AVJennings Annual Report 2021

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FY2021 Annual Report · AVJennings

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Annual Report 2021

AVJennings Limited
ABN 44 004 327 771

Housing matters.
Community matters.

*Voted by Australians. Winner, Trusted Brand
2021 Reader’s Digest Property Developers.

AVJennings Limited - Annual Report 20213

Contents.

COMPANY OVERVIEW
Chairman’s Report
2021 Highlights
Property Portfolio
Project Pipeline
Chief Executive Officer’s Report
Our Communities

GOVERNANCE & SUSTAINABILITY
Corporate Governance
Your Community Developer
Creating and Supporting Communities

DIRECTORS’ REPORT
Directors’ Report

5
6
8
9
10
12

15
18
24

FINANCIAL STATEMENTS
52
Consolidated Statement of Comprehensive Income
53
Consolidated Statement of Financial Position
54
Consolidated Statement of Changes in Equity
55
Consolidated Statement of Cash Flows
56
Notes to the Consolidated Financial Statements
Directors’ Declaration
101
Independent Auditor’s Report to the Members of AVJennings Limited 102

ADDITIONAL INFORMATION
Shareholder Information
Company Particulars

107
110

COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited - Annual Report 20214

Lyndarum North, Wollert, VIC

We believe our
traditional housing
and community
focus will prove a
significant strength
moving forward
as customers look
for more space,
connectedness and
community feeling.

AVJennings Limited - Annual Report 2021Chairman’s Report.

Dear fellow shareholders, on behalf of
the Board of Directors, I am pleased to
present our 2021 Annual Report.

Financial year 2021, the 89th year in
AVJennings’ proud history, continued
to be dominated by the impact of the
COVID-19 pandemic. From the outset,
safety remained the number one priority
for AVJennings’ Board and Management.
This not only relates to the safety of
our staff, customers, suppliers and the
community, but also the economic safety
of the Company. Few people or companies
were immune to the threats posed by the
pandemic. However, we were also aware
that the Company had to remain open and
operational to meet the important needs
of our valued customers who continued to
engage and purchase.

The progressive balancing of our business
required significant flexibility in strategy
and implementation. I am proud of how
we have managed these challenges. I
would also like to take the opportunity to
congratulate the management team and
all staff on successfully navigating through
these extraordinary challenges and
acknowledge the remarkable strength and
dedication they demonstrated.

When we entered into financial year 2021,
our presales provided us some financial
certainty as well as motivation to ensure
our customers’ dreams were met. Beyond
that, there is no doubt the industry faced
short term challenges, not because of the
lack of demand, but because of the risk
that prospective customers would defer
decisions to purchase a home during a
pandemic. Just as JobKeeper enabled
companies to sustain their business and
keep people employed, HomeBuilder acted
as a stimulus to encourage people to
continue to transact.

Improved profitability and balance sheet
strength, and strong contract signings
achieved, underpinned a quality set
of financial results. Despite short term
lockdown challenges, the Board is
optimistic that a more normal future can
be achieved as vaccination programs roll

out, and declared a final dividend of 1.8
cents per share fully franked. This brings
total dividends declared, fully franked, in
respect of financial year 2021 to 2.5 cents
per share, compared to a total 1.2 cents per
share for financial year 2020.

Looking ahead, while the global pandemic
remains an ongoing challenge, the
world is moving towards a more positive
environment as countries are better placed
to tackle the coronavirus and vaccination
programs are rolled out. The continuing
strength of the residential market since the
end of initiatives such as JobKeeper and
HomeBuilder is encouraging and consistent
with our previously stated belief that
underlying fundamentals for residential
property remain strong.

We entered financial year 2021 with a
strong balance sheet and our focus on
protecting that strength sees us very well
placed for future growth. Competition for
sites is considerable but we are confident
we will be able to add new projects to our
portfolio throughout the current financial
year and increase our landbank.

The Board continues to monitor and be
advised by Management on the changing
landscape. This not only relates to short
term changes caused by snap lockdowns,
but also long term changes such as buyer
preferences. We believe our traditional
housing and community focus will prove
a significant strength moving forward
as customers look for more space,
connectedness and community feeling. The
shift to greater workplace flexibility and
working from home will also see a positive
change in lifestyle preferences suited to
our markets. To ensure we are even better
placed to benefit from this, the team is
proactively focusing on innovation.

I would like to thank our Directors for their
continuing guidance and dedication that
has been extraordinary during these
challenging times. I would also like to
welcome Lisa Chung AM to our Board of
Directors. Lisa was appointed on
1 June 2021 as a Non-Executive Director
and Member of the Risk Management

Committee. Lisa had a successful 30 year
career in the legal profession and brings
to the Company considerable board and
senior level experience in commercial
property, urban development and
infrastructure sectors.

Finally, a sincere thank you to our
management, employees, partners,
shareholders and customers for their
continued invaluable commitment and
support in AVJennings as it heads into its
90th year.

Simon Cheong
Chairman

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION6

2021 Highlights.

Traditional
Markets.

Revenue

$311.1m

up $48.7m

18.6% (cid:31)

Proﬁt before tax

Quality
Asset Base.

Under
control

12,180 lots

(Includes land under option)

Net funds employed
spread geographically.

Work in
progress

1,537lots

$26.7m

102.7% (cid:31)

up$13.5m

Cash receipts
from customers

$331.1m

YOY Comparison

Total revenue

Statutory profit before tax

Statutory profit after tax

Gross margins

Net tangible assets (NTA)

NTA per share

EPS (cents per share)

Dividend fully franked (cents per share)

Strong
Stability.

Total fully franked
dividends

2.5 cps

Net debt

$125.4m

Gearing

20.1%

(inside 15-35% target range)

FY21

$311.1m

$26.7m

$18.7m

22.6%

FY20

$262.4m

$13.2m

$9.0m

22.8%

$406.3m

$390.3m

$1.00

4.62

2.5

$0.96

2.23

1.2

Change

18.6%

102.7%

107.0%

(0.2)pp

4.1%

4.3%

107.2%

108.3%

AVJennings Limited - Annual Report 20212021 Highlights.

Contract signings (Lots)

953

697

519

FY19
FY19

FY20
FY20

FY21
FY21

37% growth in contracts signed
provides a solid platform for
future earnings.

Results Summary

Settlements (lots)
Settlements (Lots)

905

827

Revenue ($m)
Revenue ($m)

Contract signings ($m)
Contract signings ($m)

311.1

262.4

327.7

241.2

FY20
FY20

FY21
FY21

FY20
FY20

FY21
FY21

FY20
FY20

FY21
FY21

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
8

Property Portfolio.

Number of lots at 30 June 2021.

6,000

5,000

4,000

3,000

2,000

1,000

5,763*

2,319

1,516

1,843

VIC

QLD

NSW

605

134

*includes 3,500 lots at Caboolture (under option).

Net funds employed by region.

PCP
21%

QLD
19%

PCP
1%

WA
2%

PCP
9%

SA
7%

PCP = Prior corresponding period (FY20).

PCP
26%

NSW
26%

PCP
17%

NZ
20%

PCP
26%

VIC

VIC
26%

AVJennings Limited - Annual Report 2021
Project Pipeline.

At 30 June 2021.

Pre-delivery phase

Development phase

Region Communities

Remaining

no. of lots.

