ANNUAL
FINANCIAL
REPORT
FOR THE YEAR ENDED
30 JUNE 2018
H E L P I N G P E O P L E R E A C H H O M E
SHAREHOLDERS
INFORMATION
VILLA WORLD LIMITED
Shareholder information and enquiries
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
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: Brad Scale
CONTENTS
Purpose and Beliefs
Key Highlights
Joint Chairman’s and Managing
Director’s Review
Health, Safety & Wellbeing
Operating Financial Review
Current Portfolio
Directors’ Report
Corporate Governance Statement
Remuneration Report
Auditor’s Independence Declaration
Financial Statements
Directors’ Declaration
Independent Auditor’s Report to
the Members of Villa World Limited
ASX Additional Information
3
4
6
8
10
17
34
37
40
57
58
105
106
111
The Meadows - Strathpine
1
VILLA WORLD LIMITED ANNUAL REPORT 2018 2
VILLA WORLD LIMITED ANNUAL REPORT 2018 PURPOSE AND BELIEFS
PURPOSE
HELPING PEOPLE
REACH HOME
• For our people, this means ensuring they feel
“at home” by helping them develop to their
full potential while providing a safe, healthy
and happy workplace.
• For our customers, this means helping them
find their dream home and making the process
of buying that home easy.
• For our community, this means we recognise
the broader societal contribution we can make
to better living, through our commitment to
corporate social responsibility.
• For our other external stakeholders, we’re
proud of the partnerships we have forged
with companies who share our beliefs and
have found their home working with us.
BELIEFS
• Put people first
• Do it as one team
• We do what we say
• Get it done
• Enjoy the ride
• Make it easy
“Home is more than a place...
It’s a feeling, a sense of
belonging. It’s where
the heart is.”
3
VILLA WORLD LIMITED ANNUAL REPORT 2018 KEY HIGHLIGHTS
REVENUE
($M)
441.6
NET PROFIT
AFTER TAX ($M)
43.6
FY
18
FY
17
FY
16
SALES
PER FY
JOB
FY
15
FY
14
LAND
DELIVERED
JOB
831
843
1185
1207
1678
FY
14
FY
15
FY
16
FY
17
FY
18
618
840
1060
1117
1389
4
VILL A WORLD LIMITED ANNUAL REPORT 2018
EARNINGS
PER SHARE (CPS)
34.4
DIVIDEND
(CPS)
18.5
JOB
PORTFOLIO
PORTFOLIO
OF 6,191 LOTS
REPRESENTING
4-5 YEARS SALES
DIVERSIFIED ACROSS
AND WITHIN EAST
COAST STATES
FY
17
FY
18
FY
16
FY
15
FY
14
3925
5191
5937
7832
6191
VILL A WORLD LIMITED ANNUAL REPORT 2018
5
JOINT CHAIRMAN’S
AND MANAGING
DIRECTOR’S REVIEW
NET PROFIT
AFTER TAX UP
15%
VILLA WORLD HAS BEEN DEVELOPING LAND AND BUILDING
QUALITY, AFFORDABLE HOMES FOR AUSTRALIAN FAMILIES FOR
MORE THAN 30 YEARS. WE ARE A BRICKS AND MORTAR BUSINESS –
AND MUCH MORE. WE ARE HELPING PEOPLE REACH HOME.
In May, the Board and Leadership Team launched
a newly-adopted company Purpose and Beliefs,
replacing the previous Mission, Vision and Values.
This followed a year-long period of deliberation, taking
in feedback from staff and various external business
partners along the way.
Villa World’s continued success is demonstrated by
our outstanding financial performance and emphasis
on mastering our fundamentals. It has seen Villa World
deliver a fifth consecutive year of double-digit profit
growth along with consistent earnings value for our
shareholders.
Endorsement of the new Purpose and Beliefs delivered
clarity and a strategic direction that unashamedly
sharpens Villa World’s focus on our customers, our
people and our community. This framework reflects
our past success and will shape the Company’s future
by providing strong beacons to guide decision making
at all levels.
The Board is pleased to report a statutory net profit
after tax of $43.6 million (34.4 cps), up 15% on the prior
period’s result of $37.8 million (32.5 cps). This is at the
top end of our upgraded guidance and demonstrates
Villa World’s continued strength in the east coast
residential market.
Revenue increased by 14% to $441.6 million in FY18,
up from $386.8 million last year, reflecting the
Company’s robust sales, strong delivery mindset
through operational performance, efficient inventory
management, acquisition astuteness and supported
by solid technology and systems platforms.
Even more pleasing was the sales result for the year
up 39% from 1,207 lots in FY17 to 1,678 sales this year.
Villa World continues to benefit from the geographic
diversity and substantially-sized developments in
three state markets offering affordable value in major
urban growth corridors. A strong marketing campaign
highlighting the Company’s customer centricity and
connection with our customer journey has continued to
see more people calling Villa World home. Our in-house
sales team continues to perform beyond expectations.
The Company’s position within the affordable to mid-
priced residential housing and land market provides a
strong buffer against market challenges. We continue
to meet the everyday housing needs of Australians,
particularly first home buyers, owner-occupiers,
domestic investors and builders, through consistent
delivery of high quality, affordably-priced, completed
designer homes. Villa World has also diversified its
offering through land only product and joint ventures,
increasing the Company’s market resilience.
Mark Jewell
For Villa World, home is much more than a place.
It’s the essence of our business and our connection
to our people, our customers and our community.
6
VILLA WORLD LIMITED ANNUAL REPORT 2018 “Revenue increased by 14% to
$441.6 million in FY18, up from
$386.8 million last year, reflecting
the Company’s robust sales...”
Our new purpose puts “home” at the centre of what we
do and our core beliefs guide how we will achieve that.
This is our pathway to strong and consistent financial
results through the medium term, characterised by
sustained through-the-cycle performance and astute
capital management and allocation. This sustainable
growth will be reflected in attractive yields for
shareholders.
The Board is pleased to have declared a total of 18.5
cents per share fully franked dividends in relation to the
financial year ended 30 June 2018 - an interim dividend
of 8.0 cents per share and a final dividend of 10.5 cents
per share declared post balance date.
We remain confident in the sustainability of the
dividend over the coming years.
The FY18 financial result and the consistent year-
on-year growth achieved over the past five years
demonstrate that Villa World’s commitment to its core
affordable house-and-land and land-only product is the
right path. The Board has now turned its attention to
the next phase in the Villa World journey, committing
the company to stretch beyond good, to great.
The Company’s Leadership Team and staff have been
working together to embed the newly articulated
beliefs and strive towards delivering on our purpose as
part of everyday life at Villa World. Acknowledging the
importance of our people is not new to Villa World. We
continue to invest in our people, ensuring that we have
the diverse leaders around the table to make the best
decisions. Our commitment to developing the potential
of our team was demonstrated this year through a
number of internal promotions and appointments,
and other capability development initiatives.
Similarly, the Board has emphasised the importance
of a strengthened people and culture strategy and
will continue to support safety, health and wellness
initiatives. The Board and Leadership Team are
committed to setting the cultural “tone from the top”
in these important areas.
Craig Treasure
As we move forward, the Board is also committed
to best-fit environmental, social and governance
frameworks including investment in a sustainability
strategy to reflect the forward direction marked
out in the new Villa World purpose.
We are preparing for challenges and will embrace
the opportunities presented in a changing world.
We will draw on the innovative thinking of our team
to embrace change and seek opportunities for smart
growth. The Board acknowledges the senior executive
team for their tremendous effort this year to achieve
these outstanding results, and thanks all staff and
the Company’s strong partner network for their
contribution to Helping People Reach Home.
Mark Jewell
Chairman
Craig Treasure
Managing Director and
Chief Executive Officer
7
VILLA WORLD LIMITED ANNUAL REPORT 2018 HEALTH, SAFETY
AND WELLBEING
VILLA WORLD’S NEW PURPOSE STATEMENT, HELPING PEOPLE REACH HOME,
IS SUPPORTED BY A COMMITMENT TO SIX CORE BELIEFS, DESIGNED TO ENSURE
THAT THE COMPANY’S CULTURE IS MAINTAINED AND STRENGTHENED THROUGH
ADHERENCE TO AGREED BEHAVIOURAL STANDARDS.
It sets out our approach to ensuring a healthy and safe
work environment for our workers. This commitment
also extends to managing our compliance with
regulations regarding the impacts that our business
may have on the local community or environment.
Within the HSE Due Diligence Framework, the HSE
Leadership Committee meets quarterly to discuss:
• detailed HSE reports
• lead indicators (positive safety outcomes)
• lag indicators (incidents and notices)
• other health, safety and wellbeing initiatives.
During FY18, Villa World’s HSE Management
System was certified under the Australian Standard
4801 (Occupational Health and Safety Systems)
and International Standard 14001 (Environmental
Management Systems).
At all levels, the Company continues to develop its
strong commitment to a positive health, safety and
environment culture, in line with our core beliefs and
purpose of Helping People Reach Home.
Consistent with this approach, the Company adopted a
Health and Wellbeing Policy during FY18 which commits
to providing an environment in which staff have the
opportunity to flourish, and which also contributes to
organisational success and sustainability. The policy sets
out the framework to promote and maintain employee
health and wellbeing through workplace practices, and
by encouraging participation in activities and programs
which support that goal.
Among the policy commitments is the provision of
information on healthy eating, fatigue management,
exercise, stress management and mental health. Other
incentives include corporate gym memberships, skin
cancer checks, flu vaccinations and corporate rates for
private health insurance.
The policy also outlines employee and manager
responsibilities, acknowledging the importance of
self-care and supporting colleagues to contribute
to a healthier and more productive workplace. For
employees, this includes consideration of health and
wellbeing when completing work-related duties and
at any time while representing Villa World.
It also encourages staff to identify any health and
wellbeing issues, including talking to fellow employees
about mental health issues. The policy promotes
participation in fitness, health and wellbeing activities
and events, or other social activities.
During FY18, staff participated in a range of health
and wellbeing events and activities including Wear
Red Day (supporting Health Research Australia);
International Women’s Day; Australia’s Biggest
Morning Tea (supporting the Cancer Council);
Men’s Health Week; and Dry July.
The Directors and Senior Managers lead our Health,
Safety and Environment (HSE) culture and understand
their own HSE obligations by following the Villa World
HSE Due Diligence Framework.
8
VILLA WORLD LIMITED ANNUAL REPORT 2018 For Villa World, Reconciliation is a fundamental aspect
of our purpose. We are one people. We share one home.
We will play our part in helping all Australians to feel that
they belong here together, and have the opportunity to
reach their full potential for better living.
Villa World is excited and proud to be taking the
first steps on our Reconciliation path. We have been
growing our understanding of the history and culture
of Aboriginal and Torres Strait Islander peoples.
Importantly, this has included the incorporation of
Welcome to Country and Smoking Ceremonies at
corporate events, and the first performance of a
“Native Bee Dance” developed as a collaboration
between Moondarewa Inc and the Nunukal Kunjeil
Dancers of Stradbroke Island.
Villa World continues to work towards weaving
Reconciliation through the fabric of our business.
We see a future where every Australian proudly
acknowledges and respects the deep connection of
our First Peoples to this country, our one home.
COMMUNITY
Villa World has a proud record of commitment to the
community. In further recognition of the importance
of community involvement, the Company will be
developing a more unified approach in this area,
including clear goals that align to corporate strategy.
Support and involvement in community activities during
FY18 aligned closely with the Company’s Health, Safety
and Wellbeing Policy approach and will be formalised
further in FY19.
The MATES in Construction (MIC) program achieved a
unique milestone this year, having completed 10 years
of saving and turning lives around in the Australian
construction industry.
Every year, 190 Australians working in the construction
industry die by suicide. In response, MIC provides
on-site development programs and support for workers
through case management and a 24/7 help line.
During FY18, Villa World was a proud supporter of
MIC. The Company held a golf day for our trade
contractors and supplier partners, raising close
to $40,000 for MIC. As well as highlighting the
importance of workplace mental health and suicide
prevention, the event provided Villa World with an
opportunity to thank and acknowledge the importance
of our strong partnerships with contractors and
suppliers in Helping People Reach Home.
Mates in Construction Golf Day
ACCESS Community Services Limited works towards
a cohesive community where everyone is valued and
can fully participate in the social and economic life of
the community.
This not-for-profit organisation helps migrants, refugees
and disadvantaged individuals to gain employment and
work experience.
Villa World engaged ACCESS's social enterprise to
provide builders clean and silicone services as part of
our “complete home, complete address” residential
house-and-land product. This partnership has provided
transformational opportunities for disadvantaged
individuals who face significant barriers to entering the
employment market.
The partnership was acknowledged by Queensland’s
Minister for Employment and Small Business and
Minister for Training and Skills Development, the
Hon. Shannon Fentiman, MP, Member for Waterford,
who said: “Villa World is setting a benchmark across
corporate Queensland and I encourage other
businesses to follow your lead.”
As a result of our continued sponsorship, the
Gold Coast Hospital Foundation this year received a
donation of $2500 every time a Gold Coast Hospital
and Health Staff member purchased land at our nearby
Arundel Springs project. The Company’s on-going
contribution to the Foundation has also included the
sponsorship of their annual Gala Awards for the past
two years and the funding of a children’s book entitled
'The Stripy Dachshund' by cancer patient Lisa Gilmer.
9
VILLA WORLD LIMITED ANNUAL REPORT 2018 OPERATING
FINANCIAL REVIEW
FINANCIAL RESULT
Flagship project releases across three states
contributed to a fifth consecutive year of double-
digit growth for the Company, reporting a statutory
net profit after tax of $43.6 million (34.4 cps) for the
year to 30 June 2018, a 15% increase on the $37.8
million (32.5 cps) in FY17. This result is at the top end of
upgraded guidance of net profit after tax of between
$42 million and $44 million.
REVENUE FROM LAND DEVELOPMENT,
RESIDENTIAL BUILDING AND
CONSTRUCTION CONTRACTS
Continued sales momentum combined with $175.7
million1 of carried forward sales from FY17, and an
outstanding delivery of land and housing resulted in
1,2902 wholly owned accounting settlements in FY18
(FY17: 1,116). As a result, $441.6 million (FY17: $386.8
million) in revenue was recorded.
The revenue mix reflects the Company’s continued
focus on its core capabilities in house and land, as well
as strong land only settlements, particularly in Logan,
the Gold Coast, Brisbane and the Melbourne growth
corridors. House and land product generated 53% of
revenue (FY17: 65%), with Queensland and New South
Wales continuing as the main source of revenue at
84% (FY17: 80%).
Smaller projects in South Morang, Victoria and
Hope Island, Queensland were sold during the year,
generating $27.1 million in revenue. Funds were
redeployed into the delivery of significant projects in
the growth corridors of Melbourne and the acquisition
of a project in the Logan corridor.
Average revenue per lot was $322,500, down from
$344,900 in the previous year, and is reflective of
the product mix shifting to more land-only sales. The
average revenue per house and land lot fell 2% to
$425,400. The prior year benefitted from significant
house and land settlements in the more affluent Bayside
Brisbane region. Average revenue per land-only lot fell
2% to $245,600 per lot, reflecting a large number of
settlements of affordable land in Logan and South
East Melbourne.
NET PROFIT
AFTER TAX ($M)
43.6
GROSS MARGIN
The reported gross margin for FY18 was $117.6 million
or 26.6% (FY17: $106.3 million or 27.5%), ahead of the
guidance range of 24%-26%. Strong margins were
achieved at land only estates in Queensland and Victoria.
REVENUE DERIVED FROM EQUITY
ACCOUNTED INVESTMENTS
During FY18 the Company continued to progress its
strategy to grow development/project management
income streams by deploying its management skills
into joint venture arrangements.
These ventures delivered $17.5 million in fee income
during the reporting period (FY17: $5.4 million). This
comprised of $11.1 million in development and project
management fees, including the $7.3 million fee from
the Wollert joint venture3. Further, the share of profit
from equity accounted investments was $6.4 million
(FY17: $3.0 million), related to strong land settlements
from the Rochedale joint venture and initial land
settlements from the Greenbank joint venture
(Villa Green).
The Company anticipates that development/project
management fees, and share of profit from equity
accounted investments, will provide a positive and
ongoing revenue stream for the business.
OTHER INCOME
Other income of $1.0 million (FY17: $0.8 million) was
largely comprised of bank interest received and penalty
interest on delayed settlements.
1 Inclusive of GST.
2 1,290 settlements of Company owned lots (FY17: 1116), and 74 lots relating to
joint ventures (FY17: 38), which are reflected in Share of Joint Venture Profits.
3 In 1H18, the Company entered into a joint venture with Ho Bee Land Limited
for a site located in Wollert, Victoria. The Company will receive fees for
development management, sales and marketing coordination, and has the
potential to receive a performance fee.
10
VILLA WORLD LIMITED ANNUAL REPORT 2018 Killara - Logan Reserve
OPERATIONAL PERFORMANCE
PERFORMANCE
Sales (lots)A
Mean rate of sale pcm - FY
Number of projects contributing
to profit
Settlements (# lots)B
- inc. Joint Ventures
Settlements (# lots)
- ex. Joint Ventures
House and Land (# lots)
Land Only (# lots)
Englobo Sale (# lots)C
House and Land (%)
Land Only (%)
Revenue - property sales ($m)
House and Land ($m)
Land Only ($m)
Englobo ($m)C
House and Land (%)
FY18
1678
140
28
FY17
CHANGE
1207 ▲ 39%
▲ 39%
101
28
1364
1154 ▲
18%
1290
1116
▲
16%
550
735
5
579 ▼
-5%
537 ▲ 37%
1
43%
52%
57%
48%
441.6 386.8 ▲
234.0 250.0 ▼
-6%
180.5 134.6 ▲ 34%
14%
27.1
53%
2.2
65%
Land Only (incl. englobo) (%)
Revenue - property sales ($k/Lot)D 322.5 344.9 ▼
425.4 432.1 ▼
House and Land
47%
35%
Land OnlyD
245.6 250.8 ▼
-6%
-2%
-2%
A Sales - executed contracts, not necessarily unconditional.
B Refer to Note E5(h) Revenue Recognition Policy - Transition to AASB 15.
C Englobo sales recorded at Essence South Morang (1 lot), Lyra Hope Island
(3 lots); and Celeste Hope Island (1 lot).
D Excludes englobo sale.
The Company recorded 1,678 sales during FY18,
up 39% on FY17 (1,207 lots).
The average sales rate increased to 140 per month
(FY17: 101 per month), with a strong full year
contribution from flagship projects released in FY174
and Lilium which was launched in early 2Q18. Several
smaller projects5 sold well, approaching sellout, and
initial sales were recorded from new flagship projects
which commenced selling in 4Q186.
Queensland continued to perform very well,
contributing 64% of sales (FY17: 71%). Pleasingly, the
Company has experienced continued strength in its
Victorian projects, contributing 33% of sales (FY17: 21%),
with New South Wales making up the remaining 3% of
sales (FY17: 8%).
The Company’s strategy of targeting growth corridors
continues to reap excellent results in Queensland, with
strong sales in all south-east Queensland corridors and
in Hervey Bay. In Victoria, the Company achieved very
strong sales at its land only projects while its housing
product continues to be well received in Sydney’s north-
west and south-west.
The Company maintains a solid position in all customer
segments – the core being the retail market (comprising
owner occupiers including first home buyers), as well as
builders and predominantly local investors7.
The Company delivered 1,389 lots of land, up 24% on
the 1,117 lots delivered in FY17. Housing operations
delivered 540 homes across New South Wales,
Queensland and Victoria (FY17: 548).
4 Killara (Logan Reserve), Arundel Springs (Arundel), Sienna Rise/North
(Plumpton) and Seascape (Redland Bay - which approached sell out).
5 The Orchard (Doolandella), Silvan Rise (Dakabin) and Rochedale Grand
(Rochedale).
6 The Meadows (Strathpine), Chambers Ridge (Park Ridge), Covella (Greenbank)
and Elyssia (Wollert).
7 Less than 5% of FY18 sales were to international investors (FY17: less than 5%).
11
VILLA WORLD LIMITED ANNUAL REPORT 2018 OPERATING FINANCIAL REVIEW CONT.
SALES CONTRACTS CARRIED FORWARD
ADOPTION OF AASB 15
At 30 June 2018, the Company carried forward 845
sales contracts valued at $278.1 million8, with 32% of
contracts (266 lots valued at $108.4 million) due to
settle in 1H19, 21% of contracts (181 lots valued at $61.2
million) in 2H19, with the balance of 47% of contracts
(398 lots valued at $108.5 million) settling in FY20.
The Company is carrying forward significant
unconditional sales at its projects in Plumpton and
Clyde with commencement of delivery impacted by
delays with planning authorities. It is apparent that
Victorian authorities are experiencing significant
challenges flowing from an industry-wide peak in
construction and the resolution of laws regarding
infrastructure charges, resulting in abnormal approval
delays. The Company expects to commence delivery
of the first stages of Sienna Rise and Lilium in 1H19
however future stages will be delayed into FY20.
Earlier than expected resolution of approval delays
may lead to delivery of these pre-sold stages in 2H19,
bringing forward up to $65 million in carried forward
sales at Sienna Rise (248 lots), and up to $39 million
in carried forward sales at Lilium (134 lots).
The Company will continue to monitor delivery
commencements and will provide further guidance
updates if necessary.
PROPERTY SALES AND MARKETING
COSTS
The sales and marketing strategy introduced in 2015,
which shifted focus onto the Villa World brand and
targeted regional marketing campaigns, has continued to
benefit both sales rates, and sales and marketing costs,
which were 5.8% of revenue (FY17: 5.6% of revenue).
EMPLOYEE BENEFITS
As at 30 June 2018, the Company had 155.4 full time
equivalent employees (FY17: 146). Additional roles were
added primarily in operations and marketing, due to
the expansion of operations in NSW and the addition
of new projects.
The full year salary contribution of the new employees
hired in FY17, as well as the new employees hired in
FY18 resulted in a 21% increase in staff costs year-on-
year. Employee costs represented 5.7% of revenue
(FY17: 5.3%).
In FY18, the full year salary contribution of the new
employees hired in FY18 as well as roles which may be
added in FY19 (expected to be minimal), are expected
to result in an increase in employee cost of 5 - 7%.
8 Represents gross sales price including GST.
12
Effective for reporting periods from 1 January 2018 the
Company has reassessed its revenue recognition policy
in accordance with the new standard which moves away
from the risks and rewards of ownership towards a five
step recognition model. The Company has assessed that
land only and house and land contracts will be recognised
at cash settlement which is when control is passed to the
purchaser. This is a change in recognition for contracts
entered into in Queensland and Victoria. A one off
adjustment to retained earnings and other impacted
accounts will be made on 1 July 2018. Further information
of the adoption of the new standard refer to Note E5(h)
New accounting standards and interpretations.
ASSETS AND NTA
Gross assets increased to $587.9 million at 30 June
2018 from $577.7 million. The NTA per share increased
to $2.44, prior to the declaration of the 10.5 cent fully
franked dividend (FY17: $2.27, prior to the declaration of
10.5 cent dividend).
CAPITAL MANAGEMENT
Following on from the Company’s capital repositioning
in FY17 a very strong and sustainable balance sheet has
been maintained and cash flow has been effectively
managed across the portfolio.
During the year, the Company operated a $190 million
club facility with ANZ and Westpac. In 1H18, the term of
the $50 million Westpac facility was extended through
to March 2021. In addition, a $10 million component of
the ANZ facility was also extended through to October
2020. The maturity of the $140 million ANZ facility is
staggered, with $90 million maturing October 2020,
$40 million extended through to October 2021 and
$10 million to March 2022.
At 30 June 2018, cash on hand was $12.6 million (30
June 2017: $7.7 million) and unused capacity in the
facility was $32.3 million (30 June 2017: $142.1 million).
The Company has transitioned into a strong delivery
phase. Consequently, gearing was 29.7% (12.9% as at 30
June 2017), at the top end of Company’s gearing target
of 15-30%. Net debt was $171.1 million.
The Company has on issue $50 million of Simple
Corporate Bonds. The Bonds diversify the Company’s
capital structure, extend the debt maturity and support
growth objectives. The Bonds pay a variable interest
rate of 4.75% margin above three month BBSW, and
mature in April 2022.
Strong sales and settlements during the year generated
$123.6 million in net cash flow from trading activities
(FY17: $188.7 million). Strong cash flow, combined with
VILLA WORLD LIMITED ANNUAL REPORT 2018 headroom in the debt facility enabled $155.5 million
(FY17: $123.3 million) in acquisitions to be settled. The
land acquisition amount payable at 30 June 2018 was
$33.7 million (FY17: $139.3 million). Since year end,
$4.4 million has been paid, and the balance will be
settled from operating cash flows, existing debt
facilities and proceeds from third party settlements.
The Company expects cash outflow for acquisitions of
$40 million to $60 million in FY19 funded from existing
debt facilities and working capital, inclusive of $7 million
in capital lite transactions.
The average cost of debt during the year was 7.3%
(FY17: 9.0%). A $90 million fixed interest rate swap
of 3.69% remained in place through to 12 June 2018.
To manage exposure to future interest rate risk, the
Company has executed two interest rate caps totalling
$50 million with a forward start date of 2 July 2018.
These contracts will cap the Company’s interest rate
at a maximum of 3.0% on $50 million until 2 July 2020,
and $25 million thereafter until 4 July 2022.
DIVIDEND
(CPS)
18.5
DIVIDENDS
Shareholders have benefited from the strong financial
performance during the year with the Directors
declaring total dividends of 18.5 cps fully franked in
relation to the 2018 financial year. An interim dividend
of 8cps was paid in March 2018. A final dividend has
been declared post year end of 10.5 cps and will be paid
in September 2018.
The full year dividend of 18.5 cps represents an annual
payout of 53.8% of NPAT (FY17: 59%), which is within
the Company’s stated dividend policy (payout ratio of
50% - 75% of annual NPAT, paid semi-annually).
Artist impression of the parklands at Covella - Greenbank
13
VILLA WORLD LIMITED ANNUAL REPORT 2018 OPERATING FINANCIAL REVIEW CONT.
PORTFOLIO
During FY18, the Company announced that the
Donnybrook Joint Venture had entered into a
conditional contract to sell its remaining land parcel
in Donnybrook, having previously entered into a
conditional contract to sell its adjoining parcel. The
Company’s share of revenue from these sales will
be recognised progressively in line with the staged
settlements, and will therefore be dependent on timing
of Precinct Structure Plan (PSP) approval. The Company
expects revenue from these staged sales to commence
in 2H20. Income from these staged sales will underpin
earnings from FY20 through to FY23.
Following the deployment of capital into acquisitions
in FY17, the Company has been selective in acquiring
projects to build the pipeline beyond FY19. In FY18,
the Company acquired 701 lots, including significant
land parcels in Logan and Plumpton, which will provide
product continuity for several years in these
strong markets.
The Company will continue its selective acquisition
approach, with the intention of growing its well-
established position in South-East Queensland, in
what it considers to be the most undervalued market
on the east coast. Capital allocated to New South Wales
will be reinvested in that state, enabling the Company
to continue to grow its presence through further
partnering. The Victorian land bank will be replenished,
predominantly through partnerships and structured
transactions.
As at 30 June 2018 the Company had a portfolio of
6,191 lots (FY17: 7,832 lots), representing approximately
4-5 years of sales.
THE VILLA WORLD STRATEGY
In May 2018, the Company finalised its new purpose and
beliefs, replacing the Mission, Vision and Values. The new
purpose, Helping People Reach Home, was adopted by
the Leadership Team and endorsed by the Board after an
extensive and inclusive process of embracing feedback
from staff and other business partners.
