settlements in Brisbane’s North and Bayside
suburbs, which offer a higher price point product.
At select estates, namely Mt Cotton, Park Vista, Circa
and Cascades, average revenue rose between
3 – 5% year on year.
1 Inclusive of GST
Average revenue per land only lot lifted significantly
from $230,000 to $332,000, due to a greater
portion of land only settlements coming from our
premium land only projects, Astonbrook, Seaside,
Locosi Hill and Waterline.
Over the course of the year, civil costs have remained
steady; however building costs have risen by 3% - 4%.
Access to building supplies, civil contractors,
sub-contractors and labour has remained steady.
PERFORMANCE
Number of projects
contributing to profit
Revenue - property sales
House & Land
Land Only
Settlements (lots)
- inc Joint Ventures
Settlements (lots)
- ex Joint Ventures
House & Land
Land Only
Revenue - property sales
($k/Lot)
House & Land
Land Only
Gross Margin $m
Margin (%)
FY15
FY14
20
13
CHANGE
▲ 54%
321.6
258.7
62.9
816
229.5 ▲ 40%
179.9 ▲ 44%
49.5 ▲ 27%
▲
721
13%
814
662
▲ 23%
625
189
447
215
▲ 40%
▼
-12%
395.2
346.7 ▲
14%
414.1
332.7
77.8
402.6 ▲ 3%
230.4 ▲ 44%
56.8 ▲ 37%
24.2% 24.8% ▼
-2%
▲ 38%
Underlying Gross Margin $m 86.7
62.7
Underlying Margin (%)
27.0% 27.3% ▼
-1%
GROSS MARGIN
The gross margin for FY15 was $77.8 million (FY14:
$56.8 million), after the provision for legacy
litigation issues of $8.9 million (FY14: $5.8 million).
The underlying gross margin of 27.0% (FY14: 27.3%)
remains within the Company’s target range and was
achieved across most locations and all product types.
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9
88% of revenue generated came from high gross
margin projects, which averaged 29.4%.
In the coming year, the gross margin is expected to lie
at the lower end of the target range of 26% to 29%.
The Company will continue to focus on maintaining a
balance between gross margin and sales volumes.
SALES CONTRACTS CARRIED FORWARD
At 30 June 2015, the Company carried forward 364
sales contracts valued at $134.1 million2, with the
majority3 due to settle in 1H16. These strong carried
forward sales, when combined with the Company’s
continued sales focus, place the Company in a very
strong position for 2016.
SALES PERFORMANCE
The Company recorded 843 sales during FY15
(FY14: 829). Levels of completed inventory were
replenished in 1H15, and sales rose from an average
of 59 per month in 1H15, to 82 per month in 2H15.
Eight projects were released in FY15, and experienced
solid demand which contributed to the robust sales
volumes in 2H15.
Sales were heavily weighted to Queensland (81% of
sales) due to the number of projects being marketed
and continued supportive market conditions.
Particularly strong performance was recorded across
the five projects located in Brisbane’s north and four
projects located in Brisbane’s bayside. Sales were
strong across the whole product range of affordable
land, premium land, house and land and townhouses.
Victoria represented 15% of sales in FY15. Victorian
sales benefitted from the release of two larger
projects mid-year; the land only subdivision of
Cardinia Views in Melbourne’s south east late in 2Q15,
and the house and land community of Lavinia in
Melbourne’s northern suburbs in late 3Q15.
The Company’s broader product offering appealed
to a larger market in FY15. Overall, half of this years’
sales were to owner occupier, with approximately 25%
going to first home buyers. Our premium land estates
sold well to builders, and represented 11% of sales.
Investors accounted for 39% of sales, approximately
half of which were walk in investors, largely in
Brisbane’s bayside and northern suburbs.
Housing in the mid-price range Brisbane bayside
projects proved popular with owner occupiers
(70% - 80% of sales) with a particularly strong
first home buyer presence. Brisbane’s north side
projects offering affordable housing were well
received by the first home buyer and walk in investor
market. Townhouse product in Brisbane’s north was
specifically targeted at the investor market.
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Era - Capalaba, Brisbane
2 Inclusive of GST
3 96% of contracts, and 98% of value, 349 lots worth $131 million
Operating Financial Review (continued)
The first stages of the premium land estate of Waterline
in Brisbane’s bayside were successfully released to
the builders market. A builder’s display village is due to
open mid FY16 which will service the Waterline project,
and nearby Affinity. The premium land only release at
Seaside on the Tweed Coast was taken up quickly by
builders, as were the land only lots at Mt Cotton Village.
Victorian product was equally well received by the
owner occupier and investor markets.
FY16 SALES OUTLOOK
The Company finished FY15 with 95 full time
equivalent employees (FY14: 80). The full year salary
contribution of the new employees hired in FY14,
largely in the operations division, as well as the new
employees hired in FY15 resulted in a 25.3% increase
in staff costs year on year. Employee costs fell for
the second year, as a percentage of revenue to 4.5%
(FY14: 5.1%).
In FY16 employee costs are expected to increase
by 13%.
The Company is targeting 1,000 – 1,200 sales in FY16.
The average sales rate achieved in 2H15 of 82 per
month is expected to continue into 1H16. With seven
additional projects, offering ~780 lots being released
mid year (six in Queensland and one in Victoria), sales
are expected to be weighted to the second half.
OTHER REVENUE AND SHARE OF PROFIT FROM
EQUITY ACCOUNTED INVESTMENTS
Other income of $911k was generated this year and is
largely made up of bank interest received and penalty
interest on delayed settlements.
SALES AND MARKETING COSTS
In 2015 a strategic decision was made to shift the
focus of sales and marketing away from individual
projects, towards marketing in the first instance
the Villa World brand, and then towards marketing
particular regions, with the knowledge that the
Company has a product to suit each of its buyer
segments within most regions, if not across each
individual project. The Company’s regional marketing
campaigns have proven very successful. Combined
with strong residential markets, the marketing
campaigns are having a positive impact on sales, as
well as benefitting the sales and marketing costs
which have fallen to 5.4% of revenue, from 6.5%
of revenue in the prior year. This is the second
consecutive year that sales costs as a percentage of
revenue have fallen.
These changes to the sales and marketing strategy
included bringing some on-site sales teams in-house.
On-site sales staff are contracted to particular
projects and are included in cost of sales.
EMPLOYEE COSTS
In 2015 the Company’s sales focus was on addressing
customer needs and improving the customer
journey. Accordingly, a number of management and
administrative roles were added in the sales, design
and after sales service areas.
Modest staff increases also occurred in the
operations team (site managers and estimators)
as the Company delivered more housing product
across both Queensland and Victoria. Management
personnel were boosted in Victoria ahead of
expected growth in the business.
The share of profit from equity accounted
investments and associates of $1.8 million relates
largely to the Eynesbury joint venture. The revenue
within the joint venture is largely made up of the
deferred interest charge for the settlement of
tranche two of the sale to the Hyde Group, and
additional penalty interest received due to the
delayed settlement of both tranches.
The Company has agreed to extend the settlement
of Tranche 2 to 28 August 2015. The Company
has negotiated an increase in the selling price of
$2 million. The Company’s 50% share of this ($1
million), has not been recognised as at 30 June 2015.
Payments totaling $12 million have previously been
made by the purchaser for the second tranche, and
released to the Eynesbury joint venture. Title to the
second tranche property currently remains with the
Eynesbury joint venture. The profit contribution from
the Eynesbury joint venture in 2016 is forecast to be
$1.3 million, comprising the $1 million as a result of the
increase in the selling price and extension fees.
TAX POSITION
The effective tax rate for FY15 was 13%, largely due
to the recognition of a deferred tax asset in 1H15. All
carried forward tax losses have now been recognised, as
a result, the effective tax rate will revert to 30% in FY16.
Carried forward unused tax losses of $19.3 million
remain as at 30 June 2015 (DTA of $5.8 million). It is
expected that these carried forward tax losses will be
fully utilised during the FY16 year. The Company will
return to paying cash tax in 2H16, with a $1.1 million
cash tax payment expected in 2H16.
The franking account balance at 30 June 2015 was
$10.3 million. Subsequent to the payment of the final
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11
Mt Cotton Village - Mt Cotton, Brisbane
dividend of 10 cps, the balance will be $5.5 million.
The Company has adequate franking credits to pay
fully franked dividends until it returns to paying cash
tax on an instalment basis during 2H16.
The average cost of debt during the year was
consistent with the prior year of 7.8%. A $90 million
fixed interest rate swap of 3.69% remains in place
through to June 2018.
ASSETS AND NTA
The gross assets have increased to $432.7 million
at 30 June 2015 from $317.3 million, as acquisition
momentum continues. The NTA per share has
increased by 4% to $2.00, prior to the declaration of
the 10 cent fully franked dividend (FY14: $1.92, prior
to the declaration of 9 cent dividend).
CAPITAL MANAGEMENT
During the year, the Company re-introduced Westpac
as a partner with ANZ to a club facility, and the facility
limit was increased to $180 million from $155 million.
The Westpac facility is for $50 million and matures on
2 March 2018.
At 30 June 2015 the $130 million ANZ facility was
due to expire on 30 October 2016. Post year end,
this facility has been extended with a credit approved
term sheet in hand. Documentation is due to be
finalised in September 2015. The maturity will be
staggered, with $80 million extended through to
1 March 2019 and $50 million to 30 October 2020.
At 30 June 2015, the cash on hand and unused
capacity in the facility was $98 million (30 June
2014 : $87 million). The gearing ratio at year end
improved to 16.9% (FY14: 18.9%). Strong sales and
settlements during the year generated $75.5 million
(FY14: $71.8 million) in operating cash. Strong cash
flow, combined with the capital raising of $31.7
million (FY14: $32.2 million) enabled $102 million
in acquisitions to be settled. Strategic negotiation
of acquisitions continues to ensure efficient use of
capital. The unused capacity in the facility will enable
the continued execution of the acquisition strategy
throughout FY16. Our anticipated acquisition spend
during FY16 will be $135 - $150 million.
The Company’s funding has been repositioned, a
very strong and sustainable balance sheet has been
created and cash flow has been effectively managed
across the portfolio.
DIVIDENDS
The shareholders have benefitted from the strong
financial performance during the year with the
Directors declaring total dividends of 16 cps fully
franked in relation to the 2015 financial year. This
represents a 7% growth year on year. An interim
dividend of 6cps was paid in April 2015. A final
dividend has been declared post year end of 10cps
and will be paid in September 2015.
The full year dividend of 16 cps represents an annual
payout of 69% of NPAT (FY14: 74%), which is within
the Company’s stated dividend policy (payout ratio of
50% - 75% of NPAT, paid semi-annually).
ACQUISITION
During FY15 the Company continued to execute on
its acquisitions strategy, acquiring 2,769 lots worth
$133 million across twelve Queensland and three
Victorian projects.
The land acquisition payable at 30 June 2015 is
$69.0 million in total, current $65.6 million and non-
current $3.4 million. This payable will be settled from
operating cash flows and settlement proceeds from
third party settlements and since year end, $12.7
million has been paid.
In Queensland, the Company successfully restocked
in sought after corridors of north, south and bayside
Brisbane, boosting the projects available in the
Brisbane – Gold Coast corridor, as well as entering the
Logan corridor.
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11
Operating Financial Review (continued)
In Melbourne, the Company entered the northern
corridor with Lavinia in Greenvale and north-western
corridors with Sienna in Plumpton. Both projects
commenced civil works during the year, and sales
have commenced at Lavinia.
During the year, the Company achieved the strategic
goal of capitalising on opportunities for longer dated
projects through appropriate partnering structures.
In joint venture, the Company secured a landholding
of approximately 270ha in Donnybrook, one of
Melbourne’s fastest growing urban corridors. The
project is subject to a 2-3 year planning process and
will potentially yield in excess of 2,000 lots. The joint
venture structure shares the project size and planning
risks, while the role of project and sales manager
provides the Company upside. Importantly the
project significantly boosts the medium to long term
development portfolio in Melbourne.
At financial year end, the Company has a five-year
supply pipeline, with 5,191 lots. Queensland remains
central to the Company’s business, certainly in the
near term. However, the portfolio is diversified
across the east coast States, and across strong
growth corridors within each State. Importantly, the
Company has broadened its reach across product and
price point adding to the Company’s resilience and
providing strong and sustainable cash flows. In the
near term, the portfolio, sales and settlements will
remained weighted to Queensland.
THE VILLA WORLD STRATEGY
The Company’s strong financial performance in
FY15 reflects its focus on the four key pillars of the
business – the development portfolio, delivery, sales
and Villa World’s capital structure.
Success in each of these four areas was underpinned
by a clear and deliberate strategy founded on
relationships, performance and growth.
This strategic scaffold has bolstered the Company’s
proven business model and solid financial platform,
low gearing and strong operating cash flows.
The Company will continue to grow its portfolio
within proven markets by acquiring developable land
in growth corridors. The current land bank of around
five years supply will be maintained.
The Company is targeting sales of 1,000 to 1,200 lots
in FY16, achievable through a lift in delivery which
resulted in 24% more product delivered in FY15 than
the Company averaged during the three previous
years. Continued supportive market conditions are
likely to sustain demand in South East Queensland
and near-Melbourne suburbs where the Company
has a strong footprint.
The sales strategy will leverage the Company’s
30-year milestone and continue to attract traditional
retail buyers, with tailored product and processes
in place for first home buyers and investors. The
Company’s ability to provide quality, affordable to
mid-range product for each of the ages and stages
of life is matched with the strong marketing focus on
enhancing each aspect of the customer experience.
The Company’s end product continues to reflect
changing market needs. Further enhancements
to design will keep pace with buyer preference
for open plan, functional, sizeable homes, on low
maintenance lots, with a strong focus on value for
money. The Company will roll out a new range of
home designs to suit smaller blocks while creating
greater living spaces through smarter design.
KEY RISKS
While the underlying current is one of strong
and supportive market conditions, the Company
continues to prudently manage sales, development
and finance risk, along with risks associated with
general warranty claims. The Company continues
to monitor government policies, including
macroprudential regulation and foreign
ownership policies.
Consumer confidence will continue to influence
sales. Economic conditions including interest
rates, unemployment and wages directly impact
consumer confidence. The Company has maintained
a diversified portfolio and low gearing position
assisted by structured acquisition deals and a
product portfolio that minimises sales risk.
The Company’s portfolio has minimal project-based
risk. In most cases, development approvals are
either in place prior to acquisitions, or residential
use is allowed and approval risk is mitigated by
appropriate due diligence. Risks associated with
longer-dated projects, with the opportunity to add
value through the planning process, are mitigated
through partnering arrangements or appropriately
structured acquisition terms. Production-based
risk is further minimised by the diversified
portfolio, scalable business model, transparency
on development costs and the experience of the
Company’s development team.
Warranty claims and potential litigation are inherent
risks in the development and construction industry.
The Company is currently defending litigation
involving the following matter:
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13
Parkside - Coomera, Gold Coast
Silverstone (refer to the Note B4(d) Provisions in
the 2015 Financial statements) is a 27 apartment
complex located in Tweed Heads, New South
Wales which was completed in 2009. This litigation
involves building defects, and the Company
is cross-claiming against certain suppliers
and contractors. The Silverstone litigation has
previously been noted as a contingent liability in
the Company’s financial statements in FY12, FY13
and FY14. Developments in the litigation during
FY15 have enabled the Directors to make a reliable
estimate of the financial impact. The Company has
made a provision as at 30 June 2015 of $6.5 million
for its proportion of the potential claim by the
Silverstone Owners Corporation and unit owners.
This is in addition to the provisions for legal fees and
experts costs which have been made since 30 June
2012 and expensed through cost of sales. While
the Company has made an assessment of the likely
outcome of the litigation, there is some risk that the
financial outcome for the Company may differ from
the provision amount.
The Company has mitigated financial risk during
FY15 by entering into a $180 million Club financing
arrangement with ANZ and Westpac. This
arrangement replaces the $155 million bi-lateral
facility agreement with ANZ and provide a flexible
structure, allowing other banks to be introduced
as required.
The Club financing arrangement comprises a facility
of $130 million with ANZ expiring on 30 October
2016, and a facility of $50 million with Westpac
expiring on 2 March 2018. Each facility is able to be
negotiated and extended independent of the other.
The ANZ facility has been extended post balance
sheet date, with $80 million expiring on 1 March 2019
and $50 million expiring on 30 October 2020. It is
anticipated that all covenants associated with the
facility will be complied with.
GUIDANCE
Assuming general consumer confidence is
maintained, interest rates remain low and first
home buyer grants remain in place, the Company is
targeting statutory profit before tax of $40.5 million
in FY16, representing a 38% growth on the FY15
statutory profit before tax of $29.4 million. With the
Company returning to an effective tax rate of 30%,
the Company is targeting a strong profit after tax of
$28.35 million.
This strong result is underpinned by carried forward
sales, continued sales momentum, particularly in
Queensland, and an improved delivery capability.
Seven new projects will be released mid year,
consequently profit and sales will be weighted to the
second half.
It is the intention of the Board to continue the
payment of dividends in accordance with the stated
payout policy of 50% to 75% of NPAT, paid semi-
annually. The Board anticipates paying a dividend of at
least 16 cents per share fully franked in FY16.
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13
CURRENT
PORTFOLIO
BRISBANE NORTH
Brisbane North, with its arterial road connections
into the CBD, New Moreton Bay Rail Link under
construction and ease of access to the Sunshine
Coast, continues to be a key residential growth
corridor of south-east Queensland and a significant
market for the Company.
Planned for a total of 534 lots, Park Vista at Mango
Hill is arguably our most successful project in the
current portfolio. Neighbouring North Lakes with its
town centre and education facilities, the community
is now an established village style neighbourhood
comprising contemporary family homes and park
recreation facilities, surrounded by dedicated native
reserve. FY16 will see the release of the project’s new
precinct of designer homes on the eastern side of
Anzac Avenue.
The Company continues to design and market a
range of affordably priced townhomes where small
development lots in prime locations become available.
Adjoining Park Vista is Orana, where 108 townhomes
set around recreation facilities including a swimming
pool and covered outdoor entertaining areas offer
a residential resort lifestyle. A site for a further 68
townhomes at a new project in the suburb of Griffin
close to North Lakes will extend our commitment to
the Mango Hill area.
Situated beside a nature reserve, just a short drive
from Moreton Bay, Bay Road at Burpengary is a
boutique sized community of only 143 homes, where
complementary house designs and fully landscaped
streets combine to provide a true
neighbourhood setting.
The 211 home Circa community is situated in the
prestige inner suburb of Nudgee just 12km from the
Brisbane CBD and close to Brisbane Airport. A long-
running and successful project for the Company,
Circa has been developed in boutique sized stages
and achieved a premium price point in a highly
sought after location. FY16 will see the release of
the project’s exciting new range of designer homes.
Circa’s townhome release, Circa Metro is now sold-
out. The project comprises 88 townhomes set around
residents’ recreation facilities including a resort style
swimming pool and gardens. Construction will be
completed during FY16.
Strategically, our new FY16 release of 39 townhomes
at Eminence on Ridley, will partly fill the void of
our townhome stocks in Brisbane’s prestige inner
northern suburbs. This boutique project is located in
the popular suburb of Bridgeman Downs less than
16km from the CBD.
At Joyner near Lake Samsonvale, the Company is
currently developing a land project known as Riva,
which adjoins a country golf course in the popular
Pine Rivers region just 25km from the CBD. Riva
comprises 82 premium priced lots in a prime location
close to Petrie’s train station and local CBD.
BAY ROAD
PARK VISTA &
ORANA
GRIFFIN
RIVA
EMINENCE
CIRCA &
CIRCA METRO
BRISBANE
GOLD COAST
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Park Vista – Mango Hill, Brisbane
Orana at Park Vista – Mango Hill, Brisbane (Artist’s Impression)
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15
Current Portfolio (continued)
BRISBANE SOUTH
Brisbane South with its established leafy suburbs and
freeway connection to the CBD, has for generations
been a highly sought-after residential corridor offering
the convenience of access to the Gold Coast. During
FY16 the Company will commence a new prestige
project on Gardner Road at Rochedale called Rochedale
Grand, which will comprise 148 premium priced lots,
many with glimpses of the city skyline. The site is in
an established pocket of Rochedale close to schools
and public transport. Originally a farming district of
Brisbane’s South, Rochedale has developed a modern
residential character and our new designer product
range is being created to reflect this market positioning.
BRISBANE BAYSIDE
A recent independent research report highlighted
strong demand and limited supply in the Redlands
region where the population is predicted to increase
by almost 40% over the next 20 years. Located
some 35km from the CBD, Redlands offers a
relaxed bayside lifestyle and a host of modern family
amenities. Over the past few years, our folio of
projects on Brisbane’s Bayside has grown, by design.
Our flagship project in Redlands is Mt Cotton Village
which commenced in 2009. Featuring intimate
neighbourhoods of designer homes set amongst
picturesque native bushland, and easy access to
community parks with recreation facilities, this 572 lot
community has proven popular with families seeking a
modern lifestyle just minutes from the Bay.
Era in Capalaba some 32 km from the CBD, was
launched at the start of FY15. This project was the
first location to unveil our innovative new range of
designer homes. Era is a 200 home contemporary
address set beside a natural bushland sanctuary,
offering residents a balanced blend of modern homes
and open space.
Waterline at Thornlands is a 227 lot premium
land project offering a selection of prestige, level
homesites in a bayside setting complete with its own
community park with bike and walking paths. A 23
home display village showcasing designs by a range of
leading builders will open during FY16.
During FY16, a number of new projects will be
launched in this key region commencing with Ellabay,
a boutique 84 lot community of designer homes
located in Redland Bay just 1km from the waterfront.
This will be followed with the release of 86 prestige
land lots at Affinity in Thornlands and 206 homes at
Seascape in Redland Bay just a short drive from the
new Weinam Creek marina development.
BRISBANE
ROCHEDALE
GRAND
ERA
WATERLINE &
AFFINITY
MT COTTON
VILLAGE
ELLABAY &
SEASCAPE
GOLD COAST
Mt Cotton Village - Mt Cotton, Brisbane
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17
Waterline - Thornlands, Brisbane
Era - Capalaba, Brisbane
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17
Current Portfolio (continued)
LOGAN
GOLD COAST
Logan City, located south of Brisbane is now one of
Queensland’s fastest growing corridors. Independent
research indicates a population increase of up to
200,000 over the next 20 years and jobs growth in
excess of 50,000 over that period. The Company
purchased the final stage of the successful Woodlands
master planned development at Waterford 31km from
the CBD and we have recently begun marketing this
as a new 81 home project branded The Sanctuary.
With 30 hectares of lush open spaces bordering the
community and a 17 hectare environmental corridor
at its heart, Woodlands offers a truly unique lifestyle.
During FY15, the Company returned to the Gold
Coast, with a new project in the burgeoning Coomera
area just a few minutes drive from Dreamworld and
the future Coomera Town Centre. Parkside comprises
108 contemporary family homes set around a central
park and bounded by a bushland nature reserve. Just
a short drive north, within a short walk of Tipplers
Passage and its boating facilities is our new Jacobs
Well site, planned for 107 homes.
BRISBANE
BRISBANE
THE SANCTUARY
JACOBS WELL
PARKSIDE
GOLD COAST
Parkside - Coomera, Gold Coast
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19
REGIONAL QUEENSLAND
SYDNEY
Complementing the unique attributes of the central
Queensland coast, the Company is developing
contemporary lifestyle communities. Little Creek in
Gladstone has been designed to be the city’s premium
address. Set around the huge Little Creek parklands,
a $1M+ network of parks with playgrounds and
recreation facilities, this 688 lot project offers a mix
of land and Villa World homes.
Augustus is located on the picturesque Fraser Coast
in the famous whale watching town of Hervey Bay.
The project, centrally located within the town, has
been master planned for a total of 730 homes. In
FY2015, we also released a small number of land lots
to add product diversity.
GLADSTONE
LITTLE CREEK
AUGUSTUS
HERVEY BAY
Western Sydney continues to be one of the nation’s
key residential growth corridors. Locosi Hill is located
at Schofields just 4km from the new Rouse Hill Town
Centre yet retains a semi-rural character. The project,
which includes a 7000m2 bushland reserve, comprises
55 land lots.
LOCOSI HILL
SYDNEY
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19
Augustus - Hervey Bay
Current Portfolio (continued)
MELBOURNE SOUTH EAST
MELBOURNE NORTH
Cascades on Clyde is an 1138 lot master planned
community located within the major growth corridor
of Melbourne’s South East some 55km from the CBD.
Over the past 7 years, Cascades has been a hugely
successful land project for the Company. It features 14
hectares of wetlands and parklands as well as walking
tracks, BBQ facilities and children’s playgrounds. In
the final stages, the Company offered a range of
completed home designs adapted for the local market.
Following the success of Cascades, the Company has
subsequently focused on new acquisitions in the Victorian
market, to replenish our land supply. The first of these
new projects is Cardinia Views launched in FY15, a 319
lot land project located in the quaint semi-rural area of
Pakenham some 60km south-east of the CBD. With
views of the rolling countryside and lake parklands within
walking distance, the project is attracting family buyers
with its variety of homesite sizes.
Melbourne’s North corridor, with its ease of access to
the airport and CBD continues to be in high demand by
family buyers. At our boutique sized project Roxburgh
Park, we are constructing an innovative new range of
30 terrace style urban homes in an existing residential
estate some 20km north of the CBD.
At Greenvale, just 10km from Melbourne Airport, the
Company has launched the master planned Lavinia
project comprising 131 designer homes bordering the
Greenvale Reserve. The community is well positioned
with easy access to local amenities and neighbours a
park with playground facilities. Home construction will
commence in FY16.
At Donnybrook, an emerging residential area to the
city’s north, the Company has acquired a 51% share of
a land project of approximately 2000 lots. Planning
is currently underway and we anticipate that the first
wave of buyers will be able to take up residence in FY19.
Lavinia at Greenvale, Melbourne (Artist’s Impression)
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MELBOURNE NORTH WEST
MELBOURNE WEST
Melbourne’s North West corridor, with its freeway
access to the CBD and proximity to the Caroline
Springs, Taylors Hill and Burnside Heights town
centres, continues to undergo substantial population
growth. In Plumpton, 35km to the CBD’s north
west, the Company has 2 projects close to Victoria
University and local facilities. The first, due for release
in FY2016 is Sienna, comprising 165 Villa World
designer homes from a new range crafted for the
Melbourne lifestyle. The neighbouring site comprises
a further 254 lots currently in the planning stages.
Our Parkview project at Trugania just 24km from
the CBD, is a boutique 26 lot infill site in an existing
estate adjacent to the landmark Williams Landing
project. Created in a complementary palette of
colours, the 26 contemporary family homes provide
a balance of attractive and practical living spaces,
thoughtfully set amongst quality landscaping just
metres from a family park. The project has been well
received by home buyers.
DONNYBROOK
LAVINIA &
ROXBURGH PARK
PARKVIEW
MELBOURNE
SIENNA
CARDINIA VIEWS
CASCADES
ON CLYDE
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Lavinia at Greenvale, Melbourne (Artist’s Impression)
Villa World Limited ABN 38 117 546 326
Annual report - 30 June 2015
Villa World Limited ABN 38 117 546 326
Annual report - 30 June 2015
Contents
Contents
Directors' report
Corporate governance statement
Directors' report
Financial statements
Corporate governance statement
Independent auditor's report to the members
Financial statements
Independent auditor's report to the members
Page
24
Page
37
24
38
37
77
38
77
These financial statements are the consolidated financial statements of the consolidated entity consisting of Villa
World Limited and its subsidiaries. The financial statements are presented in Australian currency.
These financial statements are the consolidated financial statements of the consolidated entity consisting of Villa
Villa World Limited is a company limited by shares, incorporated and domiciled in Australia.
World Limited and its subsidiaries. The financial statements are presented in Australian currency.
Villa World Limited is a company limited by shares, incorporated and domiciled in Australia.
Its registered office is:
Villa World Limited
Its registered office is:
Level 1 Oracle West,
Villa World Limited
19 Elizabeth Avenue,
Level 1 Oracle West,
Broadbeach QLD 4218
19 Elizabeth Avenue,
A description of the nature of the consolidated entity's operations and its principal activities is included in the
directors' report on page 24, which is not part of these financial statements.
Broadbeach QLD 4218
A description of the nature of the consolidated entity's operations and its principal activities is included in the
The financial statements were authorised for issue by the Directors on 18 August 2015. The Directors have the power
directors' report on page 24, which is not part of these financial statements.
to amend and reissue the financial statements.
The financial statements were authorised for issue by the Directors on 18 August 2015. The Directors have the power
Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All ASX
to amend and reissue the financial statements.
announcements, financial reports and other information are available on our website: www.villaworld.com.au
Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All ASX
announcements, financial reports and other information are available on our website: www.villaworld.com.au
23
23
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Villa World Limited ABN 38 117 546 326
Annual report - 30 June 2015
Villa World Limited ABN 38 117 546 326
Annual report - 30 June 2015
Contents
Contents
Directors' report
Corporate governance statement
Directors' report
Financial statements
Corporate governance statement
Independent auditor's report to the members
Financial statements
Independent auditor's report to the members
Page
24
Page
37
24
38
37
77
38
77
These financial statements are the consolidated financial statements of the consolidated entity consisting of Villa
World Limited and its subsidiaries. The financial statements are presented in Australian currency.
These financial statements are the consolidated financial statements of the consolidated entity consisting of Villa
Villa World Limited is a company limited by shares, incorporated and domiciled in Australia.
World Limited and its subsidiaries. The financial statements are presented in Australian currency.
Its registered office is:
Villa World Limited is a company limited by shares, incorporated and domiciled in Australia.
Villa World Limited
Its registered office is:
Level 1 Oracle West,
Villa World Limited
19 Elizabeth Avenue,
Level 1 Oracle West,
Broadbeach QLD 4218
19 Elizabeth Avenue,
Broadbeach QLD 4218
A description of the nature of the consolidated entity's operations and its principal activities is included in the
directors' report on page 24, which is not part of these financial statements.
