This article is from the Australian Property Journal archive
RESIDENTIAL developer AVJennings has reported a strong recovery in FY21, reporting its best result since 2018, buoyed by higher contract signings and presales.
The company announced a profit after tax was $18.7 million, after declining to $9 million in FY20 from $16.4 million in FY19.
In FY21, revenue increased to $311.1 million up from $262.4 million for 2020. Contract signings of 953 lots compared to 697 lots in FY20, with some 431 contracts amounting to $127.1M carried across balance date. Around 402, amounting to $111.6 million, of these contracts are expected to settle during FY22.
Average gross margin remained stable at 22.6% despite allowing for $1.8 million in additional provision, that was largely confined to two projects in South Australia.
AVJennings announced a final fully franked cash dividend of 1.8 cents per share, brings the total dividends to 2.5 cents per share. In FY20, no dividend was paid.
CEO Peter Summers said despite the ongoing challenges and restrictions AVJennings’ focus on land and affordable housing has delivered a 107% growth in profit.
“Pleasingly, after a period of hiatus, activity in some lower margin South Australian and Queensland projects was stimulated, enabling us to accelerate the recovery of capital which will be redeployed with the intention of improving the mix of average company margins in the future,”
Summers said as the economy opened up and market conditions improved, work-in-progress levels increased. As at 30 June 2021 the company had 1,537 lots under development, up from 1,117 last year.
“This has increased significantly from the earliest phase of the pandemic when the company preserved capital and intentionally delayed the commencement of building activity unless it was directly connected with a sales contract. In addition to new starts during FY22, we expect to complete around 787 of these carried-over lots in FY22 (comprises land-only lots, houses and apartments), of which some 265 will be improved with low-rise dwellings.”
Summers said the company is well placed entering FY22 with some 431 pre-sales on hand.
“Like other years, the earnings bias is expected to be towards the second half, potentially more so as the country continues to experience the effects of lockdowns in the first half of FY22.
“There has also been a shift in market preferences with apartments (particularly inner-city high rise) having less appeal. We remain confident the company’s focus on traditional housing product sees us well placed for the future,” he added.
“Obviously, lockdowns have, and are likely to continue to impact on economic recovery. However, we saw how quickly the economy bounced back in the latter part of 2020 and we remain confident Australia and New Zealand will retain their economic strength.” Summers concluded.
