Housing matters.
Community matters.
Annual Report 2016
AVJennings Limited ABN 44 004 327 771
Contents.
Chairman’s report
FY16 Highlights
Managing Director’s report
Community matters
Property portfolio
Project pipeline
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
Independent Auditor’s
Report to the Shareholders
of AVJennings Limited
Shareholder Information
Company Particulars
1
2
4
6
8
9
12
27
28
29
30
31
75
76
77
80
Chairman’s report.
Dear Fellow Shareholders,
On behalf of the Board of Directors I am pleased to present our
2016 Annual Report.
Our Company has reported another
strong result this year. Profit before
tax increased 22% on the previous
year to $58.8 million. Gearing remains
conservative at 17.9%, which is
indicative of a sound balance sheet,
and despite healthy sales, we have
been able to maintain our land bank
of 10,048 lots at similar levels to last
year (10,198 lots).
By maintaining high levels of
production, as well as the impact of
acquiring the joint venture interests in
certain projects in the previous year,
we were able to increase turnover. This
increased turnover together with stable
gross margins in most jurisdictions
contributed to the pleasing full year
result. It enabled us to declare a final
dividend of 3.5 cents bringing total
dividends declared for the year to
5.0 cents per share.
This time last year the Directors said
they remained confident the Company
was well positioned for future growth
and twelve months on that has not
only proved correct, but we continue
to hold that view because we believe
the market is supported by positive
fundamentals.
While specific micro-markets such
as some inner-city areas of Sydney,
Melbourne and Brisbane have
experienced significant growth in
supply and prices, this is not true
of most of the markets in which the
Company operates. In these markets,
there remains continuing demand
and under-supply, particularly in New
South Wales and Victoria. Around half
of Australia’s population lives in these
two states. The historically low interest
rate environment is likely to remain for
the foreseeable future. Employment
outlook remains stable amidst an
increasing population.
The Company is confident that
demand for its products is sustainable
given its clear strategy of delivering
traditional housing solutions at
affordable prices in well-planned
communities rather than participating
in more volatile segments.
It is our unwavering commitment
to be a strategy led company that
has underpinned another year of
strong results. We make considered
decisions about how to proceed, and
importantly how not to, and this has
resulted in a consistently high return
for you, my fellow shareholders.
At a wider company level, we have
continued to strengthen our position
and business. Significant steps include
replenishing our land bank in our
strategic geographical locations and
the continued development of our
three key assets – people, product
and brand.
It would be tempting to think the
current favourable market conditions
have carried the Company along.
While it is true we are operating in
a propitious environment, the strong
results would not be possible without
the adherence to strategy and the
dedication and expertise of our staff.
Without their resolute commitment to
building quality affordable housing
in thriving communities, our strategy
would not be implemented with the
same level of success.
It is therefore with great pride that I
reflect on another significant year in
the 84 year history of this remarkable
Company. One in which the
AVJennings staff, under the leadership
of our CEO Peter Summers, have
achieved another increase in revenue
and profit.
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 1
As Chairman, I would like to thank
my fellow Directors for their active
engagement and invaluable
contributions during the year. Their
wise counsel and business acumen
enables the Board to appropriately
balance oversight and guidance in
the interests of all stakeholders.
I am particularly grateful for the
assistance rendered by Directors
in fostering deeper relationships
between management and newer
financiers to the Company, whose
ongoing involvement strengthens
our lending platform.
Lastly, it is pleasing to see a number
of new shareholders on the register
and we warmly welcome you. I am
delighted those shareholders that
have been with the Company through
the difficult times are now enjoying
healthy returns on their investment.
The outlook remains promising for all
AVJennings shareholders and I would
like to thank you for your continued
support.
Simon Cheong
Chairman
2 | AVJENNINGS LIMITED · ABN 44 004 327 771
FY16 Highlights.
STRONG FINANCIAL GROWTH
• Revenue +32.7%
• PBT +22.0%
• EPS +18.6%
INCREASED SHAREHOLDER RETURNS
• Fully franked final dividend of 3.5 cents
•
Interim + final dividend is 5 cents fully franked
(+25%), yielding ~7.5% at current prices
•
3 consecutive years of dividend growth
FINANCIAL FLEXIBILITY MAINTAINED
SUSTAINABLE OPERATIONS
•
•
Gearing at 17.9%
$250 million ‘Club’ banking facility extended
to Sept 2018
•
Healthy and stable product pipeline of ~10k+ lots
•
•
•
Contract signings (lots) +5.5%; WIP +11.2%
Geographically diverse project pipeline in urban
growth corridors
Traditional housing undersupplied; Stable and
domestic customer profile; Affordable product
FY16
FY15
% change
FY14
Revenue
Statutory Profit before Tax
Statutory Profit after Tax
Gross Margins
Inventory Provision Write Back (After tax)
$421.9m
$317.9m
$58.8m
$40.9m
25.2%
$2.6m
$48.2m
$34.4m
26.8%
$2.6m
Net tangible assets (NTA)
$361.1m
$334.5m
NTA per share
EPS (cents per share)
Dividend (cents per share)
$0.95
10.7
5
$0.88
9
4
32.7%
22.0%
19.0%
-1.6pp
0.0%
7.9%
7.6%
18.6%
25.0%
$250.6m
$27.0m
$18.8m
21.9%
$3.6m
$313.0m
$0.81
4.9
2
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 3
FY16 Highlights.
Revenue ($m) +32.7%
Contract signings +5.5%
)
m
$
(
500
400
300
200
100
0
r
e
b
m
u
N
2,000
1,600
1,200
800
400
0
NPAT($m) +19%
FY13
FY14
FY15
FY16
Settlements +3.8%
)
m
$
(
50
40
30
20
10
0
-10
-20
r
e
b
m
u
N
2,000
1,600
1,200
800
400
0
FY13
FY14
FY15
FY16
FY13
FY14
FY15
FY16
Stronger revenue growth driven by changes in product mix and revenue share including the prior period acquisitions of JV partner interests in
‘Argyle’ and ‘St Clair’ projects
FY13FY14FY15FY16158.5250.6317.9421.98191,4151,7371,832-15.318.834.440.98291,2541,5381,596 4 | AVJENNINGS LIMITED · ABN 44 004 327 771
Managing Director’s report.
Since 2010, when we sold our
contract building business, we have
refined our business model along lines
that are consistent with achieving
this strategy. Focusing on a business
model in which we only develop
housing product on land we own or
have an interest in is an important
factor in being able to achieve
our strategy. This model allows us
to maximise the benefits from our
internal integrated housing skills.
This objective might all sound fairly
basic, but so often in the last decade
it has been difficult to achieve as
governments and sometimes industry
get distracted by short term factors.
Governments in particular have often
failed to play their part in making
sure everyday Australians and New
Zealanders have access to affordable
housing in areas in which they want
to live. High property taxes and lack
of land supply and infrastructure
continue to be barriers to achieving
these goals.
However, we will continue to focus
on the average local buyer and their
needs. We have avoided more volatile
markets such as foreign buyers and
inner city high rise apartments. We
will continue to do our part in tackling
affordability and providing quality
housing in areas where such housing
is required.
Our future will be driven by having a
clear purpose, a clear strategy and
continued investment in our people,
product and brand.
It is very satisfying when results are
achieved on the back of adherence to
strategy. It is also pleasing when they
come from backing our judgement
and having faith in our research. As
we entered the 2016 financial year,
we were not swayed by negative
comments in some sections of the
media about the likelihood of a
downturn in the housing market.
Instead we believed the fundamental
influences on demand for traditional
housing were strong and as a
consequence we maintained our
production levels which was the driver
of another good end of financial
year result.
For the third year in a row we have
reported an increase in profit, revenue
and the dividend paid to shareholders.
Importantly we believe we have now
entered a period of sustained success.
When we say we are confident of a
period of sustained success, we are
still mindful of the fact that we are in
a cyclical industry and there will be
short term factors especially at state
and at individual project level, that
will arise.
But the reason for our confidence in
the medium to longer term is demand
for housing in the market segments
in which we operate remains strong
- particularly in Sydney, Melbourne
and Auckland – due to continued
undersupply. Our purchasers
are seeking to fulfil a basic need
for housing and they do so in an
environment of generally stable
unemployment rates and low
interest rates.
Sydney remains very active with
strong demand driven by inadequate
land supply and building delivery
constraints, although the rate of sale
of developed land lots is showing
early signs of moderating as price
points test the limits of affordability.
Auckland is a strong market and
the high quality, master-planned
Hobsonville project continues to
experience significant demand
with good sales and margins being
generated, leading the Company
to explore additional opportunities
in Auckland.
Our purpose is clear. We believe
housing matters. We believe
community matters. We aim to provide
affordable quality housing within
connected communities. The home
and neighbourhood you grow up in
shapes you as a person. We believe
if we develop great communities,
where people really feel like they
belong, it will deliver a long term
benefit to society.
Having a clear understanding of
purpose - why you do what you do
- has been proven to be a feature of
strong, sustainable businesses. Such
businesses tend to look at the longer
term and not be as reactionary to
the short term. This then assists in
developing strategies that are aligned
to the purpose.
At AVJennings, our strategy is:
•
•
•
To develop high quality and
affordable housing.
To ensure the type of housing we
develop and build is of the type
required by everyday Australians
and New Zealanders.
That our developments are located
in areas where such housing is
needed and people want to live.
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 5
Land sale rates and prices seem to be
stabilising at more sustainable levels
in Brisbane, Caloundra and Coomera
in Queensland, while the Adelaide
South Australia residential market
remains subdued but positive signs
are emerging. The Company maintains
its relatively small investment in five
residential projects in Perth.
The Melbourne residential land
market remains buoyant with the
Company all but selling out its
Lyndarum estate. Future results will
be enhanced by development of the
new flagship ‘Waterline Place’ project
located in the inner bayside suburb
of Williamstown and the ‘Lyndarum
North’ development undertaken in
joint venture with AustralianSuper.
Following the completion of
substantial civil works, construction
of the first stages of Waterline has
commenced with work beginning
on the ‘Ellery’ townhouses and
‘Rosny’ apartment building and
settlements expected in late FY2017.
Development of the first stage
of Lyndarum North is scheduled
to commence prior to Christmas
following imminent completion of
the local precinct structure plan and
related regulatory processes.
Despite the disruption of a protracted
federal election campaign and some
ongoing policy uncertainties, the
outlook for key residential property
industry demand drivers remains
positive, particularly in the context
of traditional housing. Low interest
rates and inflation, positive population
growth and continuing shortages of
detached and semi-detached houses
and low rise apartments in Sydney,
Melbourne and Auckland should
all help underpin demand from the
owner-occupiers and local investors
targeted by AVJennings.
While activity patterns and growth
rates in some markets are changing,
the usual bias of results towards the
second half of the financial year
will remain and contract signings in
FY2017 are expected to be at a similar
level to that achieved in 2016.
Housing affordability remains the
subject of public debate and it is
something we are passionate about
because unless we provide housing
solutions that are affordable, we
simply do not have a business.
We believe there needs to be more
traditional housing in areas where
Australians want to live. What is
not understood is the impact on
affordability by the lack of land
release; lack of infrastructure; and the
continuing reliance by governments
on the taxation of property. We need
government polices to address all of
those three areas and then we will
have a much clearer path to a solution
on affordability.
In closing, I would like to acknowledge
our Board and especially our
Chairman, Simon Cheong. There have
been many points in the last five years
or so when the Board was challenged
to make difficult decisions or decisions
that may not have been totally
consistent with more populist views.
Without the guidance and support of
the Board these results would not have
been achieved and we certainly would
not be in the position we now find
ourselves. I would also like to thank the
wonderful staff of AVJennings. It is an
honour to lead such a great group of
people who care so much about what
we want to achieve as a Company.
We are a Company that recognizes
the importance of maintaining sound,
long term relationships with all of our
business partners and so to them I
also offer our thanks.
Peter Summers
Managing Director
6 | AVJENNINGS LIMITED · ABN 44 004 327 771
Community matters.
AVJennings is a community developer. We want to create wonderful places
to live but just as importantly we want to nurture a sense of community.
We do that by supporting community minded people and by participating
directly in community activities.
Steve Waugh Foundation
AVJennings is proud to be an inaugural partner of the Steve Waugh Foundation.
Steve’s foundation strives to improve the lives of children, young people and
their families, who live with rare diseases. Many of these people have nowhere
else to turn to receive support.
Our staff and their families regularly contribute to various fundraising activities
for the foundation including the Captain’s Ride, City to Surf Fun Run and
‘Waugh in the West’ a community cricket event held at St Clair in Adelaide.
The cornerstone of our partnership with SWF is the ‘Renee’ series of homes.
Each year we come together with our generous suppliers to build a home to
raise valuable funding for the Foundation. The ‘Renee’ is named in honour of
the remarkable Renee Eliades who has a rare disease that requires the daily
use of oxygen bottles.
Proudly partnering with
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 7
Creating great
Communities
We know our customers want to live in a nice home
but they also want it to be located in a vibrant,
welcoming and well planned community.
Good community development is no accident.
We put all our experience into making places where
living, relaxing, socialising, exploring and being
active comes naturally.
That’s why we believe, housing matters and
community matters.
The AVJennings
Community
A strong sense of community starts from within.
We have our own special community around
Australia and in Auckland. Our staff take great
pride supporting each other. There are many
individual staff members and their families who
volunteer their time or talent to make a positive
difference.
Participating in
Communities
AVJennings wants to be a good ‘neighbour’ and
support community initiatives by contributing talent
or time. Whether it be working with local schools,
business communities or sporting clubs; or simply
supporting local events by attending them, we look
for ways to foster a community spirit.
8 | AVJENNINGS LIMITED · ABN 44 004 327 771
Property portfolio.
AVJennings’ diversified geographic mix provides opportunities in
different markets. We continue to focus on urban growth corridors
and infill sites where people want to live.
Number of lots at
30 June 2016
10,048
QLD
No. of lots:
987
NSW
No. of lots:
2,768
WA
No. of lots:
426
SA
No. of lots:
2,446
VIC
No. of lots:
3,007
NZ
No. of lots:
414
Number of Lots by Location
10%
30%
28%
24%
4%
4%
QLD
VIC
NSW
SA
WA
NZ
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 9
Project pipeline.
As at 30 June 2016
Project Name
Halpine Lake, Mango Hill
Creekwood, Caloundra
Glenrowan, Mackay
Essington Rise, Leichhardt
Villaggio, Richlands
Parkside, Bethania
Big Sky, Coomera
Bridgeman Downs
Kenmore
Bridgeman Downs 2
Argyle, Elderslie
Magnolia, Hamlyn Terrace
Spring Farm (South)
Spring Farm (East)
Ravensworth Heights, Goulburn
Seacrest, Sandy Beach
Arcadian Hills, Cobbitty
Cobbitty II
Cobbitty Road, Cobbitty
Boundary Road, Schofields
Warnervale
Spring Farm Starhill PDA
Lyndarum North, Wollert
Wollert JV
Lyndarum, Epping North
Arlington Rise, Portarlington
Hazelcroft, Doreen
Waterline, Williamstown
D
N
A
L
S
N
E
E
U
Q
S
E
L
A
W
H
T
U
O
S
W
E
N
I
A
R
O
T
C
V
I
A Pathways, Murray Bridge
H
T
U
O
S
I
L
A
R
T
S
U
A
River Breeze, Goolwa North
St Clair
Eyre at Penfield
Z Hobsonville Point, Hobsonville
N
Airfields, Hobsonville
N
R
E
T
S
E
W
A
I
L
A
R
T
S
U
A
Indigo China Green, Subiaco
Viridian China Green, Subiaco
The Heights Kardinya
Viveash
Parkview, Ferndale
Remaining No. of Lots
Pre
FY 2017
FY 2018
FY 2019
FY 2020
FY 2021+
83
303
177
58
39
116
64
60
32
54
300
322
204
540
75
123
241
206
50
27
595
79
78
1,820
19
199
200
691
53
80
615
1,688
312
102
124
74
107
75
46
TOTAL NO. OF REMAINING LOTS
10,031
• Total No. of Remaining Lots does not include 17 remnant lots
• Note that it is not possible for the reader of this Report to calculate the remaining number of lots from year to year because that number
is a product of not only lots purchased and settled but also changes in stage reconfiguration
10 | AVJENNINGS LIMITED · ABN 44 004 327 771
Queensland
MACKAY
CALOUNDRA
MANGO HILL
BRIDGEMAN DOWNS
BRISBANE
KENMORE
RICHLANDS
LEICHHARDT
BETHANIA
COOMERA
Land sales rates and prices stabilising
at sustainable levels in Brisbane,
Gold Coast and Sunshine Coast.