A description of the nature of the consolidated entity's operations and its principal activities is included in the
The financial statements were authorised for issue by the Directors on 18 August 2015. The Directors have the power
directors' report on page 24, which is not part of these financial statements.
to amend and reissue the financial statements.
The financial statements were authorised for issue by the Directors on 18 August 2015. The Directors have the power
Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All ASX
to amend and reissue the financial statements.
announcements, financial reports and other information are available on our website: www.villaworld.com.au
Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All ASX
announcements, financial reports and other information are available on our website: www.villaworld.com.au
23
23
23
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Directors' report
30 June 2015 (continued)
Gerald (Gerry) Lambert BCom (Hnrs), ACA, GAICD
Non-Executive Director since 22 January 2015
Gerry is an independent director who has held key financial roles in both listed and unlisted companies in the building
and property development, and mining industries. He has had a 30 year corporate career with expertise and
experience in the financial, strategic, governance, management and human resource areas.
Other directorships (current and recent)
Gerry is currently a non-executive director of BoysTown (since February 2011), a national charitable organisation and
is a non-executive director of CuDeco Limited (since 27 April 2010), an ASX listed mining and exploration company.
Gerry has previously been an executive director of Villa World Limited from 2000 to 2005, at which time he was
Directors' report
Your Directors present their report on the consolidated entity (referred to hereafter as the Company) comprising
Villa World Limited and its subsidiaries and the Company's interest in associates for the year ended 30 June 2015.
Directors
The Directors of Villa World Limited during the year and up to the date of this report were:
Mark Jewell BCom CA (SA)
Non-Executive Director since 28 November 2013
Chairman since 28 May 2014
Mark is an independent director with more than 25 years senior executive and directorship experience in publicly
listed companies. He brings to the Board a wide range of property experience in the Australian development industry
including land estates and medium density housing.
Board Committee memberships
CFO and General Manager.
Board Committee Membership
•
•
Member of the Audit and Risk Committee (since 28 November 2013)
Member of the Remuneration and Nomination Committee (since 5 February 2015)
•
•
Chair of the Audit and Risk Committee (since 18 June 2014)
Member of the Remuneration and Nomination Committee (since 5 February 2015)
Other directorships (current and recent)
In the past three years Mark has served as an executive director of Aveo Group Limited (20 July 2011 - 20 August
2012) and a non-executive director of PBD Developments Limited (21 July 2011 - 3 April 2013).
Company Secretary
Paulene Henderson B Bus Acc MBA CA
Chief Financial Officer / Company Secretary
Craig Treasure BASc (Surveying) (QUT), FDIA
Executive Director 17 February 2012 - 1 August 2012
Chairman and Executive Director 1 August 2012 - 5 October 2012
Chairman and Managing Director 5 October 2012 - 28 May 2014
Chief Executive Officer and Managing Director since 28 May 2014
Craig Treasure has more than 30 years experience in property development, specifically in the residential land and
housing sectors along the eastern seaboard of Australia. Craig has previously held a number of executive roles and
directorships within the property industry.
David Rennick BEc, LLB
Non-Executive Director since 1 September 2014
David is an independent director and senior Melbourne based lawyer with nearly three decades experience in the
property industry, having acted for leading developers and institutions as principal legal advisor and on property and
business strategy. His area of practice in property includes master planned community projects, property
development, corporate real estate, institutional property and retail centre developments and leasing.
He is currently a partner and Head of Australia, for international law firm Pinsent Masons. Prior to that role, he was a
property partner and then CEO of national law firm Maddocks where he was responsible for leadership, client and
people strategies and management.
Board Committee membership
•
•
Member of the Audit and Risk Committee (since 1 September 2014)
Chair of the Remuneration and Nomination Committee (since 5 February 2015)
Paulene has more than 25 years' experience in strategic finance and accounting roles, primarily in the property and
hospitality sectors. She combines technical accounting expertise and commercial acumen to manage all aspects of
Villa World's corporate financing, including bank relationships, treasury and forecasting as well as investor relations
activities.
Paulene has also worked with global professional services firm Ernst and Young and held senior financial roles with
two subsidiaries of Fortune 500 company Wyndham Worldwide.
Appointed Company Secretary 19 November 2012.
Alexander (Sandy) Beard BCom (UNSW), FCA, AICD
Chairman 25 January 2012 - 31 July 2012
Non-Executive Director 11 April 2011 - 2 September 2014
Sandy is the Managing Director of CVC Limited and an experienced financier of growth companies. CVC has been an
active participant in the property sector, undertaking investments ranging from real estate development to passive
financing positions. Sandy has gained considerable industry experience through his investee board roles.
Other directorships (current and recent)
Sandy is currently an Executive Director of CVC Limited (since 31 August 2000), Director of CVC Property
Managers Limited as Responsible Entity for CVC Property Fund (since 23 December 2005), Non-Executive Chair of
Cellnet Limited (since 15 December 2006) and a Non-Executive Director of Mnemon Group Limited (since 7 June
2007). In the past three years Sandy has also served as a Non-Executive Director of Amadeus Energy Limited (14
October 2009 - 29 March 2013).
Board Committee membership
•
Member of the Audit and Risk Committee (11 April 2011 - 28 May 2014)
24
24
25
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Your Directors present their report on the consolidated entity (referred to hereafter as the Company) comprising
Villa World Limited and its subsidiaries and the Company's interest in associates for the year ended 30 June 2015.
Directors' report
Directors
The Directors of Villa World Limited during the year and up to the date of this report were:
Mark Jewell BCom CA (SA)
Non-Executive Director since 28 November 2013
Chairman since 28 May 2014
including land estates and medium density housing.
Board Committee memberships
Mark is an independent director with more than 25 years senior executive and directorship experience in publicly
listed companies. He brings to the Board a wide range of property experience in the Australian development industry
Directors' report
30 June 2015 (continued)
Gerald (Gerry) Lambert BCom (Hnrs), ACA, GAICD
Non-Executive Director since 22 January 2015
Gerry is an independent director who has held key financial roles in both listed and unlisted companies in the building
and property development, and mining industries. He has had a 30 year corporate career with expertise and
experience in the financial, strategic, governance, management and human resource areas.
Other directorships (current and recent)
Gerry is currently a non-executive director of BoysTown (since February 2011), a national charitable organisation and
is a non-executive director of CuDeco Limited (since 27 April 2010), an ASX listed mining and exploration company.
Gerry has previously been an executive director of Villa World Limited from 2000 to 2005, at which time he was
CFO and General Manager.
Board Committee Membership
•
•
Member of the Audit and Risk Committee (since 28 November 2013)
Member of the Remuneration and Nomination Committee (since 5 February 2015)
•
•
Chair of the Audit and Risk Committee (since 18 June 2014)
Member of the Remuneration and Nomination Committee (since 5 February 2015)
Other directorships (current and recent)
In the past three years Mark has served as an executive director of Aveo Group Limited (20 July 2011 - 20 August
2012) and a non-executive director of PBD Developments Limited (21 July 2011 - 3 April 2013).
Company Secretary
Paulene Henderson B Bus Acc MBA CA
Chief Financial Officer / Company Secretary
Craig Treasure BASc (Surveying) (QUT), FDIA
Executive Director 17 February 2012 - 1 August 2012
Chairman and Executive Director 1 August 2012 - 5 October 2012
Chairman and Managing Director 5 October 2012 - 28 May 2014
Chief Executive Officer and Managing Director since 28 May 2014
Craig Treasure has more than 30 years experience in property development, specifically in the residential land and
housing sectors along the eastern seaboard of Australia. Craig has previously held a number of executive roles and
directorships within the property industry.
David Rennick BEc, LLB
Non-Executive Director since 1 September 2014
David is an independent director and senior Melbourne based lawyer with nearly three decades experience in the
property industry, having acted for leading developers and institutions as principal legal advisor and on property and
business strategy. His area of practice in property includes master planned community projects, property
development, corporate real estate, institutional property and retail centre developments and leasing.
He is currently a partner and Head of Australia, for international law firm Pinsent Masons. Prior to that role, he was a
property partner and then CEO of national law firm Maddocks where he was responsible for leadership, client and
people strategies and management.
Board Committee membership
•
•
Member of the Audit and Risk Committee (since 1 September 2014)
Chair of the Remuneration and Nomination Committee (since 5 February 2015)
Paulene has more than 25 years' experience in strategic finance and accounting roles, primarily in the property and
hospitality sectors. She combines technical accounting expertise and commercial acumen to manage all aspects of
Villa World's corporate financing, including bank relationships, treasury and forecasting as well as investor relations
activities.
Paulene has also worked with global professional services firm Ernst and Young and held senior financial roles with
two subsidiaries of Fortune 500 company Wyndham Worldwide.
Appointed Company Secretary 19 November 2012.
Alexander (Sandy) Beard BCom (UNSW), FCA, AICD
Chairman 25 January 2012 - 31 July 2012
Non-Executive Director 11 April 2011 - 2 September 2014
Sandy is the Managing Director of CVC Limited and an experienced financier of growth companies. CVC has been an
active participant in the property sector, undertaking investments ranging from real estate development to passive
financing positions. Sandy has gained considerable industry experience through his investee board roles.
Other directorships (current and recent)
Sandy is currently an Executive Director of CVC Limited (since 31 August 2000), Director of CVC Property
Managers Limited as Responsible Entity for CVC Property Fund (since 23 December 2005), Non-Executive Chair of
Cellnet Limited (since 15 December 2006) and a Non-Executive Director of Mnemon Group Limited (since 7 June
2007). In the past three years Sandy has also served as a Non-Executive Director of Amadeus Energy Limited (14
October 2009 - 29 March 2013).
Board Committee membership
•
Member of the Audit and Risk Committee (11 April 2011 - 28 May 2014)
24
25
25
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Directors' report
30 June 2015 (continued)
Directors' interests
Directors' interests in shares of Villa World Ltd
as of the date of this report
Mark Jewell
Craig Treasure
David Rennick
Gerry Lambert
Meetings of Directors
103,390
834,864
22,500
22,432
The number of meetings of Villa World Limited's Board of Directors and of each Board Committee held during the
year ended 30 June 2015 including the number of meetings attended by each Director are:
Mark Jewell
Craig Treasure
David Rennick
Gerry Lambert
Alexander (Sandy) Beard
Board meetings
B
A
18
18
18
18
16
15
12
11
2
2
Audit and Risk Committee
Remuneration and Nomination
Committee1
A
4
-
3
2
-
B
4
-
4
2
-
A
3
-
3
3
-
B
3
-
3
3
-
1
The Remuneration and nomination committee was established during FY15. The first meeting occurred on 5 February 2015.
As at 30 June 2015 the equity accounted investment in the Eynesbury Joint Venture was $10.9 million.
A = Number of meetings attended
ANZ Facility
B = Number of meetings held during the time the Director held office or was a member of the committee during the
period
During August 2015 Villa World and ANZ have agreed a credit approved term sheet to effect the following extension
to the ANZ facility: $80 million to March 2019 and $50 million to October 2020. The formal documentation process
Principal activities
During the year the principal activities of the Company continued to be the development and sale of residential land,
and the development, construction and sale of house and land packages.
Review of operations and consolidated results
Group Financial Summary
Revenue1
Expenses
Finance costs
Profit before income tax
Income tax expense
Profit for the period
Profit is attributable to:
Owners of Villa World Limited
Consolidated
30-Jun-15
$'000
324,289
(284,713)
(10,196)
29,380
(3,743)
25,637
30-Jun-14
$'000
236,656
(206,462)
(7,625)
22,569
(3,503)
19,066
25,637
19,066
1
Includes revenue from land and development, residential building and construction contracts, other income and share of
profit/(loss) from associates. Refer Consolidated Statement of Comprehensive Income.
A review of operations for the financial year and the results of those operations are set out in the Operating and
Financial Review.
Dividends
The Board declared an interim dividend of 6.0 cents per share fully franked on 17 February 2015. Payment was made
to shareholders on 2 April 2015.
26
26
27
Directors' report
30 June 2015 (continued)
Matters subsequent to the end of the financial year
Final Dividend
2015.
On 18 August 2015 the Board declared a fully franked final dividend of 10.0 cents per share. The ex-dividend date is 1
September 2015 and the record date for this dividend is 3 September 2015. Payment will be made on 30 September
As at 30 June 2015, an amount of $10.3 million is held as franking credits in the Company.
Investment in the Eynesbury Joint Venture
As previously disclosed the Company has entered into unconditional contracts for the sale of the Eynesbury project
(in which the Company holds a 50% interest). On 27 June 2014 the first tranche (comprising part of the land and the
golf course business) was completed at a sale price of $30.0 million plus GST.
Settlement of the second $30.0 million tranche, originally scheduled for 2 March 2015 has been extended until 28
August 2015, subject to appropriate commercial terms including the provision of further security, payment of
interest and a $2.0 million increase to the purchase price. The Company’s 50% share ($1.0 million) has not been
recognised as at 30 June 2015. Payments totaling $12.0 million have previously been made by the purchaser for the
second tranche, and released to the Eynesbury Joint Venture. Title to the second tranche property currently remains
with the Eynesbury Joint Venture.
is expected to be completed in September 2015.
REMUNERATION REPORT
The Directors are pleased to present the Remuneration Report for FY15 which details compensation arrangements in
place for the Company's key management personnel as defined in AASB 124 “Related Party Disclosures”. This Report
is presented in accordance with the requirements of the Corporations Act 2001 (the Act) and its regulations. This
information has been audited as required by section 308(3C) of the Act.
Directors and key management personnel disclosed in this report
Independent Chairman
Independent Non-executive Director
Independent Non-executive Director
Non-executive Director
Chief Executive Officer and Managing Director
Chief Operating Officer
Chief Financial Officer
Mark Jewell
David Rennick1
Gerald (Gerry) Lambert2
Alexander (Sandy) Beard3
Craig Treasure
Scott Payten4
Paulene Henderson
Non-executive directors
Remuneration strategy
1
2
3
4
David Rennick was appointed non-executive director 1 September 2014.
Gerald (Gerry) Lambert was appointed non-executive director 22 January 2015.
Alexander (Sandy) Beard resigned 2 September 2014.
Scott Payten ceased employment 24 September 2014.
Fees and payments to non-executive directors reflect the demands which are made on and the responsibilities of the
directors. Non-executive directors receive a fixed fee for their services. Fees are reviewed annually by the Board,
taking into account amounts paid to non-executive directors with comparable roles in the external market.
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Directors' report
30 June 2015 (continued)
Matters subsequent to the end of the financial year
Final Dividend
On 18 August 2015 the Board declared a fully franked final dividend of 10.0 cents per share. The ex-dividend date is 1
September 2015 and the record date for this dividend is 3 September 2015. Payment will be made on 30 September
2015.
As at 30 June 2015, an amount of $10.3 million is held as franking credits in the Company.
Investment in the Eynesbury Joint Venture
As previously disclosed the Company has entered into unconditional contracts for the sale of the Eynesbury project
(in which the Company holds a 50% interest). On 27 June 2014 the first tranche (comprising part of the land and the
golf course business) was completed at a sale price of $30.0 million plus GST.
Settlement of the second $30.0 million tranche, originally scheduled for 2 March 2015 has been extended until 28
August 2015, subject to appropriate commercial terms including the provision of further security, payment of
interest and a $2.0 million increase to the purchase price. The Company’s 50% share ($1.0 million) has not been
recognised as at 30 June 2015. Payments totaling $12.0 million have previously been made by the purchaser for the
second tranche, and released to the Eynesbury Joint Venture. Title to the second tranche property currently remains
with the Eynesbury Joint Venture.
The Remuneration and nomination committee was established during FY15. The first meeting occurred on 5 February 2015.
As at 30 June 2015 the equity accounted investment in the Eynesbury Joint Venture was $10.9 million.
A = Number of meetings attended
ANZ Facility
During August 2015 Villa World and ANZ have agreed a credit approved term sheet to effect the following extension
to the ANZ facility: $80 million to March 2019 and $50 million to October 2020. The formal documentation process
is expected to be completed in September 2015.
REMUNERATION REPORT
The Directors are pleased to present the Remuneration Report for FY15 which details compensation arrangements in
place for the Company's key management personnel as defined in AASB 124 “Related Party Disclosures”. This Report
is presented in accordance with the requirements of the Corporations Act 2001 (the Act) and its regulations. This
information has been audited as required by section 308(3C) of the Act.
Directors and key management personnel disclosed in this report
Mark Jewell
David Rennick1
Gerald (Gerry) Lambert2
Alexander (Sandy) Beard3
Craig Treasure
Scott Payten4
Paulene Henderson
Independent Chairman
Independent Non-executive Director
Independent Non-executive Director
Non-executive Director
Chief Executive Officer and Managing Director
Chief Operating Officer
Chief Financial Officer
Directors' interests in shares of Villa World Ltd
as of the date of this report
Directors' report
30 June 2015 (continued)
Directors' interests
Mark Jewell
Craig Treasure
David Rennick
Gerry Lambert
Meetings of Directors
103,390
834,864
22,500
22,432
The number of meetings of Villa World Limited's Board of Directors and of each Board Committee held during the
year ended 30 June 2015 including the number of meetings attended by each Director are:
Board meetings
Audit and Risk Committee
Committee1
Remuneration and Nomination
Mark Jewell
Craig Treasure
David Rennick
Gerry Lambert
Alexander (Sandy) Beard
A
18
18
15
11
2
B
18
18
16
12
2
A
4
-
3
2
-
B
4
-
4
2
-
A
3
-
3
3
-
B
3
-
3
3
-
B = Number of meetings held during the time the Director held office or was a member of the committee during the
During the year the principal activities of the Company continued to be the development and sale of residential land,
and the development, construction and sale of house and land packages.
Review of operations and consolidated results
Consolidated
30-Jun-15
$'000
324,289
(284,713)
(10,196)
29,380
(3,743)
25,637
30-Jun-14
$'000
236,656
(206,462)
(7,625)
22,569
(3,503)
19,066
25,637
19,066
Includes revenue from land and development, residential building and construction contracts, other income and share of
profit/(loss) from associates. Refer Consolidated Statement of Comprehensive Income.
A review of operations for the financial year and the results of those operations are set out in the Operating and
The Board declared an interim dividend of 6.0 cents per share fully franked on 17 February 2015. Payment was made
1
1
period
Principal activities
Group Financial Summary
Revenue1
Expenses
Finance costs
Profit before income tax
Income tax expense
Profit for the period
Profit is attributable to:
Owners of Villa World Limited
Financial Review.
Dividends
to shareholders on 2 April 2015.
Gerald (Gerry) Lambert was appointed non-executive director 22 January 2015.
3
Alexander (Sandy) Beard resigned 2 September 2014.
4
Scott Payten ceased employment 24 September 2014.
David Rennick was appointed non-executive director 1 September 2014.
2
1
Non-executive directors
Remuneration strategy
Fees and payments to non-executive directors reflect the demands which are made on and the responsibilities of the
directors. Non-executive directors receive a fixed fee for their services. Fees are reviewed annually by the Board,
taking into account amounts paid to non-executive directors with comparable roles in the external market.
26
27
27
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Directors' report
30 June 2015 (continued)
Remuneration report (continued)
Remuneration strategy (continued)
Fees are determined within an aggregate directors’ fee pool limit which is periodically recommended for approval by
shareholders. Shareholders have approved maximum aggregate Board and committee fees payable to non-executive
directors of $600,000.
The total of non-executive directors’ fees paid for the year ended 30 June 2015 was $234,262 (30 June 2014:
$188,084).
Non-executive directors’ remuneration is inclusive of additional fees paid to directors who sit on committees with an
additional fee payable for chairing committees.
Service Agreements
On appointment to the Board, all non-executive directors enter into a letter of appointment with the Company. The
letter of appointment sets out the term of appointment, services to be provided, remuneration, and corporate
policies and codes of conduct to be complied with.
Executive directors and key management personnel
Remuneration strategy
Key management personnel are those people who have the authority and responsibility for planning, directing and
controlling the Company's activities, directly or indirectly. They include the Managing Director and Chief Executive
Officer and the Chief Financial Officer (collectively referred to as the "Executive").
The objective of the Company’s executive remuneration framework is to ensure reward for performance is
competitive and appropriate for the results delivered. The framework provides a mix of fixed and variable
remuneration including appropriate incentives.
Executives do not participate in discussions relating to their own remuneration. The Company's remuneration and
reward framework for an executive include a combination of fixed remuneration and key performance related
incentives.
The framework aligns executive rewards with the creation of value for shareholders. Performance based rewards are
linked to the achievement of individual performance criteria and may be adjusted at the discretion of the Board. The
remuneration package for an executive is determined by the Board and assessed against the broader market.
Remuneration policy
The Board is responsible for determining the remuneration for directors and other key management personnel. The
Board’s objective is to ensure that remuneration policies and structures are fair and competitive and aligned with the
long term interests of the Company.
The Company’s remuneration framework is structured to:
•
•
•
•
Attract and motivate high quality talent to deliver superior long term returns for shareholders.
Align shareholders’ and employees’ interests and create value for shareholders by ensuring a reasonable
proportion of senior employees’ remuneration is based on growth in total shareholder returns (“TSR”).
Be fair and consistent.
Manage total rewards with emphasis on the “at risk” element as a motivator for senior executives.
Components of executive remuneration
Total fixed remuneration
Total Fixed Remuneration (“TFR”) is a market related base salary including superannuation contributions. As and when
considered appropriate, external remuneration consultants provide analysis and advice to ensure base pay is set to
reflect the market for comparable role. TFR is reviewed annually and upon change of role or responsibility.
Directors' report
30 June 2015 (continued)
Remuneration report (continued)
Short-term incentives
Executives have a target short term incentive ("STI") opportunity depending on the accountabilities of their role and
impact on the Company’s performance. Actual STI awards can range from 0-40% of TFR. These are awarded based
on the successful achievement of pre-determined Board approved Key Performance Indicators ("KPIs"). A sliding
scale element is incorporated into relevant KPIs to motivate executives to outperform base targets set. However, the
Board has the discretion to pay over and above these amounts.
Each year the Board considers the appropriate targets and KPIs to link to the STI plan and the level of payout if
targets are met for executives. This may include setting any maximum payout under the STI plan and minimum levels
of performance to trigger payment of STI.
The KPIs are set by reference to four criteria, which are shown below:
•
•
•
•
Financial targets based on the achievement of Board approved budgets, forecasts and compliance with
bank target ratios.
Business growth targets including the development and implementation of long-term strategic planning.
People and process improvements across the Company.
Maintenance and enhancement of work health and safety corporate compliance and product quality
platforms within the Company.
For the FY14 and FY15 years, the KPIs were linked to STI plans and were based on very similar criteria.
Long-term incentives
The Company operates long-term incentives ("LTIs") in the form of the Villa World Limited Option Plan. For options
that have been issued to date, the options vest at the completion of three years of service from the grant date.
Under the terms of the options granted to date, if the participating employee leaves the Company before the vesting
date, the options are cancelled, although the Board may waive this restriction at its discretion.
The chart below shows the mix between TFR, STI and LTI for executives for the financial years ending 30 June 2015
Total remuneration package components
TFR
STI - at risk
LTI
2015
2014
2015
2014
2015
2014
66%
98%
80%
52%
70%
75%
22%
-
17%
21%
18%
19%
12%
2%
3%
27%
12%
6%
Other than statutory entitlements, there are no termination benefits applicable to the current executives.
Remuneration and other terms of employment for executives are formalised in employment agreements. The key
provisions of the agreements for the year ended 30 June 2015 relating to remuneration are set out in the following
and 2014.
Executive Directors
Craig Treasure
Other executive KMPs
Scott Payten
Paulene Henderson
Termination Benefits
Employment agreements
table:
28
28
29
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Directors' report
30 June 2015 (continued)
Remuneration report (continued)
Remuneration strategy (continued)
directors of $600,000.
$188,084).
Fees are determined within an aggregate directors’ fee pool limit which is periodically recommended for approval by
shareholders. Shareholders have approved maximum aggregate Board and committee fees payable to non-executive
The total of non-executive directors’ fees paid for the year ended 30 June 2015 was $234,262 (30 June 2014:
Non-executive directors’ remuneration is inclusive of additional fees paid to directors who sit on committees with an
On appointment to the Board, all non-executive directors enter into a letter of appointment with the Company. The
letter of appointment sets out the term of appointment, services to be provided, remuneration, and corporate
additional fee payable for chairing committees.
Service Agreements
policies and codes of conduct to be complied with.
Executive directors and key management personnel
Remuneration strategy
Key management personnel are those people who have the authority and responsibility for planning, directing and
controlling the Company's activities, directly or indirectly. They include the Managing Director and Chief Executive
The objective of the Company’s executive remuneration framework is to ensure reward for performance is
competitive and appropriate for the results delivered. The framework provides a mix of fixed and variable
remuneration including appropriate incentives.
Executives do not participate in discussions relating to their own remuneration. The Company's remuneration and
reward framework for an executive include a combination of fixed remuneration and key performance related
The framework aligns executive rewards with the creation of value for shareholders. Performance based rewards are
linked to the achievement of individual performance criteria and may be adjusted at the discretion of the Board. The
remuneration package for an executive is determined by the Board and assessed against the broader market.
incentives.
Remuneration policy
The Board is responsible for determining the remuneration for directors and other key management personnel. The
Board’s objective is to ensure that remuneration policies and structures are fair and competitive and aligned with the
long term interests of the Company.
The Company’s remuneration framework is structured to:
•
•
•
•
Attract and motivate high quality talent to deliver superior long term returns for shareholders.
Align shareholders’ and employees’ interests and create value for shareholders by ensuring a reasonable
proportion of senior employees’ remuneration is based on growth in total shareholder returns (“TSR”).
Be fair and consistent.
Manage total rewards with emphasis on the “at risk” element as a motivator for senior executives.
Components of executive remuneration
Total fixed remuneration
Total Fixed Remuneration (“TFR”) is a market related base salary including superannuation contributions. As and when
considered appropriate, external remuneration consultants provide analysis and advice to ensure base pay is set to
reflect the market for comparable role. TFR is reviewed annually and upon change of role or responsibility.
Directors' report
30 June 2015 (continued)
Remuneration report (continued)
Short-term incentives
Executives have a target short term incentive ("STI") opportunity depending on the accountabilities of their role and
impact on the Company’s performance. Actual STI awards can range from 0-40% of TFR. These are awarded based
on the successful achievement of pre-determined Board approved Key Performance Indicators ("KPIs"). A sliding
scale element is incorporated into relevant KPIs to motivate executives to outperform base targets set. However, the
Board has the discretion to pay over and above these amounts.
Each year the Board considers the appropriate targets and KPIs to link to the STI plan and the level of payout if
targets are met for executives. This may include setting any maximum payout under the STI plan and minimum levels
of performance to trigger payment of STI.
The KPIs are set by reference to four criteria, which are shown below:
•
•
•
•
Financial targets based on the achievement of Board approved budgets, forecasts and compliance with
bank target ratios.
Business growth targets including the development and implementation of long-term strategic planning.
People and process improvements across the Company.
Maintenance and enhancement of work health and safety corporate compliance and product quality
platforms within the Company.
For the FY14 and FY15 years, the KPIs were linked to STI plans and were based on very similar criteria.
Officer and the Chief Financial Officer (collectively referred to as the "Executive").
Long-term incentives
The Company operates long-term incentives ("LTIs") in the form of the Villa World Limited Option Plan. For options
that have been issued to date, the options vest at the completion of three years of service from the grant date.
Under the terms of the options granted to date, if the participating employee leaves the Company before the vesting
date, the options are cancelled, although the Board may waive this restriction at its discretion.
The chart below shows the mix between TFR, STI and LTI for executives for the financial years ending 30 June 2015
and 2014.
Executive Directors
Craig Treasure
Other executive KMPs
Scott Payten
Paulene Henderson
Termination Benefits
Total remuneration package components
TFR
2015
STI - at risk
2014
2015
2014
LTI
2015
2014
66%
98%
80%
52%
70%
75%
22%
-
17%
21%
18%
19%
12%
2%
3%
27%
12%
6%
Other than statutory entitlements, there are no termination benefits applicable to the current executives.
Employment agreements
Remuneration and other terms of employment for executives are formalised in employment agreements. The key
provisions of the agreements for the year ended 30 June 2015 relating to remuneration are set out in the following
table:
28
29
29
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Directors' report
30 June 2015 (continued)
Remuneration report (continued)
Details of remuneration
Non-executive Directors
Mark Jewell
David Rennick 1
Gerald (Gerry) Lambert 2
Alexander (Sandy) Beard 3
Sub-total non-executive directors
Chief Executive Officer and Managing
Other key management personnel
Director
Craig Treasure
Scott Payten 4
Paulene Henderson
Sub-total Chief Executive Officer and
Managing Director and other key
2015
Name
1
2
3
4
5
6
Short-term employee
benefits
Post
Long-
employment
term
Share
based
benefits
benefits
payments
salary and
Cash
Super-
bonus
annuation
Long
service
leave5
Termi-
nation
benefits Options6
$
$
$
$
$
-
-
-
-
-
10,450
5,700
3,034
-
19,184
-
-
-
-
-
-
-
-
-
-
Total
$
-
-
-
-
-
120,450
65,700
34,972
13,140
234,262
Cash
fees
$
110,000
60,000
31,938
13,140
215,078
571,963
199,905
18,783 2,755
-
100,000
893,406
103,921
256,217
-
9,392
764 445,692 (25,000)
59,369
18,783 4,740
-
8,333
534,769
347,442
management personnel
932,101 259,274
46,958 8,259 445,692
83,333
1,775,617
Total
1,147,179 259,274
66,142 8,259 445,692
83,333 2,009,879
David Rennick was appointed non-executive director 1 September 2014
Gerry Lambert was appointed non-executive director 22 January 2015.
Alexander Beard resigned 2 September 2014. Alexander is the Managing Director of CVC Limited and his director's fees are paid
Scott Payten ceased employment 24 September 2014 and received a termination payment inclusive of annual leave entitlement,
long service leave, notice period and redundancy.
Long service leave represents the amount expensed by the Company for the period.
