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VILLA World has ramped up its earnings outlook for the current year following a windfall from the sale of a Victorian subdivision and continued strength in the housing market.
The Gold Coast-based developer has forecast pre-tax earnings of $46.6 million, up from $40.5 million previously forecast, as it finally settled the second tranche of its $60 million sale of the Eynesbury subdivision in Melbourne.
Villa World will book an additional $3.6 million profit on the Eynesbury sale after imposing $4.5 million in contract extension fees on the $30 million second tranche of its 50 per cent share in the joint venture.
The sale was announced in 2013 and was expected to be finalised in March 2015, but it has been extended a number of times since then.
The deal was subject to a default notice issued in September by Villa World to the Malaysian buyer, which had already paid Villa World $30 million in the first tranche.
CEO Craig Treasure says the finalisation of the sale will release $9.5 million in cash to the company, which has been actively pursuing acquisitions this past year to meet growing demand in south-east Queensland in particular.
"This will conclude Villa World's involvement in that project and allows us to continue our focus on short to medium-term ventures that deliver the affordable housing product which we do best," Treasure says.
The company, which plans to spend up to $150 million on new site acquisitions this financial year, currently has a pipeline of 5000 lots across 20 projects, with plans to release seven new projects in FY16.
Villa World is now targeting a net profit of $32.6 million in FY16, up from the $29.4 million forecast in August. It is the third profit upgrade announced to the market this year.
The latest profit represents 15 per cent growth in earnings per share to 29.6c, building on 17 per cent EPS growth achieved in FY15.
Treasure told shareholders last month the he expects steady growth from Villa World's key markets in both Queensland and Victoria for 'at least the next couple of years'.
Villa World is expecting to pay a dividend of at least 16c per share this financial year, which is steady with the FY15 payout.
The company will reveal its interim profit on February 17.
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