Artist impression of Arundel Springs Residences - Arundel
14
VILLA WORLD LIMITED ANNUAL REPORT 2018 For Villa World’s people, Helping People Reach Home
means ensuring they feel “at home” by helping them
develop their full potential while providing a safe,
healthy and happy workplace.
For our customers, it means helping them find their
dream home and making the process of buying that
home easy.
For our community, it means we recognise the broader
societal contribution Villa World can make to better
living, through our commitment to corporate social
responsibility, and the communities we create.
For our other external stakeholders, it captures our
pride in the partnerships Villa World has forged with
companies that share our beliefs and have found
their home working with us.
This new purpose is supported by a commitment to
core beliefs:
- Put people first
- We do what we say - Get it done
- Enjoy the ride
- Make it easy
- Do it as one team
The purpose and beliefs are the foundation of the
Company’s new Strategic Framework, currently being
developed for the period 2018-2020. In addition to
focusing on key operational fundamentals, the Company
has identified other major drivers for future sustainable
success including customer centricity, smart growth and
strong governance and culture.
KEY RISKS
The Board is responsible for setting the overall risk
culture of the business, and has adopted a Risk Appetite
Statement. The Company has a risk management
framework in place to identify, assess and manage key
strategic, financial and operational risks.
While residential market conditions have generally
remained buoyant 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.
15
VILLA WORLD LIMITED ANNUAL REPORT 2018 share of profit. Joint venture profits will primarily be
from the Rochedale and Greenbank joint venture
projects, with the Donnybrook and Wollert joint
ventures to contribute from FY20.
Development / project management fees will continue
to provide a continuing revenue stream, as the
Company continues to pursue capital-efficient growth
opportunities that provide a strong return on assets.
The FY19 gross margin is expected to be within the
range of 24% to 26%.
GUIDANCE
The Company is targeting a statutory profit after
tax of approximately $40 million in FY19, assuming
general consumer confidence is maintained, interest
rates remain low, consumer credit conditions do not
deteriorate, and first home buyer grants remain in place.
There remains a possibility that resolution of delays with
planning authorities in Victoria may lead to delivery of
revenue from certain projects in FY19 rather than FY20.
The Company will update the market as necessary.
OPERATING FINANCIAL REVIEW CONT.
The Company offers well located land, and affordable
to mid-priced housing in the growth corridors of east
coast Australia, providing greater resilience to market
cycles. Consumer confidence and credit availability
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 prudent gearing position assisted by structured
acquisition deals and a product portfolio that minimises
sales risk. The Company’s portfolio has well managed
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 mitigated by
the diversified portfolio, scalable business model,
transparency on development costs and the experience
of the Company’s development team.
The Company is increasing its focus on broader risks
including environmental, social and reputational risks,
as it recognises the growing importance of these
matters to customers, investors and the community.
Warranty claims and potential litigation are inherent
risks in the development and construction industry,
and the Company makes general provision for such
warranty claims (refer to Note B5 in the 2018
financial statements).
OUTLOOK
The Company will continue to focus on operational
delivery and cash settlement of carried forward sales.
Sales are expected to remain strong, underpinned by
full year contributions from eight flagship projects in
sought-after residential corridors in Queensland (North
Brisbane, Logan and Gold Coast) and Victoria (North,
North-West and South-East Melbourne).
The Company continues to progress its strategy of
growing joint venture arrangements. In FY19, these
arrangements are expected to contribute in excess
of $6 million to profit before tax comprising
development / project management fees, and
16
VILLA WORLD LIMITED ANNUAL REPORT 2018 CURRENT
PORTFOLIO
The Meadows - Strathpine
17
VILLA WORLD LIMITED ANNUAL REPORT 2018 CURRENT
PORTFOLIO
VIC
MELBOURNE NORTH WEST
Melbourne’s North West corridor, centred around
the Caroline Springs and Taylors Hill Town Centres,
continues to experience consistent growth and housing
demand. The area boasts easy freeway access to the
CBD and is proving popular with growing families.
In the nearby Plumpton area, the Company has a
significant footprint with several projects underway
or in planning. Following the sold-out success of
Sienna, a 166-lot mixed land and homes development,
neighbouring Sienna Rise is also nearly sold out with
only one land stage remaining. This development
provided the opportunity to offer a terrace house
product which proved to be extremely popular,
particularly among first home buyers influenced
by the lower price point and quality product.
This success will be repeated at Sienna North, a land
project with a first stage offering of traditional standard
sized lots and the opportunity to offer smaller terrace
homes in future stages. Construction of both Sienna
Rise and Sienna North is expected to commence in FY19.
During FY18 the Company entered into a development
rights agreement over a 15ha site at Plumpton, close to
Caroline Springs, which will deliver product diversity in
the corridor through a 317-lot subdivision.
The Company will also deliver its core house and land
product at the 372-lot Emerson Green project, to be
launched in FY19.
CBD
Caroline Springs
Sienna North, looking south-east towards Sienna Rise - Plumpton
18
VILLA WORLD LIMITED ANNUAL REPORT 2018 11
7
7
2
5
3
5
d
a
o
a t t y s R
e
B
12
6
4
9
1
5
2
4
3
4
3
5
PLUMPTON PRECINCT STRUCTURE PLAN (PSP)
1
2
3
4
5
6
Town Centre
Secondary school
Neighbourhood parks
Playgrounds
Walking, running and
cycling paths
Fitness Circuit
7
8
9
10
11
12
Sporting fields/oval:
Soccer, AFL and Cricket
BMX bike track
Aquatic Centre
Designated off leash dog area
Sports reserve including tennis
multi-courts
Community Centre
4
3
5
4
3
3
7
7
5
10
8
5
3
5
Sienna North is located amidst the approved
future amenities of the Plumpton PSP.
Melton Highway
Source: Victorian Planning Authority
Caroline Springs
Plumpton
Donnybrook
Wollert
CAROLINE
SPRINGS
MELBOURNE
"Melbourne’s North West
corridor, centred around
the Caroline Springs and
Taylors Hill Town Centres,
continues to experience
consistent growth and
housing demand."
E
P
D
EMERSON GREEEN
SIENNA NORTH
SIENNA RISE
PLUMPTON
DONNYBROOK
ELYSSIA
CLYDE
LILIUM
19
VILLA WORLD LIMITED ANNUAL REPORT 2018 CURRENT
PORTFOLIO
VIC
MELBOURNE NORTH
Melbourne’s Northern corridor, with its proximity to
Melbourne Airport and ease of access to the CBD,
continues to attract strong interest from family
buyers. Following successful projects at Greenvale, the
Company’s presence in this market will be maintained
with the sales release of the 289-lot Elyssia land-only
project at Wollert, a joint venture project with Ho
Bee Land. With lot prices starting under $300,000,
this development is attracting strong leads and this
is expected to intensify with the opening of the sales
centre in September 2018.
During FY18, the Company announced that the
Donnybrook Joint Venture had entered into a
conditional contract to sell its remaining land parcel
in Donnybrook, having previously entered into a
conditional contract to sell its adjoining parcel. The
Company’s share of revenue from these sales will
be recognised progressively in line with the staged
settlements expected from FY20 onwards, dependent
on timing of Precinct Structure Plan gazettal.
MELBOURNE SOUTH EAST
Pakenham, around 60km south-east of the Melbourne
CBD, offers a distinct semi-rural identity. Land at Villa
World’s 320-lot Cardinia Views project sold out in FY18.
The Company’s foothold in this corridor continues with
Lilium, offering 391 land-only lots, including 230
pre-sales with delivery from FY19.
Epping
CBD
Elyssia - Wollert
20
VILLA WORLD LIMITED ANNUAL REPORT 2018 Cranbourne
CBD
Berwick
Lilium - Clyde
Elyssia - Wollert
Lilium - Clyde
Lilium - Clyde
21
VILLA WORLD LIMITED ANNUAL REPORT 2018 CURRENT
PORTFOLIO
NSW
SOUTH WEST SYDNEY
The proposed Western Sydney Airport is driving growth
and demand in this region. The new town of Oran Park
is a major infrastructure development with a network of
interconnected thoroughfares, open space and a variety
of urban residential housing options.
The Company has strategically positioned itself in
Oran Park with a variety of housing products and
precincts. Concourse, comprising 61 homes close to
the town centre, is under construction and selling.
Its partner project, The Chase, will add a further 93
townhomes to the Oran Park inventory. This project is
being delivered through a development agreement with
Greenfield Development Company that will see Villa
World construct a combination of terraces and medium
density homes. Aston, located within 200m of Oran
Park Podium, a future park and train station, will feature
33 designer townhomes ranging in size and style.
Construction at this project has recently commenced.
NORTH WEST SYDNEY
Western Sydney remains one of Australia’s fastest
growing residential corridors. The Hills Shire is centrally
located in Sydney’s North West and is home to the Box
Hill Growth Centre Precincts, a major growth area for
the Sydney basin. With the new North West Metro Link
currently under construction and due to open in 2019,
Villa World projects in this market are well placed to
take advantage of high demand.
ALLURE
H
HILLSBROOK
Box Hill
ROUSE HILL
SYDNEY
CONCOURSE
THE CHASE
ASTON
ORAN PARK
CAMPBELLTOWN
WOLLONGONG
Albion Park
BELLA VISTA
At Box Hill, the Company’s new Allure project comprises
42 designer homes. With only 29 lots remaining, the
project will sell out in FY19. On a neighbouring site is
the Hillsbrook project, offering a further 34 designer
homes, expected to launch in FY19.
ILLAWARRA
The coastal region of Illawarra remains one of the
nation’s favourite places to live. In Albion Park, south of
the Wollongong CBD, the Company’s 87-lot land project
known as Bella Vista has sold-out and will be delivered in
the first half of FY19.
Concourse - Oran Park
22
VILLA WORLD LIMITED ANNUAL REPORT 2018 Oran Park
Allure - Box Hill
23
VILLA WORLD LIMITED ANNUAL REPORT 2018 CURRENT
PORTFOLIO
QLD
Artist impression of the entry at Covella - Greenbank
LOGAN CITY
An estimated population the size of Cairns will ultimately
occupy two largely rural areas of Logan City, including
Villa World’s largest-ever Queensland project.
The flagship 1502-lot Covella community, at Greenbank,
is starting to unfold on a 153-hectare semi-rural site in
what has been tipped as South East Queensland’s new
population and employment powerhouse region.
Covella’s unveiling in October came just weeks after
Villa World launched its 300-lot Chambers Ridge
project in neighbouring Park Ridge, and the launch
late last year of the 714-lot Killara community at
Logan Reserve.
The three Villa World projects are meeting rapid
demand for affordable housing across the Logan
corridor, particularly among first home buyers
seeking value and lifestyle options.
Chambers Ridge will comprise three and four-bedroom
turnkey homes, surrounding a central park. Killara has
become Villa World’s fastest selling Queensland project
with more than 280 sales since launch.
Bushland-fringed Covella will be developed in 27 stages
over the next seven years. It comprises 1,502 lots and
will eventually be home to 4000 residents with a diverse
24
range of housing and lifestyle options on lots from
300sqm to 2000sqm.
The three Logan communities promote active and
healthy lifestyles with the provision of significant green
space, parkland and recreational facilities including bike
and walking paths, playgrounds and barbecue areas.
These amenities, and the proximity to major retail and
transport infrastructure, are attracting strong support
from building partners as well as retail customers.
During FY18 the Company acquired several sites at
Logan Reserve, near its Chambers Ridge project,
which will deliver an estimated 250-lots.
Chambers Ridge - Park Ridge
VILLA WORLD LIMITED ANNUAL REPORT 2018 Springfield Lakes
Greenbank
Shopping Centre
Covella - Greenbank
“Villa World projects are
meeting rapid demand for
affordable housing across
the Logan corridor”
Killara - Logan Reserve
KILLARA
L
LOGAN RESERVE
CHAMBERS RIDGE
SPRINGFIELD
Greenbank
LOGAN
Logan Reserve
Park Ridge
COVELLA
Killara - Builders’ Display Village
25
VILLA WORLD LIMITED ANNUAL REPORT 2018 CURRENT
PORTFOLIO
QLD
GOLD COAST
The Commonwealth Games infrastructure legacy
is delivering benefits for Villa World’s Gold Coast
projects. The Company’s most significant project in the
central Gold Coast in several years, Arundel Springs, is
recording strong sales buoyed by the prestige parkland
address beside the protected Coombabah Lakelands
Conservation Area.
The 391-lot project offers premium homesites plus
parks, walking and cycling tracks, exercise and play
zones and lush landscapes. Eighty five townhomes
will be released during FY19.
Artist impression of Arundel Springs Residences - Arundel
BRISBANE NORTH
Brisbane North has proven a highly successful market
for the Company, with strong brand recognition driving
continued demand for Villa World homes and land.
Astute land acquisitions in identified growth areas have
ensured continuance of supply for the next five years
and beyond with approvals in place and construction
commenced in the established residential suburb of
Strathpine. This new signature address in the Brisbane
North region, The Meadows, will deliver 393 family
sized designer homes predominantly for the owner-
occupier market.
Also in this market is a 291-lot land project under
planning in Upper Caboolture, close to the Caboolture
River and a short drive west of the Morayfield retail
centre. An additional 450 lots in the neighbouring
suburb of Bellmere will contribute to sales in FY21 and
ensure the Company’s continued supply in this market
for the medium term.
Silvan Rise, at Dakabin, just five minutes from North
Lakes, offers 109 designer homes and is expected to sell
out early in FY19. The affordable homes at Emerald Park,
Burpengary, attracted strong interest and sold out in
FY18. The Company has acquired a neighbouring parcel,
and will deliver 88 affordable homes.
Arundel Springs - Arundel
26
VILLA WORLD LIMITED ANNUAL REPORT 2018 The Meadows - Strathpine
Silvan Rise - Dakabin
CABOOLTURE
Bellmere
Upper
Caboolture
Burpengary
Dakabin
NORTH
LAKES
Strathpine
B
BELLMERE
UPPER CABOOLTURE
B
BURPENGARY
SILVAN RISE
THE MEADOWS
The Meadows - Strathpine
VILL A WORLD LIMITED ANNUAL REPORT 2018
27
Over the past 18 months, the Company has
undertaken a significant overhaul of its Core
Housing Range. The resulting designs are now
being rolled out across new projects including
The Meadows at Strathpine and Chambers Ridge
at Park Ridge. The ‘Marcoola 22’ featured here,
is now on display at The Meadows.
The Meadows - Strathpine
28
VILLA WORLD LIMITED ANNUAL REPORT 2018 29
VILLA WORLD LIMITED ANNUAL REPORT 2018 CURRENT
PORTFOLIO
QLD
BRISBANE SOUTH
All land has been sold and just 33 townhomes remain at
the 149-lot The Orchard, located at Doolandella on the
northern fringe of the Logan Motorway.
In the blue chip residential suburb of Rochedale,
Villa World’s flagship address, Rochedale Grand, which
comprises 167 prestige architect-designed homes
within walking distance of the future Rochedale Town
Centre, continues to attract strong sales. The Company
anticipates completion of this project early in FY19.
BRISBANE BAYSIDE
Redland City, with its bayside lifestyle and family-
friendly infrastructure, has proven a highly successful
market for the Company during the past few years with
several completed and sold-out projects.
Seascape, close to the proposed Weinam Creek marina
development, is a key development project offering land
and designer townhomes with a community garden,
residents’ swimming pool and BBQ facilities. Project
completion is expected during FY19.
The Orchard - Doolandella
UPPER
MT GRAVATT
Rochedale
ROCHEDALE GRAND
FOREST LAKE
Doolandella
REDLAND BAY
SEASCAPE
THE ORCHARD
Seascape - Redland Bay
30
VILLA WORLD LIMITED ANNUAL REPORT 2018 Augustus - Hervey Bay
REGIONAL QUEENSLAND
Villa World continued to record steady sales at its
contemporary lifestyle project Augustus on the
Central Queensland Coast. Set in the picturesque
seaside town of Hervey Bay, the project offers
affordable homes primarily to first home buyers and
downsizers predominantly relocating from interstate.
Little Creek in Gladstone is a 688-lot project which
offers a mix of land and homes set around the Little
Creek parklands, an established network of parks
with playgrounds and recreation facilities.
GLADSTONE
LITTLE CREEK
AUGUSTUS
HERVEY BAY
Augustus - Hervey Bay
Little Creek - Gladstone
31
VILLA WORLD LIMITED ANNUAL REPORT 2018 VILLA WORLD LIMITED
ABN 38 117 546 326
ANNUAL
REPORT
30 JUNE 2018
CONTENTS
Directors’ Report
Corporate Governance Statement
Remuneration Report
Financial Statements
Independent Auditor’s Report to
the Members of Villa World Limited
34
37
40
58
106
32
VILL A WORLD LIMITED ANNUAL REPORT 2018
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.
A description of the nature of the consolidated entity’s
operations and its principal activities is included in the
Directors’ report on page 34, which is not part of these
financial statements.
Villa World Limited is a company limited by shares,
incorporated and domiciled in Australia.
Its registered office is:
Villa World Limited,
Level 1 Oracle West, 19 Elizabeth Avenue,
Broadbeach QLD 4218
The financial statements were authorised for issue by
the Directors on 14 August 2018. The Directors have the
power to amend and reissue the financial statements.
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
VILL A WORLD LIMITED ANNUAL REPORT 2018
33
DIRECTORS’ REPORT
Your Directors present their report on the consolidated
entity (referred to hereafter as the Company)
comprising of Villa World Limited and its subsidiaries
and the Company’s interest in associates for the year
ended 30 June 2018.
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.
DIRECTORS
The Directors of Villa World Limited during the year
and up to the date of this report were:
Mark Jewell
BCom CA (SA), GAICD
Non-Executive Director
since 28 November 2013
Chairman
since 28 May 2014
Mark is an independent director with over 30 years’
experience in the Australian Property Industry. He is
one of Australia’s most experienced and respected
property industry directors and over his career has
held a number of senior executive positions and
directorships in listed Australian property companies.
His experience as an executive covers the full breadth
of property development from land subdivisions to
large scale iconic apartment buildings and shopping
centres. As a non-executive director and chairman
his expertise lies in corporate strategy, culture,
capital management and a strong focus on risk
and governance.
Board Committee memberships
• Member of the Audit and Risk Committee
(since 28 November 2013)
• Member of the Remuneration and Nomination
Committee (since 5 February 2015)
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 has more than 30 years’ experience in property
development, specifically in the residential land
and housing sectors along the eastern seaboard of
Australia. As a licensed surveyor and licenced property
developer Craig has previously held a number of senior
executive roles and directorships within the property
industry. His experience is both as a business proprietor
and at an executive level with publicly listed entities.
As Chief Executive Officer and Managing Director,
Craig has been responsible for guiding the Company’s
growth over recent years. In leading an integrated
property company Craig displays strong skills in
managing challenging projects with a strong focus on
customers and people and culture of the Company. In
2016 Craig completed a high performance leadership
program with Oxford University.
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.
34
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018 DIRECTORS’ REPORT
DIRECTORS (CONTINUED)
Board Committee memberships
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 memberships
• Chair of the Audit and Risk Committee
(since 5 November 2015)
• Chair of the Remuneration and Nomination
Committee (5 February 2015 - 17 February 2016)
• Member of the Audit and Risk Committee
(since 1 September 2014)
• Member of the Remuneration and Nomination
Committee (since 17 February 2016)
Other directorships (current and recent)
In the past three years David has served as a
Non-Executive Director of:
• The Hester Hornbrook Academy, a school of the
Melbourne City Mission (since 31 August 2016)
• Chair of the Remuneration and Nomination
Committee (since 17 February 2016)
• Member of the Audit and Risk Committee
(since 17 February 2016)
Other directorships (current and recent)
In the past three years Donna has served as a
Non-Executive Director of:
• Quay Credit Union
(25 June 2013 - 23 September 2016)
• G&C Mutual Bank
(1 September 2016 - 23 September 2016)
• Australian Military Bank
(1 July 2017 - 12 February 2018)
COMPANY SECRETARY
Brad Scale
LLB
General Counsel
since 29 October 2012
Company Secretary
since 3 July 2017
Brad joined the Villa World team as General Counsel in
October 2012, and was appointed Company Secretary
in July 2017. Brad’s legal career spans 30 years, much
of which was spent in private practice specialising in
property law. He was a senior partner of a leading
Queensland property firm, where he advised domestic
and international developers on major acquisitions and
disposals, master-planned residential communities and
mixed-use projects. Prior to joining Villa World, Brad
had a 4 year in-house role as Chief Legal Officer with a
large financial services group, specialising in corporate
governance, regulation and compliance,
risk management and claims management.
Donna Hardman
MBA, BCom, GAICD, FAMI
Non-Executive Director
since 17 February 2016
Donna is an independent director and brings a broad
skill set and strategic acumen which has been gained
through 25 years in senior executive and director level
roles, particularly within the international financial
services sector.
Donna has a strong human capital focus and risk
management mindset and her professional experience
includes both senior executive and consultancy roles
as a business and IT strategist. Today in both Non-
Executive Director and Principal Consultant roles,
Donna helps organisations to meet some of today’s
most complex challenges, leading organisational
change, business transformation and digital disruption.
Donna has strong professional, government and
community links and well-established networks in
relevant sectors and industry groups. She consults
on enhancing board performance and building
businesses that are at once disruptive and
commercially compelling.
35
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018 DIRECTORS’ INTERESTS
Directors’ interests in shares and performance rights of Villa World Limited as at the date of this report
Mark Jewell
Craig Treasure
David Rennick
Donna Hardman
Meetings of directors
Number of ordinary shares Number of performance rights
107,127
1,334,864
53,260
28,737
-
1,088,129
-
-
The number of meetings held by Villa World Limited’s Board of Directors and of each Board Committee during the
year ended 30 June 2018, including the number of meetings attended by each Director are:
Mark Jewell
Craig Treasure 1
David Rennick
Donna Hardman
Board meetings 2
B
A
18
17
18
17
18
18
18
18
Audit and
Risk Committee
B
A
4
4
-
4
4
4
4
4
Remuneration and
Nomination Committee
A
4
-
4
4
B
4
4
4
4
A = Number of meetings attended.
B = Number of meetings held during the time the Director held office or was a member of the committee during the period.
1 Mr Treasure attends meetings of the committees as an invitee only and is excluded from parts of the meetings as appropriate.
2 The Board recognises the importance of developing and implementing the strategy for the Company and during FY18 dedicated three
Board meetings for these purposes.
Dividends
The Board declared an interim dividend of 8.0 cents
per share fully franked on 13 February 2018. Payment
was made to shareholders on 29 March 2018.
MATTERS SUBSEQUENT TO THE END OF
THE FINANCIAL YEAR
Final Dividend
On 14 August 2018 the Board declared a fully franked
final dividend of 10.5 cents per share. The ex-dividend
date is 3 September 2018 and the record date for this
dividend is 4 September 2018. Payment will be made
on 28 September 2018.
The balance of the franking account is $17.5 million
and includes franking credits that will arise from the
payment of tax recognised as a liability at the reporting
date (refer Note A4(c)).
Investment in the Villa Green Joint Venture
On 26 July 2018, equity contributions totalling
$7 million were made by each joint venture partner,
with the carrying value of the investment increasing
to $25.2 million. Of the Company’s contribution of
$7 million, $5 million was recognised as a commitment
at 30 June 2018 (refer Note B6(b)). The contributions
were predominantly for the purpose of funding the
joint venture to complete final settlement of the
development site.
36
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018 Review of operations and consolidated results
Group Financial Summary
Revenue from continuing operations
Consolidated
2018
$’000
2017
$’000
Revenue from land development, residential building and construction contracts
441,573
386,790
Cost of land development, residential building and construction contracts1
Gross Margin
Revenue from development and project management fees
Other income
Net (impairment) / reversal of impairment of development land
Share of profit / (loss) from associates and joint ventures
Reversal of impairment of investment in equity accounted investment
Expenses from ordinary activities
Finance costs
Profit before income tax
Income tax expense
Profit for the period
(323,975)
(280,537)
117,598
106,253
11,134
1,049
(399)
6,374
-
2,427
754
1,516
3,010
627
(65,102)
(53,542)
(8,672)
61,982
(18,348)
43,634
(7,058)
53,987
(16,151)
37,836
1 In addition to the amounts included here, the total cost of inventory sold includes capitalised interest which is unwound on settlement on
a per lot basis through finance costs (refer Note C5) and impairment costs / (reversals) attributable to lots sold. For the year ended 30
June 2018, the total amount of capitalised interest unwound at settlement on a per lot basis is $5.8 million (30 June 2017: $4.3 million) and
total impairment reversals attributable to lots sold is $1.3 million (30 June 2017: $1.8 million). Total cost of inventory sold for the year ended
30 June 2018 is $328.5 million (30 June 2017: $286.6 million).
A review of operations for the financial year and the results of those operations are set out in the Operating and
Financial Review on page 10.
CORPORATE GOVERNANCE STATEMENT
30 JUNE 2018
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 2018, which is available in
the Corporate Governance section of its website at
http://www.villaworld.com.au/corporate-governance-
statement-2018
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.
37
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018 ANNUAL STATEMENT BY THE REMUNERATION AND NOMINATION COMMITTEE CHAIR
The Villa World Board acknowledges that Shareholders
want remuneration settings that achieve two things:
drive consistent, year-on-year performance, and
motivate long-term value creation. In combination,
these elements contribute to sustainable, consistent
performance now and into the future.
Of equal importance is our demonstration of clear
linkages between the remuneration setting and the
Company strategy and culture. Alignment with culture,
motivation and strategic goals will be brought further
into focus as the Company moves forward with a new
purpose, beliefs and strategic priorities.
Pay for performance FY18
Short-term incentives
The Remuneration and Nomination Committee
(the Committee) noted Villa World’s FY18 financial
performance, with a Net Profit After Tax (NPAT) of
$43.6 million, up 15% on FY17’s result of $37.8 million.
The Villa World Short-Term Incentive (STI) plan subjects
a meaningful proportion of executives’ remuneration
based on the achievement of performance measures
linked to the Company’s annual business objectives
including a range of strategic initiatives, people and
culture development and the achievement of financial
results, including Earnings Per Share (EPS), gearing
and gross margin.
The EPS result for FY18 was 34.4 cps, an increase of
5.8% on EPS for the previous period (FY17: 32.5 cps).
Targets for individual performance measures are
not disclosed as some are commercially sensitive.
Executives achieved different outcomes in regard to
their own specific objectives. Encouragingly, all Key
Management Personnel (KMP) delivered in the top
half of the performance target range, contributing
to continued strong year-on-year financial results.
Long-term incentives
The Villa World Long-Term Incentive plan (LTIP) has
been effective in ensuring alignment between the
performance of eligible executives to long-term overall
company performance. This is an important mechanism
to drive the Company’s employee ownership culture
as executives acquire shares through the vesting of
successive performance rights granted under the
LTIP. Performance measures are based on relative
Total Shareholder Return (TSR) and Return on Assets
(ROA). Explanations of the TSR and ROA calculations
are provided in the Remuneration Report, along with
performance rights granted under the LTIP during
FY18. The number and value of performance rights
held by executives is disclosed within the report.