The amount shown in the share-based payments - options column does not represent an amount paid to the individual but rather
the amount expensed by the Company. Refer note E2 (c) - Expenses arising from share-based payment transactions.
Directors' report
30 June 2015 (continued)
Remuneration report (continued)
Employment agreements (continued)
Base fee inclusive
of superannuation
Term of
agreement Notice period Review period
Anticipated annual
cash bonus (%)1
Details of the remuneration of the directors and executives are set out below:
Chief Executive Officer and
Managing Director
Craig Treasure
Other key management
personnel
Paulene Henderson
1
Anticipated cash bonus as a proportion of base salary depending on corporate and individual performance.
$600,000
$275,000
6 months
6 months
Rolling
Rolling
Annual
Annual
40%
25%
Consequences of performance on shareholder wealth
The Company ties incentives to share price growth indirectly and other measureable KPIs that drive results and
shareholder value creation. The overall level of an executive’s compensation takes into account the performance of
the Company in respect of the current financial year and the previous four financial years.
Performance KPI
Revenue
Debt
Gearing
NTA per security (cents)
Dividends (relating to the year)
Interim dividend (cents)
Final dividend (cents)
Earnings per share (cents)
Share price at 30 June
FY11
$m
$110.8
$62.4
23.5%
178.1
-
-
11.4
$0.90
FY12
$m
$146.5
$74.2
27.6%
201.0
-
-
10.1
$0.79
FY13
$m
$169.4
$70.0
24.4%
185.0
-
-
(18.2)
$1.13
FY14
$m
$229.5
$69.1
18.7%
192.0
6.0
9.0
21.5
$2.02
FY15
$m
$321.6
$92.0
16.9%
200.0
6.0
10.0
25.6
$2.00
Voting and comments made at the company's 2014 Annual General Meeting
The Company received 95.2% of “yes” votes on its remuneration report for the 2014 financial year. The Company did
not receive any specific feedback at the AGM or throughout the year on its remuneration practices.
to CVC Managers Pty Ltd.
30
30
31
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Directors' report
30 June 2015 (continued)
Remuneration report (continued)
Employment agreements (continued)
Chief Executive Officer and
Managing Director
Craig Treasure
Other key management
personnel
Paulene Henderson
1
Base fee inclusive
Term of
of superannuation
agreement Notice period Review period
Anticipated annual
cash bonus (%)1
$600,000
Rolling
6 months
Annual
Anticipated cash bonus as a proportion of base salary depending on corporate and individual performance.
$275,000
Rolling
6 months
Annual
Consequences of performance on shareholder wealth
The Company ties incentives to share price growth indirectly and other measureable KPIs that drive results and
shareholder value creation. The overall level of an executive’s compensation takes into account the performance of
the Company in respect of the current financial year and the previous four financial years.
Performance KPI
Revenue
Debt
Gearing
NTA per security (cents)
Dividends (relating to the year)
Interim dividend (cents)
Final dividend (cents)
Earnings per share (cents)
Share price at 30 June
FY11
$m
$110.8
$62.4
23.5%
178.1
-
-
11.4
$0.90
FY12
$m
$146.5
$74.2
27.6%
201.0
-
-
10.1
$0.79
FY13
$m
$169.4
$70.0
24.4%
185.0
-
-
(18.2)
$1.13
FY14
$m
$229.5
$69.1
18.7%
192.0
6.0
9.0
21.5
$2.02
FY15
$m
$321.6
$92.0
16.9%
200.0
6.0
10.0
25.6
$2.00
Voting and comments made at the company's 2014 Annual General Meeting
The Company received 95.2% of “yes” votes on its remuneration report for the 2014 financial year. The Company did
not receive any specific feedback at the AGM or throughout the year on its remuneration practices.
Directors' report
30 June 2015 (continued)
Remuneration report (continued)
Details of remuneration
Details of the remuneration of the directors and executives are set out below:
40%
25%
2015
Name
Non-executive Directors
Mark Jewell
David Rennick 1
Gerald (Gerry) Lambert 2
Alexander (Sandy) Beard 3
Sub-total non-executive directors
Chief Executive Officer and Managing
Director
Craig Treasure
Other key management personnel
Scott Payten 4
Paulene Henderson
Sub-total Chief Executive Officer and
Managing Director and other key
management personnel
Total
Cash
salary and
fees
$
110,000
60,000
31,938
13,140
215,078
Short-term employee
benefits
Post
employment
benefits
Share
based
payments
Cash
bonus
$
Super-
annuation
$
Termi-
nation
benefits Options6
$
$
Total
$
Long-
term
benefits
Long
service
leave5
$
-
-
-
-
-
10,450
5,700
3,034
-
19,184
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
120,450
65,700
34,972
13,140
234,262
571,963
199,905
18,783 2,755
-
100,000
893,406
103,921
256,217
-
59,369
9,392
18,783 4,740
764 445,692 (25,000)
8,333
-
534,769
347,442
932,101 259,274
1,147,179 259,274
46,958 8,259 445,692
66,142 8,259 445,692
83,333
1,775,617
83,333 2,009,879
1
David Rennick was appointed non-executive director 1 September 2014
2
Gerry Lambert was appointed non-executive director 22 January 2015.
3
Alexander Beard resigned 2 September 2014. Alexander is the Managing Director of CVC Limited and his director's fees are paid
to CVC Managers Pty Ltd.
4
Scott Payten ceased employment 24 September 2014 and received a termination payment inclusive of annual leave entitlement,
long service leave, notice period and redundancy.
5
Long service leave represents the amount expensed by the Company for the period.
6
The amount shown in the share-based payments - options column does not represent an amount paid to the individual but rather
the amount expensed by the Company. Refer note E2 (c) - Expenses arising from share-based payment transactions.
30
31
31
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Directors' report
30 June 2015 (continued)
Remuneration report (continued)
Details of remuneration (continued)
2014
Name
Non-executive Directors
Mark Jewell1
Alexander (Sandy) Beard2
Troy Harry3
Sub-total non-executive directors
Chief Executive Officer and Managing
Director
Craig Treasure
Other Key management personnel
Scott Payten
Paulene Henderson
Sub-total Chief Executive Officer and
Managing Director and other key
management personnel
Total
Short-term
employee benefits
Post-
employment
benefits
Cash
bonus
$
Super-
annuation
$
Long-
term
benefits
Long
service
leave4
$
Share
based
payments
Termin-
ation
benefits Options5
$
$
Total
$
-
-
-
-
4,270
-
4,995
9,265
-
-
-
-
-
-
-
-
-
-
-
-
50,429
78,660
58,995
188,084
Cash
salary and
fees
$
46,159
78,660
54,000
178,819
482,225
128,690
17,775
2,734
- 100,000
731,424
382,225
232,225
72,500
45,313
17,775
17,775
6,500
5,677
- 25,000 504,000
8,333 309,323
-
Options issued to key management personnel
Share holdings of key management personnel
Consolidated
30-Jun-15
30-Jun-14
$'000
83
83
$'000
133
133
1,096,675 246,503
1,275,494 246,503
53,325
62,590
14,911
14,911
-
-
133,333 1,544,747
133,333 1,732,831
The numbers of shares in the Company held during the financial year by each key management personnel, including
their closely related parties, are set out below. There were no shares granted during the reporting period as
1
Mark Jewell was appointed non-executive Director on 28 November 2013 and Independent Chairman on 28 May 2014.
2
Alexander Beard is the Managing Director of CVC Limited and his director's fees are paid to CVC Managers Pty Ltd.
3
Troy Harry resigned on 31 March 2014.
4
Long service leave represents the amount expensed by the Company for the period.
5
The amount shown in the share-based payments - options column does not represent an amount paid to the individual but rather
the amount expensed by the Company. Refer note E2 (c) - Expenses arising from Share-based payment transactions.
Share-based payments
(a) Villa World Limited Option Plan
Share-based compensation benefits are provided to key personnel via an employee option scheme. Under the terms
of the options granted to date, the options will only vest if the participating key management personnel continue
their respective service agreements with the Company for three years from the grant date.
The assessed fair value of the options as at the grant date is independently determined using a Binomial Option Price
Valuation Model. Details of the assumptions made in determining the fair value are discussed in Note E2 (b) - Equity
instrument disclosures relating to key management personnel.
The following table discloses the number of share options granted, vested or lapsed during the year. Share options do
not carry any voting or dividend rights, and can only be exercised once the vesting conditions have been met, until
their expiry date.
32
32
33
Directors' report
30 June 2015 (continued)
Remuneration report (continued)
Share based payments (continued)
Key management
personnel
Options previously
Exercise
Granted as
options at
granted
Grant Date Expiry Date
Price
compensation
grant date1 Vesting date
during year
Value of
Forfeited /
lapsed
Craig Treasure
26/07/2013 26/01/2017
3,000,000 $300,000
26/07/2016
Paulene Henderson 26/07/2013 26/01/2017
Scott Payten
26/07/2013 26/01/2017
250,000
$25,000
26/07/2016
750,000
$75,000
26/07/2016
750,000
1The value of options at grant date is 10 cents per option and is calculated in accordance with AASB2 Share-based Payments.
$1.25
$1.25
$1.25
-
-
(b) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee
benefit expense were as follows:
compensation.
Name
Directors
Mark Jewell
Craig
David Rennick
Gerald
(Gerry)
Lambert
Alexander
(Sandy) Beard1
Other key
management
personnel
Paulene
Henderson
Scott Payten2
Balance at the start of
Granted during
Other changes during
Balance at the end of
30-Jun-15
the year
the year
the year
the year
Direct
holding
Indirect
holding
Direct
holding
Indirect
holding
Direct
holding
Indirect
holding
Direct
holding
Indirect
holding
-
100,958
2,432
-
103,390
Treasure
250,000
550,000
2,432
252,432
582,432
32,432
22,500
22,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,432
22,432
-
-
-
-
-
-
-
-
65,816
5,526
20,652
(5,626)
86,468
-
1. Alexander (Sandy) Beard is the Managing Director of CVC Limited, which owns 169,147 shares (June 2014: 15,185,484) in Villa
World Limited. Sandy resigned 2 September 2014.
2. Scott Payten ceased employment on 24 September 2014.
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Directors' report
30 June 2015 (continued)
Remuneration report (continued)
Details of remuneration (continued)
Non-executive Directors
Mark Jewell1
Alexander (Sandy) Beard2
Troy Harry3
Sub-total non-executive directors
Chief Executive Officer and Managing
Director
Craig Treasure
Scott Payten
Paulene Henderson
Other Key management personnel
Sub-total Chief Executive Officer and
Managing Director and other key
management personnel
2014
Name
Total
1
2
3
4
5
Short-term
Post-
employee benefits
Long-
employment
term
Share
based
benefits
benefits
payments
salary and
Cash
Super-
bonus
annuation
Long
Termin-
service
leave4
ation
benefits Options5
$
$
$
$
$
-
-
-
-
4,270
-
4,995
9,265
-
-
-
-
-
-
-
-
Total
$
-
-
-
-
50,429
78,660
58,995
188,084
Cash
fees
$
46,159
78,660
54,000
178,819
482,225
128,690
17,775
2,734
- 100,000
731,424
382,225
232,225
72,500
45,313
17,775
17,775
6,500
5,677
- 25,000 504,000
-
8,333 309,323
1,096,675 246,503
1,275,494 246,503
53,325
62,590
14,911
14,911
-
-
133,333 1,544,747
133,333 1,732,831
Mark Jewell was appointed non-executive Director on 28 November 2013 and Independent Chairman on 28 May 2014.
Alexander Beard is the Managing Director of CVC Limited and his director's fees are paid to CVC Managers Pty Ltd.
Troy Harry resigned on 31 March 2014.
Long service leave represents the amount expensed by the Company for the period.
The amount shown in the share-based payments - options column does not represent an amount paid to the individual but rather
the amount expensed by the Company. Refer note E2 (c) - Expenses arising from Share-based payment transactions.
Share-based payments
(a) Villa World Limited Option Plan
Share-based compensation benefits are provided to key personnel via an employee option scheme. Under the terms
of the options granted to date, the options will only vest if the participating key management personnel continue
their respective service agreements with the Company for three years from the grant date.
The assessed fair value of the options as at the grant date is independently determined using a Binomial Option Price
Valuation Model. Details of the assumptions made in determining the fair value are discussed in Note E2 (b) - Equity
instrument disclosures relating to key management personnel.
The following table discloses the number of share options granted, vested or lapsed during the year. Share options do
not carry any voting or dividend rights, and can only be exercised once the vesting conditions have been met, until
their expiry date.
Directors' report
30 June 2015 (continued)
Remuneration report (continued)
Share based payments (continued)
Exercise
Price
Grant Date Expiry Date
Options previously
granted
Key management
personnel
Craig Treasure
26/07/2013 26/01/2017
Paulene Henderson 26/07/2013 26/01/2017
26/07/2013 26/01/2017
Scott Payten
1The value of options at grant date is 10 cents per option and is calculated in accordance with AASB2 Share-based Payments.
3,000,000 $300,000
$25,000
$75,000
26/07/2016
26/07/2016
26/07/2016
Granted as
compensation
250,000
750,000
$1.25
$1.25
$1.25
-
-
750,000
Value of
options at
grant date1 Vesting date
Forfeited /
lapsed
during year
(b) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee
benefit expense were as follows:
Options issued to key management personnel
Share holdings of key management personnel
Consolidated
30-Jun-15
$'000
83
83
30-Jun-14
$'000
133
133
The numbers of shares in the Company held during the financial year by each key management personnel, including
their closely related parties, are set out below. There were no shares granted during the reporting period as
compensation.
30-Jun-15
Balance at the start of
the year
Granted during
the year
Other changes during
Balance at the end of
the year
the year
Name
Directors
Mark Jewell
Craig
Treasure
David Rennick
Gerald
(Gerry)
Lambert
Alexander
(Sandy) Beard1
Other key
management
personnel
Paulene
Henderson
Scott Payten2
Direct
holding
Indirect
holding
Direct
holding
Indirect
holding
Direct
holding
Indirect
holding
Direct
holding
Indirect
holding
-
100,958
250,000
-
550,000
-
-
-
-
-
-
5,526
65,816
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,432
-
103,390
2,432
-
32,432
22,500
252,432
-
582,432
22,500
-
-
-
-
22,432
-
20,652
(5,626)
-
-
-
-
22,432
-
86,468
-
1. Alexander (Sandy) Beard is the Managing Director of CVC Limited, which owns 169,147 shares (June 2014: 15,185,484) in Villa
World Limited. Sandy resigned 2 September 2014.
2. Scott Payten ceased employment on 24 September 2014.
32
33
33
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Directors' report
30 June 2015 (continued)
Remuneration report (continued)
Share holdings of key management personnel (continued)
30-Jun-14
Balance at the start of
the year
Granted during
the year
Other changes during
Balance at the end of
the year
the year
Name
Directors
Mark Jewell
Craig
Treasure
Sandy Beard1
Troy Harry2
Other key
management
personnel
Scott Payten
Paulene
Henderson
Direct
holding
Indirect
holding
Direct
holding
Indirect
holding
Direct
holding
Indirect
holding
Direct
holding
Indirect
holding
-
-
200,000
-
-
500,000
-
1,100,000
760
-
-
50,050
-
-
-
-
-
-
-
-
-
-
-
-
-
100,958
-
100,958
50,000
50,000
-
-
- (1,100,000)
250,000
-
-
550,000
-
-
4,766
-
5,526
-
-
15,766
-
65,816
Ernst & Young during or since the financial year.
1
Alexander (Sandy) Beard is the Managing Director of CVC Limited, which owns 15,185,484 shares (June 2013: 17,593,604 shares) in
Villa World Limited.
2
Troy Harry resigned on 31 March 2014.
Environmental regulation
The Company is subject to environmental regulation in respect of its land development and construction activities as
set out below:
(i) Land development approvals
Approvals are required for land development from various Councils and other government agencies. Those
Councils and agencies will assess environmental factors when issuing approvals and, where applicable, will
impose relevant conditions. To the best of the Directors’ knowledge, all activities have been undertaken in
compliance with the requirements of all development approvals.
(ii) Dwelling construction/building approvals
Building approvals are obtained for the construction of dwellings from the relevant Councils. The construction
of dwellings is subject to strict requirements regarding environmental impacts including noise, silt, dust, run off
and drainage. To the best of the Directors’ knowledge, all construction activities have been undertaken in
compliance with the requirements of building approvals, Council requirements and other applicable laws.
Indemnification and Insurance of officers and auditors
Indemnification
During the year, the Company paid premiums for policies insuring directors and officers of the Company and its
related bodies corporate against certain liabilities (subject to certain exclusions and to the extent permitted by law).
The Directors have not included details of the nature of the liabilities covered or the amount of the premium paid in
respect of the directors’ and officers’ insurance policies as (in accordance with normal practice) such disclosure is
prohibited under the terms of the policies.
Insurance premiums
The Company’s constitution provides that it must indemnify, on a full indemnity basis and to the full extent permitted
by law, officers of the Company and its related bodies corporate for all losses and liabilities incurred by the person in
their position as an officer, unless covered by insurance.
34
34
35
Directors' report
30 June 2015 (continued)
Insurance premiums (continued)
The Company has entered into Deeds of Indemnity in favour of each of the directors referred to in this report who
held office during the year and the Company Secretary. Additionally, separate Deeds of Indemnity have been
entered into with other persons who have been requested to act as directors or officers of the Company or its
related bodies corporate. The indemnities in these deeds operate to the full extent permitted by law and are not
subject to a monetary limit. The Company is not aware of any liability having arisen and no claims have been made
during or since the financial year under the Deeds of Indemnity.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law,
indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a
liability incurred as such an officer or auditor.
Indemnity of auditors
Details of the amounts paid to the auditors of the Company, Ernst & Young for audit and non-audit services provided
during the year are set out in note E3 - Remuneration of auditors. To the extent permitted by law, the Company has
agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement agreement against
claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify
Non-audit services
Details of the amounts paid or payable to the auditor (Ernst & Young) for audit and non-audit services provided
during the year are set out in note E3 - Remuneration of auditors.
The Board has considered the position and, in accordance with the advice received from the Audit and Risk
Committee, is satisfied that the provision of non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the auditor's
provision of non-audit services did not compromise the Act's independence requirements because none of the
services undermine the general principles relating to auditor independence as set out in APES110 Code of Ethics for
The Audit and Risk Committee reviewed all non-audit services to ensure they did not impact the auditor's impartiality
Professional Accountants.
and objectivity.
Auditor's independence declaration
set out on page 36.
Rounding of amounts
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is
The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments
Commission, relating to the 'rounding off' of amounts in the directors' report. Amounts in the directors' report have
been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the
nearest dollar.
This report is made in accordance with a resolution of Directors.
Chief Executive Officer and Managing Director
Craig Treasure
Gold Coast
18 August 2015
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Directors' report
30 June 2015 (continued)
Remuneration report (continued)
Share holdings of key management personnel (continued)
Balance at the start of
Granted during
Other changes during
Balance at the end of
30-Jun-14
the year
the year
the year
the year
Direct
holding
Indirect
holding
Direct
holding
Indirect
holding
Direct
holding
Indirect
holding
Direct
holding
Indirect
holding
200,000
500,000
50,000
50,000
250,000
550,000
-
-
-
1,100,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,958
-
100,958
-
-
- (1,100,000)
-
-
-
-
-
Scott Payten
760
4,766
-
5,526
-
50,050
-
15,766
-
65,816
Name
Directors
Mark Jewell
Craig
Treasure
Sandy Beard1
Troy Harry2
Other key
management
personnel
Paulene
Henderson
1
2
The Company is subject to environmental regulation in respect of its land development and construction activities as
Villa World Limited.
Troy Harry resigned on 31 March 2014.
Environmental regulation
set out below:
(i) Land development approvals
Approvals are required for land development from various Councils and other government agencies. Those
Councils and agencies will assess environmental factors when issuing approvals and, where applicable, will
impose relevant conditions. To the best of the Directors’ knowledge, all activities have been undertaken in
compliance with the requirements of all development approvals.
(ii) Dwelling construction/building approvals
Building approvals are obtained for the construction of dwellings from the relevant Councils. The construction
of dwellings is subject to strict requirements regarding environmental impacts including noise, silt, dust, run off
and drainage. To the best of the Directors’ knowledge, all construction activities have been undertaken in
compliance with the requirements of building approvals, Council requirements and other applicable laws.
Indemnification and Insurance of officers and auditors
Indemnification
During the year, the Company paid premiums for policies insuring directors and officers of the Company and its
related bodies corporate against certain liabilities (subject to certain exclusions and to the extent permitted by law).
The Directors have not included details of the nature of the liabilities covered or the amount of the premium paid in
respect of the directors’ and officers’ insurance policies as (in accordance with normal practice) such disclosure is
prohibited under the terms of the policies.
Insurance premiums
The Company’s constitution provides that it must indemnify, on a full indemnity basis and to the full extent permitted
by law, officers of the Company and its related bodies corporate for all losses and liabilities incurred by the person in
their position as an officer, unless covered by insurance.
Directors' report
30 June 2015 (continued)
Insurance premiums (continued)
The Company has entered into Deeds of Indemnity in favour of each of the directors referred to in this report who
held office during the year and the Company Secretary. Additionally, separate Deeds of Indemnity have been
entered into with other persons who have been requested to act as directors or officers of the Company or its
related bodies corporate. The indemnities in these deeds operate to the full extent permitted by law and are not
subject to a monetary limit. The Company is not aware of any liability having arisen and no claims have been made
during or since the financial year under the Deeds of Indemnity.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law,
indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a
liability incurred as such an officer or auditor.
Indemnity of auditors
Details of the amounts paid to the auditors of the Company, Ernst & Young for audit and non-audit services provided
during the year are set out in note E3 - Remuneration of auditors. To the extent permitted by law, the Company has
agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement agreement against
claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify
Ernst & Young during or since the financial year.
Alexander (Sandy) Beard is the Managing Director of CVC Limited, which owns 15,185,484 shares (June 2013: 17,593,604 shares) in
Non-audit services
Details of the amounts paid or payable to the auditor (Ernst & Young) for audit and non-audit services provided
during the year are set out in note E3 - Remuneration of auditors.
The Board has considered the position and, in accordance with the advice received from the Audit and Risk
Committee, is satisfied that the provision of non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the auditor's
provision of non-audit services did not compromise the Act's independence requirements because none of the
services undermine the general principles relating to auditor independence as set out in APES110 Code of Ethics for
Professional Accountants.
The Audit and Risk Committee reviewed all non-audit services to ensure they did not impact the auditor's impartiality
and objectivity.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is
set out on page 36.
Rounding of amounts
The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments
Commission, relating to the 'rounding off' of amounts in the directors' report. Amounts in the directors' report have
been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the
nearest dollar.
This report is made in accordance with a resolution of Directors.
Craig Treasure
Chief Executive Officer and Managing Director
Gold Coast
18 August 2015
34
35
35
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Auditor’s Independence Declaration to the Directors of Villa World
Limited
In relation to our audit of the financial report of Villa World Limited for the financial year ended 30
June 2015, to the best of my knowledge and belief, there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001 or any applicable code of professional
conduct.
Corporate governance statement
30 June 2015
Corporate governance statement
The Board believes that genuine commitment to good corporate governance is essential to the performance and
sustainability of the Company's business.
The Board has given due consideration to the ASX 'Corporate Governance Principles and Recommendations', which
offer a framework for good corporate governance. The Board has approved the Corporate Governance Statement
for the year ended 30 June 2015, which is available in the Corporate Governance section of its website at
http://www.villaworld.com.au/PDF/Corporate Governance Statement.pdf
Ernst & Young
Ric Roach
Partner
18 August 2015
36
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
37
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Corporate governance statement
30 June 2015
Corporate governance statement
The Board believes that genuine commitment to good corporate governance is essential to the performance and
sustainability of the Company's business.
