ANNUAL
REPORT 2012
AVJENNINGS LIMITED ABN 44 004 327 771
1942–50
1933
1950
1932
1960–90
2012
2006
2007
2004
2009
1992
2011
2010
b | AVJENNINGS LIMITED · ABN 44 004 327 771
O u r 8 0 t h y e a r i s a s i g n i fi c a n t m i l e s t o n e .
T h i s c e l e b r a t i o n m a r k s t h e s t r e n g t h a n d s o l i d a r i t y o f o u r C om p a n y ; f r om 1 9 3 2 , w h e n
S i r A l b e r t Vi c t o r J e n n i n g s m o r t g a g e d h i s f am i l y h om e t o b u i l d a d o z e n b r i c k h o u s e s i n C a u l fi e l d ;
t o t h e m a n y s u c c e s s e s a n d b r o a d r a n g e o f p r o j e c t s w e h a v e d e l i v e r e d s i n c e t h e n .
Im p o r t a n t l y, o u r 8 0 t h y e a r a l s o s i g n a l s a p e r i o d o f n e w f o c u s a n d g r o w t h f o r o u r o r g a n i s a t i o n .
I t ’s a c e l e b r a t i o n w e w a n t t o s h a r e w i t h o u r s t a f f , s h a r e h o l d e r s , s t a k e h o l d e r s , s u p p l i e r s ;
a n d o f c o u r s e , o u r c u s t om e r s .
I t ’s a g r e a t o p p o r t u n i t y t o r e i n f o r c e o u r p u r p o s e .
1942 –50
2006
Si r A lber t vot e d one of
A lbe
Si r
t he ‘10 0 Mo st
e ‘10 0
ns
I n fluentia l Aust ra lia ns’
t he
fluent
I n flu
– T he Bulleti n
2007
1950
P ublicly float e d
P
on t he St o c k
on
Ex cha nge
E
2004
AVJen n i ng s c elebrat e d
75 yea r s of c reati ng
new a dd re sse s
G o o d We ekend n a me s
Si r A lber t a s one of t he
‘ 25 Pe o ple W ho Ch a nge d
t he Nation’
Simon Che ong
appoi nt e d a s
AVJen n i ng s C h a i r m a n
2009
Build i ng t he futu re
w it h re sidentia l
c om mu n itie s, la nd
develo pment , i nt eg rat e d
housi ng a nd low-r ise
apa r tment pr oje c ts
St eve Waugh , AO
n a me d AVJen n i ng s
C or porat e
A mba ssa dor
2011
2
2010
Po st wa r bu ild i ng
bo om , i n wh ic h
AVJen n i ng s plays
lea d i ng r ole
P ione er e d fi r st i nt eg rat e d
re sidentia l develo pment at
H illc re st E stat e, now a Nation a l
T r ust her itage pre ci nc t
T r u
333333
1933
1933
193
AVJen n i ng s bu ilds
fi r st home i n
Melbou r ne
1932
Celebrating
8 0 yea rs of
creating the
Australia n
d rea m
ea mm
2012
1960 –90
R e c og n is e d a s t he
n ation’s bigge st
homebu ilder w it h over
8 0,0 0 0 home s bu ilt
a c c ord ing t o T im e
m aga z i ne
‘Builder s t o t he Nation – T he
AV Jen n i ng s St or y’ publishe d
T he Age bo ok rev iew –
‘Build i ng up fr om Not h i ng ’
–
g ’
1992
CONTENTS
Managing Director’s Statement
Company Highlights
Chairman’s Report
Creating and Supporting
Communities
Property Portfolio
Directors’ Report
Consolidated Statement
of Comprehensive Income
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes in Equity
Consolidated Statement
of Cash Flows
Notes to the Consolidated
Financial Statements
Directors’ Declaration
1
3
4
7
8
12
22
23
24
25
26
72
Independent Auditor’s Report to the
Members of AVJennings Limited
73
Corporate Governance Statement 74
Shareholder Information
Company Particulars
79
81
1932 AVJennings builds
first home in Melbourne
1933 Pioneered first integrated
residential development at
Hillcrest Estate, now a National
Trust heritage precinct
1942-50 Post war building
boom, in which AVJennings plays
a leading role
1950 Publicly floated on the
Stock Exchange
Front Cover:
Celebrating 80 years
1960-90 Recognised as the
nation’s biggest homebuilder with
over 80,000 homes built according
to Time magazine
19 92 ‘Builders to the Nation
– The AV Jennings Story’ published
The Age book review – ‘Building
up from Nothing’
2004 Simon Cheong appointed
as AVJennings Chairman
2006 Sir Albert voted one of
the ‘100 Most Influential Australians’
– The Bulletin
2007 AVJennings celebrated
75 years of creating new addresses
2009 Good Weekend names
Sir Albert as one of the ‘25 People
Who Changed the Nation’
2010 Building the future with
residential communities, land
development, integrated housing
and low-rise apartment projects
2011 Steve Waugh, AO named
AVJennings Corporate Ambassador
2012 Celebrating 80 years of
creating the Australian dream
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
1
WELCOME TO THE AVJENNINGS
2012 ANNUAL REPORT
It is with great pride that we celebrate
80 years of creating residential communities
Sir Albert Victor Jennings was a pioneer,
an innovator and a dreamer. He created
history in the 1930s by providing quality
living that was affordable for all.
To this day, AVJennings continues
with this tradition. We understand
the different ways in which people want
to live. That is why we remain true to
our core values and continue to provide
our customers with a great range of
quality and affordable living options in
diverse locations.
We also understand the issues and
challenges in meeting our goals.
We continue to seek through
consultation with government,
innovation in design, efficient delivery
systems and our Integrated Housing
skills, ways of improving how quality
affordable living solutions can be
offered to our customers.
The AVJennings brand not only
represents quality and reliability, it is
also iconic. It has survived 80 years of
diversity and adversity and remains
one of the most recognised brands in
Australia today.
With the strength of the brand behind
us and through our professional and
experienced people, our pledge is
to continue to deliver quality and
affordable living solutions and keep
the great Australian dream alive for
coming generations.
Peter Summers
Managing Director
Images on this page:
Peter Summers, Managing Director
Internal: Cavanstone, Eastwood, NSW
National Campaign: 80 Day Sale
Ravensworth Heights, Goulburn, NSW
2 | AVJENNINGS LIMITED · ABN 44 004 327 771
We understand the different ways
in which people want to live
Images on this and opposite page:
Living at Lyndarum, Wollert, Vic
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
3
COMPANY HIGHLIGHTS
Developments Pipeline Analysis as at 30 June 2012
Number of Lots
by Location
Net Funds Employed
by Location
QLD 19%
NSW 19%
SA 26%
VIC 32%
NZ 4%
QLD 26%
NSW 31%
SA 14%
VIC 25%
NZ 4%
Results Summary to 30 June 2012
Revenues
Profit/(Loss) after Tax:
– statutory
– excluding provision for impairment
Gross Margins
$188.8 million
($29.8 million)
$5.1 million
19.9%
Total Assets (at lower of historic cost or NRV)
$498.1 million
Inventory Impairment:
– After tax
– Book value of inventory
Total Number of Lots (under control)
Net Tangible Assets Per Share
Total Dividends declared for the year
$34.9 million
10.2%
10,837
$0.97
0.5c
4 | AVJENNINGS LIMITED · ABN 44 004 327 771
CHAIRMAN’S REPORT
To My Fellow Shareholders
Market Overview
2012 Results
The 2012 financial year provided many
challenges not just for the Company,
but also for the Australian residential
property industry in general. The
continued uncertainty of weak global
economic conditions, the impact of
the high Australian dollar on certain
components of the Australian economy,
and the European debt crisis have
had significant impact on consumer
confidence.
Residential property is cyclical in nature
and we are currently operating at a
deep cyclical low in many sectors of the
market. Despite interest rate reductions
and improvement in affordability, the
market recovery has been sluggish and
buyers continue to remain cautious. In
these circumstances, the Company has
remained focused and responded in
an appropriate and prudent manner by
reducing work in progress levels and
focusing its development expenditure
on more capital efficient projects
which generate the highest turnover.
It has also reduced overheads and re-
aligned management to drive greater
accountability.
Notwithstanding current market
conditions and short term market
uncertainty, the Board and
Management remain positive for the
medium to long term outlook for the
market. The strength of our business
and our ability to adapt to meet market
conditions has positioned us well for
an eventual market upturn.
The full year ended 30 June 2012
resulted in a loss after tax of
$29.8 million. This included a provision
for loss on inventory and investments
of $34.9 million after tax. Net profit
after tax and before provisioning was
$5.1 million.
Revenues came in at $188.8 million,
down from $215.9 million in the prior
year. This was as a result of subdued
market conditions and the Group’s
strategy to reduce exposure by
reducing work in progress levels.
The provisioning is a result of a review
of the carrying values of all assets and
investments and represents a 10.2%
reduction in the book value of the
Group’s inventory. As a result, the NTA
at 30 June 2012 was 97 cents per share.
The Group remains compliant with its
banking covenants.
During the year, the Group paid
an interim fully franked dividend of
0.5 cents per share. No final dividend
was declared.
Our Brand
This is AVJennings’ 80th year of being
in the business of creating residential
communities. It is a proud and
significant heritage.
The brand has come to represent
quality, affordability and reliability.
With a strong brand supporting us,
we have been instrumental in shaping
communities by offering a diverse range
of housing and land options to our
customers, many of whom are repeat
second and third buyers. AVJennings
is built on its understanding of what
buyers want and the strength and
Images on this page:
Simon Cheong, Chairman
Artists impression: The Mill Apartments, Eastwood, NSW
Hobsonville Point Park, Auckland, NZ
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
5
importance of the brand is crucial to
this foundation. Children who have
grown up in an AVJennings home have
themselves purchased an AVJennings
home and their children after them have
also purchased an AVJennings home in
which to raise their families. This history
of second and third buyers is a tradition
of generations living in an AVJennings
home and is achieved through our
dedication to understanding our
customers, and delivering on our
promise over the long term.
Our People
On behalf of the Board, I would like
to recognize the drive and enthusiasm
of Peter Summers and all the
AVJennings staff during a difficult 2012.
In what has been a tough year, they
have worked hard and remained fully
focused and committed to adapting
to the challenging market conditions.
Together with our business partners,
they form the backbone to our long
term success and creation of long term
sustainable shareholder value.
Our Board
As Chairman, I would also like to
acknowledge the support of my fellow
Directors. Their active engagement
together with their collective skills and
experience have provided the right
balance of oversight to assist Peter
and his management team through
this challenging year.
I would also like to thank Herman
Hochstadt and acknowledge the
invaluable contribution he made to the
Board. Herman retired from the Board
after the Company’s Annual General
Meeting in November 2011 and his
insightful comments and wisdom
helped steer the Company through
challenging periods.
Together with my fellow Directors,
I also welcome Lai Teck Poh who
joined the Board in November 2011.
With a wealth of banking experience
in senior management roles, he
expands the Board’s collective
knowledge and acumen.
Outlook
There remains a fair degree of
uncertainty in the timing of the
recovery of the Australian residential
property market. This will create
challenges for the coming year. In
addition, the Company’s decision to
reduce its development expenditure
in FY12 is expected to have an impact
on short term profit as less product
will be available for sale.
Nevertheless, property market
fundamentals remain intact.
Affordability is showing signs of
improvement as a result of steady
property prices, and there is an
expected higher rate of immigration
and population growth coupled with
shortage of supply underpinning
long term demand. The regulatory
environment has also shown some
improvement with various positive
state government initiatives easing the
burden for residential property buyers.
For the Company, acquisitions made
predominantly in late 2010 are now
at advanced stages of planning and
development and they are expected to
enter profit recognition stages in the
latter part of FY13 and beyond. The
majority of projects are development
approved. We also continue to explore
acquisition opportunities for suitable
development sites taking into account
capital efficiency and availability.
Despite the current economic
conditions and uncertainty in the
residential property market, AVJennings
has remained true to its core business
of creating residential communities by
offering diversity of land and housing
options as well as focussing on the
deepest sectors of the market. We have
realised substantial economies of scale
through our ability to control the built
form in our projects and by maximising
the use of land available. Investing
in our design and internal building
capabilities has also allowed us to build
a deep knowledge across all aspects
of our business, ultimately meeting
the needs of our customers. This
experience and knowledge provides
us with the expertise to work through
both the high and low cycles.
In conclusion, I would like to thank
my fellow shareholders for your
continued support through difficult
market conditions and reassure you
that both the Board and Management
remain focused on improving
shareholder value.
Simon Cheong
Chairman
The strength of our
business and our
ability to adapt to meet
market conditions
has positioned us well
for the future
6 | AVJENNINGS LIMITED · ABN 44 004 327 771
Our investment in innovative design, excellent land
management practices, delivering outstanding community
facilities and great living environments are our way of
staying true to the goal of creating quality communities
Images on this page:
Recreation Centre, Nottingham Square, Calamvale, Qld
Project launch, Eyre at Penfield, SA
Elysium Park, Noosa Heads, Qld
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
7
CREATING AND SUPPORTING COMMUNITIES
As a Company whose foundations are in the creation of communities,
we feel it is important to have a strong sense of community within the Company,
within our people and how we relate to our market and customers
The AVJennings team continues to
be encouraged to take on active roles
in volunteering and participating in
activities which support charitable
organisations. The Company continued
its partnership with the Steve Waugh
Foundation who strive to improve the
quality of life for children and their
families affected by rare diseases.
During the year, AVJennings committed
to the construction of an AVJennings
house in one of its communities with
the profits from the sale to be directed
to the Steve Waugh Foundation.
AVJennings has received strong support
for this initiative with their suppliers and
contractors committing their support
for the project through materials and/
or labour.
Working in unison with the partnership,
has been the separate arrangement
with our Corporate Ambassador, Steve
Waugh, AO. A number of events
took place over the past year which
included Steve playing a 20 Twenty
celebrity cricket match at the St Clair
project in Adelaide to launch the official
opening of the cricket field. This event
highlighted the community values a
residential neighbourhood creates to
the 3,000 plus people who attended.
Both of these arrangements have lifted
the Company’s profile, enhanced the
sense of community within our people,
and in many cases our loyal business
partners and provided great exposure
of our projects within the business and
residential communities.
Images on this page:
Steve Waugh, AO – Corporate Ambassador
AVJennings and Steve Waugh Foundation representatives
20 Twenty cricket match, St Clair, Woodville, SA
8 | AVJENNINGS LIMITED · ABN 44 004 327 771
PROPERTY PORTFOLIO
AVJennings has remained true to its core business of creating residential
communities by offering diversity of land and housing options as well as focusing
on the deepest sectors of the market
Affordability remains a significant
challenge in the Australian and New
Zealand residential property markets.
The major issue driving affordability
relates to the availability and costs of
acquiring, servicing and developing
land. The Company’s business model
focuses on using its skills in these areas
together with its long-established
integrated housing capabilities to
deliver quality, affordable product
that is within the reach of everyday
people, whether they be first, second
or subsequent home buyers;
empty nesters; move-up buyers or
investors purchasing land; turn-key town
homes; attached homes; or low-rise
apartments.
The Company’s current property
portfolio is well placed to deliver on
these plans. It is also ideally matched
to our brand which remains one of
Australia’s leading residential property
brands. Whilst providing choice of
product to our customers, we also
offer a wide geographic spread. The
Company currently has 33 projects
spread across 4 Australian states and
New Zealand and over 10,500 lots in its
project pipeline.
As mentioned in the Chairman’s Report,
the Company’s acquisitions made
predominantly in late 2010 are now
at advanced stages of planning and
development and they are expected to
enter profit recognition stages in the
latter part of FY13 and beyond. The
majority of projects are development
approved. The Company also continues
to explore acquisition opportunities
for suitable development sites taking
into account capital efficiency and
availability.
QLD
Projects: 10
No of lots: 2,069
NSW
Projects: 10
No of lots: 2,007
NZ
Projects: 1
No of lots: 464
SA
Projects: 4
No of lots: 2,828
VIC
Projects: 8
No of lots: 3,469
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
9
Big Sky, Coomera, Qld
Halpine Lake Townhomes, Mango Hill, Qld
QUEENSLAND
Charterwood, Wadalba, NSW
Internal: Arena, Officer, Vic
NOOSA HEADS
CALOUNDRA
MANGO HILL
BRISBANE
R I C H L A N D S
LEICHHARDT
RICHLANDS
CALAMVALE
BETHANIA
COOMERA
Map: Plus project Mackay
Note: does not include 2 sundry lots
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Post
Halpine Lake, Mango Hill
Creekwood, Caloundra
Glenrowan, Mackay
Essington Rise, Leichardt
Nottingham Square, Calamvale
Villaggio, Richlands
Bethania
Elysium, Noosa Heads
Big Sky, Coomera
No of
Lots
196
666
203
130
178
102
113
171
308
10 | AVJENNINGS LIMITED · ABN 44 004 327 771
VICTORIA
WOLLERT
EPPING NORTH
DOREEN
MELBOURNE
OFFICER
PORT ARLINGTON
Arena, Officer
Lyndarum North, Wollert
No of
Lots
147
684
Wollert (Options)
1,820
Lyndarum, Epping North
Lyndarum, 100 O'Hern's Rd
Lyndarum, 150 O'Hern's Rd
Arlington Rise, Port Arlington
Doreen
34
72
79
268
365
NEW SOUTH WALES
HAMLYN TERRACE
WADALBA
CENTRAL COAST
EASTWOOD
WEST HOXTON
SYDNEY
SYDNEY
OLYMPIC
PARK
COBBITTY
ELDERSLIE
SPRING FARM
GOULBURN
WOLLONGONG
The Ridges, Elderslie
Hamlyn Terrace
Spring Farm
Ravensworth Heights, Goulburn
Seacrest, Sandy Beach
Cavanstone, Eastwood
Charterwood, Wadalba
West Hoxton
Cobbitty
Boulevard, Sydney Olympic Park
No of
Lots
330
440
218
160
136
169
36
42
466
2
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Post
Map: Plus project Sandy Beach
Note: does not include 8 sundry lots
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Post
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
11
SOUTH AUSTRALIA
PENFIELD
CHELTENHAM
ADELAIDE
MURRAY BRIDGE
GOOLWA
Note: does not include 13 sundry lots
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Post
Pathways, Murray Bridge
River Breeze, Goolwa North
St Clair, Cheltenham JV
Eyre, Penfield
No of
Lots
87
84
894
1,750
NEW ZEALAND
HOBSONVILLE
AUCKLAND
AVJennings developing Buckley Precinct, Hobsonville Point in joint venture
with Hobsonville Land Company
Hobsonville Point, Hobsonville
464
No of
Lots
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Post
12 | AVJENNINGS LIMITED · ABN 44 004 327 771
Directors’ report
For the year ended 30 June 2012
Your Directors present their Report on the Consolidated Entity
(referred to hereafter as “AVJennings”, “Consolidated Entity”
or “Group”) consisting of AVJennings Limited (“Company”
or “Parent”) and the entities it controlled at the end of, or
during, the year ended 30 June 2012.
DIRECTORS
The names of the Company’s Directors in office during the
financial year and until the date of this Report are as follows.
Directors were in office for this entire period unless otherwise
stated.
S Cheong
RJ Rowley
PK Summers
E Sam
B Chin
BG Hayman
TP Lai
HR Hochstadt
Chairman (Non-Executive)
Deputy Chairman (Non-Executive)
Managing Director and
Chief Executive Officer
Director (Non-Executive)
Director (Non-Executive)
Director (Non-Executive)
Director (Non-Executive)
- Appointed 18 November 2011
Director (Non-Executive)
- Retired 18 November 2011
COMPANY SECRETARY
The names of the Company Secretaries in office during
the financial year and until the date of this Report (unless
otherwise stated) are as follows:
CD Thompson
PK Summers
SA Vogiatzakis
PRINCIPAL ACTIVITY
The principal activity of the Consolidated Entity during the
year was Residential Development.
OPERATING RESULTS
The consolidated loss after tax for the financial year was
$29.8 million (2011: $12.9 million profit after tax).
DIVIDENDS
Dividends paid to members during the financial year were
as follows:
2010 final of 1.5 cents per fully
paid share, paid 30 September 2010.
Fully franked @ 30% tax
2011 interim of 1.0 cent per fully
paid share, paid 18 April 2011.
Fully franked @ 30% tax
2011 final dividend of 1.5 cents per
fully paid share, paid 19 October 2011.
Fully franked @ 30% tax.
2012 interim dividend of 0.5 cents per
fully paid share, paid 11 April 2012.
Fully franked @ 30% tax.
2012
$’000
2011
$’000
–
–
4,119
2,746
4,119
1,373
–
–
Total dividends paid
5,492
6,865
REVIEW OF OPERATIONS
Financial results:
The result for the full year ended 30 June 2012 was a loss after
tax of $29.8 million (2011: $12.9 million profit after tax). This
included a provision for loss on inventory and investments
of $34.9 million after tax. Net profit after tax and before
provisioning was $5.1 million.
Revenue, at $188.8 million, was down from $215.9 million
due to continued subdued market conditions, especially in
the second half year, across most projects.
The provisioning is the result of a review of the carrying
values of all assets and investments and represents a 10.2%
reduction in the book value of the Group’s inventory. As a
result, the NTA at 30 June 2012 was 97 cents per share.
Notwithstanding the inventory impairments, the Group
has responded to current market conditions by continuing
to review its overheads and achieving reductions where
appropriate and strategically reassessing commencement
and construction of projects to those which are more capital
efficient and generate the highest turnover.
The Group remains compliant with its banking covenants.
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
13
Directors’ report
For the year ended 30 June 2012
Business Overview:
The Group’s conservative approach to land acquisitions
and avoidance of land purchases during the period of high
wholesale prices prior to the GFC, has meant that it had
avoided the need to provision against asset carrying values
after the GFC occurred in 2008. A strategic approach to land
selection, use of less capital intensive acquisition structures
and avoiding overbidding on purchases provided protection
from difficult market conditions over the last couple of years.
However, recent factors including deteriorating residential
market conditions in early 2012 especially in many regional
areas and the delay in the timing and extent of the forecast
recovery in Queensland and New South Wales, which had
been expected in 2012, have resulted in reduced volumes and
margins from those budgeted for.
The Group has reviewed its operational strategies in relation
to various projects. As a result, the Group has reassessed the
bases and assumptions used to determine the carrying value
of its assets in undertaking its year end impairment testing
and has therefore taken the prudent course to provision
against the carrying value of those assets.
The projects affected are primarily in regional areas of
Queensland and New South Wales.
Negative consumer sentiment appears to be driven by a
number of factors including concerns over the impact of
macro-economic factors in Europe and the US and the impact
on Australia of any slowdown in China. It is also likely to reflect
concerns over the political climate following the last federal
election. As a result, some buyers appear to be delaying
purchase decisions.
This crisis of confidence persists despite generally good
economic conditions in Australia, relatively high and
consistent GDP growth, low unemployment figures and
continued high population growth. It also persists despite the
accepted belief (espoused by the major banks, the RBA and
others) that house prices in Australia will not suffer a sharp
decline as experienced overseas, in the absence of a major
economic shock.
As at 30 June 2012, Net Debt, including a proportionate
share of joint venture net debt was $129.0 million
(2011: $82.3 million). When taking into account deposits held
in solicitors’ trust accounts of $23.1 million at 30 June 2012,
the Net Debt was $105.9 million. The increase in Net Debt is
mainly attributable to settlement payments for acquisitions
made in prior periods.
Outlook:
The Group has responded to market challenges by reducing
costs, restructuring its management to drive greater
accountability, by focussing its development expenditure on
appropriate projects and by selectively reducing expenditure
on some projects.
There are some lead indicators that conditions may improve
at least in some markets. There has been improved visitor
flow at some Queensland and New South Wales projects and
the NSW government is finally addressing the poor housing
policy environment in that state. Relatively stable prices over
the last few years have also improved affordability in most
states. Most state governments have introduced stimulus
packages as part of recent budgets. Whilst these signs are
positive, it is still too early to ascertain whether this is a
precursor to a more general upturn in activity in the sector, or
whether short term trading conditions will remain challenging.
The Group will continue to adopt strategies appropriate to
prevailing conditions including taking a moderate approach
to levels of work-in-progress. This, in turn, will impact on short
term profit as stock available for sale will be at lower levels at
existing projects.
The Group maintains a strong land bank with approximately
10,800 lots under control, and is well placed to take
advantage of any upturn in the residential housing market.