Subsequent to year-end, the Board has tested the
extent to which performance conditions were
satisfied as at 30 June 2018 for the FY16 LTIP
allocation to the Chief Executive Officer (CEO) and
Chief Operating Officer (COO). Consequently, for
the FY16 LTIP allocation to the CEO and COO, the
Board has determined that approximately 83% of
those performance rights will vest. Performance
rights issued to the former Chief Financial Officer
(CFO) were forfeited at resignation.
Key Management Personnel
The Committee, with the support of the Board and
with Managing Director and CEO Craig Treasure,
continued to focus on building Villa World’s leadership
capability. The appointment of Michael Vinodolac
as COO (previously General Manager Operations
and an existing KMP) and Lorelei Nieves as CFO
demonstrates the Company’s long-term strategy
of growing the diverse capability potential from
within the business. Lorelei Nieves was appointed in
April 2018 and recognised as part of the KMP with
remuneration reflective of opportunities for future
development in the role.
Employee engagement
The Committee acknowledges the correlation between
highly engaged employees and a positive culture
delivering strong financial returns. The Villa World STI
plan includes a range of metrics focused on developing
leadership and team capability, identifying and retaining
key talent and promoting diversity across the business.
In addition, the Company continues to offer eligible
employees the opportunity to purchase Villa World
shares using their pre-tax salary, to a value of $5,000
per annum. This plan offers employees at all levels
an opportunity to become a current shareholder,
promoting increased motivation to deliver shareholder
value and be rewarded for their contribution towards
the long-term success of Villa World.
LOOKING FORWARD TO FY19
The Committee will continue its efforts to encourage
an open and constructive dialogue with Shareholders
and their representatives. We remain conscious that
the executive remuneration landscape is evolving and
we will continue to consult with Shareholders on any
material changes to the Villa World remuneration
policy or its implementation.
For FY19, the Committee has reduced the number
of STI measures for KMP to focus attention on smart
growth opportunities, mastering the fundamentals and
“do it differently, do it better” in order to continue to
drive long-term sustainability. This also includes a range
38
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018 of people and customer-centric metrics focused on
cementing a purpose-led organisation.
fostering a pool of succession candidates as Villa World
continues Helping People Reach Home.
Further consideration of the LTI approach, including
additional stakeholder engagement, will be undertaken
in FY19.
The Committee expects to continue to play an active
governance role through remuneration alignment
as a purpose-led organisation as we contribute to
transforming the Company to move forward with
its new purpose and beliefs. We will maintain our
investment in leadership development, creating
pathways for high-potential employees and
The Committee thanks shareholder representatives
and advisers for their feedback and suggestions to
improve transparency and readability. We trust that we
have produced an improved Remuneration Report that
is useful and informative.
Donna Hardman
Chair, Remuneration and Nomination Committee
Craig Treasure and Mark Jewell on-site
39
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018 REMUNERATION REPORT 2018 (AUDITED)
CONTENTS
SECTION A
Introduction
SECTION B
Who is covered by this report?
SECTION C
Remuneration framework and link to performance
SECTION D
Our focus on performance
SECTION E
Fixed Annual Remuneration (FAR) performance meaures and outcomes for FY18
page 41
page 41
page 41
page 43
page 43
SECTION F
Short-term incentive (STI) performance measures and outcomes for FY18
page 44
SECTION G
Long-term incentive (LTI) performance measures and outcomes
SECTION H
Remuneration Governance
SECTION I
Actual Remuneration received in FY18
SECTION J
Equity instrument disclosures
SECTION K
Non-Executive Directors’ remuneration
page 46
page 50
page 53
page 54
page 55
REMUNERATION REPORT GLOSSARY
AGM
Annual General Meeting
CEO/MD Chief Executive Officer / Managing Director
LTIP
NED
Villa World Limited executive long-term incentive plan
Non-Executive Director
Chief Financial Officer
NPBT
Net profit before tax
Ernst & Young
The 2018 fiscal year
Key Management Personnel
Key Performance Indicator, the basis for STI
Long-term incentive
RNC
ROA
SBP
STI
TSR
Remuneration and Nomination Committee
Return on assets
Share based payments
Short-term incentive
Total shareholder return
CFO
EY
FY18
KMP
KPI
LTI
40
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018 REMUNERATION REPORT 2018 (AUDITED)
SECTION A:
INTRODUCTION
The Villa World Limited Board is pleased to present the Remuneration Report for FY18.
The Board is committed to clear and transparent communication of remuneration arrangements. As in previous
years, the approach to remuneration remains firmly aligned to delivery against Company strategy and creating
sustained growth in shareholder value.
The Company’s remuneration strategy, policies and practices are designed to attract and retain the best people
and reward employees for supporting Villa World’s strategic and operational objectives. Remuneration levels are
competitive with executives in comparable companies and roles, and regularly reviewed against performance
measures and targets.
This report is presented in accordance with the requirements of the Corporations Act 2001 (the Act) and its
regulations. Information has been audited as required by Section 308(3C) of the Act.
SECTION B: WHO IS COVERED BY THIS REPORT?
This report outlines remuneration arrangements in place for Key Management Personnel (KMP) which comprises all
Directors (executive and non-executive) and other members of the Villa World Executive who have authority and
responsibility for planning, directing and controlling the activities of the Company.
Table A below lists the Company’s KMP during the 2018 financial year. The term ‘executives’ refers to those
individuals listed as Executive Directors or as Other KMP in the table below:
Table A: Key Management Personnel
KMP
Position
Non-Executive Directors
Mark Jewell
David Rennick
Independent Chairman
Independent Non-executive Director
Donna Hardman
Independent Non-executive Director
Term
Full Year
Full Year
Full Year
Executive Director
Craig Treasure
Other KMP
Chief Executive Officer and Managing Director (CEO/MD)
Full Year
Michael Vinodolac
Chief Operating Officer (COO)
Lorelei Nieves 1
Robyn Valmadre
Brett Delaney 2
Chief Financial Officer (CFO)
General Manager - Sales & Marketing
Acting CFO
Paulene Henderson 3
Chief Financial Officer and Company Secretary
1 Lorelei Nieves was appointed CFO on 18 April 2018.
2 Brett Delaney was temporarily appointed Acting CFO from 3 July 2017 until 18 April 2018.
3 Paulene Henderson resigned as CFO and Company Secretary on 5 June 2017 but remained a KMP until 3 July 2017.
Full Year
Part Year
Full Year
Part Year
Part Year
SECTION C: REMUNERATION FRAMEWORK AND LINK TO PERFORMANCE
Villa World’s remuneration framework links executive earnings to financial results achieved, while also rewarding
executives for creating longer-term shareholder value.
Executive performance is acknowledged within a Short-Term Incentive (STI) structure to improve key financial results
year-on-year and are rewarded according to their achievements against pre-determined Key Performance Indicators
(KPIs) that are both measurable and outcome-based. Non-financial targets are aligned to core values (including safety
and sustainability) and key strategic and growth objectives. A significant proportion of total remuneration potential is
aligned to long-term performance related elements consistent with the Company’s business strategy.
This combination is designed to attract, retain and motivate executives based on their current skills and experience,
as well as their continuous capability development. This in turn encourages a strong focus on performance,
supporting the delivery of outstanding returns to shareholders and aligning executive and shareholder interests
through share ownership.
41
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018 REMUNERATION REPORT 2018 (AUDITED)
SECTION C: REMUNERATION FRAMEWORK AND LINK TO PERFORMANCE (CONT.)
Table B summarises the executive remuneration structure in place during FY18.
Table B: Executive remuneration structure
Component
Performance conditions
Purpose and link to strategy
n
o
i
t
a
r
e
n
u
m
e
R
d
e
x
F
i
n
o
i
t
a
r
e
n
u
m
e
r
k
s
i
r
t
A
Fixed Annual
Remuneration
(FAR)
Salary and
other benefits
(including
statutory
superannuation)
Short-Term
Incentive (STI)
Annual incentive
opportunity
delivered in cash
Long-Term
Incentive (LTI)
A deferred
equity award
of conditional
rights subject
to performance
conditions
measured over
a three year
performance
period.
Consideration is given to the scope of each
individual’s role and their level of knowledge,
skills and expertise.
STI performance criteria are set by reference to
financial and strategic measures and individual
performance targets relevant to the specific
position.
‘Gateway’ for achieving STI
- minimum Net Profit After Tax (NPAT) threshold
performance level that must be achieved before
any STI is payable.
- the Company must promote and maintain
certification of the Health Safety Environment
(HSE) Management System under the Australian
Standards for safety and international standards
for environment.
Financial measures - include EPS, gross margin
and gearing level and reflect the alignment of
business strategy to create sustainable value for
security holders.
Strategic measures - develop a framework
that is brand, customer and people focused
while supporting technology, innovation and
sustainability.
People and culture measures - focus on
developing leadership and general capability and
identifying and retaining key talent and promoting
diversity across the business.
Individual performance objectives - aligned to
strategic objectives.
Performance conditions which must be satisfied
before the conditional right vests include:
Relative Total Shareholder Return (TSR)
- minimum threshold is 50th percentile.
- represents 75% of LTI allocation.
Return On Asset (ROA)
- minimum threshold is 12%.
- represents 25% of LTI allocation.
The performance conditions are independent
and tested separately. Performance measures
are detailed in Section G(a)(i).
Set to attract, retain and motivate the
right talent to deliver on strategy and
contibute to the Company’s financial and
operational performance.
For executives who are new to their
roles, the aim is to set fixed remuneration
at relatively modest levels compared to
their peers and to progressively increase
levels as they gain experience and prove
themselves in their roles. In this way
fixed remuneration is linked to individual
performance and effectiveness.
Performance conditions are designed
to support the financial and strategic
direction of the Company (the
achievement of which is intended to
translate through to shareholder return),
and are clearly defined and measureable.
A large proportion of outcomes are
subject to earnings targets of the
Company. Other financial targets
ensure strong operational discipline is
maintained.
Non-financial targets are aligned to
core values and key strategic and
growth objectives.
The Board has discretion to adjust STI
outcomes up or down to ensure that
individual outcomes are appropriate and
are aligned with the Company’s values.
Allocation of performance rights
encourages executives to have a
long-term view. The performance
rights are restricted and subject to
risk of forfeiture during the vesting/
performance periods.
The performance conditions are
designed to encourage executives to
focus on the key performance drivers
which underpin sustainable growth in
Shareholder value.
42
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018
REMUNERATION REPORT 2018 (AUDITED)
SECTION D: OUR FOCUS ON PERFORMANCE
The weighting of at-risk remuneration components reflects the Board’s commitment to performance-based
reward. Figure (i) below illustrates the mix of remuneration components for the current financial year.
Figure (i): Remuneration mix
CEO/MD
CHIEF OPERATING
OFFICER
GENERAL MANAGER -
SALES & MARKETING
e
c
n
a
m
r
o
f
r
e
P
t
n
e
d
n
e
p
e
d
Maximum LTI, 33.6%
Target STI Cash, 19.0%
Fixed remuneration,
47.4%
e
c
n
a
m
r
o
f
r
e
P
t
n
e
d
n
e
p
e
d
Maximum LTI, 20.2%
Target STI Cash, 18.4%
e
c
n
a
m
r
o
f
r
e
P
t
n
e
d
n
e
p
e
d
Maximum LTI, 15.2%
Target STI Cash, 19.6%
Fixed remuneration,
61.4%
Fixed remuneration,
65.2%
CHIEF FINANCIAL
OFFICER
Target STI Cash, 9.1%
e
c
n
a
m
r
o
f
r
e
P
t
n
e
d
n
e
p
e
d
Fixed remuneration,
90.9%
SECTION E: FIXED ANNUAL REMUNERATION (FAR) PERFORMANCE MEASURES
AND OUTCOMES FOR FY18
(a) Performance measures
Executive salaries are reviewed and revised as appropriate to reflect additional responsibilities, alignment to
market as well as continuous capability development. Executive FAR is tested regularly for market competitiveness
by reference to appropriate independent and externally sourced comparable benchmark information. This includes
benchmarking against comparable ASX-listed companies, and based on a range of size criteria including market
capitalisation, taking into account an executive’s responsibilities, performance, qualifications, experience and
geographic location.
Any adjustments to executive KMP remuneration requires approval by the Board based on Remuneration and
Nomination Committee (RNC) and CEO/MD recommendations. The CEO/MD does not participate in his own
remuneration appraisal.
(b) Performance outcomes
The CEO/MD’s base salary was increased by 4.3% during FY18, aligned with the success of the Company’s
commercial and financial performance in FY17. Executives received increases (~3% - 6%) in FAR in recognition of
high performance, increased responsibilities, changes in roles and delivery of business strategy. These increases
ensured competitive compensation in relation to industry peers.
Seascape - Redland Bay, QLD
43
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018
REMUNERATION REPORT 2018 (AUDITED)
SECTION F: SHORT-TERM INCENTIVE (STI) PERFORMANCE MEASURES AND
OUTCOMES FOR FY18
(a) Performance measures
The STI plan places a meaningful proportion of executives’ remuneration at risk to be delivered based on the
achievement of performance measures linked to the Company’s annual business objectives.
The structure of STI performance measures for executives in FY18 is determined by the Board at the start of
the financial year, with performance assessed against each measure at the end of the year. Actual STI awards can
range from 0 - 40% of FAR however the Board has discretion to pay over and above these amounts. A sliding
scale element is incorporated into the relevant performance measures to motivate executives to outperform base
targets set. Table C summarises the relevant executive performance measures.
Table C: FY18 STI performance measures
Financial performance
Strategic initiatives
People and culture measures
Individual performance objectives
Total
STI gateway
CEO/MD
60%
20%
20%
-
100%
COO
45%
20%
20%
15%
100%
GM SALES &
MARKETING
40%
20%
20%
20%
100%
CFO
40%
-
20%
40%
100%
Two performance gateways must be achieved in order for executives to attain their target STI. Firstly, Company
NPAT must be at least 80% of target. This was achieved for the year to 30 June 2018. Figure (ii) below highlights
the consistently strong growth in NPAT achieved during the past five years.
Figure (ii):
VILLA WORLD NET PROFIT AFTER TAX
(“NPAT”) GROWTH
43.6
37.8
33.7
NPAT ($ millions)
25.6
19.1
FY14
FY15
FY16
FY17
FY18
(b) Performance outcomes
(i) Financial performance
To achieve the second hurdle, the Company must
promote and maintain certification of the Health
Safety and Environment (HSE) Management System
under the Australian Standards for safety and
International Standard for environment. The nature of
the Company’s business demands a strong focus on
safety and sustainable performance improvement each
and every year. The role that safety plays in supporting
Company culture is core to business success and to
the way that the Company work with and value our
business partners and customers. During FY18 the
Company obtained two levels of certification due to the
strong cultural focus on HSE; Australian Standard 4801
Occupational Health and Safety Management System
and ISO 14001 Environmental Management Systems.
The overall level of executive compensation takes into account the performance of the Company. A significant
portion of the STI outcome for each executive is based on the achievement of financial results which include
earnings per share (EPS), gearing and gross margin. The combination of the financial measures and the assessment
of the overall financial health of the business ensures that Executives are rewarded for decisions and outcomes that
deliver results in the short-term but that are also sustainable (including consideration of the Board Risk Appetite)
and in the long-term interests of the Shareholders.
44
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018
REMUNERATION REPORT 2018 (AUDITED)
SECTION F: SHORT-TERM INCENTIVE (STI) PERFORMANCE MEASURES AND
OUTCOMES FOR FY18 (CONT.)
The Company has demonstrated consistently strong performance during the past five years. In that time, the
Company’s share price increased from $2.02 (opening share price as at 1 July 2014) to $2.22 (as at 30 June 2018).
The Company reported NPAT of $43.6 million, up 15% on FY17’s result of $37.8 million and achieved a gross margin
of 26.6% (FY17: 27.5%).
EPS increased to 34.4 cps (FY17: 32.5 cps) and NTA increased to $2.44 (FY17: $2.27) prior to the Board declaring
total full year dividends of 18.5 cents per share fully franked. Gearing at 30 June 2018 was 29.7% which was within
the Company’s gearing target of 15% to 30%.
Table D below summarises the Company’s achievements in the past five years and highlights the areas that drive
shareholder wealth.
Table D: Five year company performance
Performance KPI
Revenue ($m)
Net profit after tax ($m)
Debt ($m)
Gearing (%)
NTA per security ($)
Share price at 30 June
Dividends (relating to the year)
Interim dividend (cents)
Final dividend (cents)
Earnings per share (cents)
(ii) Strategic initiatives
FY14
FY15
FY16
FY17
$229.5
$321.6
$387.0
$386.8
$19.1
$69.1
18.7%
$1.92
$2.02
6.0
9.0
21.8
$25.6
$92.0
16.9%
$2.00
$2.00
6.0
10.0
25.6
$33.7
$128.6
25.6%
$2.15
$2.08
8.0
10.0
30.6
$37.8
$81.5
12.9%
$2.27
$2.25
8.0
10.5
32.5
FY18
$441.6
$43.6
$183.8
29.7%
$2.44
$2.22
8.0
10.5
34.4
Strategic Initiatives are focused on developing a framework that is brand, customer and people focused while
supporting technology, innovation and sustainability. Measures include implementation of a program to improve
customer Net Promoter Score (NPS) ratings, company re-branding of purpose and beliefs and investing in a
forward growth strategy across all states of operation.
During FY18 the Company instigated a technology strategy that will enable better informed business decisions
through access to more timely and accurate data. This strategic initiative ensures greater consistency of business
processes and supports delivery of the Company’s broader customer centricity strategy.
Acquisitions and joint venture partnerships were undertaken this year to support the Company’s growth strategies
in New South Wales and Victoria. Strategic decisions to enter into the sale of selective developments including
Donnybrook in Victoria, and Hope Island in Queensland, offer longer-term financial and commercial advantages.
In addition the Wollert land parcel was disposed of to a joint venture where the Company has 51% interest and joint
control over the project. A land development rebranding strategy and core housing review were completed during
the year to ensure delivery of cost effective, innovative design solutions within agreed margins.
(iii) People and culture measures
There is direct correlation between high levels of employee engagement and a positive culture delivering strong
security holder returns. The Villa World STI plan includes a range of metrics focused on developing leadership and
team capability, identifying and retaining key talent and promoting diversity across the business.
During FY18, the Company began implementing its leadership development framework in order to inform and
deliver on broader people and culture development strategies. These strategies focus on growing a purpose-led
company culture by creating career pathways for our people. The identification of Board and KMP succession plans
supports the strategy to promote internal candidates who are committed to the Company’s purpose and beliefs
and to recognise the skills, experience and capability that they bring to the Company.
45
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018
REMUNERATION REPORT 2018 (AUDITED)
SECTION F: SHORT-TERM INCENTIVE (STI) PERFORMANCE MEASURES AND
OUTCOMES FOR FY18 (CONT.)
(iii) People and culture measures (cont.)
The appointment of Michael Vinodolac as Chief Operating Officer (previously General Manager Operations and
an existing KMP) and Lorelei Nieves as Chief Financial Officer demonstrates the Company’s long-term strategy
of growing the diverse capability potential from within the business. As long-term employees of Villa World, these
meritorious appointments demonstrate the capability and cultural strength within the Company.
Another significant initiative delivered during FY18 was the identification and initial rollout of the Company’s new
Purpose—“Helping People Reach Home”—supported by six core beliefs. These elements provide the framework for
further development and support of people and culture initiatives during FY19 and beyond.
(iv)
Individual performance measures
Individual performance measures vary by role and from year-to-year for individuals, and are primarily linked to the
successful achievement of strategic objectives relating to long-term company sustainability. Targets for individual
performance measures are not disclosed as some are commercially sensitive. Executives have achieved different
outcomes in regard to their personal objectives, but all have delivered in the top half of the performance range.
SECTION G: LONG-TERM INCENTIVE (LTI) PERFORMANCE MEASURES AND OUTCOMES
(a) Performance measures
(i) Villa World Limited Executive Long-Term Incentive Plan (LTIP)
The Villa World LTIP is the long-term at-risk incentive component of remuneration for executives. It also applies
to other senior managers who are considered to have influence over the long-term performance of the Company.
Performance rights are granted but are restricted and subject to forfeiture until the end of the vesting / performance
period which is three years from the grant date. Maximum LTI opportunities are equivalent to 120% of fixed
remuneration for the CEO/MD and up to 60% of fixed remuneration for other executives.
Performance measures are based on relative Total Shareholder Return (TSR) and Return on Assets (ROA).
Details of these performance measures are set out in Table E below:
Table E: Long-term incentive plan performance measures
Purpose
Eligibility
Award vehicle
Performance
period
Vesting date
Opportunity
Performance
measures
LTI ensures alignment to long-term overall company performance, motivates long-term value
creation and is consistent with strategic business drivers and long-term Shareholder return.
Executives and other eligible employees of the Company who are considered to have the
capacity to impact the long-term performance of the Company. Non-executive Directors
are not eligible to participate.
Performance rights. On vesting, each performance right converts into one share.
No dividends/distributions are paid on unvested LTI awards.
Performance measures are tested over a three year period from grant date.
Vesting occurs following the release of full year results, when the Board determines the
extent to which the perfromance measures have been satisfied for the relevant performance
period. The vesting is conditional on the executive remaining employed with the Company
and achievement of performance hurdles.
Maximum LTI opportunities are equivalent to 120% of fixed remuneration for the CEO/MD
and up to 60% of fixed remuneration for other executives.
Relative TSR (75% of the LTI allocation)
Relative TSR is used because it is an objective
measure of Shareholder value creation and
is widely understood and accepted by the
various stakeholders.
Absolute ROA (25% of the LTI allocation)
ROA is a profitability ratio that measures how
well the Company has managed its assets
to generate earnings. ROA is calculated by
dividing Earnings Before Interest Tax (EBIT)
by Average funds employed.
46
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018
REMUNERATION REPORT 2018 (AUDITED)
SECTION G: LONG-TERM INCENTIVE (LTI) PERFORMANCE MEASURES AND
OUTCOMES (CONT.)
Performance
measures (cont.)
Relative TSR (75% of the LTI allocation) (cont.)
Absolute ROA (25% of the LTI allocation) (cont.)
TSR is measured relative to a comparator
group of ASX-listed companies ranked
200-300 on the ASX300 Index (excluding
companies in the mining and financial
services sectors and A-REITS). These
companies were chosen as they are of similar
size and reflect the Company’s competitors
for capital. The TSR for the Company is
measured over three financial years.
Average funds employed will be calculated by
taking the opening and closing funds employed
for each relevant year. Funds employed
is defined as net assets excluding net tax
balances, net debt, other financial liabilities
and assets, and liabilities as a result of hedging
(in accordance with accounting standards).
Relative TSR performance
ROA performance
Performance Relative TSR
(percentile)
level
Percentage
vesting
Performance Relative ROA Percentage
level
(percent)
vesting
50th to 75th Straight line vesting
maximum
between 50-100%
Threshold to >12% to 13.5% Straight line vesting
maximum
between 50-100%
Maximum
75th and above 100%
Maximum
>13.5%
100%
(b) Equity instruments granted to executives under the Villa World Executive Long-Term Incentive
Plan (LTIP)
For executives, the LTIP is an important mechanism to drive the Company’s employee ownership culture as
executives acquire shares through the vesting of successive LTIP awards. The number and value of performance
rights held by executives under the LTIP during the financial year ended 30 June 2018 is set out in Table F:
Table F: Performance rights held as at 30 June 2018
Perform-
ance
rights
awarded
Value
Weighted
average value
of perform-
ance rights
at grant
date 2
Expiry
date
Perform-
ance period
end date
Expected
price
volatility
of shares
Expected
dividend
yield
Risk
free
interest
rate
For-
feited /
lapsed
Vested 3
KMP
Craig
Treasure
FY18
383,699
$1.70
$652,288 31/08/2020 30/06/2020
21.8%
FY17
387,528
$1.44 $558,040 23/08/2019
30/06/2019
FY16
316,902
$1.06
$335,916
31/08/2018
30/06/2018
25%
27%
97,909
$1.70
$165,956
31/08/2020 30/06/2020
21.8%
97,582
$1.44
$140,518
23/08/2019
30/06/2019
FY16
56,338
$1.06
$59,718
31/08/2018
30/06/2018
25%
27%
Michael
Vinodolac
FY18
FY17
Robyn
Valmadre
Paulene
Henderson 1
FY18
74,976
$1.70
$127,084
31/08/2020 30/06/2020
21.8%
FY17
FY17
76,669
$1.44
$110,403
23/08/2019
30/06/2019
150,969
$1.44
$217,395
23/08/2019
30/06/2019
FY16
112,676
$1.06
$119,347
31/08/2018
30/06/2018
25%
25%
27%
7.7%
8.2%
7.6%
7.7%
8.2%
7.6%
7.7%
8.2%
8.2%
7.6%
1.9%
1.9%
2.1%
1.9%
1.9%
2.1%
1.9%
1.9%
1.9%
2.1%
-
-
-
-
83%
17%
-
-
-
-
83%
17%
-
-
-
-
-
-
100%
100%
1 Paulene Henderson tendered her resignation as CFO and Company Secretary on 5 June 2017 but remained a KMP until 3 July 2017.
Her performance rights were forfeited on 14 July 2017 with communication and approval by the Board prior 30 June 2017.
2 The value of performance rights reflects the weighted average fair value at the time of grant.
3 Vesting occurs following the release of full year results, when the Board determines the extent to which the performance conditions
have been satisfied for the relevant performance period.
47
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018
REMUNERATION REPORT 2018 (AUDITED)
SECTION G: LONG-TERM INCENTIVE (LTI) PERFORMANCE MEASURES AND
OUTCOMES (CONT.)
(c) Performance outcomes
(i) FY18 LTIP Grant
The third allocation of performance rights under the LTIP to the CEO/MD was approved at the FY17 Annual
General Meeting (AGM). Table G shows LTI grants awarded during the year to the CEO/MD and other executives,
subject to performance conditions over the three year performance period ending 30 June 2020. Accounting
standards require the estimated valuation of the grants be recognised over the performance period. The maximum
value is based on the estimated fair value calculated at the time of the grant and amortised in accordance with the
accounting standard requirements.
Table G: Performance rights granted during FY18
Perform-
ance
measure
Perform-
ance
rights
awarded
Fair
value per
perform-
ance share
Value of
perform-
ance rights
at grant
date 1
Perform-
ance
period end
date
Expected
price
volatility
of shares
Expected
dividend
yield
Risk
free
interest
rate
Expiry
date
Relative TSR
287,774
Absolute ROA
95,925
383,699
Relative TSR
73,432
Absolute ROA
24,477
97,909
Relative TSR
56,232
Absolute ROA
18,744
$1.57
$2.07
$1.57
$2.07
$1.57
$2.07
$451,805
31/08/2020 30/06/2020
$198,565
31/08/2020 30/06/2020
$650,370
$115,288
31/08/2020 30/06/2020
$50,668
31/08/2020 30/06/2020
$165,956
$88,284
31/08/2020 30/06/2020
$38,800
31/08/2020 30/06/2020
21.8%
21.8%
21.8%
21.8%
21.8%
21.8%
7.7%
7.7%
7.7%
7.7%
7.7%
7.7%
1.9%
1.9%
1.9%
1.9%
1.9%
1.9%
74,976
$127,084
KMP
Craig
Treasure
Total
Michael
Vinodolac
Total
Robyn
Valmadre
Total
1 The value of performance rights reflects the fair value at the time of grant.
The Meadows - Strathpine, QLD
48
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018
REMUNERATION REPORT 2018 (AUDITED)
SECTION G: LONG-TERM INCENTIVE (LTI) PERFORMANCE MEASURES AND
OUTCOMES (CONT.)