Pre

FY2022

FY2023

FY2024

FY2025

Post

Argyle, Elderslie

Evergreen, Spring Farm (South)

Evergreen, Spring Farm (East Village)

Arcadian Hills, Cobbitty

Arcadian Grove, Cobbitty

Rosella Rise, Warnervale

Evergreen, Spring Farm

Prosper, Kogarah

Huntley

Calderwood

Creekwood, Caloundra

Glenrowan, Mackay

Essington Rise, Leichhardt

Parkside, Bethania

Anise, Bridgeman Downs

Arbor, Rochedale 2

Riverton, Jimboomba

Deebing Springs, Deebing Heights

S
E
L
A
W
H
T
U
O
S
W
E
N

D
N
A
L
S
N
E
E
U
Q

Arbor, Rochedale 1

Cadence, Ripley

Ripley 3

Caboolture, Rocksberg

Z
N

Ara Hills, Orewa

A
R
O
T
C
V

H
T
U
O
S

A
I
L
A
R
T
S
U
A

Lyndarum, Wollert

Lyndarum North, Wollert JV

Aspect, Mernda

Harvest Square, Brunswick

Waterline Place, Williamstown

Pathways, Murray Bridge

Riverhaven, Goolwa North

St Clair

Eyre, Penfield

Subiaco Fine China Precinct

Viridian China Green,

A Indigo China Green,
I
L
A
R
T
S
U
A
N
R
E
T
S
E
W

The Heights, Kardinya

Parkview, Ferndale

Subiaco Fine China Precinct

Excludes 14 remnant lots.

416

518

194

390

177

1,066

205

233

449

3,500

605

1,682

238

217

172

1,238

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION

Chief Executive Officer’s
Report.

It is understandable that, especially for
a listed company, the main focus of the
annual reporting process, including the
Annual Report, is on profitability. In reality,
profitability is an outcome. It reflects
market conditions, a company’s strategy,
including its approach to risk, as well as its
ability to execute effectively.

Despite early 2020 showing signs of a
market recovery, the onset of the COVID-19
pandemic made short term profitability
more challenging. Risks changed
and priorities and strategies changed
accordingly.

Whilst prioritising safety and security, it
was pleasing to achieve revenue growth
of 18.6% to $311.1 million, assisted by
revenue recognition for GEM apartments
at Waterline Place, Williamstown in
Victoria, and the first stage of Ara Hills,
Auckland. We also saw an increase in our
contract signing numbers in financial year
2021 with 953 ($327.7 million) contracts
signed, compared to the prior year of 697
contracts ($241.2 million).

There is no doubt the Federal Government
HomeBuilder scheme helped maintain
revenue and contract signing levels during
the challenging times. But as the year
progressed, it was the recovering economy
and residential market fundamentals that
came to the fore. We have seen property
markets remain strong beyond the end of
various government stimulus programs,
although recent and snap lockdowns
remind us of the ongoing uncertainty and
need to remain alert and flexible.

Margins remained stable overall. In the
early stages of the pandemic there was
minor discounting of selling prices, but
overall prices held and even increased
as the year progressed. Against this
we have seen the inflationary impact of
HomeBuilder. As the scheme had timing
deadlines for contract signing and
commencement of construction to qualify,
this pushed a number of transactions into
a shorter timeframe than may otherwise
have been the case. There have also
been price increases due to shortages

of materials such as steel and timber.
The result also included $1.8 million in
additional inventory provision largely
relating to two South Australian projects.

Changes to the Company’s operating
structure during the 2020 financial
year, including moving to a national
structure, continue to be beneficial to both
operational decision making, flexibility
and efficiency. In the 2021 financial
year, overheads excluding the effect of
JobKeeeper payments, reduced by
$1.5 million.

From the onset of the pandemic, the
Company strongly focused on liquidity
and balance sheet stability. Net cash from
operations was a positive $64 million in
the 2021 financial year, well up on the prior
financial year’s positive $10.6 million. The
improved cash position was assisted by
solid settlements of 905 lots (827 in 2020
financial year).

Our balance sheet strength continues.
Gearing at 20.1% remains within our target
range of net debt to assets of 15 – 35%, a
significant decrease on the financial year
2020 level at 28.1%.

It is important for future results to have
both advanced projects already under
control as well as to continue acquiring
new sites.

The year saw many accomplishments
which will be important for future
operations and results. We have
commenced development at Rosella Rise,
Warnervale on the Central Coast of NSW,
a strong growth region which will benefit
from changing customer preferences
seeking more space, a greater sense of
connectivity and community and a more
balanced lifestyle, aided by more flexible
working arrangements.

In Victoria, our Aspect project at Mernda
in Melbourne’s strong northern growth
corridor is also underway, and we have
progressed plans for the newest and
largest apartment building at Waterline
Place in Williamstown, Victoria.

My lasting memory
of financial year
2021 without a
doubt is of people.

We have also made good progress in
relation to obtaining necessary approvals
for Rocksberg, Caboolture in Queensland,
and Calderwood, in New South Wales.

The early stages of the pandemic saw the
Company initially wind back production
levels, with a focus on projects where
pre-sales existed, so we could meet the
expectations and dreams of our customers.
Once the first lockdowns eased we quickly
and efficiently increased our production
levels. At 30 June, 2021 we had 1,537 lots
under development. This scaling down and
then up of our production was aided by our
horizontal business model.

The 2021 financial year also saw an
increase in the amount of housing
constructed in our projects. Our internal
building capabilities are a critical part of
our strategy, enabling us to better meet
the challenges of affordability faced by
our customers, as well as to maximise
returns from our investment in projects. Of
course building extends the timelines to
profit recognition, so the benefits of scaling
up will mainly be experienced in future
periods.

AVJennings Limited - Annual Report 202111

Due to the decision to prioritise
balance sheet strength we put a hold
on acquisitions until late into the 2020
calendar year. We have returned solidly
into acquisition mode and with our strong
balance sheet, are aiming for successful
outcomes in this area.

Whilst all at AVJennings are proud of the
financial outcomes for the year, both in
terms of profitability and balance sheet
strength, my lasting memory of financial
year 2021 without a doubt is of people.
I took enormous pride in seeing how they
lived our values in such extraordinary
times and circumstances. I received more
correspondence from customers than ever
before saying how wonderful AVJennings
staff had been in helping them achieve
their dreams. Even when issues arose, as
they invariably do when it is so difficult
to move around, they were dealt with
professionally, in a caring manner and
with brilliance.

We were proud to continue to support
our suppliers, business and community
partners, and to continue to play a vital
role in a vital industry that impacts the
lives of all of us. Indeed, Housing Matters,
Community Matters.

And we can look forward confidently to
the future, knowing we have built on the
legacy that past has created.

In such a difficult year, I thank everyone
for their continued efforts and support.

Equally, we appreciated their support of
us. We especially appreciated the support
and trust of our customers.

We have also continued our journey
along the Environmental, Sustainability
and Governance (ESG) path, listening,
learning, changing and leading. We have
always been committed to the principles
and to being not only a better company,
but a great company.

As we enter our 90th year in 2022,
we can proudly look back on the first
89 years. Those years have seen the
Company not only survive, but prosper,
through recessions, wars and now a
global pandemic. Indeed the Company
was founded in 1932, during the Great
Depression.

Peter Summers
Chief Executive Officer

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION12

Our Communities.

New South Wales.

New South Wales experienced strong
market conditions in FY21 and we expect
demand to further improve in a COVID-19
recovery phase for our quality homes in
our local residential communities. Rosella
Rise at Warnervale is our new community
within the Central Coast. The first stage
of the project will title in FY22 and we
also see the opening of 4 new AVJennings
display homes this year. At Evergreen
(Spring Farm) and Arcadian Hills (Cobbitty)
projects where there is a mix of built form
and land development, we expect strong
demand to continue through FY22. At
Evergreen we will be opening our newest
park, located in Stage 7, in second quarter
FY22.

Queensland.

Queensland had a strong year with our
Anise and Parkside projects now sold
out and construction to be complete
on both projects in FY22. Creekwood
(Caloundra) will also trade out in FY22, a
significant milestone for the QLD business.
Riverton (Jimboomba) and Cadence
(Ripley) developments have moved into
full production with a mix of land and
housing options to be delivered across both
projects. These projects are set to continue
to drive results for the business in the
coming financial years. The development
of key community parks across both
developments are underway. Planning
work on the Caboolture project continues
with significant master planning work
completed in FY21.

New Zealand.