The majority of the projects are approved for development
and some of the recently acquired projects will come to
market over the next year. These projects, such as Cobbitty
in NSW, are well placed to benefit from any improvement
in the market should it occur. The Group is focussed on the
affordable segment of the market (other than social housing)
which is the deepest and most resilient segment. Good
results have been achieved leveraging off affordable NRAS
(National Rental Affordability Scheme) product particularly in
Queensland and the Group is expanding this product offering
in other states.
The fundamentals of the market remain positive, with
improvements in affordability, low interest rates, underlying
housing shortages in some markets and benign economic
conditions expected to continue into at least 2014. The Group
is positive that the housing market will recover and remains
ready to respond to the recovery when it arrives.
SIGNIFICANT CHANGES IN THE STATE OF
AFFAIRS
As mentioned in the Review of Operations, AVJennings
has provided $49,932,000 before tax ($34,952,000 after tax)
against the carrying values of its assets.
SIGNIFICANT EVENTS AFTER THE BALANCE
SHEET DATE
No matter or circumstance has arisen since 30 June 2012 that
has significantly affected, or may significantly affect:
a) the Consolidated Entity’s operations in future financial
years; or
b) the results of those operations in future financial years; or
c) the Consolidated Entity’s state of affairs in future financial
years.
FUTURE DEVELOPMENTS, PROSPECTS AND
BUSINESS STRATEGIES
Future developments in the operations of the Consolidated
Entity and the expected results of those operations have not
been included in this Report as the Directors believe that
the inclusion of such information would be likely to result in
unreasonable prejudice to the Consolidated Entity.
The prospects and business strategies of the Consolidated
Entity are discussed on page 13 of this Report.
14 | AVJENNINGS LIMITED · ABN 44 004 327 771
Directors’ report
For the year ended 30 June 2012
ENVIRONMENTAL REGULATION
Responsibilities:
Deputy Chairman of the Board, Non-Executive Director,
Chairman of Risk Management Committee, Member of Audit
Committee, Member of Investments Committee, Member of
Nominations Committee.
Directorships held in other listed entities:
None.
Peter K Summers B.Ec. CA
Director since 27 August 1998. Mr Summers is a Chartered
Accountant and has been employed with the Company and
its related corporations since 1984, when he joined the Jack
Chia Australia Limited Group from Price Waterhouse (now
PricewaterhouseCoopers). During Mr Summers’ early period
with the group, he held various management and directorship
roles within the group. Following the acquisition of the
AVJennings residential business in September 1995,
Mr Summers was appointed Chief Financial Officer, becoming
Finance Director of AVJennings in August 1998. He was
appointed Managing Director and Chief Executive Officer of
the Company on 19 February 2009. Mr Summers has extensive
experience in general and financial management as well as
mergers and acquisitions. Resident of Melbourne.
Responsibilities:
Managing Director and Chief Executive Officer.
Directorships held in other listed entities:
None.
Elizabeth Sam B.A. Hons (Economics)
Director since 20 September 2001. Mrs Sam has over
40 years experience in international banking and finance.
She has served on numerous high level Singaporean
government financial and banking review committees and
was the Chairman of the Singapore International Monetary
Exchange from 1987 to1990 and 1993 to1996. Resident of
Singapore.
Responsibilities:
Non-Executive Director, Chairman of Nominations
Committee, Chairman of Remuneration Committee, Member
of Audit Committee.
Directorships held in other listed entities:
Boardroom Limited, since 15 August 2000.
Kasikorn Bank Plc, Thailand, since 29 March 2001.
SC Global Developments Limited, since 23 July 2002.
Banyan Tree Holdings Limited, since 23 March 2004.
The Straits Trading Company Limited, since 30 April 2008.
The Consolidated Entity’s operations are subject to various
environmental regulations under both Commonwealth
and State legislation, particularly in relation to its property
development activities. The Consolidated Entity’s practice is
to ensure that where operations are subject to environmental
regulations, those obligations are identified and appropriately
addressed. This includes the obtaining of approvals, consents
and requisite licences from the relevant authorities and
complying with their conditions.
There have been no significant known breaches of
environmental regulations to which the Consolidated Entity
is subject.
INFORMATION ON THE DIRECTORS
Simon Cheong B.Civ.Eng. MBA
Director since 20 September 2001. Mr Cheong has over
30 years experience in real estate, banking and international
finance. He currently serves as Chairman and Chief Executive
Officer of SC Global Developments Limited. Mr Cheong has
formerly held positions with Citibank (Singapore) as their
Head of Real Estate Finance for Singapore as well as with
Credit Suisse First Boston as a Director and Regional Real
Estate Head for Asia (excluding Japan). In 1996, Mr Cheong
established his own firm, SC Global Pte Limited, a real estate
and hotel advisory and direct investment group specialising in
structuring large and complex transactions worldwide. He was
elected President of the prestigious Real Estate Developers’
Association of Singapore (REDAS) for 2 terms from 2007
until 2010. He served on the Board of the Institute of Real
Estate Studies, National University of Singapore from 2008 to
2011 and was a board member of the Republic Polytechnic
Board of Governors from 2008 to 2011. He was also a Council
Member of the Singapore Business Federation, a position he
held from 2007 to 2010. Resident of Singapore.
Responsibilities:
Chairman of the Board, Non-Executive Director, Chairman
of Investments Committee, Member of Remuneration
Committee, Member of Nominations Committee.
Directorships held in other listed entities:
SC Global Developments Limited, Chairman and Chief
Executive Officer, since 14 March 2000.
Jerome Rowley SF Fin, FAICD
Director since 22 March 2007. Mr Rowley has been a career
banker since the early 1970s with Citigroup, Morgan Grenfell
and ABN Amro. From 1992 until 2002, he served as Managing
Director and CEO of ABN Amro Australia and Head of
Relationship Management and Structured Finance for ABN
Amro, Asia Pacific. He has been active in both wholesale and
investment banking domestically and internationally. During
his career, Mr Rowley devoted considerable effort towards
the recognition, understanding and management of risk as a
means of profit optimization. Of particular significance was his
involvement in advising and funding including debt, equity
and hybrids, of infrastructure projects in both Australia and
Asia Pacific. Resident of Sydney.
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
15
Directors’ report
For the year ended 30 June 2012
INFORMATION ON THE DIRECTORS (continued)
Teck Poh Lai B.A. Hons. (Economics)
Bobby Chin CA (ICAEW) B.Acc.
Director since 18 October 2005. Mr Chin is the Chairman
of Singapore Totalisator Board and serves on the Boards of
Competition Commission of Singapore, Singapore Labour
Foundation and NTUC Enterprise Co-operative Limited.
He is also a member of the Singapore Council of Presidential
Advisers. Mr Chin served 31 years with KPMG Singapore and
was its Managing Partner from 1992 until September 2005.
He is a Fellow of the Institute of Certified Public Accountants
in Singapore, and an Associate Member of the Institute of
Chartered Accountants in England and Wales. Resident of
Singapore.
Responsibilities:
Non-Executive Director,
Chairman of Audit Committee.
Directorships held in other listed entities:
Oversea-Chinese Banking Corporation Limited, since
1 October 2005.
Yeo Hiap Seng Limited, since 15 May 2006.
Ho Bee Investment Limited, since 29 November 2006.
Sembcorp Industries Limited,
since 1 December 2008.
Singapore Telecommunications Limited, since 1 May 2012.
Bruce G Hayman
Director since 18 October 2005. Mr Hayman has over 43
years commercial management experience with 21 of those
at operational Chief Executive or General Manager Level.
He is currently Chairman of Chartwell Management Services
where he brings his very wide business experience to clients
by way of the leadership, marketing, business performance
and coaching programs he offers. He has fulfilled senior
management roles both in Australia and overseas for
companies such as Nicholas Pharmaceutical Group, Dairy
Farm Group, Hong Kong Land and Seagram Corporation.
During his time in Singapore, he held the position of
Foundation President of the Singapore Australia Business
Council. He has also served as CEO of the Australian Rugby
Union. For his contribution to tourism in Australia, he has
been recognised by Tourism Training Australia with a Platinum
award. He is Chairman of the Board of The Rugby Club Ltd
and is the Deputy Chairman and a Director of the Australian
Diabetes Council – NSW. Resident of Sydney.
Responsibilities:
Non-Executive Director, Member of Remuneration
Committee, Member of Nominations Committee, Member
of Investments Committee, Member of Risk Management
Committee.
Directorships held in other listed entities:
None.
Director since 18 November 2011. Mr Lai has been a career
banker since the late 1960s. He joined Citibank Singapore
in April 1968, rising through the ranks to become Vice
President and Head of the Corporate Banking Division.
During his time with Citibank, Mr Lai undertook international
assignments with Citibank in Jakarta, New York and London.
His last position with Citigroup was as Managing Director
of Citicorp Investment Banking Singapore Ltd (Corporate
Finance and Capital Market Activities) from 1986 to 1987. Mr
Lai joined Oversea-Chinese Banking Corporation (OCBC) in
January 1988 as Executive Vice President and Division Head
of Corporate Banking. He moved on to various other senior
management positions in OCBC, such as Head of Information
Technology and Central Operations and Risk Management.
He was head of Group Audit prior to retiring in April 2010.
Resident of Singapore.
Responsibilities
Non-Executive Director, Member of Audit Committee,
Member of Remuneration Committee.
Directorships held in other listed entities:
WBL Corporation Limited, since 2 August 1993.
PT Bank OCBC NISP Tbk (Commissioner), since
4 September 2008.
Oversea-Chinese Banking Corporation, since 1 June 2010.
INFORMATION ON COMPANY SECRETARIES
Carl D Thompson LLB B. Comm.
Company Secretary since 12 January 2009. Mr Thompson
previously held the company secretary and general counsel
role at Downer EDI Limited. Prior to that he was a partner at
national law firm Corrs Chambers Westgarth, practising in
corporate and commercial work. Resident of Melbourne.
Sandra A Vogiatzakis B.A.
Company Secretary since 9 November 2004. Mrs Vogiatzakis
has been with the Company and its related corporations
since 1990 and was appointed Executive Officer in April 2006.
Resident of Melbourne.
REMUNERATION REPORT (Audited)
This Remuneration Report outlines the remuneration
arrangements of the Company and the Group in accordance
with the requirements of the Corporations Act 2001 (the Act)
and its regulations. This information has been audited as
required by section 308(3C) of the Act.
The Remuneration Report details the remuneration
arrangements of Key Management Personnel (KMP) who are
defined as those persons having authority and responsibility
for planning, directing and controlling the major activities of
the Company and the Group, directly or indirectly, including
any Director (whether executive or otherwise) of the Parent
Entity and some of the Executive Committee members.
16 | AVJENNINGS LIMITED · ABN 44 004 327 771
Directors’ report
For the year ended 30 June 2012
REMUNERATION REPORT (Audited) (continued)
2.2 Non-Executive Director Remuneration Arrangements
The Remuneration Report is presented under the
following sections:
1. Individual Key Management
Personnel disclosures
Details of KMP are set out below:
(i)
Directors
S Cheong
RJ Rowley
PK Summers
E Sam
B Chin
Chairman (Non-Executive)
Deputy Chairman (Non-
Executive)
Managing Director and Chief
Executive Officer
Director (Non-Executive)
Director (Non-Executive)
BG Hayman
Director (Non-Executive)
TP Lai
HR Hochstadt
Director (Non-Executive)
- Appointed 18 November 2011
Director (Non-Executive)
- Retired 18 November 2011
(ii)
Executives
Executive Committee Members (KMP)
M Henesey-Smith
A Soutar
Executive General Manager
(QLD, SA & NZ)
Executive General Manager
(NSW & VIC) - Appointed
12 July 2012
SC Orlandi
Chief Financial Officer
CD Thompson
L Hunt
Company Secretary/General
Counsel
General Manager, Human
Resources
2.
Principles Used to Determine the Nature
and Amount of Remuneration
2.1 The Remuneration Committee
The Remuneration Committee comprises four Non-Executive
Directors.
The Remuneration Committee has delegated decision making
authority for some matters related to the remuneration
arrangements for Executive Directors and Executives, and is
required to make recommendations to the Board on other
matters such as equity-based performance plans.
The Committee approves the remuneration arrangements
of the Chief Executive Officer and other Executives which
includes awards made under the long-term incentive (LTI)
plan. The Board sets the fees for Non-Executive Directors.
The objective is to ensure that remuneration policies and
structures are fair and competitive and aligned with the long-
term interests of the Group.
The Chief Executive Officer attends Remuneration Committee
Meetings by invitation, where management input is required.
The Chief Executive Officer is not present during any
discussions related to his own remuneration arrangements.
The Board seeks to set aggregate remuneration at a level
that provides the Group with the ability to attract and retain
Directors of the highest calibre, whilst incurring a cost that is
acceptable to Shareholders.
Fees and payments to Non-Executive Directors reflect the
demands which are made on, and the responsibilities of, the
Directors.
The amount of aggregate remuneration sought to be
approved by Shareholders and the fee structure is reviewed
periodically against fees paid to Non-Executive Directors of
comparable companies.
Two Non-Executive Directors, Mr S Cheong and Mrs E Sam,
do not receive fees, however AVJennings pays a consulting
fee to the Ultimate Parent Entity, SC Global Developments
Limited.
Non-Executive Directors do not participate in any incentive
programs.
The remuneration of Non-Executive Directors for the years
ended 30 June 2012 and 30 June 2011 is detailed on page 19
of this Report.
2.3. Executive Remuneration Arrangements
AVJennings executive remuneration strategy is designed to
attract, motivate and retain high performing individuals and
align the interests of Executives and Shareholders.
The executive remuneration framework consists of fixed
remuneration and short and long-term incentives as outlined
below.
AVJennings aims to reward Executives with a level and mix
of remuneration commensurate with their position and
responsibilities, and aligned with market practice.
i) Fixed Remuneration
Fixed Remuneration is represented by Total Employment
Cost (TEC) which comprises base salary, superannuation
contributions and other benefits.
Executive contracts of employment do not include any
guaranteed base pay increases. TEC is reviewed annually to
ensure that the Executive’s pay is competitive with the market.
An Executive’s pay is also reviewed on promotion.
The fixed component of executive remuneration is detailed in
the tables on page 20.
ii) Short Term Incentive (STI)
A formal STI program has been developed for senior
executives. The objective of the STI program is to link
executive remuneration with appropriate performance
targets. STI’s for corporate executives are linked to corporate
results as well as individual performance targets, whereas STI’s
for state executives are linked to business unit results as well
as individual performance targets.
An STI program exists for operational management. The
objective of the STI program is to link the achievement
of the Consolidated Entity’s operational targets with the
remuneration received by the Executives charged with
meeting those targets. The potential STI available is set at
a level so as to provide sufficient incentive to the Executive
to achieve the operational targets and such that the cost to
AVJennings is reasonable in the circumstances.
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
17
Directors’ report
For the year ended 30 June 2012
REMUNERATION REPORT (Audited) (continued)
Vesting subject to both service and performance conditions
Actual STI payments awarded depend on the extent to which
specific targets set at the beginning of the financial year are
met. The targets consist of a number of Key Performance
Indicators (KPIs) relating to financial outcomes (such as
contribution to net profit before tax for the business unit
or the business segment); business outcomes (such as
efficient and effective performance of functions); and cultural
factors (such as improved safety performance, leadership,
compliance and governance issues). These measures were
chosen because they represent the key drivers for the
short-term success of the business and provide a framework
for delivering long-term value. These measures also take
into account current market conditions and the associated
opportunities and risks.
On an annual basis, after consideration of the performance
against the KPIs, the Remuneration Committee determines
the amount, if any, of the short-term incentive to be paid to
each Executive. This usually occurs within two months of the
reporting date. Amounts payable are delivered as a cash
bonus in the following reporting period.
iii) Long Term Incentive (LTI)
LTI awards are made to executives in order to align
remuneration with the creation of shareholder value over the
long-term. As such, LTI awards are only made to executives
who are in a position to have an impact on the Group’s
performance against the relevant long-term performance
measures.
Share-based compensation
The AVJ Deferred Employee Share Plan (the LTI Plan)
administers employee share schemes under which shares may
be purchased on-market by the LTI Plan Trustee on behalf
of employees. These shares vest to employees for no cash
consideration subject to certain conditions being satisfied.
Employees may elect not to participate in the scheme. Shares
held by the LTI Plan’s trust and not yet allocated to employees
at the end of the reporting period are shown as treasury
shares in the Financial Statements.
Share-based compensation benefits are provided to
Executives via the Plan. These equity-settled transactions
are measured at fair value at the grant date. The original
cost of the shares is treated as a reduction in share capital
and the underlying shares identified separately as treasury
shares. The fair value of the shares at the grant date is
expensed on a straight-line basis over the vesting period with
a corresponding increase in share-based payment reserve in
equity.
Vesting subject to service condition only
The Chief Executive Officer was granted 1,000,000 shares
on 7 March 2009 which vested in equal proportions on the
first, second and third anniversary of his appointment. The
vesting dates were 19 February 2010, 19 February 2011 and
19 February 2012. The market value of the shares at the grant
date was taken to be the fair value. The service condition was
the continuity of employment over the 3 years. These shares
have vested.
2011 Grant
A total of 1,375,452 shares were granted on 28 September
2010 to certain executives. As detailed in the table on
page 18, these include 1,136,816 shares for KMP. The
remaining shares were granted to executives who were
not KMP.
2012 Grant
An additional 1,695,735 shares were granted on 5 September
2011 to certain executives. As detailed in the table on
page 18, these include 1,454,555 shares for KMP. The
remaining shares were granted to executives who were
not KMP.
These shares are subject to both service and performance
conditions and will vest to the extent that each of these
conditions is satisfied.
The service vesting condition is that the employee must still
be employed by AVJennings at 30 September 2013 (for the
2011 grant) and 30 September 2014 (for the 2012 grant). In
the event of death or permanent disablement, the shares
may vest to the estate at the Board’s discretion. In the event
that the employee is retrenched, the shares may vest subject
to Board discretion. If the employee resigns (in certain
circumstances) or is terminated, the unvested shares will be
forfeited.
The performance vesting conditions are:
• Total Shareholder Return (TSR) performance measured
against the ASX Small Industrials Index; and
• Earnings Per Share (EPS) growth. AVJennings’ EPS growth
for the performance period must meet or exceed the
target set. The EPS hurdle for total vesting of the 2011
grant is 10% p.a. growth for the three financial years to 30
September 2013, while that for the 2012 grant is 10% p.a.
growth for the three financial years to 30 September 2014.
Half of the allocation is assessed against each performance
condition. The vesting schedule for the TSR performance
condition is set out in the table below. The holder of the
shares is entitled to receive all dividends paid between grant
and vesting date.
AVJennings’ TSR rank against
companies in the Index
Percentage vesting
< median
At the median
> median but < 75th percentile
Nil
50%
Pro-rata between
50th and 75th
percentiles
>=75th percentile
100%
The fair value of the EPS element of the shares is the market
value at grant date. The Monte Carlo Model is used to fair
value the TSR element. The Model simulates AVJennings’ TSR
and compares it against the ASX Small Industrials Retail Index.
The Model takes into account historic dividends, share price
volatilities and the risk-free yield on an Australian Government
Bond at the grant date matching the remaining effective life
of 3 years.
18 | AVJENNINGS LIMITED · ABN 44 004 327 771
Directors’ report
For the year ended 30 June 2012
REMUNERATION REPORT (Audited) (continued)
2.3. Executive Remuneration Arrangements (continued)
Name
Executive Committee Members
(KMP)
PK Summers
PK Summers
PK Summers
M Henesey-Smith
M Henesey-Smith
CD Thompson
CD Thompson
SC Orlandi
SC Orlandi
L Hunt
L Hunt
Total
Shares Granted
Number of Shares Vested
Year
Granted
Number
Fair Value
Unvested
at 1 July
2011
Vested
during the
year
Unvested
at 30 June
2012
2009
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
1,000,000
$180,000
691,591
$312,945
884,891
$311,924
158,344
202,601
106,183
135,861
102,458
131,094
78,240
100,108
$71,651
$71,417
$48,048
$47,891
$46,362
$46,211
$35,404
$35,288
333,334
691,591
-
158,344
-
106,183
-
102,458
-
78,240
-
333,334
-
-
-
-
-
-
-
-
-
-
-
691,591
884,891
158,344
202,601
106,183
135,861
102,458
131,094
78,240
100,108
3,591,371
$1,207,141
1,470,150
333,334
2,591,371
AVJennings prohibits Executives from entering into arrangements to protect the value of unvested LTI awards. This prohibition
includes entering into hedging arrangements in relation to AVJennings shares.
3. Group Performance
The table below shows the Consolidated Entity’s earnings performance as well as the movement in the Consolidated Entity’s
Earnings Per Share (EPS) and Total Shareholder Return (TSR) over the current and previous 4 years.
Financial
Report Date
30 June 2008
30 June 2009
30 June 2010
30 June 2011
30 June 2012
Financial
Period
12 months
12 months
12 months
12 months
12 months
Profit / (Loss)
After Tax
$’000
11,231
(12,724)
9,616
12,893
(29,828)
Basic
EPS
Cents
4.87
(4.68)
3.51
4.72
(10.99)
TSR
Cents
(0.67)
(0.34)
0.21
0.05
(0.17)
4. Employment Contracts
i) Chief Executive Officer
Mr Summers’ contract of employment does not have a
termination date and does not stipulate a termination
payment. However, it specifies a six month notice period.
Details regarding the remuneration paid to Mr Summers are
contained in the table on page 19.
During the year no options were either granted to, or
exercised by, Mr Summers. There are currently no unexercised
or outstanding options.
ii) Other Executives
The remaining AVJennings Executives are full time permanent
employees with executive employment contracts. The
employment contracts do not have termination dates or
termination payments. However, they specify a notice period
of three months. There are no other terms or conditions that
differ significantly from the standard employment contracts
applicable to other AVJennings employees. During the year,
no options were granted to, or exercised by, the Executives.
There are currently no unexercised or outstanding options.
5.
Remuneration of Key Management Personnel
of the Company and the Consolidated Entity
Details of the nature and amount of each element of
remuneration of Directors and Executives are set out in the
tables on pages 19 and 20. The Directors are the same as
those identified in the Directors’ Report.
6.
Remuneration Options: Granted and
Vested During the Year
No options were either granted or exercised during the year.
There are currently no unexercised or outstanding options.
None of the Directors or Executives hold any options.
REMUNERATION REPORT (Audited) (continued)
Directors
Short-Term
Post
Employment
Salary /
Fees
$
Cash
Bonus
$
Other
$
Superannuation
(3)
$
30 June 2012
S Cheong(1)
RJ Rowley
-
77,982
-
-
-
-
PK Summers(2)
384,803
95,597
61,053
E Sam(1)
HR Hochstadt(4)
B Chin
BG Hayman
TP Lai(5)
-
21,410
60,000
45,872
32,820
-
-
-
-
-
-
-
-
-
-
-
6,982
50,000
-
-
-
4,128
-
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
19
Directors’ report
For the year ended 30 June 2012
Long-
Term
Long
Service
Leave
$
Share-
based
Total
Performance
Related
Shares
$
$
%
-
-
-
-
-
84,964
-
-
22,585
201,496
815,534
34.85
-
-
-
-
-
-
-
-
-
-
-
21,410
60,000
50,000
32,820
-
-
-
-
-
-
-
622,887
95,597
61,053
61,110
22,585
201,496
1,064,728
30 June 2011
S Cheong(1)
RJ Rowley
-
77,982
-
-
-
-
PK Summers(2)
424,847
123,750
63,200
E Sam(1)
HR Hochstadt
B Chin
BG Hayman
-
50,000
60,000
45,872
-
-
-
-
-
-
-
-
-
7,018
46,543
-
-
-
4,128
-
-
-
-
-
85,000
38,192
163,989
860,521
23.47
-
-
-
-
-
-
-
-
-
50,000
60,000
50,000
-
-
-
-
658,701
123,750
63,200
57,689
38,192
163,989
1,105,521
(1)
(2)
(3)
These Directors were not paid fees. A consulting fee of $50,000 per
month was paid to the ultimate parent entity SC Global Developments
Limited which covers the services of these Directors. International
airfares to attend meetings are paid for by a related entity.
‘Other’ relates to the value of motor vehicle benefits.
Payments to Defined Contribution Plans. Consists of Superannuation
Guarantee Contribution payments as well as employee voluntary
contributions. The Consolidated Entity does not contribute to any
Defined Benefit Plans.