The Board has given due consideration to the ASX 'Corporate Governance Principles and Recommendations', which
offer a framework for good corporate governance. The Board has approved the Corporate Governance Statement
for the year ended 30 June 2015, which is available in the Corporate Governance section of its website at
http://www.villaworld.com.au/PDF/Corporate Governance Statement.pdf
37
37
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Villa World Limited ABN 38 117 546 326
Annual report - 30 June 2015
Contents
Financial statements
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors' declaration
Independent auditor's report to the members
Page
39
40
41
42
43
76
77
Consolidated statement of comprehensive income
For the year ended 30 June 2015
Revenue from continuing operations
Revenue from land development, residential building and construction
Cost of land development, residential building and construction contracts
contracts
Gross Margin
Other income
Net impairment of development land
Share of profit/(loss) from associates and joint ventures
Other expenses from ordinary activities
Property sales and marketing expenses
Land holding costs
Legal and professional costs
Employee benefits
Depreciation and amortisation expense
Administration costs and other expenses
Finance costs
Profit/(Loss) before income tax
Income tax (expense)/benefit
Profit/(Loss) for the period
Profit/(Loss) is attributable to:
Owners of Villa World Limited
Earnings per share for profit/(loss) attributable to the ordinary equity
holders of the Company:
Basic earnings per share
Diluted earnings per share
Profit/(Loss) for the period
Other comprehensive income
Items that may be reclassified to profit or loss
Changes in the fair value of cash flow hedges
Income tax relating to these items
Other comprehensive income for the period, net of tax
Total comprehensive income for the period, net of tax
Total comprehensive income for the period is attributable to:
Equity holders of the company
Notes
Consolidated
30-Jun-15
30-Jun-14
$'000
$'000
A1
A1
A1
D2
C5
A5
321,550
(243,760)
77,790
911
77
1,828
(17,963)
(3,565)
(943)
(14,352)
(958)
(3,249)
(10,196)
29,380
(3,743)
25,637
229,450
(172,628)
56,822
3,439
108
3,767
(14,879)
(3,210)
(1,018)
(11,448)
(450)
(2,937)
(7,625)
22,569
(3,503)
19,066
25,637
19,066
Cents
Cents
A2
A2
25.6
25.2
21.8
21.5
Consolidated
Notes
30-Jun-15
30-Jun-14
$'000
25,637
$'000
19,066
C3(a)
C3(a)
(1,805)
541
(1,264)
24,373
(1,080)
324
(756)
18,310
24,373
18,310
38
38
39
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
FINANCIAL STATEMENTSVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Villa World Limited ABN 38 117 546 326
Annual report - 30 June 2015
Contents
Financial statements
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors' declaration
Independent auditor's report to the members
Page
39
40
41
42
43
76
77
Consolidated statement of comprehensive income
For the year ended 30 June 2015
Notes
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
Revenue from continuing operations
Revenue from land development, residential building and construction
contracts
Cost of land development, residential building and construction contracts
Gross Margin
Other income
Net impairment of development land
Share of profit/(loss) from associates and joint ventures
Other expenses from ordinary activities
Property sales and marketing expenses
Land holding costs
Legal and professional costs
Employee benefits
Depreciation and amortisation expense
Administration costs and other expenses
Finance costs
Profit/(Loss) before income tax
Income tax (expense)/benefit
Profit/(Loss) for the period
Profit/(Loss) is attributable to:
Owners of Villa World Limited
A1
A1
A1
D2
C5
A5
321,550
(243,760)
77,790
911
77
1,828
(17,963)
(3,565)
(943)
(14,352)
(958)
(3,249)
(10,196)
29,380
(3,743)
25,637
229,450
(172,628)
56,822
3,439
108
3,767
(14,879)
(3,210)
(1,018)
(11,448)
(450)
(2,937)
(7,625)
22,569
(3,503)
19,066
25,637
19,066
Cents
Cents
Earnings per share for profit/(loss) attributable to the ordinary equity
holders of the Company:
Basic earnings per share
Diluted earnings per share
A2
A2
25.6
25.2
21.8
21.5
Profit/(Loss) for the period
Other comprehensive income
Items that may be reclassified to profit or loss
Changes in the fair value of cash flow hedges
Income tax relating to these items
Other comprehensive income for the period, net of tax
Total comprehensive income for the period, net of tax
Total comprehensive income for the period is attributable to:
Equity holders of the company
Notes
C3(a)
C3(a)
Consolidated
30-Jun-15
$'000
25,637
30-Jun-14
$'000
19,066
(1,805)
541
(1,264)
24,373
(1,080)
324
(756)
18,310
24,373
18,310
38
39
39
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
FINANCIAL STATEMENTSVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Consolidated balance sheet
As at 30 June 2015
Consolidated statement of changes in equity
For the year ended 30 June 2015
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
Non-current assets
Inventories
Property, plant and equipment
Investments accounted for using the equity method
Deferred tax assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Current tax liabilities
Employee benefits
Service warranties
Other provisions
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Employee benefits - long service leave
Other provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Other reserves
Retained earnings/(Accumulated losses)
Capital and reserves attributable to owners of Villa World Limited
Total equity
Notes
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
B2
B1
B1
D2
A5(d)
B3
B4(a)
B3
C4
C2
C3(a)
22,571
41,907
191,318
3,588
259,384
148,326
898
16,779
7,286
173,289
432,673
96,452
1,196
635
14,983
239
113,505
5,926
92,044
339
261
98,570
212,075
220,598
12,118
16,899
123,660
1,978
154,655
134,563
1,125
17,968
8,958
162,614
317,269
54,856
-
500
10,079
384
65,819
1,520
69,086
351
247
71,204
137,023
180,246
444,286
174,190
(397,878)
220,598
220,598
413,375
164,774
(397,903)
180,246
180,246
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
40
40
Attributable to owners of Villa World Limited
Contributed
Cash flow
Other
Profit
Retained
equity
$'000
382,125
hedges
Reserves
Reserve
earnings
$'000
(657)
$'000
220
$'000
$'000
- (245,556)
136,132
Total
$'000
Consolidated entity
Notes
Balance at 1 July 2013
Profit for the year as reported in
the 2014 financial statements
Movement in hedge reserve (net
of tax)
the period
Total comprehensive income for
Contributions of equity, net of
transaction costs and tax
C2
26,292
Securities issued under the share
purchase plan, net of transaction
(756)
(756)
costs and tax
C2
4,958
-
4,958
Transfer opening retained profit to
profit reserve
profit reserve
Transfer current year profit to
Dividends provided for or paid
Expenses related to share based
C3(a)
C3(a)
A4(a)
payments
Transfer opening share based
payments to retained earnings
C3(a)
Balance at 30 June 2014
Balance at 1 July 2014
Profit for the year as reported in
the 2015 financial statements
Movement in hedge reserve (net
of tax)
the period
Total comprehensive income for
Securities issued from capital
raising, net of transaction costs
and tax
Securities issued under the share
purchase plan, net of transaction
costs and tax
C2
C2
Dividends provided for or paid
A4(a)
Share based payments and other
expenses
Transfer current year profit to
profit reserve
C3(a)
Balance at 30 June 2015
30,911
444,286
(2,677)
31,250
413,375
413,375
(1,413)
(1,413)
166,013
(171,413)
25,804
166,013 (397,903)
180,246
166,013 (397,903)
180,246
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
174
(220)
(46)
174
174
19,066
19,066
-
(756)
19,066
18,310
-
26,292
150,342 (150,342)
21,291
(21,291)
(5,620)
(5,620)
-
-
-
174
-
-
220
25,637
25,637
-
(1,264)
25,637
24,373
-
25,911
-
-
5,000
(15,050)
(25)
118
(15,050)
143
-
143
317
25,587
(25,587)
-
10,537
(25,612)
15,979
176,550 (397,878) 220,598
(1,264)
(1,264)
25,911
5,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
41
FINANCIAL STATEMENTSVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Contributed
equity
$'000
382,125
Attributable to owners of Villa World Limited
Other
Reserves
$'000
220
Cash flow
hedges
$'000
(657)
Retained
earnings
$'000
- (245,556)
Profit
Reserve
$'000
Total
$'000
136,132
Consolidated statement of changes in equity
For the year ended 30 June 2015
Notes
Consolidated
30-Jun-15
30-Jun-14
$'000
$'000
Consolidated entity
Notes
Balance at 1 July 2013
Profit for the year as reported in
the 2014 financial statements
Movement in hedge reserve (net
of tax)
Total comprehensive income for
the period
Contributions of equity, net of
transaction costs and tax
Securities issued under the share
purchase plan, net of transaction
costs and tax
Transfer opening retained profit to
profit reserve
Transfer current year profit to
profit reserve
Dividends provided for or paid
Expenses related to share based
payments
Transfer opening share based
payments to retained earnings
C2
C2
C3(a)
C3(a)
A4(a)
C3(a)
Property, plant and equipment
Investments accounted for using the equity method
Consolidated balance sheet
As at 30 June 2015
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
Non-current assets
Inventories
Deferred tax assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Current tax liabilities
Employee benefits
Service warranties
Other provisions
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Total liabilities
Net assets
EQUITY
Contributed equity
Other reserves
Total equity
Employee benefits - long service leave
Other provisions
Total non-current liabilities
Retained earnings/(Accumulated losses)
Capital and reserves attributable to owners of Villa World Limited
B2
B1
B1
D2
A5(d)
B3
B4(a)
B3
C4
C2
C3(a)
22,571
41,907
191,318
3,588
259,384
148,326
898
16,779
7,286
173,289
432,673
96,452
1,196
635
14,983
239
113,505
5,926
92,044
339
261
98,570
212,075
220,598
12,118
16,899
123,660
1,978
154,655
134,563
1,125
17,968
8,958
162,614
317,269
54,856
-
500
10,079
384
65,819
1,520
69,086
351
247
71,204
137,023
180,246
444,286
174,190
(397,878)
220,598
220,598
413,375
164,774
(397,903)
180,246
180,246
-
-
-
-
(756)
(756)
26,292
4,958
-
-
-
-
-
-
-
-
-
-
-
31,250
413,375
413,375
-
-
-
-
-
(1,413)
(1,413)
-
(1,264)
(1,264)
Balance at 30 June 2014
Balance at 1 July 2014
Profit for the year as reported in
the 2015 financial statements
Movement in hedge reserve (net
of tax)
Total comprehensive income for
the period
Securities issued from capital
raising, net of transaction costs
and tax
Securities issued under the share
purchase plan, net of transaction
costs and tax
Dividends provided for or paid
Share based payments and other
expenses
Transfer current year profit to
profit reserve
Balance at 30 June 2015
C2
25,911
5,000
-
-
C2
A4(a)
C3(a)
-
-
-
-
-
30,911
444,286
-
-
(2,677)
-
-
-
-
-
-
-
-
-
-
-
-
-
19,066
19,066
-
(756)
19,066
18,310
-
26,292
-
4,958
150,342 (150,342)
-
21,291
(5,620)
(21,291)
-
-
(5,620)
174
-
-
174
(220)
(46)
174
174
220
-
166,013
(171,413)
166,013 (397,903)
166,013 (397,903)
-
25,804
180,246
180,246
-
-
-
-
-
-
143
-
143
317
-
-
-
-
25,637
25,637
-
(1,264)
25,637
24,373
-
25,911
-
(15,050)
-
-
5,000
(15,050)
-
(25)
118
25,587
10,537
-
(25,587)
15,979
(25,612)
176,550 (397,878) 220,598
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
40
41
41
FINANCIAL STATEMENTSVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Consolidated statement of cash flows
For the year ended 30 June 2015
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of goods and services tax)
Payments for land acquired
Interest received
Interest paid
Borrowing costs
GST paid / (refund)
Net cash (outflow) / inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for the purchase of investment properties
Loans to related parties
Net cash inflow / (outflow) from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Proceeds from issue of share capital
Transactions costs of issue of shares
Dividends paid to company's shareholders
Net cash inflow / (outflow) from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at end of period
Reconciliation to cash at the end of the year:
Cash and cash equivalents
Cash and cash equivalents at the end of the year:
Notes
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
A6
318,436
(242,923)
75,513
(102,123)
575
(6,313)
(723)
2,612
(30,459)
(708)
(5,983)
9,000
2,309
211,437
(188,360)
31,693
(1,117)
(15,050)
38,603
10,453
12,118
22,571
266,339
(194,492)
71,847
(89,505)
543
(4,936)
(120)
(4,130)
(26,301)
(613)
-
(500)
(1,113)
24,960
(26,000)
32,200
(1,358)
(5,620)
24,182
(3,232)
15,350
12,118
22,571
22,571
12,118
12,118
Notes to the consolidated financial statements
30 June 2015
Contents of the notes to the consolidated financial statements
Page
Reconciliation of profit after income tax to net cash inflow from operating activities
CAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENT
A
A1
A2
A3
A4
A5
A6
B
B1
B2
B3
B4
B5
C
C1
C2
C3
C4
C5
C6
D
D1
D2
D3
E
E1
E2
E3
E4
E5
RESULTS FOR THE YEAR
Revenue and gross profit
Earnings per share
Segment revenue
Dividends
Taxes
OPERATING ASSETS AND LIABILITIES
Inventories
Trade and other receivables
Trade and other payables
Provisions and contingencies
Capital and other commitments
Capital risk management
Contributed equity
Other reserves
Borrowings
Finance costs
Financial risk management
GROUP STRUCTURE
Subsidiaries
Investments accounted for using equity
Parent entity financial information
OTHER INFORMATION
Basis of preparation
Key management personnel disclosures
Remuneration of auditors
Events occurring after the reporting period
Other accounting policies
44
44
45
45
46
47
50
51
51
52
53
53
56
57
57
58
58
59
61
61
66
66
66
69
70
70
70
72
72
73
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
42
42
43
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015FINANCIAL STATEMENTSVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Consolidated statement of cash flows
For the year ended 30 June 2015
Net cash (outflow) / inflow from operating activities
A6
(30,459)
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of goods and services tax)
Payments for land acquired
Interest received
Interest paid
Borrowing costs
GST paid / (refund)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for the purchase of investment properties
Loans to related parties
Net cash inflow / (outflow) from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Proceeds from issue of share capital
Transactions costs of issue of shares
Dividends paid to company's shareholders
Net cash inflow / (outflow) from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at end of period
Reconciliation to cash at the end of the year:
Cash and cash equivalents
Cash and cash equivalents at the end of the year:
Notes
Consolidated
30-Jun-15
30-Jun-14
$'000
$'000
318,436
(242,923)
75,513
(102,123)
575
(6,313)
(723)
2,612
(708)
(5,983)
9,000
2,309
211,437
(188,360)
31,693
(1,117)
(15,050)
38,603
10,453
12,118
22,571
22,571
22,571
266,339
(194,492)
71,847
(89,505)
543
(4,936)
(120)
(4,130)
(26,301)
(613)
-
(500)
(1,113)
24,960
(26,000)
32,200
(1,358)
(5,620)
24,182
(3,232)
15,350
12,118
12,118
12,118
Notes to the consolidated financial statements
30 June 2015
Contents of the notes to the consolidated financial statements
Page
A
A1
A
A1
A2
A3
A4
A5
A6
A2
A3
A4
A5
A6
B1
B2
B
B
B1
B2
B3
B4
B5
B4
B5
B3
C1
C2
C
C
C1
C2
C3
C4
C5
C6
C4
C6
C5
C3
D1
D
D
D1
D2
D3
D3
D2
E
E1
E
E1
E2
E3
E4
E5
E2
E3
E4
E5
RESULTS FOR THE YEAR
Revenue and gross profit
Earnings per share
Segment revenue
Dividends
Taxes
Reconciliation of profit after income tax to net cash inflow from operating activities
OPERATING ASSETS AND LIABILITIES
Inventories
Trade and other receivables
Trade and other payables
Provisions and contingencies
Capital and other commitments
CAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENT
Capital risk management
Contributed equity
Other reserves
Borrowings
Finance costs
Financial risk management
GROUP STRUCTURE
Subsidiaries
Investments accounted for using equity
Parent entity financial information
OTHER INFORMATION
Basis of preparation
Key management personnel disclosures
Remuneration of auditors
Events occurring after the reporting period
Other accounting policies
44
44
45
45
46
47
50
51
51
52
53
53
56
57
57
58
58
59
61
61
66
66
66
69
70
70
70
72
72
73
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
42
43
43
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
A
A
A1
A2
A3
A4
A5
A6
A1
A2
A3
A4
A5
A6
RESULTS FOR THE YEAR
This section provides information that is most relevant to explaining the Company’s performance during
the year and where relevant, the accounting policies that have been applied and significant estimates and
judgements made.
In this section:
Revenue and gross profit
Earnings per share
Segment revenue
Dividends
Taxes
Reconciliation of profit after income tax to net cash inflow from operating activities
A1 Revenue and gross profit
Revenue from land only development
Revenue from land development, residential building and construction contracts
Revenue from land development, residential building and construction contracts
Cost of land only development
Cost of land development, residential building and construction contracts
Other direct costs
Costs of land development, residential building and construction contracts
Gross profit
Gross margin
Other income
Revenue from related joint ventures
Other revenue
Recognition and measurement
Consolidated
30-Jun-15
$'000
62,887
258,663
321,550
41,730
193,107
8,923
243,760
77,790
24.2%
30-Jun-14
$'000
49,534
179,916
229,450
32,150
134,606
5,872
172,628
56,822
24.8%
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
44
867
911
2,323
1,116
3,439
Revenue is measured at the fair value of the consideration received or receivable net of returns, trade allowances,
rebates and amounts collected on behalf of third parties. The Company recognises revenue when the amount of
revenue can be reliably measured, it is probable that the future economic benefits will flow to the entity and specific
criteria have been met for each of the Company's activities as described below.
Land development and residential housing
Revenue is recognised when the risks and rewards of ownership and effective control have passed to the buyer. In
Queensland and Victoria an unconditional sales contract and registration of the land and/or certification of building
completion is required for revenue to be recognised.
Cash settlement is therefore not required in Queensland or Victoria to recognise revenue for land only and house
and land packages. However cash settlement is required in New South Wales due to section 66K of the
Conveyancing Act 1919 which specifies that risk does not pass to the purchaser until the completion of the sale or
possession of the land.
Notes to the consolidated financial statements
30 June 2015 (continued)
A1 Revenue and gross profit (continued)
Construction contracts
Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and
incentive payments. As soon as the outcome of a construction contract can be estimated reliably, contract revenue
is recognised in profit or loss in proportion to the stage of completion of the contract. The stage of completion is
assessed internally. When the outcome of a construction contract cannot be estimated reliably, contract revenue is
recognised only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a
contract is recognised immediately in the income statement.
A2 Earnings per share
Consolidated
30-Jun-15
30-Jun-14
$'000
25,637
Number
'000
$'000
19,066
Number
'000
100,141
87,477
101,630
Cents
25.6
25.2
88,790
Cents
21.8
21.5
Profit attributable to the ordinary equity holders of the Company
Weighted average number of ordinary shares used in calculating basic earnings per
Weighted average number of diluted shares used in calculating diluted earnings per
share
share
Basic earnings per share
Diluted earnings per share
Accounting for earnings per share
Basic earnings per share
Diluted earnings per share
Options
Basic earnings per share is calculated by dividing the profit attributable to the equity holders of the Company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the year, adjusted for bonus elements in ordinary shares issued during the year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration.
Options granted to employees under Villa World Limited's Employee Option Plan are considered to be potential
ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they
are dilutive. The options have not been included in the determination of basic earnings per share.
A3 Segment revenue
(a) Identification of reportable operating segments
The Company is organised into two operating segments:
(i) Property development and construction - Queensland and New South Wales.
(ii) Property development and construction - Victoria.
The company has identified its operating segments based on the internal reports that are reviewed and used by the
executive committee (chief operating decision makers) in assessing performance and in determining resource
allocation.
44
44
45
ARESULTS FOR THE YEARVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
the year and where relevant, the accounting policies that have been applied and significant estimates and
Notes to the consolidated financial statements
30 June 2015 (continued)
A
RESULTS FOR THE YEAR
judgements made.
In this section:
Revenue and gross profit
Earnings per share
Segment revenue
Dividends
Taxes
A1
A2
A3
A4
A5
A6
A1 Revenue and gross profit
Reconciliation of profit after income tax to net cash inflow from operating activities
Revenue from land only development
Revenue from land development, residential building and construction contracts
Revenue from land development, residential building and construction contracts
Cost of land only development
Cost of land development, residential building and construction contracts
Costs of land development, residential building and construction contracts
Other direct costs
Gross profit
Gross margin
Consolidated
30-Jun-15
30-Jun-14
$'000
62,887
258,663
321,550
41,730
193,107
8,923
243,760
77,790
24.2%
$'000
49,534
179,916
229,450
32,150
134,606
5,872
172,628
56,822
24.8%
Consolidated
30-Jun-15
30-Jun-14
$'000
$'000
44
867
911
2,323
1,116
3,439
Revenue from related joint ventures
Other income
Other revenue
Recognition and measurement
Revenue is measured at the fair value of the consideration received or receivable net of returns, trade allowances,
rebates and amounts collected on behalf of third parties. The Company recognises revenue when the amount of
revenue can be reliably measured, it is probable that the future economic benefits will flow to the entity and specific
criteria have been met for each of the Company's activities as described below.
Land development and residential housing
Revenue is recognised when the risks and rewards of ownership and effective control have passed to the buyer. In
Queensland and Victoria an unconditional sales contract and registration of the land and/or certification of building
completion is required for revenue to be recognised.
Cash settlement is therefore not required in Queensland or Victoria to recognise revenue for land only and house
and land packages. However cash settlement is required in New South Wales due to section 66K of the
Conveyancing Act 1919 which specifies that risk does not pass to the purchaser until the completion of the sale or
possession of the land.
This section provides information that is most relevant to explaining the Company’s performance during
Construction contracts
Notes to the consolidated financial statements
30 June 2015 (continued)
A1 Revenue and gross profit (continued)
Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and
incentive payments. As soon as the outcome of a construction contract can be estimated reliably, contract revenue
is recognised in profit or loss in proportion to the stage of completion of the contract. The stage of completion is
assessed internally. When the outcome of a construction contract cannot be estimated reliably, contract revenue is
recognised only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a
contract is recognised immediately in the income statement.
A2 Earnings per share
Profit attributable to the ordinary equity holders of the Company
Weighted average number of ordinary shares used in calculating basic earnings per
share
Weighted average number of diluted shares used in calculating diluted earnings per
share
Basic earnings per share
Diluted earnings per share
Accounting for earnings per share
Basic earnings per share
Consolidated
30-Jun-15
$'000
25,637
Number
'000
30-Jun-14
$'000
19,066
Number
'000
100,141
87,477
101,630
Cents
25.6
25.2
88,790
Cents
21.8
21.5
Basic earnings per share is calculated by dividing the profit attributable to the equity holders of the Company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the year, adjusted for bonus elements in ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration.
Options
Options granted to employees under Villa World Limited's Employee Option Plan are considered to be potential
ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they
are dilutive. The options have not been included in the determination of basic earnings per share.
A3 Segment revenue
(a) Identification of reportable operating segments
The Company is organised into two operating segments:
(i) Property development and construction - Queensland and New South Wales.
(ii) Property development and construction - Victoria.
The company has identified its operating segments based on the internal reports that are reviewed and used by the
executive committee (chief operating decision makers) in assessing performance and in determining resource
allocation.
44
45
45
ARESULTS FOR THE YEARVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
A4 Dividends (continued)
Accounting for dividends (continued)
(a) Ordinary shares
Final fully franked ordinary dividend for the year ended 30 June 2014 of 9.0 cents
per fully paid share paid on 30 September 2014 (2013: nil)
Final franked dividend based on tax paid at 30.0%
Interim dividend for the year ended 30 June 2015 of 6.0 cents per fully paid share
(2014: 6.0 cents per fully paid share) paid on 2 April 2015.
Interim franked dividend based on tax paid at 30.0%
(b) Dividends not recognised at the end of the reporting period
In addition to the above dividends, since period end the Directors have
recommended the payment of a final dividend of 10.0 cents per fully paid ordinary
share (2014: 9.0 cents per fully paid ordinary share) fully franked based on tax paid
at 30%. The aggregate amount of the proposed dividend expected to be paid on 30
September 2015 out of profits reserve at 30 June 2015, but not recognised as a
liability at period end, is:
(c) Franking credits
Consolidated
30-Jun-15
30-Jun-14
$'000
$'000
8,430
-
6,620
5,620
Consolidated
30-Jun-15
30-Jun-14
$'000
$'000
11,034
-
Consolidated entity
30-Jun-15
30-Jun-14
$'000
10,251
$'000
16,701
Notes to the consolidated financial statements
30 June 2015 (continued)
A3 Segment revenue (continued)
(a) Identification of reportable operating segments (continued)
The Company and its controlled entities develop and sell residential land and buildings predominately in Queensland,
New South Wales and Victoria. The individual operating segments of each geographical area have been aggregated
on the basis that they possess similar economic characteristics and are similar in nature of the product and
production processes.
The segment information provided to the executive committee for the reportable segments for the year ended 30
June 2015 is as follows:
From continuing operations
Segment revenue from land development, residential building and construction
contracts
Queensland and New South Wales
Victoria
Total segment revenue from land development, residential building and
construction contracts
Segment cost of land development, residential building and construction contracts
Queensland and New South Wales
Victoria
Total segment cost of land development, residential building and construction
contracts
Segment gross margin
Queensland and New South Wales
Victoria
Total segment gross margin
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
303,156
18,394
202,242
27,208
321,550
229,450
231,548
12,212
154,610
18,018
243,760
172,628
71,608
6,182
77,790
47,632
9,190
56,822
Segment assets and liabilities are not directly reported to the executive committee when assessing the performance
of the operating segments and are therefore not relevant to the disclosure.
Franking credits available for subsequent reporting periods based on a tax rate of
30.0% (2014 - 30.0%)
(b) Segment information provided to the strategic executive committee
(i) Segment Revenue
The revenue from external parties reported to the executive committee is measured in a manner consistent with that
in the income statements. Revenues from external customers are derived from land development, residential building
and construction contracts.
(ii) Segment gross margin
A5 Taxes
Accounting for taxes
The above amounts represent the balance of the franking account as at the end of the reporting period, adjusted for
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date.
The consolidated amounts include franking credits that would be available to the Parent entity if distributable profits
of subsidiaries were paid as franked dividends.
The executive committee assesses the performance of the operating segments based on a measure of gross margin.
This measurement basis consists of revenue less land, development, construction and sundry costs.
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it
relates to items recognised directly in equity or other comprehensive income.
A4 Dividends
Accounting for dividends
When determining dividend return to shareholders, the Company considers a number of factors, including the
Company's anticipated cash requirements to fund its growth and operational plans and current and future economic
conditions. According to these anticipated needs, the Company aims to return to shareholders approximately 50-
75% of net profit after income tax (NPAT). Provision is made for the amount of any dividend declared, being
appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period
but not distributed at the end of the reporting period.
Current tax expense represents the expense relating to the expected taxable income at the applicable tax rate for
the financial year. Deferred tax expense represents the tax expense in respect of the future tax consequences of
recovering or settling the carrying amount of an asset or liability.
Tax consolidation legislation
The Company and its wholly-owned Australian controlled entities are part of a tax consolidated group (TCG) where
all members are taxed as if they were part of a single entity. The head entity in the TCG is Villa World Limited.
The entities within the TCG have entered both tax sharing and tax funding arrangements with the head entity. These
arrangements limit the joint and several liabilities between the head entity and the members, and ensure the
members pay/receive their share of tax payable/receivable settled via an intercompany loan.
46
46
47
ARESULTS FOR THE YEARVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
A3 Segment revenue (continued)
(a) Identification of reportable operating segments (continued)
The Company and its controlled entities develop and sell residential land and buildings predominately in Queensland,
New South Wales and Victoria. The individual operating segments of each geographical area have been aggregated
on the basis that they possess similar economic characteristics and are similar in nature of the product and
The segment information provided to the executive committee for the reportable segments for the year ended 30
Segment revenue from land development, residential building and construction
Total segment revenue from land development, residential building and
Segment cost of land development, residential building and construction contracts
Total segment cost of land development, residential building and construction
Consolidated
30-Jun-15
30-Jun-14
$'000
$'000
303,156
18,394
202,242
27,208
321,550
229,450
231,548
12,212
154,610
18,018
243,760
172,628
71,608
6,182
77,790
47,632
9,190
56,822
production processes.
June 2015 is as follows:
From continuing operations
Queensland and New South Wales
contracts
Victoria
construction contracts
Queensland and New South Wales
Victoria
contracts
Segment gross margin
Queensland and New South Wales
Victoria
Total segment gross margin
(i) Segment Revenue
and construction contracts.
(ii) Segment gross margin
A4 Dividends
Accounting for dividends
When determining dividend return to shareholders, the Company considers a number of factors, including the
Company's anticipated cash requirements to fund its growth and operational plans and current and future economic
conditions. According to these anticipated needs, the Company aims to return to shareholders approximately 50-
75% of net profit after income tax (NPAT). Provision is made for the amount of any dividend declared, being
appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period
but not distributed at the end of the reporting period.
Notes to the consolidated financial statements
30 June 2015 (continued)
A4 Dividends (continued)
Accounting for dividends (continued)
(a) Ordinary shares
Final fully franked ordinary dividend for the year ended 30 June 2014 of 9.0 cents
per fully paid share paid on 30 September 2014 (2013: nil)
Final franked dividend based on tax paid at 30.0%
Interim dividend for the year ended 30 June 2015 of 6.0 cents per fully paid share
(2014: 6.0 cents per fully paid share) paid on 2 April 2015.
Interim franked dividend based on tax paid at 30.0%
(b) Dividends not recognised at the end of the reporting period
In addition to the above dividends, since period end the Directors have
recommended the payment of a final dividend of 10.0 cents per fully paid ordinary
share (2014: 9.0 cents per fully paid ordinary share) fully franked based on tax paid
at 30%. The aggregate amount of the proposed dividend expected to be paid on 30
September 2015 out of profits reserve at 30 June 2015, but not recognised as a
liability at period end, is:
(c) Franking credits
Segment assets and liabilities are not directly reported to the executive committee when assessing the performance
of the operating segments and are therefore not relevant to the disclosure.
Franking credits available for subsequent reporting periods based on a tax rate of
30.0% (2014 - 30.0%)
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
8,430
-
6,620
5,620
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
11,034
-
Consolidated entity
30-Jun-15
$'000
30-Jun-14
$'000
10,251
16,701
(b) Segment information provided to the strategic executive committee
The revenue from external parties reported to the executive committee is measured in a manner consistent with that
in the income statements. Revenues from external customers are derived from land development, residential building
The above amounts represent the balance of the franking account as at the end of the reporting period, adjusted for
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date.
The consolidated amounts include franking credits that would be available to the Parent entity if distributable profits
of subsidiaries were paid as franked dividends.
A5 Taxes
Accounting for taxes
The executive committee assesses the performance of the operating segments based on a measure of gross margin.
This measurement basis consists of revenue less land, development, construction and sundry costs.
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it
relates to items recognised directly in equity or other comprehensive income.
Current tax expense represents the expense relating to the expected taxable income at the applicable tax rate for
the financial year. Deferred tax expense represents the tax expense in respect of the future tax consequences of
recovering or settling the carrying amount of an asset or liability.
Tax consolidation legislation
The Company and its wholly-owned Australian controlled entities are part of a tax consolidated group (TCG) where
all members are taxed as if they were part of a single entity. The head entity in the TCG is Villa World Limited.
The entities within the TCG have entered both tax sharing and tax funding arrangements with the head entity. These
arrangements limit the joint and several liabilities between the head entity and the members, and ensure the
members pay/receive their share of tax payable/receivable settled via an intercompany loan.
46
47
47
ARESULTS FOR THE YEARVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
A5 Taxes (continued)
Accounting for taxes (continued)
Notes to the consolidated financial statements
30 June 2015 (continued)
A5 Taxes (continued)
(d) Deferred tax assets and tax liabilities
(a) Numerical reconciliation of income tax expense to prima facie tax payable
The balance comprises temporary differences attributable to:
Profit/(loss) from continuing operations before income tax expense
Tax at the Australian tax rate of 30.0% (2014 - 30.0%)
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Profit / (loss) of equity accounted investments
(Recognition) / Derecognition of deferred tax asset for losses
Other
Adjustments for current tax of prior periods
Income tax expense
Income tax expense / (benefit)
Current tax
Deferred tax
Adjustments for current tax of prior periods
Income tax expense / (benefit) included in income tax expense comprises:
(Increase) / decrease in deferred tax assets
Increase / (decrease) in deferred tax liabilities
Adjustments for current tax of prior periods
Net deferred tax - debited / (credited) directly to equity
Consolidated
30-Jun-15
$'000
29,380
29,380
8,814
30-Jun-14
$'000
22,569
22,569
6,771
(461)
8,353
(4,300)
72
(382)
(4,610)
3,743
30-Jun-15
$'000
1,196
2,929
(382)
3,743
(5,671)
7,343
382
875
2,929
901
7,672
(4,208)
319
(280)
(4,169)
3,503
30-Jun-14
$'000
-
3,783
(280)
3,503
3,725
(960)
280
738
3,783
Villa World Ltd does not recognise a deferred tax asset on its investment in the Eynesbury Pastoral Trust on the basis
that the deferred tax asset represents an unrealised capital loss for which the future use is not probable.
(b) Tax expense (income) relating to items of other comprehensive income
Cash flow hedges
Total tax expense (income) relating to items of other comprehensive income
(c) Tax losses
Consolidated
30-Jun-15
$'000
541
541
30-Jun-14
$'000
324
324
During the year a prima facie taxable income of $20.5 million (30 June 2014: $13.9 million taxable income) was
generated by the Company with unused tax losses of $19.3 million (30 June 2014: $20.3 million) remaining. The
Company has recognised all tax losses as at 30 June 2015.
Inventories
Tax losses
Accruals
Employee benefit
Provisions
Property, plant and
equipment
Other
Capital raising costs
Trade debtors
Other
Movements
As at 1 July 2014
- to profit or loss
- through equity
As at 30 June 2015
Deferred tax assets
Deferred tax liabilities
Net
30-Jun-15
30-Jun-14
30-Jun-15
30-Jun-14
30-Jun-15
30-Jun-14
$'000
15,129
5,806
490
320
4,673
116
1,303
513
-
-
22,679
6,546
(875)
28,350
$'000
11,250
6,083
631
275
3,265
96
753
326
-
-
26,404
(2,987)
(738)
22,679
$'000
(4,427)
$'000
(5,238)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(15,988)
(649)
(21,064)
(13,721)
(7,343)
-
(8,100)
(383)
(13,721)
(14,681)
960
-
(21,064)
(13,721)
$'000
10,702
5,806
490
320
4,673
116
1,303
513
(15,988)
(649)
7,286
8,958
(797)
(875)
7,286
$'000
6,012
6,083
631
275
3,265
96
753
326
(8,100)
(383)
8,958
11,723
(2,027)
(738)
8,958
Tax assets/(liabilities)
28,350
22,679
Accounting for deferred tax assets and liabilities
Deferred tax is recognised for temporary differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
•
•
when the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or
liability in a transaction that is not a business combination and that, at the time of the transaction, affects
neither the accounting nor taxable profits, or
when the taxable temporary difference is associated with interest in subsidiaries, associates or joint
ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference
will not reverse in the foreseeable future.
Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will
be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to
the extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of
recognised and unrecognised deferred tax assets are reviewed each reporting date.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same
taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
48
48
49
ARESULTS FOR THE YEARVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
A5 Taxes (continued)
Accounting for taxes (continued)
Notes to the consolidated financial statements
30 June 2015 (continued)
A5 Taxes (continued)
(d) Deferred tax assets and tax liabilities
(a) Numerical reconciliation of income tax expense to prima facie tax payable
The balance comprises temporary differences attributable to:
Profit/(loss) from continuing operations before income tax expense
Tax at the Australian tax rate of 30.0% (2014 - 30.0%)
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Profit / (loss) of equity accounted investments
(Recognition) / Derecognition of deferred tax asset for losses
Other
Adjustments for current tax of prior periods
Income tax expense
Income tax expense / (benefit)
Current tax
Deferred tax
Adjustments for current tax of prior periods
Income tax expense / (benefit) included in income tax expense comprises:
(Increase) / decrease in deferred tax assets
Increase / (decrease) in deferred tax liabilities
Adjustments for current tax of prior periods
Net deferred tax - debited / (credited) directly to equity
Villa World Ltd does not recognise a deferred tax asset on its investment in the Eynesbury Pastoral Trust on the basis
that the deferred tax asset represents an unrealised capital loss for which the future use is not probable.