In FY21 AVJennings closed out the
majority of our obligations at Hobsonville
Point. We are extremely proud of our
involvement in the development of this
market leading, award winning project.
Our focus has moved to Ara Hills in Orewa,
north of Auckland, where the Stage 1 land
development was successfully completed
in FY21 and we will release to market
and commence construction on our next
stages (2 & 3) in FY22. We look forward to
welcoming our first residents to the Ara
Hills community with housing construction
underway in stage 1. We will also open the
first section of the extensive open space
network this year.

Evergreen, Spring Farm, NSW

Cadence, Ripley, QLD
Artist Impression

Ara Hills, Orewa, NZ

AVJennings Limited - Annual Report 2021Eyre Sports Park, Eyre, SA

Waterline Place, Williamstown, VIC

South Australia.

In South Australia we have seen buyers
attracted to the quality land developments
and built form that AVJennings is known
for. Our Eyre residential community stands
apart from other developments with the
amenity created in the development
delivered upfront. FY22 will see an increase
in the number of quality affordable
AVJennings built homes to be released as
our built form program ramps up. At St
Clair, town home construction continues on
the sold out Piper townhomes. Design and
planning on future releases is underway.
We are also focused on returning capital
from older projects with development in
FY21 at Pathways (Murray Bridge) and
Riverhaven (Goolwa North). On both
projects we are forecasting to commence
development of the final stages in FY22.

Victoria.

In August 2020 Lyndarum North (Wollert)
sold its 500th lot, a significant milestone
for the development. Residents continue to
move into this master planned community
taking advantage of the high quality parks
and diversity of housing choices. At Aspect
(Mernda) sales and construction on this
230 lot development will commence in
FY22. Brunswick West (Harvest Square)
public housing renewal project will see
construction commencement in FY22 and
the release of the project to market in FY22.
The award-winning Waterline Place at
Williamstown saw the completion of
the Empress Apartments and Bower
townhomes in FY21 backed by strong
sales in both projects and we now have
construction underway for the Piper
Townhomes which has achieved strong
early sales. The Merchant Apartments, the
last apartment building for the Waterline
Precinct, will be released in FY22.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION14

Arcadian Hills, Cobbitty, NSW

AVJennings Limited - Annual Report 2021Corporate Governance.

At AVJennings, we are committed to high standards of corporate governance, so that
our decisions and actions are based on transparency, integrity and responsibility to
promote long term sustainability and the on-going success of our business.

The AVJennings Board.

The Board is responsible for the business
strategy, direction, overall corporate
governance and performance of the
Company. It is accountable to our various
stakeholders which includes, among
others, our shareholders, employees,
customers, regulators, suppliers and the
communities in which we operate.

The Board currently comprises of eight
Non-Executive Directors and one Executive
Director. Particulars of Directors’ skills and
qualifications are set out in the Directors’
Report section of the Company’s 2021
Annual Report. Core skills and attributes
identified as desirable of Directors include
industry experience, risk management,
compliance oversight, development of
strategy and policy, financial literacy,
skills and experience in banking and
finance, sales and commercial. These
skills are collectively available on the
Board and it seeks to achieve a balance in
its structure that best reflects the needs of
the Company at any particular time.

Tenure
As at 30 June 2021, the tenure profile of
the Board was as follows:
0-1 year
1 – 4 years
5 – 10 years
> 10 years

= 1 Director
= 1 Director
= 2 Directors
= 5 Directors

The Board believes that maintaining a
range of director tenures is important to
facilitate orderly board renewal, whilst
maintaining continuity and corporate
knowledge among directors.
A new Director, Ms Lisa Chung, was
appointed to the Board on 1 June 2021.

Director Independence
Directors are required to ensure that they
immediately advise the Board of any
relevant, new or changed relationships,
to enable the Board to consider and
determine the materiality of those
relationships. The Board regularly
assesses the independence of each
Director in light of these disclosures and
other factors to determine if requirements
for independence are satisfied. Based on
these reviews, the Board has determined
that six of the eight Non-Executive
Directors are independent.

Board Committees
To assist it with carrying out its
responsibilities, the Board has established
the following Committees:
•
•
•
•
•

Audit
Nominations
Remuneration
Investments
Risk Management (incorporating
a Workplace Health, Safety and
Environment sub-committee)

Each Committee has a charter that
governs its area of responsibility. Board
and Committee charters are published
in the investor section of the AVJennings
website, www.avjennings.com.au.

AVJennings also publishes a
comprehensive Corporate Governance
Statement annually in accordance with
the ASX Corporate Governance Principles,
which sets out in detail how compliance
with governance and risk management
obligations are met.

Risk Management.

The Board recognises that risk is an
inherent part of AVJennings’ business.
Identification and management of risk
is central to delivering AVJennings’
strategic and operational objectives.
Risk may manifest in many forms and
have potential to impact AVJennings
in areas such as health and safety,
environment, community, reputation,
regulatory, operational, and information
technology as well as market and financial
performance. The Board recognises that
understanding and managing risks within
sensible tolerances is fundamental to
creating long-term value for AVJennings’
shareholders, financiers, customers,
business partners, consultants, and the
communities in which it does business.

Risk Oversight, Monitoring and
Management
Responsibility for the AVJennings risk
management framework rests with
the Board, which sets the overall risk
culture and determines the appropriate
level of risk the Company is willing to
accept. It oversees the establishment
and implementation of a sound risk
management system and periodically
reviews its effectiveness. The Risk
Management Plan is the primary
mechanism to bring corporate, business
and operational/functional strategies
together, and to ensure appropriate risk
mitigation initiatives are implemented.
The plan is reviewed annually by the Risk
Management and Audit Committees and
approved by the Board.

COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited - Annual Report 2021

AVJennings Risk Oversight & Governance Framework

Board

Audit Committee &
Risk Management Committee
(100% independent)

CEO & Senior Executive Team

Line Managers & Supervisors

Internal Audit
function

Employees

External Audit
function

Roles and Responsibilities

The Risk Management Committee is
responsible for:
•

Reviewing the risk profile of the
Company to ensure that risk is
not higher than the risk appetite
determined by the Board.
Ensuring that the Company is taking
appropriate measures to achieve a
prudent balance between risk and
reward in both ongoing and new
business activities.
Assisting the Board in setting risk
strategies, polices, frameworks,
models and procedures in liaison with
management.

•

• Overseeing implementation of the risk

management framework.

• Monitoring work health & safety, the

Company’s treasury function and
insurance program.

The Audit Committee is responsible for:
• Overseeing reviews of activities to
determine the effectiveness of risk
management and internal control
processes.

•

Ensuring that staff understand their
responsibilities with respect to risk
management; and
Fostering a risk-aware culture within
their area of responsibility.

•

• Overseeing the performance of the
Internal and External Auditors.
Reviewing the Company’s full and
half year disclosures.
Reviewing the Company’s tax regime
and associated compliance.
Reviewing related party transactions.

•

The CEO and members of the Senior
Executive Team are responsible for:
Supporting the ongoing
•
implementation of risk management
in all areas of the Company’s
operations.
The identification, analysis,
treatment, monitoring and evaluation,
and reporting of significant risks in
relevant portfolios and organisational
units.

•

Line Managers and supervisors will ensure
that staff within their areas understand
their responsibilities in fostering a risk-
aware culture and in implementing risk
management practices.

All employees have a significant role in the
management of risk within their area of
responsibility.

The Internal Auditor:
• Operates under the Internal Audit

Plan, Risk Management Plan, Fraud
Risk Assessment & Management Plan
approved by the Audit Committee.

• Operates independent of

management and reports to the Audit
Committee.

AVJennings Limited - Annual Report 2021
17

Interactions were further supported by
increased email communication, online
content and support, including an online
chat function.

With the gradual lifting of restrictions,
staff members were allowed to return to
the office with appropriate hygiene, social
distancing and other safety measures in
place.

