VILLA World Group (ASX:VLW) has recorded a half-yearly net profit after tax of $6.4 million, a drop of $3.9 million on the corresponding period last year.
The drop in net profit comes despite the Gold Coast company’s increase in operating profit, plus a huge boost in development and constructing revenue.
Operating profit was $6.2 million compared to $4.5 million the prior corresponding period, while development and construction revenue increased by more than $24 million to $87.1 million.
The affordable housing developer had 11 projects, which contributed to the half year 2012 profit, with total sales of 207 lots compared to 286 in the corresponding period.
Projects in Queensland, most notably in the economic powerhouse of Gladstone, have contributed strongly to the company’s bottom line, with a 29 per cent increase in sales activity in the state, but the Victorian market hasn’t fared so well.
“The group has achieved a sound performance for the half year, as new Queensland projects are now contributing to revenue,” says managing director John Potter (pictured).
“In general, house and land sales in Villa World’s Queensland markets continue positive sales momentum, due to our focus on affordability with a higher level of sales activity being experienced in the Gladstone market. The Victorian market continues to be very challenging.”
“The board is of the opinion that further interest rate reductions, stability in the global economy and improving sentiment will be the keys to a sustained recovery in the property market.”
Despite Potter’s disappointment in the Victorian market, he says diversity is important in the group’s portfolio.
“Villa World’s geographic diversity remains a core business strength, providing the flexibility to respond to the varying market conditions,” he says.
Net tangible assets of the group at the end of the year were $152.7 million, representing $1.94 per share.
The company was formerly owned by the delisted GEO Property Group, headed by Guy Farrands.
Villa World shares were today trading 2 per cent down at 0.82c.
Read more about Villa World and the remainder of the top-performers in the annual Gold Coast Business News Top Companies issue – out in March.