(b) Tax expense (income) relating to items of other comprehensive income
Total tax expense (income) relating to items of other comprehensive income
Cash flow hedges
(c) Tax losses
During the year a prima facie taxable income of $20.5 million (30 June 2014: $13.9 million taxable income) was
generated by the Company with unused tax losses of $19.3 million (30 June 2014: $20.3 million) remaining. The
Company has recognised all tax losses as at 30 June 2015.
Consolidated
30-Jun-15
30-Jun-14
$'000
29,380
29,380
8,814
(461)
8,353
(4,300)
72
(382)
(4,610)
3,743
$'000
1,196
2,929
(382)
3,743
(5,671)
7,343
382
875
2,929
$'000
22,569
22,569
6,771
901
7,672
(4,208)
319
(280)
(4,169)
3,503
$'000
-
3,783
(280)
3,503
3,725
(960)
280
738
3,783
30-Jun-15
30-Jun-14
Consolidated
30-Jun-15
30-Jun-14
$'000
541
541
$'000
324
324
Inventories
Tax losses
Accruals
Employee benefit
Provisions
Property, plant and
equipment
Other
Capital raising costs
Trade debtors
Other
Tax assets/(liabilities)
Movements
As at 1 July 2014
- to profit or loss
- through equity
As at 30 June 2015
Deferred tax assets
30-Jun-15
$'000
15,129
5,806
490
320
4,673
30-Jun-14
$'000
11,250
6,083
631
275
3,265
Deferred tax liabilities
30-Jun-15
$'000
(4,427)
-
-
-
-
30-Jun-14
$'000
(5,238)
-
-
-
-
Net
30-Jun-15
$'000
10,702
5,806
490
320
4,673
30-Jun-14
$'000
6,012
6,083
631
275
3,265
116
1,303
513
-
-
28,350
22,679
6,546
(875)
28,350
96
753
326
-
-
22,679
26,404
(2,987)
(738)
22,679
-
-
-
(15,988)
(649)
(21,064)
(13,721)
(7,343)
-
(21,064)
-
-
-
(8,100)
(383)
(13,721)
(14,681)
960
-
(13,721)
116
1,303
513
(15,988)
(649)
7,286
8,958
(797)
(875)
7,286
96
753
326
(8,100)
(383)
8,958
11,723
(2,027)
(738)
8,958
Accounting for deferred tax assets and liabilities
Deferred tax is recognised for temporary differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
•
•
when the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or
liability in a transaction that is not a business combination and that, at the time of the transaction, affects
neither the accounting nor taxable profits, or
when the taxable temporary difference is associated with interest in subsidiaries, associates or joint
ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference
will not reverse in the foreseeable future.
Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will
be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to
the extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of
recognised and unrecognised deferred tax assets are reviewed each reporting date.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same
taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
48
49
49
ARESULTS FOR THE YEARVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
This section shows the assets used to generate the Company's trading performance and the liabilities
Notes to the consolidated financial statements
30 June 2015 (continued)
A5 Taxes (continued)
(e) Critical accounting estimates and assumptions for income taxes
The Company is subject to income taxes in Australia.
The Company recognises liabilities based on the current understanding of the tax law. Where that final tax outcome
of these matters is different from the amounts that were initially recorded, such differences will impact the current
and deferred tax provisions in the period in which such determination is made.
In addition, the Company has recognised deferred tax assets relating to carried forward tax losses to the extent there
are sufficient taxable temporary differences (deferred tax liabilities) relating to the same taxation authority.
Utilisation of the tax losses also depends on the ability of the Company to satisfy certain tests at the time the losses
are recouped. It is believed that the Company will satisfy those tests in order to utilise any tax losses.
A6 Reconciliation of profit after income tax to net cash inflow from operating activities
Profit for the year
Depreciation and amortisation
Capitalised interest and fees
Borrowing costs
Net (gain) / loss on disposal of property, plant and equipment
Share of (gain) / loss from associate
Impairment of development land
Change in operating assets and liabilities:
(Increase) / decrease in trade debtors
(Increase) / decrease in inventories
Increase / (decrease) in trade creditors
(Increase) / decrease in deferred tax assets
Increase / (decrease) in other operating assets and liabilities
Increase / (decrease) in other provisions
Net cash inflow / (outflow) from operating activities
Consolidated
30-Jun-15
$'000
25,637
958
3,028
560
(23)
(1,828)
(77)
(25,202)
(81,344)
39,662
2,211
(104)
6,063
(30,459)
30-Jun-14
$'000
19,066
450
2,189
364
-
(3,767)
(108)
10,038
(88,844)
27,022
3,090
80
4,119
(26,301)
Notes to the consolidated financial statements
30 June 2015 (continued)
B
OPERATING ASSETS AND LIABILITIES
incurred as a result.
In this section:
Inventories
Trade and other receivables
Trade and other payables
Provisions and contingencies
Capital and other commitments
B1
B2
B3
B4
B5
B1
Inventories
Acquisition cost of land held for development and resale
Acquisition cost of land held for development and resale
Impairment of development land
Current assets
Development costs
Capitalised interest
Non-current assets
Development costs
Capitalised interest
Impairment of development land
Total inventory
Accounting for inventories
Land held for resale and development costs
Consolidated
30-Jun-15
30-Jun-14
$'000
$'000
110,505
76,459
4,958
(604)
191,318
114,451
35,880
6,324
(8,329)
148,326
339,644
55,054
64,642
4,810
(846)
123,660
101,059
35,547
7,940
(9,983)
134,563
258,223
Land held for resale is stated at the lower of cost and net realisable value. Cost includes the cost of acquisition,
development and borrowing costs. When development is completed borrowing costs are expensed as incurred.
Other holding costs are expensed as incurred. The cost of land and buildings acquired under contracts entered into
but not settled prior to balance date are not taken up as inventories and as liabilities at balance date unless all
contractual conditions have been fulfilled and there is certainty of completion of the purchase evident at balance
sheet date.
Estimates of net realisable value ('NRV') of inventories
The NRV of inventories is the estimated selling price in the ordinary course of business less estimated costs of
completion and cost to sell. The net realisable value amount has been determined based on the current future
estimated cash flow of the projects. Realisation is dependent on the ability to meet forecasted/estimated cash flows.
These estimates take into consideration fluctuation of price or cost directly relating to events occurring after the end
of the period to the extent that such events confirm conditions existing at the end of the period. Consistent with
previous periods, key estimates have been reviewed including the costs of completion and dates of completion.
50
50
51
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015 ARESULTS FOR THE YEARVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
A5 Taxes (continued)
(e) Critical accounting estimates and assumptions for income taxes
The Company is subject to income taxes in Australia.
The Company recognises liabilities based on the current understanding of the tax law. Where that final tax outcome
of these matters is different from the amounts that were initially recorded, such differences will impact the current
and deferred tax provisions in the period in which such determination is made.
In addition, the Company has recognised deferred tax assets relating to carried forward tax losses to the extent there
are sufficient taxable temporary differences (deferred tax liabilities) relating to the same taxation authority.
Utilisation of the tax losses also depends on the ability of the Company to satisfy certain tests at the time the losses
are recouped. It is believed that the Company will satisfy those tests in order to utilise any tax losses.
A6 Reconciliation of profit after income tax to net cash inflow from operating activities
Net (gain) / loss on disposal of property, plant and equipment
Profit for the year
Depreciation and amortisation
Capitalised interest and fees
Borrowing costs
Share of (gain) / loss from associate
Impairment of development land
Change in operating assets and liabilities:
(Increase) / decrease in trade debtors
(Increase) / decrease in inventories
Increase / (decrease) in trade creditors
(Increase) / decrease in deferred tax assets
Increase / (decrease) in other operating assets and liabilities
Increase / (decrease) in other provisions
Net cash inflow / (outflow) from operating activities
Consolidated
30-Jun-15
30-Jun-14
$'000
25,637
958
3,028
560
(23)
(1,828)
(77)
(25,202)
(81,344)
39,662
2,211
(104)
6,063
(30,459)
$'000
19,066
450
2,189
364
-
(3,767)
(108)
10,038
(88,844)
27,022
3,090
80
4,119
(26,301)
Notes to the consolidated financial statements
30 June 2015 (continued)
B
B
OPERATING ASSETS AND LIABILITIES
This section shows the assets used to generate the Company's trading performance and the liabilities
incurred as a result.
In this section:
B1
B2
B3
B4
B5
B1
B2
B3
B4
B5
Inventories
Trade and other receivables
Trade and other payables
Provisions and contingencies
Capital and other commitments
B1
Inventories
Current assets
Acquisition cost of land held for development and resale
Development costs
Capitalised interest
Impairment of development land
Non-current assets
Acquisition cost of land held for development and resale
Development costs
Capitalised interest
Impairment of development land
Total inventory
Accounting for inventories
Land held for resale and development costs
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
110,505
76,459
4,958
(604)
191,318
114,451
35,880
6,324
(8,329)
148,326
339,644
55,054
64,642
4,810
(846)
123,660
101,059
35,547
7,940
(9,983)
134,563
258,223
Land held for resale is stated at the lower of cost and net realisable value. Cost includes the cost of acquisition,
development and borrowing costs. When development is completed borrowing costs are expensed as incurred.
Other holding costs are expensed as incurred. The cost of land and buildings acquired under contracts entered into
but not settled prior to balance date are not taken up as inventories and as liabilities at balance date unless all
contractual conditions have been fulfilled and there is certainty of completion of the purchase evident at balance
sheet date.
Estimates of net realisable value ('NRV') of inventories
The NRV of inventories is the estimated selling price in the ordinary course of business less estimated costs of
completion and cost to sell. The net realisable value amount has been determined based on the current future
estimated cash flow of the projects. Realisation is dependent on the ability to meet forecasted/estimated cash flows.
These estimates take into consideration fluctuation of price or cost directly relating to events occurring after the end
of the period to the extent that such events confirm conditions existing at the end of the period. Consistent with
previous periods, key estimates have been reviewed including the costs of completion and dates of completion.
50
51
51
BOPERATING ASSETS AND LIABILITIESVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
B1
Inventories (continued)
Borrowing costs
Borrowing costs included in the cost of land held for resale are those costs that the Company incurs in connection
with the borrowing of funds. Borrowing costs which are directly attributable to the acquisition, construction or
production of a qualifying asset such as inventories are capitalised using the interest incurred method. In these
circumstances, borrowing costs are capitalised to the cost of the assets whilst in active development until the assets
are ready for their intended use or sale. In the event that a development is suspended for an extended period of time
the borrowing costs are recognised as expenses.
B2 Trade and other receivables
Accounting for trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using
the effective interest rate method, less an allowance for impairment. Collectability of trade receivables is reviewed
on an ongoing basis and at balance date, specific impairment losses are recorded for any doubtful accounts.
Trade receivables are recognised in accordance with the Company's revenue recognition policy (refer Note A1). Also
considered in this process is the ageing of the trade receivables, the settlement history of the buyer and any current
feedback or other information known regarding the buyer. Collectability of trade receivables is generally upon
settlement or per the terms of the contract. As at 30 June 2015 the balance of trade receivables is $41.1 million and
they are expected to be received when due.
Other receivables generally arise from transactions outside the usual operating activities of the Company. Interest
may be charged at commercial rates where the terms of repayment exceed six months. Collateral is not normally
obtained and settlement is generally no more than 60 days from date of recognition. These balances do not contain
impaired assets and based on credit history, it is expected that these other balances will be received when due.
Trade receivables due from related parties includes the project management fee the Company will receive for the
sale of Eynesbury. The amount of $0.6 million is due on settlement of the second tranche scheduled for 28 August
2015.
Trade receivables
Trade receivable properties
Trade receivables due from related parties
Other receivables
Total trade and other receivables
The Company’s credit risk management policy is discussed in note C6 (b) - Credit risk.
The ageing of current trade receivables is as follows:
1 to 3 months
3 to 6 months
Over 6 months
Past due but not impaired
Consolidated
30-Jun-15
$'000
271
40,156
660
41,087
820
41,907
30-Jun-14
$'000
977
13,848
660
15,485
1,414
16,899
Consolidated
30-Jun-15
$'000
37,715
3,372
-
41,087
30-Jun-14
$'000
14,698
-
787
15,485
Notes to the consolidated financial statements
30 June 2015 (continued)
B3 Trade and other payables
Accounting for trade and other payables
Trade and other payables are initially recognised at fair value less transaction costs and subsequently carried at
amortised cost using the effective interest method. Trade and other payables are recognised as current if they are
due within 12 months of the reporting date.
Land acquisitions represent amounts payable for the purchase of inventory secured for the purpose of land
development, residential construction and resale. Trade payables represent the liability for goods and services
provided to the Company prior to the end of financial year which are unpaid. Other payables are unsecured amounts.
The Company maintains a rolling cash flow to ensure its operational requirements are met within the contractual
terms of the agreements; whilst providing sufficient flexibility to fund growth, working capital requirements and
future strategic opportunities.
Current liabilities
Land acquisitions
Sub-contractors and materials
Total trade payables
Other current payables
Accrued expenses
Other payables1
Total current other payables
Total current trade and other payables
Total non-current trade and other payables
Non-current liabilities
Land acquisitions
Other payables2
Total payables
1
2
B4 Provisions and contingencies
Accounting for provisions
(a) Service warranties
Current liabilities
Service warranties
Total current provisions
Includes derivatives payable of $1.6 million (30 June 2014: $0.6 million). Refer note C6(d) - Fair value measurements.
Includes derivatives payable of $2.2 million (30 June 2014: $1.4 million). Refer note C6(d) - Fair value measurements.
Provisions are recognised when the Company has a present (legal or constructive) obligation as a result of a past
event, it is probable the Company will be required to settle the obligation, and a reliable estimate can be made of the
amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the
obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to
the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.
Consolidated
30-Jun-15
30-Jun-14
$'000
$'000
65,627
5,931
71,558
21,671
3,223
24,894
96,452
3,408
2,518
5,926
102,378
30,403
4,510
34,913
19,166
777
19,943
54,856
-
1,520
1,520
56,376
Consolidated
30-Jun-15
30-Jun-14
$'000
14,983
14,983
$'000
10,079
10,079
As of 30 June 2015, the trade receivables of the Company of $nil (30 June 2014: $nil) were past due but not
impaired.
52
52
53
BOPERATING ASSETS AND LIABILITIESVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
B1
Inventories (continued)
Borrowing costs
the borrowing costs are recognised as expenses.
B2 Trade and other receivables
Accounting for trade and other receivables
Borrowing costs included in the cost of land held for resale are those costs that the Company incurs in connection
with the borrowing of funds. Borrowing costs which are directly attributable to the acquisition, construction or
production of a qualifying asset such as inventories are capitalised using the interest incurred method. In these
circumstances, borrowing costs are capitalised to the cost of the assets whilst in active development until the assets
are ready for their intended use or sale. In the event that a development is suspended for an extended period of time
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using
the effective interest rate method, less an allowance for impairment. Collectability of trade receivables is reviewed
on an ongoing basis and at balance date, specific impairment losses are recorded for any doubtful accounts.
Trade receivables are recognised in accordance with the Company's revenue recognition policy (refer Note A1). Also
considered in this process is the ageing of the trade receivables, the settlement history of the buyer and any current
feedback or other information known regarding the buyer. Collectability of trade receivables is generally upon
settlement or per the terms of the contract. As at 30 June 2015 the balance of trade receivables is $41.1 million and
they are expected to be received when due.
Other receivables generally arise from transactions outside the usual operating activities of the Company. Interest
may be charged at commercial rates where the terms of repayment exceed six months. Collateral is not normally
obtained and settlement is generally no more than 60 days from date of recognition. These balances do not contain
impaired assets and based on credit history, it is expected that these other balances will be received when due.
Trade receivables due from related parties includes the project management fee the Company will receive for the
sale of Eynesbury. The amount of $0.6 million is due on settlement of the second tranche scheduled for 28 August
2015.
Trade receivables
Trade receivable properties
Trade receivables due from related parties
Other receivables
Total trade and other receivables
The Company’s credit risk management policy is discussed in note C6 (b) - Credit risk.
The ageing of current trade receivables is as follows:
1 to 3 months
3 to 6 months
Over 6 months
Past due but not impaired
impaired.
As of 30 June 2015, the trade receivables of the Company of $nil (30 June 2014: $nil) were past due but not
Consolidated
30-Jun-15
30-Jun-14
$'000
271
40,156
660
41,087
820
41,907
$'000
977
13,848
660
15,485
1,414
16,899
Consolidated
30-Jun-15
30-Jun-14
$'000
37,715
3,372
-
41,087
$'000
14,698
-
787
15,485
Notes to the consolidated financial statements
30 June 2015 (continued)
B3 Trade and other payables
Accounting for trade and other payables
Trade and other payables are initially recognised at fair value less transaction costs and subsequently carried at
amortised cost using the effective interest method. Trade and other payables are recognised as current if they are
due within 12 months of the reporting date.
Land acquisitions represent amounts payable for the purchase of inventory secured for the purpose of land
development, residential construction and resale. Trade payables represent the liability for goods and services
provided to the Company prior to the end of financial year which are unpaid. Other payables are unsecured amounts.
The Company maintains a rolling cash flow to ensure its operational requirements are met within the contractual
terms of the agreements; whilst providing sufficient flexibility to fund growth, working capital requirements and
future strategic opportunities.
Current liabilities
Land acquisitions
Sub-contractors and materials
Total trade payables
Other current payables
Accrued expenses
Other payables1
Total current other payables
Total current trade and other payables
Non-current liabilities
Land acquisitions
Other payables2
Total non-current trade and other payables
Total payables
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
65,627
5,931
71,558
21,671
3,223
24,894
96,452
3,408
2,518
5,926
102,378
30,403
4,510
34,913
19,166
777
19,943
54,856
-
1,520
1,520
56,376
1
Includes derivatives payable of $1.6 million (30 June 2014: $0.6 million). Refer note C6(d) - Fair value measurements.
2
Includes derivatives payable of $2.2 million (30 June 2014: $1.4 million). Refer note C6(d) - Fair value measurements.
B4 Provisions and contingencies
Accounting for provisions
Provisions are recognised when the Company has a present (legal or constructive) obligation as a result of a past
event, it is probable the Company will be required to settle the obligation, and a reliable estimate can be made of the
amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the
obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to
the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.
(a) Service warranties
Current liabilities
Service warranties
Total current provisions
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
14,983
14,983
10,079
10,079
52
53
53
BOPERATING ASSETS AND LIABILITIESVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
B4 Provisions and contingencies (continued)
(a) Service warranties (continued)
A provision for warranties is recognised when the underlying products or services are sold. Provision is made for the
estimated warranty claims in respect of Villa World Developments Pty Ltd built properties which are still under
warranty at balance date. These claims are expected to be settled within the statutory warranty period. Where the
Company expects some or all of a provision to be reimbursed, such as under an insurance contract, the
reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain.
The following statutory warranty periods generally apply to the Company’s housing products:
•
•
•
Queensland - 6 years 6 months from completion of work
Victoria - 10 years from issue of occupancy certificate
New South Wales - 10 years from occupation certificate
Management estimates the related provision for future warranty claims based on historical warranty claim
information, as well as recent trends that might suggest that past cost information may differ from future claims.
The Company includes legal costs in the provision for warranty claims to the extent that it has a present obligation to
incur these costs at the end of the reporting period. Estimating this provision requires the exercise of significant
judgement and it is therefore possible that actual amounts may differ from this estimate. The assumptions made in
relation to the current period are consistent with those in the prior year.
(b) Amounts not expected to be settled within 12 months
The current provision for employee benefits includes accrued annual leave and long service leave. For long service
leave it includes all unconditional entitlements where employees have completed the required period of service.
Included within the long service leave provision is an amount of $120,505 (30 June 2014: $82,804) classified as
current, since the Company does not have an unconditional right to defer settlement for this obligation. The non-
current long service leave provision covers conditional entitlements where employees have not completed their
required period of service, adjusted for the probability of likely realisation.
(c) Movements in provisions
Consolidated entity
Current liabilities
Carrying amount at the start of the year
- additional provisions recognised
Amounts incurred and charged
Carrying amount at end of period
(d) Legal claims
Home warranty claim - Thornleigh
Service
warranties
30-Jun-15
$'000
Service
warranties
30-Jun-14
$'000
10,079
10,213
(5,309)
14,983
5,900
6,679
(2,500)
10,079
A claim of $6.8 million was made against the Company in respect of defects at the Wild Ash Grove development in
Thornleigh, NSW. This was first disclosed in detail in the annual report for the year ended 30 June 2010 as a
contingent liability.
Pursuant to a referee determination and subsequent Court adoption hearing, the Company was found liable for the
Plaintiff's damages in the amount of $3.6 million, which the Company has paid. The Company has also been ordered
to pay a proportion of the costs incurred by the Plaintiff and certain other Defendants. The Company’s liability for
those costs has been estimated at $3.2 million and it is expected that this will be paid during the 2016 financial year.
Estimating this provision requires the exercise of significant judgement and it is therefore possible that actual
amounts may differ from this estimate.
Notes to the consolidated financial statements
30 June 2015 (continued)
B4 Provisions and contingencies (continued)
(d) Legal claims (continued)
Silverstone Litigation
The Silverstone litigation relates to alleged defects at a residential building located in Tweed Heads, NSW. The
building comprises 27 units and was completed in 2009. A Villa World subsidiary, Villa World Developments Pty Ltd,
was the registered builder. Villa World Developments Pty Ltd engaged independent subcontractors to carry out
construction.
Progress in the Silverstone litigation during 2H15 has enabled the directors to make a reliable estimate of the
financial impact. The Company has made a provision as at 30 June 2015 of approximately $6.5 million for its
proportion of the potential claim against it by the Silverstone owners corporation and unit owners. This is in addition
to the provisions for legal fees and experts costs which have been made since 30 June 2012 and expensed through
Cost of Sales. The Silverstone litigation has previously been noted as a contingent liability in the Company's financial
statements for the years ending 30 June 2012, 30 June 2013, and 30 June 2014.
Estimating the provisions requires the exercise of significant judgement and it is therefore possible that actual
amounts may differ from this estimate.
The information in relation to provisions usually required by AASB137 Provisions, Contingent Liabilities and Contingent
Assets is not disclosed on the grounds that it is expected to prejudice the outcome of the potential litigation.
(e) Contingencies
(i) Estimates of material amounts of contingent liabilities not provided for in the financial report
The Company has entered into agreements to indemnify certain employees and former employees against all
liabilities that may arise as a result of any claims against them by third parties as a result of the Company’s building
activities. It is impractical to estimate the amount that may arise from these arrangements. There were no claims
made against the Company at 30 June 2015 (30 June 2014: nil).
A controlled entity has contractual arrangements that provide for liquidated damages under certain circumstances. It
is impractical to estimate the amount of any liability that may arise from these arrangements. There were no claims
made against the Company at 30 June 2015 (30 June 2014: nil).
The Company has provided bank guarantees to the total of $13.0 million (30 June 2014: $11.0 million) to authorities
and councils in relation to certain works to be undertaken or maintained or in support of contractual commitments.
Refer note C4 (a) - Borrowings.
(ii) Contingent liabilities in respect of other entities
The Company has provided guarantees in respect of the loan facility for the Eynesbury and Donnybrook joint
ventures. The special conditions of the debt facility limit the maximum principal amount recoverable from the
Company to 50% in respect of Eynesbury and 51% for Donnybrook of the principal outstanding, interest and
reasonable costs. As at 30 June 2015, the Eynesbury facility (at 100%) was drawn to $10.0 million and $0.2 million of
bank guarantees were issued (30 June 2014: $10.0 million and $0.3 million bank guarantees). The Donnybrook debt
facility (at 100%) was drawn to $5.1 million as at 30 June 2015 (30 June 2014: nil).
54
54
55
BOPERATING ASSETS AND LIABILITIESVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
B4 Provisions and contingencies (continued)
(a) Service warranties (continued)
Notes to the consolidated financial statements
30 June 2015 (continued)
B4 Provisions and contingencies (continued)
(d) Legal claims (continued)
A provision for warranties is recognised when the underlying products or services are sold. Provision is made for the
Silverstone Litigation
estimated warranty claims in respect of Villa World Developments Pty Ltd built properties which are still under
warranty at balance date. These claims are expected to be settled within the statutory warranty period. Where the
Company expects some or all of a provision to be reimbursed, such as under an insurance contract, the
reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain.
The following statutory warranty periods generally apply to the Company’s housing products:
•
•
•
Queensland - 6 years 6 months from completion of work
Victoria - 10 years from issue of occupancy certificate
New South Wales - 10 years from occupation certificate
Management estimates the related provision for future warranty claims based on historical warranty claim
information, as well as recent trends that might suggest that past cost information may differ from future claims.
The Company includes legal costs in the provision for warranty claims to the extent that it has a present obligation to
incur these costs at the end of the reporting period. Estimating this provision requires the exercise of significant
judgement and it is therefore possible that actual amounts may differ from this estimate. The assumptions made in
relation to the current period are consistent with those in the prior year.
(b) Amounts not expected to be settled within 12 months
The current provision for employee benefits includes accrued annual leave and long service leave. For long service
leave it includes all unconditional entitlements where employees have completed the required period of service.
Included within the long service leave provision is an amount of $120,505 (30 June 2014: $82,804) classified as
current, since the Company does not have an unconditional right to defer settlement for this obligation. The non-
current long service leave provision covers conditional entitlements where employees have not completed their
required period of service, adjusted for the probability of likely realisation.
(c) Movements in provisions
Consolidated entity
Current liabilities
Carrying amount at the start of the year
- additional provisions recognised
Amounts incurred and charged
Carrying amount at end of period
(d) Legal claims
Home warranty claim - Thornleigh
Service
warranties
30-Jun-15
$'000
Service
warranties
30-Jun-14
$'000
10,079
10,213
(5,309)
14,983
5,900
6,679
(2,500)
10,079
A claim of $6.8 million was made against the Company in respect of defects at the Wild Ash Grove development in
Thornleigh, NSW. This was first disclosed in detail in the annual report for the year ended 30 June 2010 as a
contingent liability.
Pursuant to a referee determination and subsequent Court adoption hearing, the Company was found liable for the
Plaintiff's damages in the amount of $3.6 million, which the Company has paid. The Company has also been ordered
to pay a proportion of the costs incurred by the Plaintiff and certain other Defendants. The Company’s liability for
those costs has been estimated at $3.2 million and it is expected that this will be paid during the 2016 financial year.
Estimating this provision requires the exercise of significant judgement and it is therefore possible that actual
amounts may differ from this estimate.
The Silverstone litigation relates to alleged defects at a residential building located in Tweed Heads, NSW. The
building comprises 27 units and was completed in 2009. A Villa World subsidiary, Villa World Developments Pty Ltd,
was the registered builder. Villa World Developments Pty Ltd engaged independent subcontractors to carry out
construction.
Progress in the Silverstone litigation during 2H15 has enabled the directors to make a reliable estimate of the
financial impact. The Company has made a provision as at 30 June 2015 of approximately $6.5 million for its
proportion of the potential claim against it by the Silverstone owners corporation and unit owners. This is in addition
to the provisions for legal fees and experts costs which have been made since 30 June 2012 and expensed through
Cost of Sales. The Silverstone litigation has previously been noted as a contingent liability in the Company's financial
statements for the years ending 30 June 2012, 30 June 2013, and 30 June 2014.
Estimating the provisions requires the exercise of significant judgement and it is therefore possible that actual
amounts may differ from this estimate.
The information in relation to provisions usually required by AASB137 Provisions, Contingent Liabilities and Contingent
Assets is not disclosed on the grounds that it is expected to prejudice the outcome of the potential litigation.
(e) Contingencies
(i) Estimates of material amounts of contingent liabilities not provided for in the financial report
The Company has entered into agreements to indemnify certain employees and former employees against all
liabilities that may arise as a result of any claims against them by third parties as a result of the Company’s building
activities. It is impractical to estimate the amount that may arise from these arrangements. There were no claims
made against the Company at 30 June 2015 (30 June 2014: nil).
A controlled entity has contractual arrangements that provide for liquidated damages under certain circumstances. It
is impractical to estimate the amount of any liability that may arise from these arrangements. There were no claims
made against the Company at 30 June 2015 (30 June 2014: nil).
The Company has provided bank guarantees to the total of $13.0 million (30 June 2014: $11.0 million) to authorities
and councils in relation to certain works to be undertaken or maintained or in support of contractual commitments.
Refer note C4 (a) - Borrowings.
(ii) Contingent liabilities in respect of other entities
The Company has provided guarantees in respect of the loan facility for the Eynesbury and Donnybrook joint
ventures. The special conditions of the debt facility limit the maximum principal amount recoverable from the
Company to 50% in respect of Eynesbury and 51% for Donnybrook of the principal outstanding, interest and
reasonable costs. As at 30 June 2015, the Eynesbury facility (at 100%) was drawn to $10.0 million and $0.2 million of
bank guarantees were issued (30 June 2014: $10.0 million and $0.3 million bank guarantees). The Donnybrook debt
facility (at 100%) was drawn to $5.1 million as at 30 June 2015 (30 June 2014: nil).
54
55
55
BOPERATING ASSETS AND LIABILITIESVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
B5 Capital and other commitments
(a) Capital commitments
Notes to the consolidated financial statements
30 June 2015 (continued)
C
CAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENT
This section outlines how the Company manages its capital structure and related financing costs, including
its balance sheet liquidity and access to capital markets.
Villa World Developments Pty Ltd, a wholly owned subsidiary of Villa World Limited, assumed certain contractual
obligations in conjunction with the execution of Put and Call Option Agreements (the Agreements) in relation to the
acquisition of individual subdivided lots in property developments to the north of Brisbane and in Victoria.