COVID-19 Response

The Risk Management Committee met
fortnightly in response to the COVID-19
pandemic crisis over the period March
to June 2020 to oversee initiatives
implemented by senior management,
from both a safety and operations
perspective, in response to the crisis.
These initiatives continued to apply in FY21
as the ongoing effects of the pandemic
were felt, with intermittent lockdowns and
border closures ordered by state and
federal governments in Australia and New
Zealand.

•

With the safety of our people, customers,
suppliers and the wider community in
mind, several initiatives were adopted,
which included:
•

Fast tracking flexible and remote
working arrangements for staff as
a priority, with team collaboration
facilitated by Microsoft Teams
technology and the Zoom platform.
• Modified leave arrangements for all
staff, which continued up to the end
of calendar year 2020.
Staff engagement and involvement
via regular surveys, competitions and
communication.
Increased visibility of the senior
managers through regular virtual
staff information sessions.
A 20% reduction in Directors’ fees for
a period of three months, from May
2020 to July 2020.
Senior executives foregoing LTI and
STI awards due to vest in FY21.
Scaling back non-critical expenses
and implementing other cost saving
measures.
A review of supply chains, to identify
items from overseas suppliers, what
local supply channels were available
and what alternative or substitute
materials could be used.

•

Where possible, our sales centres
remained open to facilitate customer
interaction throughout the disruptions,
with pre-arranged appointments,
contactless check-in, social distancing
measures, cleaning and hygiene practices.

• Monitors the effectiveness and

efficiency of business processes &
policies.

• Monitors and reports on compliance

with approved processes and policies.

The External Auditor:
• Operates under the External

•

Audit Plan approved by the Audit
Committee.
Reviews financial reporting processes
at full and half year.
Provides assurance that financial
reports are free from material
misstatements

• Operates independent of

management.

Risk Management Related
Policies

AVJennings maintains a comprehensive
set of policies and procedures which form
an integral part of its governance and risk
management framework. They include:
•

A Code of Conduct which applies to
all levels of management and staff.
Financial & Personnel delegations.
Delegated approval authorities
(Powers of Attorney and related
policies).
A Risk Appetite Statement.
A Discrimination and Harassment
Prevention Policy.
A Whistleblower Policy.
A Fraud and Corruption Prevention
Policy.
A Securities Trading Policy.
A Shareholder Communication and
Continuous Disclosure Policy; and
An Environmental Policy.

•
•

•

In addition, frameworks exist for
Workplace Health and Safety, incidents,
conflicts of interest and compliance
reporting. Multiple levels of review exist
for compliance reporting in respect of
specific transactions, full and half year
disclosures, with external audit review and
sign off, as appropriate.

COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited - Annual Report 202118

Your Community Developer.

David Tripoussis, NSW Sales Manager
Donna Elayadi, National Marketing Manager

AVJennings continues to be one of the
most recognised and trusted names in
quality, affordable housing. We have been
building the great Australian dream since
1932.

Voted by Australians as the Most
Trusted Brand in the Property Developer
category in the 2021 Reader’s Digest
Awards, our reputation has been built on
quality, affordability, meticulous design
and connectivity for our customers,
whilst operating in a socially and
environmentally responsible manner. Our
focus is to create a lasting, positive legacy
in everything that we do.

We recognise that providing housing is a
basic need. It is a fundamental right for
everyone to have a home. We are proud to
be part of an industry which helps to meet
that most basic of human need.

Environmental
Sustainability

We recognise that there are risks of
environmental impact through our
residential development activities and
strive to be an environmentally responsible
organisation and minimise impact where
possible, whilst balancing the need to
provide housing for Australians and New
Zealanders.

biodiversity loss through our
operations.

•

• Create and deliver environmentally
responsible homes and communities.
Take leadership in encouraging
our stakeholders and suppliers to
minimise pollution, waste and use
of non-renewable energy resources,
thereby reducing our and our
customers’ carbon footprint.

Our environmental policy sets out our
main objectives to:
• Comply with all applicable statutory
requirements, codes of practice,
standards and guidelines.
Embed environmental considerations
in the planning and development
process.
Protect and encourage biodiversity,
including preventing and mitigating

•

AVJennings Limited - Annual Report 202119

Creekwood, Caloundra, QLD

COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited - Annual Report 202120

Proud owners of our first

prefabricated walling system home

at Evergreen, Spring Farm, NSW.

Harvest Square, Brunswick West, VIC

Artist Impression

AVJennings Limited - Annual Report 202121

How these Objectives
are Implemented.

Our Master-planned
Communities
With a focus on connectivity, our
greenfield projects are located within
designated urban corridors, close to major
transport corridors where infrastructure
already exists or is being built,
encouraging the use of public transport
where possible to reduce our residents’
carbon footprint.

Our large greenfield projects in Lyndarum
North, Wollert (VIC) and Arcadian Hills,
Cobbitty (NSW), in addition to being within
1 kilometre of proposed rail transport
corridors, also include amenities such as
shopping precincts including speciality
retail, community centres, schools,
hospitals, cafes and community hubs
within walkable catchments.

Our apartment and medium density
projects such as Harvest Square in
Brunswick West and Waterline Place in
Williamstown (VIC), Prosper in Kogarah
(NSW) and Arbor in Rochedale (QLD)
are close to train stations and bus stops,
providing great alternatives to transport
by car.

Increases in dwelling densities in new
communities reduces the footprint of
land taken for housing, helping with
environmental objectives of controlling
urban sprawl. Smaller block sizes make
them more affordable, particularly for first
home buyers who make up a significant
proportion of our customers.

Providing high quality usable amenity
where we are developing is a fundamental
part of our business. The parks,
playgrounds, picnic areas, open spaces
and walking trails are some of the key
meeting points in our communities. They
are the breakout spaces, spaces to play,
areas to explore and relax. These areas
have only become more important through
the COVID-19 pandemic with lockdowns
restricting movements of our residents
to their local area. Our masterplans

incorporate these recreational areas into
our projects.

At our Lyndarum North, Wollert (VIC)
community, approximately 29.2 hectares
of land has been dedicated to parks and
open spaces, incorporating BBQ areas,
sports precincts, walking and cycling
tracks.

Our Evergreen, Spring Farm (NSW)
community features approximately 9
hectares of multiple family-friendly parks
and reserves in both the east and south
villages, with walking and bike tracks
connecting each park and offering plenty
of choice to enjoy and explore the area.

Efficient Design
We understand that the increasing
cost of energy is a challenge for our
residents and aim to integrate energy
efficiency considerations into the design
and construction of housing. Our built
form products are assessed against the
Nationwide House Energy Rating Scheme
(NatHERS) to achieve the minimum 6 star
rating mandated by governments across
Australia.

supply and fixing of components (frame,
insulation, internal linings and external
veneers/claddings), with a single wall that
integrates all these things and is ready for
paint finishes once erected.
Compared to traditional construction,
this system was 4 weeks quicker to
build, more cost effective, achieved 50%
higher thermal efficiencies, had load
bearing capacity up to 4 storeys and
was also rated for extreme bush fire
areas. Pleasingly, the home sold prior
to completion and we propose to trial
two more prefabricated builds in the
near future. The walling system for these
next 2 builds will arrive pre-installed with
European-grade double glazed windows
& sliding doors for even greater thermal
efficiency. Early calculations indicate that
these homes will have a thermal star rating
of around 8.5.

COVID-19 Responsive Design
During the height of the pandemic and the
resultant lifestyle restrictions, we carried
out various research activities including
workshops and surveys to investigate the
real-life experiences that the crisis imposed
on people.

During the planning of our communities,
we use high levels of masterplanning
expertise to optimise the passive solar
asset of each allotment via carefully
considered road patterns to set lot
orientation. Further to this, where
we augment our developments with
AVJennings housing, our in-house
designers carefully consider the attributes
of each lot and match it to a product from
our extensive design library to deliver
synergistic house and land outcomes.