(4) Retired 18 November 2011.
(5) Appointed 18 November 2011.
(a)
(b)
Directors are also reimbursed for airfares (other than the international
airfares for those Directors referred to in (1) above), and other expenses
relating to the provision of their services.
With the exception of share-based compensation for the Chief
Executive referred to in 2.3(iii), there were no other share-based
payments made to Directors in the year under review.
20 | AVJENNINGS LIMITED · ABN 44 004 327 771
Directors’ report
For the year ended 30 June 2012
REMUNERATION REPORT (Audited) (continued)
Executives
Short-Term
Post
Employment
Salary /
Fees
$
Cash
Bonus
$
Other (1)
$
Superannuation(2)
$
Long-
Term
Long
Service
Leave
$
Share-
based
Total
Performance
Related
Shares
$
$
%
30 June 2012
M Henesey-Smith
306,319
43,775
15,000
SC Orlandi
284,114
14,163
CD Thompson
239,465
14,678
L Hunt
194,166
10,815
-
-
-
50,000
15,775
44,575
24,775
15,597
43,186
473,877
12,286
27,943
354,281
4,616
2,838
28,960
332,294
21,339
253,933
1,024,064
83,431
15,000
135,125
35,337
121,428
1,414,385
30 June 2011
M Henesey-Smith
285,828
42,500
15,000
SC Orlandi
282,216
8,250
CD Thompson
222,227
21,375
L Hunt
196,615
10,500
-
-
-
52,128
15,199
56,599
15,199
18,074
17,913
431,443
9,490
3,067
1,758
11,591
326,746
12,012
315,280
8,851
232,923
986,886
82,625
15,000
139,125
32,389
50,367
1,306,392
18.35
11.88
13.13
12.66
14.00
6.07
10.59
8.31
(1)
(2)
Represents the value of motor vehicle benefits.
Payments to Defined Contribution Plans. Consists of Superannuation Guarantee Contribution payments as well as employee voluntary contributions.
The Consolidated Entity does not contribute to any Defined Benefit Plans.
MEETINGS OF DIRECTORS AND DIRECTORS’ COMMITTEES
The number of meetings of Directors and Directors’ committees held during the year, for the period the Director was a Member
of the Board or a Committee, and the number of meetings attended by each Director are detailed below.
Full Meetings of
Directors
Audit
Remuneration
Nominations
Risk Management
Meetings of Committees
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
S Cheong
RJ Rowley
PK Summers
E Sam
HR Hochstadt(1)
B Chin
BG Hayman
TP Lai(2)
6
6
6
6
3
6
6
3
6
6
6
6
3
5
6
3
-
3
-
3
-
3
-
1
-
3
-
3
-
3
-
1
1
-
-
1
1
-
1
-
1
-
-
1
1
-
1
-
2
2
-
2
2
-
2
-
2
2
-
2
2
-
2
-
-
5
-
-
-
-
5
-
-
5
-
-
-
-
5
-
(1) Retired on 18 November 2011.
(2) Appointed on 18 November 2011.
Investments Committee
The Investments Committee does not formally meet in person. It conducts physical inspections of certain major development
sites and receives detailed briefings from management on all major development sites prior to consideration of formal
acquisition proposals which are dealt with by way of circular resolution.
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
21
Directors’ report
For the year ended 30 June 2012
criminal proceedings that may be brought against the Officers
in their capacity as Officers of entities in the Consolidated
Entity. In accordance with common practice, the insurance
policy prohibits disclosure of the nature of the liability insured
against and the amount of the premium.
ROUNDING OF AMOUNTS
The amounts contained in this Report and in the Financial
Statements have been rounded to the nearest $1,000 (where
rounding is permitted) under the option available to the
Company under the Australian Securities and Investments
Commission (ASIC) Class Order 98/100. The Company is an
entity to which the Class Order applies.
DIRECTORS’ INTERESTS
The relevant interests of the Directors in the shares of the
Company at the date of this Report are:
Director
S Cheong
E Sam
PK Summers
RJ Rowley
Number
137,370,023
149,534
1,275,481
180,000
INDEMNIFYING OFFICERS
During the year, the Consolidated Entity paid a premium in
respect of a contract insuring its Directors and employees
against liabilities that may be incurred in defending civil or
AUDITOR’S INDEPENDENCE DECLARATION
We have obtained the following Independence Declaration from our auditors, Ernst & Young:
In relation to our audit of the financial report of AVJennings Limited for the financial year ended 30 June 2012, to the best of
my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations
Act 2001 or any applicable code of professional conduct.
Ernst & Young
27 September 2012
Mark Conroy
Partner
Liability limited by a scheme
approved under Professional Standards
Legislation
NON-AUDIT SERVICES
A number of non-audit services were provided by the Consolidated Entity’s auditor, Ernst & Young. These non-audit services are
detailed in note 8 to this Financial Report. The Directors are satisfied that the provision of non-audit services is compatible with
the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type
of non-audit service provided means that auditor independence was not compromised.
This Report is made in accordance with a resolution of the Directors.
Simon Cheong
Director
27 September 2012
Peter Summers
Director
22 | AVJENNINGS LIMITED · ABN 44 004 327 771
consoliDateD statement of comprehensive income
For the year ended 30 June 2012
Continuing operations
Revenues
Share of profits of associates and joint venture entities
accounted for using the equity method
Change in inventories, finished goods and work-in-progress
Provision for loss on inventories
Provision for loss on equity accounted investments
Other operational expenses
Advertising expenses
Display costs
Employee expenses
Depreciation and amortisation expense
Finance costs
Fair value (loss)/gain on interest rate derivatives
Other expenses
Profit/(loss) from continuing operations before income tax
Income tax credit/(expense)
Note
2012
$’000
2011
$’000
5
5
5
5
5
9
188,809
215,901
5,759
(151,244)
(48,621)
(1,311)
(5,595)
(3,250)
(1,007)
1,779
(153,986)
-
-
(5,375)
(3,437)
(1,088)
(19,088)
(21,535)
(353)
(475)
(119)
(486)
(914)
441
(9,459)
(11,357)
(45,954)
19,943
16,126
(5,343)
Profit/(loss) from continuing operations after income tax
(29,828)
14,600
Discontinued operations
Loss from discontinued operations after income tax
10
-
(1,707)
Net profit/(loss) for the year
(29,828)
12,893
Other comprehensive income
Foreign currency translation
Other comprehensive income/(loss) for the year net of tax
100
100
(427)
(427)
Total comprehensive income/(loss) for the year
(29,728)
12,466
Earnings per share for profit/(loss) from continuing operations
attributable to ordinary equity holders of the parent:
Cents
Cents
Basic earnings per share
Diluted earnings per share
12
12
(10.99)
(11.03)
Earnings per share for loss from discontinued operations
attributable to ordinary equity holders of the parent:
Basic earnings per share
Diluted earnings per share
Earnings per share for profit/(loss) attributable to ordinary equity
holders of the parent:
Basic earnings per share
Diluted earnings per share
-
-
12
12
(10.99)
(11.03)
5.35
5.19
(0.63)
(0.62)
4.72
4.57
consoliDateD statement of financial position
As at 30 June 2012
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
23
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Tax receivable
Other current assets
Total current assets
NON-CURRENT ASSETS
Inventories
Investments accounted for using the equity method
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
CURRENT LIABILITIES
Trade and other payables
Derivative financial instruments
Interest-bearing loans and borrowings
Tax payable
Provisions
Total current liabilities
NON-CURRENT LIABILITIES
Trade and other payables
Interest-bearing loans and borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Note
13
14
15
16
15
17
21
22
23
24
25
27
23
24
26
27
2012
$’000
4,560
35,522
73,872
514
2,112
2011
$’000
12,260
17,159
131,231
-
1,300
116,580
161,950
353,152
24,407
1,174
2,816
285,630
41,131
1,087
2,816
381,549
330,664
498,129
492,614
46,946
187
1,100
-
3,667
48,485
68
62,529
3,540
3,235
51,900
117,857
47,520
123,137
5,938
641
43,400
6,619
19,516
694
177,236
70,229
229,136
188,086
268,993
304,528
Equity attributable to equity holders of the parent
Contributed equity
Reserves
Retained earnings
Total equity
28
29(a)
29(c)
121,096
121,835
430
(94)
147,467
182,787
268,993
304,528
24 | AVJENNINGS LIMITED · ABN 44 004 327 771
consoliDateD statement of changes in equity
For the year ended 30 June 2012
Attributable to equity holders of the Parent
Total equity
Foreign
Currency
Translation
Reserve
Share-
based
Payment
Reserve
Contributed
Equity
Retained
Earnings
Note
$’000
$’000
$’000
$’000
$’000
At 1 July 2010
122,578
Profit for the year
Other comprehensive loss for the year
Total comprehensive income for the year
Transactions with owners in their
capacity as owners
-
-
-
- Treasury shares acquired
28(b)
(743)
- Foreign currency translation reserve
- Share-based payment reserve
- Dividends paid
11
-
-
-
-
-
(427)
(427)
-
10
-
-
(743)
(417)
81
176,759
299,418
-
-
-
-
-
242
-
242
12,893
12,893
-
(427)
12,893
12,466
-
-
-
(6,865)
6,028
(743)
10
242
(6,865)
5,110
At 30 June 2011
121,835
(417)
323
182,787
304,528
Loss for the year
Other comprehensive income for the
year
Total comprehensive loss for the year
Transactions with owners in their
capacity as owners
-
-
-
- Treasury shares acquired
28(b)
(739)
- Foreign currency translation reserve
- Share-based payment reserve
- Dividends paid
11
-
-
-
-
100
100
-
60
-
-
(739)
160
-
-
-
-
-
364
-
364
(29,828)
(29,828)
-
100
(29,828)
(29,728)
-
-
-
(739)
60
364
(5,492)
(5,492)
(35,320)
(35,535)
At 30 June 2012
121,096
(257)
687
147,467
268,993
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
25
consoliDateD statement of cash flows
For the year ended 30 June 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers, land vendors and employees
Interest paid
Income tax paid
Note
2012
$’000
2011
$’000
188,798
(230,949)
(10,809)
(3,498)
248,672
(254,104)
(10,863)
(1,157)
Net cash used in operating activities
30
(56,458)
(17,452)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Proceeds from sale of discontinued operations
Interest received
Distribution received
Dividends received
Investments in associates and joint venture entities
21
53
(641)
-
481
1,380
-
(1,361)
819
(657)
21,304
907
4,510
1,000
(3,594)
Net cash (used in)/from investing activities
(88)
24,289
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Loans from related parties
Repayment of borrowings
Payment of finance lease liability
Payment for treasury shares
Equity dividends paid
Net cash from/(used in) financing activities
NET DECREASE IN CASH HELD
Cash and cash equivalents at beginning of year
Effects of exchange rate changes on cash and cash equivalents
28(b)
103,601
-
124,238
2,000
(48,482)
(137,120)
(30)
(739)
(5,492)
(207)
(743)
(6,865)
48,858
(18,697)
(7,688)
12,260
(12)
(11,860)
24,110
10
CASH AND CASH EQUIVALENTS AT END OF YEAR
13
4,560
12,260
26 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
1. CORPORATE INFORMATION
The Consolidated Financial Statements of AVJennings
Limited for the year ended 30 June 2012 were authorised
for issue in accordance with a resolution of the Directors on
27 September 2012.
AVJennings Limited (the Parent) is a Company limited by
shares incorporated in Australia whose shares are publicly
traded on the Australian Securities Exchange and the
Singapore Exchange through the Central Limit Order
Book System (CLOB). The ultimate parent is SC Global
Developments Limited, a company incorporated in Singapore
which owns 50.03% of the ordinary shares in AVJennings
Limited.
The Consolidated Entity (“AVJennings”, “Consolidated
Entity” or “Group”) consists of AVJennings Limited (the
“Company” or the “Parent Entity”) and its controlled entities.
The nature of the operations and principal activities of the
Consolidated Entity are described in the Directors’ Report.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of preparation
The Financial Report is a general purpose financial report,
which has been prepared in accordance with the requirements
of the Corporations Act 2001, Australian Accounting
Standards and other authoritative pronouncements of the
Australian Accounting Standards Board. The Financial Report
has also been prepared on a historical cost basis, except for
derivative financial instruments which have been measured
at fair value with variations reflected in the profit and loss
account.
The preparation of consolidated financial statements
requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the
process of applying accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the Consolidated
Financial Statements, are disclosed in note 4. AVJennings is a
for-profit entity for the purpose of preparing the Consolidated
Financial Statements.
The Financial Report is presented in Australian Dollars and
all values are rounded to the nearest thousand dollars ($’000)
unless otherwise stated.
a) Compliance with IFRS
The Financial Report also complies with the International
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
b)
New accounting standards and interpretations
(i)
Changes in accounting policy and disclosures:
The accounting policies adopted are consistent with those of
the previous financial year.
None of the new Standards and amendments to Standards
that are mandatory for the first time for the financial year
beginning 1 July 2011 affected any of the amounts recognised
in the current period or any prior period and are not likely to
affect future periods.
(ii)
Accounting Standards and Interpretations issued but not
yet effective:
Certain new Australian Accounting Standards and
Interpretations have been published that are not mandatory
for 30 June 2012 reporting periods. The Group’s assessment
of the impact of these new Standards and Interpretations is
set out on pages 26 and 27.
A) AASB 9 Financial Instruments, AASB 2009-11
Amendments to Australian Accounting Standards arising from
AASB 9, AASB 2010-7 Amendments to Australian Accounting
Standards arising from AASB 9 (December 2010) (effective
from 1 January 2015) and AASB 2012-6 Amendments to
Australian Accounting Standards – Mandatory Effective Date
of AASB 9 and Transition Disclosures.
AASB Financial Instruments addresses the classification,
measurement and derecognition of financial assets and
financial liabilities. The standard is not applicable until 1
January 2015 but is available for early adoption. The adoption
of this standard is not expected to have any effect on the
Consolidated Financial Statements.
B) AASB 10 Consolidated Financial Statements, AASB 11
Joint Arrangements, AASB 12 Disclosure of Interests in Other
Entities, revised AASB 127 Separate Financial Statements
and AASB 128 Investments in Associates and Joint Ventures
and AASB 2011-7 Amendments to Australian Accounting
Standards arising from the Consolidation and Joint
Arrangements Standards (effective 1 January 2013).
In August 2011, the AASB issued a suite of five new and
amended standards which address the accounting for
joint arrangements, consolidated financial statements and
associated disclosures.
AASB 10 replaces all of the guidance on control and
consolidation in AASB 127 Consolidated and Separate
Financial Statements, and Interpretation 12 Consolidation
– Special Purpose Entities. The core principle that a
consolidated entity presents a parent and its subsidiaries as
if they are a single economic entity remains unchanged, as
do the mechanics of consolidation. However, the standard
introduces a single definition of control that applies to all
entities. It focuses on the need to have both power and rights
or exposure to variable returns. Power is the current ability
to direct the activities that significantly influence returns.
Returns must vary and can be positive, negative or both.
Control exists when the investor can use its power to affect
the amount of its returns. There is also new guidance on
participating and protective rights and on agent/principal
relationships. While the Group does not expect the new
standard to have a significant impact on its composition, it
has yet to perform a detailed analysis of the new guidance
in the context of its various investees that may or may not be
controlled under the new rules.
notes to the consoliDateD financial statements
For the year ended 30 June 2012
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
27
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
b)
New accounting standards and interpretations
(continued)
AASB 11 introduces a principles based approach to
accounting for joint arrangements. The focus is no longer
on the legal structure of joint arrangements, but rather on
how rights and obligations are shared by the parties to
the joint arrangement. Based on the assessment of rights
and obligations, a joint arrangement will be classified as
either a joint operation or a joint venture. Joint ventures are
accounted for using the equity method, and the choice to
proportionately consolidate will no longer be permitted.
Parties to a joint operation will account for their share of
revenues, expenses, assets and liabilities in much of the same
way as under the previous standard. AASB 11 also provides
guidance for parties that participate in joint arrangements but
do not share joint control.
The Group’s investment in the joint venture partnership will be
classified as a joint venture under the new rules. As the Group
already applies the equity method in accounting for this
investment, AASB 11 will not have any impact on the amounts
recognised in its Consolidated Financial Statements.
AASB 12 sets out the required disclosures for entities
reporting under the two new standards, AASB 10 and AASB
11, and replaces the disclosure requirements currently found
in AASB 127 and AASB 128. Application of this standard by
the Group will not affect any of the amounts recognised in the
Consolidated Financial Statements, but will impact the type of
information disclosed in relation to the Group’s investments.
The Group has not adopted the new standards before their
operative date. They would therefore be first applied in the
Consolidated Financial Statements for the annual reporting
period ending 30 June 2014.
C) AASB 13 Fair Value Measurement and AASB 2011-8
Amendments to Australian Accounting Standards arising from
AASB 13 (effective 1 January 2013).
AASB 13 was released in September 2011. It explains how to
measure fair value and aims to enhance fair value disclosures.
The Group has yet to determine which, if any, of its current
measurement techniques will have to change as a result of the
new guidance. It is therefore not possible to state the impact,
if any, of the new rules on any of the amounts recognised in
the Consolidated Financial Statements. However, application
of the new standard will impact the type of information
disclosed in the notes to the Consolidated Financial
Statements. The Group has not adopted the new standard
before its operative date, which means that it would be first
applied in the annual reporting period ending 30 June 2014.
There are no other Standards that are not yet effective and
that are expected to have a material impact on the Group in
the current or future reporting periods and on foreseeable
future transactions.
c) Basis of consolidation
The Consolidated Financial Statements incorporate the assets
and liabilities of all subsidiaries of AVJennings Limited as at 30
June 2012 and the results of all subsidiaries for the year then
ended.
Subsidiaries are all entities (including special purpose
entities) over which the Group has the power to govern the
financial and operating policies, generally accompanying
a shareholding of more than one-half of the voting rights.
The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when
assessing whether a Group controls another entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated
from the date that control ceases.
The acquisition method of accounting is used to account for
business combinations by the Group (refer to note 2(d)).
Intercompany transactions, balances and unrealised gains
on transactions between group companies are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of the impairment of the asset transferred.
Accounting policies of the subsidiaries are consistent with the
policies adopted by the Group.
Non-controlling interests in the results and equity of
subsidiaries are shown separately in the Consolidated
Statement of Comprehensive Income, Consolidated
Statement of Changes in Equity and the Consolidated
Statement of Financial Position respectively.
The AVJ Deferred Employee Share Plan Trust was formed to
administer the Group’s employee share scheme. This Trust is
consolidated, as the substance of the relationship is that the
Trust is controlled by the Group. Shares held by the Trust are
disclosed as treasury shares and deducted from contributed
equity.
d) Business combinations
Business combinations are accounted for using the acquisition
method. The consideration transferred for the acquisition of a
subsidiary comprises the fair values of the assets transferred,
the liabilities incurred and the equity interests issued by
the Consolidated Entity. The consideration transferred also
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement and the fair value of
any pre-existing equity interest in the subsidiary. Acquisition-
related costs are expensed as incurred. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a
business combination are measured at their fair values at the
acquisition date. For each business combination, the Group
recognises any non-controlling interest in the acquiree either
at fair value or at the non-controlling interest’s proportionate
share of the acquiree’s net identifiable assets.
The excess of the consideration transferred and the amount
of any non-controlling interest in the acquiree over the fair
value of the net identifiable assets acquired is recorded as
goodwill. If those amounts are less than the fair value of
the net identifiable assets of the subsidiary acquired and
the measurement of all amounts has been reviewed, the
difference is recognised directly in profit and loss as a bargain
purchase.
28 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
d) Business combinations (continued)
Where settlement of any part of cash consideration is
deferred, the amounts payable in the future are discounted to
their present value as at the date of exchange. The discount
rate used is the entity’s incremental borrowing rate, being
the rate at which a similar borrowing could be obtained
from an independent financier under comparable terms and
conditions.
Contingent consideration is classified either as equity or a
financial liability. Amounts classified as a financial liability are
subsequently remeasured to fair value with changes in fair
value recognised in profit or loss.
e) Joint ventures
Jointly controlled assets:
Interest in jointly controlled assets is accounted for using
proportionate consolidation. AVJennings recognises its
interest in the jointly controlled assets by recognising its
interest in the assets and liabilities of the joint venture. It also
recognises its share of expenses and income from the use
and output of the jointly controlled asset. Details of the jointly
controlled assets are set out in note 20.
Joint venture entities:
The interest in a joint venture entity is accounted for using the
equity method after initially being recognised at cost. Under
the equity method, the share of the profits or losses of the
entity are recognised in the profit and loss, and the share of
post-acquisition movements in reserves is recognised in other
comprehensive income. Dividends received from joint venture
entities are recognised as a reduction in the carrying amount
of the investment. Details relating to joint venture entities are
set out in note 17(b).
Profits or losses on transactions with joint venture entities
are eliminated to the extent of the Consolidated Entity’s
ownership interest until such time as they are realised by
the joint venture entity on consumption or sale. However, a
loss on the transaction is recognised immediately if the loss
provides evidence of a reduction in the net realisable value of
current assets, or an impairment loss.
At each reporting date, the Group determines whether
there is any objective evidence that the investment in the
joint venture entity is impaired. Where evidence exists, the
impairment is calculated as the difference between the
recoverable amount of the joint venture entity and its carrying
value, and recognised in the profit and loss.
f)
Investments in associates
An associate is an entity over which the Consolidated Entity
has significant influence but not control or joint control.
Investments in associates are accounted for using the equity
method.
Under the equity method, investments in associates are
carried in the Consolidated Statement of Financial Position
at cost plus post-acquisition changes in the Consolidated
Entity’s share of net assets of the associates.
The Consolidated Entity’s share of an associate’s profits
or losses is recognised in the Consolidated Statement of
Comprehensive Income. The cumulative post-acquisition
movements are adjusted against the carrying amount of
the investment. Dividends receivable from associates are
recognised as a reduction in the carrying amount of the
investment. Details relating to associates are set out in note
17(a).
At each reporting date, the Group determines whether there
is any objective evidence that the investment in the associate
is impaired. Where evidence exists, the impairment is
calculated as the difference between the recoverable amount
of the associate and its carrying value, and recognised in the
profit and loss.
When the Consolidated Entity’s share of losses in an associate
equals or exceeds its interest in the associate, including any
unsecured long-term receivables, the Consolidated Entity
does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the associate.
Unrealised gains on transactions with associates are
eliminated to the extent of the Consolidated Entity’s interest
in the associates.
The reporting dates of the associate and the Consolidated
Entity are identical and the associate’s accounting policies
conform to those used by the Consolidated Entity.
g) Segment reporting
Operating segments are reported in a manner consistent with
the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible
for allocating resources and assessing performance of the
operating segments, has been identified as the Executive
Committee.
Information regarding business activities that are below the
quantitative criteria are combined, and disclosed in a separate
category called “other”.
h) Property, plant and equipment
Property, plant and equipment are stated at historical cost
less accumulated depreciation and accumulated impairment
losses, if any.
Depreciation is calculated on a straight-line basis over the
estimated useful life of the specific assets as follows:
Plant, equipment, and motor vehicles
Motor vehicles under finance lease
Leasehold improvements
3-7 years
2-3 years
3-10
years
Assets held under finance leases are depreciated over their
expected useful lives on the same basis as owned assets.
An asset’s carrying amount is written down to its recoverable
amount if the carrying amount is greater than the estimated
recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with the carrying amount. These are included in the
Consolidated Statement of Comprehensive Income.
The assets’ useful lives and amortisation methods are
reviewed, and adjusted if appropriate, at each financial year
end.
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
29
notes to the consoliDateD financial statements
For the year ended 30 June 2012
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
h) Property, plant and equipment (continued)
Derecognition:
An item of property, plant and equipment is derecognised
upon disposal or when no further future economic benefits
are expected from its use or disposal.
i) Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, are capitalised
as part of the cost of those assets during the period of
time required to complete and prepare the assets for their
intended use or sale.
Interest income on borrowings pending their expenditure on
qualifying assets is deducted from borrowing costs eligible for
capitalisation.
All other borrowing costs are expensed.
j)
Intangible assets
Intangible assets acquired separately are measured at cost
on initial recognition. The cost of intangible assets acquired
in a business combination are their fair value as at the date
of the acquisition. Following initial recognition, intangible
assets are carried at cost less any accumulated amortisation
and accumulated impairment losses. The Consolidated Entity
does not capitalise any expenditure resulting in the creation
of internally generated intangible assets.