New South Wales
WARNERVALE
HAMLYN TERRACE
SANDY BEACH
CENTRAL COAST
SCHOFIELDS
COBBITTY
ELDERSLIE
SPRING FARM
SYDNEY
GOULBURN
WOLLONGONG
Sydney and Central Coast markets
remain active with strong demand
driven by inadequate supply and
building delivery constraints.
Victoria
WOLLERT
EPPING NORTH
WILLIAMSTOWN
DOREEN
MELBOURNE
PORTARLINGTON
The Melbourne market remains buoyant.
Future results will be enhanced by the
development of Waterline Place at
Williamstown and Lyndarum North.
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 11
South Australia
PENFIELD
ST CLAIR
ADELAIDE
GOOLWA NORTH
MURRAY BRIDGE
The Adelaide residential market
remains subdued but positive signs
are emerging.
Western Australia
VIVEASH
SUBIACO
PERTH
FERNDALE
KARDINYA
The local Perth economy is
transitioning. The Company has
invested in 5 joint venture projects with
a local developer and all 426 lots are
within the Perth metropolitan area.
New Zealand
HOBSONVILLE POINT
AUCKLAND
Auckland remains a strong market
with positive net population migration.
Hobsonville continues to experience
significant demand. AVJennings is
exploring further opportunities in Auckland
to add to the 414 lots acquired in 2015.
12 | AVJENNINGS LIMITED · ABN 44 004 327 771
The Directors of AVJennings Limited present their report together with the Financial Report of the Group (referred to hereafter as
“AVJennings” or “Group”) and the Auditor’s Report thereon for the year ended 30 June 2016. The Group comprises AVJennings
Limited (“Company” or “Parent”) and its controlled entities.
DIRECTORS
The Directors of AVJennings Limited during the financial year and up until the date of this Report are as follows. Directors were
in office for the entire period.
S Cheong
RJ Rowley
Non-Executive Chairman
Non-Executive Deputy Chairman
PK Summers
Managing Director and Chief Executive Officer
E Sam
B Chin
Non-Executive Director
Non-Executive Director
BG Hayman
Non-Executive Director
TP Lai
D Tsang
Non-Executive Director
Non-Executive Director
PRINCIPAL ACTIVITY
The principal activity of the Group during the year was Residential Development.
OPERATING RESULTS
The consolidated profit after tax for the financial year was $40.9 million (2015: $34.4 million).
DIVIDENDS
Dividends paid to members during the financial year were as follows:
2014 final dividend of 2.0 cents per share,
paid 18 September 2014. Fully franked @ 30% tax
2015 interim dividend of 1.0 cent per share,
paid 8 April 2015. Fully franked @ 30% tax
2016 final dividend of 3.0 cents per share,
paid 23 September 2015. Fully franked @ 30% tax
2016 interim dividend of 1.5 cents per share,
paid 15 April 2016. Fully franked @ 30% tax
2016
$’000
–
–
11,532
5,767
2015
$’000
7,688
3,844
–
–
Total cash dividends declared and paid
17,299
11,532
In addition to the above, subsequent to the end of the financial year, a fully franked final dividend of 3.5 cents per share was
paid on 23 September 2016 (2015: 3.0 cents). The Dividend Reinvestment Plan remains suspended.
Directors’ Report AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 13
OPERATING AND FINANCIAL REVIEW
Financial Results
The Company recorded profit before tax of $58.8 million for
the year ended 30 June 2016, up 22.0% on the previous year
(30 June 2015: $48.2 million) and profit after tax of $40.9
million (30 June 2015: $34.4 million).
Strong revenues in the second half of FY2016, substantial
post balance date cash inflows from the collection of
receivables and confidence in the outlook for FY2017 enabled
the Directors to declare that a fully franked final dividend of
3.5 cents per share be paid in September 2016, taking total
dividends declared for 2016 to 5.0 cents per share.
Contract signings of 1,832 lots were up on last year (1,737
lots) as too were settlements, which rose to 1,596 lots. Full
year revenue increased 32.7% to $421.9 million (30 June
2015: $317.9 million) on the back of changes in product
mix and project share, with the Company benefitting from
announcements made in prior periods that it would acquire
the interests of joint venture partners in the ‘Argyle’, Sydney
and ‘St Clair’, Adelaide projects.
Business Overview
Continuing high levels of production, sales and settlements
together with stable gross margins in most jurisdictions
contributed to the pleasing full year result. New South Wales,
Queensland and New Zealand all continued to benefit from
the net positive effect of active project and product mix
changes that enabled the Company to capitalise on the
differing strengths of each market.
Particularly good contributions were made by certain projects
including ‘Arcadian Hills’, ‘The Ponds’ and ‘Argyle’ in Sydney
and ‘Magnolia’ on the Central Coast of New South Wales.
‘Nottingham Square’ in Brisbane, ‘Big Sky’ in Coomera and
‘Creekwood’ in Caloundra all performed well for Queensland.
‘Hazelcroft’ and ‘Lyndarum’ demonstrated the ongoing
strength of demand in the north of Melbourne Victoria,
while ‘St Clair’ in Adelaide South Australia and ‘Catalina’
in Hobsonville Auckland had appeal for customers in those
markets.
Work in progress was up 11.2% year-on-year to 1,681 lots.
The level of completed unsold stock remained insignificant at
only 2.8% by value of total lots under control.
The Company actively replenished inventory during the year,
which saw controlled land fall only nominally to 10,048 lots
(30 June 2015: 10,198 lots) despite continuing strong sales.
Acquisitions included:
•
•
the remaining 50% of the Argyle Elderslie, New South
Wales joint venture;
two separate land parcels in Bridgeman Downs,
Queensland (approximately 114 townhouse and
land lots);
• a land parcel in Kenmore, Queensland (estimated
32 townhouse lots);
• a large land parcel at Spring Farm, New South Wales
(up to 540 lots);
• a land parcel at Cobbitty, New South Wales
•
(approximately 50 lots); and
land parcels in Hobsonville Auckland (approximately
414 lots).
Gearing remained low with net debt/total assets of only
17.9% (30 June 2015: 13.6%) and the Company extended
the termination date of its core $250 million ‘Club’ banking
facility by a further 12 months from 30 September 2017 to
30 September 2018.
Outlook
The Company believes that the level of activity currently
experienced in many of its markets is the product of strong
fundamentals. While specific micro-markets such as some
inner-city areas of Sydney and Melbourne continue to
experience strong price growth, this is not true of most of
the Company’s estates, where price growth is moderated by
competition. The Company is confident that demand for its
products is sustainable given its clear strategy of delivering
traditional housing solutions at affordable prices in well-
planned communities rather than participating in more
volatile segments.
Sydney remains very active with strong demand driven by
inadequate land supply and building delivery constraints,
although the rate of sale of developed land lots is showing
early signs of moderating as price points test the limits of
affordability.
Auckland is a strong market and the high quality, master-
planned Hobsonville project continues to experience
significant demand with good sales and margins being
generated, leading the Company to explore additional
opportunities in Auckland.
Land sale rates and prices seem to be stabilising at more
sustainable levels in Brisbane, Caloundra and Coomera in
Queensland, while the Adelaide South Australia residential
market remains subdued but positive signs are emerging.
The Company maintains its relatively small investment in
five residential projects in Perth.
The Melbourne residential land market remains buoyant with
the Company all but selling out its Lyndarum estate. Future
results will be enhanced by development of the new flagship
‘Waterline Place’ project located in the inner bayside suburb
of Williamstown and the ‘Lyndarum North’ development
undertaken in joint venture with AustralianSuper. Following the
completion of substantial civil works, construction of the first
stages of Waterline has commenced with work beginning on
the ‘Ellery’ townhouses and ‘Rosny’ apartment building and
settlements expected in late FY2017. Development of the first
stage of Lyndarum North is scheduled to commence prior to
Christmas following imminent completion of the local precinct
structure plan and related regulatory processes.
Despite the disruption of a protracted federal election
campaign and some ongoing policy uncertainties, the outlook
for key residential property industry demand drivers remains
positive, particularly in the context of traditional housing. Low
interest rates and inflation, positive population growth and
continuing shortages of detached and semi-detached houses
and low rise apartments in Sydney, Melbourne and Auckland
should all help underpin demand from the owner-occupiers
and local investors targeted by AVJennings. While activity
patterns and growth rates in some markets are changing, the
usual bias of results towards the second half of the financial
year will remain and contract signings in FY2017 are
expected to be at a similar level to that achieved in 2016.
Directors’ Report 14 | AVJENNINGS LIMITED · ABN 44 004 327 771
SIGNIFICANT EVENTS AFTER THE
BALANCE SHEET DATE
Subsequent to 30 June 2016, the Group has extended its
Club Borrowing Facility expiry date from 30 September 2017
to 30 September 2018.
No other matter or circumstance has arisen since 30 June
2016 that has significantly affected, or may significantly
affect:
a) the Group’s operations in future financial years; or
b) the results of those operations in future financial years; or
c) the Group’s state of affairs in future financial years.
FUTURE DEVELOPMENTS, PROSPECTS AND
BUSINESS STRATEGIES
The prospects and business strategies of the Group are
discussed on page 13 of this Report.
ENVIRONMENTAL REGULATION
The Group’s operations are subject to various environmental
regulations under both Commonwealth and State legislation,
particularly in relation to its property development activities.
The Group’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 Group 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 Pte Ltd. 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 Ltd, a real estate
and hotel advisory and direct investment group specialising
in structuring large and complex transactions worldwide. He
was twice 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:
None.
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.
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 Ltd 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 International Monetary Exchange from
1987-1990 and 1993-1996. Mrs Sam is a Director of
SC Global Developments Pte Ltd, the Company’s major
shareholder. Resident of Singapore.
Responsibilities:
Non-Executive Director, Chairman of Nominations Committee,
Chairman of Remuneration Committee.
Directorships held in other listed entities:
Banyan Tree Holdings Limited, since 23 March 2004.
Directors’ Report AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 15
INFORMATION ON THE DIRECTORS (continued)
Bobby Chin CA (ICAEW) B.Acc.
Director since 18 October 2005. Mr Chin is currently the
Chairman of NTUC Fairprice Co-operative Limited and NTUC
Fairprice Foundation Limited. He is the Deputy Chairman
of the Housing & Development Board and NTUC Enterprise
Co-operative Limited. He is a Director of Singapore Labour
Foundation and also serves as 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 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:
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.
Other Directorships:
Temasek Holdings (Private) Limited, since 10 June 2014.
Bruce G Hayman
Director since 18 October 2005. Mr Hayman has over
46 years commercial management experience with 20 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 now known as AUSTCHAM Singapore.
He has also served as CEO of the Australian Rugby Union
and as Chairman of the Board of the Rugby Club Ltd. He is
Chairman of the Ella Foundation and a Director of Diabetes
NSW. Resident of Sydney.
Responsibilities:
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, Member of Investments
Committee.
Directorships held in other listed entities:
PT Bank OCBC NISP Tbk (Commissioner) since
4 September 2008.
Oversea-Chinese Banking Corporation since 1 June 2010.
David Tsang B.A. (Economics)
Director since 2 June 2014. Mr Tsang has over 20 years
experience in real estate, corporate finance and investments,
completing transactions in Asia, North America and Europe.
He currently holds the position of Managing Director for SC
Global Developments Pte Ltd and has held various senior
director and finance positions within the SC Global Group.
Mr Tsang began his career in Investment Banking with Nesbitt
Burns in New York. He relocated from the United States to
Singapore in 1996 and joined Simon Cheong as a founding
member in establishing SC Global Pte Ltd, a boutique real
estate advisory and principal investment firm. In 1999, Mr
Tsang co-led two successful M&A transactions for the SC
Global Group, acquiring controlling interests in publicly listed
companies MPH Ltd and ANA Hotels (Singapore) Ltd. Mr Tsang
took an executive position as Director of Special Projects
at MPH Ltd from 2000 to 2004, helping to restructure and
unlock value for shareholders. Mr Tsang also helped lead the
transformation of ANA Hotels (Singapore) Ltd into the business
of high end residential development and which continues to
operate today as SC Global Developments. Mr Tsang served
previously as a Director on the Board of AVJennings Ltd from
2004 to 2006. Resident of Singapore.
Responsibilities:
Non-Executive Director, Member of Audit Committee,
Member of Investments Committee.
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.
Directorships held in other listed entities:
None.
Teck Poh Lai B.A. Hons. (Economics)
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
INFORMATION ON THE COMPANY SECRETARY
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.
Directors’ Report 16 | AVJENNINGS LIMITED · ABN 44 004 327 771
REMUNERATION REPORT (Audited)
This Remuneration Report for the Group is provided in
accordance with the requirements of the Corporations Act
2001 (the Act) and 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.
1. Key Management Personnel
The name and position of each KMP whose remuneration is
disclosed in this report are set out below:
(i)
Directors
S Cheong
RJ Rowley
PK Summers
E Sam
B Chin
Non-Executive Chairman
Non-Executive Deputy Chairman
Managing Director and
Chief Executive Officer
Non-Executive Director
Non-Executive Director
BG Hayman
Non-Executive Director
TP Lai
D Tsang
Non-Executive Director
Non-Executive Director
(ii)
Executives
L Mahaffy
SC Orlandi
CD Thompson
L Hunt
Chief Financial Officer
Chief Strategy Officer
Company Secretary/
General Counsel
General Manager,
Human Resources
2. Remuneration Framework
2.1 Remuneration Governance
The Board has established a Remuneration Committee which
comprises four Non-Executive Directors and is responsible for
determining and reviewing remuneration arrangements for
KMP and other senior management personnel.
The Committee is responsible for ensuring that remuneration
is set at fair and competitive levels to enable the Group to
access the skills required to operate successfully.
2.2 External Advisers
No remuneration consultant made any remuneration
recommendation as defined in Section 9B of the Corporations
Act 2001 during the year ended 30 June 2016.
2.3 Non-Executive Director (NED) Remuneration
Arrangements
At the Annual General Meeting (AGM) in the year 2000,
shareholders approved a maximum annual aggregate fee
pool of $400,000 for NEDs. The allocation of fees to individual
NEDs is determined after considering factors such as time
commitment, the size and scale of the Company’s operations,
skill sets, participation in committee work and fees paid to
directors of comparable companies. The Group does not
provide any retirement benefits scheme for NEDs. NEDs do not
receive any performance-based remuneration.
Three NEDs, Mr S Cheong, Mrs E Sam and Mr D Tsang do not
receive fees. However, AVJennings pays a consulting fee to
the Ultimate Parent Entity, SC Global Developments Pte Ltd.