The outcome of this research has been the
development of a COVID-19 responsive
design prototype, Project X, which is
currently under construction, also at
Evergreen in Spring Farm (NSW). The
design includes features that cater for
salient COVID ‘pulse points’ including
touchless entry and sanitisation station;
sound proofed multi-purpose room for
home office, home schooling, exercise
etc; and parcel delivery provisions for
increased online shopping.

Recent Design Initiatives
Our design team recently undertook a
successful initiative to build a house at our
Evergreen, Spring Farm (NSW) community
using a prefabricated composite walling
system sourced from an Australian owned
producer, with very encouraging results.

The prefabricated system replaces
traditional on-site wall construction
which uses separate and independent

Harvest Square, Brunswick
West (VIC)
The development at Harvest Square,
Brunswick West (VIC) is to consist of 111
apartments over 2 buildings dedicated
to Social Housing and, in addition,
a component of 87 private dwellings
including townhouses, apartments and
8 dwellings specifically for Women’s
Housing. Environmental remediation works
on the project are nearing completion,

COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited - Annual Report 202122

with the commencement of basement
construction forecast for Q4 of 2021.
The development is designed to meet 5
Star Green Star (independently certified
by Green Building Council Australia) and
an average of 7 Stars NatHERS rating.
To achieve these standards, the design
contemplates a wholistic approach from
design, construction and to ongoing
operation.

Key performance criteria include indoor
environment quality, energy consumption,
transport, water, materials selection,
land ecology, emissions and innovation
practices.

What it will mean for our residents is
a reduction in energy consumption,
reduction of emissions, an increase
in liveability and sustainability, and a
reduction in living costs. To achieve 5
Star Green Star is considered Australian
excellence and only a small number of
residential housing projects have achieved
this benchmark in Australia and even
less for projects with incorporated social
housing.

Alternative Energy
Solar panels are now a standard inclusion
for AVJennings delivered housing at
Rosella Rise at Warnervale (NSW) and
have been included in the last 5 stages
of development at Waterline Place in
Williamstown (VIC). At Harvest Square, all
dwellings will have solar panels.

Materials
Combustible cladding on apartment
and office buildings has been a focus of
building authorities across Australia. In our
apartment projects all external materials
are assessed to ensure that they comply
with the regulations associated with
combustible cladding. At Waterline Place
in Williamstown (VIC), all the apartment
buildings have external sprinkler systems
on balconies to further help mitigate
against the risk of external (balcony) fires
on these buildings.

All materials used in our built form
products conform to applicable Australian
standards.

Water
In the areas in which we operate we
are seeing on average an increase in
temperature and dryer landscapes. Storm
water management, the creation of water
wise landscapes and the capture and
reuse of rainwater are priorities in our
developments.

The treatment of stormwater prior
to leaving our development sites to
maintain or improve downstream water
quality is undertaken through Water
Sensitive Urban Design. Wetlands, rain
gardens and stormwater detention
basins are constructed as part of our
civil and landscape works in a variety of
combinations on all of our master planned
communities. Wetlands and rain gardens
treat the water quality prior to it leaving
the site and stormwater detention reduces
the intensity (height) of flood peaks by
retaining water onsite for a period of time.

The wetland system constructed at our
Creekwood, Caloundra (QLD) project
was a finalist at the recent QLD Urban
Development Institute of Australia Annual
Awards in the environmental excellence
category. Rain gardens were constructed
in Stage 1 of our Ara Hills, Orewa project in
New Zealand.

A goal across all our projects is to reduce
the use of potable water across our
developments and in the houses we
construct. Some examples of this are
rainwater tanks as standard across our
Eyre Community (SA) and Water Efficiency
Labelling & Standards (WELS) rated
appliances specified for installation at
Harvest Square, Brunswick West (VIC).

Waste
Civil works on our sites are a source of
emissions and our civil works contractors
use heavy equipment to move large
amounts of soil and rock across sites to
achieve development and landscape
levels. In consultation with our civil
contractors, work is done to reduce vehicle
movement across sites (and emissions
associated with burning fuel). Where
possible, excess soil and rocks are reused
elsewhere within the project as fill or for

landscaping, with the aim of reducing
waste being sent to landfill.
At Lyndarum North in Wollert (VIC)
located in the basalt plains of Melbourne’s
northern suburbs, all excavated rock
is recycled into crushed rock to be
used for construction. During the initial
construction on the site a mobile rock
crushing plant was in operation providing
crushed rock that was used for trench
backfilling and base course material for
footpath construction. Rock currently
generated onsite is sent to a closely
located quarry for crushing and reuse.

Contaminants and hazardous waste found
on site is disposed of in line with applicable
government regulations.

On our housing construction sites we are
looking at ways to reduce and recycle
waste. In Victoria all building construction
waste is sorted onsite into different waste
streams and removed for recycling via a
specialist recycling contractor.

Protecting Biodiversity
We understand the importance
biodiversity plays in sustaining healthy
ecosystems and in supporting our health
and wellbeing. Our land development
activities can have significant impact on
the surrounding environment, particularly
in our greenfield sites, where development
can impact surrounding bushland habitat
and significant species in a particular
location.

Mitigation measures include revegetation,
relocation, allocation of land for
woodlands, provision of offset sites, open
spaces and reserves. They also include
habitat preservation of significant fauna
and flora identified on our sites, using
the principles of Water Sensitive Urban
Design to manage rain water runoff and
protect wetlands habitat, and ongoing
management of these initiatives.

Our Lyndarum North masterplan in
Wollert (VIC) was designed around the
preservation of the mature River Red
Gum trees (estimated to be over 200
years old) that are scattered throughout
the site. The trees are located in specific

AVJennings Limited - Annual Report 202123

conservation reserves, large parks and
small neighbourhood pocket parks. The
River Red Gums set the character of the
landscape setting for the masterplanned
community and are celebrated throughout
the development. Approximately 3.74
hectares of land was set aside as tree
protection reserves, with a further 7.4
hectares dedicated to local conservation
areas for flora and fauna preservation.

At our Evergreen, Spring Farm (NSW)
community, 8 hectares of land was
dedicated for the preservation of critically
endangered Cumberland Woodplain and
Elderslie Banksia Scrub Forest ecological
communities.

More recently, we dedicated 4.7 hectares
of land for preservation of habitat of
the endangered squirrel gliders found
near our Rosella Rise, Warnervale (NSW)
community. The area set aside is a buffer
zone to potential squirrel glider habitat
that will be landscaped and revegetated
through development works.

Management of biodiversity is also heavily
regulated by state and local government
bodies, underscoring the importance of

Lyndarum North, Wollert, VIC

preserving Australia’s unique fauna and
flora, and our land development activities
are managed within these frameworks.

Cultural Heritage Management
Where cultural heritage issues, in
particular cultural heritage items, relics
and sites of First Peoples are identified
on land which we intend to develop, these
are managed respectfully, in consultation
with local indigenous communities and
within the terms of Cultural Heritage
Management Plans agreed to by all
interested parties.

Reconciliation Action Plan
A Reconciliation Action Plan, currently
in development, will provide guiding
principles as to how we proactively
engage with First Peoples across Australia.
Guidelines are also being developed for
engagement with New Zealand’s Māori
people.

Climate Resilience
Extreme weather events, such as floods
and bushfires have the potential to impact
our operations, communities and the

health and wellbeing of our residents.
We are committed to creating climate
resilient communities that are safe for
our residents and can adapt to changing
conditions.

All our developments are constructed in
accordance with authority requirements
and expert recommendations to manage
these changes in climate. Where
developments are constructed in proximity
to a flood plain or area of inundation,
housing is constructed with freeboard to
the 1 in 100 year flood levels. The level of
freeboard required varies depending on
the location of the development, further
reducing any risk of flooding.

Developments that are located on the
urban fringe or adjacent to areas of
grassland or bushland are assessed
against the potential threat of fire. This
assessment of the bushfire attack levels is
a regulatory requirement, which then sets
requirement for buffer zones in the urban
design process for the development and
housing design standards, which must be
complied with.

COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited - Annual Report 202124

Creating and Supporting
Communities.

