Villa World : 11 Oct 2016 - Investor Insight October 2016

INVESTOR INSIGHT

OCTOBER 2016

CELEBRATING 30 YEARS

SUCCESS THROUGH PROPERTY

MESSAGE FROM THE MANAGING DIRECTOR

& CHIEF EXECUTIVE OFFICER

Following three consecutive years of double-digit profit growth, Villa World has made a positive start to FY17 with strategic project site acquisitions in Queensland, development approval for a

flagship community at Logan Reserve,

a start to construction at the Gold Coast's last ever centrally located land release, as well as

a successful re-entry to the New South Wales market.

These project milestones exemplify our strategy of Focus, Grow and Lead as we continue to deliver success through property.

Our success is something I am rightly proud of, and I therefore extend an invitation to all

our shareholders to attend Villa World's Annual General Meeting in Broadbeach, Gold Coast, on 3 November 2016.

Among other business at the AGM, we will put forward Donna Hardman for election as a

non-executive Director. Donna was appointed to the Board as an independent non-executive Director on 17 February 2016. She is the Chair of the Remuneration and Nomination Committee and a Member of the Audit and Risk Committee and has made a significant contribution to our Board in that time.

Together with Chairman Mark Jewell and non-executive Director David Rennick, the

Villa World Board has played an important role in focussing our business strategy and positioning the Company for sustainable growth over the next decade.

We are continuing to forge ahead to become recognised as a leading east coast residential house and land developer, and ultimately a leading Australia property company.

So far in FY17 we have added more than 1,100 lots to our portfolio as we maintain our five to six-year project pipeline. Further information on these acquisitions is provided on page 3.

We have also seen our It's So Easy Spring sales campaign take off and highlight key points of difference in the Villa World business model - our one contract, one deposit, one final payment approach - which we know appeals to our target customer segments.

Spring is traditionally a great time for house buying and we have entered the season and FY17 with continued sales momentum in our key Queensland and Victorian markets, having brought forward

$165.6 million in pre-sales from FY16.

With positive market conditions, including Queensland's increase to the first home buyer grant, low interest rates and fluctuating but upward-trending consumer confidence, Villa World is targeting statutory profit after tax growth of

at least 5% to $35.4 million in FY17. The Company continues to operate with a prudently geared balance sheet and expects net debt to assets to remain comfortably within our target range of 15% to 30%.

Our Board is committed to continuing to pay strong dividends, in accordance with the stated payout policy of 50% to 75% of NPAT, paid semi- annually. The Board anticipates paying a dividend of at least 18 cents per share fully franked in FY17, representing continued strong yield.

As we move beyond our 30th year in business, Villa World has its sights firmly fixed on the long term. We are positively differentiated from our competitors, highlighted by our unique business model, our nominal overseas customer base and 100 per cent focus in the residential land and housing market, and continue to maintain a strong balance sheet and an upscale in delivery.

We look forward to bringing you continued success through property throughout the year.

Craig Treasure

1 INVESTOR INSIGHT OCTOBER 2016

"So far in FY17 we have added more than 1,100 lots to our portfolio as we maintain our five to six-year project pipeline"

Killara - Logan Reserve, Queensland

INVESTOR INSIGHT OCTOBER 2016 2

ACQUISITIONS

1. Announced on 17 August 2016.

2. Inclusive of GST as applicable

LO = Land Only; H&L = House & Land; TH = Townhomes

The strength of the Villa World balance sheet is reflected in the maintenance of our five to six-year pipeline of strategic acquisitions within growth corridors in east coast states.

Villa World has increased its footprint in identified Queensland property hotspots such as Logan in the south east, Arundel on the Gold Coast, and Strathpine on Brisbane's northside.

The Company continues to target increased geographic diversity as it moves towards a 40/40/20 split across its three major east coast markets, being Queensland, Victoria and New South Wales. We continue to pursue growth in our Victorian land bank to match our already substantial Queensland portfolio. This has been buoyed by continued sales strength in the Victorian market and increased market uptake of the unique Villa World build model.

The Company continues to benefit from strong sales in Queensland, supporting further recent acquisitions that give Villa World a greater presence in the high-growth Logan market in south east Queensland, while also increasing the overall product mix. This includes a 700 plus lot land project called Killara in Logan Reserve, which will offer a selection of house and land

3 INVESTOR INSIGHT OCTOBER 2016

packages from leading builders, many of which will be featured in the future Builders' Display Village (due to open mid 2017).

The Company purchased a 9ha site in Park Ridge, adjoining and almost doubling the lot yield at

the Villa World Cottonwood estate to 300 lots. Offering house and land packages, this estate will target the owner occupier market and is expected to contribute revenue in 2H18.

A successful joint venture acquisition of 153 development-ready hectares at Greenbank secured one of the most substantial residential land parcels in South East Queensland, and also further strengthened the Company's relationship with the Sydney-based Greenfields Development Company. With Logan identified as one of the Top 10 best locations for property buyers seeking capital growth, Greenbank will be developed into a vibrant community, eventually home to around 4,000 residents.

It was another demonstration of the Company's use of capital efficient means to progress expansion of our footprint. Development and project management fees will provide an ongoing and growing revenue stream.