The fees are paid pursuant to a consultancy and advisory
agreement for the provision of the following:
• Services of at least two directors on the Board;
• Assistance in sourcing and facilitating financial and
banking requirements particularly from Asian-based and
other institutions;
• Assistance in secretarial and administrative matters in
connection with the Company’s Singapore listing;
• Sourcing and facilitating business, commercial and
investment opportunities; and
• Ancillary advice.
The appropriateness of the agreement and the
reasonableness of the fees is assessed annually by the
Australian-based independent NEDs taking into account
the actual services provided, comparable market data for
similar services, the benefits to the Company and the likely
cost of replacement of the services provided. The annual fees
payable are $600,000. The agreement may be terminated by
either party giving six months’ notice or by the Company on
30 days’ notice for cause.
The remuneration of NEDs is detailed on page 23.
2.4. Executive Remuneration Arrangements
Executive remuneration includes a mix of fixed and variable
remuneration. Variable remuneration includes short term
incentives, long term incentives and retention components.
i) Fixed Remuneration
Fixed Remuneration is represented by Total Employment
Cost (TEC) which comprises base remuneration and
superannuation contributions.
TEC is reviewed annually or on promotion/appointment to the
role. TEC is benchmarked against market data for comparable
roles in the market. The Company sets TEC based on relevant
market analysis, the scope and nature of the role and the
individual’s performance, skills and responsibilities.
The fixed component of remuneration of other KMP’s is
detailed on page 24.
Directors’ Report AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 17
REMUNERATION REPORT (Audited) (continued)
2.4. Executive Remuneration Arrangements (continued)
ii) Variable Remuneration
A) Short Term Incentive (STI)
Executives participate in a STI plan which assesses achievement against Key Performance Measures (KPM). Each executive has
Key Performance Measures that are aligned to company, business unit and individual performance. An STI payment is awarded
to the extent performance is achieved by individuals against the Key Performance Measures set at the beginning of the financial
year, as appropriate, and with regards to relevant business unit and company performance.
STI awards for the executive team in the 2016 financial year were based on the scorecard measures and weightings disclosed
below. These targets were set by the Remuneration Committee and align with the Group’s strategic and business objectives.
They are reviewed annually.
The CEO has a target STI opportunity of 35% of TEC and other Executives have a STI opportunity of 17% to 30% of TEC.
The variable “at risk” component of executive remuneration ensures that a proportion of remuneration varies with performance
(both of the individual and, as appropriate, the business unit and the Company as a whole).
Allocation of Overall Performance Incentive between Components (shown as % of TEC)
Position
CEO
Senior Executives
State General Managers
Total At Risk (%)
STI (%)
LTI (%)
Retention (%)
100
33
50
35
17
30
40
8
10
25
8
10
The proportions of STI, LTI and retention components take into account:
• Market practice;
•
•
The objectives that the Board seeks to achieve and the behaviours which support that outcome;
The desire for Senior Executives to have a shareholding as a proportion of remuneration in the event that equity rewards
have vested; and
The service period before executives can receive equity rewards.
•
Directors’ Report 18 | AVJENNINGS LIMITED · ABN 44 004 327 771
REMUNERATION REPORT (Audited) (continued)
2.4. Executive Remuneration Arrangements (continued)
The table below provides an overview of the STI against key financial and non-financial performance measures.
Financial and Business Performance
Underlying Profit
Performance
• Group profit before tax.
• Return on NFE (Net Funds Employed).
• Cost to income ratio.
• Appropriate and efficient capital management.
• Alignment of priorities and allocation of resources.
• Market conditions, in particular performance in the
Business
Performance
prevailing market.
• Implementation of Company strategy and improvement
in underlying health of the Company.
• Increase in the Group’s market share of residential
CEO
Senior
Executives
State
General
Managers
70%
30% to 40%
50%
Non-Financial
Customer and
Stakeholder
Performance
People
Safety and
Environment
property sector.
• Risk management.
• Customer Advocacy.
• Employee retention and engagement.
• Leadership.
• Providing a safe work environment.
• Minimise the impact of our activities on the environment.
30%
60% to 70%
50%
The Remuneration Committee is responsible for determining the STI to be paid based on an assessment of the extent to which
the Key Performance Measures are met. The STI payment is made within two months of the reporting date. The Committee has
the discretion to adjust STIs upwards or downwards in light of unexpected or unintended circumstances.
Based on achievements of the Group in the 2016 financial year and performance against individual Key Performance Measures,
the Remuneration Committee determined that Executives achieved between 65% and 100% of their target opportunity (average
81%). In making this assessment, the Committee considered the following factors:
• Performance in implementing Company strategy.
• Performance in the prevailing market.
• Strong profit before tax.
• An increase in contract signings compared to the previous year.
•
• Performance against individual KPMs.
Improvement in the underlying health of the Company.
Directors’ Report AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 19
Retention component
– years of service
Percentage of rights
vesting
one year
two years
three years
33.33%
33.33%
33.34%
On 29 May 2015 and 18 September 2015, rights were
granted to KMP as detailed in the table on page 21.
The May 2015 Grant was delayed from 2014 whilst the
Remuneration Committee considered the changes to the plan
resulting in the Rights plan. The May 2015 Grant was made
for the FY15 year (with LTI testing in September 2018). The
September 2015 Grant was made in the FY16 year with LTI
testing in September 2018.
The fair value of the rights at the date of the grant is
determined using an appropriate valuation model. The fair
value is expensed over the period in which the performance
and/or service conditions are fulfilled with a corresponding
increase in share-based payment reserve in equity. The
cumulative expense recognised for equity-settled transactions
at each reporting date until the vesting date reflects the
extent to which the vesting period has expired and the
Group’s best estimate of the number of equity instruments
that will ultimately vest. The expense or credit in the
Consolidated Statement of Comprehensive Income represents
the movement in cumulative expense recognised between the
beginning and end of that period.
(ii) LTI (FY14 and prior years)
The AVJ Deferred Employee Share Plan (the LTI Plan)
administers employee share schemes under which shares
were purchased on-market by the LTI Plan Trustee on behalf
of employees. These shares will vest to employees for no cash
consideration subject to certain conditions being satisfied.
Shares held by the LTI Plan’s trust and not yet allocated to
employees are shown as treasury shares in the Financial
Statements.
Vesting is subject to both service and performance conditions,
except for the FY13 Delayed Grant which is only subject to
the service condition (see page 20). The service condition
requires the executive to be employed by the Company as
at 30 September in the third year after the grant date for
each grant. The performance conditions apply to each grant
– as to 50% as measured by the TSR hurdle and as to 50%
by the EPS hurdle. The two performance hurdles are tested
differently. The EPS hurdle is tested as at 30 June in the test
year (three years after grant). The TSR hurdle is tested at
30 September of the third year after grant.
REMUNERATION REPORT (Audited) (continued)
2.4. Executive Remuneration Arrangements (continued)
B) Long Term Incentive (LTI)
LTI awards are only made to executives who are in a position
to have an impact on the Group’s performance and the
creation of shareholder value over the longer term.
(i) LTI and Retention (current year and FY15)
With effect from FY15, LTI arrangements were varied and
remuneration is now provided by the Issue of Rights (instead
of shares) and includes a retention component. The use of
Rights as an incentive reduces the upfront cash requirements
of the Company (as shares do not need to be acquired
for allocations) and because participants do not receive
dividends on Rights (as distinct from shares).
The Total Shareholder Return (TSR) hurdle of the LTI
component was replaced by a Return on Equity (ROE) hurdle
which uses market capitalisation as a proxy for equity,
and is more appropriate from a shareholders’ perspective
as the required rates of return do not vary with “market”
performance. The ROE hurdle operates such that 50% vesting
occurs at an average annual return of 12% with 100% vesting
at an average annual return of 18%. The EPS hurdle remains
unchanged and is consistent with the FY14 and prior years’
LTI structure explained under LTI (FY14 and prior years)
below. The performance conditions will be tested at the end
of the three year vesting period and the number of rights
that may vest will depend on the level of average annual
returns achieved over that three year period. The service
rights are split into three tranches that progressively vest
each year subject to satisfaction of the service condition. The
CEO’s participation was determined as 40% (LTI) and 25%
(Retention component) of TEC respectively.
The operation of the EPS, ROE and Retention hurdles are set
out below.
AVJennings’ EPS growth
rate over the three year
performance period
< 5%
5%
5% –10%
>=10%
Percentage of rights
vesting
Nil
50% of the allocation
for the hurdle
Pro-rata between
50% and 100%
100% of the allocation
for the hurdle
AVJennings’ ROE over the three
year performance period
Percentage of rights
vesting
<12%
12%
15%
>=18%
Nil
50%
75%
100% (Straight line
interpolation between
12% and 18%)
Directors’ Report AVJennings’ EPS growth rate
over the performance period
Percentage
vesting
< 5%
5%
5% – 10%
>=10%
Nil
50% of the allocation
for the hurdle
Pro-rata between 50%
and 100%
100% of the allocation
for the hurdle
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 at
the date when the Grant is made is determined using an
appropriate valuation model. That fair value is expensed
over the period in which the performance and/or service
conditions are fulfilled with a corresponding increase in
share-based payment reserve in equity. The cumulative
expense recognised for equity-settled transactions at each
reporting date until the vesting date reflects the extent
to which the vesting period has expired and the Group’s
best estimate of the number of equity instruments that will
ultimately vest. The expense or credit in the Consolidated
Statement of Comprehensive Income represents the
movement in cumulative expense recognised between the
beginning and end of that period.
In respect of shares forfeited, no further amounts are
expensed. The cumulative amounts relating to non-market
based measures expensed to the date of forfeiture are
reversed.
There is no non-recourse financing provided to executives in
relation to any share-based payments.
20 | AVJENNINGS LIMITED · ABN 44 004 327 771
REMUNERATION REPORT (Audited) (continued)
2.4. Executive Remuneration Arrangements (continued)
The following is the status of allocations made to KMP under
the LTI Plan:
FY13 Grant
On 12 September 2012, shares were granted to KMP and as
detailed in the table on page 21, these vested during the year.
FY13 Delayed Grant
On 25 September 2013, shares were granted to KMP as
detailed in the table on page 21. The Grant was subject only
to service conditions as to 50% for one year to 30 September
2014, which vested in the previous year, and as to 50% for
two years to 30 September 2015, which vested in the current
year.
FY14 Grant
On 25 September 2013, shares were granted to KMP as
detailed in the table on page 21.
The service vesting condition for the FY13 and FY14 Grants is
that the employee must still be employed by AVJennings at
30 September 2015 and 30 September 2016 respectively. In
the event of death, permanent disablement or retrenchment,
the shares may vest to the estate at the Board’s 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 for each grant is as
follows:
FY2013 Grant – 10% p.a. growth for the three financial
years to 30 June 2015
FY2014 Grant – 10% p.a. growth for the three financial
years to 30 June 2016
Half of the allocation is assessed against each performance
condition. The vesting schedule for the TSR and EPS
performance conditions are set out in the following tables.
The holder of the shares is entitled to receive all dividends
paid between grant and vesting dates.
AVJennings’ TSR rank against
companies in the Index at
30 September
Percentage
vesting
< median
At the median
Nil
50%
> median but < 75th percentile
Pro-rata between 50th
and 75th percentiles
>=75th percentile
100%
Directors’ Report
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 21
REMUNERATION REPORT (Audited) (continued)
2.4. Executive Remuneration Arrangements (continued)
The following is the status of shares granted to KMP under the FY14 and previous years’ LTI Plans:
KMP
PK Summers
PK Summers
A Soutar (1)
A Soutar (1)
L Mahaffy
SC Orlandi
SC Orlandi
CD Thompson
CD Thompson
L Hunt
L Hunt
Total
Year of Grant
Fair Value
Shares at
beginning of
the year
FY13-D
FY14
FY13
FY14
FY14
FY13-D
FY14
FY13-D
FY14
FY13-D
FY14
$166,866
$351,499
$74,389
$77,902
$56,947
$24,720
$50,407
$25,619
$62,286
$18,877
$38,493
142,620
666,349
280,712
147,682
107,957
21,128
95,558
21,897
118,078
16,134
72,973
Forfeited
–
–
–
(110,761)
–
–
–
–
–
–
–
Vested
(142,620)
–
(280,712)
(36,921)
–
(21,128)
–
(21,897)
–
(16,134)
–
Shares at end
of the year
–
666,349
–
–
107,957
–
95,558
–
118,078
–
72,973
$948,005
1,691,088
(110,761)
(519,412)
1,060,915
(1) Ceased employment 30 June 2015.
Note: In the table above, “FY13-D” refers to the FY13 Delayed Grant.
The following is the status of rights granted to KMP under the current year and FY15 LTI Plans:
KMP
PK Summers
PK Summers
A Soutar (1)
L Mahaffy
L Mahaffy
SC Orlandi
SC Orlandi
CD Thompson
CD Thompson
L Hunt
L Hunt
Total
Year of Grant
FY15
FY16
FY15
FY15
FY16
FY15
FY16
FY15
FY16
FY15
FY16
Rights at
beginning of
the year
665,068
–
92,236
79,812
–
70,646
–
87,296
–
53,946
–
Number
of Rights
granted
–
643,864
–
–
102,783
–
90,979
–
112,419
–
69,475
Issued on
vesting of
Rights
(82,654)
(78,996)
–
(12,969)
(16,527)
(11,480)
(14,629)
(14,185)
(18,076)
(8,766)
(11,171)
Rights
forfeited
Rights at end
of the year
–
–
(92,236)
–
–
–
–
–
–
–
–
582,414
564,868
–
66,843
86,256
59,166
76,350
73,111
94,343
45,180
58,304
1,049,004
1,019,520
(269,453)
(92,236)
1,706,835
(1) Ceased employment 30 June 2015.
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 Group’s earnings performance as well as the movement in the Group’s Earnings Per Share (EPS),
Total Shareholder Return (TSR) and Market Capitalisation over the last 5 years.
Financial
Report
Date
30 June 2012
30 June 2013
30 June 2014
30 June 2015
30 June 2016
Profit/(Loss)
After Tax
$’000
(29,828)
(15,266)
18,782
34,385
40,912
Basic
EPS
Cents
(10.99)
(5.46)
4.94
9.03
10.71
TSR*
Cents
(15.0)
14.0
13.0
10.5
(4.0)
Market
Capitalisation
$‘000
Return on Market
Capitalisation
%
81,455
167,666
216,715
245,694
213,968
(36.62)
(9.11)
8.67
14.00
19.12
* TSR is the aggregate of the movement in the share price and dividends paid during the year ended 30 June.
Directors’ Report 22 | AVJENNINGS LIMITED · ABN 44 004 327 771
REMUNERATION REPORT (Audited) (continued)
5. Remuneration of KMP
4. Employment Contracts
i) Chief Executive Officer
Mr Summers’ employment contract 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 24.
ii) Other Executives
The other executives are full time permanent employees with
employment contracts. The employment contracts do not
have termination dates or termination payments. However,
they specify a notice period of three months.
Details of the nature and amount of each element of
remuneration of Directors and executives are set out in the
tables on pages 23 and 24. 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.
7.
Shareholdings of KMP
The number of shares in the Company held during the financial year by each KMP of the Group, including their personally
related parties, are set out below.