The call option gives Villa World Developments Pty Ltd (or a third party) the option to purchase the lot(s) at a
nominated price by a sunset date. The put option gives the vendor the right to sell to the Company at a nominated
price on expiry of the call option sunset date. The potential total commitments remaining under the Agreements are
$32.9 million (30 June 2014: $38.5 million). The commitments are crystallised on registration of the land by the
vendor and will be made available on a stage by stage basis. However, the Agreements are severable by development
stage and the commitments may be less than the total commitments under the Agreements as outlined above.
In this section:
Capital risk management
Contributed equity
Other reserves
Borrowings
Finance costs
Financial risk management
C1
C2
C3
C4
C5
C6
C1 Capital risk management
Capital commitments in relation to put and call arrangements
Opening balance
Crystallised and paid commitments
Arrangements entered into during the year
Total commitments
(b) Lease commitments
Accounting for leases
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
38,465
(30,493)
24,896
32,868
43,798
(30,375)
25,042
38,465
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as
lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from
the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.
Non-cancellable operating leases
The Company has entered into leases for office space on normal commercial terms with lease terms between three
and five years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the
lease are renegotiated.
Future commitments for minimum lease payments in relation to non-cancellable operating leases are payable as
follows:
Within one year
Later than one year but not later than five years
Later than five years
Consolidated
30-Jun-15
$'000
357
1,018
-
1,375
30-Jun-14
$'000
233
965
20
1,218
The Company’s objectives when managing capital are to safeguard the ability to continue as a going concern,
continue to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital
structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the group will consider a range of alternatives which may include:
raising or reducing borrowings
adjusting the dividend policy
issue of new securities
return of capital to shareholders
sale of assets.
•
•
•
•
•
•
•
•
•
Capital strength remained a strategic focus area and during the year the Company restructured its debt facility and
completed a successful capital raising in January 2015. This allowed the Company to:
pursue growth opportunities through the development of the existing portfolio
reinvest in the business through value accretive acquisitions
grow dividends
strengthen balance sheet.
Consistent with others in the industry, the Company monitors capital on the basis of the gearing ratio. This ratio is
calculated as total debt divided by total assets adjusted for cash on hand. Total debt is calculated as borrowings
(including “interest bearing liabilities” and “other financial commitments” as shown in the balance sheet).
The Company's policy is to continue to manage debt levels and maintain the gearing ratio between 15% and 30%. As
at 30 June 2015, the gearing ratio was 16.9% (30 June 2014: 18.7%).
The Company has complied with the financial covenants of its borrowing facilities during the 2015 and 2014
reporting periods.
Total borrowings (excluding bank guarantees)
Less: Cash and cash equivalents
Net debt
Total assets
Less: Cash and cash equivalents
Gearing ratio
Notes
C4
Consolidated
30-Jun-15
30-Jun-14
$'000
92,044
(22,571)
69,473
432,673
(22,571)
410,102
$'000
69,086
(12,118)
56,968
317,269
(12,118)
305,151
16.9%
18.7%
56
56
57
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015 BOPERATING ASSETS AND LIABILITIESVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
B5 Capital and other commitments
(a) Capital commitments
Villa World Developments Pty Ltd, a wholly owned subsidiary of Villa World Limited, assumed certain contractual
obligations in conjunction with the execution of Put and Call Option Agreements (the Agreements) in relation to the
acquisition of individual subdivided lots in property developments to the north of Brisbane and in Victoria.
The call option gives Villa World Developments Pty Ltd (or a third party) the option to purchase the lot(s) at a
nominated price by a sunset date. The put option gives the vendor the right to sell to the Company at a nominated
price on expiry of the call option sunset date. The potential total commitments remaining under the Agreements are
$32.9 million (30 June 2014: $38.5 million). The commitments are crystallised on registration of the land by the
vendor and will be made available on a stage by stage basis. However, the Agreements are severable by development
Capital commitments in relation to put and call arrangements
Opening balance
Crystallised and paid commitments
Arrangements entered into during the year
Total commitments
(b) Lease commitments
Accounting for leases
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as
lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from
the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.
Non-cancellable operating leases
lease are renegotiated.
follows:
The Company has entered into leases for office space on normal commercial terms with lease terms between three
and five years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the
Future commitments for minimum lease payments in relation to non-cancellable operating leases are payable as
Consolidated
30-Jun-15
30-Jun-14
$'000
$'000
38,465
(30,493)
24,896
32,868
43,798
(30,375)
25,042
38,465
Consolidated
30-Jun-15
30-Jun-14
$'000
357
1,018
-
1,375
$'000
233
965
20
1,218
Within one year
Later than five years
Later than one year but not later than five years
Notes to the consolidated financial statements
30 June 2015 (continued)
C
C
C1
C2
C3
C4
C5
C6
C1
C2
C3
C4
C5
C6
CAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENT
This section outlines how the Company manages its capital structure and related financing costs, including
its balance sheet liquidity and access to capital markets.
In this section:
Capital risk management
Contributed equity
Other reserves
Borrowings
Finance costs
Financial risk management
stage and the commitments may be less than the total commitments under the Agreements as outlined above.
C1 Capital risk management
The Company’s objectives when managing capital are to safeguard the ability to continue as a going concern,
continue to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital
structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the group will consider a range of alternatives which may include:
•
•
•
•
•
raising or reducing borrowings
adjusting the dividend policy
issue of new securities
return of capital to shareholders
sale of assets.
Capital strength remained a strategic focus area and during the year the Company restructured its debt facility and
completed a successful capital raising in January 2015. This allowed the Company to:
•
•
•
•
pursue growth opportunities through the development of the existing portfolio
reinvest in the business through value accretive acquisitions
grow dividends
strengthen balance sheet.
Consistent with others in the industry, the Company monitors capital on the basis of the gearing ratio. This ratio is
calculated as total debt divided by total assets adjusted for cash on hand. Total debt is calculated as borrowings
(including “interest bearing liabilities” and “other financial commitments” as shown in the balance sheet).
The Company's policy is to continue to manage debt levels and maintain the gearing ratio between 15% and 30%. As
at 30 June 2015, the gearing ratio was 16.9% (30 June 2014: 18.7%).
The Company has complied with the financial covenants of its borrowing facilities during the 2015 and 2014
reporting periods.
Total borrowings (excluding bank guarantees)
Less: Cash and cash equivalents
Net debt
Total assets
Less: Cash and cash equivalents
Gearing ratio
Notes
C4
Consolidated
30-Jun-15
$'000
92,044
(22,571)
69,473
432,673
(22,571)
410,102
30-Jun-14
$'000
69,086
(12,118)
56,968
317,269
(12,118)
305,151
16.9%
18.7%
56
57
57
CCAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENTVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
C2 Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds.
Ordinary shares
Opening balance
Shares issued as part of the capital raising 1
Shares issued as part of the share purchase plan2
Transaction costs from capital transactions net of
tax
30-Jun-15
2015
Shares
'000
30-Jun-14
2014
Shares
'000
30-Jun-15
$'000
30-Jun-14
$'000
93,664
14,050
2,630
-
110,344
73,539
17,000
3,125
413,375
26,693
5,000
-
93,664
(782)
444,286
382,125
27,200
5,000
(950)
413,375
1
On 29 January, Villa World Limited announced it had completed a fully underwritten institutional placement to raise $26.7 million.
The placement was completed at an issue price of $1.90 per share, representing a 10.0% discount to the closing price of the
Company's shares on 27 January 2015, a 7.0% discount to the volume weighted average price for the five trading days prior to the
announcement of the placement and a 4.7% discount to the volume weighted average price for the 10 days prior to this
announcement.
2
The record date for the share purchase plan was 28 January 2015. The share purchase plan was offered at the same price per share
as the institutional placement.
(a) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary
shares present at a meeting in person or by proxy, is entitled to one vote and upon a poll each share is entitled to one
vote. Ordinary shares have no par value and Villa World Limited does not have a limited amount of authorised capital.
(b) Options
Information relating to the Company, including details of options issued, exercised and lapsed during the financial
year, is set out in the Remuneration report on page 32 and in note E2 (b) - Equity instrument disclosures relating to
key management personnel.
C3 Other reserves
(a) Movements in other reserves
(i) Profits reserve
Opening balance
Transfer opening retained profits
Transfer current year profit
Dividends provided for or paid
Closing balance
Notes
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
166,013
-
25,587
(15,050)
176,550
-
150,342
21,291
(5,620)
166,013
A4(a)
58
58
59
Notes to the consolidated financial statements
30 June 2015 (continued)
C3 Other reserves (continued)
(a) Movements in other reserves (continued)
(ii) Hedging reserve - cash flow hedges
Opening balance
Revaluation - gross
Deferred tax
Closing balance
(iii) Share-based payments
Opening balance
Share-based payments expense
Transfer options lapsed to retained earnings
Closing balance
Total other reserves
(i) Profits reserve
(b) Nature and purpose of other reserves
Notes
A5(d)
Notes
E2(c)
Consolidated
30-Jun-15
30-Jun-14
$'000
$'000
(1,413)
(1,805)
541
(2,677)
(657)
(1,080)
324
(1,413)
Consolidated
30-Jun-15
30-Jun-14
$'000
$'000
174
143
-
317
220
174
(220)
174
174,190
164,774
The profits reserve represents opening retained profits and current year profits transferred to a reserve to preserve
the characteristic as a profit and not allocate against prior year accumulated losses. Any such profits are available to
enable payment of franked dividends in the future should the Directors declare by resolution. Profits are determined
and transferred on an entity basis. Losses are retained by the entity.
(ii) Cash flow hedges
The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are
recognised in other comprehensive income. Amounts are reclassified to profit or loss when the associated hedged
transaction affects profit or loss (for instance when the forecast transaction that is hedged takes place).
The share-based payments reserve is used to recognise the fair value of options issued to key management personnel
and executives. Refer note E2 (b) - Equity instrument disclosures relating to key management personnel and the
(iii) Share-based payments
Remuneration report on page 32.
C4 Borrowings
Accounting for borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred and are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is
recognised in profit or loss over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down
occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the
fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it
relates.
CCAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENTVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
30-Jun-15
30-Jun-14
$'000
$'000
30-Jun-15
30-Jun-14
2015
Shares
'000
93,664
14,050
2,630
-
110,344
2014
Shares
'000
73,539
17,000
3,125
413,375
26,693
5,000
-
(782)
93,664
444,286
382,125
27,200
5,000
(950)
413,375
Ordinary shares
Opening balance
Shares issued as part of the capital raising 1
Shares issued as part of the share purchase plan2
Transaction costs from capital transactions net of
tax
1
2
announcement.
as the institutional placement.
(a) Ordinary shares
On 29 January, Villa World Limited announced it had completed a fully underwritten institutional placement to raise $26.7 million.
The placement was completed at an issue price of $1.90 per share, representing a 10.0% discount to the closing price of the
Company's shares on 27 January 2015, a 7.0% discount to the volume weighted average price for the five trading days prior to the
announcement of the placement and a 4.7% discount to the volume weighted average price for the 10 days prior to this
The record date for the share purchase plan was 28 January 2015. The share purchase plan was offered at the same price per share
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary
shares present at a meeting in person or by proxy, is entitled to one vote and upon a poll each share is entitled to one
vote. Ordinary shares have no par value and Villa World Limited does not have a limited amount of authorised capital.
Information relating to the Company, including details of options issued, exercised and lapsed during the financial
year, is set out in the Remuneration report on page 32 and in note E2 (b) - Equity instrument disclosures relating to
(b) Options
key management personnel.
C3 Other reserves
(a) Movements in other reserves
(i) Profits reserve
Opening balance
Transfer opening retained profits
Transfer current year profit
Dividends provided for or paid
Closing balance
Notes
Consolidated
30-Jun-15
30-Jun-14
$'000
$'000
166,013
-
25,587
(15,050)
176,550
-
150,342
21,291
(5,620)
166,013
A4(a)
Notes to the consolidated financial statements
30 June 2015 (continued)
C2 Contributed equity
Notes to the consolidated financial statements
30 June 2015 (continued)
C3 Other reserves (continued)
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
(a) Movements in other reserves (continued)
are shown in equity as a deduction, net of tax, from the proceeds.
(ii) Hedging reserve - cash flow hedges
Opening balance
Revaluation - gross
Deferred tax
Closing balance
(iii) Share-based payments
Opening balance
Share-based payments expense
Transfer options lapsed to retained earnings
Closing balance
Total other reserves
(b) Nature and purpose of other reserves
(i) Profits reserve
Notes
A5(d)
Notes
E2(c)
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
(1,413)
(1,805)
541
(2,677)
(657)
(1,080)
324
(1,413)
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
174
143
-
317
174,190
220
174
(220)
174
164,774
The profits reserve represents opening retained profits and current year profits transferred to a reserve to preserve
the characteristic as a profit and not allocate against prior year accumulated losses. Any such profits are available to
enable payment of franked dividends in the future should the Directors declare by resolution. Profits are determined
and transferred on an entity basis. Losses are retained by the entity.
(ii) Cash flow hedges
The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are
recognised in other comprehensive income. Amounts are reclassified to profit or loss when the associated hedged
transaction affects profit or loss (for instance when the forecast transaction that is hedged takes place).
(iii) Share-based payments
The share-based payments reserve is used to recognise the fair value of options issued to key management personnel
and executives. Refer note E2 (b) - Equity instrument disclosures relating to key management personnel and the
Remuneration report on page 32.
C4 Borrowings
Accounting for borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred and are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is
recognised in profit or loss over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down
occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the
fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it
relates.
58
59
59
CCAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENTVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
C4 Borrowings (continued)
Accounting for borrowings (continued)
Interest expense is accrued at the effective interest rate.
All of the consolidated entity's assets are pledged as security for the Company's finance facilities. The carrying
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished
or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities
assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting period.
(a) Financing arrangements
Access was available at balance date to the following lines of credit:
Total financing facilities secured (i)
Australian and New Zealand Banking Group
Westpac Banking Corporation
Facilities utilised at reporting date
Loan (secured) (i) - non-current
Bank guarantees utilised at reporting date
Loan (secured) (i)
Facilities unutilised at reporting date
Loan (secured) (i)
(i) Club facility
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
130,000
50,000
180,000
92,044
92,044
12,981
12,981
74,975
74,975
155,000
-
155,000
69,086
69,086
11,026
11,026
74,888
74,888
On 4 March 2015 the Company entered into a $180.0 million Club Financing Arrangement (Club Facility) with
Australia and New Zealand Banking Group Limited (ANZ) and Westpac Banking Corporation (Westpac). The Club
Facility replaces the $155 million bilateral multi-option facility agreement with ANZ and comprises a facility of $130.0
million with ANZ expiring on 30 October 2016 and a facility of $50.0 million with Westpac expiring on 2 March 2018.
As at 30 June 2015 the facility was drawn exclusive of bank guarantees at $92.0 million (30 June 2014: $69.1 million).
Bank guarantees issued total $13.0 million (30 June 2014: $11.0 million). The bank guarantees are also disclosed in
note B4 (e) - Contingencies.
No restrictions have been imposed on this facility by the financiers during the year ending 30 June 2015 and
drawdowns continue to be made in the ordinary course of business. All covenants under the facility were met within
the required timeframes during the year.
Interest is payable based on a margin over bank bill swap rate. The Company entered into interest rate swap
contracts to fix the interest rate at 3.69% (excluding the margin and line fees applicable under the loan agreement)
on $90 million of borrowings. Refer to note C6 (d) (ii) - Derivative financial instruments. The swap contract matures
on 12 June 2018.
The fair value of non-current borrowings and the bank guarantees equals their carrying amount, as the impact of
discounting is not significant.
60
60
Notes to the consolidated financial statements
30 June 2015 (continued)
C5 Finance costs
(b) Assets pledged as security
amounts of assets pledged as security are set out below:
Total inventory:
Current inventory
Non-current inventory
Aggregate carrying amount
Accounting for finance costs
Consolidated
30-Jun-15
30-Jun-14
$'000
$'000
191,318
148,326
339,644
123,660
134,563
258,223
Consolidated
30-Jun-15
30-Jun-14
$'000
$'000
6,616
1,436
551
8,603
(3,096)
4,689
10,196
5,073
1,268
364
6,705
(2,451)
3,371
7,625
Ancillary costs incurred in connection with the arrangement of borrowings are capitalised and amortised over the life
of the borrowings. Borrowing costs incurred for the construction of any qualifying asset are capitalised during the
period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs
are expensed.
Loan interest and charges
Other financial institutions
Unwind of discount deferred consideration
Borrowing costs
Amount capitalised1
Unwind of amount capitalised
Total finance costs included within the income statement
The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate
applicable to the entity's outstanding borrowings during the year, including line fees and margins, in this case 7.80% (30 June 2014:
1
7.80%).
C6 Financial risk management
The Company's activities are exposed to a variety of financial risks:
Risk
Exposure arising from
Measurement
Market risk -
interest rate risk
Credit risk
Borrowings at variable rates
Cash and cash equivalents,
Cash flow forecasting,
sensitivity analysis
Ageing analysis, credit
derivative financial instruments,
ratings, management of
deposits with banks and financial
institutions, credit exposure of
outstanding receivables
Borrowings and other liabilities
Liquidity risk
Management
Interest rate swaps
Ongoing management
review, contractual
arrangements
Management of cash flows
Availability and flexibility
and forecast, gearing
of financing facilities
It is the responsibility of the Board and management to ensure that adequate risk identification, assessment and
mitigation practices are in place for the effective oversight and management of these risks. The Board provides
written principles for overall risk management as well as written policies covering specific items, such as mitigating
interest rate and credit risks, use of derivative financial instruments and investing excess liquidity. Risk management is
carried out by the finance department under oversight from the Board.
The Company’s overall risk management program focuses on the unpredictability of financial markets, is managed
centrally to ensure alignment of financial risk management with corporate objectives and seeks to minimise potential
adverse effects on the financial performance of the Company.
deposits
analysis
61
CCAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENTVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
C4 Borrowings (continued)
Accounting for borrowings (continued)
Interest expense is accrued at the effective interest rate.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished
or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities
assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting period.
(a) Financing arrangements
Access was available at balance date to the following lines of credit:
Total financing facilities secured (i)
Australian and New Zealand Banking Group
Westpac Banking Corporation
Facilities utilised at reporting date
Loan (secured) (i) - non-current
Bank guarantees utilised at reporting date
Loan (secured) (i)
Facilities unutilised at reporting date
Loan (secured) (i)
(i) Club facility
Consolidated
30-Jun-15
30-Jun-14
$'000
$'000
130,000
50,000
180,000
92,044
92,044
12,981
12,981
74,975
74,975
155,000
-
155,000
69,086
69,086
11,026
11,026
74,888
74,888
On 4 March 2015 the Company entered into a $180.0 million Club Financing Arrangement (Club Facility) with
Australia and New Zealand Banking Group Limited (ANZ) and Westpac Banking Corporation (Westpac). The Club
Facility replaces the $155 million bilateral multi-option facility agreement with ANZ and comprises a facility of $130.0
million with ANZ expiring on 30 October 2016 and a facility of $50.0 million with Westpac expiring on 2 March 2018.
As at 30 June 2015 the facility was drawn exclusive of bank guarantees at $92.0 million (30 June 2014: $69.1 million).
Bank guarantees issued total $13.0 million (30 June 2014: $11.0 million). The bank guarantees are also disclosed in
note B4 (e) - Contingencies.
No restrictions have been imposed on this facility by the financiers during the year ending 30 June 2015 and
drawdowns continue to be made in the ordinary course of business. All covenants under the facility were met within
the required timeframes during the year.
Interest is payable based on a margin over bank bill swap rate. The Company entered into interest rate swap
contracts to fix the interest rate at 3.69% (excluding the margin and line fees applicable under the loan agreement)
on $90 million of borrowings. Refer to note C6 (d) (ii) - Derivative financial instruments. The swap contract matures
on 12 June 2018.
discounting is not significant.
The fair value of non-current borrowings and the bank guarantees equals their carrying amount, as the impact of
Notes to the consolidated financial statements
30 June 2015 (continued)
C5 Finance costs
(b) Assets pledged as security
All of the consolidated entity's assets are pledged as security for the Company's finance facilities. The carrying
amounts of assets pledged as security are set out below:
Total inventory:
Current inventory
Non-current inventory
Aggregate carrying amount
Accounting for finance costs
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
191,318
148,326
339,644
123,660
134,563
258,223
Ancillary costs incurred in connection with the arrangement of borrowings are capitalised and amortised over the life
of the borrowings. Borrowing costs incurred for the construction of any qualifying asset are capitalised during the
period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs
are expensed.
Loan interest and charges
Other financial institutions
Unwind of discount deferred consideration
Borrowing costs
Amount capitalised1
Unwind of amount capitalised
Total finance costs included within the income statement
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
6,616
1,436
551
8,603
(3,096)
4,689
10,196
5,073
1,268
364
6,705
(2,451)
3,371
7,625
1
The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate
applicable to the entity's outstanding borrowings during the year, including line fees and margins, in this case 7.80% (30 June 2014:
7.80%).
C6 Financial risk management
The Company's activities are exposed to a variety of financial risks:
Risk
Market risk -
interest rate risk
Credit risk
Liquidity risk
Exposure arising from
Borrowings at variable rates
Cash and cash equivalents,
derivative financial instruments,
deposits with banks and financial
institutions, credit exposure of
outstanding receivables
Borrowings and other liabilities
Measurement
Cash flow forecasting,
sensitivity analysis
Ageing analysis, credit
ratings, management of
deposits
Management
Interest rate swaps
Ongoing management
review, contractual
arrangements
Management of cash flows
and forecast, gearing
analysis
Availability and flexibility
of financing facilities
It is the responsibility of the Board and management to ensure that adequate risk identification, assessment and
mitigation practices are in place for the effective oversight and management of these risks. The Board provides
written principles for overall risk management as well as written policies covering specific items, such as mitigating
interest rate and credit risks, use of derivative financial instruments and investing excess liquidity. Risk management is
carried out by the finance department under oversight from the Board.
The Company’s overall risk management program focuses on the unpredictability of financial markets, is managed
centrally to ensure alignment of financial risk management with corporate objectives and seeks to minimise potential
adverse effects on the financial performance of the Company.
60
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CCAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENTVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
C6 Financial risk management (continued)
The Company holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Borrowings
Derivative payable
(a) Market risk
Valuation basis
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Fair value
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
22,571
41,907
102,378
92,044
3,823
12,118
16,899
54,358
69,086
2,019
Market risk is the risk that the fair value or future cash flows of a financial asset or financial liability will fluctuate
because of changes in market prices. The Company’s market risk arises from its interest rate risk.
Interest rate risk
The Company’s main interest rate risk arises from borrowings issued at variable interest rates. Borrowings issued at
variable rates expose the Company to cash flow interest rate risk.
The Company manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. The Company
agrees to exchange, at specified intervals, the difference between fixed and variable interest rate interest amounts
calculated by reference to an agreed notional principal amount. These swaps are designated to hedge interest costs
associated with underlying debt obligations.
The Company policy is to maintain a minimum of $90.0 million (2014: $70.0 million) of its borrowings fixed by way of
interest rate swaps.
As at the end of the reporting period, the Company had the following variable rate borrowings and interest rate swap
contracts outstanding:
Consolidated entity
30 June 2015
30 June 2014
Club facility
Interest rate swaps - syndicated loans
Net exposure to cash flow interest rate risk
Weighted
average
interest rate1
%
2.1%
3.7%
-%
Weighted
average
interest rate1
%
2.7%
3.5%
-%
Balance
$'000
92,044
(90,000)
2,044
Balance
$'000
69,086
(70,000)
(914)
1Does not include any margin and line fees applicable under the loan agreement.
An analysis by maturities is provided in note (c).
Sensitivity analysis
At 30 June 2015, if interest rates had changed by -/+ 25 basis points from the year end rates with all other variables
held constant, post-tax profits for the year, would have been $0.02 million lower/higher (30 June 2014: $0.03
million lower/higher), mainly as a result of higher/lower interest expense from interest bearing liabilities. Other
components of equity would have been $0.6 million lower/higher (30 June 2014: $0.8 million lower/higher) mainly as
a result of an increase/decrease in the fair value of the cash flow hedges of borrowings.
(b) Credit risk
Credit risk is the risk that a contracting entity will not complete its obligation under a financial instrument or
contractual arrangement. Credit risk is managed on a consolidated basis.
Notes to the consolidated financial statements
30 June 2015 (continued)
C6 Financial risk management (continued)
(b) Credit risk (continued)
The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of
financial assets mentioned above.
Credit risk arises primarily from trade receivables relating to the sale of properties (including the sale of house and
land packages or land only) but also from the Company’s cash and deposits with financial counterparties.
(i) Trade and receivables
other receivables.
This group of receivables is primarily from the sale of land or house and land packages.
The Company’s revenue recognition policy is set out in note A1 - Revenue and gross profit and in note B2 - Trade and
The Company has no significant concentrations of credit risk to any single counterparty for trade receivables. The
Company also has policies to ensure that sales of properties are made to customers with an appropriate credit
history. Trade receivables are secured against those properties until the proceeds are received.
The credit risk associated with trade receivables from joint venture entities is monitored through management’s
review of project feasibilities and the Company’s ongoing involvement in the operations of those entities.
The Company did not recognise any impairment losses in the current year (30 June 2014:$Nil).
Overall, the trade receivable balance is low relative to the scale of the balance sheet and, owing to the short-term
nature of the ageing of the balance, the credit risk of trade receivables is considered to be low.
For cash and deposits held with banks and financial institutions, only independently rated parties with a minimum
(ii) Cash and deposits
rating of “AA “- are accepted.
(c) Liquidity risk
covenants.
page 9.
This is the risk that suitable funding for the Company’s activities may not be available. The Company addresses this
risk through review of rolling cash flow forecasts throughout the year to assess and monitor the current and forecast
availability of funding, and to ensure sufficient headroom against facility limits and compliance with banking
At 30 June 2015, the Company carried forward 364 sales contracts worth $134.1 million (incl GST). Of these 349
contracts worth $130.1 million will settle in 1H16. Further detail is provided in the Operating and Financial Review on
Furthermore, the Company’s policy is to minimise its exposure to liquidity risk by managing its refinancing risk.
Refinancing risk may be reduced by reborrowing prior to the contracted maturity date, effectively switching liquidity
risk for market risk. This is subject to credit facilities being available at the time of the desired refinancing.
The Company’s gearing policy is discussed in note C1 - Capital risk management and the Company’s borrowings are
set out in Note C4 - Borrowings.
During 2015 the Company entered into a Club Financing Arrangement with Australia and New Zealand Banking
Group Limited (ANZ) and Westpac Banking Corporation (Westpac), to provide funding for the Company's ongoing
requirements for its core business.
The Company’s borrowings were previously concentrated to a single credit provider being ANZ. The Board considers
using two credit providers will minimise the concentration of risks and therefore mitigate financial loss through
potential counterparty failure. Each facility with ANZ and Westpac is able to be negotiated and extended with the
consent of that lender, independent of the other. Refer note C4 - Borrowings.
At 30 June 2015 the company had unutilised borrowing facilities of $75.0 million (30 June 2014: $74.9 million).
62
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CCAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENTVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
C6 Financial risk management (continued)
The Company holds the following financial instruments:
Valuation basis
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Fair value
Consolidated
30-Jun-15
30-Jun-14
$'000
$'000
22,571
41,907
102,378
92,044
3,823
12,118
16,899
54,358
69,086
2,019
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Borrowings
Derivative payable
(a) Market risk
Interest rate risk
interest rate swaps.
contracts outstanding:
Consolidated entity
Market risk is the risk that the fair value or future cash flows of a financial asset or financial liability will fluctuate
because of changes in market prices. The Company’s market risk arises from its interest rate risk.
The Company’s main interest rate risk arises from borrowings issued at variable interest rates. Borrowings issued at
variable rates expose the Company to cash flow interest rate risk.
The Company manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. The Company
agrees to exchange, at specified intervals, the difference between fixed and variable interest rate interest amounts
calculated by reference to an agreed notional principal amount. These swaps are designated to hedge interest costs
associated with underlying debt obligations.
The Company policy is to maintain a minimum of $90.0 million (2014: $70.0 million) of its borrowings fixed by way of
30 June 2015
30 June 2014
Weighted
average
interest rate1
%
2.1%
3.7%
Weighted
average
Balance
interest rate1
$'000
92,044
(90,000)
2,044
%
2.7%
3.5%
-%
-%
Balance
$'000
69,086
(70,000)
(914)
Club facility
Interest rate swaps - syndicated loans
Net exposure to cash flow interest rate risk
1Does not include any margin and line fees applicable under the loan agreement.
An analysis by maturities is provided in note (c).
Sensitivity analysis
At 30 June 2015, if interest rates had changed by -/+ 25 basis points from the year end rates with all other variables
held constant, post-tax profits for the year, would have been $0.02 million lower/higher (30 June 2014: $0.03
million lower/higher), mainly as a result of higher/lower interest expense from interest bearing liabilities. Other
components of equity would have been $0.6 million lower/higher (30 June 2014: $0.8 million lower/higher) mainly as
a result of an increase/decrease in the fair value of the cash flow hedges of borrowings.
(b) Credit risk
Credit risk is the risk that a contracting entity will not complete its obligation under a financial instrument or
contractual arrangement. Credit risk is managed on a consolidated basis.
Notes to the consolidated financial statements
30 June 2015 (continued)
C6 Financial risk management (continued)
(b) Credit risk (continued)
The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of
financial assets mentioned above.
Credit risk arises primarily from trade receivables relating to the sale of properties (including the sale of house and
land packages or land only) but also from the Company’s cash and deposits with financial counterparties.
(i) Trade and receivables
This group of receivables is primarily from the sale of land or house and land packages.
The Company’s revenue recognition policy is set out in note A1 - Revenue and gross profit and in note B2 - Trade and
other receivables.
The Company has no significant concentrations of credit risk to any single counterparty for trade receivables. The
Company also has policies to ensure that sales of properties are made to customers with an appropriate credit
history. Trade receivables are secured against those properties until the proceeds are received.