We believe that housing matters and community matters. Everyone wants to feel like
they belong. It’s part of the human spirit. A home is part of a community, and for nearly
90 years, we have helped our customers build a brighter future by creating high quality
residential communities that they feel a part of.

Our Communities

Communities are part of the urban
fabric of great cities in Australia and
New Zealand. Communities that are
well connected and support each
other are better places to live. We
build infrastructure that supports our
communities, such as roads, drainage
systems and open space, integrating
these with neighbouring communities and
surrounding landscapes. Our master-
planned communities include shopping
precincts, cafes, medical centres and
other services that are within walking
distance, to support the needs of our
residents. Our projects are located
close to major transport hubs and train
stations, to encourage the use of public
transport where possible. Great attention
is paid to landscape design, that includes
parks, ovals, community hubs and
sporting facilities to foster connectivity
and inclusion, whilst also encouraging
residents to be active and spend time
outdoors.

We are pleased the feature park and
playground completed recently at our
Lyndarum North Project in Wollert (VIC)
has proved to be extremely popular
with our residents, as well as those
from surrounding neighbourhoods.
In Queensland, community parks at
Cadence in Ripley and Riverton in
Jimboomba are underway, soon to add
additional amenity for residents.

We regularly engage with our communities
by hosting family fun days, community
and entertainment events that provide
residents the opportunity to meet,
engage with each other and get to know
the people in their neighbourhoods,
creating community spirit and making

lasting friendships. Community based
activities had to be scaled back in FY21
due the ongoing impacts of COVID-19,
but we successfully ran Christmas lights
and egg counting competitions at our
Lyndarum North, Evergreen and Arcadian
Hills communities to name a few, in
which residents were able to participate
remotely, with no risk around social
distancing.

Our Customers

Having been in the business of building the
dream of home ownership since 1932, we
are proud that we are able to continue to
help our customers achieve that dream.

Customer Engagement
We aim to engage with our customers at
every touch point of their journey with
AVJennings. From initial enquiry through
to post purchase, our customers can
connect with us in person or virtually at
our Sales and Information Centres, or
digitally via our website, live chat, social
media or online community groups.
Our customer surveys continually invite
feedback and assess levels of satisfaction
as our new purchasers and residents move
through the stages of their home buying
and home ownership experience.

Results indicate that 80% of our customers
make a purchase decision within six
months and are selecting an AVJennings
home for design and quality.

Brand research reveals our customers
most associate the terms ‘professional’,
‘affordable’ and ‘trustworthy’ with
AVJennings.

More than 70% of our customers say
that their AVJennings community has
met or exceeded their expectations.
Approximately 90% of our building
customers are satisfied with their property
purchase, and 85% of customers feel that
their home represents good value
for money.

Some quotes from our happy
customers

‘Approachable staff, Good quality home
in my budget, Good amenities.’
- First Home Buyer at Anise (QLD)

‘I could not be happier, l have downsized
to the home of my dreams. The size, the
conveniences and necessities included
in my purchase are everything l could
ever wanted in my new home. Thank you
AVJennings for a beautiful new home.’
- Home Buyer (NSW)

‘With slightly larger blocks and a nice
estate layout, we chose because of these
things. Land was left empty for park
lands etc.’
- Land Buyer, Riverton at Jimboomba
(QLD)

We continue to promote and reward our
customers’ loyalty with our Refer a Friend
and Repeat Purchaser programs.

Affordable Product
Every person deserves access to safe,
quality affordable housing. Affordable
housing is vital to protect the liveability
of our cities. We aim to support this
need by offering innovative housing and
apartment design, appropriately sized
land blocks that, whilst being affordably
priced, satisfy the density requirements
of councils and regulators and reduce

AVJennings Limited - Annual Report 202125

Workplace Health & Safety
Living our value of Safety, our focus is to
ensure the health, safety and welfare of
all employees, contractors, clients, visitors
on site and members of the public who
come into contact with our Company’s
operations. We strive for continuous
improvement in WHS management and to
fulfil our legal obligations with regard to
health and safety at all times.
Formal site inspections occur on all
AVJennings’ controlled sites and during
FY21, over 1,000 inspections focusing
on Health, Safety and Environment
were completed across our workplaces.
Included in this number are inspections,
as required, for site specific tasks/plant
and COVID-19 related matters. Our HSE
team also undertook actions to continue
to support all employees, particularly
those impacted by COVID-19 lockdown
restrictions. Built form site inspections
showed 96% compliance.

96%

Compliant

Non-compliant

urban sprawl. A significant proportion
of AVJennings’ customers are first home
buyers. We are constantly looking for
innovative concepts and affordable
housing solutions that suit the changing
lifestyles and livelihoods of our customers.
Pleasingly, in FY21, work commenced
on our Harvest Square, Brunswick West
project in Victoria. The project is a
partnership with the State Government of
Victoria that will deliver 111 social housing
dwellings and 8 dwellings specifically for
community housing provider Women’s
Housing Limited, in addition to a private
development comprising 29 townhouses
and a 50-dwelling apartment.

First Home
Buyers

35%

Our People

Builders/
Developers
16%

Investors

18%

Subsequent
Home Buyers

31%

ramping and set-downs/build-ups of
flooring, assistive technology and many
other elements, such as postboxes within
reach for wheelchair bound residents.
Pleasingly, settlements of the sale of these
modified apartments to Summer Housing
occurred in the FY21 financial year, with
tenant demand for the apartments strong
and residents expected to move into their
new homes in the near future.

Essential Worker Promotion
In appreciation for their amazing efforts,
we launched a special promotion for
eligible purchasers employed in essential
services and those classified as front-line
workers in the management of COVID-19.
With discounts of up to $25,000 offered
for land purchases in selected projects,
the campaign was considered an overall
success.

One of our important communities is our
people. AVJennings prides itself on being
an equal opportunity employer and we
offer a diverse and inclusive workplace,
where everyone feels safe and supported.
It is the talent, passion, dedication and
hard work of our people that underpins the
continued success of our Company.

We recognise our people through our
Service Awards program, our annual
employee awards including the prestigious
CEO Award. Our annual scholarship
program, The Bob Sutton Scholarship
(named after a previous Chairman),
continues to support the education and
development of our employees and their
immediate family members. In FY21, we
were delighted to award the scholarship to
the daughter of one of our Victorian based
employees.

An AVJennings mentoring program
was implemented in FY21. The program
is designed to create an environment
where mentoring is valued, supports
self-development and allocating time for
mentoring is valued.

Summer Housing Initiative,
Waterline Place, Williamstown,
Victoria
Established in 2017, Summer Housing’s
mission is to expand the range and
scale of diverse housing options for
people with disability living in, or at risk
of admission to, residential aged care,
particularly younger people. We were
able to partner with Summer Housing to
provide 11 modified apartments within
our Empress Apartment Complex at
Waterline Place, enabling residents with
special needs to access their apartments
and live comfortably within the complex.
Modifications to existing product were
required to meet the Liveable Housing
Australia Platinum Level certification.
These included adjustable joinery,

COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited - Annual Report 202126

Wellbeing
2020 saw the establishment of a mental
health support program for employees
and their families via AccessEAP, a leading
provider of employee assistance programs
in Australia. In 2021, the AVJ Wellness
Hub was launched. The hub provides
all employees with an array of wellness
resources and information, with the aim to
promote both physical and mental health
and a core focus on positive wellbeing.
AVJennings employees also have access to
numerous corporate benefits through the
hub, including resources from AccessEAP,
the staff superannuation fund and HSBC
as part of its Corporate Partners Program.

Our parental leave policy has seen 100%
of employees on parental leave returning
to work during FY21. In late 2020, we
also enhanced our flexible working
arrangements to ensure that it works for
both the business and all our employees.

