BUILDING Jennings tips house recovery
The loss was limited by a pick-up in revenue, particularly in the key NSW market, and after-tax profit of $3.8 million in the second half of the financial year.
The company was forced to write down the book value of its assets by $23 million after the residential market hit rock bottom midway through last year.
A similar slump in earnings and profits, coupled with a more optimistic outlook, was recorded for its rival developer Stockland.
AVJennings' revenues bounced back in the six months to June as income from house and land sales doubled in the second half to $158 million, a result still substantially below the previous year. "We're certainly entering this year with upward momentum," Mr Summer said.
In Queensland, transactions were recovering, albeit off a low base. NSW was also "well into its recovery" following a rise in settlements and contracts, he said.
"Consumer confidence seems to have lifted over the last six months in particular, reversing a decade-long trend."
Activity in Victoria was "fair", but the company's financial statements show revenue has slumped sharply, down to $28 million, a 60 per cent fall from the previous year.
"In terms of contribution to results, it's come off hard," Mr Summers said.
Auckland, which was going through a strong growth phase, would also contribute.
The company had restructured its debt for another two years and raised $40 million in an April entitlement offer to settle on development sites and to deliver new projects, he said.
Completed and unsold stock were at acceptable levels, Mr Summer said.
Anton Whitehead, the director of equity capital markets at Bell Potter, said the numbers from AVJennings were further evidence that the early stages of a housing recovery was beginning.
Frequently Asked Questions about this Article…
AVJennings recorded a full-year loss of $15.3 million. The company said the residential market hit rock bottom midway through the year, forcing a $23 million write-down of asset book value, although a second-half after-tax profit of $3.8 million and a pickup in revenue helped limit the overall loss.
Yes. AVJennings’ chief executive Peter Summers said growing consumer confidence in NSW is driving the beginnings of a housing recovery, with a rise in settlements and contracts and a bounce in revenues driven by stronger house and land sales in the state.
Revenues bounced back in the six months to June, driven by house and land sales that doubled in the second half to $158 million. Despite the recovery, that result remained substantially below the previous year’s levels.
The $23 million write-down reflected a reduction in the book value of AVJennings’ assets after a sharp residential market downturn. That impairment reduced reported profits for the year but was part of adjusting the balance sheet to current market values.
Performance varies by region: Queensland transactions were recovering but from a low base; Victoria’s activity was described as “fair” but revenue slumped to $28 million (a 60% fall year-on-year); and Auckland was in a strong growth phase and expected to contribute to results.
AVJennings restructured its debt for another two years and raised $40 million via an April entitlement offer, with the proceeds earmarked to settle on development sites and deliver new projects. The company also reported completed and unsold stock were at acceptable levels.
Anton Whitehead, director of equity capital markets at Bell Potter, said AVJennings’ numbers were further evidence that the early stages of a housing recovery were beginning, supporting management’s more optimistic outlook.
Investors should note two key points from the report: AVJennings is showing early recovery signs—especially in NSW—with doubled house and land sales in the second half, but the company still reported a full-year loss and a significant asset write-down. Management has extended debt facilities and raised $40 million to fund development, so watching regional sales trends, settlement volumes and future earnings reports will be important for assessing momentum.
Call 1300 880 160
Start a chat
Schedule a call