For the year ended 30 June 2016
Directors
S Cheong
E Sam
PK Summers
RJ Rowley
D Tsang
Executives
L Mahaffy
SC Orlandi
CD Thompson
L Hunt
Opening
Balance
Vested as
Remuneration
On market
Purchase
Closing
Balance
192,318,030
209,349
2,815,505
252,000
837,396
19,967
202,483
884,448
87,082
–
–
304,270
–
–
29,496
47,237
54,158
36,071
–
–
–
–
–
192,318,030
209,349
3,119,775
252,000
837,396
–
–
288,500
26,033
49,463
249,720
1,227,106
149,186
Total
197,626,260
471,232
314,533
198,412,025
For the year ended 30 June 2015
Directors
S Cheong
E Sam
PK Summers
RJ Rowley
D Tsang
Executives
A Soutar (1)
L Mahaffy
SC Orlandi
CD Thompson
L Hunt
192,318,030
209,349
2,416,266
252,000
837,396
212,131
19,967
143,337
823,152
41,916
–
–
399,239
–
–
–
–
59,146
61,296
45,166
Total
197,273,544
564,847
(1) Ceased employment 30 June 2015.
–
–
–
–
–
–
–
–
–
–
–
192,318,030
209,349
2,815,505
252,000
837,396
212,131
19,967
202,483
884,448
87,082
197,838,391
Directors’ Report AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 23
REMUNERATION REPORT (Audited) (continued)
8. Remuneration Tables
i) Non-Executive Directors
S Cheong (1)
RJ Rowley
E Sam (1)
B Chin
BG Hayman
TP Lai
D Tsang (1)
Total
Total
Year
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Short-Term
Fees
$
Post Employment
Superannuation(2)
$
–
–
77,626
77,626
–
–
60,000
60,000
45,662
45,662
50,000
50,000
–
–
233,288
233,288
–
–
7,374
7,374
–
–
–
–
4,338
4,338
–
–
–
–
11,712
11,712
Total
$
–
–
85,000
85,000
–
–
60,000
60,000
50,000
50,000
50,000
50,000
–
–
245,000
245,000
(1)
(2)
These Directors were not paid fees. A consulting fee of $50,000 per month was paid to the ultimate parent entity SC Global Developments Pte Ltd
which covers the services of these Directors. International airfares to attend meetings are paid for by a related entity.
Payments to Defined Contribution Plans consist of Superannuation Guarantee Contribution payments as well as employee voluntary contributions.
The Group does not contribute to any Defined Benefit Plans.
(a)
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.
Directors’ Report
24 | AVJENNINGS LIMITED · ABN 44 004 327 771
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Directors’ Report
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 25
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
Held
4
4
4
4
4
4
4
4
Attended
4
4
4
4
4
4
4
4
Held
–
3
–
–
3
–
3
3
Attended
–
3
–
–
3
–
3
3
Meetings of Committees
Remuneration
Held
1
–
–
1
–
1
1
–
Attended
1
–
–
1
–
1
1
–
Nominations
Held
1
1
–
1
–
1
–
–
Attended
1
1
–
1
–
1
–
–
Risk Management
Attended
–
3
–
–
–
3
–
–
Held
–
3
–
–
–
3
–
–
S Cheong
RJ Rowley
PK Summers
E Sam
B Chin
BG Hayman
TP Lai
D Tsang
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.
DIRECTORS’ INTERESTS
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed to
indemnify its auditors, Ernst & Young, as part of the terms
of its audit engagement agreement against claims by third
parties arising from the audit (for an unspecified amount). No
payment has been made to indemnify Ernst & Young during or
since the financial year.
ROUNDING
ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191 is applicable to the Group and in
accordance with that Instrument, amounts in the Financial
Report and the Directors’ Report are rounded to the nearest
thousand dollars, unless otherwise indicated.
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
D Tsang
Number
192,318,030
209,349
3,119,775
252,000
837,396
*Does not include unvested shares under the AVJ Deferred Employee
Share Plan. Refer to page 21.
INDEMNIFYING OFFICERS
During the year, the Group paid a premium in respect of
a contract insuring its Directors and employees against
liabilities that may be incurred in defending civil or criminal
proceedings that may be brought against the Officers in their
capacity as Officers of entities in the Group. In accordance
with common practice, the insurance policy prohibits
disclosure of the nature of the liability insured against and
the amount of the premium.
Directors’ Report 26 | AVJENNINGS LIMITED · ABN 44 004 327 771
AUDITOR’S INDEPENDENCE DECLARATION
We have obtained the following Independence Declaration from our auditors, Ernst & Young:
AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF AVJENNINGS LIMITED
As lead auditor for the audit of AVJennings Limited for the financial year ended 30 June 2016, I declare to the best of my
knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to t he audit ; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of AVJennings Limited and the entities it controlled during the financial year.
Ernst & Young
28 September 2016
Mark Conroy
Partner
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
NON-AUDIT SERVICES
The Group’s auditor, Ernst & Young provided certain non-audit services as outlined in note 29. The Board has considered these
and based on advice received from the Audit Committee, is satisfied that provision of these services is compatible with, and did
not compromise, the auditor independence requirements imposed by the Corporations Act 2001, for the following reasons:
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of
•
the auditor; and
the non-audit services do not undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board as they
do not involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the
Group, acting as advocate for the Group or jointly sharing economic risks or rewards.
Signed in accordance with a resolution of the Directors.
Simon Cheong
Director
28 September 2016
Peter Summers
Director
Directors’ Report
Consolidated Statement of Comprehensive Income
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 27
Revenues
Cost of sales
Gross profit
Share of (losses)/profits of associates and joint venture
entities accounted for using the equity method
Change in inventory loss provisions
Other operational expenses
Selling and marketing expenses
Employee expenses
Depreciation expense
Finance costs
Management and administration expenses
Profit before income tax
Income tax
Profit after income tax
Other comprehensive income
Foreign currency translation
Other comprehensive income/(loss) for the year
Note
2
22(b)
2
2
2
2
3
2016
$’000
421,884
(315,731)
106,153
(583)
3,665
(5,479)
(11,002)
(24,797)
(275)
(526)
(8,373)
58,783
(17,871)
40,912
2,042
2,042
2015
$’000
317,903
(232,641)
85,262
1,569
3,720
(4,953)
(7,126)
(20,402)
(300)
(863)
(8,736)
48,171
(13,786)
34,385
(1,397)
(1,397)
Total comprehensive income for the year
42,954
32,988
Earnings per share (cents per share):
Basic earnings per share
Diluted earnings per share
30
30
10.71
10.71
9.03
9.03
28 | AVJENNINGS LIMITED · ABN 44 004 327 771
Consolidated Statement of Financial Position
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Tax receivable
Other assets
Total current assets
NON-CURRENT ASSETS
Trade and other receivables
Inventories
Equity accounted investments
Available-for-sale financial asset
Plant and equipment
Intangible assets
Total non-current assets
Total assets
CURRENT LIABILITIES
Trade and other payables
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
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Total equity
Note
2016
$’000
2015
$’000
4
5
6
7
5
6
22
8
9
10
11
12
13
43,086
106,060
209,939
–
2,140
37,812
69,088
204,942
143
2,060
361,225
314,045
21,694
343,098
8,684
2,880
985
2,816
13,094
312,007
10,667
2,880
605
2,816
380,157
342,069
741,382
656,114
120,611
10,057
10,494
6,261
117,461
3,008
–
5,510
147,423
125,979
11
12
3(b)
13
40,355
165,466
23,437
794
51,556
123,716
16,775
742
230,052
192,789
377,475
318,768
363,907
337,346
14
15(a)
15(c)
160,436
6,022
197,449
363,907
160,436
3,074
173,836
337,346
Consolidated Statement of Changes in Equity
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 29
Attributable to equity holders
of AVJennings Limited
Total
equity
Foreign
Currency
Translation
Reserve
Share-based
Payment
Reserve
Retained
Earnings
Contributed
Equity
Note
$’000
$’000
$’000
$’000
$’000
At 1 July 2014
160,436
3,188
1,173
150,983
315,780
Profit for the year
Other comprehensive loss for the year
Total comprehensive (loss)/income
for the year
Transactions with owners in their
capacity as owners
- Share-based payment expense
reversed (forfeited shares)
- Share-based payment expense
- Dividends paid
28(a)
28(a)
16
–
–
–
–
–
–
–
–
(1,397)
(1,397)
–
–
–
34,385
–
34,385
(1,397)
34,385
32,988
–
–
–
(326)
436
–
–
(326)
436
–
(11,532)
(11,532)
(1,397)
110
22,853
21,566
At 30 June 2015
160,436
1,791
1,283
173,836
337,346
Profit for the year
Other comprehensive income
for the year
Total comprehensive income for the year
Transactions with owners in their
capacity as owners
- Share-based payment expense
reversed (forfeited shares)
- Share-based payment expense
- Dividends paid
28(a)
28(a)
16
–
–
–
–
–
–
–
At 30 June 2016
160,436
–
2,042
2,042
–
–
–
2,042
3,833
–
–
–
40,912
40,912
–
40,912
2,042
42,954
(19)
925
–
906
–
–
(19)
925
(17,299)
(17,299)
23,613
26,561
2,189
197,449
363,907
30 | AVJENNINGS LIMITED · ABN 44 004 327 771
Consolidated Statement of Cash Flows
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Finance costs including interest paid
Income tax paid
Note
2016
$’000
2015
$’000
417,922
(432,880)
(12,566)
(786)
317,278
(320,115)
(10,396)
(1,127)
2
Net cash used in operating activities
17
(28,310)
(14,360)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of plant and equipment
Payments for plant and equipment
Interest received
Distributions received from associates and joint venture entities
Dividends received from joint venture entity
Payment for available-for-sale financial asset
Investments in associates and joint venture entities
Net cash from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Repayment of borrowings
Dividends paid
Net cash from financing activities
9
2
22(b)
22(b)
22(b)
16
2
(735)
526
–
1,400
–
–
8
(274)
863
18,750
5,350
(1,380)
(6,091)
1,193
17,226
454,482
(405,683)
(17,299)
240,177
(199,036)
(11,532)
31,500
29,609
NET INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of year
Effects of exchange rate changes on cash and cash equivalents
4,383
37,812
891
CASH AND CASH EQUIVALENTS AT END OF YEAR
4
43,086
32,475
4,796
541
37,812
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 31
Section A – How the numbers are calculated
Section A1 Segment information
1. OPERATING SEGMENTS
AVJennings operates primarily in residential development.
The Group determines segments based on information that is provided to the Managing Director who is the chief operating
decision maker (CODM). The CODM assesses the performance and makes decisions about the resources to be allocated to the
segment. Each segment prepares a detailed finance report on a monthly basis which summarises the following:
• Historic results of the segment; and
• Forecast of the segment for the remainder of the year.
Reportable segments
Jurisdictions:
This includes activities relating to Land Development, Integrated Housing and Apartments Development.
Other:
This includes numerous low value items, amongst the most significant of which are interest and certain sales commissions.
Notes to the Consolidated Financial Statements 32 | AVJENNINGS LIMITED · ABN 44 004 327 771
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Notes to the Consolidated Financial Statements
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 33
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Notes to the Consolidated Financial Statements
34 | AVJENNINGS LIMITED · ABN 44 004 327 771
Section A2 Profit and loss information
2. REVENUES AND EXPENSES
Revenues
Sales of land and built form
Interest received
Management fees received/receivable
Other
Total revenues
Revenue recognition
2016
$’000
2015
$’000
420,203
307,888
526
785
370
863
6,613
2,539
421,884
317,903
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 generally 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 revenue and costs are recognised by reference to the stage of completion of the contract. Depending on the nature
of the contract, this is measured based on the proportion of contract costs incurred for work performed to date relative to the
estimated total contract costs; completion of physical proportion of the contract work; or surveys of work performed. 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.
Dividends
Dividends are recognised as revenue when the right to receive payment is established.
Notes to the Consolidated Financial Statements 2. REVENUES AND EXPENSES (continued)
Expenses
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 35
Note
2016
$’000
2015
$’000
Cost of sales include:
Amortisation of finance costs capitalised to inventories
15,454
10,172
Employee expenses
Superannuation contributions
Other employee costs
Total employee expenses
Depreciation expense
Leasehold improvements
Plant, equipment and motor vehicles
Total depreciation expense
Other expenses
Minimum operating lease payments
Finance costs
Bank loans and overdraft
Less: Amount capitalised to inventories
Finance costs expensed
Impairment of assets
Decrease in inventory loss provisions
Total impairment reversed
1,744
23,053
1,473
18,929
24,797
20,402
9
9
8
267
275
7
293
300
2,636
2,421
12,566
(12,040)
526
3,665
3,665
10,396
(9,533)
863
3,720
3,720
For the year ended 30 June 2016, the movement in inventory loss provisions resulted from a realignment of future assumptions
with current market conditions predominantly driven by projects in New South Wales and Queensland.
Notes to the Consolidated Financial Statements 36 | AVJENNINGS LIMITED · ABN 44 004 327 771
3. INCOME TAX
The major components of income tax are:
Current income tax
Current income tax charge
Adjustment for prior year
Deferred income tax
Current year temporary differences
Adjustment for prior year
Income tax reported in the Consolidated
Statement of Comprehensive Income
2016
$’000
2015
$’000
11,442
10
6,425
(6)
915
41
12,871
(41)
17,871
13,786
Numerical reconciliation between aggregate tax recognised in the Consolidated Statement of Comprehensive Income
and tax calculated per the statutory income tax rate:
Accounting profit before income tax
Tax at Australian income tax rate of 30% (2015 – 30%)
Adjustment for prior year
Non-assessable equity accounted share of Joint Venture losses/(profits)
Other non-deductible items and variations
Income tax
Effective tax rate
(a) Tax consolidation legislation
58,783
17,635
4
175
57
48,171
14,451
–
(471)
(194)
17,871
13,786
30%
29%
AVJennings Limited and its wholly owned Australian entities are in a Tax Consolidated Group. All members of the Tax
Consolidated Group are taxed as a single entity.
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 entities in the Tax Consolidated Group have entered into a Tax Sharing Agreement which provides for the allocation of
income tax liabilities between the entities. This limits the tax liability of the wholly owned entities in the case of a default by
the Head Entity.
The entities in the Tax Consolidated Group have also entered into a Tax Funding Agreement to fully compensate/be
compensated by the Head Entity for current tax balances and deferred tax assets or unused tax losses and credits transferred.
Notes to the Consolidated Financial Statements
3. INCOME TAX (continued)
(b) Deferred tax
The balance comprises temporary differences attributable to:
– inventories
– unearned revenue
– prepayments and accruals
– employee provisions and accruals
– brand name
– tax losses
– other
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 37
2016
$’000
15,421
9,954
(1,209)
(1,294)
845
–
(280)
2015
$’000
13,783
6,639
(819)
(927)
845
(2,506)
(240)
Deferred tax liabilities
23,437
16,775
(c) Accounting
Income tax expense is calculated at the applicable tax rate and recognised in the profit and loss for the year, unless it relates to
other comprehensive income or transactions recognised directly in equity.
The tax expense comprises current and deferred tax. Broadly, current tax represents the tax expense paid or payable for the
current year. Deferred tax accounts for tax on temporary differences. Temporary differences generally occur when income and
expenses are recognised by tax authorities and for accounting purposes in different periods.
Deferred tax assets, including those arising from tax losses, are only recognised to the extent it is probable that sufficient
taxable profits will be available to utilise the losses in the foreseeable future.
Notes to the Consolidated Financial Statements 38 | AVJENNINGS LIMITED · ABN 44 004 327 771
Section A3 Balance Sheet information
4. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Accounting
2016
$’000
2015
$’000
43,086
37,812
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, which are subject to an insignificant risk of changes in value.
5.
TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Related party receivables
Funds held in trust accounts
Other receivables
2016
$’000
102,910
1,600
657
893
2015
$’000
62,823
1,753
1,730
2,782
Total current trade and other receivables
106,060
69,088
Non-current
Trade receivables
Related party receivables
Other receivables
15,063
1,601
5,030
12,818
276
–
Total non-current trade and other receivables
21,694
13,094
(a) Accounting
Trade receivables are recognised at the amount invoiced less provision for impairment. Trade receivables are generally due for
settlement between 30 and 180 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written-off
by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when
there is objective evidence that the Group will not be able to collect all amounts due. The amount of the impairment allowance is
the difference between the carrying amount of the receivable and the present value of estimated future cash flows, discounted
at the effective interest rate. Cash flows relating to short term receivables are not discounted if the effect of discounting is
immaterial.
The amount of the impairment loss is recognised in profit or loss. When a trade receivable for which an impairment allowance
has been recognised becomes uncollectible in a subsequent period, it is written-off against the allowance account. Subsequent
recoveries of amounts previously written off are recognised in profit or loss.
Notes to the Consolidated Financial Statements AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 39
5.
TRADE AND OTHER RECEIVABLES (continued)
(b) Allowance for impairment loss
No impairment loss (2015: $Nil) has been recognised by the Group in the current year.
At 30 June, the ageing analysis of trade receivables is as follows:
Number of days outstanding
Total
$’000
0-30
$’000
31-60
$’000
61-90
$’000
+ 91
$’000
+ 91#
$’000
2016
2015
# Considered impaired.
At the beginning of the year
Amounts written off during the year
At the end of the year
(c) Related party receivables
117,973
117,962
75,641
75,627
6
7
–
1
5
6
2016
$’000
–
–
–
–
–
2015
$’000
82
(82)
–
For terms and conditions relating to related party receivables, refer to note 27(j).
(d) Other receivables
These generally arise from transactions outside of the classification of trade receivables such as sundry debtors.
These receivables are not past due or impaired.
(e) Fair value and credit risk
The carrying value of receivables is assumed to approximate their fair value. The effect of discounting is immaterial.
Receivables consist of a large number of customers and there is no significant credit risk exposure to a single customer.
Receivables in respect of land and built form require to be fully settled prior to passing of title.
Notes to the Consolidated Financial Statements
40 | AVJENNINGS LIMITED · ABN 44 004 327 771
6. INVENTORIES
Current
Broadacres
Land to be subdivided – at cost
Borrowing and holding costs capitalised
Impairment provision
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
Impairment provision
Total work-in-progress
Completed inventory
Completed houses and apartments – at cost
Completed residential land lots – at cost
Borrowing and holding costs capitalised
Impairment provision
Total completed inventory
Total current inventories
Non-current
Broadacres
Land to be subdivided – at cost
Borrowing and holding costs capitalised
Impairment provision
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
Impairment provision
Total work-in-progress
Completed inventory
Completed residential land lots – at cost
Borrowing and holding costs capitalised
Impairment provision
Total completed inventory
Total non-current inventories
Total inventories
Note
2016
$’000
2014
$’000
6(a)
6(a)
6(a)
6(a)
6(a)
6(a)
49,237
9,873
(3,133)
55,977
61,590
26,025
22,799
11,105
(2,390)
39,983
10,630
(4,409)
46,204
48,177
29,147
25,950
12,559
(3,304)
119,129
112,529
14,742
18,138
2,833
(880)
34,833
7,984
38,025
2,758
(2,558)
46,209
209,939
204,942
278,176
29,182
(14,076)
254,162
27,562
(19,394)
293,282
262,330
32,382
14,757
1,231
1,805
(519)
33,838
4,558
1,219
6,896
(530)
49,656
45,981
178
11
(29)
160
3,685
32
(21)
3,696
343,098
312,007
553,037
516,949
Notes to the Consolidated Financial Statements AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 41
6. INVENTORIES (continued)
(a) Borrowing costs attributable to qualifying assets are capitalised. These include interest, fees and costs associated with
interest rate derivatives and have been capitalised at a weighted average rate of 6.18% (2015: 6.90%).
(b) Inventory with a carrying value of $98,405,000 (2015: $18,019,000) was pledged as security for project specific
borrowings (refer to note 12(b)). The Group’s remaining inventory has been pledged as security for the main banking
facility (refer to note 12(a)).
Accounting
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.
Development projects and land
Costs include cost 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.
Movement in impairment provisions
At beginning of year
Amounts utilised
Amounts reversed
At end of year
7. OTHER ASSETS
Prepayments
Deposits
Total other current assets
2016
$’000
30,216
(5,524)
(3,665)
2015
$’000
46,267
(12,331)
(3,720)
21,027
30,216
2016
$’000
2,052
88
2015
$’000
1,943
117
2,140
2,060
Notes to the Consolidated Financial Statements 42 | AVJENNINGS LIMITED · ABN 44 004 327 771
8. AVAILABLE-FOR-SALE FINANCIAL ASSET
Property Fund Units
2016
$’000
2015
$’000
2,880
2,880
These comprise units in unlisted property funds that do not have an active market. As the range of reasonable fair values can
be significant and these estimates cannot be made reliably, the units are measured at cost less impairment.
The Company intends to hold the property fund units until the development activity being undertaken is completed, and all
product is sold.
Impairment and risk exposure
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset is impaired.
A financial asset is impaired only if there is objective evidence of impairment as a result of one or more events that occurred and
that loss event (or events) has an impact on the estimated future cash flows of the financial asset that can be reliably estimated.
In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the
security below the cost is considered an indicator that the assets are impaired.
If there is objective evidence of impairment for an available-for-sale financial asset, the cumulative loss, measured as the
difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously
recognised in profit and loss, is taken to profit and loss.
None of the financial assets are either past due or impaired.
All available-for-sale investments are denominated in Australian currency. As a result, there is no exposure to foreign currency
risk. There is also no exposure to price risk as the intention is to hold the investments to maturity.
Notes to the Consolidated Financial Statements 9. 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, equipment and motor vehicles
Total plant and equipment
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 43
2016
$’000
379
(259)
120
6,631
(5,766)
865
985
2015
$’000
410
(347)
63
6,167
(5,625)
542
605
Reconciliations
Reconciliations of the carrying amounts of each class of plant and equipment at the beginning and end of the year are
set out below:
For the year ended 30 June 2015
Note
Carrying amount at 1 July 2014
Additions
Disposals
Depreciation charge
Carrying amount at 30 June 2015
For the year ended 30 June 2016
Carrying amount at 1 July 2015
Additions
Disposals
Depreciation charge
Carrying amount at 30 June 2016
Accounting
2
2
Leasehold
improve-
ments
$’000
Plant,
equipment
and motor
vehicles
$’000
62
8
–
(7)
63
63
91
(26)
(8)
120
580
266
(11)
(293)
542
542
644
(54)
(267)
865
Total
$’000
642
274
(11)
(300)
605
605
735
(80)
(275)
985
Plant and equipment is stated at historical cost less accumulated depreciation and impairment.
Depreciation is calculated on a straight-line basis using the following rates which are consistent with the prior year:
Plant, equipment, and motor vehicles
Leasehold improvements
3-7 years
3-10 years
Notes to the Consolidated Financial Statements 44 | AVJENNINGS LIMITED · ABN 44 004 327 771
10. INTANGIBLE ASSETS
Brand name at cost
Less: accumulated amortisation
Total intangible assets
2016
$’000
9,868
(7,052)
2,816
2015
$’000
9,868
(7,052)
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 was amortised over the expected useful life.
In accordance with the accounting policy discussed below, 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 2016,
there were no indicators of impairment.
Accounting
Intangible assets acquired separately are measured at cost on initial recognition. The cost of intangible assets acquired in a
business combination is 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 Group 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 are 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 considered to modify the amortisation period
or method, as appropriate, and are treated as changes in accounting estimates and adjusted on a prospective basis. The
amortisation expense on intangible assets with finite lives is recognised in the Consolidated Statement of Comprehensive Income
in the expense category that is 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 useful life from
indefinite to finite is made on a prospective basis.
Notes to the Consolidated Financial Statements 11. TRADE AND OTHER PAYABLES
Current
Secured
Land creditors
Unsecured
Land creditors
Trade creditors
Related party payables
Other creditors and accruals
Total current payables
Non-Current
Unsecured
Land creditors
Other creditors and accruals
Total non-current payables
Land creditors
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 45
2016
$’000
2015
$’000
4,350
–
74,904
14,306
3,128
23,923
89,689
12,403
3,128
12,241
116,261
117,461
120,611
117,461
39,571
784
51,556
–
40,355
51,556
Titles for land purchased from unsecured land creditors only transfer to the Group on settlement 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 27(j).
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 5.65% (2015: 6.95%).
Accounting
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial year
which are unpaid. The amounts are usually unsecured and paid within 30 to 60 days of recognition.
Notes to the Consolidated Financial Statements 46 | AVJENNINGS LIMITED · ABN 44 004 327 771
12. INTEREST-BEARING LOANS AND BORROWINGS
Current
Bank loans
Total current interest-bearing liabilities
Non-current
Bank loans
Total non-current interest-bearing liabilities
Accounting
Borrowing costs
2016
$’000
2015
$’000
10,057
3,008
10,057
3,008
165,466
123,716
165,466
123,716
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other
borrowing costs are expensed.
Borrowing costs consist of interest and other costs incurred in connection with the borrowing of funds. Interest income on
borrowed funds pending their expenditure, is deducted from borrowing costs eligible for capitalisation.
Interest-bearing loans and borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable
transaction costs. Subsequently, the carrying value of loans and borrowings is at approximation to their fair values. 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 repayment for at least 12 months
after the reporting date.
Notes to the Consolidated Financial Statements AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 47
12. INTEREST-BEARING LOANS AND BORROWINGS (continued)
Financing arrangements
The Group has access to the following lines of credit:
30 June 2016
Main banking facilities
– bank overdraft
– bank loans
– performance bonds
Other non-cash facilities
Project funding facilities
– bank loans
Contract performance bond facilities
– performance bonds
30 June 2015
Main banking facilities
– bank overdraft
– bank loans
– performance bonds
Other non-cash facilities
Project funding facilities
– bank loans
Contract performance bond facilities
– performance bonds
Note
12(a)
12(b)
12(c)
12(a)
12(b)
12(c)
Available
$’000
Utilised
$’000
Unutilised
$’000
5,000
225,000
20,000
250,000
220
–
143,243
14,317
157,560
–
5,000
81,757
5,683
92,440
220
92,000
32,280
59,720
35,000
22,239
12,761
5,000
210,000
35,000
250,000
1,800
–
123,716
9,778
133,494
–
5,000
86,284
25,222
116,506
1,800
3,026
3,008
18
25,000
21,134
3,866
At 30 June 2016 main banking facilities are interchangeable up to $47 million (2015: $47 million) between the bank loans
and performance bonds.
Notes to the Consolidated Financial Statements
48 | AVJENNINGS LIMITED · ABN 44 004 327 771
12. INTEREST-BEARING LOANS AND BORROWINGS (continued)
Significant terms and conditions
(a) Main banking facilities
The Group’s main banking facilities which were due to mature on 30 September 2017 have subsequent to the year end been
extended to 30 September 2018. The main banking facilities are secured by a fixed and floating charge over all the assets
and undertakings of the entities within the Group that are obligors under the main banking facilities, and by first registered
mortgages over various real estate inventories other than those controlled by the Group under project development agreements
and those assets pledged as security for project funding (see note 12(b)). 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 (see
note 21). The current interest rates on the bank loans range from 2.88% to 3.74% (2015: 3.09% to 4.30%).
(b) Project funding facilities
Project funding facilities are secured by:
• a fixed and floating charge over the assets of the entity involved in the relevant project, namely, AVJennings Waterline
Pty Ltd; and
• a first registered mortgage over certain real estate inventories of the entity involved in the relevant project, namely,
AVJennings Waterline Pty Ltd.
The lines of credit shown are maximum limits which are available progressively as projects are developed. The expiry date
for the facility at the reporting date was November 2019. The outstanding amounts are expected to be repaid or refinanced
prior to expiry of the facility. As at 30 June 2016, the balance outstanding on the bank loan facilities was $32,280,000
(2015: $3,008,000).
The carrying amounts of the pledged assets are as follows:
Waterline, Victoria
Arlington Rise, Victoria
2016
$’000
2015
$’000
98,905
-
-
18,051
The weighted average interest rate on the project funding loans at year-end was 3.40% (2015: 2.09%).
(c) Contract performance bond facilities
The Group has entered into Contract performance bond facilities of $35,000,000 (2015: $25,000,000). The Contract
performance bond facilities are subject to review annually. The facilities expire by 31 December 2016 and management
expects the annual review which is underway, to be completed shortly and the facilities extended for a further 12 months.
The performance bond facilities are secured by Deeds of Indemnity between the Parent Entity and various controlled entities.
Details of the controlled entities, included in the Deeds of Indemnity are set out in note 21.
Notes to the Consolidated Financial Statements
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 49
2016
$’000
4,028
2,233
2015
$’000
3,760
1,750
6,261
5,510
794
794
742
742
13. PROVISIONS
Current
Employee benefits
Other
Total current provisions
Non-current
Employee benefits
Total non-current provisions
Accounting
Provisions
A provision is recognised when there is a present obligation (legal or constructive) as a result of a past event, it is probable that
an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the obligation.
Wages, salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits and annual leave are recognised in respect of employees’
services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled.
Expenses for sick leave are recognised when the leave is taken and are measured at the rates paid or payable.
Long service leave
Liabilities for long service leave are measured as the present value of expected future payments to be made in respect of
services provided by employees up to the reporting date, discounted using corporate bond rates. Consideration is given to
expected future wage and salary levels, experience of employee departures and periods of service.
Notes to the Consolidated Financial Statements 50 | AVJENNINGS LIMITED · ABN 44 004 327 771
14. CONTRIBUTED EQUITY
Ordinary shares
Treasury shares
Share capital
Note
14(a)
14(b)
2016
Number
2015
Number
2016
$’000
384,423,851
384,423,851
162,793
(2,338,154)
(3,502,401)
(2,357)
2015
$’000
162,793
(2,357)
382,085,697
380,921,450
160,436
160,436
(a) Movement in ordinary share capital
Number
Number
$’000
As at the beginning of the year
384,423,851
384,423,851
162,793
$’000
162,793
As at the end of the year
384,423,851
384,423,851
162,793
162,793
Holders of ordinary shares are entitled to dividends and to one vote per share at shareholders’ meetings.
(b) Movement in treasury shares
Number
Number
$’000
As at the beginning of the year
Employee share scheme issue
(3,502,401)
(4,221,605)
(2,357)
1,164,247
719,204
–
$’000
(2,357)
–
As at the end of the year
(2,338,154)
(3,502,401)
(2,357)
(2,357)
Accounting
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.
Where any group company purchases the Company’s equity instruments, for example as the result of a share-based payment
plan, the consideration paid, including any directly attributable incremental costs is deducted from equity attributable to the
owners of AVJennings Limited as treasury shares.
Shares held by the AVJ Deferred Employee Share Plan are disclosed as treasury shares and deducted from contributed equity.
15. RESERVES AND RETAINED EARNINGS
(a) Reserves
At 1 July 2014
Foreign currency translation
Share-based payment expense
At 30 June 2015
Foreign currency translation
Share-based payment expense
At 30 June 2016
(b) Nature and purpose of reserves
Foreign currency translation reserve
Foreign
Currency
Translation
Reserve
$’000
Share-based
Payment
Reserve
$’000
3,188
(1,397)
–
1,791
2,042
–
3,833
1,173
–
110
1,283
–
906
2,189
Note
28(a)
28(a)
Total
$’000
4,361
(1,397)
110
3,074
2,042
906
6,022
Exchange differences arising on translation foreign operations are recognised in other comprehensive income as
explained in note 36(e) and accumulated in a separate reserve within equity. The cumulative amount is reclassified to the
Consolidated Statement of Comprehensive Income when the net investment is disposed of.