Employee Engagement
We conduct employee engagement
surveys annually to measure satisfaction
levels. Pleasingly, improvements in overall
scores were recorded in FY21, in areas
such as work environment, teamwork, and
health and wellbeing compared to FY20.
Supportive, friendly, positive, respectful
and fun were identified by respondents
as key attributes contributing to positive
team culture. We had a strong response
rate in 2021 with 79.4% of employees
participating in the survey. An overall
engagement score of 4.2 (out of a possible
5) was recorded in FY21, compared to 3.90
in FY20.

Diversity
We recognise that a talented and diverse
workforce is a key competitive advantage.
We are committed to seeking out and
retaining the best people and leveraging

their diverse backgrounds, experience and
perspectives to provide improved services
for our customers and return for our
shareholders. We believe that promoting
diversity, where differences are tolerated,
inappropriate attitudes and behaviours
are confronted and equal opportunity for
advancement is provided, contributes to
a positive culture and business success.
It also encourages diversity of thought
– fostering greater innovation due to
different perspectives and increases our
ability to recruit people with the best skills
and attributes.

Gender Diversity
In FY21, 45.5% of our workforce was
female. The proportion of women in
senior management positions and on the
Board was 22% and 12.5% respectively.
We will continue to pursue opportunities
to promote and attract more females to
senior management positions, through
career development opportunities and our
talent acquisition processes.

Our Suppliers

Our supply chain includes all
organisations from which we source goods
and services used in our business. We
recognise that development of long-term
business relationships with key suppliers
who share our values and behaviours is
key to maintaining a sustainable supply
chain. We regularly engage with key
suppliers and subcontractors to ensure
ongoing support for our business.

We published our first Modern Slavery
Statement in FY21 and will continue to
engage with our suppliers to ensure they
share our commitment to limiting the risk
of modern slavery infiltrating our supply
chains. A Policy that sets out our position
on Modern Slavery has been developed

and will be communicated to our suppliers
and all staff involved in procurements.
We are also in the process of introducing
into our procurement practices specific
requirements that prohibit modern slavery
practices, in the form of a supplier Code of
Conduct.

Our Shareholders

As a listed public Company, we take our
responsibilities of creating shareholder
value and disclosure obligations
seriously. Our Australian based Directors,
particularly our Deputy Chairman,
Managing Director, Chief Financial
Officer and Company Secretary engage
regularly with institutional investors,
research analysts and individual investors
through briefings on a scheduled (release
of half and full year results) and ad-hoc
basis (at other times during the year). We
place importance on these interactions
as it allows AVJennings to articulate its
strategy and also to receive feedback
from investors on strategy, financial
performance and governance.

In August 2020, we held our FY20 results
announcement presentation via a webinar
conferencing facility, which enabled
shareholders to participate virtually and
ask questions via the webinar portal. We
also held our first Virtual Annual General
Meeting in October 2020, providing an
opportunity for shareholders on our
Singapore register to participate in the
meeting in real time. The virtual meeting
allowed ease of attendance and as a
result, we had the largest shareholder
attendance in recent years.

Proud sponsors of

AVJennings Limited - Annual Report 202127

Creekwood Park Opening with
Romelda Aiken from QLD Firebirds

Community
Engagement

Our Valued Partnerships
Alongside our firm belief that Housing
Matters, Community Matters, at
AVJennings we are actively involved in
supporting communities, it is at the core of
everything we do.

While we work hard to create great places
to live, we also contribute to the broader
community through our long-standing
partnerships, our bushfire and community
relief program and aligning ourselves with
company ambassadors, Steve Waugh AO
and Laura Geitz who hold the same values
we do.

Both Steve, former Australian cricket
captain, and Laura, former Australian
netball captain have led their country
with distinction in their fields and since
their retirements have continued to work
actively in the community. Steve, mainly
through his philanthropic work and Laura,
through promoting a healthy and active
lifestyle. Not only do they each epitomise
dependability and high achievement, they
are excellent role models.

In 2012, AVJennings became a proud
corporate partner of the Steve Waugh
Foundation. The Foundation supports
children, young adults and their families
living with a rare disease who have
nowhere else to turn. To date we have

raised over $1 million for the Foundation
through various fundraising initiatives
and activities. One of the major initiatives
involves the construction of The Renee
series of homes in which we are up to
Number 6. With the drive of our people and
the kind generosity of our suppliers who
pitch in with labour and materials not only
are we supporting the Foundation with
proceeds of sale, but we are also providing
our customer with a great place to live in a
great community.

We are also proud sponsors of women’ s
sport supporting the Queensland Firebirds
in the Super Netball League and more
recently the inaugural sponsor of the St
Kilda Football Club’s AFLW team. Aligning
ourselves with women’s sport is important
to us as we are firm believers that females
are deserved of equal opportunity to
play sport at an elite level and equally
important is that they act as important
role models to our people and our
communities.

AVJennings also proudly sponsors the St
Kilda Football Club who have led the way
in promoting the value of inclusion and
diversity.

In early 2020 AVJennings pledged $1
million over 4 years by establishing
a Bushfire & Community Relief Fund
in support of the bushfire crisis that
impacted so many communities through
the summer of 2019/2020 recognising
that disaster recovery would be long

and challenging. We immediately
donated $250,000 to the Red Cross. In
the second year our main contribution
was to The Royal Flying Doctor Service
who provide critical support to many of
the communities impacted by natural
disasters. We also donated to the
Gippsland Emergency Relief Fund and
GIVIT. Both of these organisations provide
relief to ensure families and people
devastated by natural disaster get exactly
what they need to recover, where and
when they need it.

In addition to these major partnerships, we
also work closely with our project based
local community and sporting groups to
assist in promoting active and healthy
lifestyles and connectivity especially in
these trying times during the pandemic.

What makes these partnerships and
alignments so important is also our people
who give so much to the community not
only in fundraising initiatives but also
volunteering of their time. We support
them in any which way we can. They are
the epitome of the community spirit.

We are an organisation that champions
community. Our partnerships are not
chosen based on their marketability, but
based on their values and like mindedness
in championing community and
connectedness.

Community matters.

COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited - Annual Report 202128

The Directors of AVJennings Limited present their report together with the Financial Report of the Group (referred to hereafter as
“AVJennings”, “Group” or “Company”) and the Auditor’s Report thereon for the year ended 30 June 2021. 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 unless otherwise stated.

S Cheong

RJ Rowley

Non-Executive Chairman

Non-Executive Deputy Chairman

PK Summers

Managing Director and Chief Executive Officer

B Chin

Non-Executive Director

BG Hayman

Non-Executive Director

TP Lai

BL Tan

P Kearns

L Chung

Non-Executive Director

Non-Executive Director (appointed on 1 June 2021)

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 $18.7 million (2020: $9.0 million).

DIVIDENDS

Dividends paid during the financial year were as follows:

Cash dividends declared and paid
2019 final dividend of 1.5 cents per share,
paid 20 September 2019. Fully franked @ 30% tax

2020 interim dividend of 1.2 cents per share,
paid 27 March 2020. Fully franked @ 30% tax

2021 interim dividend of 0.7 cents per share,
paid 26 March 2021. Fully franked @ 30% tax

Total cash dividends declared and paid

2021

$’000

2020

$’000

6,093

4,875

2,843

10,968

Subsequent to the end of the financial year, the Directors have declared a fully franked final dividend of 1.8 cents per share to be
paid on 23 September 2021 (2020: $Nil). The Dividend Reinvestment Plan (DRP) remains suspended.

Directors’ Report.AVJennings Limited - Annual Report 202129

The FY21 period also saw significant milestones achieved
which are critical to future results. The Company commenced
development at Rosella Rise, Warnervale (New South Wales)
and Aspect, Mernda (Victoria), in strong growth areas. Planning
approvals were obtained, and physical works commenced at
Harvest Square, Brunswick West, which is a project conducted in
partnership with the Victorian Government that will see a much
needed increase in the supply of high quality social housing
in a great community setting. The Company also commenced
planning for the next and largest apartment building at Waterline
Place, Williamstown. Excellent progress was also made in relation
to the planning and approval process for our large- scale,
master-planned project at Caboolture in Queensland.