The useful lives of intangible assets are assessed as either
finite or indefinite.
Intangible assets with finite lives are amortised over the
useful economic life and assessed for impairment whenever
there is an indication that the asset may be impaired. The
amortisation period and the amortisation method for an
intangible asset with a finite useful life is reviewed at least at
the end of each reporting period. Changes in the expected
useful life or the expected pattern of consumption of future
economic benefits embodied in the asset are accounted
for by changing the amortisation period or method, as
appropriate, and are treated as changes in accounting
estimates. The amortisation expense on intangible assets
with finite lives is recognised in the income statement in
the expense category consistent with the function of the
intangible assets.
Intangible assets with indefinite useful lives are not amortised,
but are tested for impairment annually. The assessment of
indefinite life is reviewed annually to determine whether
the indefinite life continues to be supportable. If not, the
change in the useful life from indefinite to finite is made on a
prospective basis.
k)
Inventories
Inventories are stated at the lower of cost and net realisable
value. Net realisable value is the estimated selling price in
the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the
sale. Estimates of net realisable value are based on the most
recent evidence available at the time the estimates are made,
of the amount the inventories are expected to realise and the
estimate of costs to complete. Refer to note 4(ii).
Development projects and land:
Cost includes the costs of acquisition, development,
borrowings and all other costs directly related to specific
projects. Borrowing and holding costs such as rates and taxes
incurred after completion of development and construction
are expensed. Costs expected to be incurred under penalty
clauses and rectification provisions are also included.
Construction contracts:
Construction work-in-progress is stated at the aggregate
of contract costs incurred to date plus recognised profits
less recognised losses and progress billings. Contract
costs include all costs directly related to specific contracts,
and costs that are specifically chargeable to the customer
under the terms of the contract. The stage of completion is
measured using the percentage of completion method.
l)
Non-current assets (or disposal groups) held
for sale and discontinued operations
Non-current assets and disposal groups are classified as held
for sale and measured at the lower of their carrying amount
and fair value less costs to sell if their carrying amount will be
recovered principally through a sale transaction instead of
use. For an asset or disposal group to be classified as held for
sale, it must be available for an immediate sale in its present
condition and its sale must be highly probable.
An impairment loss is recognised for any initial or subsequent
write-down of the asset (or disposal group) to fair value
less costs to sell. A gain is recognised for any subsequent
increases in fair value less costs to sell of an asset (or disposal
group), but not in excess of any cumulative impairment
loss previously recognised. A gain or loss not previously
recognised by the date of the sale of the non-current asset (or
disposal group) is recognised at the date of derecognition.
A discontinued operation is a component of the entity that
has been disposed of or is classified as held for sale and that
represents a separate major line of business and is part of a
single coordinated plan to dispose of such a line of business.
The results of discontinued operations are presented
separately on the face of the Consolidated Statement of
Comprehensive Income and the assets and liabilities are
presented separately on the face of the Consolidated
Statement of Financial Position.
m) Trade and other receivables
Trade receivables are carried at the amount invoiced less a
provision for impairment.
Settlement terms for trade receivables are:
•
•
Development housing and land sales – generally between
30 and 180 days
Contract building (progress billing) – generally between
7 and 30 days
Collectability of trade receivables is reviewed on an ongoing
basis. Individual debts that are known to be uncollectible
are written-off when identified. A provision for impairment
is recognised when there is objective evidence that the
Consolidated Entity will not be able to collect the receivable.
The amount of the impairment loss is the difference between
the carrying amount of the receivable and the present value
of estimated future cash flows, which are not discounted
for short-term receivables as the effect of discounting is
immaterial.
30 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
m) Trade and other receivables (continued)
Where a receivable is expected to be settled more than
twelve months after the reporting date, its carrying amount
is discounted using the effective interest rate method. The
difference between the carrying amount and the present
value is recorded in the Statement of Comprehensive Income.
n) Cash and cash equivalents
Cash and cash equivalents in the Consolidated Statement
of Financial Position comprise cash at bank and in hand and
short-term deposits with a maturity of three months or less.
For the purposes of the Consolidated Statement of Cash
Flows, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of bank overdrafts. Bank
overdrafts are included within interest-bearing loans and
borrowings in current liabilities in the Consolidated Statement
of Financial Position.
o)
Interest-bearing loans and borrowings
Loans and borrowings are initially recognised at the fair
value of the consideration received less directly attributable
transaction costs. The difference between the proceeds
(net of transaction costs) and the redemption amount
is recognised in profit and loss over the period of the
borrowings using the effective interest method. Fees paid
on establishment of loan facilities are capitalised as a
prepayment and amortised over the period of the facility.
Borrowings are classified as current liabilities unless there is
an unconditional right to defer settlement of the liability for at
least 12 months after the reporting date.
p) Provisions
Provisions are recognised when the Consolidated Entity has
a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be
required to settle the obligation and the amount has been
reliably estimated.
When the Consolidated Entity expects some or all of a
provision to be reimbursed, for example, under an insurance
contract, the reimbursement is recognised as a separate
asset, but only when the reimbursement is virtually certain.
The expense relating to any provision is presented in the
Consolidated Statement of Comprehensive Income net of
any reimbursement.
Where there are a number of similar obligations, the
likelihood that an outflow will be required in settlement
is determined by considering the class of obligations as a
whole. A provision is recognised even if the likelihood of an
outflow with respect to any one item included in the same
class of obligations may be small.
q) Employee benefits
Short-term employee benefit obligations:
Liabilities for wages and salaries, including non-monetary
benefits and annual leave expected to be settled within
12 months after the end of the reporting period in which
the employees render the related service are recognised in
respect of employees’ services up to the end of the reporting
period. They are measured at the amounts expected to be
paid when the liabilities are settled. The liability for annual
leave is recognised in the provision for employee benefits.
All other short-term employee benefit obligations are
presented as payables.
Other long-term employee benefit obligations:
The liability for long service leave and annual leave which is
not expected to be settled within 12 months after the end of
the period in which the employees render the related service
is recognised in the provision for employee benefits and
measured as the present value of expected future payments
to be made in respect of services provided by employees up
to the reporting period using the project unit credit method.
Consideration is given to expected future wage and salary
levels, experience of employee departures and periods of
service. Expected future payments are discounted at a pre-tax
rate that reflects the time value of money.
Superannuation contributions:
Contributions to superannuation plans are recognised as an
expense in the Consolidated Statement of Comprehensive
Income as they become payable.
Bonus entitlements:
A liability is recognised for bonus entitlements where
contractually obliged or where there is a past practice that has
created a constructive obligation.
r)
Share-based payment transactions
Share-based compensation benefits are provided to
Executives via the AVJ Deferred Employee Share Plan.
Information relating to the plan is set out in note 35.
The original cost of equity-settled transactions is treated as a
reduction in share capital and the underlying shares identified
separately as treasury shares. The fair value of the shares at
the grant date is expensed on a straight-line basis over the
vesting period with a corresponding increase in share-based
payment reserve in equity.
s) Leases
Consolidated Entity as lessee:
Finance leases which transfer to the Consolidated Entity
substantially all the risks and benefits incidental to ownership
of the leased item, are capitalised at the commencement of
the lease at the fair value of the leased property or, if lower,
at the present value of the minimum lease payments. Lease
payments are apportioned between finance charges and
reduction of the lease liability so as to achieve a constant rate
of interest on the remaining balance of the liability. Finance
charges are recognised as finance costs in the Consolidated
Statement of Comprehensive Income.
The property, plant and equipment acquired under finance
leases is depreciated over the asset’s useful life or over the
shorter of the asset’s useful life and the lease term if there
is no reasonable certainty that the Consolidated Entity will
obtain ownership at the end of the lease term.
Leases in which a significant portion of the risks and rewards
of ownership are not transferred to the Consolidated Entity
as lessee are classified as operating leases. Payments made
under operating leases (net of any incentives received from
the lessor) are charged to profit or loss on a straight-line basis
over the period of the lease.
notes to the consoliDateD financial statements
For the year ended 30 June 2012
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
31
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
s) Leases (continued)
Consolidated Entity as lessor:
Leases in which the Consolidated Entity does not transfer
substantially all the risks and benefits of ownership of an asset
are classified as operating leases. Initial direct costs incurred
in negotiating an operating lease are added to the carrying
amount of the leased asset and recognised over the lease
term on the same basis as rental income.
t) Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable. Revenue is recognised for the major
business activities as follows:
Development projects and land sales:
Revenue from the sale of land, houses and apartments is
recognised when the significant risks, rewards of ownership
and effective control have been transferred to the buyer. This
has been determined to occur on settlement.
Revenue from land sales is recognised prior to settlement
when a signed unconditional contract for sale exists,
the significant risks, rewards of ownership and effective
control have been transferred to the buyer, and there is no
management involvement to the degree usually associated
with ownership.
Construction contracts:
Contract building relates to Home Building Agreements
and the like, where there is a contract to build a house or
provide other residential construction services. Contract
revenue and expenses are recognised in accordance with
the percentage of completion method unless the outcome
of the contract cannot be reliably estimated. Where the
outcome of a contract cannot be reliably estimated, contract
costs are recognised as an expense as incurred, and where
it is probable that the costs will be recovered, revenue
is recognised to the extent of costs incurred. Where it is
probable that a loss will arise from a construction contract,
the excess of total costs over revenue is recognised as an
expense immediately.
Interest revenue:
Revenue is recognised as interest accrues using the effective
interest rate method.
Management fees:
Revenue is recognised upon delivery of the services.
u)
Income tax
Current tax assets and liabilities for the current year are
measured at the amount expected to be recovered from
or paid to the taxation authorities based on current year’s
taxable income. The tax rates and tax laws used to compute
the amount are those that are enacted or substantively
enacted at the reporting date.
Current income tax relating to items recognised directly in
equity is recognised in equity and not in the Consolidated
Statement of Comprehensive Income.
Deferred income tax is provided on all temporary differences
at the reporting date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes.
Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused tax credits
and any unused tax losses. Deferred tax assets are recognised
to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences,
and the carry forward of unused tax credits and unused tax
losses can be utilised.
The carrying amount of deferred tax assets is reviewed at
each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available
to allow all or part of the deferred income tax asset to be
utilised.
Unrecognised deferred income tax assets are reassessed at
each reporting date and are recognised to the extent that it
has become probable that future taxable profits will allow the
deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to be applied in the year when
the asset is realised or the liability is settled, based on tax
rates (and tax laws) that have been enacted or substantively
enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a
legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred taxes relate to
the same taxable entity and the same taxation authority.
Tax consolidation:
AVJennings Limited and its wholly-owned controlled entities
implemented the Tax Consolidation Legislation as of 1 July
2002.
The head entity, AVJennings Limited, has entered into an
agreement with its wholly-owned subsidiary, AVJennings
Properties Limited, under which AVJennings Properties
Limited will account for the current and deferred tax amounts
of the controlled entities in the Tax Consolidated Group.
The Consolidated Entity has applied the group allocation
approach in determining the appropriate amount of current
taxes and deferred taxes to allocate to the members of the
Tax Consolidated Group.
In addition to its own current and deferred tax amounts,
AVJennings Properties Limited also recognises the current
tax liabilities (or assets) and the deferred tax assets arising
from unused tax losses and unused tax credits assumed from
controlled entities in the Tax Consolidated Group.
Assets or liabilities arising under tax funding agreements
with the tax consolidated entities are recognised as amounts
receivable from, or payable to, other entities in the Group.
v) Other taxes
Revenues, expenses and assets are recognised net of the
amount of GST except:
• when the GST incurred on purchase of goods and
services is not recoverable from the taxation authority, in
which case the GST is recognised as part of the cost of
acquisition of the asset or as part of the expense item as
applicable;
receivables and payables, which are stated with the
amount of GST included.
•
32 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
v) Other taxes (continued)
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables or
payables in the Consolidated Statement of Financial Position.
Cash flows are included in the Consolidated Statement of
Cash Flows on a gross basis and the GST component of cash
flows arising from investing and financing activities, which
is recoverable from, or payable to, the taxation authority is
classified as part of operating cash flows.
Commitments and contingencies are disclosed net of the
amount of GST recoverable from, or payable to, the taxation
authority.
Treasury shares:
Shares acquired on-market for use in employee share-based
payment plans are referred to as treasury shares. The cost
of these shares is deducted from equity. No gain or loss is
recognised in profit or loss for the purchase, sale, issue or
cancellation of the Company’s shares.
aa) Foreign currency translation
(i) Functional and presentation currency:
Both the functional and presentation currency of AVJennings
Limited and its Australian subsidiaries is Australian Dollars ($).
A controlled entity, AVJ Hobsonville Pty Limited, has a branch
in New Zealand whose functional currency is New Zealand
Dollars which is translated to the presentation currency for
consolidation reporting.
w) Derivative financial instruments
(ii) Transactions and balances:
The Consolidated Entity uses interest rate swaps and caps
to hedge its risk associated with interest rate fluctuations.
These derivatives do not qualify for hedge accounting and
changes in fair value are recognised immediately as income or
expenses in profit and loss.
Derivative financial instruments are initially recognised at fair
value on the date a derivative contract is entered into and are
subsequently remeasured to their fair value at the end of each
reporting period. Derivative financial instruments are not held
for trading purposes.
x) Trade and other payables
Trade and other payables represent liabilities for goods and
services provided to the Consolidated Entity prior to the
end of the financial year which are unpaid. The amounts
are unsecured and are usually paid within 30 to 60 days of
recognition.
y) Earnings per share
Basic earnings per share is calculated as net profit attributable
to members of the parent, adjusted to exclude any costs
of servicing equity (other than dividends), divided by the
weighted average number of ordinary shares, adjusted for any
bonus element.
Diluted earnings per share is calculated as net profit
attributable to members of the parent, adjusted for:
• costs of servicing equity (other than dividends);
•
the after tax effect of dividends and interest associated
with dilutive potential ordinary shares that have been
recognised as expenses; and
• other non-discretionary changes in revenues or expenses
during the period that would result from the dilution
of potential ordinary shares, divided by the weighted
average number of ordinary shares and dilutive potential
ordinary shares, adjusted for any bonus element.
z) Contributed equity
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds.
Foreign currency transactions are translated into the Entity’s
functional currency at the rates of exchange prevailing at the
dates of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and from
the translation at reporting date exchange rates of monetary
assets and liabilities denominated in foreign currencies are
recognised in profit and loss, except when they are deferred
in equity as they are attributable to part of the net investment
in a foreign operation.
Non-monetary items that are measured in terms of historical
cost in a foreign currency are translated using the exchange
rates as at the date of the initial transaction. Non-monetary
items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair
value was determined.
(iii) Translation of Group Companies’ functional currency to
presentation currency:
The results and financial position of foreign operations that
have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
• assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet;
income and expenses for each statement of
comprehensive income are translated at average
exchange rates;
•
• all resulting exchange differences are recognised in other
comprehensive income.
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities are
recognised in other comprehensive income. When a foreign
investment is sold or any borrowings forming part of the net
investment are repaid, the associated exchange differences
are reclassified to profit or loss, as part of the gain or loss on
sale.
ab) Comparative figures
To enable meaningful comparison, some comparatives
have been reclassified to conform with the current year’s
presentation.
notes to the consoliDateD financial statements
For the year ended 30 June 2012
3.
FINANCIAL RISK MANAGEMENT
(i) Interest rate risk
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
33
The Consolidated Entity’s principal financial instruments
comprise receivables, payables, finance leases, derivatives,
cash, bank loans and overdrafts.
Risk Management is carried out by a central treasury
department under policies approved by the Board of
Directors. The objective of the policies is to support the
delivery of financial targets and manage key financial risks
such as interest rates, foreign currency, credit and liquidity.
The overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise
potential adverse effects on the financial performance of the
Consolidated Entity.
AVJennings enters into derivative transactions, principally
interest rate cap and interest rate swap contracts, to hedge
interest rate risk exposures. Derivatives are exclusively used
for hedging purposes, i.e. not as trading or other speculative
instruments.
The Consolidated Entity uses different methods to measure
and manage different types of risks to which it is exposed.
These methods include sensitivity analysis in the case of
interest rates and ageing analysis for credit risk. Liquidity
risk is managed through the development of future rolling
cash flow forecasts and the continuity of funding through the
facilities mentioned in notes 24(a) and 24(b).
Primary responsibility for identification and control of financial
risks rests with management under the authority of the Board.
The Board reviews and agrees on policies for managing each
of the risks identified below.
The Consolidated Entity’s exposure to market interest rates
relates to the obligations arising from interest-bearing loans
and overdraft. The level of debt is disclosed in note 24.
The policy is to manage finance costs using a mix of fixed
and variable rate debt with a target to have approximately
50% of forecast average borrowings at fixed or capped rates
of interest. Forecast average borrowings are derived from
periodic rolling cash flow forecasts which include an allowance
for potential acquisitions. Please refer to the table below for
the position at the reporting date.
To manage the mix of fixed and variable debt in a cost
efficient manner, the Consolidated Entity enters into interest
rate cap and floating-to-fixed interest rate swap contracts.
The fair value exposure on derivatives is a by-product of
the Consolidated Entity’s attempt to manage the cash flow
volatility arising from interest rate changes.
Interest rate cap contracts are entered into for a notional
principal amount by paying an upfront premium that covers
a specific period. The strike rates for these contracts are
benchmarked against the BBSY bid rate (Australian Bank Bill
Swap Reference Rate - Average Bid Rate) on a quarterly basis.
Settlement occurs quarterly, in favour of the Consolidated
Entity, should the BBSY bid rate be above the cap strike rate
(movements in the variable rate are directly proportional to
movements in the BBSY bid rate).
By entering into interest rate swaps, the Consolidated Entity
agrees to exchange, at the end of each quarter, the difference
between fixed and variable rate interest amounts calculated
by reference to an agreed-upon notional principal amount.
The Consolidated Entity’s interest rate derivatives do not
qualify for hedge accounting treatment. Gains or losses arising
from changes in fair value are recognised in profit or loss.
At the reporting date, the following variable rate borrowings, interest rate swap and interest rate cap contracts were outstanding:
Cash
Bank loans
Lease liabilities
Net financial liabilities
Interest rate caps
Interest rate swaps
Borrowings not hedged
2012
2011
Weighted
average
interest rate
%
2.03
5.29
-
Balance
$‘000
(4,560)
124,237
-
119,677
(15,000)
(15,000)
89,677
Weighted
average
interest rate
%
4.04
6.72
9.16
Balance
$‘000
(12,260)
69,119
29
56,888
(15,000)
(15,000)
26,888
Interest rate derivative contracts are exposed to fair value movements if interest rates change. Details of these contracts are
outlined in note 24(e).
At 30 June 2012, after taking into account the effect of interest rate swaps, approximately 18.4% of available borrowings are at
fixed or capped rates of interest (2011: 17.3%).
The Consolidated Entity analyses its interest rate exposure on an ongoing basis. Within this analysis, consideration is given to
potential renewals of existing positions, alternative financing, alternative hedging positions and the mix of fixed and variable
interest rates.
34 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
3. FINANCIAL RISK MANAGEMENT (continued)
(i)
Interest rate risk (continued)
The following sensitivity analysis is based on the interest rate exposures in existence at the balance sheet date.
At 30 June 2012, if interest rates had moved, as illustrated in the table below, with all other variables held constant,
post tax profit and other comprehensive income would have been affected as follows:
+ 1.00% (100 basis points)
+ 0.50% (50 basis points)
- 0.50% (50 basis points)
Post Tax Profit
Higher/(Lower)
Other Comprehensive Income
Higher/(Lower)
2012
$’000
(29)
(14)
14
2011
$’000
203
94
(84)
2012
$’000
-
-
-
2011
$’000
-
-
-
The above fluctuations in post-tax profit and other comprehensive income are net of interest capitalised to inventories.
The effect on the basis that no interest is capitalised, would be as follows:
+1.00% (100 basis points)
+0.50% (50 basis points)
-0.50% (50 basis points)
(ii) Foreign currency risk
Post Tax Profit
Higher/(Lower)
Other Comprehensive Income
Higher/(Lower)
2012
$’000
(668)
(333)
333
2011
$’000
(54)
(34)
44
2012
$’000
-
-
-
2011
$’000
-
-
-
AVJ Hobsonville Pty Limited is a subsidiary which has a branch in New Zealand. The operations of the branch, including
purchases of inventory denominated in New Zealand Dollars, are funded by AVJennings Properties Limited (another subsidiary)
through an intragroup account.
The Consolidated Statement of Financial Position is affected by the exchange rate movements between New Zealand Dollar
and Australian Dollar. This exposure is not hedged as the effects are not considered to be material.
The Consolidated Entity also has transactional exposures. Such exposure arises from sales or purchases by an operating entity
in currencies other than the functional currency. This exposure is not considered to be material in relation to the branch in
New Zealand.
At balance date, the Consolidated Entity had the following exposure to New Zealand Dollar foreign currency that is not
designated in cash flow hedges:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Total Financial Assets
Financial Liabilities
Trade and other payables
Total Financial Liabilities
Net exposure
2012
NZ$’000
2011
NZ$’000
1,024
8,018
9,042
(13,237)
(13,237)
(4,195)
1,390
4,080
5,470
(12,342)
(12,342)
(6,872)
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
35
notes to the consoliDateD financial statements
For the year ended 30 June 2012
3. FINANCIAL RISK MANAGEMENT (continued)
(ii) Foreign currency risk (continued)
At balance date, had the Australian Dollar moved, the effect of exposure to New Zealand Dollar foreign currency that is not
designated in cash flow hedges is illustrated in the following table:
Consolidated
AUD/NZD +10%
AUD/NZD - 5%
AUD/NZD -10%
(iii) Price risk
Post Tax Profit
Higher/(Lower)
Other Comprehensive Income
Higher/(Lower)
2012
$’000
2011
$’000
-
-
-
-
-
-
(v) Liquidity risk
2012
$’000
(934)
541
1,141
2011
$’000
(834)
483
1,019
The Consolidated Entity does not have commodity and equity
securities price risk.
Liquidity arises from the financial liabilities of the Consolidated
Entity and the ability to repay them as and when they fall due.
(iv) Credit risk
Credit risk arises from financial assets which comprise cash
and cash equivalents, trade and other receivables, derivative
instruments and the granting of financial guarantees.
Exposure to credit arises from potential default of the
counterparty, with a maximum exposure equal to the carrying
amount of the financial assets (as outlined in each applicable
note) as well as $15,846,000 (2011: $15,663,000) in relation
to financial guarantees granted – see note 32 for further
information.
Contracts for Land, Integrated Housing and Apartments
usually require payment in full prior to passing of title to
customers. In the event that title is to pass without full
payment being received, appropriate credit verification
procedures are performed prior to executing the contract.
Derivative counterparties and cash deposits are limited to
financial institutions approved by the Board.
The Consolidated Entity has no significant concentrations of
credit risk and does not hold any credit derivatives to offset its
credit exposure.
The objective is to maintain a balance between continuity
of funding and flexibility through the use of bank overdrafts,
bank loans, finance leases and committed available credit
facilities. Liquidity risk is managed by monitoring forecast cash
flows on a monthly basis and matching the maturity profiles of
financial assets and liabilities.
The current main banking facilities are due to mature on
30 September 2013. In addition, the Consolidated Entity
operates certain project funding facilities which are discussed
in note 24(b).
At 30 June 2012, 0.9% (2011: 90.4%) of the Consolidated
Entity’s interest-bearing loans and borrowings will mature in
less than one year.
A. Non-derivative financial liabilities:
The liquidity risk disclosures on page 36 reflect all
contractually fixed pay-offs, repayments and interest resulting
from recognised financial liabilities and financial guarantees
as of 30 June 2012. For the other obligations, the respective
undiscounted cash flows for the respective upcoming fiscal
years are presented. The timing of cash flows is based on the
contractual terms of the underlying contract.
However, where the counterparty has a choice of when the
amount is paid, the liability is allocated to the earliest period
in which it can be required to be paid. For financial guarantee
contracts, the maximum amount of the guarantee is allocated
to the earliest period in which the guarantee can be called.
The risk implied from the values shown in the table on page
36, reflects a balanced view of cash inflows and outflows of
non-derivative financial instruments. The Consolidated Entity
ensures that sufficient liquid assets are available to meet all
the required short-term cash payments.