Share-based payment reserve
The share-based payment reserve is used to recognise the fair value of shares issued to employees, with a corresponding
increase in employee expense in the Statement of Comprehensive Income. Refer to note 28(b) for details of the Plan.
Notes to the Consolidated Financial Statements 15. RESERVES AND RETAINED EARNINGS (continued)
(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
16. DIVIDENDS
Cash dividends declared and paid
2014 final dividend of 2.0 cents per share,
paid 18 September 2014. Fully franked @ 30% tax
2015 interim dividend of 1.0 cent per share,
paid 8 April 2015. Fully franked @ 30% tax
2015 final dividend of 3.0 cents per share,
paid 23 September 2015. Fully franked @ 30% tax
2016 interim dividend of 1.5 cents per share,
paid 15 April 2016. Fully franked @ 30% tax
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 51
2016
$’000
2015
$’000
173,836
40,912
(17,299)
150,983
34,385
(11,532)
197,449
173,836
2016
$’000
2015
$’000
–
–
11,532
5,767
7,688
3,844
–
–
Total cash dividends declared and paid
17,299
11,532
Dividends proposed
2015 final dividend of 3.0 cents per share,
paid 23 September 2015. Fully franked @ 30% tax
2016 final dividend of 3.5 cents per share,
paid 23 September 2016. Fully franked @ 30% tax
Total dividends proposed
The Company’s Dividend Reinvestment Plan remains suspended.
Dividend franking account
–
11,532
13,455
13,455
–
11,532
Franking credits available for subsequent financial years based on a tax rate of 30%
15,162
18,596
The above balance is based on the balance of the dividend franking account at the year-end adjusted for:
•
•
franking credits that will arise from the payment of the amount provided for income tax; and
franking debits that will arise from the payment of dividends proposed at the year-end.
Notes to the Consolidated Financial Statements 52 | AVJENNINGS LIMITED · ABN 44 004 327 771
Section A4 Cash Flows information
17. CASH FLOW STATEMENT RECONCILIATION
Reconciliation of profit after tax to net cash flow used in operating activities
Profit after tax
Adjustments for non-cash items:
Depreciation
Net loss on disposal of plant and equipment
Interest revenue classified as investing cash flow
Share of losses/(profits) of associates and joint venture entities
Change in inventory loss provisions
Share-based payments expense
Change in operating assets and liabilities:
Increase in inventories
Increase in trade and other receivables
Increase in other current assets
Decrease/(increase) in current tax receivables
Increase in deferred tax liability
Increase/(decrease) in current tax liability
(Decrease)/increase in trade and other payables
Increase in provisions
2016
$’000
2015
$’000
40,912
34,385
275
80
(526)
583
(9,189)
906
(26,899)
(45,572)
(80)
143
6,662
10,494
(6,902)
803
300
4
(863)
(1,569)
(16,051)
110
(120,075)
(31,466)
(673)
(143)
12,734
(251)
108,350
848
Net cash used in operating activities
(28,310)
(14,360)
Section B – Risk
18. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of financial statements involves the use of certain critical accounting estimates and requires management
to exercise judgement. These estimates and judgements are continually reviewed based on historical experience, current and
expected market conditions as well as other relevant factors.
(i) Judgements
In applying the Group’s accounting policies, management makes judgements, which can significantly affect the amounts
recognised in the Consolidated Financial Statements. This includes the determination of whether revenue recognition criteria
has been satisfied on sales of land lots with deferred settlement terms.
(ii) Estimates and assumptions
Estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are described below.
Estimates of net realisable value of inventories:
Estimates of net realisable value are based on the most reliable evidence available at the time the estimates are made of the net
amount expected to be realised from the sale of inventories, and the estimated costs of completion. The key assumptions used in
this exercise require judgement and are reviewed at least half-yearly.
Profit recognised on developments:
The calculation of profit for land lots and built form is based on actual costs to date and estimates of costs to complete.
Notes to the Consolidated Financial Statements
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 53
19. FINANCIAL RISK MANAGEMENT
The Group’s principal financial instruments comprise receivables, payables, loans and borrowings, cash and short-term
deposits, derivatives and financial guarantee contracts.
The Group’s treasury department focuses on the following main financial risks: interest rate risk, foreign currency risk, credit
risk and liquidity risk. It provides assurance to the Group’s senior management that financial risk activities are governed by
appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with policies
and risk objectives.
Responsibility for the monitoring of financial risk exposure and the formulation of appropriate responses rests with the Chief
Financial Officer.
The Board reviews and approves policies, discusses their appropriateness with senior management and varies them
as necessary.
(i) Interest rate risk
Interest rate risk is the risk that the fair value of a financial instrument or future cash flows associated with it will fluctuate
because of changes in market interest rates. The exposure to market interest rates primarily relates to interest-bearing loans and
borrowings issued at variable rates.
In assessing interest rate risk, the Group considers its loan maturity and cash flow profile and the outlook for interest rates over
the medium term. To manage this, the Group may enter into hedging strategies that combine interest rate caps and floors,
as well as floating-to-fixed interest rate swap contracts. However, the forecast cash position together with the current benign
outlook for medium term interest rates has resulted in the Group retaining none of the drawn debt at a fixed rate of interest.
The Group may use various techniques, including interest rate swaps, caps and collars to hedge its risk associated with interest
rate fluctuations. These derivatives do not qualify for hedge accounting and changes in fair value are recognised in profit and loss.
Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and their
fair value is reassessed at the end of each reporting period. Derivative financial instruments are not held for trading purposes.
At balance date, the following variable rate borrowings, interest rate cap and interest rate collar contracts were outstanding:
Cash
Bank loans
Net financial liabilities
Interest rate cap and collar
Borrowings not hedged
2016
2015
Weighted
average
interest rate
%
2.16
3.41
Weighted
average
interest rate
%
1.73
3.24
Balance
$‘000
(43,086)
175,523
132,437
–
132,437
Balance
$‘000
(37,812)
126,724
88,912
(20,000)
68,912
Notes to the Consolidated Financial Statements 54 | AVJENNINGS LIMITED · ABN 44 004 327 771
19. FINANCIAL RISK MANAGEMENT (continued)
(i) Interest rate risk (continued)
Interest rate derivative contracts are exposed to fair value movements if interest rates change. Details of these contracts are:
Type of derivative
Period
Start
Date
Period
End
Date
Interest rate cap and collar
11-Jun-15
30-Sep-15
Cap
Rate
%
2.95
Floor
Rate
%
2.50
Principal Amount
2016
$’000
2015
$’000
–
20,000
At 30 June 2016, none of the available borrowings are at capped and collared rates of interest (2015: 9.2%).
The Group 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.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on exposures existing at
balance date.
With all other variables held constant, profit after tax and other comprehensive income would have been affected as follows:
Profit After Tax
Higher/(Lower)
Other Comprehensive Income
Higher/(Lower)
2016
$’000
(276)
(138)
138
2015
$’000
(163)
(86)
55
2016
$’000
2015
$’000
–
–
–
–
–
–
+100 basis points
+50 basis points
– 50 basis points
(ii) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in
foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s
net investments in foreign subsidiaries.
At balance date, the Group had the following exposure to New Zealand Dollar foreign currency that is not hedged:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial Liabilities
Trade and other payables
Interest-bearing loans and borrowings
Total financial liabilities
Net exposure
2016
NZ$’000
2015
NZ$’000
10,273
50,076
60,349
57,511
5,500
63,011
(2,662)
6,399
41,430
47,829
20,120
5,500
25,620
22,209
Notes to the Consolidated Financial Statements AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 55
19. FINANCIAL RISK MANAGEMENT (continued)
(ii) Foreign currency risk (continued)
The following table demonstrates the sensitivity to a change in AUD/NZD exchange rates on exposures existing at balance date.
With all other variables held constant, profit after tax and other comprehensive income would have been affected as follows:
AUD/NZD +10%
AUD/NZD – 5%
AUD/NZD – 10%
(iii) Credit risk
Profit After Tax
Higher/(Lower)
Other Comprehensive Income
Higher/(Lower)
2016
$’000
(732)
366
732
2015
$’000
(656)
328
656
2016
$’000
(204)
102
204
2015
$’000
(140)
70
140
Credit risk is the risk that a counterparty will not meet its contractual obligations under a financial instrument, leading to a
financial loss. Credit risk arises from cash and cash equivalents, trade and other receivables, available-for-financial asset,
financial instruments and from granting of financial guarantees.
Trade Receivables
Contracts for Land, Integrated Housing and Apartments usually require payment in full prior to passing of title to customers
and collateral is therefore unnecessary. In the event that title is to pass prior to full payment being received, appropriate credit
verification procedures are performed before contract execution.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Group’s treasury department in accordance
with Group policy. Surplus funds are invested in high quality and low risk short-term money market instruments to ensure
preservation of capital. Counterparties are limited to financial institutions approved by the Board.
Credit risk arises from potential default of the counterparty, with a maximum exposure equal to the carrying amount of the
financial assets as well as $5,593,000 (2015: $2,801,000) in relation to financial guarantees granted – see note 33 for further
information.
The Group has no significant concentrations of credit risk.
(iv) Liquidity risk
The Group manages its liquidity risk by monitoring forecast cash flows on a fortnightly basis and matching the maturity
profiles of financial assets and liabilities. These are reviewed by the Chief Financial Officer and presented to the Board as
appropriate. The objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans
and committed available credit facilities.
The current main banking facilities are due to mature on 30 September 2018 and are therefore non-current. In addition, the
Group operates certain project funding facilities which are discussed in note 12(b). The maturity profile of all debt facilities is
monitored on a regular basis by the Chief Financial Officer and ongoing financing plans presented to the Board for approval
well in advance of maturity.
Notes to the Consolidated Financial Statements 56 | AVJENNINGS LIMITED · ABN 44 004 327 771
19. FINANCIAL RISK MANAGEMENT (continued)
(iv) Liquidity risk (continued)
At 30 June 2016, 5.7% (2015: 2.4%) of the Group’s interest-bearing loans and borrowings will mature in less than one year.
The table below summarises the maturity profile of the Group’s financial assets and liabilities based on contractual
undiscounted payments.
Year ended 30 June 2016
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
43,086
91,922
135,008
103,714
2,868
5,593
–
14,138
14,138
16,897
12,892
–
–
21,694
43,086
127,754
21,694
170,840
40,355
168,420
–
160,966
184,180
5,593
112,175
29,789
208,775
350,739
Net maturity
22,833
(15,651)
(187,081)
(179,899)
Year ended 30 June 2015
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
37,812
58,987
96,799
106,670
5,163
2,801
–
10,377
10,377
10,791
2,109
–
–
12,818
37,812
82,182
12,818
119,994
51,556
129,040
–
169,017
136,312
2,801
114,634
12,900
180,596
308,130
Net maturity
(17,835)
(2,523)
(167,778)
(188,136)
* 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 short term assets to meet short term payments, at reporting date, the Group has
approximately $165 million (2015: $122 million) of unused credit facilities available for its immediate use. Please refer to
note 12.
Notes to the Consolidated Financial Statements AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 57
19. FINANCIAL RISK MANAGEMENT (continued)
(v) Fair value
The following table provides the fair value measurement hierarchy of the Group’s financial assets and financial liabilities:
Year ended 30 June 2016
Year ended 30 June 2015
Quoted
prices
in active
markets
(Level 1)
$’000
Significant
observable
inputs
Significant
unobservable
inputs
Total
(Level 2)
$’000
(Level 3)
$’000
$’000
Quoted
prices
in active
markets
(Level 1)
$’000
Significant
observable
inputs
Significant
unobservable
inputs
Total
(Level 2)
$’000
(Level 3)
$’000
$’000
Financial liabilities
Interest-bearing loans
and borrowings
–
–
175,523
175,523
–
–
175,523
175,523
–
–
126,724
126,724
–
–
126,724
126,724
20. CAPITAL RISK MANAGEMENT
In managing capital, management’s objective is to ensure that returns to shareholders are optimised by using a mix of
funding options. The aim is to achieve the lowest possible weighted average cost of capital.
In order to maintain or adjust the capital structure, management may change the amount of dividends, offer a dividend
reinvestment plan, return capital to shareholders, issue new shares or sell assets to reduce debt.
During the year ended 30 June 2016, a total dividend of $17,299,000 was paid (2015: $11,532,000).
Management monitors capital mix through the debt to equity ratio (net debt/total equity) and the debt to total assets ratio
(net debt/total assets) calculated below:
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
Consolidated
2016
$’000
175,523
(43,086)
2015
$’000
126,724
(37,812)
132,437
88,912
363,907
337,346
741,382
656,114
36.4%
17.9%
26.4%
13.6%
AVJennings Limited complied with the financial covenants of its borrowing facilities during the 2016 and 2015 reporting periods.
Notes to the Consolidated Financial Statements
58 | AVJENNINGS LIMITED · ABN 44 004 327 771
Section C – Group Structure
21. CONTROLLED ENTITIES
(a) Investment in controlled entities
The following economic entities are the controlled entities of AVJennings Limited:
ECONOMIC ENTITY (1)
2016
2015
2016
2015
% 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
AVJ ODP Pty Limited
AVJennings (Cammeray) Pty Limited
AVJennings Syndicate No 3 Limited
AVJennings Syndicate No 4 Limited(3)
AVJennings Officer Syndicate Limited(3)
AVJennings Properties SPV No 1 Pty Limited
AVJennings Properties SPV No 2 Pty Limited
AVJennings Properties SPV No 4 Pty Limited
AVJennings Properties Elderslie No 2 Pty Ltd
AVJennings Wollert Pty Limited
AVJ Erskineville Pty Limited
AVJ Hobsonville Pty Limited
AVJennings Properties SPV No 9 Pty Limited
AVJennings SPV No 10 Pty Limited
AVJennings SPV No 19 Pty Limited
AVJennings SPV No 20 Pty Limited
AVJennings SPV No 21 Pty Limited
Creekwood Developments Pty Limited(3)
Portarlington Nominees Pty Limited
AVJennings St Clair Pty Limited
St Clair JV Nominee Pty Limited
AVJennings Properties Wollert SPV Pty Limited
AVJennings Waterline Pty Limited
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
100
100
No
No
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
No
Yes
No
Yes
Yes
No
Yes
Yes
No
Yes
Yes
Yes
Yes
No
No
No
No
Yes
Yes
Yes
Yes
No
No
No
No
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
No
Yes
No
Yes
Yes
No
No
Yes
N/A
Yes
Yes
Yes
No
No
N/A
N/A
N/A
Yes
No
Yes
Yes
No
No
(1) 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.
(2) These entities, including AVJennings Limited, are included under the Banking Cross Deed of Covenant referred to in note 12(a).
(3) These entities, including AVJennings Limited, are included in the Deeds of Indemnity for performance bond facilities referred to in note 12(c).