(ii) FY16 LTIP Grant
The performance conditions for the LTI performance rights granted in November 2015 were measured for vesting
as at 30 June 2018.
Vesting of LTI grants is dependent on achieving relative TSR performance and absolute ROA targets over a three
year period, with the Board having over-arching discretion to ensure vesting outcomes are appropriately aligned
to performance.
ROA Performance
Villa World ROA has been consistent over the past three years and has exceeded the threshold each year.
TSR performance
Villa World achieved a strong relative TSR of 63.49% over the three year performance period ended 30 June 2018,
resulting in approximately 77% vesting for the TSR component.
Overall performance
The total rights vesting for Villa World executives for FY16 LTI award is approximately 83%. Vesting occurs following
the release of full year results, when the Board determines the extent to which the performance conditions have
been satisfied for the relevant performance period.
Villa World Queensland land sales team
49
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018
REMUNERATION REPORT 2018 (AUDITED)
SECTION H: REMUNERATION GOVERNANCE
Villa World’s remuneration strategy requires approval by the Board, following recommendations from the
Remuneration and Nomination Committee (RNC). The role of the RNC is set out in its charter, which is reviewed
annually and can be viewed in the Investor Relations, Corporate Governance section of the Villa World website,
http://www.villaworld.com.au/investor-centre/corporate-governance
Villa World’s Remuneration Objectives
Remuneration is
fair and delivers
a competitive
advantage in
attracting motivating
and retaining
executive talent
Creation of reward
differentiation to
drive performance
values and
behaviours
Provide equal
opportunity and
enhance diversity
An appropriate
balance of fixed and
at risk components
Support strategic
direction of Villa
World and create
sustained growth in
shareholder value
The RNC met on four occasions during FY18 and held numerous informal discussions about broader remuneration
issues. In addition to the Committee members, the CEO and other Non-Executive Directors attend meetings as
required, except in circumstances where their own remuneration is being discussed.
Villa World’s remuneration governance is depicted in Figure (iii).
Arundel Springs - Arundel, QLD
50
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018 REMUNERATION REPORT 2018 (AUDITED)
SECTION H: REMUNERATION GOVERNANCE (CONT.)
Figure (iii): Remuneration governance structure
THE BOARD
Reviews, applies judgement and, as appropriate, approves the RNC’s recommendations
▲
REMUNERATION & NOMINATION COMMITTEE
The RNC is empowered to source any internal resources and obtain external independent professional
advice it considers necessary to enable it to make recommendations to the Board on the following:
Remuneration policy,
composition and
quantum of remuneration
components for exexutive
KMP and performance
targets
▲
▼
Remuneration policy in
respect of NEDs
Talent management
policies and practices
including superannuation
arrangements
Design features of
employee and executive
STI and LTI plan awards,
including setting of
performance and other
vesting conditions
▲
▼
Independent External Remuneration Advisors
Internal Resources
• External benchmarking
CEO
• Remuneration Structure and mix
• External benchmarking
• At risk approaches (STI & LTI)
• Alignment of remuneration strategy
• Proxy advisor considerations
• External & Independent remuneration
advice and information
• Recommendations on remuneration
outcomes for executive team
Management
• Implementing remuneration policies
(a) Remuneration report approval at the FY17 AGM
Of the eligible votes cast at the Company’s AGM held on 24 October 2017, 98.24% were in favour of the
remuneration report for FY17. The Company did not receive any specific feedback at the AGM on its remuneration
practices. The RNC will continue to encourage an open and constructive dialogue with Shareholders and their
representative bodies, and will consult with major Shareholders on any material changes to the remuneration policy
or how it is implemented. We are aware that the executive remuneration landscape is evolving and of the potential
for change.
(b) Use of Remuneration Advisers
To assist in performing its duties and making recommendations to the Board, the RNC seeks independent advice from
external consultants on various remuneration related matters including insights on remuneration trends, regulatory
updates and market data in relation to the remuneration of Non-Executive Directors and Villa World executives.
Ernst & Young (EY) are engaged as the Company’s independent external remuneration advisor to ensure that
it is fully informed when making remuneration decisions and to assist with the review of the overall executive
remuneration structure. EY’s global governance guidelines and terms of engagement include specific strict
guidelines designed to protect their independence, as part of this service to existing audit clients. No remuneration
recommendations as defined in Section 9B of the Corporations Act 2001 were obtained during the financial year
ended 30 June 2018.
51
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018 REMUNERATION REPORT 2018 (AUDITED)
SECTION H: REMUNERATION GOVERNANCE (CONT.)
(c) Clawback of STI and LTIP awards
The Company has a formal Clawback Policy that provides the Board with broad discretion to ensure that no unfair
benefit or detriment is derived by any participant in the case of material misstatement in Company financial results or
serious misconduct by a participant, including where the Company suffers material reputational damage. This includes
discretion to reduce, forfeit or reinstate unvested awards or alter the performance conditions applying to any award.
(d) Securities dealing policy
Consistent with the Corporations Act 2001, executives are prohibited under the Company’s Securities Dealing Policy
from hedging or otherwise reducing or eliminating the risk associated with unvested equity-based incentives. If the
executive hedges in breach of this policy, consequences may involve disciplinary action and could result in dismissal
and forfeiture of equity based incentives. Conviction of insider trading can attract criminal and civil liability under
the Corporations Act 2001.
(e) Cessation of employment
If an executive resigns or is terminated for cause, any unvested awards are forfeited unless otherwise determined
by the Board. The treatment of vested and unexercised awards will be determined by the Board with reference to
the circumstances of cessation.
(f) Executive Employment Agreements
Remuneration and other terms of employment for executives are formalised in employment agreements. Specific
information relating to the terms of the agreements for the current executives are set out in table below. Other
than statutory entitlements, there are no termination benefits applicable to other current executives. The Board
and the RNC must approve all termination payments.
Table H: Executive employment agreements
Base fee
inclusive of
superannuation
Term of
agreement
Notice
period
Review
period
Maximum
annual cash
bonus (%) 1
CEO/MD
Craig Treasure
Other KMP
Michael Vinodolac
Lorelei Nieves
Robyn Valmadre
$725,000
Rolling
6 months
Annual
$370,000
$250,000
$340,000
Rolling
Rolling
Rolling
3 months
3 months
3 months
Annual
Annual
Annual
40%
30%
10%
30%
1 Anticipated cash bonus as a proportion of base salary depending on corporate and individual performance.
Concourse - Oran Park, NSW
52
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018 REMUNERATION REPORT 2018 (AUDITED)
SECTION I: ACTUAL REMUNERATION RECEIVED IN FY18
Table I sets out the value of remuneration received by executive KMP for FY18 and FY17.
Table I: Executive remuneration for FY18
Short-term
benefits
Post-
employ-
ment
Long-
term
benefits
Share-based
payments 6
Salary
and fees
Cash
Bonus
Super-
annuation
contri-
butions
$
$
$
Long
service
leave 5
Share
options
Perfor-
mance
Rights
Termi-
nation
benefits
Perfor-
mance
related
TOTAL
$
$
$
$
%
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,183
13,014
9,543
8,676
9,543
8,676
34,269
30,366
Non-Executive
Directors
Mark Jewell
(Chairman)
2018
159,817
2017
136,986
David Rennick
2018 100,457
2017
91,324
Donna Hardman
2018 100,457
2017
91,324
2018 360,731
2017
319,634
Total Non-
Executive Directors
Other KMP
Craig Treasure
(CEO and MD) 1
2018 711,794
278,000
20,049
10,741
2017 689,306
270,000
19,616
16,402
Michael Vinodolac
2018 349,951
87,500
20,049
16,842
2017
341,243
60,000
19,616
19,324
11,958
66,745
Lorelei Nieves 2
2018
41,069
2017
-
-
-
3,819
1,876
-
-
Robyn Valmadre
2018
319,951
66,000
20,049
9,351
2017
310,384
63,000
19,616
2,237
Brett Delaney 3
2018 236,250
2017
-
Paulene Henderson 4 2018
68,879
-
-
-
-
-
5,012
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
515,415
297,985
122,227
-
-
79,288
36,801
-
-
-
-
-
-
-
-
-
-
-
-
175,000
150,000
110,000
100,000
110,000
100,000
395,000
350,000
-
-
-
-
-
-
-
-
1,535,999
52%
1,293,309
44%
596,569
518,886
46,764
-
494,638
432,038
236,250
-
35%
27%
-
-
29%
23%
-
-
-
-
-
-
-
Total Executive
Director and KMP
2017 305,384
75,000
19,616
11,656
2018 1,727,894 431,500
68,978
38,810
(39,812 )
-
371,844
9%
716,930
269,446 3,253,558
2017 1,646,317 468,000
78,464
49,619
11,958
361,719
-
2,616,077
TOTAL
2018 2,088,625 431,500
103,247
38,810
-
716,930
269,446 3,648,558
2017
1,965,951 468,000
108,830
49,619
11,958
361,719
-
2,966,077
269,446
343,337
1 Base salary for Craig Treasure includes a motor vehicle allowance of $6,843 for the year ended 30 June 2018 (30 June 2017: $13,922).
2 Lorelei Nieves was appointed Chief Financial Officer on 18 April 2018.
3 Brett Delaney was temporarily appointed Acting CFO from 3 July 2017 up to 18 April 2018.
4 Paulene Henderson resigned as CFO and Company Secretary on 5 June 2017 but remained a KMP until 3 July 2017.
5 Long service leave represents the amount expensed by the Company for the period.
6 The amount shown in share-based payments represents the amount expensed by the Company.
53
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018 REMUNERATION REPORT 2018 (AUDITED)
SECTION J: EQUITY INSTRUMENT DISCLOSURES
(a)
Interests in shares and bonds
The Board believes the interests of the KMP should be closely aligned to those of Shareholders through significant
exposure to the Company’s share price and dividends.
A summary of the current KMPs interests in shares and bonds in Villa World as at 30 June 2018 is shown in the
table J below:
Table J: KMP interest in shares and bonds
Shares
Bonds
Balance at the
start of the year
Other changes
during the year
Balance at the
end of the year
Balance at the
start of the year
Other changes
during the year
Balance at the
end of the year
Direct
holding
Indirect
holding
Direct
holding
Indirect
holding
Direct
holding
Indirect
holding
Direct
holding
Indirect
holding
Direct
holding
Indirect
holding
Direct
holding
Indirect
holding
Directors
Mark Jewell
-
107,127
Craig Treasure
752,432 582,432
-
-
David Rennick
2,234
48,737
2,125
Donna Hardman
-
28,737
-
Other KMP
Michael Vinodolac
49,854
Lorelei Nieves
1,321
-
-
2,125
850
Robyn Valmadre
428
7,000
-
-
-
-
-
-
-
-
-
107,127
752,432 582,432
4,359 48,737
-
28,737
51,979
2,171
-
-
428
7,000
-
-
-
-
-
-
-
Paulene Henderson 1
2,662
98,942
(2,662 )
(98,942 )
-
-
300
Total
808,931 872,975 2,438
(98,942 ) 811,369 774,033
300
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
300
300
-
-
-
-
-
-
-
-
-
1 Paulene Henderson resigned as CFO and Company Secretary on 5 June 2017 but remained a KMP until 3 July 2017.
(b)
Interests in performance rights
A summary of the current KMPs holdings in performance rights in Villa World as at 30 June 2018 is shown in
table K below:
Table K: KMP performance rights holding
Balance at
the start of
the year
Granted
during
the year
Exercised
during
the year
Lapsed/
forfeited during
the year
Balance at
the end of
the year
Vested and
exercisable at the
end of the year
Directors
Craig Treasure
Other KMP
Michael Vinodolac
Robyn Valmadre
Total
704,430
383,699
153,920
76,669
97,909
74,976
935,019
556,584
-
-
-
-
-
-
-
-
1,088,129
251,829
151,645
1,491,603
-
-
-
-
54
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018 REMUNERATION REPORT 2018 (AUDITED)
SECTION K: NON-EXECUTIVE DIRECTORS’ REMUNERATION
(a) Policy and approach to setting fees
Non-Executive Directors receive a base fee for service as a director of the Board, and an additional fee for chairing
a committee. The Chairman, taking into account the greater time commitment required, receives a higher fee.
The Board’s policy is to pay fees that are competitive with comparable companies (those with a similar market
capitalisation), at a level to attract and retain directors of the appropriate calibre and recognising the anticipated
time commitments and continual increasing responsibilities of directors to meet market expectations of their role.
In order to maintain independence and impartiality, Non-Executive Directors are not entitled to any form of
incentive payments and the level of their fees is not set with reference to measures of Company performance.
(b) Annual review of fees within the maximum approved by shareholders
The Non-Executive Directors’ fees (comprising base and committee fees inclusive of superannuation) have been
set by the Board within the maximum aggregate amount of $600,000 per annum as approved by Shareholders
at the 2017 AGM.
Non-Executive Director fees are reviewed annually and set and approved by the Board based on independent
advice received from external remuneration consultants as required.
A review of Non-Executive Director fees was undertaken during FY18, based on comparative market data provided
by external experts. Within the shareholder approved maximum aggregate fee amount, the Board approved
increases of ~10%-17% to the base fees for Non-Executive Directors ensuring Villa World remains competitive with
comparable companies.
This increase also reflects the calibre, increased time commitment and responsibilities of the Non-Executive
Directors as the Company continues to grow and promote greater diversity of thinking and challenging amongst
its Board as part of its good to great strategy.
(c) Board and committee fees
Following the review as described above, the Board approved the following base and committee fees (inclusive of
statutory superannuation):
Table J: Board and committee fees
Base fees
Non-Executive Chair
Non-Executive Directors
Additional fees
Committee Chair
FY18
FY17
$175,000
$150,000
$90,000
$85,000
$20,000
$15,000
55
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018 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.
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, as nominees for the purposes of
licenses held by the Company, or who are employed in key senior positions. 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 of the Company or of any related body corporate against a liability
incurred as such an officer.
Indemnity 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.
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.
The Audit and Risk Committee reviewed all non-audit services to ensure they did not impact the auditor’s impartiality
and objectivity.
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 level of independence required under the Act because none
of the services undermine the general principles relating to auditor independence as set out in APES110 Code of Ethics
for Professional Accountants.
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 57.
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191, 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 ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/191 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
14 August 2018
56
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018 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
Ernst & Young
Ernst & Young
Ernst & Young
111 Eagle Street
111 Eagle Street
111 Eagle Street
Brisbane QLD 4000 Australia
Brisbane QLD 4000 Australia
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
GPO Box 7878 Brisbane QLD 4001
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Tel: +61 7 3011 3333
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
Fax: +61 7 3011 3100
Fax: +61 7 3011 3100
ey.com/au
ey.com/au
ey.com/au
As lead auditor for the audit of Villa World Limited for the financial year ended 30 June 2018, I declare
to the best of my knowledge and belief, there have been:
Auditor’s Independence Declaration to the Directors of Villa World
Auditor’s Independence Declaration to the Directors of Villa World
Auditor’s Independence Declaration to the Directors of Villa World
Limited
Limited
Limited
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
As lead auditor for the audit of Villa World Limited for the financial year ended 30 June 2018, I declare
As lead auditor for the audit of Villa World Limited for the financial year ended 30 June 2018, I declare
As lead auditor for the audit of Villa World Limited for the financial year ended 30 June 2018, I declare
to the best of my knowledge and belief, there have been:
This declaration is in respect of Villa World Limited and the entities it controlled during the financial
to the best of my knowledge and belief, there have been:
to the best of my knowledge and belief, there have been:
year.
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
relation to the audit; and
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
b) no contraventions of any applicable code of professional conduct in relation to the audit.
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Villa World Limited and the entities it controlled during the financial
This declaration is in respect of Villa World Limited and the entities it controlled during the financial
This declaration is in respect of Villa World Limited and the entities it controlled during the financial
year.
year.
year.
Ernst & Young
Ernst & Young
Ernst & Young
Ernst & Young
Ric Roach
Partner
14 August 2018
Ric Roach
Ric Roach
Ric Roach
Partner
Partner
Partner
14 August 2018
14 August 2018
14 August 2018
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
57
DIRECTORS’ REPORTVILLA WORLD LIMITED ANNUAL REPORT 2018
Annual report - 30 June 2018
Contents
Financial statements
Financial statements
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of changes in equity
Consolidated statement of cash flows
Consolidated statement of cash flows
Notes to the consolidated financial statements
Notes to the consolidated financial statements
Directors' declaration
Directors' declaration
Independent auditor’s report to the members of Villa World Limited
Independent auditor's report to the members of Villa World Limited
Page
59
59
60
60
61
61
62
62
63
63
105
105
106
106
58
VILLA WORLD ANNUAL REPORT 2018
| 58
FINANCIAL STATEMENTSVILLA WORLD LIMITED ANNUAL REPORT 2018
Consolidated statement of comprehensive income
For the year ended 30 June 2018
Consolidated statement of comprehensive income
For the year ended 30 June 2018
Revenue from continuing operations
Revenue from land development, residential building and construction
contracts
Cost of land development, residential building and construction contracts
Revenue from continuing operations
Gross Margin
Revenue from land development, residential building and construction
Revenue from development and project management fees
contracts
Other income
Cost of land development, residential building and construction contracts
Net (impairment) / reversal of impairment of development land
Gross Margin
Share of profit / (loss) from associates and joint ventures
Revenue from development and project management fees
Reversal of impairment of investment in equity accounted investment
Other income
Other expenses from ordinary activities
Net (impairment) / reversal of impairment of development land
Property sales and marketing expenses
Share of profit / (loss) from associates and joint ventures
Land holding costs
Reversal of impairment of investment in equity accounted investment
Legal and professional costs
Other expenses from ordinary activities
Employee benefits
Property sales and marketing expenses
Depreciation and amortisation expense
Land holding costs
Administration costs and other expenses
Legal and professional costs
Finance costs
Employee benefits
Profit before income tax
Depreciation and amortisation expense
Income tax expense
Administration costs and other expenses
Profit for the period
Finance costs
Profit is attributable to:
Profit before income tax
Owners of Villa World Limited
Income tax expense
Profit for the period
Profit is attributable to:
Earnings per share for profit attributable to the ordinary equity
Owners of Villa World Limited
holders of the Company:
Basic earnings per share
Diluted earnings per share
Earnings per share for profit attributable to the ordinary equity
holders of the Company:
Basic earnings per share
Diluted earnings per share
Notes
A1(a)
Notes
A1(a)
A1(b)
A1(a)
A1(c)
A1(a)
D3
A1(b)
D3
A1(c)
D3
D3
C5
A5(b)
C5
A5(b)
A2
A2
A2
A2
Notes
Consolidated
2018
$'000
2017
$'000
Consolidated
2018
441,573
$'000
(323,975)
117,598
11,134
441,573
1,049
(323,975)
(399)
117,598
6,374
11,134
-
1,049
(399)
(25,509)
6,374
(4,559)
-
(2,515)
(25,037)
(25,509)
(710)
(4,559)
(6,772)
(2,515)
(8,672)
(25,037)
61,982
(710)
(18,348)
(6,772)
43,634
(8,672)
61,982
43,634
(18,348)
43,634
Cents
43,634
34.4
Cents
34.2
2017
386,790
$'000
(280,537)
106,253
2,427
386,790
754
(280,537)
1,516
106,253
3,010
2,427
627
754
1,516
(21,730)
3,010
(4,086)
627
(1,693)
(20,630)
(21,730)
(577)
(4,086)
(4,826)
(1,693)
(7,058)
(20,630)
53,987
(577)
(16,151)
(4,826)
37,836
(7,058)
53,987
37,836
(16,151)
37,836
Cents
37,836
32.5
Cents
32.4
Consolidated
34.4
2018
34.2
$'000
43,634
32.5
2017
32.4
$'000
37,836
Profit for the period
Other comprehensive income
Items that may be reclassified to profit or loss
Changes in the fair value of cash flow hedges
Profit for the period
Income tax relating to these items
Other comprehensive income
Other comprehensive income for the period, net of tax
Items that may be reclassified to profit or loss
Total comprehensive income for the period, net of tax
Changes in the fair value of cash flow hedges
Total comprehensive income for the period is attributable to:
Income tax relating to these items
Owners of Villa World Limited
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:
Owners of Villa World Limited
Notes
C3(a)
C3(a), A5(c)
C3(a)
C3(a), A5(c)
Consolidated
2018
$'000
1,803
43,634
(541)
1,262
44,896
1,803
(541)
44,896
1,262
44,896
2017
$'000
1,561
37,836
(468)
1,093
38,929
1,561
(468)
38,929
1,093
38,929
44,896
38,929
The above consolidated statement of comprehensive income should be read in conjunction with the
accompanying notes.
VILLA WORLD ANNUAL REPORT 2018
The above consolidated statement of comprehensive income should be read in conjunction with the
accompanying notes.
VILLA WORLD ANNUAL REPORT 2018
| 59
| 59
59
FINANCIAL STATEMENTSVILLA WORLD LIMITED ANNUAL REPORT 2018
Consolidated balance sheet
As at 30 June 2018
Consolidated balance sheet
As at 30 June 2018
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
ASSETS
Inventories
Current assets
Other current assets
Cash and cash equivalents
Total current assets
Trade and other receivables
Non-current assets
Inventories
Inventories
Other current assets
Property, plant and equipment
Total current assets
Investments accounted for using the equity method
Non-current assets
Other non-current assets
Inventories
Total non-current assets
Property, plant and equipment
Total assets
Investments accounted for using the equity method
LIABILITIES
Other non-current assets
Current liabilities
Total non-current assets
Trade and other payables
Total assets
Deferred income
LIABILITIES
Current tax liabilities
Current liabilities
Other financial liabilities
Trade and other payables
Employee benefits
Deferred income
Service warranties
Current tax liabilities
Other provisions
Other financial liabilities
Total current liabilities
Employee benefits
Non-current liabilities
Service warranties
Trade and other payables
Other provisions
Borrowings
Total current liabilities
Deferred income
Non-current liabilities
Deferred tax liabilities
Trade and other payables
Other financial liabilities
Borrowings
Employee benefits
Deferred income
Other provisions
Deferred tax liabilities
Total non-current liabilities
Other financial liabilities
Total liabilities
Employee benefits
Net assets
Other provisions
EQUITY
Total non-current liabilities
Contributed equity
Total liabilities
Other reserves
Net assets
Accumulated losses
EQUITY
Capital and reserves attributable to owners of Villa World Limited
Contributed equity
Total equity
Other reserves
Accumulated losses
Capital and reserves attributable to owners of Villa World Limited
Total equity
Notes
Notes
B2
B1
B3
B2
B1
B1
B3
D3
B3
B1
D3
B3
B4
A5(b)
B4
B5(a)
A5(b)
B5(a)
B4
C4
A5(d)
B4
C4
A5(d)
C2
C3(a)
C2
C3(a)
2018
12,645
$'000
130,206
167,590
4,187
12,645
314,628
130,206
167,590
233,967
4,187
2,063
314,628
27,260
10,000
233,967
273,290
2,063
587,918
27,260
10,000
273,290
64,426
587,918
42
2,353
3
64,426
1,298
42
4,266
2,353
45
3
72,433
1,298
4,266
13,396
45
183,786
72,433
-
7,979
13,396
59
183,786
453
-
92
7,979
205,765
59
278,198
453
309,720
92
205,765
477,611
278,198
241,021
309,720
(408,912)
309,720
477,611
309,720
241,021
(408,912)
309,720
309,720
Consolidated
2018
$'000
2017
$'000
Consolidated
2017
7,663
$'000
52,628
206,757
3,347
7,663
270,395
52,628
206,757
271,205
3,347
1,195
270,395
24,869
10,000
271,205
307,269
1,195
577,664
24,869
10,000
307,269
165,435
577,664
467
10,775
-
165,435
1,053
467
4,219
10,775
130
-
182,079
1,053
4,219
23,760
130
81,457
182,079
84
1,972
23,760
-
81,457
496
84
78
1,972
107,847
-
289,926
496
287,738
78
107,847
477,597
289,926
208,511
287,738
(398,370)
287,738
477,597
287,738
208,511
(398,370)
287,738
287,738
| 60
| 60
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
VILLA WORLD ANNUAL REPORT 2018
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
60
VILLA WORLD ANNUAL REPORT 2018
FINANCIAL STATEMENTSVILLA WORLD LIMITED ANNUAL REPORT 2018
Consolidated statement of changes in equity
For the year ended 30 June 2018
Consolidated statement of changes in equity
For the year ended 30 June 2018
Consolidated
Consolidated
Balance at 1 July 2016
Profit for the year as reported in
the 2017 financial statements
Balance at 1 July 2016
Movement in hedge reserve (net
Profit for the year as reported in
of tax)
the 2017 financial statements
Total comprehensive income
Movement in hedge reserve (net
for the period
of tax)
Securities issued from capital
Total comprehensive income
raising
for the period
Securities issued under the share
Securities issued from capital
purchase plan
raising
Transaction costs from capital
Securities issued under the share
transactions, net of tax
purchase plan
Transfer current year profit to
Transaction costs from capital
profit reserve
transactions, net of tax
Dividends provided for or paid
Transfer current year profit to
Expenses related to share based
profit reserve
payments
Dividends provided for or paid
Employee Share Scheme tax
Expenses related to share based
impact
payments
Proceeds from exercise of
Employee Share Scheme tax
options under the Villa World
impact
Limited Option Plan
Proceeds from exercise of
Shares acquired by Employee
options under the Villa World
Share Scheme Trust
Limited Option Plan
Shares acquired by Employee
Share Scheme Trust
Balance at 1 July 2017
Profit for the year as reported in
Balance at 30 June 2017
the 2018 financial statements
Balance at 1 July 2017
Movement in hedge reserve (net
Profit for the year as reported in
of tax)
the 2018 financial statements
Total comprehensive income
Movement in hedge reserve (net
for the period
of tax)
Dividends provided for or paid
Total comprehensive income
Expenses related to share based
for the period
payments
Dividends provided for or paid
Employee Share Scheme tax
Expenses related to share based
impact
payments
Transfer current year profit to
Employee Share Scheme tax
profit reserve
impact
Shares allocated by the
Transfer current year profit to
Employee Share Scheme Trust
profit reserve
Shares acquired by Employee
Shares allocated by the
Share Scheme Trust
Employee Share Scheme Trust
Shares acquired by Employee
Share Scheme Trust
Balance at 30 June 2018
Balance at 30 June 2017
Notes
Notes
C2
C2
C2
C2
C2
C2
C2
C2
C3(a)
C2
A4(a), C3(a)
C3(a)
A4(a), C3(a)
C3(a)
A4(a), C3(a)
C3(a)
A4(a), C3(a)
C3(a)
C3(a)
C3(a)
C3(a)
C2
C3(a)
C2
C2
C2
Contributed
equity
$'000
Contributed
equity
$'000
444,271
-
444,271
Attributable to owners of Villa World Limited
Cash flow
hedges
Attributable to owners of Villa World Limited
$'000
Cash flow
(2,355)
hedges
$'000
Other
reserves
$'000
Other
reserves
$'000
Profit
Reserve
$'000
Profit
Reserve
$'000
190,234
Accumulated
losses
$'000
Accumulated
losses
$'000
2,441
37,836
-
-
-
Total
$'000
Total
$'000
37,836
(397,711) 236,880
(2,355)
2,441
190,234
(397,711) 236,880
-
-
-
-
20,000
-
9,997
20,000
(590)
9,997
-
(590)
-
-
-
-
-
-
(384)
4,303
33,326
477,597
(384)
477,597
33,326
477,597
-
477,597
-
-
-
-
-
-
-
-
-
-
-
-
91
-
(77)
91
14
477,611
(77)
14
477,611
1,093
-
1,093
1,093
-
-
-
1,093
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,262)
-
(1,262)
-
(1,262)
-
(1,262)
1,262
-
1,262
1,262
-
-
1,262
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,093
37,836
37,836
37,836
-
38,929
1,093
-
-
-
20,000
38,929
9,997
20,000
(590)
9,997
37,836
-
-
38,495
(20,445)
-
(38,495)
-
(590)
- (20,445)
-
-
405
-
38,495
(20,445)
-
-
-
-
-
-
(38,495)
-
-
405
- (20,445)
-
(1,357)
405
-
(1,357)
4,303
-
-
-
(384)
18,050
-
(38,495)
-
4,303
11,929
208,284
-
208,284
18,050
(398,370) 287,738
-
(398,370) 287,738
(38,495)
11,929
(384)
(1,357)
405
(1,357)
-
-
-
(952)
1,489
-
1,489
(952)
1,489
-
208,284
-
(398,370) 287,738
43,634
43,634
1,489
208,284
(398,370) 287,738
-
-
-
-
-
-
-
-
1,262
43,634
43,634
-
(23,481)
-
43,634
-
44,896
1,262
- (23,481)
-
793
-
(236)
793
(236)
-
-
-
-
-
557
2,046
-
557
-
(23,481)
-
-
-
54,172
-
54,172
-
-
30,691
-
43,634
793
-
44,896
- (23,481)
(4)
-
(54,172)
(4)
(54,172)
-
-
(240)
793
-
(240)
91
-
(77)
91
(54,176) (22,914)
-
238,975
(408,912) 309,720
-
-
(77)
30,691
(54,176) (22,914)
Balance at 30 June 2018
2,046
238,975
(408,912) 309,720
C3(a)
C2
-
4,303
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes.