The credit risk associated with trade receivables from joint venture entities is monitored through management’s
review of project feasibilities and the Company’s ongoing involvement in the operations of those entities.
The Company did not recognise any impairment losses in the current year (30 June 2014:$Nil).
Overall, the trade receivable balance is low relative to the scale of the balance sheet and, owing to the short-term
nature of the ageing of the balance, the credit risk of trade receivables is considered to be low.
(ii) Cash and deposits
For cash and deposits held with banks and financial institutions, only independently rated parties with a minimum
rating of “AA “- are accepted.
As at the end of the reporting period, the Company had the following variable rate borrowings and interest rate swap
(c) Liquidity risk
This is the risk that suitable funding for the Company’s activities may not be available. The Company addresses this
risk through review of rolling cash flow forecasts throughout the year to assess and monitor the current and forecast
availability of funding, and to ensure sufficient headroom against facility limits and compliance with banking
covenants.
At 30 June 2015, the Company carried forward 364 sales contracts worth $134.1 million (incl GST). Of these 349
contracts worth $130.1 million will settle in 1H16. Further detail is provided in the Operating and Financial Review on
page 9.
Furthermore, the Company’s policy is to minimise its exposure to liquidity risk by managing its refinancing risk.
Refinancing risk may be reduced by reborrowing prior to the contracted maturity date, effectively switching liquidity
risk for market risk. This is subject to credit facilities being available at the time of the desired refinancing.
The Company’s gearing policy is discussed in note C1 - Capital risk management and the Company’s borrowings are
set out in Note C4 - Borrowings.
During 2015 the Company entered into a Club Financing Arrangement with Australia and New Zealand Banking
Group Limited (ANZ) and Westpac Banking Corporation (Westpac), to provide funding for the Company's ongoing
requirements for its core business.
The Company’s borrowings were previously concentrated to a single credit provider being ANZ. The Board considers
using two credit providers will minimise the concentration of risks and therefore mitigate financial loss through
potential counterparty failure. Each facility with ANZ and Westpac is able to be negotiated and extended with the
consent of that lender, independent of the other. Refer note C4 - Borrowings.
At 30 June 2015 the company had unutilised borrowing facilities of $75.0 million (30 June 2014: $74.9 million).
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CCAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENTVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
C6 Financial risk management (continued)
(c) Liquidity risk (continued)
(i) Maturities of financial liabilities
The table below analyses the Company’s financial liabilities including derivatives into relevant maturity groupings
based on the period remaining to the contractual maturity date. The amounts disclosed in the table are the
contractual undiscounted cash flows and therefore may not reconcile with the amounts disclosed on the Balance
Sheet. For interest rate swaps the cash flows have been estimated using forward interest rates applicable at the
reporting date.
Contractual maturities of financial
liabilities
Less than 6
Total
contrac-
tual
cash
Over 5
years
flows
$'000 $'000
Carrying
amount
(assets)/
liabilities
$'000
Between
1 & 2 years
$'000
Between
2 & 5 years
$'000
months 6 - 12 months
$'000
$'000
At 30 June 2015
Non-derivatives
Commitments
Trade payables
Club facility
Total non-derivatives
Derivatives
Net settled (interest rate swaps)
At 30 June 2014
Non-derivatives
Commitments
Trade payables
Club facility
Total non-derivatives
Derivatives
1,628
47,313
2,872
51,813
835
835
11,175
32,912
2,661
-
19,985
2,847
18,077
7,668
60,362
13,163
-
36,841
22,832
86,107
50,004
753
753
1,325
1,325
910
910
-
-
-
-
-
-
-
-
-
-
-
-
32,868
74,966
102,922
-
74,966
92,044
210,756
167,010
3,823
3,823
3,823
3,823
38,465
34,912
81,337
-
34,912
69,086
154,714
103,997
2,019
2,019
2,019
2,019
-
-
70,765
70,765
644
644
11,950
2,000
2,618
15,340
-
5,293
46,748
16,568
20,633
Net settled (interest rate swaps)
Total derivatives
287
287
312
312
776
776
The Company expects to meet its financial liabilities through the various available liquidity sources, including sale
contracts carried forward, cash deposits, undrawn committed borrowing facilities and, in the longer-term, debt
refinancings.
Fair value hierarchy
(d) Fair value measurements
(i) Carrying amounts versus fair values
At 30 June 2015, the carrying amounts of the Company’s financial assets and liabilities approximate their fair values.
(ii) Derivative financial instruments
The Company is party to derivative financial instruments in the normal course of business in order to hedge exposure
to fluctuations in interest rates. In accordance with the Company's financial risk management policies, the Company
does not hold or issue derivative financial instruments for trading purposes.
It is policy to protect part of the Club Facility of $180.0 million from exposure to fluctuating interest rates.
Accordingly the Company has entered into an interest rate swap contract under which it is obliged to receive
interest at variable rates and to pay interest at fixed rates. Interest payments for interest rate swaps are net settled
every 30 days. The interest rate swap contract is designated as a cash flow hedging instrument.
64
64
65
Notes to the consolidated financial statements
30 June 2015 (continued)
C6 Financial risk management (continued)
(ii) Derivative financial instruments (continued)
Amount
hedged
$'000
Interest rate
swap
Club Facility -
1. % of loan facility limit.
The Club facility for the Company bears an average variable interest rate of 7.8% (including line and facility fees).
The interest rate swap contract in place is referred to in the table below:
Loan facility
Percent
Expiry date
$'000
hedged %1 Fixed rate %2
15 %3
$'000
Variable rate
Valuation as
as at 30-Jun-
at 30-Jun-15
Swap
90,000
12-Jun-18
180,000
50.0%
3.69%
2.09%
3,823
2. The swap rate outlined above does not include any margin and line fees applicable under the loan agreement.
3. Variable rate is 30 day BBSY @ 30 June 2015.
The fair value of the interest rate swap liability at 30 June 2015 was $3.8 million (30 June 2014: $2.0 million).
The fair value of the interest rate swap is the estimated amount that the entity would receive or pay to terminate the
swap at the balance sheet date, taking into account current interest rates, forward interest yield curves and the
current creditworthiness of the swap counterparties. The fair value of interest rate swap is calculated as the present
value of the estimated future cash flows.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
re-measured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair
value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item
being hedged.
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value
of the derivative is recognised in other comprehensive income and accumulated in the hedging reserve. Any
ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss. There is no
material ineffectiveness for the year ended 30 June 2015.
The amount accumulated in equity is retained in other comprehensive income and reclassified to profit or loss in the
same period or periods during which the hedged item affects profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or
exercised, or the designation is revoked, the hedge accounting is discontinued prospectively. If the forecast
transaction is no longer expected to occur, then the amount accumulated in equity is reclassified to profit and loss.
All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy,
described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
(b)
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (as prices) or indirectly (derived from prices) (level 2); and
(c)
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
During the year, there were no transfers between Level 1, Level 2 and Level 3 fair value categories.
The fair value measurement of interest rate swap liability of $3.8 million (30 June 2014: $2.0 million) has been
categorised as Level 2. This is the Company’s only financial instrument included on the balance sheet measured at fair
value.
CCAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENTVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
C6 Financial risk management (continued)
(c) Liquidity risk (continued)
(i) Maturities of financial liabilities
The table below analyses the Company’s financial liabilities including derivatives into relevant maturity groupings
based on the period remaining to the contractual maturity date. The amounts disclosed in the table are the
contractual undiscounted cash flows and therefore may not reconcile with the amounts disclosed on the Balance
Sheet. For interest rate swaps the cash flows have been estimated using forward interest rates applicable at the
reporting date.
Contractual maturities of financial
liabilities
Less than 6
Between
Between
Over 5
months 6 - 12 months
1 & 2 years
2 & 5 years
years
$'000
$'000
$'000
$'000
$'000 $'000
contrac-
Carrying
Total
tual
cash
flows
amount
(assets)/
liabilities
$'000
-
19,985
2,847
18,077
7,668
60,362
13,163
-
36,841
32,868
74,966
102,922
-
74,966
92,044
22,832
86,107
50,004
210,756
167,010
At 30 June 2015
Non-derivatives
Commitments
Trade payables
Club facility
Total non-derivatives
Derivatives
At 30 June 2014
Non-derivatives
Commitments
Trade payables
Club facility
Total non-derivatives
Derivatives
1,628
47,313
2,872
51,813
835
835
11,175
32,912
2,661
Net settled (interest rate swaps)
753
753
1,325
1,325
910
910
3,823
3,823
3,823
3,823
11,950
2,000
2,618
15,340
-
5,293
46,748
16,568
20,633
-
-
70,765
70,765
644
644
38,465
34,912
81,337
-
34,912
69,086
154,714
103,997
2,019
2,019
2,019
2,019
Net settled (interest rate swaps)
Total derivatives
287
287
312
312
776
776
refinancings.
(d) Fair value measurements
(i) Carrying amounts versus fair values
(ii) Derivative financial instruments
At 30 June 2015, the carrying amounts of the Company’s financial assets and liabilities approximate their fair values.
The Company is party to derivative financial instruments in the normal course of business in order to hedge exposure
to fluctuations in interest rates. In accordance with the Company's financial risk management policies, the Company
does not hold or issue derivative financial instruments for trading purposes.
It is policy to protect part of the Club Facility of $180.0 million from exposure to fluctuating interest rates.
Accordingly the Company has entered into an interest rate swap contract under which it is obliged to receive
interest at variable rates and to pay interest at fixed rates. Interest payments for interest rate swaps are net settled
every 30 days. The interest rate swap contract is designated as a cash flow hedging instrument.
-
-
-
-
-
-
-
-
-
-
-
-
Notes to the consolidated financial statements
30 June 2015 (continued)
C6 Financial risk management (continued)
(ii) Derivative financial instruments (continued)
The Club facility for the Company bears an average variable interest rate of 7.8% (including line and facility fees).
The interest rate swap contract in place is referred to in the table below:
Interest rate
swap
Club Facility -
Swap
Amount
hedged
$'000
Expiry date
Loan facility
$'000
Percent
hedged %1 Fixed rate %2
Variable rate
as at 30-Jun-
15 %3
Valuation as
at 30-Jun-15
$'000
90,000
12-Jun-18
180,000
50.0%
3.69%
2.09%
3,823
1. % of loan facility limit.
2. The swap rate outlined above does not include any margin and line fees applicable under the loan agreement.
3. Variable rate is 30 day BBSY @ 30 June 2015.
The fair value of the interest rate swap liability at 30 June 2015 was $3.8 million (30 June 2014: $2.0 million).
The fair value of the interest rate swap is the estimated amount that the entity would receive or pay to terminate the
swap at the balance sheet date, taking into account current interest rates, forward interest yield curves and the
current creditworthiness of the swap counterparties. The fair value of interest rate swap is calculated as the present
value of the estimated future cash flows.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
re-measured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair
value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item
being hedged.
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value
of the derivative is recognised in other comprehensive income and accumulated in the hedging reserve. Any
ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss. There is no
material ineffectiveness for the year ended 30 June 2015.
The amount accumulated in equity is retained in other comprehensive income and reclassified to profit or loss in the
same period or periods during which the hedged item affects profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or
exercised, or the designation is revoked, the hedge accounting is discontinued prospectively. If the forecast
transaction is no longer expected to occur, then the amount accumulated in equity is reclassified to profit and loss.
The Company expects to meet its financial liabilities through the various available liquidity sources, including sale
contracts carried forward, cash deposits, undrawn committed borrowing facilities and, in the longer-term, debt
Fair value hierarchy
All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy,
described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
(b)
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (as prices) or indirectly (derived from prices) (level 2); and
(c)
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
During the year, there were no transfers between Level 1, Level 2 and Level 3 fair value categories.
The fair value measurement of interest rate swap liability of $3.8 million (30 June 2014: $2.0 million) has been
categorised as Level 2. This is the Company’s only financial instrument included on the balance sheet measured at fair
value.
64
65
65
CCAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENTVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
D
D
GROUP STRUCTURE
This section provides information which will help users understand how the group structure affects the
financial position and performance of the Company as a whole.
Notes to the consolidated financial statements
30 June 2015 (continued)
D2 Investments accounted for using equity (continued)
The Company has the following interests in jointly controlled entities:
In this section:
D1
D2
D3
D1
D2
D3
Subsidiaries
Investments accounted for using equity
Parent entity
D1 Subsidiaries
Accounting for subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of all subsidiaries at 30 June 2015.
Subsidiaries are all entities (including structured entities) over which the Company has control. The Company
controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power to direct the entity's activities. Subsidiaries are fully consolidated
from the date on which control is transferred to the Company. They are de-consolidated from the date that control
ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities within the Company are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the
asset transferred. Investments in subsidiaries are accounted for at cost in the individual financial statements of the
Company. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the Company.
Significant investments in subsidiaries
Name of entity
Parent entity
Villa World Limited
Villa World Developments Pty Ltd
Villa World (Vic) Pty Ltd
GPDQ Pty Ltd
Hervey Bay (JV) Pty Ltd
Cornell's Hill Pty Ltd 1
Cotton Ventures Pty Ltd 1
Westminster Street Developments Pty Ltd 1
Villa World Redlands Pty Ltd
Villa World Greenacre Pty Ltd
Villa World Thornlands Pty Ltd
Villa World Pinelands Pty Ltd
Villa World Seascape Pty Ltd
Villa World Rochedale Pty Ltd
1
These companies were de-registered during FY15.
D2 Investments accounted for using equity
Country of
incorporation
Class of shares
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Equity holding
2015
%
100
100
100
100
-
-
-
100
100
100
100
100
100
2014
%
100
100
100
100
100
100
100
100
-
-
-
-
-
A joint venture is either a venture or operation over whose activities the Company has joint control established by
contractual agreement. Investments in joint venture entities are accounted for on an equity accounted basis. Under
the equity method, the share of profits or losses of the joint venture are recognised in the income statement. The
share of post-acquisition movements in reserves is recognised in other comprehensive income.
Investments in joint ventures are assessed for impairment when indicators or impairment are present and if required,
written down to the recoverable amount. Transactions with the joint venture are eliminated to the extent of the
Company's interest in the joint venture until such time as they are realised by the joint venture on consumption or
sale.
Name of Entity
Notes % Owned Purpose
Eynesbury Holdings Pty Ltd
D2(a)
Land, Victoria, as Trustee.
The owner of the Eynesbury Development Joint Venture
The owner of the Eynesbury Development Joint Venture
Eynesbury Pastoral Trust
D2(a)
Land, Victoria.
Eynesbury Golf Pty Ltd
Eynesbury Development Joint
Venture
Expression Homes Pty Ltd
Donnybrook JV Pty Ltd
The golf course and homestead hospitality business were
sold and settled during FY15. This entity will be wound up in
due course.
in Victoria.
Residential development at Eynesbury, Victoria.
Residential development and construction projects primarily
Residential development at Donnybrook, Victoria
50
50
50
50
50
51
The carrying amounts of these joint ventures at balance date were:
Eynesbury Joint Venture
Donnybrook Joint Venture
30-Jun-15
30-Jun-14
30-Jun-15
30-Jun-14
30-Jun-15
30-Jun-14
Opening balance
Add: Cash contribution
Add: Share of net
profit / (loss) of
associates and joint
Less: Repayment to
ventures
Company
Total
(a) Eynesbury joint venture
$'000
17,968
-
1,934
(9,000)
10,902
$'000
13,701
500
3,767
-
17,968
$'000
-
6,366
(106)
(383)
5,877
$'000
-
-
-
-
-
'000
17,968
6,366
1,828
(9,383)
16,779
Summarised financial information of the Eynesbury joint venture is set out below:
Total
'000
13,701
500
3,767
-
17,968
Villa World's share of joint ventures' assets and liabilities
Current assets, including cash and cash equivalents $15.7m (2014:$29.4m) and trade
Current liabilities including bill facility $10.0m (2014:$10.0m)
Non-current liabilities including related party loans of $38.8m (2014:$56.8m)
debtors $24.4m (2014:$25.5m).
Non-current assets
Total assets
Total liabilities
Equity
Proportion of the Company's ownership
Equity attributable to the investment
30-Jun-15
30-Jun-14
$'000
$'000
44,359
2,567
46,926
20,433
38,789
59,222
(12,296)
50%
(6,148)
58,666
1,198
59,864
15,608
57,132
72,740
(12,876)
50%
(6,438)
66
66
67
DGROUP STRUCTUREVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
financial position and performance of the Company as a whole.
Notes to the consolidated financial statements
30 June 2015 (continued)
D
GROUP STRUCTURE
Investments accounted for using equity
In this section:
Subsidiaries
Parent entity
D1
D2
D3
D1 Subsidiaries
Accounting for subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of all subsidiaries at 30 June 2015.
Subsidiaries are all entities (including structured entities) over which the Company has control. The Company
controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power to direct the entity's activities. Subsidiaries are fully consolidated
from the date on which control is transferred to the Company. They are de-consolidated from the date that control
ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities within the Company are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the
asset transferred. Investments in subsidiaries are accounted for at cost in the individual financial statements of the
Company. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the Company.
Significant investments in subsidiaries
Name of entity
Parent entity
Villa World Limited
Villa World Developments Pty Ltd
Villa World (Vic) Pty Ltd
GPDQ Pty Ltd
Hervey Bay (JV) Pty Ltd
Cornell's Hill Pty Ltd 1
Cotton Ventures Pty Ltd 1
Villa World Redlands Pty Ltd
Villa World Greenacre Pty Ltd
Villa World Thornlands Pty Ltd
Villa World Pinelands Pty Ltd
Villa World Seascape Pty Ltd
Villa World Rochedale Pty Ltd
Westminster Street Developments Pty Ltd 1
1
These companies were de-registered during FY15.
D2 Investments accounted for using equity
Country of
incorporation
Class of shares
Equity holding
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2015
%
100
100
100
100
-
-
-
100
100
100
100
100
100
2014
%
100
100
100
100
100
100
100
100
-
-
-
-
-
A joint venture is either a venture or operation over whose activities the Company has joint control established by
contractual agreement. Investments in joint venture entities are accounted for on an equity accounted basis. Under
the equity method, the share of profits or losses of the joint venture are recognised in the income statement. The
share of post-acquisition movements in reserves is recognised in other comprehensive income.
Investments in joint ventures are assessed for impairment when indicators or impairment are present and if required,
written down to the recoverable amount. Transactions with the joint venture are eliminated to the extent of the
Company's interest in the joint venture until such time as they are realised by the joint venture on consumption or
sale.
This section provides information which will help users understand how the group structure affects the
The Company has the following interests in jointly controlled entities:
Notes to the consolidated financial statements
30 June 2015 (continued)
D2 Investments accounted for using equity (continued)
Name of Entity
Notes % Owned Purpose
Eynesbury Holdings Pty Ltd
D2(a)
Eynesbury Pastoral Trust
D2(a)
Eynesbury Golf Pty Ltd
Eynesbury Development Joint
Venture
Expression Homes Pty Ltd
Donnybrook JV Pty Ltd
50
50
50
50
50
51
The owner of the Eynesbury Development Joint Venture
Land, Victoria, as Trustee.
The owner of the Eynesbury Development Joint Venture
Land, Victoria.
The golf course and homestead hospitality business were
sold and settled during FY15. This entity will be wound up in
due course.
Residential development at Eynesbury, Victoria.
Residential development and construction projects primarily
in Victoria.
Residential development at Donnybrook, Victoria
The carrying amounts of these joint ventures at balance date were:
Eynesbury Joint Venture
Donnybrook Joint Venture
Total
30-Jun-15
$'000
17,968
-
30-Jun-14
$'000
13,701
500
30-Jun-15
$'000
-
6,366
30-Jun-14
$'000
-
-
30-Jun-15
'000
17,968
6,366
30-Jun-14
'000
13,701
500
1,934
(9,000)
10,902
3,767
-
17,968
(106)
(383)
5,877
-
-
-
1,828
(9,383)
16,779
3,767
-
17,968
Opening balance
Add: Cash contribution
Add: Share of net
profit / (loss) of
associates and joint
ventures
Less: Repayment to
Company
Total
(a) Eynesbury joint venture
Summarised financial information of the Eynesbury joint venture is set out below:
Villa World's share of joint ventures' assets and liabilities
Current assets, including cash and cash equivalents $15.7m (2014:$29.4m) and trade
debtors $24.4m (2014:$25.5m).
Non-current assets
Total assets
Current liabilities including bill facility $10.0m (2014:$10.0m)
Non-current liabilities including related party loans of $38.8m (2014:$56.8m)
Total liabilities
Equity
Proportion of the Company's ownership
Equity attributable to the investment
30-Jun-15
$'000
30-Jun-14
$'000
44,359
2,567
46,926
20,433
38,789
59,222
(12,296)
50%
(6,148)
58,666
1,198
59,864
15,608
57,132
72,740
(12,876)
50%
(6,438)
66
67
67
DGROUP STRUCTUREVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
D2 Investments accounted for using equity (continued)
Impairment of equity accounted investments
After application of the equity method, (including recognising the joint venture’s losses), the Company applies AASB
139 Financial Instruments: Recognition and Measurement to determine whether it is necessary to recognise any
additional impairment loss with respect to its net investment in the joint venture. The amount of the loss is measured
as the difference between the asset’s carrying amount and the present value of estimated future cash flows
(excluding future credit losses that have not been incurred). Estimating these future cash flows of the joint venture
requires significant judgement and therefore actual amounts may differ from this impairment estimate.
D3 Parent entity financial information
The financial information for the Parent entity, Villa World Limited has been prepared on the same basis as the
consolidated financial statements. Investments in controlled entities are carried in the Company's financial
statements at the lower of cost or recoverable amount. Villa World Limited and its wholly-owned Australian
controlled entities have implemented the tax consolidation legislation. Refer note A5 - Taxes.
(a) Summary financial information
The individual financial statements for the parent entity, Villa World Limited, show the following aggregate amounts:
Balance sheet
Current assets
Net assets
Shareholders' equity
Issued capital
Reserves
Retained earnings
Total equity
Profit / (loss) for the period
(b) Contingent liabilities of the parent entity
30-Jun-15
30-Jun-14
$'000
$'000
17,835
199,605
120,573
79,212
(180)
199,605
4,018
15,702
179,842
89,662
89,960
220
179,842
3,923
The parent entity has provided a financial guarantee in respect of the Club Facility with Australia and New Zealand
Banking Group and Westpac Banking Corporation. Details of the parent entities contingent liabilities are disclosed in
note B3 - Provisions and contingencies.
Notes to the consolidated financial statements
30 June 2015 (continued)
D2 Investments accounted for using equity (continued)
(a) Eynesbury joint venture (continued)
Equity
Estimate of loans to be forgiven
Repayment to Company
Net asset position after loan forgiveness
Proportion of the Company's ownership
Equity attributable to the investment
30-Jun-15
$'000
(12,296)
34,100
-
21,804
50%
10,902
30-Jun-14
$'000
(12,876)
30,812
18,000
35,936
50%
17,968
The non-current liabilities include loans to the Joint Venture partners totaling $38.8 million which have not been
forgiven in the Joint Venture. It is anticipated that $34.1 million of these loans will be forgiven in due course resulting
in a net asset position of approximately $22.0 million (50% share of $11.0 million).
Villa World's aggregate share of joint ventures revenue, expenses and results
Revenue
Expenses
Profit / (loss) before income tax
Company's share of profit for the year
Villa World's aggregate share of joint ventures contingent liabilities
Bank guarantees
30-Jun-15
$'000
3,727
140
3,867
1,934
30-Jun-14
$'000
71,269
(63,734)
7,535
3,767
242
178
The equity accounted investment in the Company's Eynesbury Township joint venture as at 30 June 2015 is $10.9
million (30 June 2014 $18.0 million).
As previously disclosed the Company has entered into unconditional contracts for the sale of the Eynesbury project
(in which the Company holds a 50% interest). On 27 June 2014 the first tranche (comprising part of the land and the
golf course business) was completed at a sale price of $30.0 million plus GST.
Settlement of the second $30.0 million tranche, originally scheduled for 2 March 2015 has been extended until 28
August 2015, subject to appropriate commercial terms including the provision of further security, payment of
interest and a $2.0 million increase to the purchase price. The Company’s 50% share ($1.0 million) has not been
recognised as at 30 June 2015. Payments totaling $12.0 million have previously been made by the purchaser for the
second tranche, and released to the Eynesbury Joint Venture. Title to the second tranche property currently remains
with the Eynesbury Joint Venture.
For the Eynesbury joint venture entities, the joint venture parties have agreed that they will share liabilities in the
same proportion as their holdings in the joint venture (50% each). If the parties have entered an agreement which
creates on each of them a joint and several (unlimited) liability to a third party, they have agreed to indemnify each
other to the extent that one of them is required to pay more than 50% of the liability to a third party.
(b) Donnybrook joint venture
As previously disclosed, the Company in joint venture partnership, has entered into unconditional contracts for the
purchase of two adjoining sites at Donnybrook, Victoria (in which the Company holds a 51% interest). A total price of
$22.8 million has been agreed for the two sites, securing a landholding of approximately 270ha in one of Melbourne’s
fastest growing urban corridors. The sites are located within the Urban Growth Boundary, and will be the subject of a
2.5-3 year planning process potentially yielding in excess of 2,000 lots. On 19 December 2014 the first site was
completed at a sale price of $12.7 million. Settlement of the adjoining site at a sale price of $10.1 million is due on 26
August 2015.
The equity accounted investment in the Company's Donnybrook joint venture as at 30 June 2015 is $5.9 million (30
June 2014: nil).
68
68
69
DGROUP STRUCTUREVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
D2 Investments accounted for using equity (continued)
Impairment of equity accounted investments
After application of the equity method, (including recognising the joint venture’s losses), the Company applies AASB
139 Financial Instruments: Recognition and Measurement to determine whether it is necessary to recognise any
additional impairment loss with respect to its net investment in the joint venture. The amount of the loss is measured
as the difference between the asset’s carrying amount and the present value of estimated future cash flows
(excluding future credit losses that have not been incurred). Estimating these future cash flows of the joint venture
requires significant judgement and therefore actual amounts may differ from this impairment estimate.
D3 Parent entity financial information
The financial information for the Parent entity, Villa World Limited has been prepared on the same basis as the
consolidated financial statements. Investments in controlled entities are carried in the Company's financial
statements at the lower of cost or recoverable amount. Villa World Limited and its wholly-owned Australian
controlled entities have implemented the tax consolidation legislation. Refer note A5 - Taxes.
(a) Summary financial information
The individual financial statements for the parent entity, Villa World Limited, show the following aggregate amounts:
Balance sheet
Current assets
Net assets
Shareholders' equity
Issued capital
Reserves
Retained earnings
Total equity
Profit / (loss) for the period
30-Jun-15
$'000
30-Jun-14
$'000
17,835
199,605
120,573
79,212
(180)
199,605
4,018
15,702
179,842
89,662
89,960
220
179,842
3,923
(b) Contingent liabilities of the parent entity
The parent entity has provided a financial guarantee in respect of the Club Facility with Australia and New Zealand
Banking Group and Westpac Banking Corporation. Details of the parent entities contingent liabilities are disclosed in
note B3 - Provisions and contingencies.
Notes to the consolidated financial statements
30 June 2015 (continued)
D2 Investments accounted for using equity (continued)
(a) Eynesbury joint venture (continued)
Equity
Estimate of loans to be forgiven
Repayment to Company
Net asset position after loan forgiveness
Proportion of the Company's ownership
Equity attributable to the investment
30-Jun-15
30-Jun-14
$'000
(12,296)
34,100
-
21,804
50%
10,902
$'000
(12,876)
30,812
18,000
35,936
50%
17,968
30-Jun-15
30-Jun-14
$'000
3,727
140
3,867
1,934
242
$'000
71,269
(63,734)
7,535
3,767
178
The non-current liabilities include loans to the Joint Venture partners totaling $38.8 million which have not been
forgiven in the Joint Venture. It is anticipated that $34.1 million of these loans will be forgiven in due course resulting
in a net asset position of approximately $22.0 million (50% share of $11.0 million).
Villa World's aggregate share of joint ventures revenue, expenses and results
Revenue
Expenses
Profit / (loss) before income tax
Company's share of profit for the year
Villa World's aggregate share of joint ventures contingent liabilities
Bank guarantees
The equity accounted investment in the Company's Eynesbury Township joint venture as at 30 June 2015 is $10.9
million (30 June 2014 $18.0 million).
As previously disclosed the Company has entered into unconditional contracts for the sale of the Eynesbury project
(in which the Company holds a 50% interest). On 27 June 2014 the first tranche (comprising part of the land and the
golf course business) was completed at a sale price of $30.0 million plus GST.
Settlement of the second $30.0 million tranche, originally scheduled for 2 March 2015 has been extended until 28
August 2015, subject to appropriate commercial terms including the provision of further security, payment of
interest and a $2.0 million increase to the purchase price. The Company’s 50% share ($1.0 million) has not been
recognised as at 30 June 2015. Payments totaling $12.0 million have previously been made by the purchaser for the
second tranche, and released to the Eynesbury Joint Venture. Title to the second tranche property currently remains
with the Eynesbury Joint Venture.
For the Eynesbury joint venture entities, the joint venture parties have agreed that they will share liabilities in the
same proportion as their holdings in the joint venture (50% each). If the parties have entered an agreement which
creates on each of them a joint and several (unlimited) liability to a third party, they have agreed to indemnify each
other to the extent that one of them is required to pay more than 50% of the liability to a third party.
(b) Donnybrook joint venture
As previously disclosed, the Company in joint venture partnership, has entered into unconditional contracts for the
purchase of two adjoining sites at Donnybrook, Victoria (in which the Company holds a 51% interest). A total price of
$22.8 million has been agreed for the two sites, securing a landholding of approximately 270ha in one of Melbourne’s
fastest growing urban corridors. The sites are located within the Urban Growth Boundary, and will be the subject of a
2.5-3 year planning process potentially yielding in excess of 2,000 lots. On 19 December 2014 the first site was
completed at a sale price of $12.7 million. Settlement of the adjoining site at a sale price of $10.1 million is due on 26
The equity accounted investment in the Company's Donnybrook joint venture as at 30 June 2015 is $5.9 million (30
August 2015.