Notes to the Consolidated Financial Statements AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 59
21. CONTROLLED ENTITIES (continued)
(b) Ultimate parent
AVJennings Limited is the ultimate Australian parent entity. SC Global Developments Pte Ltd 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 21(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 21(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 21(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:
Revenues
Cost of property development sold
Other expenses
Profit before income tax
Income tax
Profit after income tax
Dividends paid
(Loss)/profit for the year
Closed Group
2016
$’000
200,591
(139,923)
(40,587)
20,081
(6,057)
2015
$’000
162,203
(107,375)
(34,941)
19,887
(6,576)
14,024
13,311
(17,299)
(11,532)
(3,275)
1,779
Notes to the Consolidated Financial Statements 60 | AVJENNINGS LIMITED · ABN 44 004 327 771
21. 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
Other assets
Total current assets
NON-CURRENT ASSETS
Trade and other receivables
Inventories
Equity accounted investments
Available-for-sale financial asset
Plant and equipment
Intangible assets
Total non-current assets
Total assets
CURRENT LIABILITIES
Trade and other payables
Tax payable
Provisions
Total current liabilities
NON-CURRENT LIABILITIES
Trade and other payables
Interest-bearing loans and borrowings
Deferred tax
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Total equity
2016
$’000
2015
$’000
41,265
182,747
104,115
644
31,503
182,447
88,470
1,852
328,771
304,272
6,631
148,976
5,495
2,880
985
2,816
–
132,899
6,090
2,880
605
2,816
167,783
145,290
496,554
449,562
64,512
9,146
6,136
50,372
–
5,411
79,794
55,783
784
138,000
19,078
794
–
118,846
13,718
742
158,656
133,306
238,450
189,089
258,104
260,473
160,436
2,188
95,480
160,436
1,282
98,755
258,104
260,473
Notes to the Consolidated Financial Statements AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 61
21. 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 year
(Loss)/profit for the year
Total income and expenses for the year
Transactions with owners in their capacity as owners
– Share-based payment expense
Closed Group
2016
$’000
2015
$’000
260,473
258,584
(3,275)
(3,275)
906
(2,369)
1,779
1,779
110
1,889
At end of year
258,104
260,473
22. EQUITY ACCOUNTED INVESTMENTS
Investment in Associate – unincorporated
Interest in Joint Ventures – unlisted
Total equity accounted investments
Accounting
Note
22(a)
2016
$’000
4
8,680
8,684
2015
$’000
4
10,663
10,667
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the
financial and operating policy decisions of the investee, but is not control or joint control over those policies.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the
net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only
when decisions about the relevant activities require unanimous consent of the parties sharing control.
Investments in associate and joint ventures are accounted for using the equity method. Under the equity method, investments in
these entities are carried at cost plus post acquisition changes in the Group’s share of net assets of these entities.
The Consolidated Statement of Comprehensive Income reflects the Group’s share of profits or losses of equity accounted
investments. Changes in OCI of these investments are presented as part of the Group’s OCI. If a change has been a change
recognised directly in the equity of the associate or joint venture, the Group recognises its share of the change in equity.
Dividends received from an associate or a joint venture are recognised as a reduction in the carrying amount of the investment.
Unrealised gains and losses resulting from transactions between the Group and the associate or joint venture are eliminated to
the extent of the interest in the associate or joint venture, until such time as they are realised by the associate or joint venture on
consumption or sale.
The aggregate of the Group’s share of profit or loss of associate and joint ventures is shown separately on the face of the
Consolidated Statement of Comprehensive Income and represents profit or loss after tax and non-controlling interests in the
associates and joint ventures.
The financial statements of the associate and joint ventures are prepared for the same reporting period as the Group. Where
necessary, adjustments are made to bring the accounting policies in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment
loss on its equity accounted investments. If there is objective evidence that the investment in the associate or joint venture is
impaired, the Group calculates the amount of impairment as the difference between the recoverable amount of the investment
and its carrying value and recognises it in the Consolidated Statement of Comprehensive Income.
Notes to the Consolidated Financial Statements 62 | AVJENNINGS LIMITED · ABN 44 004 327 771
22. EQUITY ACCOUNTED INVESTMENTS (continued)
(a) Interest in Joint Ventures
Joint Venture and principal activities
Eastwood – Land Development and Building Construction
Woodville – Land Development and Building Construction
Pindan Capital Group Dwelling Trust – Building Construction
Movements in carrying amount
At beginning of year
Contributions made
Distributions received
Dividends received
Share of (loss)/profit
At end of year
Interest held
2016
2015
50.0%
50.0%
33.3%
2016
$’000
10,663
–
–
(1,400)
(583)
8,680
50.0%
50.0%
33.3%
2015
$’000
27,103
6,091
(18,750)
(5,350)
1,569
10,663
The Group’s share of the individually immaterial Joint Ventures’ assets, liabilities, revenues 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 revenues and expenses
Revenues
Expenses
(Loss)/profit before income tax
Income tax
(Loss)/profit after income tax
2016
$’000
3,778
10,868
14,646
4,093
1,873
5.966
8,680
43
(621)
(578)
(5)
(583)
2015
$’000
7,586
8,970
16,556
4,846
1,047
5,893
10,663
29,985
(27,743)
2,242
(673)
1,569
Notes to the Consolidated Financial Statements AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 63
23. INTEREST IN JOINT OPERATIONS
A number of controlled entities have entered into joint operations. Information relating to the Joint Operations is set out below:
Joint Operation name, principal place of business and principal activities
Hobsonville Joint Venture (New Zealand) – Land Development
Elderslie Joint Venture (New South Wales) – Land Development and Building Construction
Wollert Joint Venture (Victoria) – Land Development and Building Construction
Interest Held
2016
2015
–
–
49%
50%
50%
49%
In June 2015, the development and sales of land at Hobsonville Buckley A was completed.
In November 2015, the Group purchased the remaining 50% share held by the joint operation partner in the Elderslie Joint
Venture. Elderslie did not constitute a business and was therefore accounted for as an asset acquisition.
Accounting
A joint operation is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the
assets and obligations for the liabilities of the joint operation. Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing
control. The proportionate interests in the assets, liabilities, revenues and expenses of joint operations have been recognised in
the Financial Statements under the appropriate headings.
The Group’s interest in the profits and losses of the individually immaterial Joint Operations are included in the Consolidated
Statement of Comprehensive Income, under the following classifications:
Revenues
Cost of property developments sold
Other expenses
Profit before income tax
Income tax
Profit after income tax
Total comprehensive income for the year
2016
$’000
3,088
(2,695)
(188)
205
(62)
143
143
2015
$’000
15,606
(11,082)
(946)
3,578
(1,073)
2,505
2,505
Notes to the Consolidated Financial Statements 64 | AVJENNINGS LIMITED · ABN 44 004 327 771
23. INTEREST IN JOINT OPERATIONS (continued)
The Group’s interest in the assets and liabilities of individually immaterial Joint Operations are included in the Consolidated
Statement of Financial Position, under the following classifications:
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
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
Total non-current liabilities
Total liabilities
Net assets
2016
$’000
2015
$’000
947
12
730
6,259
493
-
1,689
6,752
22,315
17,920
22,315
17,920
24,004
24,672
259
259
10,100
10,100
1,028
1,028
232
232
1,287
10,332
22,717
14,340
Notes to the Consolidated Financial Statements AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 65
Section D – Other information
25. STATEMENT OF COMPLIANCE
24. CORPORATE INFORMATION
The Consolidated Financial Statements of AVJennings
Limited for the year ended 30 June 2016 were authorised
for issue in accordance with a resolution of the Directors
on 28 September 2016.
AVJennings Limited (the Parent) is a for-profit Company
limited by shares domiciled and incorporated in Australia
whose shares are publicly traded on the Australian Securities
Exchange and the Singapore Exchange through SGX
Globalquote. The ultimate parent is SC Global Developments
Pte Ltd, a company incorporated in Singapore which owns
50.03% of the ordinary shares in AVJennings Limited.
The Group (“AVJennings” or “Group”) consists of AVJennings
Limited (“Company” or “Parent”) and its controlled entities.
The nature of the operations and principal activities of the
Group are provided in the Directors’ Report.
These consolidated financial statements are general purpose
financial reports. They have been prepared in accordance
with Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards
Board, the Corporations Act 2001 and International Financial
Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB).
26. BASIS OF PREPARATION
These financial statements have been prepared on a going
concern basis, using historical cost convention. All figures in
the financial statements are presented in Australian dollars
and have been rounded to the nearest thousand dollars in
accordance with ASIC Corporations Instrument 2016/191,
unless otherwise indicated.
Where necessary, comparative information has been restated
to conform to the current year’s disclosures.
27. RELATED PARTY DISCLOSURES
(a) Ultimate parent
AVJennings Limited is the ultimate Australian parent entity. SC Global Developments Pte Ltd (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:
Fully paid ordinary shares
Owned by Directors directly,
or indirectly or beneficially
2016
Number
2015
Number
196,736,550
196,432,280
(c) Entity with significant influence over AVJennings Limited
192,318,030 ordinary shares equating to 50.03% of the total ordinary shares on issue (2015: 192,318,030 and 50.03%
respectively) were held by SC Global Developments Pte Ltd and its associates in the Parent Entity at 30 June 2016. Certain
Directors of SC Global Developments Pte Ltd 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
An impairment assessment is undertaken each reporting period to determine whether there is objective evidence that a related
party receivable is impaired. At 30 June 2016, there is no evidence of impairment and recoverability is considered probable
(2015: Nil).
Notes to the Consolidated Financial Statements
66 | AVJENNINGS LIMITED · ABN 44 004 327 771
27. RELATED PARTY DISCLOSURES (continued)
(e) Transactions with related parties
Entity with significant influence over the Group:
SC Global Developments Pte Ltd
Consultancy fee paid/payable
Joint Ventures:
Eastwood JV
Management fee received/receivable
Accounting services fee received/receivable
Dividends received
Distributions received
Woodville JV
Note
2016
$
2015
$
(i)
600,000
600,000
49,684
12,500
5,558,869
45,833
1,400,000
5,350,000
–
18,750,000
Accounting services fee received/receivable
16,500
30,000
Joint Operations:
Wollert JV
Planning services fee received/receivable
Management fee received/receivable
Accounting services fee received/receivable
Cheltenham JV
–
1,935,132
50,000
813,450
276,447
8,333
Accounting services fee received/receivable
–
24,000
(i) Consultancy fees paid to SC Global Developments Pte Ltd of $600,000 (2015: $600,000)
(f) Joint ventures and Joint operations in which related entities in the Group are venturers
Joint arrangements in which the Group has an interest are set out in notes 22 and 23.
(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
Non-current receivables
Joint Ventures
(h) Loans to and from related parties
Loan advanced
Joint Ventures
Loan received
Joint Ventures
2016
$’000
2015
$’000
1,600
1,753
1,601
276
1,119
181
2,978
2,978
Notes to the Consolidated Financial Statements
27. RELATED PARTY DISCLOSURES (continued)
(i) Remuneration of Key Management Personnel
Short-term
– Salary/Fees
– Accrued annual leave
– STI
– Other (1)
Post employment
– Superannuation (2)
Long-term
– Accrued Long service leave
Share-based payment
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 67
2016
$
2015
$
1,906,290
2,165,542
24,041
378,409
61,343
76,853
431,001
77,595
108,252
140,410
77,411
657,066
61,733
95,066
3,212,812
3,048,200
(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 Group does not contribute to any Defined Benefit Plans.
(j) 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.
28. 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
Expense reversed on forfeiture of shares
Total expense arising from share-based payment transactions
The share-based payment plan is described in note 28(b).
(b) Type of share-based payment plan
2016
$’000
925
(19)
906
2015
$’000
436
(326)
110
LTI awards are only made to executives who are in a position to have an impact on the Group’s performance and the creation
of shareholder value over the long term.
Notes to the Consolidated Financial Statements
68 | AVJENNINGS LIMITED · ABN 44 004 327 771
28. SHARE-BASED PAYMENT PLANS (continued)
(b) Type of share-based payment plan (continued)
(i) LTI and retention (current year and 2015)
With effect from FY15, LTI arrangements were varied and
remuneration is now provided by the Issue of Rights (instead
of shares) and includes a retention component. The use of
Rights as an incentive reduces the upfront cash requirements
of the Company (as shares do not need to be acquired
for allocations) and because participants do not receive
dividends on Rights (as distinct from shares).
The Total Shareholder Return (TSR) hurdle of the LTI
component was replaced by a Return on Equity (ROE) hurdle
which uses market capitalisation as a proxy for equity,
and is more appropriate from a shareholders’ perspective
as the required rates of return do not vary with “market”
performance. The ROE hurdle operates such that 50% vesting
occurs at an average annual return of 12% with 100% vesting
at an average annual return of 18%. The EPS hurdle remains
unchanged and is consistent with the FY14 and prior years’
LTI structure explained under LTI (FY14 and prior years)
below. The performance conditions will be tested at the end
of the three year vesting period and the number of rights
that may vest will depend on the level of average annual
returns achieved over that three year period. The service
rights are split into three tranches that progressively vest
each year subject to satisfaction of the service condition.
The CEO’s participation was determined as 40% (LTI) and
25% (Retention component) of TEC respectively.
The operation of the EPS, ROE and Retention hurdles are set
out below.
AVJennings’ EPS growth
rate over the three year
performance period
< 5%
5%
5% –10%
>=10%
Percentage of rights
vesting
Nil
50% of the allocation
for the hurdle
Pro-rata between
50% and 100%
100% of the allocation
for the hurdle
AVJennings’ ROE over the three
year performance period
Percentage of rights
vesting
<12%
12%
15%
>=18%
Nil
50%
75%
100% (Straight line
interpolation between
12% and 18%)
Retention component
– years of service
Percentage of rights
vesting
one year
two years
three years
Accounting
33.33%
33.33%
33.34%
The fair value of the rights at the date of the grant is
determined using an appropriate valuation model. The fair
value is expensed over the period in which the performance
and/or service conditions are fulfilled with a corresponding
increase in share-based payment reserve in equity. The
cumulative expense recognised for equity-settled transactions
at each reporting date until the vesting date reflects the
extent to which the vesting period has expired and the
Group’s best estimate of the number of equity instruments
that will ultimately vest. The expense or credit in the
Consolidated Statement of Comprehensive Income represents
the movement in cumulative expense recognised between the
beginning and end of that period.
(ii) LTI Awards (FY2014 and prior years)
The AVJ Deferred Employee Share Plan (the LTI Plan)
administers employee share schemes under which shares
were purchased on-market by the LTI Plan Trustee on behalf
of employees. These shares will vest to employees for no cash
consideration subject to certain conditions being satisfied.
Shares held by the LTI Plan’s trustee and not yet allocated
to employees are shown as treasury shares in the Financial
Statements.
Vesting is subject to both service and performance conditions,
except for the FY13 Delayed Grant which is only subject
to the service condition (see below). The service condition
requires the executive to be employed by the Company as
at 30 September in the third year after the grant date for
each grant. The performance conditions apply to each grant
– as to 50% as measured by the TSR hurdle and as to 50%
by the EPS hurdle. The two performance hurdles are tested
differently. The EPS hurdle is tested as at 30 June in the test
year (three years after grant). The TSR hurdle is tested at
30 September of the third year after grant.
The service vesting condition for the FY13 and FY14 Grants is
that the employee must still be employed by AVJennings at
30 September 2015 and 30 September 2016 respectively. In
the event of death, permanent disablement or retrenchment,
the shares may vest to the estate at the Board’s discretion.
If the employee resigns (in certain circumstances) or is
terminated, the unvested shares will be forfeited.