VILLA WORLD ANNUAL REPORT 2018
| 61
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes.
VILLA WORLD ANNUAL REPORT 2018
| 61
61
FINANCIAL STATEMENTSVILLA WORLD LIMITED ANNUAL REPORT 2018
Consolidated statement of cash flows
For the year ended 30 June 2018
Notes
Notes
A5(b)
A6
A5(b)
Consolidated statement of cash flows
For the year ended 30 June 2018
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
Receipts from the transfer of development rights
Payments to suppliers and employees (inclusive of goods and services
Cash flows from operating activities
tax)
Receipts from customers (inclusive of goods and services tax)
Net cash flow from trading activities
Receipts from the transfer of development rights
Payments for land acquired
Payments to suppliers and employees (inclusive of goods and services
Interest received
tax)
Interest paid
Net cash flow from trading activities
Corporate tax paid
Payments for land acquired
Borrowing costs
Interest received
GST paid
Interest paid
Net cash (outflow) / inflow from operating activities
Corporate tax paid
Cash flows from investing activities
Borrowing costs
Payments for property, plant and equipment
GST paid
Payments for equity accounted investments
Net cash (outflow) / inflow from operating activities
Distributions received from equity accounted investments
Cash flows from investing activities
Net cash outflow from investing activities
Payments for property, plant and equipment
Cash flows from financing activities
D3
Payments for equity accounted investments
C6(c)
Proceeds from borrowings
D3
Distributions received from equity accounted investments
C6(c)
Repayment of borrowings
Net cash outflow from investing activities
C4(a)
Proceeds from issue of Villa World Bonds
Cash flows from financing activities
C4(a)
Transaction costs arising from issue of Villa World Bonds
C6(c)
Proceeds from borrowings
C2
Proceeds from share capital issue
C6(c)
Repayment of borrowings
C2
Proceeds from securities issued under the share purchase plan
C4(a)
Proceeds from issue of Villa World Bonds
C2
Transactions costs from capital transactions
Transaction costs arising from issue of Villa World Bonds
C4(a)
Proceeds from exercise of options under the Villa World Limited Option
C2
Proceeds from share capital issue
C2
Plan
C2
Proceeds from securities issued under the share purchase plan
C2
Payments for shares acquired by the Employee Share Scheme Trust
Transactions costs from capital transactions
C2
Proceeds from shares allocated under the Employee Share Scheme Trust C2
Proceeds from exercise of options under the Villa World Limited Option
A4(a)
Dividends paid to Company's shareholders
Plan
C2
Net cash inflow / (outflow) from financing activities
Payments for shares acquired by the Employee Share Scheme Trust
C2
Net increase / (decrease) in cash and cash equivalents
Proceeds from shares allocated under the Employee Share Scheme Trust C2
Cash and cash equivalents at the beginning of the financial year
Dividends paid to Company's shareholders
Cash and cash equivalents at end of period
Net cash inflow / (outflow) from financing activities
Reconciliation to cash at the end of the year:
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the 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:
D3
A6
D3
A4(a)
Consolidated
2018
$'000
2017
$'000
396,887
2018
18,951
$'000
Consolidated
443,559
2017
-
$'000
(292,267)
396,887
123,571
18,951
(155,516)
358
(292,267)
(7,996)
123,571
(21,542)
(155,516)
(120)
358
(6,395)
(7,996)
(67,640)
(21,542)
(120)
(1,518)
(6,395)
(23,167)
(67,640)
19,636
(5,049)
(1,518)
(23,167)
225,353
19,636
(124,215)
(5,049)
-
-
225,353
-
(124,215)
-
-
-
-
-
-
-
(77)
-
91
(23,481)
-
77,671
(77)
4,982
91
7,663
(23,481)
12,645
77,671
4,982
12,645
7,663
12,645
12,645
12,645
12,645
(254,843)
443,559
188,716
-
(123,294)
316
(254,843)
(5,764)
188,716
(9,049)
(123,294)
(249)
316
(15,261)
(5,764)
35,415
(9,049)
(249)
(594)
(15,261)
(5,000)
35,415
2,250
(3,344)
(594)
(5,000)
175,454
2,250
(269,486)
(3,344)
50,000
(1,615)
175,454
20,000
(269,486)
9,997
50,000
(590)
(1,615)
20,000
4,303
9,997
(384)
(590)
-
(20,445)
4,303
(32,766)
(384)
(695)
-
8,358
(20,445)
7,663
(32,766)
(695)
7,663
8,358
7,663
7,663
7,663
7,663
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
VILLA WORLD ANNUAL REPORT 2018
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The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
62
VILLA WORLD ANNUAL REPORT 2018
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FINANCIAL STATEMENTSVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018
Contents of the notes to the consolidated financial statements
A
A1
A2
A3
A4
A5
A6
A
A1
A2
A3
A4
A5
A6
B
B1
B2
B3
B4
B5
B6
B
C
C1
C2
C3
C4
C5
C6
B1
B2
B3
B4
B5
B6
C
D
D1
D2
D3
D4
C1
C2
C3
C4
C5
E
E1
E2
E3
E4
E5
C6
D
D1
D2
D3
D4
E
E1
E2
E3
E4
E5
Revenue
RESULTS FOR THE YEAR
RESULTS FOR THE YEAR
Revenue
Earnings per share
Segment information
Dividends
Taxes
Reconciliation of profit after income tax to net cash inflow from operating activities
Segment information
Earnings per share
Reconciliation of profit after income tax to net cash inflow from operating activities
Dividends
Taxes
OPERATING ASSETS AND LIABILITIES
Inventories
Trade and other receivables
Other assets
Trade and other payables
Provisions and contingencies
Capital and other commitments
OPERATING ASSETS AND LIABILITIES
Inventories
Other assets
CAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENT
Trade and other receivables
Capital risk management
Contributed equity
Other reserves
Borrowings
Finance costs
Provisions and contingencies
Financial risk management
Capital and other commitments
Trade and other payables
CAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENT
GROUP STRUCTURE
Subsidiaries
Deed of cross guarantee
Investments accounted for using the equity method
Parent entity financial information
Capital risk management
Contributed equity
Borrowings
Other reserves
OTHER INFORMATION
Basis of preparation
Key management personnel disclosures
Remuneration of auditors
Events occurring after the reporting period
Other accounting policies
Financial risk management
Finance costs
GROUP STRUCTURE
Subsidiaries
Deed of cross guarantee
Investments accounted for using the equity method
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
Page
64
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65
66
67
68
70
71
71
72
72
73
74
75
77
77
78
79
79
82
82
88
88
89
90
96
97
97
97
99
100
100
64
64
65
66
67
68
70
71
71
72
72
73
74
75
77
77
78
79
79
82
82
88
88
89
90
96
97
97
97
99
100
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VILLA WORLD ANNUAL REPORT 2018
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63
FINANCIAL STATEMENTSVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
A
RESULTS FOR THE YEAR
A
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
Earnings per share
Segment information
Dividends
Taxes
Reconciliation of profit after income tax to net cash inflow from operating activities
A1
A1
A2
A2
A3
A3
A4
A4
A5
A5
A6
A6
A1 Revenue
(a) Gross profit
Consolidated
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 development1
Cost of land development, residential building and construction contracts1
Other direct costs2
Cost of land development, residential building and construction contracts
Gross profit1
Gross margin1
1.
2017
$'000
134,551
252,239
386,790
93,086
187,705
(254)
280,537
106,253
27.5%
In addition to the amounts included here, the total cost of inventory sold includes capitalised interest which is unwound on settlement on a per
lot basis through finance costs (refer Note C5) and impairment costs / (reversals) attributable to lots sold. For the year ended 30 June 2018,
the total amount of capitalised interest unwound at settlement on a per lot basis is $5.8 million (30 June 2017: $4.3 million) and total impairment
reversals attributable to lots sold is $1.3 million (30 June 2017: $1.8 million). Total cost of inventory sold for the year ended 30 June 2018 is
$328.4 million (30 June 2017: $283.1 million).
Includes provisions raised for warranty claims or released where warranty term has expired. FY17 includes unused provision in relation to
legal claims concluded in 1H17.
2018
$'000
207,617
233,956
441,573
142,554
180,919
502
323,975
117,598
26.6%
2.
(b) Revenue from development and project management fees
Joint Venture revenue
Opportunity fee - Wollert joint venture1
Project management fees - Rochedale joint venture
Project management fees - Villa Green joint venture
Commission and other fees - Rochedale joint venture
1.
Represents 49% of opportunity fee received from the Wollert joint venture for the right to develop the land.
(c) Other income
Rebates received
Other income
Consolidated
2018
$'000
7,301
1,921
759
1,153
11,134
2017
$'000
-
1,493
-
934
2,427
Consolidated
2018
$'000
48
1,001
1,049
2017
$'000
14
740
754
64
VILLA WORLD ANNUAL REPORT 2018
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RESULTS FOR THE YEARAVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
A1 Revenue (continued)
(d) Accounting for 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
Significant accounting judgement
Revenue is recognised when the risks and rewards of ownership and effective control have passed to the buyer
which requires judgement. 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.
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 and based on costs incurred to forecast total costs. 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.
Joint venture revenue
The Company is responsible for performing different services under each respective joint venture including project
management, sales and marketing and administrative management. Revenue received as consideration for these
services is recognised when each respective lot's sale is settled as this is when entitlement arises.
Other rights or services may be provided upon entering into joint venture agreements and are recognised in
accordance with the terms of individual agreements, to the extent of the Company’s ownership Interest. Non
ownership interests of these fees are treated in accordance with AASB 128 whereby they are included in the
carrying value of the investment and unwound as each developed lot settles.
A2 Earnings per share
(a) Basic and diluted 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
(b) Accounting for earnings per share
(i) Basic earnings per share
Consolidated
2018
$'000
43,634
Shares
'000
2017
$'000
37,836
Shares
'000
126,926
116,360
127,383
Cents
34.4
34.2
116,798
Cents
32.5
32.4
Basic earnings per share is calculated on the Company's statutory net profit for the year divided by the weighted
average number of securities outstanding, excluding treasury shares.
VILLA WORLD ANNUAL REPORT 2018
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65
RESULTS FOR THE YEARAVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
A2 Earnings per share (continued)
(b) Accounting for earnings per share (continued)
(ii) Diluted earnings per share
Diluted earnings per share adjusts the basic earnings per share for the dilutive effect of any instrument, such as
performance rights and options, that could be converted into ordinary securities. Refer Note E2(b) for equity
instruments outstanding as at 30 June 2018.
A3 Segment information
(a) Identification of reportable operating segments
The Company has identified its operating segments based on the internal reports that are reviewed and used by
the leadership team (chief operating decision maker) in assessing performance and in determining resource
allocation.
The Company is organised into two reportable segments:
(i) Property development and construction - New South Wales and Queensland
(ii) Property development and construction - Victoria
The Company and its controlled entities develop and sell residential land and buildings predominately in New South
Wales, Victoria and Queensland. The operating segments within 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.
(i) Gross margin from reportable operating segments
The segment information provided to the leadership team for the reportable segments for the year ended 30 June
2018 is as follows:
From continuing
operations
Segment revenue
Segment expenses
Gross margin
Share of net profit /
(loss) from associates
and joint ventures
Revenue from
development and
project management
fees
Queensland and
New South Wales
2018
$'000
270,871
(203,815)
67,056
2017
$'000
302,034
(220,315)
81,719
Victoria
2018
$'000
68,647
(51,983)
16,664
2017
$'000
78,851
(55,483)
23,368
Significant operating
segments
2018
$'000
102,055
(68,177)
33,878
2017
$'000
5,905
(4,739)
1,166
Total
2018
$'000
441,573
(323,975)
117,598
2017
$'000
386,790
(280,537)
106,253
6,505
2,946
(131)
64
3,833
2,427
7,301
-
-
-
-
-
6,374
3,010
11,134
2,427
(ii) Significant operating segments
An operating segment is deemed significant if it has reported revenue of 10% or more of the combined revenue of
all operating segments. For the year ended 30 June 2018, two operating segments have produced revenue that is
more than 10% of the combined revenue generated in the Queensland and New South Wales operating segment.
These two significant operating segments have been disclosed independently in the table below:
From continuing operations
Segment revenue
Segment expenses
Gross margin
Arundel Springs
Seascape
2018
$'000
51,885
(31,520)
20,365
2017
$'000
-
-
-
2018
$'000
50,170
(36,657)
13,513
2017
$'000
5,905
(4,739)
1,166
2018
$'000
102,055
(68,177)
33,878
Total
2017
$'000
5,905
(4,739)
1,166
Segment assets and liabilities are not directly reported to the leadership team when assessing the performance of
the operating segments and are therefore not relevant to the disclosure.
66
VILLA WORLD ANNUAL REPORT 2018
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RESULTS FOR THE YEARAVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
A3 Segment information (continued)
(b) Segment information provided to the leadership team
(i) Segment Revenue
The revenue from external parties reported to the leadership team 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
The leadership team assesses the performance of the operating segments based on a measure of gross margin.
This measurement basis consists of revenue from land development, residential building and construction contracts
less cost of land development, residential building and construction contracts. Segment expenses exclude finance
costs and impairment costs / (reversals).
(iii) Other material items
The leadership team assesses the performance of the operating segments by reviewing the share of profit / (loss)
from investments in joint venture / associates and any other revenue earned (e.g. project management fees)
associated with these investments.
A4 Dividends
(a) Ordinary shares
Final fully franked ordinary dividend for the year ended 30 June 2017 of 10.5
cents per fully paid share paid on 29 September 2017 (2016: 10.0 cents per
share)
Final franked dividend based on tax paid at 30.0%
Interim dividend for the year ended 30 June 2018 of 8.0 cents per fully paid share
(2017: 8.0 cents per fully paid share) paid on 29 March 2018
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 10.5 cents per fully paid ordinary
share (2017: 10.5 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 28 September 2018 out of profits reserve at 30 June 2018, but not recognised
as a liability at period end, is:
(c) Franking credits
Franking credits available for subsequent reporting periods based on a tax rate of
30.0% (2017 - 30.0%)
Franking credits that will arise from the payment of income tax payable as at the
end of the financial year
Consolidated
2018
$'000
2017
$'000
13,327
11,359
10,154
23,481
9,086
20,445
Consolidated
2018
$'000
2017
$'000
13,327
13,327
Consolidated
2018
$'000
15,119
2,353
17,472
2017
$'000
3,641
10,775
14,416
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 and
franking credits that will arise from the payment of income tax liabilities recognised at the reporting date.
VILLA WORLD ANNUAL REPORT 2018
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67
RESULTS FOR THE YEARAVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
A4 Dividends (continued)
(c) Franking credits (continued)
The consolidated amounts include franking credits that would be available to the Parent entity if distributable profits
of subsidiaries were paid as franked dividends.
(d) 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.
A5 Taxes
(a) Accounting for taxes
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.
Comparatives have been adjusted to be consistent with the current period.
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 liability between the head entity and the members, and ensure the
members pay / receive their share of tax payable / receivable settled via an intercompany loan.
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Consolidated
Profit from continuing operations before income tax expense
Tax at the Australian tax rate of 30% (2017 - 30%)
Other
Adjustments for current and deferred tax of prior periods
Income tax expense
Current tax amounts recognised in equity
Movement in temporary differences
Income tax payable for the financial year
Income taxes payable at the beginning of the financial year
Income taxes paid
Income tax payable at 30 June
Income tax expense
Current tax
Deferred tax
Adjustments for current tax of prior periods
Movement in deferred income tax included in income tax expense
(Increase) / decrease in deferred tax assets
Increase / (decrease) in deferred tax liabilities
2018
$'000
61,982
18,595
(84)
(163)
(247)
18,348
238
(5,466)
13,120
10,775
(21,542)
2,353
12,882
5,466
-
18,348
(18,692)
24,158
5,466
2017
$'000
53,987
16,196
(111)
66
(45)
16,151
1,357
(2,552)
14,956
4,868
(9,049)
10,775
14,030
2,552
(431)
16,151
7,064
(4,512)
2,552
68
VILLA WORLD ANNUAL REPORT 2018
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RESULTS FOR THE YEARAVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
A5 Taxes (continued)
(c) Tax expense relating to items of other comprehensive income
Cash flow hedges
Total tax expense relating to items of other comprehensive income
(d) Deferred tax assets and tax liabilities
The balance comprises temporary differences attributable to:
Consolidated
2018
$'000
(541)
(541)
2017
$'000
(468)
(468)
Inventories
Accruals
Employee benefits
Provisions
Property, plant and
equipment
Investments accounted
for using the equity
method
Other
Capital raising costs
Trade debtors
Other current debtors
Tax assets / (liabilities)
Movements
As at 1 July
- to profit or loss
- through equity
As at 30 June
Deferred tax assets
2017
$'000
12,749
500
465
1,328
2018
$'000
29,306
737
539
1,307
Deferred tax liabilities
2017
$'000
(3,549)
-
-
-
2018
$'000
(3,976)
-
-
-
2018
$'000
25,330
737
539
1,307
Net
2017
$'000
9,200
500
465
1,328
178
292
-
-
178
292
2,292
318
219
-
-
34,896
16,745
18,692
(541)
34,896
165
828
418
-
-
16,745
24,024
(7,064)
(215)
16,745
-
(45)
-
(38,029)
(825)
(42,875)
(18,717)
(24,158)
-
(42,875)
-
(63)
-
(13,681)
(1,424)
(18,717)
2,292
273
219
(38,029)
(825)
(7,979)
(23,229)
4,512
-
(18,717)
(1,972)
(5,466)
(541)
(7,979)
165
765
418
(13,681)
(1,424)
(1,972)
795
(2,552)
(215)
(1,972)
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 at 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.
VILLA WORLD ANNUAL REPORT 2018
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69
RESULTS FOR THE YEARAVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (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 the 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 recognises 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.
There are no revenue tax losses available for utilisation as at 30 June 2018.
A6 Reconciliation of profit after income tax to net cash inflow from operating activities
Profit for the year
Depreciation
Capitalised interest and fees
Amortisation of borrowing costs
Net gain on disposal of property, plant and equipment
Share of gain from associate
Net gain on disposal of associate
Impairment / (reversal) of impairment of development land
Transactions with equity accounted investment
Hedge ineffectiveness on interest rate swaps
Change in operating assets and liabilities:
(Increase) / decrease in trade debtors
Decrease / (increase) in inventories
(Decrease) / increase in trade payables
Increase in deferred tax liabilities
Increase / (decrease) in other operating assets and liabilities
(Decrease) in other provisions
Net cash (outflow) / inflow from operating activities
Consolidated
2018
$'000
43,634
710
(510)
456
(56)
(6,374)
(85)
399
7,599
19
2017
$'000
37,836
577
1,131
125
(10)
(3,010)
-
(1,516)
-
(312)
(77,578)
76,406
(111,374)
6,007
1,351
(8,244)
(67,640)
19,734
(104,266)
96,565
2,767
(10,440)
(3,766)
35,415
70
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RESULTS FOR THE YEARAVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
B
OPERATING ASSETS AND LIABILITIES
B
This section shows the assets used to generate the Company's trading performance and the liabilities incurred
as a result.
In this section:
Inventories
Trade and other receivables
Other assets
Trade and other payables
Provisions and contingencies
Capital and other commitments
B1
B1
B2
B2
B3
B3
B4
B4
B5
B5
B6
B6
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
2018
$'000
88,077
76,193
4,687
(1,367)
167,590
188,821
40,986
10,245
(6,085)
233,967
401,557
2017
$'000
125,794
78,756
3,930
(1,723)
206,757
238,163
30,725
7,693
(5,376)
271,205
477,962
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.
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. Borrowing costs attributable to the sale of land are
capitalised and accounted for within finance costs (refer Note C5) in the income statement.
Critical accounting 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 rates of sale and sale prices, the costs of
completion and dates of completion and expected financing costs.
VILLA WORLD ANNUAL REPORT 2018
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OPERATING ASSETS AND LIABILITIESBVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
B2 Trade and other receivables
Accounting for trade and other receivables
Trade receivables are primarily amounts due from customers from the development or sale of land; or the
development, construction and sale of house and land packages in accordance with the Company's revenue
recognition policy (refer Note A1(d)). Trade receivables are initially recognised 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 any specific impairment
losses are recorded when there is objective evidence that collection of the receivable is doubtful. Throughout this
process, consideration is given to the ageing of the trade receivable, the settlement history, and any other
information known regarding the customer.
Trade receivables are generally due for settlement within 30 days (or per the terms of the contract) and therefore
are all classified as current. As at 30 June 2018 the balance of trade receivables is $127.4 million (30 June 2017:
$47.3 million) and they are expected to be received when due. Separate negotiated arrangements outside of the
standard collection policy are made on occasion when the purchaser enters into multiple contracts or extensions
are required to facilitate settlement. These balances do not contain impaired assets and based on credit history, it
is expected that these balances will 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.
Accrued income includes interest received and project management fees received from associates and recognised
in accordance with the Company's revenue recognition policy.
Trade receivables
Trade receivable properties
Other receivables
Accrued Income
Total trade and other receivables
The Company’s credit risk management policy is discussed in Note C6(b).
The ageing of current trade receivables is as follows:
0 to 3 months
3 to 6 months
Over 6 months
Past due but not impaired
Consolidated
2018
$'000
587
126,835
127,422
2,766
18
2,784
130,206
2017
$'000
593
46,735
47,328
2,149
3,151
5,300
52,628
Consolidated
2018
$'000
111,708
7,200
8,514
127,422
2017
$'000
41,026
4,021
2,281
47,328
As of 30 June 2018, the trade receivables of the Company of nil (30 June 2017: nil) were past due but not impaired.
B3 Other assets
Accounting for other assets
Current assets include assets held primarily for trading purposes, cash and cash equivalents and assets expected
to be realised in, or intended for sale or use in the course of the Company's operating cycle and within one year of
the reporting date. The remaining other assets are classified as non-current.
72
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OPERATING ASSETS AND LIABILITIESBVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
B3 Other assets (continued)
Current assets
Prepayments
Advance commissions
Other
Consolidated
2018
$'000
1,339
2,751
97
4,187
2017
$'000
1,144
1,595
608
3,347
Non-current assets
Other non-current assets1
Total other assets
1.
10,000
10,000
The Company has entered into a conditional Development Agreement with the owner of approximately 73 hectares of land at Byron Bay. The
land was rezoned to residential use by the New South Wales Government in November 2014. The Development Agreement remains subject
to the Company receiving satisfactory development approval and a construction certificate for the proposed development, the outcome of
which remains uncertain. The landowner will retain a number of the approved lots, to be determined following the outcome of the approval
process. The Company has paid an initial $10 million to the landowner, secured by a first mortgage over the land and fully refundable if the
above conditions aren’t satisfied. If those conditions are satisfied and the transaction proceeds, the Company is required to construct dwellings
on the lots to be retained by the landowner, over a period of up to 10 years.
10,000
10,000
B4 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.
Payables due to sub-contractors and materials are classified as current liabilities and represent the liability for
goods and services provided to the Company prior to the end of the financial year which are unpaid. These amounts
are unsecured and usually paid within 30 days of recognition.
Land acquisitions represent amounts payable when the Company enters into unconditional contracts with land
vendors to secure properties for future development.
Accrued expenses and other payables are unsecured amounts and generally settled within 30 days of recognition.
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 other current payables
Total current trade and other payables
Non-current liabilities
Land acquisitions
Other payables
Total non-current trade and other payables
Total payables
1.
Includes derivatives payable of nil (30 June 2017: $1.8m).
Consolidated
2018
$'000
21,347
3,872
25,219
36,753
2,454
39,207
64,426
12,401
995
13,396
77,822
2017
$'000
116,024
2,927
118,951
42,586
3,898
46,484
165,435
23,276
484
23,760
189,195
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OPERATING ASSETS AND LIABILITIESBVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
Notes to the consolidated financial statements
30 June 2018 (continued)
Notes to the consolidated financial statements
30 June 2018 (continued)
Notes to the consolidated financial statements
30 June 2018 (continued)
B5 Provisions and contingencies
30 June 2018 (continued)
B5 Provisions and contingencies
B5 Provisions and contingencies
B5 Provisions and contingencies
Accounting for provisions
Accounting for provisions
Accounting for provisions
Provisions are recognised when the Company has a present (legal or constructive) obligation as a result of a past
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
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
Provisions are recognised when the Company has a present (legal or constructive) obligation as a result of a past
the amount of the obligation.
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.
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.
Critical accounting estimate
the amount of the obligation.
Critical accounting estimate
Critical accounting estimate
The amount recognised as a provision is the best estimate of the consideration required to settle the present
Critical accounting estimate
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
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
The amount recognised as a provision is the best estimate of the consideration required to settle the present
time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The
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
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the
increase in the provision resulting from the passage of time is recognised as a finance cost.
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.
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
increase in the provision resulting from the passage of time is recognised as a finance cost.
(a) Service warranties
(a) Service warranties
(a) Service warranties
2017
2017
2017
$'000
$'000
2017
$'000
Current liabilities
$'000
Current liabilities
Current liabilities
4,219
Service warranties
4,219
Service warranties
Current liabilities
4,219
Service warranties
4,219
Total current provisions
4,219
Total current provisions
4,219
Service warranties
4,219
Total current provisions
A provision for warranties is recognised when the underlying products or services are sold. Provision is made for
4,219
Total current provisions
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
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
A provision for warranties is recognised when the underlying products or services are sold. Provision is made for
warranty at balance date. These claims are expected to be settled within the statutory warranty period. Where the
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
the estimated warranty claims in respect of Villa World Developments Pty Ltd built properties which are still under
Company expects some or all of a provision to be reimbursed, such as under an insurance contract, the
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
warranty at balance date. These claims are expected to be settled within the statutory warranty period. Where the
reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain.