36 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
3. FINANCIAL RISK MANAGEMENT (continued)
(v) Liquidity risk (continued)
A. Non-derivative financial liabilities: (continued)
Year ended 30 June 2012
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
Interest-bearing loans and borrowings*
Financial Guarantees
< 6 months
$’000
6-12
months
$’000
> 1-5 years
$’000
Total
$’000
4,560
35,522
40,082
24,172
4,415
15,846
-
-
-
-
-
-
22,774
3,241
-
47,520
125,338
-
4,560
35,522
40,082
94,466
132,994
15,846
44,433
26,015
172,858
243,306
Net maturity
(4,351)
(26,015)
(172,858)
(203,224)
Year ended 30 June 2011
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
Interest-bearing loans and borrowings*
Financial Guarantees
< 6 months
$’000
6-12
months
$’000
> 1-5 years
$’000
Total
$’000
12,260
17,159
29,419
27,045
58,805
15,663
-
-
-
-
-
-
21,440
5,266
-
43,400
7,132
-
12,260
17,159
29,419
91,885
71,203
15,663
101,513
26,706
50,532
178,751
Net maturity
(72,094)
(26,706)
(50,532)
(149,332)
* Expected settlement amounts of interest-bearing loans and borrowings include an estimate of the interest payable to the date of expiry of the facilities.
In addition to maintaining sufficient assets to meet short-term payments, at reporting date, the Consolidated Entity has
approximately $74 million (2011: $135 million) of unused credit facilities available for its immediate use. Please refer to note 24.
notes to the consoliDateD financial statements
For the year ended 30 June 2012
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
37
3. FINANCIAL RISK MANAGEMENT (continued)
(v) Liquidity risk (continued)
B. Derivative financial liabilities:
The table below details the liquidity risk arising from the derivative liabilities held by the Consolidated Entity at balance date.
Year ended 30 June 2012
Derivatives
Net settled (interest rate swaps)
Net maturity
Year ended 30 June 2011
Derivatives
Net settled (interest rate swaps)
Net maturity
(vi) Fair value
< 6 months
$’000
42
42
< 6 months
$’000
15
15
6-12
months
$’000
-
-
6-12
months
$’000
-
-
> 1-5 years
$’000
Total
$’000
-
-
42
42
> 1-5 years
$’000
Total
$’000
-
-
15
15
The methods used in estimating the fair value of a financial instrument are:
Level 1 –
the fair value is calculated using quoted prices in active markets.
Level 2 –
the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable
for the asset or the liability, either directly (as prices) or indirectly (derived from prices).
Level 3 –
the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised in the
table below.
Year ended 30 June 2012
Year ended 30 June 2011
Quoted
market
price
(Level 1)
Valuation
technique
– market
observable
inputs
(Level 2)
$’000
$’000
Valuation
technique
– non
market
observable
inputs
(Level 3)
$’000
Total
Quoted
market
price
(Level 1)
Valuation
technique
– market
observable
inputs
(Level 2)
$’000
$’000
$’000
Valuation
technique
– non
market
observable
inputs
(Level 3)
$’000
Total
$’000
Financial liabilities
Derivative instruments
Interest rate swaps
-
-
187
187
-
-
187
187
-
-
68
68
-
-
68
68
Quoted market price represents the fair value determined based on quoted prices in active markets as at the reporting date
without any deduction of transaction costs. The fair value of the listed equity investments are based on quoted market prices.
For financial instruments not quoted in active markets, valuation techniques such as present value techniques, comparison to
similar instruments for which market observable prices exist and other relevant models used by market participants are used.
These valuation techniques use both observable and unobservable market inputs.
Financial instruments that use valuation techniques with only observable market inputs or unobservable inputs that are not
significant to the overall valuation include interest rate swaps not traded on a recognised exchange.
The fair value of unlisted debt and equity securities, as well as other instruments that do not have an active market, are based
on valuation techniques using market data that is not observable. Where the impact of credit risk on the fair value of a derivative
is significant, and the inputs on credit risk (e.g. CDS spreads) are not observable, the derivative would be classified as based on
non observable market inputs (Level 3).
There were no transfers between any of the categories during the year.
38 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
4. SIGNIFICANT ACCOUNTING JUDGEMENTS,
Estimates of net realisable value of inventories:
The net realisable value is the estimated selling price in
the ordinary course of business less the estimated costs of
completion and costs of selling as per note 2(k). Estimates
take into consideration fluctuations in price or cost, and
development time and sales rates. The key assumptions used
in this exercise require the use of management judgement
and are reviewed at least half-yearly.
Profit recognised on developments:
Profit on developments is generally recognised on settlement
as discussed in note 2(t). The calculation of profit for projects
that are in progress, is based on actual costs to date and
estimates of costs to complete.
Share-based payment transactions:
The cost of equity settled securities allocated to employees
is measured by reference to the fair value of the equity
instruments at the date on which they are granted. As
explained in note 35(b), the fair value of some equity
instruments is determined using the Monte Carlo simulation
model which includes a number of judgements and
assumptions. These judgements and assumptions have no
impact on the carrying value of assets and liabilities in the
Consolidated Statement of Financial Position but may impact
the share-based payment expense taken to profit and loss.
Valuation of derivatives:
Derivatives not quoted in an active market are valued based
on certain assumptions and estimates. These valuations can
change depending on market volatility.
ESTIMATES AND ASSUMPTIONS
The preparation of consolidated financial statements
requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues,
expenses, assets and liabilities, and the disclosure of
contingent liabilities, at the end of a reporting period.
However, uncertainty about these assumptions and estimates
could result in outcomes that require a material adjustment to
the carrying amount of the asset or liability affected, in future
periods.
(i)
Critical judgements in applying accounting policies
In applying the Group’s accounting policies, management
has made the following judgements, which have the
most significant effect on the amounts recognised in the
Consolidated Financial Statements:
Recovery of deferred tax assets:
Deferred tax assets are recognised for deductible temporary
differences and tax losses where management considers that
it is probable that future taxable profits will be available to
utilise these.
Cost of goods sold:
Management uses judgement in determining the method to
be used for cost apportionment. Costs may be apportioned
based on yield, unit entitlement, percentage of revenue or
other equitable methods. Costs include costs incurred to
date as well as forecast costs to bring the inventory into a
saleable state.
(ii) Critical accounting estimates and assumptions
Key assumptions concerning the future and other key
sources of estimating uncertainty at the reporting date, that
have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities are described
below. Assumptions and estimates are based on parameters
currently available. Existing circumstances and assumptions
about future developments, however, may change due to
changes in market condition or circumstances arising beyond
the control of the Group. Future assumptions are altered as
these changes occur.
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
39
notes to the consoliDateD financial statements
For the year ended 30 June 2012
5. REVENUES AND EXPENSES
Profit / (Loss) from ordinary activities before income tax includes the following revenues and expenses:
Revenues from continuing operations
Developments
Home Improvements
Interest revenue
Management fees
Rental revenue
Royalty revenue
Sundry revenue
Expense recovery from third party
Total revenues
Note
2012
$’000
2011
$’000
181,022
194,995
2,060
481
2,913
18
1,258
1,057
-
7,993
958
3,579
47
1,655
1,019
5,655
188,809
215,901
Changes in inventories, finished goods and work-in-progress
Amortisation of finance costs capitalised to inventories
6,998
6,246
Employee benefits expenses
Defined contribution superannuation expense
Other employee benefits expenses
Total employee benefits expenses
Depreciation and amortisation expense
Depreciation
Leasehold improvements
Plant, equipment and motor vehicles
Amortisation
Motor vehicles under lease
Total depreciation and amortisation expense
Other expenses
Minimum operating lease payments
Finance costs
Bank loans and overdrafts
Finance charges payable under finance leases
Total finance costs
Less: Amount capitalised to inventories
Finance costs expensed
Impairment of assets
Inventories impaired
Equity accounted investments impaired
Total Impairment
1,286
17,802
1,484
20,051
19,088
21,535
21
21
21
48
305
-
353
101
325
60
486
2,379
3,346
10,809
-
10,809
(10,334)
475
48,621
1,311
49,932
10,844
19
10,863
(9,949)
914
-
-
-
40 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
6. OPERATING SEGMENTS
Accounting policies
Identification of reportable segments
The Consolidated Entity has identified its operating segments
based on the internal reports that are reviewed and used by
the chief operating decision makers in assessing performance
and in determining the allocation of resources.
The operating segments are identified by management
based on the states in which the Consolidated Entity sells its
products and services. Discrete financial information about
each of these operating businesses is reported on a monthly
basis.
Types of products and services
The Consolidated Entity operates primarily in residential
development.
The accounting policies used in reporting segments are the
same as those contained in note 2 to the Financial Report.
Operating segments
States:
This includes activities relating to Land Development,
Integrated Housing, Apartments Development and Home
Improvements.
Other:
This includes corporate transactions entered into by the Head
Office which are not state based.
notes to the consoliDateD financial statements
For the year ended 30 June 2012
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
41
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42 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
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notes to the consoliDateD financial statements
For the year ended 30 June 2012
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
43
7. KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Compensation of Key Management Personnel
Short-term
- Salary/Fees
- Cash bonus
- Other (1)
Post employment
- Superannuation (2)
Long-term
- Long service leave
Share-based payment
2012
$
2011
$
1,646,951
1,645,587
179,028
76,053
206,375
78,200
196,235
196,814
57,922
322,924
70,581
214,356
2,479,113
2,411,913
(1)
(2)
‘Other’ represents the value of motor vehicle benefits.
Payments to Defined Contribution Plans. Consist of Superannuation Guarantee Contribution payments as well as employee voluntary contributions.
The Consolidated Entity does not contribute to any Defined Benefit Plans.
Detailed remuneration disclosures are provided in the Remuneration Report on pages 19 and 20.
(b) Shareholdings of Key Management Personnel
The number of shares in the Company held during the financial year by each Key Management Personnel of the Consolidated
Entity, including their personally related parties, are set out below. Details of shares granted as compensation during the
reporting period are given in note 7(d).
Number of shares held in AVJennings Limited
For the year ended 30 June 2012
Directors
S Cheong
E Sam
PK Summers
RJ Rowley
Executives
CD Thompson
L Hunt
Total
For the year ended 30 June 2011
Directors
S Cheong
E Sam
PK Summers
RJ Rowley
Executives
CD Thompson
Total
Opening
Balance
Vested as
Remuneration
Net Other
Change(1)
Closing
Balance
137,370,023
149,534
942,147
180,000
319,500
-
-
-
333,334
-
-
-
-
-
-
-
-
2,222
137,370,023
149,534
1,275,481
180,000
319,500
2,222
138,961,204
333,334
2,222
139,296,760
137,370,023
149,534
333,333
180,000
-
-
-
608,814
-
-
-
-
-
-
137,370,023
149,534
942,147
180,000
319,500
319,500
138,032,890
608,814
319,500
138,961,204
(1) The “net other change” relates to shares acquired on market.
No other Key Management Personnel held shares in AVJennings Limited at any time during the year.
All equity transactions with Key Management Personnel have been entered into under terms and conditions no more
favourable than those the Company would have adopted if dealing at arm’s length.
44 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
7. KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)
(c) Compensation options: granted and vested during the year
No options were granted or exercised during the year. There are currently no unexercised or outstanding options.
None of the Key Management Personnel hold any options.
(d) Equity instrument disclosures relating to Key Management Personnel
Share-based compensation benefits based on different vesting conditions are provided to certain Key Management Personnel
via the AVJ Deferred Employee Share Plan.
Vesting subject to service condition only
The Chief Executive Officer was granted 1,000,000 shares on 7 March 2009 which vested in equal proportions on the first,
second and third anniversary of his appointment. The vesting dates were 19 February 2010, 19 February 2011 and 19 February
2012. The market value of the shares at the grant date was taken to be the fair value. The service condition was the continuity
of employment over the 3 years. These shares have vested.
Vesting subject to both service and performance conditions
2011 Grant
A total of 1,375,452 shares were granted on 28 September 2010 to certain Executives. As detailed below, these include
1,136,816 shares for KMP. The remaining shares were granted to executives who were not KMP.
2012 Grant
An additional 1,695,735 shares were granted on 5 September 2011 to certain executives. As detailed below, these include
1,454,555 shares for KMP. The remaining shares were granted to executives who were not KMP.
Name
Executive Committee Members
(KMP)
PK Summers
PK Summers
PK Summers
M Henesey-Smith
M Henesey-Smith
CD Thompson
CD Thompson
SC Orlandi
SC Orlandi
L Hunt
L Hunt
Total
Shares Granted
Number of Shares Vested
Year
Granted
Number
Fair Value
Unvested
at 1 July
2011
Vested
during the
year
Unvested
at 30 June
2012
2009
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
1,000,000
$180,000
333,334
333,334
-
691,591
$312,945
691,591
884,891
$311,924
-
158,344
$71,651
158,344
202,601
$71,417
-
106,183
$48,048
106,183
135,861
$47,891
-
102,458
$46,362
102,458
131,094
$46,211
-
78,240
$35,404
78,240
100,108
$35,288
-
-
-
-
-
-
-
-
-
-
-
691,591
884,891
158,344
202,601
106,183
135,861
102,458
131,094
78,240
100,108
3,591,371
$1,207,141
1,470,150
333,334
2,591,371
These shares are subject to both service and performance conditions and will vest to the extent that each of these conditions
is satisfied.
The service vesting condition is that the employee must still be employed by AVJennings at 30 September 2013 (for the 2011
grant) and 30 September 2014 (for the 2012 grant), except in the event of death or permanent disablement in which case the
shares will vest to the estate. In the event that the employee is retrenched, the shares may vest subject to certain conditions.
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
45
notes to the consoliDateD financial statements
For the year ended 30 June 2012
7. KEY MANAGEMENT PERSONNEL
DISCLOSURES (continued)
(d) Equity instrument disclosures relating to Key
Management Personnel (continued)
The performance vesting conditions are:
• Total Shareholder Return (TSR) performance measured
against the ASX Small Industrials Index; and
The fair value of the EPS element of the shares is the market
value at grant date. The Monte Carlo Model is used to fair
value the TSR element. The Model simulates AVJennings’ TSR
and compares it against the ASX Small Industrials Retail Index.
The Model takes into account historic dividends, share price
volatilities and the risk-free yield on an Australian Government
Bond at the grant date matching the remaining effective life
of 3 years.
• Earnings Per Share (EPS) growth. AVJennings’ EPS
Please refer to note 2(r), note 28(b) and note 35(b).
(e)
Loans to Key Management Personnel
There are currently no outstanding loans receivable from
Key Management Personnel. No loans were made to Key
Management Personnel during the year.
(f)
Other Transactions with Key Management Personnel
Purchases:
During the year, a townhouse was sold to Mr PK Summers for
$327,000 (2011:Nil). This was the listed undiscounted selling
price and Mr Summers did not have a role in setting the
selling price. The purchase was fully paid for and there was
no outstanding amount at the end of the financial year.
growth for the performance period must meet or exceed
the target set. The EPS hurdle for total vesting of the
2011 grant is 10% p.a. growth for the three financial
years to 30 September 2013, while that for the 2012
grant is 10% p.a. growth for the three financial years
to 30 September 2014.
Half of the allocation is assessed against each performance
condition. The vesting schedule for the TSR performance
condition is set out in the table below. The holder of the
shares is entitled to receive all dividends paid between grant
and vesting date.
AVJennings’ TSR rank against
companies in the Index
Percentage vesting
< median
At the median
> median but < 75th percentile
Nil
50%
Pro-rata between
50th and 75th
percentiles
>=75th percentile
100%
8. AUDITOR’S REMUNERATION
Amounts received or due and receivable by Ernst & Young (Australia) for:
An audit or review of the 30 June full-year and 31 December interim financial
reports of the Entity and other entities in the Consolidated Group
- Share of audit or review costs of the financial reports of the
Consolidated Entity's joint ventures
- Other services in relation to the Entity and any
other entities in the Consolidated Group
- non-audit related fees
Total auditor's remuneration
2012
$
2011
$
272,593
232,214
2,215
3,500
12,360
15,000
287,168
250,714
46 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
9.
INCOME TAX
Income tax expense/(credit)
The major components of income tax expense/(credit) are:
Current income tax
Current income tax charge
Adjustment for prior periods
Deferred income tax
Current year temporary differences
Adjustment for prior periods
Note
2012
$’000
2011
$’000
196
(710)
(16,450)
838
3,522
117
2,000
(9)
Income tax (credit) / expense reported in the Consolidated Statement of
Comprehensive Income
(16,126)
5,630
Numerical reconciliation between aggregate tax expense recognised in Consolidated Statement of Comprehensive Income
and tax expense calculated per the statutory income tax rate:
Accounting profit/(loss) before income tax from continuing operations
Loss before income tax from discontinued operations
10
Total accounting profit/(loss) before income tax
Tax at Australian income tax rate of 30% (2011 - 30%)
Adjustment for prior periods
Equity accounted share of Joint Venture profits
Other non-deductible items and variations
Aggregate income tax (credit) / expense
Aggregate income tax (credit) / expense is attributable to:
Continuing operations
Discontinued operations
Tax losses
The Consolidated Entity has capital tax losses of $196,956
(2011: $196,956) for which no deferred tax asset has been
recognised. These are available indefinitely for offset against
future capital gains subject to satisfaction of the relevant
statutory tests.
Tax consolidation
AVJennings Limited and its wholly-owned resident entities
have formed a tax consolidated group with effect from
1 July 2002 and are therefore taxed as a single entity from
that date. The accounting policy in relation to tax
consolidation is set out in note 2(u).
The Head Entity, AVJennings Limited, has entered into an
agreement with its wholly-owned subsidiary, AVJennings
Properties Limited, under which AVJennings Properties
Limited will account for the current and deferred tax amounts
of the controlled entities in the Tax Consolidated Group.
The Group has applied the group allocation approach
in determining the appropriate amount of current taxes
and deferred taxes to allocate to members of the Tax
Consolidated Group.
Nature of tax funding arrangements and tax sharing
agreements
Entities within the Tax Consolidated Group have entered
into a tax funding arrangement and a tax sharing agreement
with the Head Entity. Under the terms of the Tax Funding
(45,954)
-
(45,954)
(13,787)
128
(1,603)
(864)
19,943
(1,420)
18,523
5,557
108
(520)
485
(16,126)
5,630
(16,126)
-
(16,126)
5,343
287
5,630
Arrangement, each of the entities in the Tax Consolidated
Group has agreed to pay or receive a tax equivalent payment
to, or from, the Head Entity, based on the current tax liability
or current tax asset of the entity. Such amounts are reflected
in amounts receivable from, or payable to, other entities in
the Tax Consolidated Group.
The Tax Sharing Agreement entered into between members
of the Tax Consolidated Group provides for the determination
of the allocation of income tax liabilities between the entities
should the Head Entity default on its tax payment obligations
or if an entity should leave the Tax Consolidated Group. The
effect of the Tax Sharing Agreement is that each member’s
liability for tax payable by the Tax Consolidated Group is
limited to the amount payable to the Head Entity under the
Tax Funding Arrangement.
Taxation of financial arrangements (TOFA)
Legislation is in place which changes the tax treatment
of financial arrangements including the tax treatment of
hedging transactions. The Consolidated Entity has assessed
the potential impact of these changes on its tax position. No
impact has been recognised and no adjustments have been
made to the deferred tax and income tax balances at 30 June
2012 (2011: $Nil).
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
47
notes to the consoliDateD financial statements
For the year ended 30 June 2012
10. DISCONTINUED OPERATIONS
Comparatives for the year ended 30 June 2011 include results of the Contract Building Division which was discontinued
on 31 July 2010.
11. DIVIDENDS
Dividends paid and recognised
2010 final of 1.5 cents per fully paid share, paid 30 September 2010.
Fully franked @ 30% tax.
2011 interim of 1.0 cent per fully paid share, paid 18 April 2011.
Fully franked @ 30% tax.
2011 final dividend of 1.5 cents per fully paid share, paid 19 October 2011.
Fully franked @ 30% tax.
2012 interim dividend of 0.5 cents per fully paid share, paid 11 April 2012.
Fully franked @ 30% tax.
Total dividends paid
Dividends proposed
2012
$’000
2011
$’000
-
-
4,119
1,373
5,492
4,119
2,746
-
-
6,865
2011 final dividend of 1.5 cents per fully paid share, paid 19 October 2011.
Fully franked @ 30% tax
Total dividends proposed
-
-
4,119
4,119
The Company’s Dividend Reinvestment Plan remains suspended.
Franking credit balance
Franking credits available for subsequent financial years based on a tax rate of
30%
21,333
23,880
The above amounts represent the balance of the franking account as at the reporting date, adjusted for franking credits that will
arise from the payment of the amount of the provision for income tax.
48 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
12. EARNINGS PER SHARE
(a) Earnings used in calculating earnings per share
For basic earnings per share:
Net profit/(loss) from continuing operations attributable
to ordinary equity holders of the parent
Loss attributable to discontinued operations
Net profit/(loss) attributable to equity holders of the parent
For diluted earnings per share:
Net profit/(loss) from continuing operations attributable to ordinary
equity holders of the parent (from basic EPS)
Tax effected share-based payment expense
- liability component
Net profit/(loss) from continuing operations attributable to ordinary
equity holders adjusted for the effect of future share-based payment expense
Loss attributable to discontinued operations
Net profit/(loss) attributable to equity holders of the parent
(b) Weighted average number of shares used as denominator
Weighted average number of ordinary shares (excluding
treasury shares) for basic earnings per share
Effect of dilution:
Treasury shares
2012
$’000
2011
$’000
(29,828)
-
14,600
(1,707)
(29,828)
12,893
(29,828)
14,600
(470)
(336)
(30,298)
-
14,264
(1,707)
(30,298)
12,557
2012
Number
2011
Number
271,517,507
272,879,908
3,071,187
1,708,786
Weighted average number of ordinary shares for diluted earnings per share
274,588,694
274,588,694
There have been no transactions involving ordinary shares that would significantly change the number of ordinary shares
outstanding between the reporting date and the date of completion of these Consolidated Financial Statements.
13. CASH AND CASH EQUIVALENTS
Reconciliation to Consolidated Statement of Cash Flows
For the purposes of Consolidated Statement of Cash Flows, cash and cash
equivalents comprise the following at 30 June:
Cash at bank and in hand
4,560
12,260
2012
$’000
2011
$’000
notes to the consoliDateD financial statements
For the year ended 30 June 2012
14. TRADE AND OTHER RECEIVABLES
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
49
Current
Amounts due under construction contracts and trade receivables
Related parties receivables
Funds held in solicitors trust accounts
Other receivables
Allowance for impairment of other receivables
2012
$’000
6,109
3,299
21,896
4,228
(10)
2011
$’000
5,046
6,014
-
6,177
(78)
Total current trade and other receivables
35,522
17,159
(a) Allowance for impairment loss
An impairment loss of $10,000 (2011: Nil) has been recognised by the Consolidated Entity in the current year.
At 30 June, the ageing analysis of trade receivables is a follows:
Number of days outstanding
Total
$’000
0-30
31-60
$’000
$’000
6,109
6,010
5,046
3,949
-
96
61-90
PDNI*
$’000
-
132
+ 91
PDNI*
$’000
89
869
+ 91
CI#
$’000
10
-
2012
2011
* Past due not impaired (PDNI)
# Considered impaired (CI)
With regards to receivables past due not impaired (PDNI), the relevant debtors have been directly contacted and the
Consolidated Entity is satisfied that payment will be received in full.
Movements in provision for impairment of trade and other receivables
At the beginning of the year
Amounts recovered during the year
Amounts provided for during the year
At the end of the year
(b) Related party receivables
2012
$’000
78
(78)
10
10
2011
$’000
168
(90)
-
78
For terms and conditions relating to related party receivables, refer to note 34 (i).
(c) Other receivables
Other receivables generally arise from transactions outside the usual operating activities of the Consolidated Entity.
These receivables are not past due or impaired.
(d) Fair value and credit risk
Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value.
The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor is it the
Consolidated Entity’s policy to transfer (on-sell) receivables to special purpose entities.