Notes to the Consolidated Financial Statements AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 69
28. SHARE-BASED PAYMENT PLANS (continued)
(b) Type of share-based payment plan (continued)
Summary of treasury shares
The following summarises the movement of the number of shares (both KMP and other executives) under the LTI Plan:
Purchased
on market
Issued
from holding
account
Forfeited and
transferred
to holding
account
Shares
vested
Unvested
shares
FY2011 Grant
FY2012 Grant
FY2013 Grant
FY2013 Delayed Grant
FY2014 Grant
FY2015 Rights Grant
FY2016 Rights Grant
Holding Account
1,375,452
1,695,735
293,913
–
856,505
–
–
–
–
–
(1,375,452)
–
(1,240,047)
(455,688)
–
(513,168)
(32,653)
(494,374)
–
–
–
–
(258,443)
(36,921)
1,314,732
–
–
(169,402)
(213,898)
–
–
219,255
527,027
753,591
169,402
213,898
(1,883,173)
2,906,595
–
1,023,422
Total
4,221,605
–
–
(1,883,451)
2,338,154
Summary of rights granted
The following is the status of rights granted (both KMP and other executives) from FY15 onwards under the restructured
share-based remuneration:
FY2015 Grant
FY2016 Grant
Total
Rights granted
Rights vested
Rights forfeited
Unvested rights
1,363,583
1,587,251
(169,402)
(213,898)
(164,666)
(104,413)
1,029,515
1,268,940
2,950,834
(383,300)
(269,079)
2,298,455
Notes to the Consolidated Financial Statements 70 | AVJENNINGS LIMITED · ABN 44 004 327 771
28. SHARE-BASED PAYMENT PLANS (continued)
(b) Type of share-based payment plan (continued)
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 for each grant is as follows:
FY2013 grant – 10% p.a. growth for the three financial years to 30 June 2015
FY2014 grant – 10% p.a. growth for the three financial years to 30 June 2016
Half of the allocation is assessed against each performance condition. The vesting schedule for the TSR and EPS performance
conditions are set out in the tables 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 at
30 September
Percentage
vesting
AVJennings’ EPS growth
rate over the performance
period
< median
At the median
Nil
50%
< 5%
5%
> median but < 75th percentile
Pro-rata between 50th
and 75th percentiles
5% – 10%
>=75th percentile
100%
>=10%
Percentage
vesting
Nil
50% of the allocation
for the hurdle
Pro-rata between 50%
and 100%
100% of the allocation
for the hurdle
Accounting
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 at the date when the grant is made is determined using an appropriate valuation
model. That fair value is expensed over the period in which the performance and/or service conditions are fulfilled with a
corresponding increase in share-based payment reserve in equity. The cumulative expense recognised for equity-settled
transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the
Group’s best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the Consolidated
Statement of Comprehensive Income represents the movement in cumulative expense recognised between the beginning and
end of that period.
In respect of shares forfeited, no further amounts are expensed. The cumulative amounts relating to non- market based
measures expensed to the date of forfeiture are reversed.
There is no non-recourse financing provided to executives in relation to any share-based payments.
Notes to the Consolidated Financial Statements
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 71
29. AUDITOR’S REMUNERATION
Ernst & Young
Audit and assurance services
– Audit and review of the financial reports of the Group
– Share of audit and review costs of the financial reports of the Group’s joint ventures
Non-assurance services
Total auditor’s remuneration
30. EARNINGS PER SHARE
2016
$
2015
$
282,014
2,624
264,288
–
–
128,190
284,638
392,478
Basic EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the Parent by the weighted
average number of ordinary shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit attributable to ordinary equity holders of the Parent by the sum of
the weighted average number of ordinary shares outstanding during the year (adjusted for treasury shares) and the weighted
average number of ordinary shares, if any, that would be issued on conversion of all the dilutive potential ordinary shares into
ordinary shares.
The following reflects the income and share data used in the basic and diluted EPS computations:
Profit attributable to ordinary equity holders of the parent
40,912
34,385
2016
$’000
2015
$’000
Weighted average number of ordinary shares
Treasury shares
2016
Number
2015
Number
384,423,851
384,423,851
(2,338,154)
(3,502,401)
Weighted average number of ordinary shares for EPS
382,085,697
380,921,450
Notes to the Consolidated Financial Statements 72 | AVJENNINGS LIMITED · ABN 44 004 327 771
31. 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
Contributed equity
Reserves
Share-based payment reserve
Retained earnings
Total equity
Profit for the year
Total comprehensive income
2016
$’000
2015
$’000
52,745
216,031
51,839
215,125
6
6
6
6
160,436
160,436
2,189
53,400
1,283
53,400
216,025
215,119
–
–
–
–
(b) Guarantees entered into by the Parent Entity
The Parent Entity has not provided any financial guarantees other than those mentioned in notes 12(a), 12(c) 21(c) and 33.
(c) Contingent liabilities of the Parent Entity
Please refer to note 33 for details of the Parent Entity’s contingent liabilities.
32. COMMITMENTS
Operating lease commitments – Group 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
2016
$’000
2015
$’000
2,080
2,382
4,462
4,210
252
4,462
1,867
691
2,558
2,268
290
2,558
Notes to the Consolidated Financial Statements AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 73
33. CONTINGENCIES
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 21(c).
Contract performance bond facilities
The Parent Entity has entered into Deeds of Indemnity with various controlled entities to indemnify the obligation of those
entities in relation to the Contract performance bond facilities. Details of these entities are set out in note 21. Contingent
liabilities in respect of certain performance bonds, granted by the Group’s financiers, in the normal course of business as at
30 June 2016 amounted to $22,239,000 (2015: $21,134,000). 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 Group’s results.
Secured
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 21.
Performance guarantees
Contingent liabilities in respect of certain performance guarantees, granted by the Group bankers in the normal course of
business to unrelated parties, at 30 June 2016, amounted to $8,724,000 (2015: $6,977,000). No liability is expected to arise.
Financial guarantees
Financial guarantees granted by the Group’s bankers to unrelated parties in the normal course of business at 30 June 2016,
amounted to $5,593,000 (2015: $2,801,000). No liability is expected to arise.
34. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE
Subsequent to 30 June 2016, the Group has extended its Club Borrowing Facility expiry date from 30 September 2017 to
30 September 2018.
No other matter or circumstance has arisen since 30 June 2016 that has significantly affected, or may significantly affect:
a) the Group’s operations in future financial years; or
b) the results of those operations in future financial years; or
c) the Group’s state of affairs in future financial years.
35. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
The new and amended standards adopted by the Group for the year ended 30 June 2016 have not had a significant impact on
the current period or any prior period and are not likely to have a significant impact on future periods.
Certain new accounting standards have been published that are not mandatory for the year ended 30 June 2016 and have not
been adopted early by the Group. The Group’s assessment of the impact of these new standards is set out below:
AASB 9 Financial Instruments (effective 1 January 2018 / applicable for the Group 1 July 2018 with early adoption permitted)
AASB 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities. The Group
does not expect a material impact to the Group’s accounting for financial instruments.
AASB 15 Revenue from Contracts with Customers: (effective 1 January 2018 / applicable for the Group 1 July 2018 with early
adoption permitted)
AASB 15 Revenue from Contracts with Customers establishes a comprehensive framework for determining whether, how much
and when revenue is recognised. It replaces existing revenue recognition guidance, including AASB 118 Revenue and AASB
111 Construction Contracts. The new standard is unlikely to have a material impact on land and built form revenue as the
performance obligation is delivering the completed product. AVJennings is assessing the potential impact on its consolidated
financial statements resulting from the application of AASB 15.
The Group has not yet decided when to adopt AASB 15.
AASB 16 Leases: (effective 1 January 2019 / applicable for the Group 1 July 2019 with early adoption permitted if AASB 15 is
also adopted)
AASB 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases. This standard will
predominantly affect lessees, bringing all major leases on balance sheet. AVJennings is assessing the potential impact on its
consolidated financial statements resulting from the application of AASB 16.
The Group has not yet decided when to adopt AASB 16.
Notes to the Consolidated Financial Statements 74 | AVJENNINGS LIMITED · ABN 44 004 327 771
36. OTHER ACCOUNTING POLICIES
Significant accounting policies relating to particular items are set out in the relevant notes. Other significant accounting
policies adopted in the preparation of the financial report are set out below.
a) Basis of consolidation
The Consolidated Financial Statements comprise the financial statements of AVJennings Limited and its subsidiaries as at
30 June 2016. Subsidiaries are entities over which the Group has control. Control is achieved when the Group is exposed to,
or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power
to direct the activities of the entity. Subsidiaries are consolidated from the date on which control is transferred to the Group
and deconsolidated from the date control ceases.
The financial statements of subsidiaries are prepared for the same period as the Parent, adopting consistent accounting
policies. All intra-group assets and liabilities, equity, income, expenses and cash flows are fully eliminated in preparing the
consolidated financial statements.
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.
b) Business combinations
Business combinations are accounted for using the acquisition method. This involves recognising at acquisition date, separately
from goodwill, the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The
identifiable assets acquired and the liabilities assumed are measured at their acquisition date fair values. Acquisition-related
costs are expensed as incurred.
c) Leases
Leases where the Group, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases.
The Group did not have any finance leases at the year end.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee, are
classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are
recognised as an expense on a straight-line basis over the period of the lease.
Lease income from operating leases where the Group is a lessor is recognised in income on a straight-line basis over the lease
term. The respective leased assets are included in the Consolidated Statement of Financial Position based on their nature.
d) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except:
• when the GST incurred on a sale or purchase of assets or services is not payable to or recoverable from the taxation
authority, in which case the GST is recognised as part of the revenue or as part of the cost of acquisition of the asset or the
expense item as applicable
receivables and payables, which are stated with the amount of GST included.
•
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. Commitments and contingencies are disclosed net of the amount of GST
recoverable from, or payable to, the taxation authority.
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.
e) Foreign currency translation
(i) Functional and presentation currency
The Group’s functional and presentation currency is Australian Dollars.
(ii) Translation of Group Companies’ functional currency to presentation currency
The results and financial positions 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 Statement of Financial Position presented are translated at the closing rate at the date of that
Statement of Financial Position;
income and expenses for each Statement of Comprehensive Income are translated at average exchange rates; and
•
• 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 operation 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.
Notes to the Consolidated Financial Statements Directors’ Declaration
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 75
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 Group’s financial position as at 30 June 2016 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 25; 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 2016.
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 Group identified in note 21 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
28 September 2016
Peter Summers
Director
76 | AVJENNINGS LIMITED · ABN 44 004 327 771
Independent auditor’s report to the shareholders
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 2016, the
consolidated statement of 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 25, 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 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.
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 2016 and
of its performance for the year ended on that date;
and
ii
complying with Australian Accounting Standards
and the Corporations Regulations 2001 ; and
b. the financial report also complies with International
Financial Reporting Standards as disclosed in Note 25.
Report on the remuneration report
We have audited the Remuneration Report included in pages
11 to 22 of the directors’ report for the year ended 30 June
2016. 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 2016, complies with section 300A
of the Corporations Act 2001.
Ernst & Young
Mark Conroy
Partner
Sydney
28 September 2016
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 77
Shareholder Information
As at 21 September 2016
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
SC Global Developments Pte Ltd
IOOF Holdings Limited
Australian
Securities
Exchange
Singapore
Exchange
Total
597
840
343
573
110
2,463
387
587
1,601
500
457
32
3,177
283
1,184
2,441
843
1,030
142
5,640
670
Ordinary
Shares
192,318,030
43,897,871
%
50.03
11.42
78 | AVJENNINGS LIMITED · ABN 44 004 327 771
Shareholder Information
As at 21 September 2016
3. TWENTY LARGEST SHAREHOLDERS ON THE AUSTRALIAN REGISTER
Name
The Central Depository (Pte) Ltd
JP Morgan Nominees Australia Ltd
HSBC Custody Nominees (Australia) Ltd
Citicorp Nominees Pty Ltd
BNP Paribas Nominees Pty Ltd
National Nominees Ltd
John E Gill Trading Pty Ltd
John E Gill Operations Pty Ltd
Citicorp Nominees Pty Limited
Pacific Custodians Pty Ltd
Gillcorp Pty Limited
HSBC Custody Nominees (Australia) Ltd
Luton Pty Ltd
Horrie Pty Ltd
Brazil Farming Pty Ltd
HSBC Custody Nominees (Australia) Ltd - A/c 3
Gillcorp Pty Limited
IQ Rental & Finance Pty Ltd
Jilliby Pty Ltd
D R M Gill & J M Gill (Gill Super Fund A/c)
Ordinary
Shares
%
224,606,708
58.43
17,141,352
15,797,219
12,203,201
10,112,765
9,098,546
5,648,712
5,459,927
4,986,022
4,927,433
4,738,416
2,917,753
2,700,000
2,670,000
2,600,000
1,647,210
1,475,123
1,290,000
1,250,000
1,242,832
4.46
4.11
3.17
2.63
2.37
1.47
1.42
1.30
1.28
1.23
0.76
0.70
0.69
0.68
0.43
0.38
0.34
0.33
0.32
Total
332,513,219
86.50
AVJENNINGS LIMITED · ANNUAL REPORT 2016 | 79
Shareholder Information
As at 21 September 2016
4. TWENTY LARGEST SHAREHOLDERS ON THE SINGAPORE REGISTER
Name
UOB Nominees (2006) Pte Ltd
United Overseas Bank Nominees Pte Ltd
Trimount Pte Ltd
Oei Hong Leong Foundation Pte Ltd
DBS Nominees Pte Ltd
UOB Kay Hian Pte Ltd
Lim Chin Tiong
Tsang Sze Hang
Rowland Wong Kwok Ho
Vesmith Investments Pte Ltd
OCBC Nominees Singapore Pte Ltd
Pansbury Investments Pte Ltd
Raffles Nominees (Pte) Ltd
Hexacon Construction Pte Ltd
Citibank Nominees Singapore Pte Ltd
Chng Bee Suan
Teo Chiang Long
HSBC (Singapore) Nominees Pte Ltd
Wee Kim Choo @ Elizabeth Sam
Lim Kong Wee
Total
Ordinary
Shares
%
179,235,872
46.62
12,003,929
1,659,940
1,462,112
1,366,246
1,283,345
1,158,220
837,396
748,833
634,876
605,517
496,160
485,932
368,480
349,364
322,320
250,648
225,953
209,349
200,974
3.12
0.43
0.38
0.36
0.33
0.30
0.22
0.19
0.17
0.16
0.13
0.13
0.10
0.09
0.08
0.07
0.06
0.05
0.05
203,905,466
53.04
Percentages are calculated on the total number of shares on issue.
5. VOTING RIGHTS
Ordinary Shareholder
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 Securities Exchange is 384,423,851.
80 | AVJENNINGS LIMITED · ABN 44 004 327 771
Company Particulars
DIRECTORS
Mr Simon Cheong
Mr Jerome Rowley
Mrs Elizabeth Sam
Mr Bobby Chin
Mr Lai Teck Poh
Mr Bruce Hayman
Mr David Tsang
Mr Peter Summers
COMPANY SECRETARY
Mr Carl Thompson
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
SHARE REGISTRY
Australia
Link Market Services Ltd
Tower 4
727 Collins Street, Docklands Vic 3008
Telephone: +61 1300 554 474
Singapore
The Central Depository (Pte) Ltd
11 North Buona Vista Drive #06-07
The Metropolis Tower 2
Singapore 138589
Telephone +65 6535 7511
ANNUAL GENERAL MEETING
The Annual General Meeting of the Company
will be held at:
Westin Room IV
The Westin Melbourne
205 Collins Street
Melbourne Vic 3000.
Friday, 18 November 2016 at 10.00 a.m.
DIVIDENDS
Commonwealth Bank of Australia Ltd (Bankwest Division)
DBS Bank
HSBC Bank Australia Ltd
United Overseas Bank Ltd
Dividends paid in the year under review:
Final Dividend of $0.03 for FY15 paid on 23 September 2015
Interim Dividend of $0.015 for FY16 paid on 15 April 2016
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
11 North Buona Vista Drive #06-07
The Metropolis Tower 2
Singapore 138589
through SGX Globalquote (formerly known as the Central
Limit Order Book System (CLOB)).