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.
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:
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:
The following statutory warranty periods generally apply to the Company's housing products:
The following statutory warranty periods generally apply to the Company's housing products:
2018
2018
2018
$'000
$'000
2018
$'000
$'000
4,266
4,266
4,266
4,266
4,266
4,266
4,266
4,266
Consolidated
Consolidated
Consolidated
Consolidated
• New South Wales - 10 years from issue of occupation certificate
• New South Wales - 10 years from issue of occupation certificate
• New South Wales - 10 years from issue of occupation certificate
Victoria - 10 years from issue of occupancy certificate
•
• New South Wales - 10 years from issue of occupation certificate
Victoria - 10 years from issue of occupancy certificate
•
Victoria - 10 years from issue of occupancy certificate
•
• Queensland - 6 years 6 months from completion of work
Victoria - 10 years from issue of occupancy certificate
•
• Queensland - 6 years 6 months from completion of work
• Queensland - 6 years 6 months from completion of work
• Queensland - 6 years 6 months from completion of work
Management estimates the related provision for future warranty claims based on historical warranty claim
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.
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.
Management estimates the related provision for future warranty claims based on historical warranty claim
The Company includes legal costs in the provision for warranty claims to the extent that it has a present obligation
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
information, as well as recent trends that might suggest that past cost information may differ from future claims.
to incur these costs at the end of the reporting period. Estimating this provision requires the exercise of significant
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
The Company includes legal costs in the provision for warranty claims to the extent that it has a present obligation
judgement and it is therefore possible that actual amounts may differ from this estimate. The assumptions made in
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
to incur these costs at the end of the reporting period. Estimating this provision requires the exercise of significant
relation to the current period are consistent with those in the prior year.
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.
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) Movement in warranty provisions
relation to the current period are consistent with those in the prior year.
(b) Movement in warranty provisions
(b) Movement in warranty provisions
(b) Movement in warranty provisions
Consolidated
Consolidated
Consolidated
Consolidated
2018
2018
2018
$'000
$'000
2018
$'000
$'000
4,219
4,219
4,219
1,749
1,749
4,219
1,749
(1,592)
(1,592)
1,749
(1,592)
(110)
(110)
(1,592)
(110)
4,266
4,266
(110)
4,266
4,266
2017
2017
2017
$'000
$'000
2017
$'000
$'000
14,392
14,392
14,392
1,310
1,310
14,392
1,310
(10,840)
(10,840)
1,310
(10,840)
(643)
(643)
(10,840)
(643)
4,219
4,219
(643)
4,219
4,219
FY17 includes amounts associated with the conclusion of legal claim as previously announced.
FY17 includes amounts associated with the conclusion of legal claim as previously announced.
Unused provisions released where warranty term has expired.
FY17 includes amounts associated with the conclusion of legal claim as previously announced.
Unused provisions released where warranty term has expired.
FY17 includes amounts associated with the conclusion of legal claim as previously announced.
Unused provisions released where warranty term has expired.
Unused provisions released where warranty term has expired.
Current liabilities
Current liabilities
Current liabilities
Carrying amount at the start of the year
Carrying amount at the start of the year
Current liabilities
Carrying amount at the start of the year
- additional provisions recognised
- additional provisions recognised
Carrying amount at the start of the year
Amounts incurred and paid1
- additional provisions recognised
Amounts incurred and paid1
- additional provisions recognised
Amounts incurred and paid1
- unused amounts reversed2
- unused amounts reversed2
Amounts incurred and paid1
- unused amounts reversed2
Carrying amount at end of period
- unused amounts reversed2
Carrying amount at end of period
1.
Carrying amount at end of period
1.
Carrying amount at end of period
2.
1.
2.
1.
2.
(c) Amounts not expected to be settled within 12 months
2.
(c) Amounts not expected to be settled within 12 months
(c) Amounts not expected to be settled within 12 months
(c) Amounts not expected to be settled within 12 months
The current provision for employee benefits includes accrued annual leave and long service leave. Long service
The current provision for employee benefits includes accrued annual leave and long service leave. Long service
leave includes all unconditional entitlements where employees have completed the required period of service.
The current provision for employee benefits includes accrued annual leave and long service leave. Long service
leave includes all unconditional entitlements where employees have completed the required period of service.
The current provision for employee benefits includes accrued annual leave and long service leave. Long service
Included within the long service leave provision is an amount of $487,885 (30 June 2017: $254,745) classified as
leave includes all unconditional entitlements where employees have completed the required period of service.
Included within the long service leave provision is an amount of $487,885 (30 June 2017: $254,745) classified as
leave includes all unconditional entitlements where employees have completed the required period of service.
current, since the Company does not have an unconditional right to defer settlement for this obligation. The non-
Included within the long service leave provision is an amount of $487,885 (30 June 2017: $254,745) classified as
current, since the Company does not have an unconditional right to defer settlement for this obligation. The non-
Included within the long service leave provision is an amount of $487,885 (30 June 2017: $254,745) classified as
current long service leave provision covers conditional entitlements where employees have not completed their
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
current, since the Company does not have an unconditional right to defer settlement for this obligation. The non-
required period of service, adjusted for the probability of likely realisation.
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.
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.
Critical accounting estimate
required period of service, adjusted for the probability of likely realisation.
Critical accounting estimate
Critical accounting estimate
Provision for long service leave is based on the following key assumptions: future salary and wages increases;
Critical accounting estimate
Provision for long service leave is based on the following key assumptions: future salary and wages increases;
future on cost rates; and future probability of employee departures and period of service.
Provision for long service leave is based on the following key assumptions: future salary and wages increases;
future on cost rates; and future probability of employee departures and period of service.
Provision for long service leave is based on the following key assumptions: future salary and wages increases;
future on cost rates; and future probability of employee departures and period of service.
future on cost rates; and future probability of employee departures and period of service.
VILLA WORLD ANNUAL REPORT 2018
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VILLA WORLD ANNUAL REPORT 2018
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OPERATING ASSETS AND LIABILITIESBVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
B5 Provisions and contingencies (continued)
(d) 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 2018 (30 June 2017: 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 2018 (30 June 2017: nil).
The Company has provided bank guarantees to the total of $22.7 million (30 June 2017: $14.9 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)).
(ii) Liabilities in respect of other entities
The Company has interests in a number of Joint Ventures and is a Guarantor for the financing facilities of the joint
ventures. The guarantee given by Villa World in respect of the financing facilities utilised by the Donnybrook joint
venture meets the definition of a financial guarantee contract.
As at 30 June 2018, no liability has been recognised as no amount was received from the joint venture and no
outflow is probable.
Donnybrook Joint
Venture
2017
$'000
11,220
10,750
2018
$'000
23,985
22,409
Rochedale Joint
Venture
2017
$'000
11,500
-
2018
$'000
1,000
-
Villa Green Joint
Venture
2017
$'000
-
-
2018
$'000
2,318
-
-
51%
-
51%
589
50%
743
50%
1,795
50%
-
50%
Total financing facilities
Facilities utilised at reporting date
Bank guarantees and surety bonds utilised at
reporting date
Proportion of the Company's ownership
B6 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 within New South Wales, Victoria and
Queensland.
The call options give Villa World Developments Pty Ltd (or a nominated third party) the option to purchase the lot(s)
at a nominated price by the call option expiry date. The put options give the vendor the right to sell to the Company
at a nominated price on expiry of the call option. The potential total commitments remaining under the Agreements
are $13.8 million (30 June 2017: $16.6 million). The commitments are crystallised upon the satisfaction of the
conditions under the Agreements and registration of the land by the vendor and will be made available under the
terms of the contract. However, some Agreements are severable by development stage and the commitments may
be less than the total commitments under the Agreements as outlined below.
Capital commitments in relation to put and call arrangements
Opening balance
Crystallised and paid commitments
Arrangements entered into during the period
Total commitments at 30 June
Consolidated
2018
$'000
16,552
(7,822)
5,044
13,774
2017
$'000
13,163
(49,402)
52,791
16,552
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OPERATING ASSETS AND LIABILITIESBVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
B6 Capital and other commitments (continued)
(b) Joint Venture commitments
As at 30 June 2018, the Company has commitments of $8.1 million (30 June 2017: $22.5 million). These
commitments relate to equity contributions committed under the joint venture agreements with Greenfields
Development Company of $5 million (30 June 2017: $22.5 million) and Ho Bee Land Limited of $3.1 million (30
June 2017: nil).
(c) 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
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
Consolidated
2018
$'000
410
577
987
2017
$'000
643
948
1,591
76
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OPERATING ASSETS AND LIABILITIESBVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
C
CAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENT
C
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
C1
C1
C2
C2
C3
C3
C4
C4
C5
C5
C6
C6
C1 Capital risk management
Capital is defined as the combination of shareholders' equity, reserves and net debt. The Board is responsible for
monitoring and approving the capital management framework within which management operates. Capital
management is an integral part of the Company's risk framework and seeks to safeguard the ability of the Company
to continue as a going concern while maximising shareholder value through optimising the level and use of capital
resources and the mix of debt and equity funding.
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 remains a strategic focus and allows the Company to:
•
•
•
•
pursue growth opportunities through the development of the existing portfolio
reinvest in the business through value accretive acquisitions
grow dividends
strengthen the 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 2018, the gearing ratio was 29.7% (30 June 2017: 12.9%).
The Company has complied with the financial covenants of its borrowing facilities during the 2018 and 2017
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(a)
Consolidated
2018
$'000
183,786
(12,645)
171,141
587,918
(12,645)
575,273
29.7%
2017
$'000
81,457
(7,663)
73,794
577,664
(7,663)
570,001
12.9%
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CAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENTCVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
C2 Contributed equity
Ordinary shares
Opening balance
Proceeds from exercise of options under the Villa World
Limited Option Plan
Shares acquired by the Employee Share Scheme Trust
Shares allocated by the Employee Share Scheme Trust
Shares issued as part of the capital raising
Shares issued as part of the share purchase plan
Transaction costs from capital transactions, net of tax
(a) Ordinary shares
2018
Shares
'000
2017
Shares
'000
2018
$'000
2017
$'000
126,907
110,344
477,597
444,271
-
(32)
39
-
-
-
126,914
3,400
(169)
-
8,889
4,443
-
126,907
-
(77)
91
-
-
-
477,611
4,303
(384)
-
20,000
9,997
(590)
477,597
Ordinary shares in Villa World Limited are classified as contributed equity. Incremental costs directly attributable to
the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. 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) Treasury shares
Treasury shares refer to those shares issued to Villa World Ltd Employee Share Scheme Pty Ltd as trustee for
Villa World Ltd Employee Share Scheme Trust. The shares are fully paid ordinary shares in the capital of the
Company and rank equally with all other existing shares from the date issued. Under the accounting standards,
the Company is deemed to control the Villa World Employee Share Scheme and the shares (and associated
transactions) are eliminated on consolidation, thereby deducting these issued shares from issued capital whilst
held by the Trustee. As these shares are deemed not to have been issued by the consolidated entity, they are not
included in the Company's earnings per share and statements regarding the gross value of dividends, unless
transacted by the Employee Share Scheme outside of the group. No gain or loss on treasury shares is recognised
in profit and loss. Upon disposal, any gain will be recognised in profit and loss. As at 30 June 2018, the total number
of Treasury Shares on hand is 12,500 (30 June 2017: 19,350).
(c) Share-based equity instruments
Information relating to performance rights issued, exercised and forfeited / lapsed during the financial year, is set
out in the Remuneration report and in Note E2(b).
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Notes to the consolidated financial statements
30 June 2018 (continued)
C3 Other reserves
(a) Movements in other reserves
(i) Profits reserve
Opening balance
Transfer current year profit
Dividends provided for or paid
Closing balance
(ii) Hedging reserve - cash flow hedges
Opening balance
Revaluation - gross
Deferred tax
Closing balance
(iii) Share-based payments
Opening balance
Share-based payments expense
Employee Share Scheme tax impact
Performance rights forfeited / lapsed
Closing balance
Total other reserves
(b) Nature and purpose of other reserves
(i) Profits reserve
Notes
A4(a)
A5(c)
E2(c)
E2(c)
Consolidated
2018
$'000
208,284
54,172
(23,481)
238,975
(1,262)
1,803
(541)
-
1,489
793
(236)
-
2,046
241,021
2017
$'000
190,234
38,495
(20,445)
208,284
(2,355)
1,561
(468)
(1,262)
2,441
445
(1,357)
(40)
1,489
208,511
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, considered
an effective 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 performance rights issued to key
management personnel and executives. Equity instrument disclosures relating to key management personnel can
be found in Note E2(c) and within the Remuneration Report section of the Directors' Report.
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.
Interest expense is accrued at the effective interest rate.
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CAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENTCVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
C4 Borrowings (continued)
Accounting for borrowings (continued)
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:
30 June 2018
Financing arrangements
Bank loans - secured (i)
Villa World Bonds - unsecured (ii)
Facility
amount
$'000
Utilised
amount
$'000
Bank
guarantees
utilised
$'000
Available
amount
$'000
Effective
interest
rate
%
190,000
50,000
135,0131
48,7732
22,694
-
32,293
-
7.3%
7.2%
Net of transaction costs and amortisation as at 30 June 2018.
1.
2. Net of transaction costs and amortisation as at 30 June 2018. Refer Note C4(a)(ii).
240,000
183,786
22,694
32,293
30 June 2017
Financing arrangements
Bank loans - secured (i)
Villa World Bonds - unsecured (ii)
Facility
amount
$'000
190,000
50,000
Utilised
amount
$'000
33,0051
48,4522
Bank
guarantees
utilised
$'000
Available
amount
$'000
Effective
interest
rate
%
14,860
-
142,135
-
9.5%
7.2%
240,000
81,457
14,860
142,135
Net of transaction costs and amortisation as at 30 June 2017.
1.
2. Net of transaction costs and amortisation as at 30 June 2017. Refer Note C4(a)(ii).
(i) Bank Loan - secured
The Company's Club Financing Arrangement with Australia and New Zealand Banking Group Limited (ANZ) and
Westpac Banking Corporation (Westpac) remains at $190 million (30 June 2017: $190 million). The Club Financing
Arrangement provides funding for the Company's ongoing core business. It comprises a facility of $140 million with
ANZ and a facility of $50 million with Westpac.
The maturity of the ANZ facility has been staggered, with $90 million expiring on 31 October 2020, $40 million
expiring on 31 October 2021, and $10 million expiring on 31 March 2022. The $50 million Westpac facility expires
on 31 March 2021.
As at 30 June 2018 the facility was drawn exclusive of bank guarantees at $135 million (30 June 2017: $33 million).
Bank guarantees issued total $22.7 million (30 June 2017: $14.9 million). The bank guarantees are also disclosed
in Note B5(d).
No restrictions have been imposed on this facility by the financiers during the year ending 30 June 2018 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)). The swap contract matured on 12 June 2018.
To manage exposure to future interest rate risk, the Company has executed two interest rate caps totalling $50
million with a forward start date of 2 July 2018. The interest rate cap contracts will cap the Company's floating
interest rate at a maximum of 3% on $50 million until 2 July 2020 and $25 million thereafter until 4 July 2022.
The fair value of non-current borrowings and the bank guarantees equals their carrying amount, as the impact of
discounting is not significant.
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Notes to the consolidated financial statements
30 June 2018 (continued)
C4 Borrowings (continued)
(a) Financing arrangements (continued)
(ii) Villa World Bonds - unsecured
The Company issued 500,000 bonds with a face value of $100 per bond on 21 April 2017 (ASX: VLWHA). The
bonds are unsecured and interest-bearing at a variable rate of interest of 4.75% margin over the 3 month bank bill
swap rate, paid quarterly in arrears and have a maturity date of 21 April 2022.
Under the terms of the Bonds, the Company is required to maintain two covenants. The negative pledge (secured
gearing ratio) is calculated based on total secured debt divided by total assets. Under the negative pledge the
Company must maintain a secured gearing ratio of no greater than 40%. As at 30 June 2018 the secured gearing
ratio is 21.3% (30 June 2017: 4.2%).
The limitation on debt incurrence covenant (gearing 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). For the purposes of the covenant, the Company must maintain a
gearing ratio of no greater than 50%. As at 30 June 2018, the gearing ratio is 29.7% (30 June 2017: 12.9%), refer
Note C1.
The fair value of Villa World bonds is the quoted market value (ASX: VLWHA) of a bond which at 30 June 2018
was $104.50 per bond (30 June 2017: $101.50) (Level 1).
The bonds are presented in the Balance Sheet as follows:
Villa World Bonds
Transaction and finance costs
Amortisation of borrowing costs
Non-current liability
Consolidated
2018
$'000
50,000
(1,549)
322
48,773
2017
$'000
50,000
(1,615)
67
48,452
Interest is payable based on a 4.75% margin over the 3 month bank bill swap rate. The fifth interest instalment was
paid on 23 July 2018 at an interest rate of 6.82%.
Accrued interest expense
(b) Assets pledged as security
The carrying amounts of assets pledged as security are set out below:
Total inventory:
Current inventory
Non-current inventory
Aggregate carrying amount
(c) Guarantors
Consolidated
2018
$'000
635
635
2017
$'000
623
623
Consolidated
2018
$'000
167,590
233,967
401,557
2017
$'000
206,757
271,205
477,962
Villa World is required to ensure that, so long as any Villa World Bond remains outstanding, each member of the
Group which provides a guarantee of indebtedness of any other member of the Group, under the terms of any of
the Group's external bank debt facilities, is a Guarantor. This requirement as to the Guarantors does not apply to
joint venture entities included in the consolidated financial statements of the Group pursuant to Current Accounting
Practice.
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Notes to the consolidated financial statements
30 June 2018 (continued)
C5 Finance costs
Accounting for finance costs
The interest incurred method is currently utilised for all Villa World projects. 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.
Interest allocation which relates to non-qualifying assets is expensed. For each accounting settlement the actual
capitalised interest is then expensed / (unwound) on a per lot basis through finance costs. Once an asset has been
impaired or development activity has ceased, then subject to detailed review and Board approval, capitalisation of
interest may cease and the borrowing costs will be expensed in the month incurred.
Consolidated
2018
$'000
2017
$'000
Loan interest and charges
Financial institutions
Unwind of discount deferred consideration
Interest payable on Villa World Limited Bonds
Borrowing costs
Fair value loss / (gain) on interest swap cash flow hedge
7,311
844
623
374
(312)
8,840
(6,105)
4,323
7,058
The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is 7.3% for club facility borrowings (30 June
2017: 9.5%) and 7.2% for borrowing costs associated with Villa World Bonds (30 June 2017: 7.2%).
Amount capitalised1
Unwind of amount capitalised2
Total finance costs included within the income statement
1.
7,960
196
3,254
576
19
12,005
(9,091)
5,758
8,672
2. Capitalised interest on sale of land unwound at settlement on a per lot basis (refer Note A1).
C6 Financial risk management
The Company has exposure to the following financial risks:
Risk
Market risk - interest rate
risk
Credit risk
Liquidity risk
Exposure arising from
Borrowings at variable rates
Measurement
Cash flow forecasting,
sensitivity analysis
Ageing analysis, credit
ratings, management of
deposits
Cash and cash equivalents,
derivative financial instruments,
deposits with banks and
financial institutions, credit
exposure of outstanding
receivables
Borrowings and other liabilities Management of cash flows
and forecasts, gearing
analysis
Management
Interest rate swaps,
interest rate caps
Ongoing management
review, contractual
arrangements
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.
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Notes to the consolidated financial statements
30 June 2018 (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
Bonds
Derivative payable
(a) Market risk
Valuation basis
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Fair value
Consolidated
2018
$'000
12,645
130,206
39,597
135,013
48,773
-
2017
$'000
7,663
52,628
142,228
33,005
48,452
1,783
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.
(i)
Interest rate risk
The Company's primary investment strategy is closely aligned to economic cycles and interest rates. Interest rate
risk refers to the risk that the value of a financial instrument or the associated cash flows will fluctuate due to
changes in market interest rates.
The Company's interest rate risk primarily arises from borrowings. Borrowings issued at variable rates expose the
Company to cash flow interest rate risk. Borrowings issued at fixed rates expose the Company to fair value interest
rate risk. Under the Company Policy, a maximum of 50% of debt with a maturity of less than five years can be
hedged. The Company operated within this range during the financial year ended 30 June 2018.
The Company has managed its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Under
these contracts, 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 entered into interest rate swap contracts in June 2014 to fix the interest rate on $90 million of
borrowings (2017: $90 million). The swap contract matured on the 12 June 2018. To manage exposure to future
interest rate risk, the Company has executed two interest rate caps totalling $50 million with a forward start date of
2 July 2018. The interest rate cap contracts will cap the Company's floating interest rate at a maximum of 3% on
$50 million until 2 July 2020 and $25 million thereafter until 4 July 2022.
As at the end of the reporting period, the Company had the following variable rate borrowings and interest rate
swap contracts outstanding:
Consolidated
30 June 2018
30 June 2017
Balance
$'000
33,005
50,000
(90,000)
(6,995)
Variable rate for Club facility is 30 day BBSY at 29 June 2018 and does not include any margin and line fees applicable under the loan
agreement.
Variable rate for Villa World Bonds is 90 day BBSW at 29 June 2018 and does not include any margin.
Club facility1
Villa World Bonds2
Interest rate swaps - syndicated loans
Net exposure to cash flow interest rate risk
1.
Balance
$'000
135,013
50,000
-
185,013
2.
Variable
interest rate
%
2.1%
2.1%
-%
4.2%
Variable
interest rate
%
1.7%
1.7%
3.7%
7.1%
An analysis by maturities is provided in Note (c).
Sensitivity analysis
At 30 June 2018, if interest rates had changed by -/+ 40 basis points from the year end rates with all other variables
held constant, post-tax profits for the year, would have been $0.04 million lower/higher (30 June 2017: $0.1 million
lower/higher on -/+ 25 basis points), mainly as a result of higher/lower interest expense from interest bearing
liabilities.
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable
market environment, showing a significantly higher volatility than in prior years.
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Notes to the consolidated financial statements
30 June 2018 (continued)
C6 Financial risk management (continued)
(b) Credit risk
Credit risk is the risk associated with a counterparty defaulting or failing to perform their contractual obligations.
Credit risk is managed on a consolidated basis.
The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of the
following financial assets.
(i) Cash and deposits
Credit risk from derivative financial instruments and cash arises from balances held with counterparty financial
institutions. To manage this risk, the Company restricts dealings to highly rated counterparties approved within its
credit limit policy. For cash and deposits held with banks and financial institutions, only independently rated parties
with a minimum rating of "AA-" are accepted.
Given the high credit ratings of the Company's counterparties at 30 June 2018, it is not expected that any
counterparty will fail to meet its obligations.
(ii) Trade and other receivables
The Company's primary source of revenue is from the development and sale of residential land, and the
development, construction and sale of house and land packages to customers (refer Note A1(d)). To mitigate the
Company's exposure to credit risk, trade receivables arising from the sale of properties are secured by legal title
until settlement when sale proceeds are received.
Credit risk arising on trade and other receivables is monitored on an ongoing basis mitigating exposure to bad
debts (refer Note B2). Based on the credit history of trade and other receivables, it is expected that these amounts
will be received. The Company does not hold any collateral in relation to these receivables.
The Company did not recognise any trade receivable impairment losses in the current year (30 June 2017: nil).
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.
Owing to the short-term nature of the ageing of the balance and balances secured against property, the credit risk
of trade receivables is considered to be low.
(c) Liquidity risk
Liquidity risk is the risk the Company will not be able to meet its financial obligations as and when they fall due.
The Company addresses this risk by reviewing rolling cash flow forecasts throughout the year and by assessing
and monitoring availability of funding, ensuring there is sufficient headroom against facility limits and compliance
with banking covenants.
The Company operates a $190 million financing facility with ANZ and Westpac which provides funding for the
Company's core business. The Company has unused borrowing facilities which further reduces liquidity risk. At 30
June 2018 the Company has unutilised borrowing facilities of $32.3 million (30 June 2017: $142.1 million) (refer
Note C4(a)). The proceeds from a $50 million bond issue in April 2017, provides the Company with additional
financial capacity and diversifies the Company's debt, supporting the Company's growth objectives and extending
the maturity of borrowings.
The Company aims at maintaining flexibility in funding by regularly updating and reviewing its cash flow forecasts
to assist in managing its liquidity.
Reinforcing the Company's commitment to effective cash flow management, at 30 June 2018, 845 sales contracts
were carried forward at a value of $278.1 million (including GST) with 31.5% of contracts (266 lots valued at $108.4
million) due to settle in 1H19 (refer Operating Financial Review page 12). These strong carried forward sales, when
combined with the Company's capital management policy further assist in managing liquidity.
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.
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Notes to the consolidated financial statements
30 June 2018 (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
At 30 June 2018
Non-derivatives
Commitments
Trade payables
Villa World Bonds
Club facility
Total non-derivatives
Derivatives
Net settled (interest rate swaps)
Total derivatives
At 30 June 2017
Non-derivatives
Commitments
Trade payables
Villa World Bonds
Club facility
Total non-derivatives
Derivatives
Net settled (interest rate swaps)
Total derivatives
Less than
6 months
$'000
6 - 12
months
$'000
Between
1 and 2
years
$'000
Between
2 and 5
years
$'000
Over 5
years
$'000
Total
contrac-
tual
cash
flows
$'000
Carrying
amount
(assets) /
liabilities
$'000
-
19,824
1,720
3,636
25,180
5,044
5,395
1,710
3,591
15,740
-
14,108
3,440
7,248
24,796
8,730
270
56,861
140,262
206,123
13,774
-
39,597
-
63,731
-
- 154,737
- 271,839
-
37,620
48,773
135,013
221,406
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
110,180
1,627
1,657
113,464
7,822
8,771
1,600
1,643
19,836
-
6,194
3,228
7,809
17,231
8,730
17,083
58,887
32,286
116,986
-
16,552
- 142,228
65,342
-
-
43,395
- 267,517
-
142,228
48,452
33,005
223,685
919
919
864
864
-
-
-
-
-
-
1,783
1,783
1,783
1,783
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.
(ii) Changes in liabilities arising from financing activities
The below table provides a reconciliation between the opening and closing balances on the face of the Balance
Sheet for liabilities arising from financing activities. The major changes in the Company's liabilities arising from
financing activities are due to financing cash flows.
Consolidated
Non-current borrowings
1. Other includes non-cash transaction costs associated with non-current borrowings.
1 July 2017
$'000
81,457
Cash inflows
$'000
225,353
Cash outflows
$'000
(124,215)
Other1
$'000
1,191
30 June 2018
$'000
183,786
(d) Fair value measurement of financial instruments
(i) Critical accounting estimate - fair value measurement
The carrying amounts and estimated fair values of the Company's financial instruments recognised in the financial
statements are materially the same.
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Notes to the consolidated financial statements
30 June 2018 (continued)
C6 Financial risk management (continued)
(d) Fair value measurement of financial instruments (continued)
(i) Critical accounting estimate - fair value measurement (continued)
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)
(c)
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
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.
(ii) Fair values disclosed
(A) Carrying amount approximates fair value
The carrying amounts of receivables, other current assets and payables are assumed to approximate their fair
values due to their short-term nature. The fair value of non-current borrowings (other than the simple corporate
bond) is estimated by discounting the future contractual cash flows at the current market interest rates that are
available to the Company for similar financial instruments.
(B) Measured at fair value
(I) Bonds
In April 2017, the Company issued $50 million of simple corporate bonds. The Bonds were issued in order to
diversify the Company's capital structure, extend debt maturity and support growth objectives (refer Note C4(a)).