50 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
15. INVENTORIES
Current
Home Improvements
Work-in-progress on contracts
Cost plus attributable profits
Less: progress billings
Total work-in-progress/(excess progress billings on contracts)
Land, Housing and Apartments Developments
Broadacres
Land to be subdivided - at cost
Borrowing and holding costs capitalised
Provision for loss on inventories
Total broadacres
Work-in-progress
Land subdivided or in the course of being subdivided - at cost
Development costs capitalised
Houses and apartments under construction - at cost
Borrowing and holding costs capitalised
Provision for loss on inventories
Total work-in-progress
Completed inventory
Completed houses and apartments - at cost
Completed residential land lots - at cost
Borrowing and holding costs capitalised
Provision for loss on inventories
Total completed inventory
Total current inventories
Note
2012
$’000
2011
$’000
9,860
(9,791)
69
16,284
4,240
(1,238)
19,286
7,975
8,317
2,914
3,386
(1,662)
7,677
(8,683)
(1,006)
3,458
1,347
-
4,805
34,617
26,688
18,181
11,929
-
20,930
91,415
16,369
18,086
1,738
(2,606)
23,642
10,902
1,473
-
33,587
36,017
73,872
131,231
15(a)
15(a)
15(a)
notes to the consoliDateD financial statements
For the year ended 30 June 2012
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
51
15. INVENTORIES (continued)
Non-current
Land, Housing and Apartments Developments
Broadacres
Land to be subdivided - at cost
Borrowing and holding costs capitalised
Provision for loss on inventories
Total broadacres
Work-in-progress
Land subdivided or in the course of being subdivided - at cost
Development costs capitalised
Borrowing and holding costs capitalised
Provision for loss on inventories
Total work-in-progress
Completed inventory
Completed houses and apartments - at cost
Completed residential land lots - at cost
Borrowing and holding costs capitalised
Provision for loss on inventories
Total completed inventory
Total non-current inventories
Total inventories
Note
2012
$’000
2011
$’000
15(a)
15(a)
15(a)
181,617
33,577
(23,621)
117,444
29,126
-
191,573
146,570
103,691
43,964
26,157
(18,940)
90,797
22,862
19,922
-
154,872
133,581
-
6,873
388
(554)
6,707
1,483
3,608
388
-
5,479
353,152
285,630
427,024
416,861
(a)
(b)
(c)
Borrowing costs are recognised as part of the carrying amount of the qualifying asset. Borrowing costs include interest,
fees and costs associated with interest rate derivatives. These costs have been capitalised at a weighted average rate of
10.73% (2011: 13.96%).
Inventory with a book value of $102,230,000 (2011: $87,772,000) had been pledged as security for project specific borrowings
(refer to note 24(b)). The Consolidated Entity’s remaining inventory has been pledged as security for the main banking facility
(refer to note 24(a)).
Write-downs of inventories to net realisable value recognised as an expense during the year ended 30 June 2012 amounted
to $48,621,000 (2011: $Nil). The expense has been disclosed as a separate item on the Consolidated Statement of
Comprehensive Income.
Movements in provision for loss on inventories
At the beginning of the year
Provisions created
At the end of the year
2012
$’000
-
48,621
48,621
2011
$’000
-
-
-
52 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
16. OTHER CURRENT ASSETS
Prepayments
Deposits
Total other current assets
2012
$’000
1,985
127
2011
$’000
1,182
118
2,112
1,300
17. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Investment in Associate - unincorporated
Interest in Joint Venture Entities - unlisted
Note
17(a)
17(b)
2012
$’000
499
23,908
2011
$’000
1,484
39,647
Total equity accounted investments
24,407
41,131
Investments in Associates are accounted for in accordance with the policy outlined in note 2(f) while Joint Venture Entities are
accounted for in accordance with note 2(e).
(a) Investment in Associate
The Consolidated Entity has significant influence over the Associate because it is represented on the project governing body
and its employees provide essential technical knowledge to the project. The Associate is an unincorporated partnership which
trades in Australia. It has a 30 June year-end and its principal activity is the development and sale of residential lots.
Investment details
Associate name and principal activity
Epping JV - Land Development
Movements in carrying amount
At the beginning of year
Distribution received
Share of net profit
At the end of year
Interest held
2012
2011
10%
2012
$’000
1,484
(1,380)
395
499
10%
2011
$’000
1,614
(370)
240
1,484
Summarised financial information of the Associate
The Consolidated Entity’s share of the results of the Associate and its aggregated assets and liabilities are as follows:
Assets
Liabilities
Revenues
Profit
2012
$’000
557
119
1,153
395
2011
$’000
1,624
140
1,677
240
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
53
notes to the consoliDateD financial statements
For the year ended 30 June 2012
17. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (continued)
(a) Investment in Associate (continued)
Impairment
The Consolidated Entity’s investment in the Associate was not impaired at any time during the year.
Share of Associate’s commitments and contingent liabilities
The Associate’s commitments and contingent liabilities have been entered into on a non-recourse basis and therefore the
Consolidated Entity has no exposure to the Associate’s commitments and contingent liabilities as at the date of this Report.
The share of contingent liabilities in respect to certain performance guarantees granted by the Associate in the normal course
of business to unrelated parties, at 30 June 2012, amounted to $58,000 (2011: $164,000).
(b) Interest in Joint Venture Entities
Investment details
Joint Venture Entity and principal activities
Meridan Plains - Land Development and Building Construction(1)
Eastwood - Land Development and Building Construction
Sydney Olympic Park - Commercial Development and Construction
Woodville - Land Development and Building Construction
Arlington Rise - Land Development and Building Construction(2)
Movements in carrying amount
At the beginning of year
Contributions made
Distributions received
Dividends received
Share of net profit
AVJennings' acqusition of joint venture assets
Write-down of investment(3)
At the end of year
Interest held
2012
2011
-
50%
50%
50%
-
2012
$’000
39,647
1,361
-
-
5,364
(21,153)
(1,311)
50%
50%
50%
50%
45%
2011
$’000
39,654
3,594
(4,140)
(1,000)
1,539
-
-
23,908
39,647
(1)
(2)
(3)
On 30 September 2011, the Consolidated Entity purchased the equity held by the joint venture partner in Meridan Plains (also referred to as Creekwood).
Meridan Plains does not constitute a business and has been accounted for as an asset acquisition. Creekwood Developments Pty Limited is now a fully
owned subsidiary.
On 27 March 2012, the Consolidated Entity purchased the equity held by the joint venture partner in Arlington Rise. Arlington Rise does not constitute
a business and has been accounted for as an asset acquisition.
Write-down of investment to net realisable value recognised as an expense during the year ended 30 June 2012 amounted to $1,311,000 (2011: $Nil).
The expense has been disclosed as a separate item on the Consolidated Statement of Comprehensive Income.
54 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
17. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (continued)
(b) Interest in Joint Venture Entities (continued)
The Consolidated Entity’s share of the Joint Venture Entities’ assets (including goodwill), liabilities, revenue and expenses are as
follows:
Share of assets and liabilities
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Share of revenue, expenses and results
Revenues
Expenses
Profit before tax
Tax
Profit after tax
18. PARENT ENTITY FINANCIAL INFORMATION
(a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Balance Sheet
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Issued capital
Reserves
Share-based payment reserve
Retained earnings
Contributed equity
Profit for the year
Total comprehensive income
(b) Guarantees entered into by the parent entity
The parent entity has not provided any financial guarantees.
(c) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2012 (2011: Nil).
2012
$’000
19,883
16,707
36,590
7,194
5,488
12,682
2011
$’000
39,511
31,174
70,685
12,970
18,068
31,038
23,908
39,647
18,785
(12,231)
6,554
(1,190)
5,364
30,014
(28,032)
1,982
(443)
1,539
2012
$’000
31,382
194,728
19,545
19,545
2011
$’000
31,382
194,668
19,118
19,118
121,096
121,835
687
53,400
175,183
8
8
323
53,392
175,550
135
135
notes to the consoliDateD financial statements
For the year ended 30 June 2012
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
55
19. CONTROLLED ENTITIES
(a) Investment in controlled entities
The following economic entities are the controlled entities of AVJennings Limited:
ECONOMIC ENTITY (1)
2012
2011
2012
2011
% Equity Interest
Included in Banking Cross Deed
of Covenant (2)
Entities included in the Closed Group
A.V. Jennings Real Estate Pty Limited
AVJennings Real Estate (VIC) Pty Limited
AVJennings Holdings Limited(3)
AVJennings Properties Limited(3)
Jennings Sinnamon Park Pty Limited
Long Corporation Limited(3)
Orlit Pty Limited(3)
Sundell Pty Limited(3)
AVJennings Housing Pty Limited(3)
AVJennings Home Improvements S.A. Pty Limited(3)
AVJennings Mackay Pty Limited(3)
Entities excluded from the Closed Group
Crebb No 12 Pty Limited
Dunby Pty Limited
Epping Developments Limited
Montpellier Gardens Pty Limited
Sirda Pty Limited
AVJ ODP Pty Limited
AVJennings (Cammeray) Pty Limited
AVJennings Syndicate No 2 Limited
AVJennings Syndicate No 3 Limited
AVJennings Syndicate No 4 Limited
AVJennings Officer Syndicate Limited
AVJennings Properties SPV No 1 Pty Limited
AVJennings Properties SPV No 2 Pty Limited
AVJennings Properties SPV No 3 Pty Limited
AVJennings Properties SPV No 4 Pty Limited
AVJennings Wollert Pty Limited
AVJ Erskineville Pty Limited
AVJ Hobsonville Pty Limited
AVJ SPV No 8 Pty Limited
AVJennings Properties SPV No 9 Pty Limited
AVJennings SPV No 10 Pty Limited
AVJennings Properties SPV No 11 Pty Limited
AVJennings Properties SPV No 15 Pty Limited
Creekwood Developments Pty Limited(4)
Portarlington Nominees Pty Limited(4)
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
50
No
No
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
No
No
No
No
No
Yes
Yes
No
No
No
No
No
No
Yes
No
No
No
No
No
Yes
No
No
No
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
No
No
No
No
No
Yes
Yes
No
No
No
No
No
No
Yes
No
No
No
No
No
No
No
(1)
(2)
(3)
(4)
All entities are incorporated in Australia. With the exception of AVJ Hobsonville Pty Limited, which has a branch in New Zealand, all entities operate
within Australia.
These entities, including AVJennings Limited, are included under the Banking Cross Deed of Covenant referred to in note 24(a).
These entities, including AVJennings Limited, are included in the Deed of Indemnity for Contract performance bond facility referred to in note 24(c).
Creekwood Developments Pty Limited and Portarlington Nominees Pty Limited became wholly owned subsidiaries on 30 September 2011 and
27 March 2012 respectively.
56 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
19. CONTROLLED ENTITIES (continued)
(b) Ultimate parent
AVJennings Limited is the ultimate Australian parent entity. SC Global Developments Limited is the ultimate parent entity.
(c) Deeds of cross guarantee
Certain entities within the Group are parties to deeds of cross guarantee under which each controlled entity guarantees the
debts of the others. By entering into these deeds, the controlled entities are relieved from the requirement to prepare Financial
Statements and Directors’ Reports under Class Order 98/1418 (as amended by Class Orders 98/2017, 00/321, 01/1087, 02/248,
02/1017, 04/663, 04/682, 04/1624, 05/542, 06/51, 08/11, 08/255, 08/618 and 09/626) issued by the Australian Securities and
Investments Commission (ASIC). Those entities included in the Closed Group are listed in note 19(a). These entities represent a
“Closed Group” for the purposes of the Class Order, and as there are no other parties to the deeds of cross guarantee that are
controlled by AVJennings Limited, they also represent the “Extended Closed Group”.
(d) Class order closed group
Certain controlled entities were granted relief by ASIC (under provisions of Class Orders) from the requirement to prepare
separate audited financial statements, where deeds of indemnity have been entered into between the Parent Entity and the
Controlled Entities to meet their liabilities as required (refer to note 19(c)).
The Extended Closed Group referred to in the Directors’ Declaration therefore comprises all of the entities within the Class
Order. Certain entities falling outside of the Extended Closed Group are listed in note 19(a), and are therefore required to
prepare separate annual financial statements.
The Consolidated Statement of Comprehensive Income for those controlled entities which are party to the deed is as follows:
Continuing operations
Revenues
Cost of sales
Other expenses
Profit/(loss) from continuing operations before income tax
Income tax
Closed Group
2012
$’000
108,054
(89,386)
(78,199)
(59,531)
16,620
2011
$’000
97,331
(56,139)
(34,684)
6,508
(5,221)
Profit/(loss) from continuing operations after income tax
(42,911)
1,287
Discontinued operations
Loss from discontinued operations after income tax
Loss for the year
-
(1,707)
(42,911)
(420)
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
57
notes to the consoliDateD financial statements
For the year ended 30 June 2012
19. CONTROLLED ENTITIES (continued)
(d) Class order closed group (continued)
The Consolidated Statement of Financial Position for those controlled entities which are party to the deed is as follows:
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Tax receivable
Other current assets
Total current assets
NON-CURRENT ASSETS
Inventories
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
CURRENT LIABILITIES
Derivative financial instruments
Interest-bearing loans and borrowings
Tax payable
Short-term provisions
Total current liabilities
NON-CURRENT LIABILITIES
Trade and other payables
Interest-bearing loans and borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Equity attributable to equity holders of the parent
Contributed equity
Reserves
Retained earnings
Total equity
2012
$’000
3,162
110,348
46,347
669
1,977
2011
$’000
11,017
60,850
79,494
-
1,143
162,503
152,504
210,247
236,947
1,174
2,816
1,090
2,816
214,237
240,853
376,740
393,357
187
-
-
3,667
68
50,029
3,540
3,235
3,854
56,872
37,692
103,000
4,442
641
43,401
-
19,341
694
145,775
63,436
149,629
120,308
227,111
273,049
121,096
121,835
687
323
105,329
150,891
227,112
273,049
58 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
19. CONTROLLED ENTITIES (continued)
(d) Class order closed group (continued)
The Consolidated Statement of Changes in Equity for those controlled entities which are party to the deed is as follows:
At beginning of the year
Changes in equity due to members entering/exiting the closed group
Loss for the year
Total income and expenses for the year
Equity transactions
- Treasury shares acquired
- Share-based payment reserve
- Dividends paid to equity holders of parent
2012
$’000
2011
$’000
273,049
280,190
2,841
(42,911)
(40,070)
(739)
364
(5,492)
(45,937)
645
(420)
225
(743)
242
(6,865)
(7,141)
At end of the year
227,112
273,049
20. INTEREST IN JOINT VENTURE OPERATIONS
A number of controlled entities have entered into joint venture operations. Information relating to the Joint Ventures
is set out below:
Joint Venture name and principal activities
Cammeray Joint Venture - Apartments Development
Cheltenham Joint Venture - Land Development and Building Construction
Hobsonville Joint Venture - Land Development
INTEREST IN OUTPUT
2012
$’000
50%
50%
50%
2011
$’000
50%
50%
50%
The Consolidated Entity’s interest in the profits and losses of the Joint Venture Operations are included in the Consolidated
Statement of Comprehensive Income, in accordance with the accounting policy described in note 2(e), under the following
classifications:
Revenues
Cost of sales
Other expenses
Profit before income tax
Income tax expense
Net profit for the year
2012
$’000
12,549
(10,358)
(1,641)
550
(165)
385
2011
$’000
10,364
(8,783)
(803)
778
(233)
545
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
59
notes to the consoliDateD financial statements
For the year ended 30 June 2012
20. INTEREST IN JOINT VENTURE OPERATIONS (continued)
The Consolidated Entity’s interest in the assets and liabilities of Joint Venture Operations are included in the Consolidated
Statement of Financial Position, in accordance with the policy described in note 2(e), under the following classifications:
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
NON-CURRENT ASSETS
Inventories
Total non-current assets
Total assets
CURRENT LIABILITIES
Trade and other payables
Total current liabilities
NON-CURRENT LIABILITIES
Trade and other payables
Interest-bearing borrowings
Total non-current liabilities
Total liabilities
Net assets
21. PROPERTY, PLANT AND EQUIPMENT
Leasehold improvements
At cost
Less: accumulated depreciation
Total leasehold improvements
Plant, equipment and motor vehicles
At cost
Less: accumulated depreciation
Total plant and equipment
Motor vehicles under finance lease
At cost
Less: accumulated amortisation
Total motor vehicles under finance lease
2012
$’000
534
5,878
4,612
10
2011
$’000
129
831
948
6
11,034
1,914
39,569
39,651
39,569
39,651
50,603
41,565
4,984
4,984
127
127
9,578
7,287
11,811
744
16,865
12,555
21,849
12,682
28,754
28,883
2012
$’000
378
(307)
71
7,966
(6,863)
1,103
-
-
-
2011
$’000
789
(587)
202
8,222
(7,366)
856
45
(16)
29
Total property, plant and equipment
1,174
1,087
60 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
21. PROPERTY, PLANT AND EQUIPMENT (continued)
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the year
are set out below:
For the year ended 30 June 2011
Note
Carrying amount at 1 July 2010
Additions
Disposals
Depreciation/amortisation charge
Carrying amount at 30 June 2011
For the year ended 30 June 2012
Carrying amount at 1 July 2011
Additions
Disposals
Depreciation/amortisation charge
5
5
Plant,
equipment
and motor
vehicles
$’000
Leasehold
improvements
$’000
474
21
(192)
(101)
202
202
38
(121)
(48)
1,180
636
(635)
(325)
856
856
603
(51)
(305)
Carrying amount at 30 June 2012
71
1,103
22. INTANGIBLE ASSETS
Brand name at cost
Less: accumulated amortisation
Total intangible assets
Leased
motor
vehicles
$’000
212
-
(123)
(60)
Total
$’000
1,866
657
(950)
(486)
29
1,087
29
-
(29)
-
-
1,087
641
(201)
(353)
1,174
2012
$’000
9,868
(7,052)
2011
$’000
9,868
(7,052)
2,816
2,816
The intangible asset relates to the value of the “AVJennings” brand name which was acquired as part of a business
combination in 1995. On recognition, the asset was determined to have a finite life of 20 years and has since been amortised
over the expected useful life. In accordance with the accounting policy discussed in note 2(j), the amortisation period
and the amortisation method for an intangible asset are reviewed at least each financial year-end. A review carried out at
31 December 2009 determined that the brand name has indefinite useful life. This change in accounting estimate has been
applied prospectively with amortisation ceasing as of 31 December 2009.
The brand name is tested for impairment annually, or more frequently if there are indicators of impairment. At 30 June 2012,
there were no indicators of impairment.
notes to the consoliDateD financial statements
For the year ended 30 June 2012
23. TRADE AND OTHER PAYABLES
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
61
Current
Secured
Land creditors
Unsecured
Land creditors
Trade creditors
Related party payables
Other creditors and accruals
2012
$’000
2011
$’000
5,600
5,300
25,196
9,239
2,450
4,461
41,346
23,235
10,380
2,300
7,270
43,185
Total current payables
46,946
48,485
Non-Current
Secured
Land creditors
Unsecured
Land creditors
Total non-current payables
Land creditors
-
5,600
47,520
37,800
47,520
43,400
The amounts due to secured land creditors are secured over the title to properties acquired by way of either mortgage back or
bank guarantee in favour of the land vendor. These security arrangements remain in place until final settlement of the amounts
due to the land vendor. Titles for the unsecured land creditors only transfer to the Consolidated Entity on full payment of the
amount outstanding or upon provision of some other security.
Related party payables
For terms and conditions relating to related party payables, refer to note 34(i).
Fair value
Due to the short-term nature of current payables, their carrying amount is assumed to approximate their fair value.
Non-current land creditors have been discounted using a rate of 9.54% (2011: 6.25%).
24. INTEREST-BEARING LOANS AND BORROWINGS
Current
Secured
Bank loans
Unsecured
Lease liabilities
Note
2012
$’000
2011
$’000
1,100
62,500
31(b)
-
29
Total current interest-bearing liabilities
1,100
62,529
Non-current
Secured
Bank loans
Total non-current interest-bearing liabilities
123,137
123,137
6,619
6,619
62 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
24. INTEREST- BEARING LOANS AND BORROWINGS (continued)
Financing arrangements
The Consolidated Entity has access to the following lines of credit:
30 June 2012
Main banking facilities
- bank overdraft
- bank loans
- performance bonds and other non-cash facilities (1)
Project funding
- bank loans
- performance bonds and other non-cash facilities
Available
$’000
Utilised
$’000
Unutilised
$’000
5,000
134,000
33,600
-
103,000
11,334
5,000
31,000
22,266
172,600
114,334
58,266
Note
24(a)
24(b)
24,078
23,500
47,578
21,237
17,775
39,012
2,841
5,725
8,566
5,576
1,200
14,381
5,831
20,212
8,861
1,171
Contract performance bond facility
24(c)
- performance bonds
Leasing facilities
10,000
4,424
24(d)
1,200
-
(1)
At 30 June 2012 these facilities are interchangeable up to $5 million (2011: $5 million) between the bank loans and performance bonds /
other non-cash facilities.
30 June 2011
Main banking facilities
- bank overdraft
- bank loans
- performance bonds and other non-cash facilities
Project funding
- bank loans
- performance bonds and other non-cash facilities
24(a)
24(b)
2,200
137,800
31,000
-
50,000
16,298
2,200
87,800
14,702
171,000
66,298
104,702
33,500
23,500
57,000
19,119
17,669
36,788
Contract performance bond facility
24(c)
- performance bonds
Leasing facilities
Significant terms and conditions
(a) Main banking facilities
10,000
1,139
24(d)
1,200
29
The main banking facilities are secured by a fixed and floating charge over all the assets and undertakings of the entities within
the Consolidated Entity, other than those assets pledged as security for project funding (see note 24(b)), and those assets
pledged as security for properties acquired as detailed in note 23 (secured land creditors). The Parent Entity has entered into a
cross deed of covenant with various controlled entities to guarantee obligations of those entities in relation to the main banking
facilities. Details of entities included in the cross deed of covenant are set out in note 19. There is no overdraft utilisation at year-
end and the current interest rates on the bank loans range from 5.09% to 5.97% (2011: 6.88% to 7.07%).
The Consolidated Entity’s main banking facilities mature on 30 September 2013. These facilities are secured by a fixed and
floating charge over all the assets and undertakings of the entities within the Consolidated Entity as mentioned above, and by
first registered mortgages over various real estate inventories other than those assets pledged as security for project funding
(see note 24(b)) and secured land creditors (see note 23).
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
63
notes to the consoliDateD financial statements
For the year ended 30 June 2012
24. INTEREST-BEARING LOANS AND BORROWINGS (continued)
(b) Project funding
Project funding facilities are secured by:
•
•
•
fixed and floating charge over all assets and undertakings of the entity involved in the relevant project, namely,
AVJennings Wollert Pty Limited;
first registered mortgage over the real estate inventories of the entity involved in the relevant project, namely,
AVJennings Wollert Pty Limited;
fixed and floating charge over the assets and undertakings of a related company involved in the relevant project,
namely, St Clair JV Nominee Pty Limited;
• deed of mortgage over the shares held by the relevant entity, namely, AVJennings Properties SPV No 4 Pty Limited,
•
•
•
in a related company, namely, St Clair JV Nominee Pty Limited;
fixed and floating charge over the assets and undertakings, including project rights, of a relevant entity, namely,
AVJennings Properties SPV No 4 Pty Limited;
fixed and floating charge over the assets of the entity involved in the relevant project, namely, Portarlington
Nominees Pty Limited; and
first registered mortgage over certain real estate inventories of the entity involved in the relevant project, namely,
Portarlington Nominees Pty Limited.
At 30 June 2012 the facilities shown are interchangeable up to $5,000,000 (2011: $5,000,000) between the bank loans and
performance bonds/other non-cash facilities. The lines of credit shown are maximum limits which are available progressively
as projects are developed. The expiry dates for the facilities are between February 2014 and May 2015. Individual projects are
expected to be completed and the outstanding amounts repaid or refinanced prior to expiry of each facility. As at 30 June 2012,
the balance outstanding on these facilities was $21,237,000 (2011: $19,119,000).
The carrying amounts of the pledged assets are as follows:
Wollert, Victoria
Cheltenham, South Australia
Arlington Rise, Victoria
2012
$’000
45,492
50,422
16,431
2011
$’000
47,211
41,509
-
The weighted average interest rate on the project funding loans at the year-end was 4.40% (2011: 6.07%).
(c) Contract performance bond facility
The Consolidated Entity has entered into a Contract performance bond facility of $10,000,000 (2011: $10,000,000).
The Contract performance bond facility is subject to review annually. Subsequent to the year end, this facility has been
extended to 30 September 2013. The Contract performance bond facility is secured by a Deed of Indemnity between
the Parent Entity and various controlled entities. Details of the controlled entities, included in the Deed of Indemnity are
set out in note 19.
(d) Leasing facilities
No separate security has been provided by the Consolidated Entity in relation to lease liabilities. The rights to the leased
assets revert to the lessor in the event of default. The facility matures on 30 September 2013.