June 2014: nil).
68
69
69
DGROUP STRUCTUREVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
E
E
OTHER INFORMATION
This section provides the remaining information relating to the Company that must be disclosed to comply
with the Accounting Standards, the Corporations Act 2001 or the Corporations Regulations.
In this section:
E1
E2
E3
E4
E5
E1
E2
E3
E4
E5
Basis of preparation
Key management personnel disclosures
Remuneration of auditors
Events occurring after the reporting period
Other accounting policies
E1 Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards
and interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Villa World
Limited is a for-profit entity for the purpose of preparing the financial statements.
(i) Compliance with IFRS
The consolidated financial statements of the Villa World Limited also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
(ii) Historical cost convention
These financial statements have been prepared under the historical cost convention, except for financial assets and
liabilities (including derivative instruments) which are measured at fair value through profit or loss.
(iii) Critical accounting estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Company's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to
the financial statements are disclosed within the relevant note. Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are
revised and in any future periods affected.
(iv) Functional and presentation currency
The consolidated financial statements are presented in Australian dollars, which is the functional and presentation
currency of Villa World Limited.
E2 Key management personnel disclosures
(a) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
Consolidated
30-Jun-15
$
1,406,453
66,142
8,259
445,692
83,333
2,009,879
30-Jun-14
$
1,521,997
62,590
14,911
-
133,333
1,732,831
Detailed remuneration disclosures are provided in the remuneration report on pages 27 to 34.
Notes to the consolidated financial statements
30 June 2015 (continued)
E2 Key management personnel disclosures (continued)
(b) Equity instrument disclosures relating to key management personnel
Villa World Limited Option Plan
Share-based compensation benefits are provided to key personnel via an employee option scheme. The fair value of
options granted under the Villa World Limited Option Plan is recognised as an employee benefits expense with a
corresponding increase in equity. Under the terms of the options granted to date, the options will only vest if the
participating key management personnel continue their respective service agreements with the Company for three
years from the grant date.
The total amount to be expensed is determined by reference to the fair value of the options granted, which includes
any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any
service and non-market performance vesting conditions. The total expense is recognised over the vesting period
which is the period over which all of the specified vesting conditions are to be satisfied. It recognises the impact of
the revision to original estimates, if any, in the profit or loss, with a corresponding adjustment to equity.
The assessed fair value of the options as at the grant date is independently determined using a Binomial Option Price
Valuation Model, taking into account the terms and conditions upon which the share options were granted.
The volatility assumption is representative of the level of uncertainty expected in the movements of the share price
over the life of the option. The historic volatility of the market price of the Company's shares and the mean reversion
tendency of volatilities are the two factors which are assessed when determining the expected volatility.
Set out below is a summary of the terms and conditions of each grant of options to key management personnel and
other senior employees under the Option Plan which will effect remuneration in the future reporting period:
Forfeited /
Grant
date
Granted as
lapsed
Balance as at
Expiry
Vesting
Exercise
volatility
dividend
interest
compensation
during year
30 June 2015
date
date
price
of shares
yield
26/7/2013 4,500,000
750,000
3,750,000
26/7/2013 26/7/2016 $1.25
5/11/2013
250,000
17/2/2014
150,000
-
-
250,000
5/5/2017
5/11/2016 $1.60
150,000
11/8/2017
11/2/2017 $1.60
Expected
price
Expected
Risk free
25%
30%
30%
9.0%
5.5%
7.1%
rate
2.57%
3.15%
3.10%
1. The value of options at grant date is 10 cents per option for those issued on 26 July 2013, 27 cents per option for those issued on
5 November 2013 and 41 cents per option for those issued 17 February 2014. The value of options are calculated in accordance with
AASB2 Share-based Payments.
(c) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee
benefit expense were as follows:
Options issued to key management personnel
Options issued to senior employees
(d) Loans to KMP
For the financial year ended 30 June 2015, there were no loans to key management personnel (2014: $nil).
Consolidated
30-Jun-15
30-Jun-14
$'000
83
60
143
$'000
133
41
174
70
70
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EOTHER INFORMATIONVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
This section provides the remaining information relating to the Company that must be disclosed to comply
with the Accounting Standards, the Corporations Act 2001 or the Corporations Regulations.
Notes to the consolidated financial statements
30 June 2015 (continued)
E
OTHER INFORMATION
In this section:
Basis of preparation
Key management personnel disclosures
Remuneration of auditors
Events occurring after the reporting period
Other accounting policies
E1
E2
E3
E4
E5
E1 Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards
and interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Villa World
Limited is a for-profit entity for the purpose of preparing the financial statements.
The consolidated financial statements of the Villa World Limited also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
These financial statements have been prepared under the historical cost convention, except for financial assets and
liabilities (including derivative instruments) which are measured at fair value through profit or loss.
(i) Compliance with IFRS
(ii) Historical cost convention
(iii) Critical accounting estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Company's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to
the financial statements are disclosed within the relevant note. Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are
The consolidated financial statements are presented in Australian dollars, which is the functional and presentation
revised and in any future periods affected.
(iv) Functional and presentation currency
currency of Villa World Limited.
E2 Key management personnel disclosures
(a) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
Consolidated
30-Jun-15
30-Jun-14
$
1,406,453
66,142
8,259
445,692
83,333
2,009,879
1,521,997
62,590
14,911
$
-
133,333
1,732,831
Notes to the consolidated financial statements
30 June 2015 (continued)
E2 Key management personnel disclosures (continued)
(b) Equity instrument disclosures relating to key management personnel
Villa World Limited Option Plan
Share-based compensation benefits are provided to key personnel via an employee option scheme. The fair value of
options granted under the Villa World Limited Option Plan is recognised as an employee benefits expense with a
corresponding increase in equity. Under the terms of the options granted to date, the options will only vest if the
participating key management personnel continue their respective service agreements with the Company for three
years from the grant date.
The total amount to be expensed is determined by reference to the fair value of the options granted, which includes
any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any
service and non-market performance vesting conditions. The total expense is recognised over the vesting period
which is the period over which all of the specified vesting conditions are to be satisfied. It recognises the impact of
the revision to original estimates, if any, in the profit or loss, with a corresponding adjustment to equity.
The assessed fair value of the options as at the grant date is independently determined using a Binomial Option Price
Valuation Model, taking into account the terms and conditions upon which the share options were granted.
The volatility assumption is representative of the level of uncertainty expected in the movements of the share price
over the life of the option. The historic volatility of the market price of the Company's shares and the mean reversion
tendency of volatilities are the two factors which are assessed when determining the expected volatility.
Set out below is a summary of the terms and conditions of each grant of options to key management personnel and
other senior employees under the Option Plan which will effect remuneration in the future reporting period:
Grant
date
26/7/2013 4,500,000
Granted as
compensation
Forfeited /
lapsed
during year
750,000
Balance as at
30 June 2015
3,750,000
Exercise
Vesting
Expiry
date
price
date
26/7/2013 26/7/2016 $1.25
Expected
price
volatility
of shares
25%
Expected
dividend
yield
9.0%
Risk free
interest
rate
2.57%
5/11/2013
250,000
17/2/2014
150,000
-
-
250,000
5/5/2017
5/11/2016 $1.60
150,000
11/8/2017
11/2/2017 $1.60
30%
30%
5.5%
3.15%
7.1%
3.10%
1. The value of options at grant date is 10 cents per option for those issued on 26 July 2013, 27 cents per option for those issued on
5 November 2013 and 41 cents per option for those issued 17 February 2014. The value of options are calculated in accordance with
AASB2 Share-based Payments.
(c) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee
benefit expense were as follows:
Options issued to key management personnel
Options issued to senior employees
(d) Loans to KMP
Consolidated
30-Jun-15
$'000
83
60
143
30-Jun-14
$'000
133
41
174
Detailed remuneration disclosures are provided in the remuneration report on pages 27 to 34.
For the financial year ended 30 June 2015, there were no loans to key management personnel (2014: $nil).
70
71
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EOTHER INFORMATIONVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
E3 Remuneration of auditors
Notes to the consolidated financial statements
30 June 2015 (continued)
E5 Other accounting policies
During the year, the following fees were paid or payable for services provided by the Lead Auditor of the
consolidated entity, its related practices and non-related audit firms:
(a) Ernst & Young
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all the periods presented, unless otherwise stated. The
financial statements are for the consolidated entity consisting of Villa World Limited and its subsidiaries.
Audit and other assurance services
Audit and review of financial statements
Other services provided by Ernst & Young
Other services
Total remuneration of Ernst & Young
(b) Non-Ernst & Young related audit firms
Audit and other assurance services
Audit and review of financial statements
Other services provided by non-Ernst & Young audit firms
Taxation services
Other services
Total remuneration of non-Ernst & Young audit firms
E4 Events occurring after the reporting period
Final Dividend
Consolidated
30-Jun-15
$
30-Jun-14
$
130,000
114,979
103,611
233,611
87,037
202,016
Consolidated
30-Jun-15
$'000
30-Jun-14
$'000
-
123,384
56,450
179,834
42,543
8,311
18,570
69,424
On 18 August 2015 the Board declared a fully franked final dividend of 10.0 cents per share. The ex-dividend date is 1
September 2015 and the record date for this dividend is 3 September 2015. Payment will be made on 30 September
2015.
As at 30 June 2015, an amount of $10.3 million is held as franking credits in the Company.
Investment in the Eynesbury Joint Venture
As previously disclosed the Company has entered into unconditional contracts for the sale of the Eynesbury project
(in which the Company holds a 50% interest). On 27 June 2014 the first tranche (comprising part of the land and the
golf course business) was completed at a sale price of $30.0 million plus GST.
Settlement of the second $30.0 million tranche, originally scheduled for 2 March 2015 has been extended until 28
August 2015, subject to appropriate commercial terms including the provision of further security, payment of
interest and a $2.0 million increase to the purchase price. The Company’s 50% share ($1.0 million) has not been
recognised as at 30 June 2015. Payments totaling $12.0 million have previously been made by the purchaser for the
second tranche, and released to the Eynesbury Joint Venture. Title to the second tranche property currently remains
with the Eynesbury Joint Venture.
As at 30 June 2015 the equity accounted investment in the Eynesbury Joint Venture was $10.9 million.
ANZ Facility
During August 2015 Villa World and ANZ have agreed a credit approved term sheet to effect the following extension
to the ANZ facility: $80 million to March 2019 and $50 million to October 2020. The formal documentation process
is expected to be completed in September 2015.
loss.
(ii) Depreciation
equipment are:
-
-
-
-
Vehicles
Plant and equipment
Leasehold improvements
Information technology
period.
(c) Impairment of assets
(a) Expense recognition
Expenses are recognised in the income statement on an accrual basis.
(b) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated
impairment losses. Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or
Depreciation is calculated on a straight-line or diminishing value basis to write off the net cost of each item of
property, plant and equipment, including leased equipment, over its expected useful life to the consolidated entity.
Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain
that the Company will obtain ownership by the end of the lease term. The expected useful lives of property, plant and
3 - 5 years
3 - 10 years
2 - 8 years
4 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
The carrying amounts of the Company’s assets are tested for impairment at each balance sheet date where there are
events or changes in circumstances that indicate they might be impaired.
An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount.
Impairment losses are recognised in the income statement unless the asset has previously been re-valued, in which
case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess
recognised through the income statement.
The recoverable amount of assets is the greater of their fair value less costs to sell and value in use. In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that
does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating
unit to which the asset belongs.
An assessment is made at each reporting date to determine whether there is an indication that previously recognised
impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset's
recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the
assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised.
The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed
the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised
for the asset in prior years. Such reversal is recognised in the statement of profit or loss unless the asset is carried at
a revalued amount, in which case, the reversal is treated as a revaluation increase.
72
72
73
EOTHER INFORMATIONVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
E3 Remuneration of auditors
Notes to the consolidated financial statements
30 June 2015 (continued)
E5 Other accounting policies
During the year, the following fees were paid or payable for services provided by the Lead Auditor of the
consolidated entity, its related practices and non-related audit firms:
(a) Ernst & Young
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all the periods presented, unless otherwise stated. The
financial statements are for the consolidated entity consisting of Villa World Limited and its subsidiaries.
Consolidated
30-Jun-15
30-Jun-14
$
$
130,000
114,979
103,611
233,611
87,037
202,016
Consolidated
30-Jun-15
30-Jun-14
$'000
-
123,384
56,450
179,834
$'000
42,543
8,311
18,570
69,424
Audit and other assurance services
Audit and review of financial statements
Other services provided by Ernst & Young
Other services
Total remuneration of Ernst & Young
(b) Non-Ernst & Young related audit firms
Audit and other assurance services
Audit and review of financial statements
Other services provided by non-Ernst & Young audit firms
Total remuneration of non-Ernst & Young audit firms
E4 Events occurring after the reporting period
Taxation services
Other services
Final Dividend
2015.
On 18 August 2015 the Board declared a fully franked final dividend of 10.0 cents per share. The ex-dividend date is 1
September 2015 and the record date for this dividend is 3 September 2015. Payment will be made on 30 September
As at 30 June 2015, an amount of $10.3 million is held as franking credits in the Company.
Investment in the Eynesbury Joint Venture
As previously disclosed the Company has entered into unconditional contracts for the sale of the Eynesbury project
(in which the Company holds a 50% interest). On 27 June 2014 the first tranche (comprising part of the land and the
golf course business) was completed at a sale price of $30.0 million plus GST.
Settlement of the second $30.0 million tranche, originally scheduled for 2 March 2015 has been extended until 28
August 2015, subject to appropriate commercial terms including the provision of further security, payment of
interest and a $2.0 million increase to the purchase price. The Company’s 50% share ($1.0 million) has not been
recognised as at 30 June 2015. Payments totaling $12.0 million have previously been made by the purchaser for the
second tranche, and released to the Eynesbury Joint Venture. Title to the second tranche property currently remains
with the Eynesbury Joint Venture.
As at 30 June 2015 the equity accounted investment in the Eynesbury Joint Venture was $10.9 million.
ANZ Facility
During August 2015 Villa World and ANZ have agreed a credit approved term sheet to effect the following extension
to the ANZ facility: $80 million to March 2019 and $50 million to October 2020. The formal documentation process
is expected to be completed in September 2015.
(a) Expense recognition
Expenses are recognised in the income statement on an accrual basis.
(b) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated
impairment losses. Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or
loss.
(ii) Depreciation
Depreciation is calculated on a straight-line or diminishing value basis to write off the net cost of each item of
property, plant and equipment, including leased equipment, over its expected useful life to the consolidated entity.
Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain
that the Company will obtain ownership by the end of the lease term. The expected useful lives of property, plant and
equipment are:
-
-
-
-
Vehicles
Plant and equipment
Leasehold improvements
Information technology
3 - 5 years
3 - 10 years
2 - 8 years
4 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period.
(c) Impairment of assets
The carrying amounts of the Company’s assets are tested for impairment at each balance sheet date where there are
events or changes in circumstances that indicate they might be impaired.
An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount.
Impairment losses are recognised in the income statement unless the asset has previously been re-valued, in which
case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess
recognised through the income statement.
The recoverable amount of assets is the greater of their fair value less costs to sell and value in use. In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that
does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating
unit to which the asset belongs.
An assessment is made at each reporting date to determine whether there is an indication that previously recognised
impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset's
recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the
assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised.
The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed
the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised
for the asset in prior years. Such reversal is recognised in the statement of profit or loss unless the asset is carried at
a revalued amount, in which case, the reversal is treated as a revaluation increase.
72
73
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EOTHER INFORMATIONVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Notes to the consolidated financial statements
30 June 2015 (continued)
E5 Other accounting policies (continued)
(h) New accounting standards and interpretations (continued)
(i) AASB 9 Financial Instruments and its consequential amendments
AASB 9 Financial Instruments includes requirements for the classification, measurement and derecognition of
financial assets. These requirements improve and simplify the approach for classification and measurement of
financial assets compared with the requirements of AASB 139. The standard is not applicable to the Company until 1
July 2018 but is available for early adoption. The Company is currently assessing the impact of the new guidance.
(ii) AASB 15 Revenue from Contracts with Customers
AASB 15 Revenue from Contracts and Customers establishes principles for reporting useful information to users of
financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an
entity's contracts with customers. The standard is not applicable until 1 January 2017 but is available for early
adoption. The Company is currently assessing the impact of the new guidance.
The International Accounting Standards Board (IASB) in its July 2015 meeting decided to confirm its proposal to
defer the effective date of IFRS 15 (the international equivalent of AASB 15) from 1 January 2017 to 1 January 2018.
The amendment to give effect to the new effective date for IFRS 15 is expected to be issued in September 2015. As
this time, it is expected that the AASB will make a corresponding amendment to AASB 15, which will mean that the
application date of this standard for the Group will move from 1 July 2017 to 1 July 2018.
New standards and amendments to standards that are mandatory for the first time for the financial year beginning 1
July 2014 have been adopted by the Company. The Company has assessed the impact of these new standard and
interpretations and has determined there is no material impact.
There are no other standards that are not yet effective and that are expected to have a material impact on the
Notes to the consolidated financial statements
30 June 2015 (continued)
E5 Other accounting policies (continued)
(d) Cash and cash equivalents
For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash
on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current
liabilities in the consolidated balance sheet.
(e) Employee benefits
(i) Short-term obligations
Liabilities for salaries and wages, including non-monetary benefits and annual leave expected to be settled within 12
months of the reporting date are recognised as provisions in respect of employees services up to the reporting date
and are measured as the amounts expected to be paid when the liabilities are settled.
(ii) Other long-term employee benefit obligations
The Company's net obligation in respect of long-term employee benefits is the amount of future benefits that
employees have earned in return for their service in the current and prior periods. That benefit is discounted to
determine its present value. Re-measurements are recognised in profit or loss in the period in which they arise. The
obligations are presented as current liabilities in the consolidated balance sheet if the entity does not have an
unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the
actual settlement is expected to occur.
(iii) Bonus plans
The Company recognises a liability and an expense for bonuses. The Company recognises a liability where it is
contractually obliged or where there is a past practice that has created a constructive obligation.
Company.
(iv) Termination benefits
Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those
benefits and when the Company recognises costs for a restructuring. If benefits are not expected to be settled
wholly within 12 months of the end of the reporting period, then they are discounted.
(f) Goods and Services Tax (GST)
Revenues, expenses and assets/liabilities (other than receivables) are recognised net of the amount of associated
GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the
cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount of
GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or
liability in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
(g) Rounding of amounts
The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments
Commission, relating to the 'rounding off' of amounts in the financial statements. Amounts in the financial
statements have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain
cases, the nearest dollar.
(h) New accounting standards and interpretations
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Company for the annual reporting period ended 30 June 2015. The
Company's assessment of the impact of these new or amended Accounting Standards and Interpretations, most
relevant to the Company are set out on the following page.
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74
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EOTHER INFORMATIONVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash
(i) AASB 9 Financial Instruments and its consequential amendments
Notes to the consolidated financial statements
30 June 2015 (continued)
E5 Other accounting policies (continued)
(h) New accounting standards and interpretations (continued)
AASB 9 Financial Instruments includes requirements for the classification, measurement and derecognition of
financial assets. These requirements improve and simplify the approach for classification and measurement of
financial assets compared with the requirements of AASB 139. The standard is not applicable to the Company until 1
July 2018 but is available for early adoption. The Company is currently assessing the impact of the new guidance.
(ii) AASB 15 Revenue from Contracts with Customers
AASB 15 Revenue from Contracts and Customers establishes principles for reporting useful information to users of
financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an
entity's contracts with customers. The standard is not applicable until 1 January 2017 but is available for early
adoption. The Company is currently assessing the impact of the new guidance.
The International Accounting Standards Board (IASB) in its July 2015 meeting decided to confirm its proposal to
defer the effective date of IFRS 15 (the international equivalent of AASB 15) from 1 January 2017 to 1 January 2018.
The amendment to give effect to the new effective date for IFRS 15 is expected to be issued in September 2015. As
this time, it is expected that the AASB will make a corresponding amendment to AASB 15, which will mean that the
application date of this standard for the Group will move from 1 July 2017 to 1 July 2018.
New standards and amendments to standards that are mandatory for the first time for the financial year beginning 1
July 2014 have been adopted by the Company. The Company has assessed the impact of these new standard and
interpretations and has determined there is no material impact.
There are no other standards that are not yet effective and that are expected to have a material impact on the
Company.
Notes to the consolidated financial statements
30 June 2015 (continued)
E5 Other accounting policies (continued)
(d) Cash and cash equivalents
liabilities in the consolidated balance sheet.
(e) Employee benefits
(i) Short-term obligations
on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current
Liabilities for salaries and wages, including non-monetary benefits and annual leave expected to be settled within 12
months of the reporting date are recognised as provisions in respect of employees services up to the reporting date
and are measured as the amounts expected to be paid when the liabilities are settled.
(ii) Other long-term employee benefit obligations
The Company's net obligation in respect of long-term employee benefits is the amount of future benefits that
employees have earned in return for their service in the current and prior periods. That benefit is discounted to
determine its present value. Re-measurements are recognised in profit or loss in the period in which they arise. The
obligations are presented as current liabilities in the consolidated balance sheet if the entity does not have an
unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the
actual settlement is expected to occur.
(iii) Bonus plans
(iv) Termination benefits
The Company recognises a liability and an expense for bonuses. The Company recognises a liability where it is
contractually obliged or where there is a past practice that has created a constructive obligation.
Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those
benefits and when the Company recognises costs for a restructuring. If benefits are not expected to be settled
wholly within 12 months of the end of the reporting period, then they are discounted.
(f) Goods and Services Tax (GST)
Revenues, expenses and assets/liabilities (other than receivables) are recognised net of the amount of associated
GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the
cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount of
GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or
liability in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
(g) Rounding of amounts
The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments
Commission, relating to the 'rounding off' of amounts in the financial statements. Amounts in the financial
statements have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain
cases, the nearest dollar.
(h) New accounting standards and interpretations
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Company for the annual reporting period ended 30 June 2015. The
Company's assessment of the impact of these new or amended Accounting Standards and Interpretations, most
relevant to the Company are set out on the following page.
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75
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EOTHER INFORMATIONVILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Directors' declaration
30 June 2015
In the Directors' opinion:
(a)
the financial statements and notes set out on pages 38 to 75 are in accordance with the Corporations Act
2001, including:
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements, and
giving a true and fair view of the consolidated entity's financial position as at 30 June 2015 and of its
performance for the year ended on that date, and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
Note E1 confirms that the financial statements also comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required
by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of Directors.
Craig Treasure
Chief Executive Officer and Managing Director
Gold Coast
18 August 2015
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VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Directors' declaration
30 June 2015
In the Directors' opinion:
2001, including:
(a)
the financial statements and notes set out on pages 38 to 75 are in accordance with the Corporations Act
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
(ii)
giving a true and fair view of the consolidated entity's financial position as at 30 June 2015 and of its
professional reporting requirements, and
performance for the year ended on that date, and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
Note E1 confirms that the financial statements also comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required
by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of Directors.
Chief Executive Officer and Managing Director
Craig Treasure
Gold Coast
18 August 2015
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Independent auditor's report to the members of Villa World Limited
Report on the financial report
We have audited the accompanying financial report of Villa World Limited, which comprises the
consolidated balance sheet as at 30 June 2015, the consolidated statement of comprehensive income,
the consolidated statement of changes in equity and the consolidated statement of cash flows for the
year then ended, notes comprising a summary of significant accounting policies and other explanatory
information, and the directors' declaration of the consolidated entity comprising the company and the
entities it controlled at the year's end or from time to time during the financial year.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal controls as the directors determine are necessary to enable the preparation of
the financial report that is free from material misstatement, whether due to fraud or error. In Note E1,
the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements comply with International Financial Reporting Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal controls relevant to the entity's
preparation and fair presentation of the financial report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity's internal controls. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a
copy of which is included in the directors’ report.
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A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Opinion
In our opinion:
a.
the financial report of Villa World Limited is in accordance with the Corporations Act 2001,
including:
i
ii
giving a true and fair view of the consolidated entity's financial position as at 30 June
2015 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations
2001; and
b.
the financial report also complies with International Financial Reporting Standards as
disclosed in Note E1.
Report on the remuneration report
We have audited the Remuneration Report included in pages 27 to 34 of the directors' report for the
year ended 30 June 2015. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Villa World Limited for the year ended 30 June 2015,
complies with section 300A of the Corporations Act 2001.
Ernst & Young
Ric Roach
Partner
Brisbane
18 August 2015
Additional information requested by the Australian Securities Exchange Limited Listing Rules and not disclosed
ASX Additional Information
elsewhere in this report are set out below:
Shareholdings (as at 6 August 2015)
The following holds were listed in the register of substantial shareholders:
Quest Asset Partners Pty Ltd
LHC Capital Partners Ltd
Brazil Farming Pty Ltd
Westpac Banking Corporation
Distribution of Shareholders (as at 6 August 2015):
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
No of shares held
6,536,757
6,500,000
5,567,286
5,554,422
Total holders
659
1,679
700
891
77
4,006
The total number of shareholders with less than a marketable parcel of 231 shares is 162.
Options issued under the Villa World Limited Option Plan to take up ordinary shares, as part of an employee incentive
Unquoted equity securities
plan, as at 6 August 2015 is 4,150,000.
Classes of units and voting rights
As at 30 June 2015 there were 3,911 shareholders (30 June 2014: 3,127). The voting rights attaching to the shares, as
set out in section 253C of the Corporations Act were:
(a)
at an adjourned meeting the holders with voting rights who are present either in person or by proxy
constitute a quorum and are entitled to pass the resolutions; and
(b)
on a show of hands every person present who is a shareholder has one vote and on a poll every present in
person or by proxy or attorney has one vote for each share held.
Options
There are not voting rights attached to the options.
For details of registered office and share registry details refer to inside front cover – Shareholder Information.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
78
79
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
ASX Additional Information
Additional information requested by the Australian Securities Exchange Limited Listing Rules and not disclosed
elsewhere in this report are set out below:
Shareholdings (as at 6 August 2015)
The following holds were listed in the register of substantial shareholders:
Quest Asset Partners Pty Ltd
LHC Capital Partners Ltd
Brazil Farming Pty Ltd
Westpac Banking Corporation
Distribution of Shareholders (as at 6 August 2015):
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
No of shares held
6,536,757
6,500,000
5,567,286
5,554,422
Total holders
659
1,679
700
891
77
4,006
The total number of shareholders with less than a marketable parcel of 231 shares is 162.
Unquoted equity securities
Options issued under the Villa World Limited Option Plan to take up ordinary shares, as part of an employee incentive
plan, as at 6 August 2015 is 4,150,000.
Classes of units and voting rights
As at 30 June 2015 there were 3,911 shareholders (30 June 2014: 3,127). The voting rights attaching to the shares, as
set out in section 253C of the Corporations Act were:
(a)
(b)
at an adjourned meeting the holders with voting rights who are present either in person or by proxy
constitute a quorum and are entitled to pass the resolutions; and
on a show of hands every person present who is a shareholder has one vote and on a poll every present in
person or by proxy or attorney has one vote for each share held.
Options
There are not voting rights attached to the options.
For details of registered office and share registry details refer to inside front cover – Shareholder Information.
79
79
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
ASX Additional Information (continued)
Top 20 Shareholders (as at 6 August 2015)
Name
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
UBS NOMINEES PTY LTD
BRAZIL FARMING PTY LTD
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
CVC LIMITED
DEBUSCEY PTY LTD
HORRIE PTY LTD
GEOMAR SUPERANNUATION PTY LTD
ZERO NOMINEES PTY LTD
CRAIG G TREASURE PTY LTD
MANDEL PTY LTD
SHAYANA PTY LTD
SANDHURST TRUSTEES LTD
TRACIE'S FUTURE PTY LTD
Units
% of Units
19,512,525
13,065,912
7,908,056
6,017,719
5,667,286
3,165,712
2,310,252
1,352,490
1,122,914
830,091
681,412
644,235
612,432
607,198
605,000
582,432
500,000
499,568
477,830
464,568
17.68
11.84
7.17
5.45
5.14
2.87
2.09
1.23
1.02
0.75
0.62
0.58
0.56
0.55
0.55
0.53
0.45
0.45
0.43
0.42
Totals: Top 20 holders of FULLY PAID ORDINARY SHARES (TOTAL)
66,627,632
60.38
80
80
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
ASX Additional Information (continued)
Top 20 Shareholders (as at 6 August 2015)
Name
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
UBS NOMINEES PTY LTD
BRAZIL FARMING PTY LTD
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
CVC LIMITED
DEBUSCEY PTY LTD
HORRIE PTY LTD
GEOMAR SUPERANNUATION PTY LTD
ZERO NOMINEES PTY LTD
CRAIG G TREASURE PTY LTD
MANDEL PTY LTD
SHAYANA PTY LTD
SANDHURST TRUSTEES LTD
TRACIE'S FUTURE PTY LTD
Units
% of Units
19,512,525
13,065,912
7,908,056
6,017,719
5,667,286
3,165,712
2,310,252
1,352,490
1,122,914
830,091
681,412
644,235
612,432
607,198
605,000
582,432
500,000
499,568
477,830
464,568
17.68
11.84
7.17
5.45
5.14
2.87
2.09
1.23
1.02
0.75
0.62
0.58
0.56
0.55
0.55
0.53
0.45
0.45
0.43
0.42
Totals: Top 20 holders of FULLY PAID ORDINARY SHARES (TOTAL)
66,627,632
60.38
80
VILLA WORLD LIMITED ANNUAL REPORT 2015 VILLA WORLD LIMITED ANNUAL REPORT 2015
Villa World Limited
ABN 38 117 546 326
Level 1 Oracle West
19 Elizabeth Avenue, Broadbeach QLD 4218
PO Box 1899, Broadbeach QLD 4218
+61 7 5588 8888
villaworld.com.au
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