The bonds are traded on the Australian Stock Exchange (ASX: VLWHA). The fair value of a Villa World Bond is
the quoted market value which at 30 June 2018 was $104.50 per bond (30 June 2017: $101.50 per bond). The
Villa World simple corporate bonds are classified as level 1 under the fair value hierarchy.
(II) Derivative financial instruments
The Company uses derivative financial instruments to hedge its 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 Company's borrowings of $240 million from exposure to fluctuating interest rates.
The Company entered into interest rate swap contracts in June 2014 to fix the interest rate at 3.69% (excluding the
margin and line fees applicable under the loan agreement) on $90 million of borrowings. 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.
The swap contract matured on 12 June 2018. To manage exposure to future interest rate risk, the Company has
executed two interest rate caps totalling $50 million with a forward start date of 2 July 2018. The interest rate cap
contracts will cap the Company's floating interest rate at a maximum of 3% on $50 million until 2 July 2020 and $25
million thereafter until 4 July 2022.
Total borrowings for the Company bears an average variable interest rate of 7.3% (including line and facility fees)
(30 June 2017: 9%).
The fair value of the interest rate swap liability at 30 June 2018 was nil (30 June 2017: $1.8 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 the interest rate swap is calculated as the
present value of the estimated future cash flows and is classified as level 2 under the fair value hierarchy.
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Notes to the consolidated financial statements
30 June 2018 (continued)
C6 Financial risk management (continued)
(d) Fair value measurement of financial instruments (continued)
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently remeasured to their fair value at the end of each reporting period. 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.
Accounting for cash flow hedges
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 within
finance costs. There was no material ineffectiveness for the year ended 30 June 2018.
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 amortised via profit and loss.
VILLA WORLD ANNUAL REPORT 2018
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87
CAPITAL STRUCTURE, FINANCE COSTS AND FINANCIAL RISK MANAGEMENTCVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
D
GROUP STRUCTURE
D
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.
In this section:
Subsidiaries
Deed of cross guarantee
Investments accounted for using the equity method
Parent entity financial information
D1
D1
D2
D2
D3
D3
D4
D4
D1 Subsidiaries
Accounting for subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of all subsidiaries at 30 June
2018. 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
Country of Class of shares
Equity holding
incorporation
2018
%
2017
%
Australia
Ordinary
100
100
Parent entity
Villa World Limited1
Controlled entities of Villa World Limited
Villa World Developments Pty Ltd1
Villa World ESS Pty Ltd as trustee for Villa World
Employee Share Scheme Trust
Villa World Rochedale Pty Ltd
Villa World Byron Pty Ltd
Villa World Yatala Pty Ltd
Villa World Properties Pty Ltd1
Villa World Seascape Pty Ltd1
Villa World Thornlands Pty Ltd1
Villa World (Vic) Pty Ltd
Villa World Realty (NSW) Pty Ltd
Villa World Realty Pty Ltd
GPDQ Pty Ltd1
Villa World Strathpine Pty Ltd1
Villa World Redlands Pty Ltd1
Villa World Heritage Pty Ltd
Hervey Bay (JV) Pty Ltd1
Villa World Wollert Pty Ltd
Villa World Plumpton Pty Ltd
Ature Pty Ltd
1.
100
100
100
-
100
100
100
100
-
100
100
100
100
-
100
-
100
-
These companies are parties to the Deed of Cross Guarantee and members of the Closed Group as at 30 June 2018. They have been granted
relief from the necessity to prepare financial reports in accordance with ASIC Corporations (Wholly-owned Companies) Instrument 2016/785
issued by the Australian Securities and Investments Commission (refer Note D2).
Australia
Australia
Australia
Australia
Australia
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
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
88
VILLA WORLD ANNUAL REPORT 2018
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GROUP STRUCTUREDVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
D2 Deed of cross guarantee
Villa World Limited, and certain wholly-owned companies (the 'Closed Group'), identified in Note D1, are parties to
a Deed of Cross Guarantee (the 'Deed'). The effect of the Deed is that the members of the Closed Group guarantee
to each creditor, payment in full of any debt, in the event of winding up of any of the members under certain
provisions of the Corporations Act 2001.
ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, provides relief to parties to the Deed from
the Corporations Act 2001 requirements for preparation, audit and lodgement of Financial Reports and Directors'
reports, subject to certain conditions as set out therein. This Class Order does not apply to trusts.
Pursuant to the requirements of this Class Order, a summarised consolidated Statement of Comprehensive Income
for the year ended 30 June 2018, a summary of the movements in consolidated retained earnings and consolidated
Balance Sheet as at 30 June 2018, comprising the members of the Closed Group after eliminating all transactions
between members are set out below.
(a) Consolidated statement of comprehensive income
Revenue from continuing operations
Revenue from land development, residential building and construction contracts
Cost of land development, residential building and construction contracts
Gross Margin
Revenue from development and project management fees
Other income
Net (impairment) / reversal of 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 before income tax
Income tax expense
Profit 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
(b) Summary of movements in consolidated retained earnings
Retained earnings at the beginning of the financial year
Profit for the year
Transfer current year profit to profits reserve
Retained earnings at the end of the financial year
Closed Group
2018
$'000
2017
$'000
440,794
(323,975)
116,819
9,981
1,048
(399)
1,132
(24,708)
(4,256)
(2,495)
(25,139)
(710)
(6,829)
(8,673)
55,771
(16,000)
39,771
1,803
(541)
1,262
41,033
386,790
(280,537)
106,253
1,493
753
1,516
(67)
(21,454)
(4,086)
(1,667)
(21,022)
(577)
(4,820)
(7,047)
49,275
(14,929)
34,346
1,561
(468)
1,093
35,439
Closed Group
2018
$'000
(18,054)
39,771
(53,376)
(31,659)
2017
$'000
(14,447)
34,346
(37,953)
(18,054)
VILLA WORLD ANNUAL REPORT 2018
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89
DGROUP STRUCTUREVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
D2 Deed of cross guarantee (continued)
(c) Consolidated balance sheet
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
Receivables
Investments accounted for using the equity method
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Other financial liabilities
Current tax liabilities
Employee benefits
Service warranties
Other provisions
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Deferred tax liabilities
Other provisions
Employee benefits
Intercompany loan payable
Other financial liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Other reserves
Accumulated losses
Total equity
(d) Guarantor
Closed Group
2018
$'000
12,641
130,171
158,149
3,854
304,815
211,787
2,069
52,227
5,740
271,823
576,638
64,065
3
2,834
1,298
4,266
45
72,511
13,395
183,786
7,281
92
453
-
59
205,066
277,577
299,061
96,346
234,374
(31,659)
299,061
2017
$'000
7,652
72,718
206,757
3,280
290,407
241,626
1,195
-
13,391
256,212
546,619
137,344
-
10,775
1,053
4,219
130
153,521
23,760
81,457
1,403
78
496
4,950
-
112,144
265,665
280,954
96,347
202,661
(18,054)
280,954
The parent entity has provided a financial guarantee for the financing facilities of the Closed Group. The parent has
also provided guarantees as disclosed in Note B5(d).
D3 Investments accounted for using the equity method
A joint venture is an arrangement where the Company has joint control over the activities and joint rights to the net
assets. The Company initially records the joint venture at the cost of the investment and subsequently accounts for
them using the equity method. Under the equity method, the Company's share of joint venture's profit or loss is
added to / deducted from the carrying amount each year. Distributions received or receivable are recognised by
reducing the carrying amount of the joint venture.
When transactions between the Company and its joint venture create an unrealised gain, the Company eliminates
the unrealised gain relating to the Company's proportional interest in the joint venture. Unrealised losses are
eliminated in the same way unless there is evidence of impairment, in which case the loss is realised.
90
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GROUP STRUCTUREDVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
D3 Investments accounted for using the equity method (continued)
The principal place of business for all joint venture entities is Level 1, Oracle West, 19 Elizabeth Avenue,
Broadbeach, Qld, 4218.
The Company has the following interests in jointly controlled entities.
Notes % Owned Purpose
Name of Entity
Eynesbury Holdings Pty Ltd
Eynesbury Pastoral Trust
Eynesbury Golf Pty Ltd
Eynesbury Development
Joint Venture
D3(a)
Expression Homes Pty Ltd
Donnybrook JV Pty Ltd
Villa World Rochedale Pty Ltd
and Ausin Rochedale Pty Ltd
as trustee for Ausin Rochedale
Trust
Villa Green Pty Ltd
Wollert JV Pty Ltd
D3(b)
D3(c)
D3(d)
D3(e)
50
50
50
50
50
51
50
50
51
The owner of the Eynesbury Development Joint Venture
Land, Victoria, as Trustee. The entity is in the process of
being de-registered.
The owner of the Eynesbury Development Joint Venture
Land, Victoria. The trust has now been
terminated.
The golf course and homestead hospitality business.
The entity is in the process of being de-registered.
Residential development at Eynesbury, Victoria.
The joint venture is in the process of being de-
registered.
Residential development and construction projects
primarily in Victoria. The entity was de-registered
on 6 June 2018.
Residential development at Donnybrook, Victoria.
Residential development at Rochedale, Queensland.
Residential development at Greenbank, Queensland.
Residential development at Wollert, Victoria.
The carrying amounts of these joint ventures at balance date were:
Oppor -
Rochedale
Eynesbury
Joint
Venture
Cash
contrib-
tunity Share of net Distributions
received
$'000
(136)
(2,250)
(5,100)
-
(14,400)
Gain
Impair -
ment
on
ution reversal disposal
$'000
$'000
$'000
-
85
-
-
627
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,000
-
-
5,000
-
11,167
-
-
85
23,167
-
5,000
Total
$'000
-
51
3,308
8,429
2,268
- 11,426
- 18,226
4,963
-
-
3,458
-
-
(19,636) 27,260
(2,250) 24,869
Represents 51% share of the opportunity fee received from the Wollert joint venture to be unwound over time as lots settle. The transaction
is only recognised to the extent that the Company's share of profit is not recognised being 49%.
profit/(loss)
$'000
-
94
(21)
(30)
5,242
2,983
1,263
(37)
(110)
-
6,374
3,010
2018
2017
Donnybrook 2018
2017
2018
2017
Villa Green 2018
2017
2018
2017
2018
2017
Opening
balance
$'000
51
1,580
8,429
8,459
11,426
8,443
4,963
-
-
-
24,869
18,482
fee1
$'000
-
-
-
-
-
-
-
-
(7,599)
-
(7,599)
-
-
-
627
Wollert
Total
1.
(a) Eynesbury joint venture
During the period ended 30 June 2018, the process for de-registering the Eynesbury joint venture entities
commenced. Payments totalling $136,000 (30 June 2017: $2.3 million) have been received by the Company for
the year ended 30 June 2018.
The equity accounted investment in the Company's Eynesbury joint venture as at 30 June 2018 is nil (30 June
2017: $51,000).
For the Eynesbury joint venture entities, the joint venture parties have agreed that they will share liabilities in the
same proportion as their holding 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.
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DGROUP STRUCTUREVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
D3 Investments accounted for using the equity method (continued)
(b) Donnybrook joint venture
On 20 December 2017, the Company announced the Donnybrook joint venture had entered into a conditional
contract to sell its remaining parcel at 960 Donnybrook Road, having previously entered into a conditional contract
to sell its adjoining parcel at 1030 Donnybrook Road to Slatterley Property Group Pty Ltd. The site comprises
~208ha, with the Donnybrook joint venture to retain certain portions of the site including non-residential
components. The purchaser is 960 Blueways Pty Ltd, a wholly owned subsidiary of Blueways Holding Pty Ltd. The
Company's share of revenue from the sale is $50 million which will be recognised progressively in line with the
staged settlements, and will therefore be dependent on timing of Precinct Structure Plan approval. This sale
underpins forecast earnings from FY20 - FY23.
The equity accounted investment in the Company's Donnybrook joint venture as at 30 June 2018 is $3.3 million
(30 June 2017: $8.4 million).
Summarised financial information of the Company's investment in the Donnybrook joint venture is set out below:
Consolidated
Assets including inventories $28.3m (2017: $26.6m); cash and cash equivalents
$0.2m (2017: $0.5m); trade debtors and other receivables $0.4m (2017: $0.4m)
Total assets
Current liabilities including trade and other payables $0.1m (2017: $0.2m); bill
facility $22.4m (2017: nil)
Non-current liabilities including bill facility nil (2017: $10.7m)
Total liabilities
Equity
Proportion of the Company's ownership
Equity attributable to the investment
Revenue
Cost of sales
Administrative expenses
Finance costs
Loss before income tax
Income tax benefit
Loss for the period
Proportion of the Company's ownership
Loss attributable to the investment
2018
$'000
28,942
28,942
22,455
-
22,455
6,487
51%
3,308
118
-
(183)
(79)
(144)
102
(42)
51%
(21)
2017
$'000
27,489
27,489
211
10,750
10,961
16,528
51%
8,429
121
-
(179)
-
(58)
-
(58)
51%
(30)
Donnybrook joint venture is jointly controlled as the parties contractually share the agreed control of the
arrangement including the unanimous consent of the parties sharing control for decision making.
92
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GROUP STRUCTUREDVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
D3 Investments accounted for using the equity method (continued)
(c) Villa World Rochedale Pty Ltd and Ausin Rochedale Pty Ltd as trustee for Ausin Rochedale Trust
The equity accounted investment in the Company's Rochedale joint venture as at 30 June 2018 is $2.3 million (30
June 2017: $11.4 million).
Summarised financial information of the Company's investment in the Rochedale joint venture is set out below:
Assets including inventories $1.8m (2017: $18.4m); cash and cash equivalents
$3.3m (2017: $4m); trade debtors and other receivables $1.6m (2017: $1.6m)
Total assets
Liabilities including trade and other payables $2.2m (2017: $1.1m)
Total liabilities
Equity
Proportion of the Company's ownership
Equity attributable to the investment
Revenue
Cost of sales
Administrative expenses
Finance costs
Profit before income tax
Income tax expense
Profit for the period
Proportion of the Company's ownership
Profit attributable to the investment
Consolidated
2018
$'000
6,734
6,734
2,198
2,198
4,536
50%
2,268
35,922
(21,914)
(2,818)
(707)
10,483
-
10,483
50%
5,242
2017
$'000
23,949
23,949
1,096
1,096
22,853
50%
11,426
28,027
(19,546)
(1,949)
(566)
5,966
-
5,966
50%
2,983
For the Rochedale 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.
VILLA WORLD ANNUAL REPORT 2018
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DGROUP STRUCTUREVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
D3 Investments accounted for using the equity method (continued)
(d) Villa Green joint venture
The equity accounted investment in the Company's Villa Green joint venture as at 30 June 2018 is $18.2 million
(30 June 2017: $5 million).
Summarised financial information of the Company's investment in Villa Green joint venture is set out below:
Consolidated
Assets including inventories $61.9m (2017: $50.2m); cash and cash equivalents
$6.3m (2017: $0.7m); trade debtors and other receivables $11m (2017: nil)
Total assets
Liabilities including trade and other payables $8.8m (2017: $2.9m); real estate
purchases $34m (2017: $38m)
Total liabilities
Equity
Proportion of the Company's ownership
Equity attributable to the investment
Revenue
Cost of sales
Administrative expenses
Finance costs
Profit / (loss) before income tax
Income tax expense
Profit / (loss) for the period
Proportion of the Company's ownership
Profit / (loss) attributable to the investment
2018
$'000
79,202
79,202
42,751
42,751
36,451
50%
18,226
12,966
(7,740)
(1,411)
(237)
3,578
(1,051)
2,527
50%
1,263
2017
$'000
50,906
50,906
40,980
40,980
9,926
50%
4,963
12
-
(87)
-
(75)
-
(75)
50%
(37)
In undertaking the land component of the development, the joint venture partners are to contribute equal capital
contributions and share profits on a 50/50 several liability basis. The Company's ownership interest in the
development is a joint arrangement with joint control and is classified as a joint venture under AASB 11 Joint
Arrangements. Under AASB 11, the Company accounts for the investment using the equity method in accordance
with AASB 128 Investments in Associates and Joint Ventures.
94
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GROUP STRUCTUREDVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
D3 Investments accounted for using the equity method (continued)
(e) Wollert joint venture
On 20 December 2017, the Company entered into a joint venture with Ho Bee Limited to develop the ~15.76ha site
located in Wollert, Victoria, 25km north of Melbourne CBD. The joint venture will deliver an approximate 289 lot
land community at an average sales price of approximately $295,000. The joint venture will obtain project specific
financing for the development in due course. In undertaking the development, the joint venturers are to contribute
capital and share profits on the basis of 51% (Villa World) and 49% (Ho Bee). The Company will receive fees for
development management and sales and marketing coordination; and has the potential to receive a performance
fee. During the year, the Company received an opportunity fee of $14.9 million (recognised only to the extent that
the Company’s share of profit is not recognised being 49%) as well as a reimbursement of project costs previously
incurred. These amounts are described in the consolidated statement of cash flows as ‘receipts from the transfer
of development rights’.
The equity accounted investment in the Company's Wollert joint venture as at 30 June 2018 is $3.5 million (30
June 2017: nil).
Summarised financial information of the Company's investment in the Wollert joint venture is set out below:
Assets including inventories $31.2m (2017: nil); cash and cash equivalents $0.8m (2017: nil)
trade and other receivables $0.1m (2017: nil)
Total assets
Liabilities including trade and other payables $10.5m (2017: nil)
Total liabilities
Equity
Proportion of the Company's ownership
Equity attributable to the investment1
Revenue
Cost of sales
Administrative expenses
Finance costs
Loss before income tax
Income tax benefit
Loss for the period
Proportion of the Company's ownership
Loss attributable to the investment
1.
Includes 100% of the upstream transaction with the Company.
Consolidated
2018
$'000
32,143
32,143
10,462
10,462
21,681
51%
11,057
9
-
(316)
-
(307)
92
(215)
51%
(110)
The Company's ownership interest in the development is a joint arrangement with joint control and is classified as
a joint venture under AASB 11 Joint Arrangements. The joint venture partners will contribute capital and share
profits on the basis of 51% (Villa World) and 49% (Ho Bee). Under AASB 11 the Company accounts for the
investment using the equity method in accordance with AASB 128 Investments in Associates and Joint Ventures.
(f) Critical accounting judgements for equity accounted investments
(i) Joint control of equity accounted investments
In relation to the joint ventures of Donnybrook and Wollert, management has assessed there is joint control as the
parties share the agreed control of the arrangement including the unanimous consent of the parties sharing control
for the decision making.
(ii)
Impairment of equity accounted investments
Joint ventures are tested for impairment at the end of each reporting period, and impaired if necessary by
comparing the carrying amount to the recoverable amount. The recoverable amount is calculated as the estimated
present value of future distributions to be received from the joint venture and from its ultimate disposal. Estimating
these future cash flows of the joint venture requires significant judgement and therefore actual amounts may differ
from an impairment estimate.
At 30 June 2018, none of the equity accounted investments were considered to be impaired.
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DGROUP STRUCTUREVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
D4 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(a)).
(a) Summary financial information
The individual financial statements for the parent entity, Villa World Limited, show the following aggregate amounts:
Balance sheet
ASSETS
Current assets
Total assets
LIABILITIES
Current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Reserves
Retained earnings
Total equity
Profit / (loss) for the period
Consolidated
2018
$'000
2017
$'000
61,928
222,667
2,998
51,469
171,198
160,957
17,149
(6,908)
171,198
1,252
45,299
252,202
11,380
59,329
192,873
160,957
40,076
(8,160)
192,873
(1,113)
(b) Guarantees entered into by 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 as well as the guarantees disclosed in Notes B5(d) and D2.
96
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GROUP STRUCTUREDVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
E
OTHER INFORMATION
E
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:
Basis of preparation
Key management personnel disclosures
Remuneration of auditors
Events occurring after the reporting period
Other accounting policies
E1
E1
E2
E2
E3
E3
E4
E4
E5
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.
Certain comparative items have been reclassified in the financial statements to align with the 30 June 2018 year
end disclosures.
(i) Compliance with IFRS
The consolidated financial statements of 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 derivative financial
instruments which are measured at fair value through profit or loss.
(iii) Critical accounting estimates and judgements
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. The resulting accounting estimates will by definition, seldom equal the related actual
results. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in
any future periods affected.
The areas involving a higher degree of estimation or judgement are discussed in the following Notes:
Revenue
Taxes
Inventories
Warranty claims
Fair value measurement
Investments accounted for using the equity method
Share-based payments
(iv) Functional and presentation currency
Note
A1
A5
B1
B5
C6
D3
E2
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
In accordance with the requirements of AASB 124 Related Party Disclosures, the KMP comprise all Directors
(executive and non-executive) and those other members of the Villa World Executive who have authority and
responsibility for planning, directing and controlling the activities of the Company. A summary of KMP compensation
is set out in the table over:
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Notes to the consolidated financial statements
Notes to the consolidated financial statements
30 June 2018 (continued)
30 June 2018 (continued)
E2 Key management personnel disclosures (continued)
E2 Key management personnel disclosures (continued)
(a) Key management personnel compensation (continued)
(a) Key management personnel compensation (continued)
Consolidated
Consolidated
2018
2018
$
$
2,520,125
2,520,125
103,247
103,247
38,810
38,810
269,446
269,446
716,930
716,930
3,648,558
3,648,558
Short-term employee benefits
Short-term employee benefits
Post-employment benefits
Post-employment benefits
Long-term benefits
Long-term benefits
Termination benefits
Termination benefits
Share-based payments
Share-based payments
2017
2017
$
$
2,433,951
2,433,951
108,830
108,830
49,619
49,619
-
-
373,677
373,677
2,966,077
2,966,077
Information regarding the compensation of individual KMP and some equity instrument disclosures as required by
Information regarding the compensation of individual KMP and some equity instrument disclosures as required by
Corporation Regulation 2M.3.03 is provided in the Remuneration Report section of the Directors' Report.
Corporation Regulation 2M.3.03 is provided in the Remuneration Report section of the Directors' Report.
(b) Equity instrument disclosures relating to key management personnel
(b) Equity instrument disclosures relating to key management personnel
Villa World operates a security based compensation scheme, the Villa World Limited Executive Long-Term
Villa World operates a security based compensation scheme, the Villa World Limited Executive Long-Term
Incentive Plan (LTIP). Under the LTIP, eligible employees, including executive directors, are paid or incentivised
Incentive Plan (LTIP). Under the LTIP, eligible employees, including executive directors, are paid or incentivised
for their performance in part through rights over shares.
for their performance in part through rights over shares.
(i) Villa World Limited Executive Long-Term Incentive Plan
(i) Villa World Limited Executive Long-Term Incentive Plan
The Villa World Executive LTIP was introduced in November 2015, and under the plan executives and other eligible
The Villa World Executive LTIP was introduced in November 2015, and under the plan executives and other eligible
senior employees are invited to receive performance rights in the Company. The third allocation of performance
senior employees are invited to receive performance rights in the Company. The third allocation of performance
rights under the LTIP to the CEO / Managing Director was approved at the Company AGM held in November 2017.
rights under the LTIP to the CEO / Managing Director was approved at the Company AGM held in November 2017.
The key driver for LTIP is to provide a variable remuneration component that is competitive and is aligned to
The key driver for LTIP is to provide a variable remuneration component that is competitive and is aligned to
shareholder returns over a longer period. It has been structured to appropriately incentivise executives and promote
shareholder returns over a longer period. It has been structured to appropriately incentivise executives and promote
retention. Detailed remuneration disclosures including the link between the LTIP and shareholder wealth are
retention. Detailed remuneration disclosures including the link between the LTIP and shareholder wealth are
provided in the Remuneration Report section of the Directors' Report.
provided in the Remuneration Report section of the Directors' Report.
Under the LTIP each performance right enables the participant to acquire a share in Villa World Limited, at a future
Under the LTIP each performance right enables the participant to acquire a share in Villa World Limited, at a future
date and exercise price, subject to conditions. The number of performance rights allocated to each participant is
date and exercise price, subject to conditions. The number of performance rights allocated to each participant is
set by the Board and based on individual circumstances and performance. Vesting conditions are subject to
set by the Board and based on individual circumstances and performance. Vesting conditions are subject to
performance hurdles which are based on Villa World's TSR (75%) and ROA (25%) performance over a three-year
performance hurdles which are based on Villa World's TSR (75%) and ROA (25%) performance over a three-year
period.
period.
Vesting occurs following the release of full year results, when the Board determines the extent to which the
Vesting occurs following the release of full year results, when the Board determines the extent to which the
performance conditions have been satisfied for the relevant performance period.
performance conditions have been satisfied for the relevant performance period.
The LTIP is accounted for as equity-settled share-based payments (SBP). The fair value is estimated at grant date
The LTIP is accounted for as equity-settled share-based payments (SBP). The fair value is estimated at grant date
and recognised over the vesting period as an expense in the SBP reserve.
and recognised over the vesting period as an expense in the SBP reserve.
Judgement in calculating fair value of share-based payments
Judgement in calculating fair value of share-based payments
To calculate the expense for equity settled SBPs, the fair value of the equity instruments at grant date has to be
To calculate the expense for equity settled SBPs, the fair value of the equity instruments at grant date has to be
estimated. The fair value is determined using the binomial pricing model. Key assumptions and judgements are set
estimated. The fair value is determined using the binomial pricing model. Key assumptions and judgements are set
out below. These judgements and assumptions relating to fair value measurement may impact the SBP expense
out below. These judgements and assumptions relating to fair value measurement may impact the SBP expense
taken to profit or loss and reserves.
taken to profit or loss and reserves.
Grant date
Grant date
Performance rights granted
Performance rights granted
Performance rights forfeited / lapsed
Performance rights forfeited / lapsed
Total performance rights granted as
Total performance rights granted as
compensation at 30 June
compensation at 30 June
Grant date share price ($)
Grant date share price ($)
Volatility (%)1
Volatility (%)1
Dividend yield (%)
Dividend yield (%)
Risk-free rate (%)
Risk-free rate (%)
Weighted average fair value ($)
Weighted average fair value ($)
Performance period end date
Performance period end date
1.
1.
The volatility assumption is based on annualised historical daily volatility over the three year period to the valuation date.
The volatility assumption is based on annualised historical daily volatility over the three year period to the valuation date.
373,240
373,240
1.98
1.98
27.00
27.00
7.60
7.60
2.10
2.10
1.06
1.06
30 June 2018
30 June 2018
627,993
627,993
2.23
2.23
25.00
25.00
8.15
8.15
1.87
1.87
1.44
1.44
30 June 2019
30 June 2019
634,647
634,647
2.54
2.54
21.79
21.79
7.69
7.69
1.85
1.85
1.70
1.70
30 June 2020
30 June 2020
30 Nov 2016
30 Nov 2016
778,962
778,962
(150,969)
(150,969)
30 Nov 2015
30 Nov 2015
485,916
485,916
(112,676)
(112,676)
30 Nov 2017
30 Nov 2017
634,647
634,647
-
-
The performance period has been satisfied for the performance rights awarded on 30 November 2015. Subject to
The performance period has been satisfied for the performance rights awarded on 30 November 2015. Subject to
Board approval, the performance rights will vest on or around the 14 August 2018.
Board approval, the performance rights will vest on or around the 14 August 2018.