64 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
24. INTEREST-BEARING LOANS AND BORROWINGS (continued)
(e) Interest rate hedge instruments
The Consolidated Entity manages the cash flow effect of interest rate risk by entering into interest rate cap and interest rate
swap contracts.
Interest rate cap contracts are entered into for a principal Australian Dollar amount by paying an upfront premium that covers
a specific period. The strike rates for these contracts are benchmarked against the BBSY bid rate (Australian Bank Bill Swap
Reference Rate - Average Bid Rate) on a quarterly basis. Settlement occurs quarterly, in favour of the Consolidated Entity, should
the BBSY bid rate be above the cap strike rate (movements in the variable rate are directly proportional to movements in the
BBSY bid rate).
Under the interest rate swaps, at the end of every quarter, the Consolidated Entity and the counterparty agree to exchange the
difference between the interest calculated by applying the fixed contract rates and that calculated by applying the BBSY bid
rate to the principal Australian Dollar amounts.
Details of interest rate derivative contracts are as follows:
Expiry
Date
14 January 2013
14 January 2013
14 January 2013
14 January 2013
Strike
Rate
%
5.35
5.39
-
-
Fixed
Rate
%
-
-
5.35
5.39
Type of derivative
Interest rate cap
Interest rate cap
Interest rate swap
Interest rate swap
25. TAX PAYABLE
Income tax payable
26. DEFERRED TAX LIABILITIES
The provision for deferred income tax is made up as follows:
- capitalisation of development costs
- prepayments, accruals/provisions and investments
- brand name
- unrealised loss on interest derivatives
- provisions for assets impairments
- tax loss carried forward
Deferred tax liabilities
Reconciliations
Principal Amount
2012
$’000
7,500
7,500
7,500
7,500
2012
$’000
-
2012
$’000
21,078
1,413
845
(44)
(14,979)
(2,375)
2011
$’000
7,500
7,500
7,500
7,500
2011
$’000
3,540
2011
$’000
19,542
(850)
845
(21)
-
-
5,938
19,516
Reconciliations of the carrying amount of the deferred tax liability at the beginning and end of the year are set out below:
Carrying amount at beginning of year
Arising temporary differences
Carrying amount at end of year
Tax losses
2012
$’000
19,516
(13,578)
2011
$’000
17,398
2,118
5,938
19,516
The Consolidated Entity has capital tax losses of $196,956 (2011: $196,956) which are available indefinitely for offset against
future capital gains subject to satisfaction of the relevant statutory tests.
notes to the consoliDateD financial statements
For the year ended 30 June 2012
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
65
27. PROVISIONS
Current
Employee benefits
Other
Total current provisions
Non-current
Employee benefits
Total non-current provisions
28. CONTRIBUTED EQUITY
Ordinary shares
Treasury shares
Share capital
2012
$’000
2,911
756
2011
$’000
2,739
496
3,667
3,235
641
641
694
694
Note
28(a)
28(b)
2012
Number
2011
Number
2012
$’000
274,588,694
274,588,694
122,837
(3,071,187)
(1,708,786)
(1,741)
2011
$’000
122,837
(1,002)
121,096
121,835
(a) Movement in ordinary share capital
Number
Number
$’000
As at the beginning of the year
274,588,694
274,588,694
122,837
$’000
122,837
As at the end of the year
274,588,694
274,588,694
122,837
122,837
Fully paid ordinary shares carry one vote per share and carry the right to dividends. There are currently no unexercised or
outstanding options. No options were exercised during the year.
(b) Movement in treasury shares
As at the beginning of the year
Acquisition of shares by AVJ Deferred
Employee Share Plan Trust
Employee share scheme issue
Number
(1,708,786)
Number
(666,667)
$’000
(1,002)
(1,695,735)
(1,375,452)
333,334
333,333
(1,362,401)
(1,042,119)
(739)
-
(739)
$’000
(259)
(743)
-
(743)
As at the end of the year
(3,071,187)
(1,708,786)
(1,741)
(1,002)
Treasury shares are shares in AVJennings Limited that are held by the AVJ Deferred Employee Share Plan Trust for the purpose
of issuing shares to Executives via the AVJ Deferred Employee Share Plan.
The original cost of the shares is treated as a reduction in share capital and the underlying shares identified separately as
treasury shares.
66 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
28. CONTRIBUTED EQUITY (continued)
(c) Capital Risk Management
When managing capital, management’s objective is to ensure that the Consolidated Entity continues as a going concern.
Management also aims to maintain an optimal capital structure that reduces the cost of capital.
In order to maintain or adjust the capital structure, management may change the amount of dividends paid to shareholders,
offer a dividend reinvestment plan, return capital to shareholders, issue new shares or sell assets to reduce debt.
During the year ended 30 June 2012, a total dividend of $5,492,000 was paid (2011: $6,865,000).
Management monitors the capital mix through the debt to equity ratio (net debt/total equity) and the debt to total assets ratio
(net debt/total assets). Based on continuing operations of the Consolidated Entity, these ratios are as follows:
Interest-bearing loans and borrowings*
Less: cash and cash equivalents
Net debt
Total equity
Total assets
Net debt to equity ratio
Net debt to total assets ratio
* Excludes leased liabilities amounting to $Nil (2011: $29,000).
2012
$’000
124,237
(4,560)
119,677
2011
$’000
69,119
(12,260)
56,859
268,993
304,528
498,129
492,614
44.5%
24.0%
18.7%
11.5%
AVJennings Limited has complied with the financial covenants of its borrowing facilities during the 2012 and 2011 reporting
periods.
29. RESERVES AND RETAINED EARNINGS
(a) Reserves
Foreign
Currency
Translation
Reserve
$’000
Share-based
Payment
Reserve
$’000
-
(417)
-
(417)
160
-
(257)
81
-
242
323
-
364
687
Total
$’000
81
(417)
242
(94)
160
364
430
At 1 July 2010
Foreign currency translation
Share-based payments
At 30 June 2011
Foreign currency translation
Share-based payments
At 30 June 2012
(b) Nature and purpose of reserves
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the Financial
Statements of subsidiaries which have functional currency different to the Australian dollar. Refer to note 2(aa).
Share-based payment reserve
The share-based payment reserve is used to recognise the grant date fair value of shares issued to employees. Refer to notes
2(r) and 7(d) for further details of the plan.
notes to the consoliDateD financial statements
For the year ended 30 June 2012
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
67
(c) Retained earnings
Movements in retained earnings were as follows:
At the beginning of the year
Net profit for the year
Dividends
At the end of the year
30. CASH FLOW STATEMENT RECONCILIATION
Reconciliation of net profit/(loss) after tax to net cash flows from
operations
Net profit/(loss) after tax
Adjustments for:
Depreciation
Amortisation
Net loss on disposal of property, plant and equipment
Interest income classified as investing cash flow
Share of profits of associates and joint venture entities
Provision for loss on equity accounted investments
Provision for loss on inventories
Share-based payments expense
Foreign currency reserve movement
Fair value adjustment to derivatives
Change in operating assets and liabilities:
Increase in inventories
(Increase)/decrease in trade and other receivables
(Increase)/decrease in prepayments and deposits
Increase/(decrease) in deferred tax liability
Increase/(decrease) in current tax liability
Increase in current tax assets
Increase in trade and other payables
Increase/(decrease) in provisions
2012
$’000
2011
$’000
182,787
(29,828)
(5,492)
176,759
12,893
(6,865)
147,467
182,787
2012
$’000
2011
$’000
(29,828)
12,893
353
-
150
(481)
(5,759)
1,311
48,621
364
72
119
(58,784)
(18,363)
(812)
(13,578)
(3,540)
(514)
23,833
378
426
60
15
(907)
(1,779)
-
-
242
-
(441)
(70,948)
3,288
352
1,990
2,635
-
35,004
(282)
Net cash flows used in operating activities
(56,458)
(17,452)
31. COMMITMENTS
(a) Capital commitments
Conditional contracts for the acquisition of land which have not yet been recognised in the Consolidated Financial Statements
are as follows:
Within one year
Total expenditure commitments
2012
$’000
-
-
2011
$’000
5
5
68 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
31. COMMITMENTS (continued)
(b) Finance lease commitments – Consolidated Entity as lessee
Finance leases are employed as a means of funding the acquisition of employer provided motor vehicles. Lease payments
are generally fixed. Where leases have renewal or purchase options, they are exercisable at market prices. No finance lease
arrangements create restrictions on other financing transactions.
Future minimum lease payments under finance leases and hire purchase contracts together with the present value of the net
minimum lease payments are as follows:
Note
2012
$’000
2011
$’000
Finance leases
Analysis of finance lease commitments
Minimum lease payments
Within one year
After one year, but not more than five years
Total minimum lease payments
Less amounts representing finance charges
Within one year
After one year, but not more than five years
Total finance charges
Present value of minimum lease payments
Present value of lease payments
Within one year
Total present value of minimum lease payments
-
-
-
-
-
-
-
-
-
30
-
30
(1)
-
(1)
29
29
29
24
The Consolidated Entity has no finance lease arrangements where the Consolidated Entity is the lessor.
(c) Operating lease commitments – Consolidated Entity as lessee
Operating leases include property, display homes, computer equipment leases and leases for motor vehicles provided under
novated leases. Certain property leases include inflation escalation and market review clauses. No renewal or purchase options
exist in relation to operating leases, and no operating leases contain restrictions on financing or other leasing activities.
Future minimum rentals payable under non-cancellable operating leases are as follows:
Operating leases
Commitments in relation to leases contracted for at the reporting date but not
recognised as liabilities:
Within one year
After one year, but not more than five years
Total operating leases
Represented by:
Non-cancellable operating leases
Cancellable operating leases
Total operating leases
2012
$’000
2011
$’000
1,891
3,524
844
1,082
5,415
1,926
5,271
144
1,926
-
5,415
1,926
notes to the consoliDateD financial statements
For the year ended 30 June 2012
32. CONTINGENCIES
34. RELATED PARTY DISCLOSURES
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
69
(a) Ultimate parent
AVJennings Limited is the ultimate Australian parent entity.
SC Global Developments Limited (incorporated in Singapore)
is the ultimate parent entity.
(b) Share and share option transactions with Directors
and Director-related entities
The aggregate number of shares and options held at the
reporting date either directly or indirectly or beneficially by
the Directors or by an entity related to those Directors of
AVJennings Limited are as follows:
Owned by Directors
directly,
or indirectly or
beneficially
2012
Number
2011
Number
Fully paid ordinary shares
138,975,038
138,641,704
Directors and Director-related entities received normal
dividends on these ordinary shares.
(c)
Entity with significant influence over AVJennings
Limited
137,370,023 ordinary shares equating to 50.03% of the total
ordinary shares on issue (2011: 137,370,023 and 50.03%
respectively) were held by SC Global Developments Limited
and its associates in the Parent Entity at 30 June 2012. Certain
Directors of SC Global Developments Limited are also
Directors of AVJennings Limited. Details of Directors’ interests
in the shares of the Parent Entity are set out in the Directors’
Report.
(d) Parent Entity amounts receivable from and payable to
controlled entities
At 30 June 2012, the Parent Entity has not set up any
provisions against debts owed by related parties as
recoverability is considered probable (2011: $Nil). An
impairment assessment is undertaken each financial year-
end to determine whether there is objective evidence that a
related party receivable is impaired. If evidence of impairment
exists, the impairment loss is recognised immediately.
Unsecured
Cross guarantees
The Parent Entity has entered into deeds of cross guarantee
in respect of the debts of certain of its controlled entities as
described in note 19.
Banking facilities
The Parent Entity has entered into a cross deed of covenant
with various controlled entities to guarantee the obligations
of those entities in relation to the banking facilities. Details of
these entities are set out in note 19.
Contract performance bond facility
The Parent Entity has entered into a Deed of Indemnity
with various controlled entities to indemnify the obligation
of those entities in relation to the Contract performance
bond facility. Details of these entities are set out in note
19. Contingent liabilities in respect of certain performance
bonds, granted by the Consolidated Entity’s financiers, in the
normal course of business as at 30 June 2012, amounted to
$4,424,000 (2011: $1,139,000). No liability is expected to arise.
Legal issues
From time to time a controlled entity defends actions served
on it in respect of rectification of building faults and other
issues. It is not practicable to estimate the amount, if any,
which the entity could be liable for in this respect. The
Directors anticipate that the resolution of any such matters
currently outstanding will not have a material effect on the
Consolidated Entity’s results.
Secured
Performance guarantees
Contingent liabilities in respect of certain performance
guarantees, granted by the Consolidated Entity bankers in
the normal course of business to unrelated parties, at 30 June
2012, amounted to $13,263,000 (2011:$18,304,000). No liability
is expected to arise.
Financial guarantees
Financial guarantees granted by the Consolidated Entity’s
bankers to unrelated parties in the normal course of business
at 30 June 2012, amounted to $15,846,000 (2011: $15,663,000).
No liability is expected to arise.
33. SIGNIFICANT EVENTS AFTER THE BALANCE
SHEET DATE
No matter or circumstance has arisen since 30 June 2012 that
has significantly affected, or may significantly affect:
a) the Consolidated Entity’s operations in future financial
years; or
b) the results of those operations in future financial years; or
c) the Consolidated Entity’s state of affairs in future financial
years.
70 | AVJENNINGS LIMITED · ABN 44 004 327 771
notes to the consoliDateD financial statements
For the year ended 30 June 2012
34. RELATED PARTY DISCLOSURES (continued)
(e) Transactions with related parties
Entity with significant influence over the Consolidated Entity:
SC Global Developments Limited
Consultancy fee paid/payable
Reimbursement of sundry expenses
Associate:
Epping JV
Note
2012
$’000
2011
$’000
(i)
(ii)
600,000
-
600,000
9,552
Management fee received/receivable
669,246
527,386
Joint Ventures:
Meridan Plains
Management fee received/receivable
Accounting services fee received/receivable
Eastwood
Management fee received/receivable
Accounting services fee received/receivable
Arlington Rise
67,915
8,333
419,736
50,000
1,516,363
1,768,632
50,000
50,000
Reversal of over accrued management fee receivable
(42,440)
367,440
Cheltenham JV
Accounting services fee received/receivable
54,000
-
Woodville
Licence fees paid to access land
Dividends received
Accounting services fee received/receivable
(i)
Consultancy fees paid to SC Global Developments Limited of $600,000 (2011: $600,000).
(ii) Overseas airfares reimbursed for HR Hochstadt and B Chin to attend meetings in Australia.
-
-
54,000
2,274,162
1,000,000
-
(f) Joint ventures in which related entities in the Consolidated Entity are venturers
Joint ventures in which the Consolidated Entity has an interest are set out in note 17 and note 20.
(g) Outstanding balances arising from provision of services
The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:
Current receivables
Joint Ventures
(h) Loans from related party
Loan received
Joint Venture
2012
$’000
2011
$’000
3,299
6,014
2012
$’000
2011
$’000
2,000
2,000
(i) Terms and conditions of transactions with related parties
Transactions with related parties are made at arm’s length both at normal market prices and on normal commercial terms.
Outstanding balances at year-end are unsecured, interest free, at call and settlement occurs in cash.
(j) Transactions with Key Management Personnel
Disclosures relating to Key Management Personnel are set out in note 7.
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
71
notes to the consoliDateD financial statements
For the year ended 30 June 2012
35. SHARE-BASED PAYMENT PLANS
(a) Recognised share-based payment expenses
Total expenses arising from share-based payment transactions and disclosed as part of employee benefit expenses are shown
in the table below:
Expense arising from equity-settled share-based payment transactions
Total expense arising from share-based payment transactions
2012
$’000
364
364
2011
$’000
242
242
The share-based payment plan is described in note 35(b). There have been no cancellations or modifications to the plan during 2012.
(b) Type of share-based payment plan
AVJ Deferred Employee Share Plan
The AVJ Deferred Employee Share Plan (the LTI Plan)
administers employee share schemes under which shares may
be purchased on-market by the LTI Plan Trustee on behalf
of employees. These shares vest to employees for no cash
consideration subject to certain conditions being satisfied.
Employees may elect not to participate in the scheme. Shares
held by the LTI Plan’s trust and not yet allocated to employees
at the end of the reporting period are shown as treasury
shares in the Consolidated Financial Statements.
Share-based compensation benefits are provided to
Executives via the LTI Plan. These equity-settled transactions
are measured at fair value at the grant date. The original
cost of the shares is treated as a reduction in share capital
and the underlying shares identified separately as treasury
shares. The fair value of the shares at the grant date is
expensed on a straight-line basis over the vesting period with
a corresponding increase in share-based payment reserve in
equity.
Vesting subject to service condition only
The Chief Executive Officer was granted 1,000,000 shares
on 7 March 2009 which vested in equal proportions on the
first, second and third anniversary of his appointment. The
vesting dates were 19 February 2010, 19 February 2011 and
19 February 2012. The market value of the shares at the grant
date was taken to be the fair value. The service condition was
the continuity of employment over the 3 years. These shares
have vested.
Vesting subject to both service and performance conditions
2011 Grant
A total of 1,375,452 shares were granted on 28 September
2010 to certain executives. As detailed in the table on page
18 and page 43, these include 1,136,816 shares for KMP. The
remaining shares were granted to executives who were not
KMP.
2012 Grant
An additional 1,695,735 shares were granted on 5 September
2011 to certain executives. As detailed in the table on page
18 and page 43, these include 1,454,555 shares for KMP. The
remaining shares were granted to executives who were not
KMP.
These shares are subject to both service and performance
conditions and will vest to the extent that each of these
conditions is satisfied.
The service vesting condition is that the employee must still
be employed by AVJennings at 30 September 2013 (for the
2011 grant) and 30 September 2014 (for the 2012 grant). In
the event of death or permanent disablement the shares
may vest subject to Board discretion. In the event that the
employee is retrenched, the shares may vest subject to Board
discretion. If the employee resigns (in certain circumstances)
or is terminated, the vested shares will be forfeited.
The performance vesting conditions are:
• Total Shareholder Return (TSR) performance measured
against the ASX Small Industrials Index; and
• Earnings Per Share (EPS) growth. AVJennings’ EPS growth
for the performance period must meet or exceed the
target set. The EPS hurdle for total vesting of the 2011
grant is 10% p.a. growth for the three financial years
to 30 September 2013, while that for the 2012 grant
is 10% p.a. growth for the three financial years to
30 September 2014.
Half of the allocation is assessed against each performance
condition. The vesting schedule for the TSR performance
condition is set out in the table below. The holder of the
shares is entitled to receive all dividends paid between grant
and vesting date.
AVJennings’ TSR rank against
companies in the Index
Percentage vesting
< median
At the median
> median but < 75th percentile
Nil
50%
Pro-rata between
50th
and 75th percentiles
>=75th percentile
100%
The fair value of the EPS element of the shares is the market
value at grant date. The Monte Carlo Model is used to fair
value the TSR element. The Model simulates AVJennings’ TSR
and compares it against the ASX Small Industrials Retail Index.
The Model takes into account historic dividends, share price
volatilities and the risk-free yield on an Australian Government
Bond at the grant date matching the remaining effective life
of 3 years.
72 | AVJENNINGS LIMITED · ABN 44 004 327 771
Directors’ Declaration
In accordance with a resolution of the Directors of AVJennings Limited, we state that:
1)
In the opinion of the Directors:
i)
the Consolidated Financial Statements and Notes are in accordance with the Corporations Act 2001, including;
a) giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2012 and of their performance
for the year ended on that date; and
b) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and
Corporations Regulations 2001;
ii)
the Consolidated Financial Statements and Notes also comply with International Financial Reporting Standards as
disclosed in note 2; and
iii) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
2)
3)
This declaration has been made after receiving the declarations required to be made to the Directors in accordance with
section 295A of the Corporations Act 2001 for the financial year ended 30 June 2012.
In the opinion of the Directors, as at the date of this declaration, there are reasonable grounds to believe that the members
of the Closed Consolidated Entity identified in note 19 will be able to meet any obligations or liabilities to which they are
or may become subject, by virtue of the Deed of Cross Guarantee.
On behalf of the Board
Simon Cheong
Director
27 September 2012
Peter Summers
Director
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
73
inDepenDent auDitor’s report to the members
of avJennings limiteD
Report on the financial report
Independence
We have audited the accompanying financial report of
AVJennings Limited, which comprises the consolidated
statement of financial position as at 30 June 2012, the
consolidated income statement, the consolidated statement
of other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash
flows for the year then ended, notes comprising a summary
of significant accounting policies and other explanatory
information, and the directors’ declaration of the consolidated
entity comprising the company and the entities it controlled
at the year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the
preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards
and the Corporations Act 2001 and for such internal controls
as the directors determine are necessary to enable the
preparation of the financial report that is free from material
misstatement, whether due to fraud or error. In Note 2, the
directors also state, in accordance with Accounting Standard
AASB 101 Presentation of Financial Statements, that the
financial statements comply with International Financial
Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial
report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. Those
standards require that we comply with relevant ethical
requirements relating to audit engagements and plan
and perform the audit to obtain reasonable assurance
about whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial
report. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or
error. In making those risk assessments, the auditor considers
internal controls relevant to the entity’s preparation and fair
presentation of the financial report in order to design audit
procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness
of the consolidated entity’s internal controls. An audit also
includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
In conducting our audit we have complied with the
independence requirements of the Corporations Act 2001.
We have given to the directors of the company a written
Auditor’s Independence Declaration, a copy of which is
included in the directors’ report.
In addition to our audit of the financial report, we were
engaged to undertake the services disclosed in the notes to
the financial statements. The provision of these services has
not impaired our independence.
Opinion
In our opinion:
a. the financial report of AVJennings Limited is in accordance
with the Corporations Act 2001, including:
i
giving a true and fair view of the consolidated
entity’s financial position as at 30 June 2012 and of its
performance for the year ended on that date; and
complying with Australian Accounting Standards and
the Corporations Regulations 2001; and
b. the financial report also complies with International
ii
Financial Reporting Standards as disclosed in Note 2.
Report on the remuneration report
We have audited the Remuneration Report included in
pages 15 to 20 of the directors’ report for the year ended
30 June 2012. The directors of the company are responsible
for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations
Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of AVJennings
Limited for the year ended 30 June 2012, complies with
section 300A of the Corporations Act 2001.
Ernst & Young
Mark Conroy
Partner
Sydney
27 September 2012
74 | AVJENNINGS LIMITED · ABN 44 004 327 771
corporate governance statement
For the year ended 30 June 2012
This Corporate Governance Statement indicates the
Company’s conformance with the Australian Securities
Exchange’s (“ASX”) Corporate Governance Council’s,
“Corporate Governance Principles and Recommendations”
(2nd Edition), as required by the ASX Listing Rules.
The AVJennings Corporate Governance Statement is
structured with reference to the ASX recommendations.
Areas of non compliance will be disclosed under the relevant
principle. All corporate practices within this report were in
place for the entire year unless otherwise indicated. This
Statement refers to documents that support the Company’s
Corporate Governance framework and it is posted in the
Corporate Governance section on the Company’s website:
www.avjennings.com.au.
Principle 1:
Lay solid foundations for management and oversight
by the Board
Recommendation 1.1 of the ASX Corporate Governance
Principles requires the Company to establish and disclose
the functions reserved for the Board and those delegated to
management. The roles and responsibilities of the Company’s
Board, Board Committees and senior management have been
established through Board approved Charters, which have
been operational throughout the period and are disclosed on
the Company’s website at www.avjennings.com.au.
All persons who are invited and agree to act as a Director of
the Company do so by a formal letter of consent.
To assist it in carrying out its responsibilities, the Board
has established several standing Board Committees of its
members. Director appointments to Board Committees are
by formal resolutions of the Board. The Chairman of each
Committee reports on any matters of substance at the next
full Board Meeting. Membership of Board Committees and
attendance at Board and Committee meetings is tabulated in
the Director’s Report section of the Company’s Annual Report.
The Board Committees are:
• Audit Committee
• Nominations Committee
• Remuneration Committee
Investments Committee
•
• Risk Management Committee (incorporating the
Occupational
Health, Safety and Environment sub-committee)
The roles and responsibilities of the Chief Executive Officer
and senior management are established through key
performance objectives. They are assessed against those
objectives on an annual basis, or more frequently if that is
indicated.
