Revenue surge fuels 19% rise in AVJennings' full-year profit
Earnings hit A$40.9m as revenue goes up by almost one-third to A$421.9m
Singapore
A SURGE in revenue pushed Australian residential property developer AVJennings' net profit 19 per cent up to A$40.9 million (S$42 million) for the full year ended June 30 (FY2016). This represents earnings per share of 10.71 Australian cents, up from FY2015's 9.03.
FY2016 revenue grew 32.7 per cent to A$421.9 million on the back of changes in product mix and project share.
The company benefited from announcements made in prior periods that it would acquire the interests of joint-venture partners in the Argyle, Sydney and St Clair, Adelaide projects.
Strong revenues in the second half of FY2016, substantial post-balance date cash inflows from the collection of receivables and confidence in the outlook for FY2017 enabled the directors to declare a final dividend of 3.5 Australian cents per share to be paid in September 2016.
This brings total dividends declared for 2016 to five Australian cents per share.
"Continuing high levels of production, sales and settlements together with stable gross margins in most jurisdictions contributed to the pleasing full-year result. New South Wales, Queensland and New Zealand all continued to benefit from the net positive effect of active project and product mix changes that enabled the company to capitalise on the differing strengths of each market," the developer said.
Work in progress was up 11.2 per cent year-on-year to 1,681 lots while the level of completed unsold stock continued to be low at 2.8 per cent by value of total lots under control.
Gearing remained low with net debt/total assets of only 17.9 per cent (total net debt of A$132.4 million), moderately above the position at June 30, 2015, (13.6 per cent) but well below that at Dec 31, 2015 (22.9 per cent).
AVJennings chairman Simon Cheong attributed the results to the company's clear and sustainable strategy of delivering quality traditional housing at affordable prices in diversified locations.
"We have resisted the temptation to expand into more volatile market segments and have instead focused on pursuing opportunities in the deepest part of the market developing land, detached housing and townhouses at prices that are affordable for Australians," he said.
Despite the disruption of a protracted federal election campaign and some ongoing policy uncertainties, it said the outlook for key residential property industry demand drivers remains positive, particularly in the context of traditional housing.
"Low interest rates and inflation, positive population growth and continuing shortages of detached and semi-detached houses and low rise apartments in Sydney, Melbourne and Auckland should all help underpin demand from the owner-occupiers and local investors targeted by AVJennings.
"While activity patterns and growth rates in some markets are changing, the usual bias of results towards the second half of the financial year will remain and contract signings in FY2017 are expected to be at a similar level to that achieved in 2016."
AVJennings shares closed trading on Thursday at A$0.70 cum dividend, up 6.9 per cent.