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Notes to the consolidated financial statements
30 June 2018 (continued)
E2 Key management personnel disclosures (continued)
(b) Equity instrument disclosures relating to key management personnel (continued)
(i) Villa World Limited Executive Long-Term Incentive Plan (continued)
Judgement in calculating fair value of share-based payments (continued)
Set out below is a summary of movements in the number of performance rights under the LTIP at the end of the
financial year:
As at 1 July
Granted during the year
Vested during the year
Forfeited / lapsed during the year
As at 30 June
2018
Number of
performance rights
1,001,233
634,647
-
-
1,635,880
2017
Number of
performance rights
485,916
778,962
-
(263,645)
1,001,233
The weighted average remaining contractual life at 30 June 2018 was 1.32 years (30 June 2017: 2.32 years).
(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:
Expense arising from share-based payment transactions
Forfeited share-based payment transactions
(d) Transactions with KMP
Consolidated
2018
$'000
793
-
793
2017
$'000
445
(40)
405
During the reporting period, Villa World Properties Pty Ltd (a subsidiary of Villa World Limited) acquired a property
adjacent to one of its holdings in South-East Queensland on arms-length terms from an entity in which Mark Jewell
(Non-Executive Director of Villa World Limited) held a 49% interest.
(e) Loans to KMP
For the financial year ended 30 June 2018, there were no loans to key management personnel (30 June 2017: nil).
E3 Remuneration of auditors
During the year, the following fees were paid or payable for services provided by the Lead Auditor, Ernst & Young
of the consolidated entity and its related practices:
Audit and other assurance services
Audit and review of financial statements
Other assurance services1
Total remuneration for audit and other assurance services
Other non-audit services
Other accounting advice
Taxation services
Total remuneration for other services
Total remuneration of Ernst & Young
1.
343,441
29,369
372,810
612,964
Assurance related services include accounting support provided in relation to adoption of AASB 15 and accounting services associated with
the Villa World share purchase plan.
46,825
-
46,825
252,577
Consolidated
2018
$
197,252
8,500
205,752
2017
$
184,404
55,750
240,154
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Notes to the consolidated financial statements
30 June 2018 (continued)
E3 Remuneration of auditors (continued)
The statutory audit requirements for the Company vary from year to year and can have an impact on the level of
audit fees. The Company may decide to engage the auditor on assignments additional to their statutory audit duties
where the auditor's expertise and experience with the Company is important. These assignments relate to other
non-audit services including accounting advice and tax advice and capital debt market advice.
The majority of non-audit fees in FY17 relate to services provided during the issuance of the Simple Corporate
Bond. The costs associated with this assignment were paid to the Ernst & Young Capital and Debt Advisory Team.
The auditor has provided an independence declaration and the Committee is satisfied that the work performed on
non-audit services was conducted by a team separate from the audit team and does not impact the independence
of the auditor.
E4 Events occurring after the reporting period
Final dividend
On 14 August 2018 the Board declared a fully franked final dividend of 10.5 cents per share. The ex-dividend date
is 3 September 2018 and the record date for this dividend is 4 September 2018. Payment will be made on 28
September 2018.
The balance of the franking account is $17.5 million and includes franking credits that will arise from the payment
of tax recognised as a liability at the reporting date (refer Note A4(c)).
Investment in the Villa Green Joint Venture
On 26 July 2018, equity contributions totalling $7 million were made by each joint venture partner, with the carrying
value of the investment increasing to $25.2 million. Of the Company’s contribution of $7 million, $5 million was
recognised as a commitment at 30 June 2018 (refer Note B6(b)). The contributions were predominantly for the
purpose of funding the joint venture to complete final settlement of the development site.
E5 Other accounting policies
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out
below unless disclosed within the individual Notes. 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.
(a) Expense recognition
Expenses are recognised in the income statement on an accrual basis.
(b) Property, plant and equipment
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.
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) 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.
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Notes to the consolidated financial statements
30 June 2018 (continued)
E5 Other accounting policies (continued)
(d) Impairment of assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount of an asset is the higher of its fair value less costs of
disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for
which there are separately identifiable cash generating units. Assets that suffered an impairment are reviewed for
possible reversal of the impairment at the end of each reporting period.
(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. Remeasurements 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.
(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 taxation authority 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 ASIC Corporations (Rounding in Financial / Directors' Report) Instrument
2016/191, 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
Instrument 2016/191 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 2018.
The Company's assessment of the impact of these new or amended Accounting Standards and Interpretations,
most relevant to the Company are set out below.
New standards and amendments to standards that are mandatory for the first time for the financial year beginning
1 July 2017 have been adopted by the Company. The Company is in the process of assessing the impact of the
following new standards and interpretations, most relevant to the Company are set out over:
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Notes to the consolidated financial statements
30 June 2018 (continued)
E5 Other accounting policies (continued)
(h) New accounting standards and interpretations (continued)
(i) AASB 9 Financial Instruments
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 adoption of AASB 9 is not expected to have a material impact
on the Company.
(ii) AASB 16 Leases
AASB 16 Leases introduces a single lessee accounting model and requires a lessee to recognise assets and
liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is
required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease
liability representing its obligations to make lease payments.
AASB 16 substantially carries forward the lessor accounting requirements in AASB 117 Leases. Accordingly a
lessor continues to classify its leases as operating leases, and to account for those two types of leases differently.
AASB 16 requires enhanced disclosures for both lessees and lessors to improve information disclosed about an
entity's exposure to leases.
This new standard is applicable to annual reporting periods beginning on or after 1 January 2019, with early
application permitted. The Company is currently assessing the impact of the new guidance and expects to adopt
this standard for the year ended 30 June 2020.
(iii) AASB15 Revenue from Contracts with Customers
AASB 15 Revenue from contracts with customers was issued in December 2014, and amended in May 2016. The
new revenue standard will supersede all current revenue recognition requirements under Australian Accounting
Standards and permits either a full or modified retrospective approach on transition.
The core principle of AASB 15 is to recognise revenue at an amount that reflects the consideration to which an
entity expects to be entitled in exchange for transferring goods or services to a customer.
AASB 15 establishes a five-step model to account for revenue arising from contracts with customers and includes
increased disclosure requirements. These include but are not limited to, identifying performance obligations in the
contract, estimating the amount of variable consideration to include in the transaction price and allocating the
transaction price to each separate performance obligation.
Significant judgement is required to determine when control over the asset is transferred to the customer. The new
standard is based on the principle that the revenue is recognised when control of a good or service transfers to a
customer.
Whilst the directors believe the Company’s assessment of the impact of AASB 15 to be consistent with how other
companies in the Property Development and Construction industry are intending to apply the new accounting
standard, it is noted that there are still specific legal clauses within sales contracts in certain jurisdictions that are
being considered as to application under AASB 15 which may cause a change in the impact assessment described
below.
Impact
The Company's primary source of revenue is derived from the development and sales of residential land, and the
development, construction and sale of house and land packages.
The Company has assessed and evaluated the potential impact of AASB 15 on its consolidated financial
statements. Under AASB 15, the Company considers that performance obligations are satisfied at settlement
irrespective of geographical location as this is when control of the asset transfers to the customer.
This represents a change from the Company's existing revenue recognition policy for Queensland and Victoria
sales whereby revenue is currently recognised when there is an unconditional sales contact and registration of the
land and / or certification of building completion.
The Company's construction contracts are not expected to be materially impacted by the adoption of the new
standard.
Development and project management fees will be addressed on a per contract basis and are not expected to
have any significant impact. AASB 15 will be applied by the Company for the financial year ended 30 June 2019.
Villa World is adopting the modified retrospective approach. Under this approach, comparatives (the year ended
30 June 2018) will not be restated.
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Notes to the consolidated financial statements
30 June 2018 (continued)
E5 Other accounting policies (continued)
(h) New accounting standards and interpretations (continued)
(iii) AASB15 Revenue from Contracts with Customers (continued)
The presentation and disclosure requirements in AASB 15 are more detailed than under current Australian
Accounting Standards and will increase the volume of disclosures required in the financial statements. Many of
the disclosure requirements in AASB 15 are new, including disclosure of significant judgements made and the
disaggregation of revenue recognised from contracts with customers into categories that depict how the nature,
timing and uncertainty of revenue and cash flows are affected by economic factors.
Summarised impact for 1 July 2018:
Revenue item
House and land, and
land only contracts in
Queensland and
Victoria.
Nature of change
The assessment of control under
AASB 15 results in revenue
recognition at cash settlement. As a
result, revenue (and associated costs
of sales) recognised on contracts
which were unconditional but not
settled as at 30 June 2018 under the
Company’s existing revenue
recognition policy will be reversed
through an adjustment to retained
earnings on transition and
corresponding balance sheet
accounts will also be impacted. In
addition, as the Company’s
associates and joint ventures apply
consistent accounting policies,
corresponding adjustments are made
which impact retained earnings and
investments accounted for using the
equity method.
Financial impact of adoption
As detailed in the table below:
Trade receivables will decrease by $127.1
million.
Inventory will increase by $91.7 million.
Other current assets will increase by $0.8
million.
Investment accounted for using the equity
method will decrease by $1.4 million.
Deferred tax assets will increase by $1.0
million.
Trade and other payables will decrease by
$4.7 million.
Deferred income will increase by $0.02
million.
Service warranties provision will decrease by
$0.2 million.
Deferred tax liabilities will decrease by $8.0
million.
Retained earnings will decrease by $22.2
million.
Estimated cumulative impact on consolidated balance sheet
The cumulative estimated effect of the changes that will be made to the Company's consolidated 1 July 2018
balance sheet for the adoption of AASB 15 Revenue from contracts with customers will be as follows:
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OTHER INFORMATIONEVILLA WORLD LIMITED ANNUAL REPORT 2018
Notes to the consolidated financial statements
30 June 2018 (continued)
E5 Other accounting policies (continued)
(h) New accounting standards and interpretations (continued)
(iii) AASB15 Revenue from Contracts with Customers (continued)
Estimated cumulative impact on consolidated balance sheet (continued)
Balance
30-Jun-18
$'000
AASB 15
adjustment
$'000
Restated balance
1-Jul-18
$'000
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
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Deferred income
Current tax liabilities
Other current liabilities
Employee benefits
Service warranties
Other provisions
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Deferred tax liabilities
Other financial liabilities
Employee benefits
Other provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Other reserves
Accumulated losses
Total equity
12,645
130,206
167,590
4,187
314,628
233,967
2,063
27,260
-
10,000
273,290
587,918
(64,426)
(42)
(2,353)
(3)
(1,298)
(4,266)
(45)
(72,433)
(13,396)
(183,786)
(7,979)
(59)
(453)
(92)
(205,765)
(278,198)
309,720
477,611
241,021
(408,912)
309,720
-
(127,103)
91,662
762
(34,679)
-
-
(1,375)
1,030
-
(345)
(35,024)
4,667
(18)
-
-
-
177
-
4,826
-
-
7,979
-
-
-
7,979
12,805
(22,219)
-
-
(22,219)
(22,219)
12,645
3,103
259,252
4,949
279,949
233,967
2,063
25,885
1,030
10,000
272,945
552,894
(59,759)
(60)
(2,353)
(3)
(1,298)
(4,089)
(45)
(67,607)
(13,396)
(183,786)
-
(59)
(453)
(92)
(197,786)
(265,393)
287,501
477,611
241,021
(431,131)
287,501
There are no other standards that are not yet effective and that are expected to have a material impact on the
Company.
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OTHER INFORMATIONEVILLA WORLD LIMITED ANNUAL REPORT 2018
Directors' declaration
30 June 2018
In the Directors' opinion:
(a)
the financial statements and notes set out on pages 58 to 104 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 2018 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
14 August 2018
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VILLA WORLD LIMITED ANNUAL REPORT 2018
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Ernst & Young
Ernst & Young
111 Eagle Street
111 Eagle Street
Brisbane QLD 4000 Australia
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Tel: +61 7 3011 3333
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
Fax: +61 7 3011 3100
ey.com/au
ey.com/au
Independent Auditor's Report to the Members of Villa World Limited
Independent Auditor's Report to the Members of Villa World Limited
Independent Auditor's Report to the Members of Villa World Limited
Report on the Audit of the Financial Report
Opinion
Report on the Audit of the Financial Report
Report on the Audit of the Financial Report
We have audited the financial report of Villa World Limited (the Company), and its subsidiaries
Opinion
Opinion
(collectively the Group), which comprises the consolidated balance sheet as at 30 June 2018, the
consolidated statement of comprehensive income, consolidated statement of changes in equity and
We have audited the financial report of Villa World Limited (the Company), and its subsidiaries
We have audited the financial report of Villa World Limited (the Company), and its subsidiaries
consolidated statement of cash flows for the year then ended, notes to the financial statements,
(collectively the Group), which comprises the consolidated balance sheet as at 30 June 2018, the
(collectively the Group), which comprises the consolidated balance sheet as at 30 June 2018, the
including a summary of significant accounting policies, and the directors' declaration.
consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, notes to the financial statements,
consolidated statement of cash flows for the year then ended, notes to the financial statements,
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
including a summary of significant accounting policies, and the directors' declaration.
including a summary of significant accounting policies, and the directors' declaration.
Act 2001, including:
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
giving a true and fair view of the consolidated financial position of the Group as at 30 June
a)
Act 2001, including:
Act 2001, including:
2018 and of its consolidated financial performance for the year ended on that date; and
a)
a)
b)
giving a true and fair view of the consolidated financial position of the Group as at 30 June
giving a true and fair view of the consolidated financial position of the Group as at 30 June
complying with Australian Accounting Standards and the Corporations Regulations 2001.
2018 and of its consolidated financial performance for the year ended on that date; and
2018 and of its consolidated financial performance for the year ended on that date; and
b)
b)
Basis for Opinion
complying with Australian Accounting Standards and the Corporations Regulations 2001.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
Basis for Opinion
Basis for Opinion
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
independence requirements of the Corporations Act 2001 and the ethical requirements of the
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Report section of our report. We are independent of the Group in accordance with the auditor
Report section of our report. We are independent of the Group in accordance with the auditor
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
independence requirements of the Corporations Act 2001 and the ethical requirements of the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
fulfilled our other ethical responsibilities in accordance with the Code.
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
fulfilled our other ethical responsibilities in accordance with the Code.
fulfilled our other ethical responsibilities in accordance with the Code.
for our opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
Key Audit Matters
Key Audit Matters
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
Key audit matters are those matters that, in our professional judgment, were of most significance in
Key audit matters are those matters that, in our professional judgment, were of most significance in
a separate opinion on these matters. For each matter below, our description of how our audit
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report of the current year. These matters were addressed in the context of
addressed the matter is provided in that context.
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
a separate opinion on these matters. For each matter below, our description of how our audit
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
addressed the matter is provided in that context.
addressed the matter is provided in that context.
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
material misstatement of the financial report. The results of our audit procedures, including the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
procedures performed to address the matters below, provide the basis for our audit opinion on the
included the performance of procedures designed to respond to our assessment of the risks of
included the performance of procedures designed to respond to our assessment of the risks of
accompanying financial report.
material misstatement of the financial report. The results of our audit procedures, including the
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
accompanying financial report.
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VILLA WORLD LIMITED ANNUAL REPORT 2018
1. Net Realisable Value (“NRV”) of inventories
Refer to Note B1 of the financial report
1. Net Realisable Value (“NRV”) of inventories
Refer to Note B1 of the financial report
Why significant
How our audit addressed the key audit matter
The NRV of inventories is heavily
Why significant
influenced by movements in the
property market in Australia and other
The NRV of inventories is heavily
uncertain elements such as availability
influenced by movements in the
of finance for home-owners and
property market in Australia and other
investors. As described in Note B1 to
uncertain elements such as availability
the financial report, the Group
of finance for home-owners and
undertakes a review of its inventories
investors. As described in Note B1 to
to ensure each individual project is
the financial report, the Group
valued at the lower of cost or NRV in
undertakes a review of its inventories
accordance with Australian Accounting
to ensure each individual project is
Standards.
valued at the lower of cost or NRV in
accordance with Australian Accounting
This is significant to our audit as it is
Standards.
material to the Group and the extent of
judgements and estimates applied in
This is significant to our audit as it is
determining the NRV of projects. The
material to the Group and the extent of
NRV is based on future cash flows,
judgements and estimates applied in
which depend on key assumptions
determining the NRV of projects. The
relating to sales rates, land pricing, the
NRV is based on future cash flows,
expected date of completion, the level
which depend on key assumptions
of debt used to finance the project, and
relating to sales rates, land pricing, the
estimated future development costs.
expected date of completion, the level
of debt used to finance the project, and
estimated future development costs.
We obtained the assessment of NRV for the Group’s inventory
How our audit addressed the key audit matter
portfolio and performed the following:
►
Compared the Group’s current cash flow forecast
We obtained the assessment of NRV for the Group’s inventory
►
assumptions to recent actual project performance,
portfolio and performed the following:
including sales prices, sales rates and margins achieved
Compared the Group’s current cash flow forecast
during the period;
assumptions to recent actual project performance,
Enquired of the development managers to understand
including sales prices, sales rates and margins achieved
changes in:
during the period;
►
►
o key feasibility assumptions since the NRV
Enquired of the development managers to understand
changes in:
assessment in the prior year and the original
feasibility,;
o key feasibility assumptions since the NRV
o changes in strategy adopted for revised
assessment in the prior year and the original
feasibilities and then examined supporting
feasibility,;
documentation for these changes;
o changes in strategy adopted for revised
• For a sample of projects, we assessed the key
feasibilities and then examined supporting
assumptions in the feasibilities by agreeing to
documentation for these changes;
supporting documentation such as development
• For a sample of projects, we assessed the key
approvals and sales data to support sales prices. We
assumptions in the feasibilities by agreeing to
also involved our real estate specialists to assist with
supporting documentation such as development
the assessment of a sample of feasibilities and key
approvals and sales data to support sales prices. We
assumptions;
also involved our real estate specialists to assist with
• For projects which had a reversal of previous NRV
the assessment of a sample of feasibilities and key
write-downs during the period, we considered the
assumptions;
underlying changes in the feasibilities by evaluating
• For projects which had a reversal of previous NRV
recent actual performance of the project and agreeing
write-downs during the period, we considered the
to supporting documentation and calculations
underlying changes in the feasibilities by evaluating
provided by the Group;
recent actual performance of the project and agreeing
• For a sample of inventory costs capitalised during the
to supporting documentation and calculations
year we agreed these to supporting documentation;
provided by the Group;
and
• For a sample of inventory costs capitalised during the
• Assessed the adequacy of the Group’s disclosures in
year we agreed these to supporting documentation;
the financial report regarding inventories.
and
• Assessed the adequacy of the Group’s disclosures in
the financial report regarding inventories.
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VILLA WORLD LIMITED ANNUAL REPORT 2018
2. Revenue recognition
Refer to Note A1 of the financial report
2. Revenue recognition
Refer to Note A1 of the financial report
Why significant
How our audit addressed the key audit matter
Revenue is a key audit matter because
Why significant
judgment is involved in determining the
point in time there is sufficient certainty
Revenue is a key audit matter because
for revenue to be recognised. This is
judgment is involved in determining the
particularly important for cases when
point in time there is sufficient certainty
revenue is recognised prior to settlement
for revenue to be recognised. This is
of the land or house and land sale.
particularly important for cases when
revenue is recognised prior to settlement
The accounting policy for revenue
of the land or house and land sale.
recognition is described in Note A1 to
the financial report.
The accounting policy for revenue
recognition is described in Note A1 to
the financial report.
In obtaining sufficient audit evidence, we:
How our audit addressed the key audit matter
• Assessed the effectiveness of relevant controls over
In obtaining sufficient audit evidence, we:
the timing of revenue recognition;
• For revenue recognised prior to settlement we
• Tested revenue cut-off by selecting a sample of sales
• Assessed the effectiveness of relevant controls over
transactions taking place before and after the
the timing of revenue recognition;
balance sheet date and checking whether those
• Tested revenue cut-off by selecting a sample of sales
transactions were recognised in the correct period
transactions taking place before and after the
by agreeing to supporting documentation such as
balance sheet date and checking whether those
sales contract, proof of land registration and proof of
transactions were recognised in the correct period
building completion performed by an independent
by agreeing to supporting documentation such as
party;
sales contract, proof of land registration and proof of
building completion performed by an independent
assessed, on a sample basis, whether the recognition
party;
complied with Australian Accounting Standards and
interpretations issued by the Australian Accounting
assessed, on a sample basis, whether the recognition
Standards Board;
complied with Australian Accounting Standards and
interpretations issued by the Australian Accounting
entries posted to the system manually and checked
Standards Board;
that the journals were appropriately approved and
had supporting evidence; and
entries posted to the system manually and checked
• Assessed the adequacy of the Group’s disclosures in
that the journals were appropriately approved and
respect of the accounting policies on revenue
had supporting evidence; and
recognition.
• Tested key reconciliations and revenue journal
• Tested key reconciliations and revenue journal
• For revenue recognised prior to settlement we
• Assessed the adequacy of the Group’s disclosures in
Information Other than the Financial Report and Auditor’s Report Thereon
respect of the accounting policies on revenue
recognition.
The directors are responsible for the other information. The other information comprises the
Information Other than the Financial Report and Auditor’s Report Thereon
information included in the Company’s 2018 Annual Report, but does not include the financial report
and our auditor’s report thereon.
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2018 Annual Report, but does not include the financial report
Our opinion on the financial report does not cover the other information and accordingly we do not
and our auditor’s report thereon.
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
In connection with our audit of the financial report, our responsibility is to read the other information
and our related assurance opinion.
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
In connection with our audit of the financial report, our responsibility is to read the other information
If, based on the work we have performed, we conclude that there is a material misstatement of this
and, in doing so, consider whether the other information is materially inconsistent with the financial
other information, we are required to report that fact. We have nothing to report in this regard.
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
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VILLA WORLD LIMITED ANNUAL REPORT 2018
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
Responsibilities of the Directors for the Financial Report
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
The directors of the Company are responsible for the preparation of the financial report that gives a
financial report that gives a true and fair view and is free from material misstatement, whether due to
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
fraud or error.
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
fraud or error.
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
operations, or have no realistic alternative but to do so.
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
Auditor's Responsibilities for the Audit of the Financial Report
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
audit conducted in accordance with the Australian Auditing Standards will always detect a material
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
if, individually or in the aggregate, they could reasonably be expected to influence the economic
audit conducted in accordance with the Australian Auditing Standards will always detect a material
decisions of users taken on the basis of this financial report.
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
decisions of users taken on the basis of this financial report.
judgment and maintain professional scepticism throughout the audit. We also:
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
Identify and assess the risks of material misstatement of the financial report, whether due to
judgment and maintain professional scepticism throughout the audit. We also:
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
Identify and assess the risks of material misstatement of the financial report, whether due to
detecting a material misstatement resulting from fraud is higher than for one resulting from
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
override of internal control.
detecting a material misstatement resulting from fraud is higher than for one resulting from
Obtain an understanding of internal control relevant to the audit in order to design audit
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
override of internal control.
opinion on the effectiveness of the Group’s internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
estimates and related disclosures made by the directors.
opinion on the effectiveness of the Group’s internal control.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
estimates and related disclosures made by the directors.
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
and, based on the audit evidence obtained, whether a material uncertainty exists related to
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
to the date of our auditor’s report. However, future events or conditions may cause the Group
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
to cease to continue as a going concern.
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
Evaluate the overall presentation, structure and content of the financial report, including the
to the date of our auditor’s report. However, future events or conditions may cause the Group
disclosures, and whether the financial report represents the underlying transactions and events
to cease to continue as a going concern.
in a manner that achieves fair presentation.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
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109
VILLA WORLD LIMITED ANNUAL REPORT 2018
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
responsible for the direction, supervision and performance of the Group audit. We remain solely
or business activities within the Group to express an opinion on the financial report. We are
responsible for our audit opinion.
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
We communicate with the directors regarding, among other matters, the planned scope and timing of
identify during our audit.
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
We also provide the directors with a statement that we have complied with relevant ethical
matters that may reasonably be thought to bear on our independence, and where applicable, related
requirements regarding independence, and to communicate with them all relationships and other
safeguards.
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
From the matters communicated to the directors, we determine those matters that were of most
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
significance in the audit of the financial report of the current year and are therefore the key audit
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
should not be communicated in our report because the adverse consequences of doing so would
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
reasonably be expected to outweigh the public interest benefits of such communication.
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Remuneration Report
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 40 to 55 of the directors' report for the
year ended 30 June 2018.
We have audited the Remuneration Report included in pages 40 to 55 of the directors' report for the
year ended 30 June 2018.
In our opinion, the Remuneration Report of Villa World Limited for the year ended 30 June 2018,
complies with section 300A of the Corporations Act 2001.
In our opinion, the Remuneration Report of Villa World Limited for the year ended 30 June 2018,
complies with section 300A of the Corporations Act 2001.
Responsibilities
Responsibilities
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
The directors of the Company are responsible for the preparation and presentation of the
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
accordance with Australian Auditing Standards.
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Ernst & Young
Ric Roach
Partner
Ric Roach
Brisbane
Partner
14 August 2018
Brisbane
14 August 2018
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110
VILLA WORLD LIMITED ANNUAL REPORT 2018
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 1 August 2018)
The following holdings were listed in the register of substantial shareholders:
Dimensional
Brazil Farming Pty Ltd
Distribution of Shareholders (as at 1 August 2018):
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
7,622,612
7,097,286
Total holders
1,042
1,955
977
1,367
80
5,421
There were 256 shareholders with less than a marketable parcel of 231 shares.
Unquoted equity securities
As at 30 June 2018, there were 1,635,880 performance rights (with the potential to take up ordinary shares) issued
to 4 participating employees under the Villa World Limited Executive Long-Term Incentive Plan.
There are no voting rights attached to the performance rights.
Quoted equity securities
As at 1 August 2018 there were 5,421 shareholders (31 July 2017: 5,333).
The voting rights attaching to the ordinary shares are:
(a)
(b)
On a show of hands, each shareholder present has one vote and
on a poll, one vote for each fully paid share held.
For details of registered office and share registry details refer to inside front cover – Shareholder Information.
VILLA WORLD ANNUAL REPORT 2018
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111
VILLA WORLD LIMITED ANNUAL REPORT 2018
Top 20 Shareholders (as at 1 August 2018)
Name
Units
% of
Units
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
15,960,921
12.57
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
BRAZIL FARMING PTY LTD
PERSHING AUSTRALIA NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
CVC LIMITED
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
MR MALCOLM JOHN ROSS + MRS JUNE ROSS
BRISPOT NOMINEES PTY LTD
COOLTRAC PTY LTD
TOBAKA PTY LTD
NATIONAL NOMINEES LIMITED
HORRIE PTY LTD
ECAPITAL NOMINEES PTY LIMITED
DEBUSCEY PTY LTD
GEOMAR SUPERANNUATION PTY LTD
BRAZIL FARMING PTY LIMITED
CRAIG G TREASURE PTY LTD
9,461,092
7,671,501
7,515,457
5,071,222
3,929,171
3,151,683
1,846,658
1,823,170
1,780,424
1,600,694
1,044,370
879,898
800,960
700,000
673,495
644,235
610,935
600,000
582,432
7.45
6.04
5.92
4.00
3.10
2.48
1.45
1.44
1.40
1.26
0.82
0.69
0.63
0.55
0.53
0.51
0.48
0.47
0.46
Totals: Top 20 holders of FULLY PAID ORDINARY SHARES (TOTAL)
66,348,318
52.27
112
VILLA WORLD ANNUAL REPORT 2018
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VILLA WORLD LIMITED ANNUAL REPORT 2018
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
H E L P I N G P E O P L E R E A C H H O M E
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