The Remuneration Committee monitors the performance of
the Chief Executive Officer. It also monitors the performance
of the Chief Financial Officer and the Company Secretary
in consultation with the Chief Executive Officer. The Chief
Executive Officer assesses the performance of senior
management and these assessments are reviewed by the
Remuneration Committee. The process for evaluating
the performance of senior executives is set out in the
Remuneration Report section of the Company’s Annual
Report.
The Board has also approved financial delegations and
personnel delegations which cover specific areas of
delegated responsibility to the Managing Director and senior
management.
During the period, the Board has considered broad Corporate
Governance matters, including the continuing relevance of
existing committees and its own performance and reaffirmed
its belief that the Committee structures provided sound
oversight of Management, by the Board.
Principle 2:
Structure the Board to add value
Directors
The Company’s Constitution and Section 201A of the
Corporations Act 2001 stipulate that a public company must
have at least three Directors.
The Board has adopted guidelines concerning its
composition. For the time being, the Board has determined
that there shall be at least five Directors, increasing where
additional expertise is required. The current Directors of the
Company are listed in the Directors’ Report of the Company’s
Annual Report with a brief description of their qualifications,
experience, special responsibilities and status as Executive,
Non-Executive or Independent Director.
The Board includes both Executive and Non-Executive
Directors with a majority of Non-Executive Directors. The
Non-Executive Directors include both independent and
non-independent Directors. There is a strong element
of independence on the Board, with four of the six Non-
Executive Directors being independent, determined in
accordance with the ASX guidelines on independence. The
other two Non-Executive Directors, who represent SC Global
Developments Limited, a substantial shareholder, have no
involvement in the operational management of the Company.
The Managing Director is an Executive Director.
The Chairman of the Board is selected by the full Board.
The current Chairman of the Board, Mr Simon Cheong, is
also Chairman of the Board of a substantial shareholder, SC
Global Developments Limited. Although there is no lead
Independent Director as recommended by the ASX Principles,
the Deputy Chairman, Mr Jerome Rowley, is an Independent
Director. The roles of the Chairperson and Chief Executive
Officer are exercised by different individuals.
The Board meets around six scheduled times a year either in
person or by teleconference and occasionally on an ad-hoc
basis if required. Meeting venues are planned to enable
Directors to familiarise themselves with major development
projects. A formal agenda is in place for each meeting.
New Directors are inducted individually on the Company’s
financial, strategic, operational and risk management
positions, the culture and values of the Company and
meeting arrangements. Directors have access to Company
records and information through the Company Secretary and
other relevant senior officers. They receive regular detailed
reports on financial and operational aspects of the Company’s
business and may request elaboration or explanation of those
reports at any time.
Each Director has the right to seek independent professional
advice at the Company’s expense. Prior approval of the
Chairman is required but this may not be unreasonably
withheld. Any advice obtained is made available to the
Chairman.
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
75
corporate governance statement
For the year ended 30 June 2012
Nominations Committee
The Board has a Nominations Committee, comprising two
Independent Directors, Mr R J Rowley, and Mr B G Hayman
and two Non-Executive Directors, Mr S Cheong and Mrs E
Sam, who is also Chairperson of the Committee. The Board is
of the view that the Committee, which consists entirely of Non
Executive Directors, albeit without an independent majority
or Chairperson, is structured appropriately to perform its
functions
The Nominations Committee Charter sets out its role,
responsibilities, composition, structure, membership
requirements and guidelines and is posted on the Corporate
Governance section of the Company’s website. The purpose
of the Committee is to review and make recommendations
to the Board on Board composition, to establish the criteria
for Board and Board Committee membership and to evaluate
Board performance and the performance of Directors.
The Nominations Committee assists the Board in identifying,
evaluating and recommending candidates to the Board,
having regard to the relevant skills, experience, personal
attributes, diversity, availability and time commitments
required of new Directors. The Committee may make use of
external consultants if that is deemed appropriate.
The Committee meets at least annually.
A Board skills matrix has been developed and is used to
assess the skills and experience available on the Board and
to identify gaps in skills, if any. Development of strategy
and policy, financial literacy, industry experience, banking
and finance, risk management, compliance oversight, sales
and commercial experience are some of the desirable skills
identified and these are collectively available on the Board.
In November 2011, through the Nominations Committee,
the Directors reviewed the performance of the whole
Board and Board Committees. The review considered each
director’s expertise, skill and experience, along with their
understanding of the company’s business, preparation for
meetings, relationships with other directors and management,
awareness of ethical and governance issues, and overall
contribution. The outcomes of the review were discussed and
considered by all the Directors and the general conclusion
was that the Board and each of the Board Committees were
operating well. The Company had experienced a challenging
year in difficult market conditions and the Board had provided
good oversight of management’s actions and provided
strategic direction to those activities. It was also considered
that the respective committees had done likewise within their
spheres of responsibility.
Details of Directors’ experience and qualifications and
attendance at Board and Committee Meetings are set out on
pages 14 to 15 of the Directors’ Report.
Company Secretary
The Board appoints the Company Secretary and all Directors
have access to the Company Secretary. Details of the
Company Secretary’s experience and qualifications are set out
in the Company’s Annual Report.
The role of the Company Secretary is to support the
effectiveness of the Board by monitoring and advising the
Board on its Corporate Governance responsibilities by
means of its charters, procedures and updates on legislation
and regulation. The Company Secretary is also responsible
for lodgements with relevant regulators, management of
dividend payments and/or Dividend Reinvestment Plan
allotments and management of the relationship between
shareholders and the share registry.
Principle 3:
Promote ethical and responsible decision making
Code of Conduct
The Company has a Code of Conduct which sets out
the behaviour required of all Board members, senior
management, employees and contractors throughout
the period. The content of the Code is integrated into
management practices and forms part of the terms of
employment of all Company employees. The Code, which is
disclosed on the Company’s website, provides a mechanism
to employees to report breaches of the Code without fear of
retribution. Senior management deals with breaches of the
Code and monitors compliance. The Company Secretary and
the Chief Executive Officer report to the Board and the Audit
Committee on various aspects of Code Compliance.
Dealing in AVJennings’ shares
The Company’s Securities Trading Policy places restrictions
on the ability of Directors, officers and employees to trade in
the Company’s shares during specified restricted “black out”
periods. The restrictions are designed to minimise the risk of
actual or perceived insider trading.
Diversity
In accordance with the ASX recommendations, the Board
has established a Diversity Policy and has set measurable
objectives to achieve its goals on diversity. The Company’s
progress towards achieving these objectives, together with
details of the proportion of women employees in the whole
organisation, women in senior executive positions and women
on the Board, are shown on page 78 of this report.
The Diversity Policy is available for viewing on the Company’s
website at www.avjennings.com.au.
Principle 4:
Safeguard integrity in financial reporting
Audit Committee
The Company has an Audit Committee comprising of three
Independent Directors, Mr B Chin (who is a Chartered
Accountant and is also the Chairman of the Committee), Mr
R J Rowley, Mr T P Lai and one Non-Executive Director, Mrs E
Sam. The Chairman of the Committee is a different individual
to the Chairman of the Board. The Audit Committee Charter
sets out its role, responsibilities, composition, structure and
membership requirements and is posted on the Corporate
Governance section of Company’s website.
All other members of the Board are invited to attend Audit
Committee meetings as observers and in a non voting
capacity. Usually, all Board members attend all Audit
Committee meetings either as members or observers.
The Audit Committee papers, including the minutes of
the previous Committee Meetings, are sent to all Board
members.
76 | AVJENNINGS LIMITED · ABN 44 004 327 771
corporate governance statement
For the year ended 30 June 2012
The Chief Executive Officer, Chief Financial Officer, Company
Secretary, Internal Auditor and the External Auditor
attend Audit Committee meetings at the discretion of the
Committee. The Committee also meets privately with the
External Auditor at least once a year and usually twice per
year, without management being present. In addition, the
Internal Auditor reports directly to the Audit Committee and
the Committee meets privately with the Internal Auditor at
least once per year.
The Minutes of each Committee meeting are circulated after
the meeting and the signed minutes tabled at the subsequent
meeting of the Committee. The Chairman of the Committee
is available to report on or answer questions about the
Committee’s conclusions and recommendations to the Board.
The Committee meets at least three times during the year.
Audit Governance
The Company has a policy on the provision of auditing
and related services. The Committee is satisfied with the
independence of the External Auditor.
During the reporting period, the Company had its 2011
Annual Report and Audit Committee Charter posted on
its website. The Annual Report has details of the Audit
Committee’s membership and the number of meetings held
and attended.
Financial Reporting
The Board receives regular reports about the financial
condition and operational results of the Company throughout
the year. In relation to the half year and annual Financial
Statements, Senior Management is required to sign off on
the systems and processes within their area of responsibility.
This procedure supports the Managing Director and Chief
Financial Officer in their certification to the Board in effect
stating that the Company’s accounts present a true and
fair view, in all material aspects, of the Company’s financial
condition and operational results and accord with the relevant
accounting standards.
Principle 5:
Make timely and balanced disclosure
A continuous disclosure regime operates throughout the
Group. The Company has in place a formal disclosure policy,
contained within the Shareholder Communication Policy,
to ensure matters that a person could reasonably expect to
have a material effect on the share price are announced to
the ASX and Singapore Exchange (SGX) in a timely manner.
This policy has been formally communicated to all relevant
staff. The Company Secretary is the nominated Continuous
Disclosure Officer. The Board is advised of any notifiable
events. The Board approves, or is advised of, all releases that
are made to the ASX and the SGX. All announcements made
by the Company are posted on the Company’s website in the
“Shareholder” section.
The policy addresses:
• Compliance with continuous disclosure obligations;
• Maintenance of confidentiality where appropriate;
• Timely and factual release of information where
appropriate;
• Clarity and balance in reporting;
• Equal and timely access to information.
Principle 6:
Respect the rights of Shareholders
The Company endeavours to keep its Shareholders fully
informed of matters likely to be of interest to them. The
Shareholder Communication Policy outlines the process
through which the Company will endeavour to ensure
timely and accurate information is provided equally to all
shareholders. Information is communicated to shareholders
through:
• Reports to the ASX, SGX and the press;
• Half and full year profit announcements;
• Annual Reports;
•
Investor briefings and information provided to analysts,
(which are released to the ASX and SGX prior to being
provided to the analysts);
• Continuous disclosure to the ASX pursuant to the ASX
Listing Rules and notification of the same information to
the SGX; and
• Posting all the above and any other notifications made by
the Company to Shareholders, on its website.
The Company’s website – www.avjennings.com.au has a
section titled “Shareholders” with sub sections on:
• The Company’s previous Annual Financial Reports and
Half Yearly Reports;
• The Company’s share price on the ASX- provided by a link
to the ASX web site;
• Announcements made to the ASX and SGX;
• Copies of investor presentations;
• Corporate Governance Charters and Policies including a
Shareholder Communication Policy;
• Terms and conditions of the Company’s Dividend
Reinvestment Plan; and
• Media releases.
All shareholders are encouraged to attend AVJennings’
AGM in person or participate by sending a proxy as their
representative. At the Annual General Meeting, the Chairman
encourages questions and comments from Shareholders
and seeks to ensure the Meeting is managed to give the
maximum number of Shareholders an opportunity to
participate. In the interests of clarity, questions on operational
matters may be answered by the Chief Executive Officer or
another appropriate member of senior management.
The External Auditor attends the Company’s Annual General
Meeting and is available to respond to questions about the
conduct of the audit and the preparation and content of the
Independent Audit Report.
Principle 7:
Recognise and manage risk
The Board has ultimate responsibility for risk management,
compliance and control functions across the Group. These
functions are aligned with the Company’s strategy and
business objectives.
The Company has in place internal controls intended to
identify and manage significant business risks. These include
the review of development proposals and the management of
their ongoing performance. Management prepares the Risk
Management Plan and the Board is responsible for reviewing
and approving it.
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
77
corporate governance statement
For the year ended 30 June 2012
The Committee reviews and reports to the Board on:
• Conditions of service and remuneration of the Chief
Executive Officer and his direct reports;
• Performance of the Chief Executive Officer;
• Remuneration of the Chief Financial Officer and the
Company Secretary;
• Remuneration policies for the Company, which include the
performance review of all employees, senior management
and Board members;
• Proposals for reward initiatives;
• Succession plans for senior management; and
• Other related matters as directed by the Board.
The Chief Executive Officer attends meetings of the
Remuneration Committee by invitation when required to
report on, and discuss, senior management performance
and remuneration matters. He is excluded from Committee
deliberations relating to his position.
The Committee is empowered to seek external professional
advice on any matter within its terms of reference.
Senior managers of the Company receive a balance of fixed
and variable (at risk) remuneration. The proportions vary at
different levels within the Company, reflecting the capacity
of the senior managers to influence the overall outcome
of the Company’s operations and returns to Shareholders.
The bonuses (if any) to executives are based on a review of
individual executive performance as well as the Company’s
overall financial performance.
Director’s fees paid to Non-Executive Directors and
Independent Non-Executive Directors are determined by
the Board, and are within the aggregate limits approved by
Shareholders. The Independent Non-Executive Directors
currently receive fees paid by the Company. The Committee
has available to it data on fees paid to independent
directors by a wide range of Companies. The remaining
two Non-Executive Directors do not receive fees, however
the Company pays a consulting fee to the substantial
Shareholder, SC Global Developments Limited.
AVJennings’ Remuneration Report is set out on pages 15 to
20 of the Directors’ Report.
The Board has established a Risk Management Committee,
which incorporates a sub-committee responsible for
occupational health, safety and environmental matters.
The Committee comprises two Independent Directors Mr
R J Rowley (Chairman) and Mr B G Hayman and generally
meets quarterly. The Committee is supported by the Chief
Executive Officer, Chief Financial Officer and the Company
Secretary. The Risk Management Committee is responsible
for identifying and considering new risks and for monitoring
management’s implementation of the Risk Management Plan,
taking the Internal Auditor’s review into account.
The Company’s assets are insured under a comprehensive
insurance program which is reviewed annually.
The Company also has an Investments Committee comprising
one Non-Executive Director, Mr S Cheong, two Independent
Directors, Mr B G Hayman and Mr R J Rowley and one
Non-Director member, Mr David Tsang. The Committee
considers all major land development acquisition and
disposal proposals that are over monetary limits delegated
to management. It also conducts a pre-commencement
review and ongoing project reviews during the life of all
development projects.
The Chief Executive Officer and the Chief Financial Officer
are required to provide the Board with a written statement in
accordance with section 295A of the Corporations Act to the
effect that:
• The integrity of financial statements is founded on a sound
system of risk management and internal compliance and
control which implements the policies adopted by the
Board; and
• The Company’s risk management and internal compliance
and control system, in so far as it relates to financial risk, is
operating efficiently and effectively in all material respects.
Principle 8:
Remunerate fairly and responsibly
The Board has established a Remuneration Committee to
review and determine, among other things, remuneration
policies and packages applicable to any Executive Directors,
the Company Secretary and direct reports to the CEO.
It also reviews remuneration to senior managers of the
Company and the remuneration policies of the Company. The
Committee meets at least annually and usually twice per year
and its Charter is available on the Company’s website under
the Corporate Governance Section.
The Committee consists of two Non-Executive Directors, Mrs
E Sam (Chairperson) and Mr S Cheong, and two Independent
Directors, Mr B G Hayman and Mr T P Lai. The Board is of the
view that the Committee, which consists entirely of Non-
Executive Directors, albeit without an independent majority
or Chairperson, is structured appropriately to perform
its functions in reviewing the remuneration of Company
executives and staff.
78 | AVJENNINGS LIMITED · ABN 44 004 327 771
Diversity report
For the year ended 30 June 2012
This is the first Diversity Annual Report of AVJennings
Limited (“AVJennings”) in compliance with ASX Corporate
Governance Council Principles and Recommendations.
Approach to Diversity
AVJennings aims to embed equity and diversity principles
in its work practices and organisational environment.To
ensure that these practices remain appropriate and foster
an inclusive environment, AVJennings annually reviews
its workforce diversity profile, its policies and any relevant
external developments.
To enhance efficiency and productivity, employment decisions
such as selection, promotion and training are made based
on merit rather than personal attributes (gender, race, marital
status, age and other characteristics (which can vary based
on the jurisdiction)). AVJennings also actively takes steps to
eliminate discriminatory behaviour and harassment in the
work place.
Measurable Objective
Progress Response
Responsibility for Diversity
Employees at all levels of employment are responsible for
the creation and implementation of a diverse, inclusive and
tolerant workplace, and for elimination of discriminatory
practices.
The Board is responsible for monitoring the development and
implementation of diversity initiatives, policies and practices.
The Board reports annually on these matters.
Diversity Targets
This first report reflects AVJennings’ focus during the
reporting period on the reporting on gender diversity as
required under the ASX Corporate Governance Council
Principles and Recommendations.
1.
2.
At least one female Board
Director
One (1) female Board Director of seven (7) as at the reporting date.
At least one female Executive
Committee Member
Three (3) female Executive Committee Members of seven (7), including the CEO,
as at the reporting date.
3. Non-Discriminatory
Recruitment
The Company’s Recruitment, Selection and Appointment to Role policies reflect
our position on diversity.
4. Non-Discriminatory Selection
5. Data Collection
6.
EOWA Reporting
All recruitment, internal and external, identifies that AVJennings is an Equal
Opportunity Employer.
Selection is based on merit and the recruitment process requires that the
Selection Advisory Committee (Interview Panel) comprise both genders.
External recruitment suppliers, where applicable, are requested to provide a
balanced short list.
During the reporting period, 50% of all new hires were female.
Diversity information is sought from employees when they commence employment.
It is provided on a voluntary basis and includes information on disability, ethnic origin
and proficiency in languages other than English. The diversity statistics are based
primarily on this data. During the reporting period, all employees had the opportunity
to review and update their profile. Data collection is an ongoing process.
Data that is collected is reviewed and action taken as appropriate. During the
reporting period, with a focus on gender diversity, female participation was reviewed
across the different job families in the business, pay equity and female attrition rates.
Further analysis, subject to data available, will provide a platform for ongoing
improvement in our broader equity and diversity policies.
2012 report submitted to EOWA was reviewed by the Board. During the reporting
period there was an improved ratio of women in the Senior Management team and
at the Technical/Specialist level.
Women accounted for around 43% of employees in March 2012.
7. No Cultural Impediments
No impediments identified during the reporting period.
KEY:
met or above target
on track to meet target
below target
As at 30 June 2012, women accounted for 44% of total current permanent employees and the proportion of women at various
levels of the Company was:
Level and Role
Non-executive Director
Executive Team
Company
17%
43%
44%
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
79
shareholDer information
As at 28 September 2012
1. NUMBER OF SHAREHOLDERS AND DISTRIBUTION OF EQUITY SECURITIES
Range of Holdings of Ordinary Shares
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
Total number of holders
Number of holders of less than a marketable parcel
2. SUBSTANTIAL SHAREHOLDERS
As disclosed by latest notices received by the Company:
Name
SCGlobal Developments Ltd
Guinness Peat Group plc
Orbis Australia Group
Australian
Securities
Exchange
Singapore
Exchange
Total
571
942
318
385
53
2,269
809
738
1,727
529
464
37
3,495
1,223
Ordinary
Shares
137,370,023
20,938,920
14,133,206
1,309
2,669
847
849
90
5,764
2,032
%
50.03
7.63
5.15
3. TWENTY LARGEST SHAREHOLDERS ON THE AUSTRALIAN REGISTER
Name
The Central Depository (Pte) Limited
GPG Australia Nominees Limited
National Nominees Limited
Citicorp Nominees Pty Limited
JP Morgan Nominees Australia Ltd
AVJ Employee Share Plan Managers Pty Ltd
John E Gill Operations Pty Ltd
HSBC Custody Nominees (Australia) Limited
John E Gill Trading Pty Ltd
Gillcorp Pty Limited
Allabah Pty Ltd
Avoca Equities Pty Limited
Luton Pty Ltd
D R M Gill & J M Gill (Gill Super Fund A/c)
GPG Nominees Pty Ltd
Ago Pty Ltd (Superannuation Fund A/c)
Di Iulio Homes Pty Ltd (Di Iulio Super Fund A/c)
Savoy Management Pty Ltd
Scorpio Nominees Pty Ltd (Gwenton A/c)
JP Morgan Nominees Australia Ltd (Cash Income A/c)
Ordinary
Shares
%
171,509,250
62.46
20,110,858
10,490,476
10,262,431
10,239,398
4,350,958
3,899,948
3,575,365
3,109,991
2,665,556
2,432,552
1,322,065
1,150,000
1,067,847
1,054,289
945,001
777,643
560,758
538,209
502,753
7.32
3.82
3.74
3.73
1.58
1.42
1.30
1.13
0.97
0.89
0.48
0.42
0.39
0.38
0.34
0.28
0.20
0.20
0.18
Total
250,565,348
91.25
80 | AVJENNINGS LIMITED · ABN 44 004 327 771
shareholDer information
As at 28 September 2012
4. TWENTY LARGEST SHAREHOLDERS ON THE SINGAPORE REGISTER
Name
UOB Nominees (2006) Pte Ltd
United Overseas Bank Nominees
DBS Nominees Pte Ltd
UOB Kay Hian Pte Ltd
Trimount Pte Ltd
Oei Hong Leong Foundation Pte Ltd
OCBC Nominees Singapore Private Ltd
Lim Chin Tiong
Tsang Sze Hang
Rowland Wong Kwok Ho
Vesmith Investments Pte Ltd
Tan Chee Jin
Pansbury Investments Pte Ltd
Phillip Securities Pte Ltd
HSBC (Singapore) Nominees Pte Ltd
Ooi Kim Sew
Hexacon Construction Pte Ltd
Teo Chiang Long
Mohamed Salleh S/o Kadir Mohideen Saibu Maricar
Goh Choon Eng
Total
Percentages are calculated on the total number of shares on issue.
5. VOTING RIGHTS
Ordinary Shareholder
Ordinary
Shares
128,030,309
9,438,151
1,570,412
1,494,480
1,185,672
1,044,366
837,594
714,800
598,140
527,738
453,483
400,000
354,400
336,830
284,029
280,000
263,200
250,648
241,532
188,905
%
46.63
3.44
0.57
0.54
0.43
0.38
0.31
0.26
0.22
0.19
0.17
0.15
0.13
0.12
0.10
0.10
0.10
0.09
0.09
0.07
148,494,689
54.08
On a show of hands, every member present in person or by representative, proxy or attorney shall have one vote, and on a poll
each fully paid share shall have one vote.
6. TOTAL NUMBER OF SHARES
The total number of shares on issue and listed on the Australian Stock Exchange is 274,588,694.
AVJENNINGS LIMITED · ANNUAL REPORT 2012 |
81
SHARE REGISTRY
Australia
Boardroom Pty Limited
Level 7, 207 Kent Street
Sydney NSW 2000
Telephone: 1300 737 760 (within Australia)
+61 2 9290 9600 (outside Australia)
Singapore
The Central Depository (Pte) Ltd
4 Shenton Way
#02-01 SGX Centre 2
Singapore 068807
Telephone +65 6535 7511
ANNUAL GENERAL MEETING
The Annual General Meeting of the Company
will be held at:
Meeting Rooms 23.01 and 23.02
Level 23, Ernst & Young Building
8 Exhibition Street
Melbourne VIC 3000
Friday, 23 November 2012 at 10.00am.
DIVIDENDS
An interim dividend of 0.5 cents per share
(fully franked) was paid on 11 April 2012.
company particulars
DIRECTORS
Mr Simon Cheong
Mr Jerome Rowley
Mrs Elizabeth Sam
Mr Bobby Chin
Mr Teck Poh Lai
Mr Bruce Hayman
Mr Peter Summers
COMPANY SECRETARIES
Mr Peter Summers
Mr Carl Thompson
Mrs Sandra Vogiatzakis
PRINCIPAL REGISTERED OFFICE IN AUSTRALIA
Level 4, 108 Power Street
Hawthorn Vic 3122
Telephone +61 3 8888 4800
AUDITORS
Ernst & Young
680 George Street
Sydney NSW 2000
BANKERS
Australia and New Zealand Banking Group Ltd
HSBC Bank Australia Ltd
United Overseas Bank Limited
National Australia Bank Ltd
STOCK EXCHANGE LISTINGS
Australia
The Company is listed on:
The Australian Securities Exchange
Level 4, 525 Collins Street
Melbourne VIC 3000
Singapore
The Company’s shares are also quoted and traded on:
The Singapore Exchange
2 Shenton Way
#19-00 SGX Centre 1
Singapore 068804
through the Central Limit Order Book System (CLOB).