During FY21 the Company also increased the level of housing
under construction at our projects. The year saw 181 dwellings
started, compared with 132 dwellings in FY20 and we plan to
increase this further in FY22. Increasing the level of built form not
only provides more choice to customers, but also enables the
Company to enhance returns by extracting maximum value from
each project.

As the economy opened up and market conditions improved,
work-in-progress levels increased. As at 30 June 2021 the
company had 1,537 lots under development (FY20: 1,117 lots).
This has increased significantly from the earliest phase of
the pandemic when the Company preserved capital and
intentionally delayed the commencement of building activity
unless it was directly connected with a sales contract. In addition
to new starts during FY22, we expect to complete around 787 of
these carried-over lots in FY22 (comprises land-only lots, houses
and apartments), of which some 265 will be improved with low-
rise dwellings.

OPERATING AND FINANCIAL REVIEW
OPERATING AND FINANCIAL REVIEW

Financial Results

AVJennings earned Profit Before Tax of $26.7M for the year
ended 30 June 2021, well up on the prior year (30 June 2020
PBT: $13.2M) and its best result since 2018 (FY19 PBT: $23.8M
and FY18 PBT $45.1M). Profit After Tax was $18.7M (30 June
2020: $9.0M).

In FY21, revenue increased to $311.1M up from $262.4M for
2020. Contract signings of 953 lots were well up on the prior
period (FY20: 697 lots), with some 431 contracts amounting to
$127.1M carried across balance date. Around 402, amounting
to $111.6M, of these contracts are expected to settle during
FY22, which will help underpin future results. The results
included $2.8M in JobKeeper receipts.

Average gross margin remained stable at 22.6%, while the
average net margin improved slightly. The result was achieved
after allowing for $1.8M in additional provision (having no
cash impact), that was largely confined to two projects in
South Australia.

Dividend

The quality of the result coupled with the strong level of
presales carried over balance date led directors to declare
a final fully franked cash dividend of 1.8 cents per share,
which together with the interim dividend of 0.7 cents per share
declared for the first half, brings the total dividends declared,
fully franked, in respect of FY21 to 2.5 cents per share.
Based upon VWAP of 60.1366 cents per share (June 2021),
this represents a yield of 4.2% before franking credits (fully
franked 5.9% grossed up). The DRP will remain suspended.

Business Overview

Strong contributions were generated by our major regions,
highlighting the benefits of geographical diversification. The
first stage of our flagship project Ara Hills at Orewa in New
Zealand was completed and achieved significant revenue
recognition. Arcadian Hills at Cobbitty and Evergreen at
Spring Farm in New South Wales performed well, generating
strong margins from net price escalation as demand
outstripped supply. In Victoria, the latest stages of Lyndarum
North sold out and the bulk of apartments in the Empress
building at Waterline Place settled. In Queensland, the current
stages of Cadence at Ripley and Riverton at Jimboomba sold
and settled.

Pleasingly, after a period of hiatus, activity in some lower
margin South Australian and Queensland projects was
stimulated, enabling us to accelerate the recovery of capital
which will be redeployed with the intention of improving the
mix of average Company margins in the future.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION30

OPERATING AND FINANCIAL REVIEW
(CONTINUED)

SIGNIFICANT EVENTS AFTER
BALANCE SHEET DATE

Balance Sheet and Land Holdings

Strong settlements of 905 lots (FY20: 827 lots) drove net cash
from operations of $64.0M, well up on FY20 ($10.6M). This
enabled the Company to reduce net debt and gearing to $125.4M
and 20.1% (net debt/total assets) (FY20: $184.4M and 28.1%)
respectively, creating headroom to fund increased investment in
work-in-progress and a programme of future acquisitions in line
with the Company’s significant growth ambitions.

No matter or circumstance has arisen since 30 June 2021 that
has significantly affected, or may significantly affect:

the Group’s operations in future financial years; or

the results of those operations in future financial years; or

the Group’s state of affairs in future financial years.

Total inventory including land under option stood at 12,180 lots
(FY20: 12,134 lots).

Outlook

The Company has previously acknowledged the short term
importance of government support programs. However, the
Company also stated its belief that as the economy recovered,
the underlying strength of market fundamentals, which were
starting to show through in early 2020, would be the main market
driver. Hence, we expected we would see momentum continue,
even after initiatives such as HomeBuilder expired. Pleasingly,
this has proved to be the case, with around 87 contracts per
month (average April-June 2021) signed after the conclusion of
the JobKeeper and HomeBuilder initiatives.

The Company is well placed entering FY22 with some 431 pre-
sales on hand. Like other years, the earnings bias is expected to
be towards the second half, potentially more so as the country
continues to experience the effects of lockdowns in the first half
of FY22.

We are also well placed in terms of stock production with
work under way on some 1,537 lots/housing. Whilst costs are
increasing, so too are selling prices, giving us confidence overall
margins will be maintained.

There has also been a shift in market preferences with
apartments (particularly inner-city high rise) having less appeal.
We remain confident the Company’s focus on traditional housing
product sees us well placed for the future.

Closed international borders will provide a challenge in the
medium term. Long term we believe that both Australia and New
Zealand will be attractive options for overseas migration.

Obviously, lockdowns have, and are likely to continue to impact
on economic recovery. However, we saw how quickly the
economy bounced back in the latter part of 2020 and we remain
confident Australia and New Zealand will retain their economic
strength.

FUTURE DEVELOPMENTS, PROSPECTS
AND BUSINESS STRATEGIES

The prospects and business strategies of the Group are
discussed in the operating and financial review 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 requirements.

To the best of the Directors’ knowledge, property development
activities have and are being undertaken in compliance with
these requirements.

CHANGE IN STATE OF AFFAIRS

The Australian Federal Government first introduced COVID-19
pandemic-related activity constraints in early February 2020,
with various other levels of Government in Australia and New
Zealand subsequently implementing complementary measures
aimed at protecting public health. These have chiefly consisted
of various levels of restraint of business and social activity that
are imposed for limited periods of time in response to local
outbreaks of the virus. Most of the more severe constraints
were relaxed during the first half of fiscal 2021, following which
economic activity in the Company’s key markets gradually
strengthened. The post-balance date reintroduction of severe
constraints on activity in New South Wales and Victoria, and to a
lesser extent in Queensland and New Zealand, have the potential
to negatively affect public perception of the prevalence of the
virus, consumer and business confidence, outlook and the way in
which the Company conducts business.

Directors’ Report.AVJennings Limited - Annual Report 202131

INFORMATION ON THE DIRECTORS

Simon Cheong B.Civ.Eng. MBA

Director since 20 September 2001. Mr Cheong has over 35 years
experience in real estate, banking and international finance.
He is the founder and currently serves as Chairman and Chief
Executive Officer of SC Global Developments Pte Ltd. (the
ultimate holding company). He 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 till 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. On 1 June 2017, Mr Cheong was appointed a
Non-Executive Director of Singapore Airlines Limited. 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:

Singapore Airlines Limited since 1 June 2017.

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.

Bobby Chin CA (ICAEW) B.Acc.

Director since 18 October 2005. Mr Chin is currently the
Chairman of NTUC Fairprice Co-operative Ltd, NTUC Fairprice
Foundation Ltd and the Housing & Development Board. He is
the Deputy Chairman of NTUC Enterprise Co-operative Ltd and
a Director of Singapore Labour Foundation. He also serves as
Chairman of the Singapore Corporate Governance Advisory
Committee. 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, Member
of Nominations Committee.

Directorships held in other listed entities:

Ho Bee Land Limited, since 29 November 2006.

Other Directorships:

Temasek Holdings (Private) Limited, since 10 June 2014.

Frasers Logistics & Commercial Asset Management Pte Ltd since
29 April 2020.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
32

INFORMATION ON THE DIRECTORS
(CONTINUED)

Bruce G Hayman

Director since 18 October 2005. Mr Hayman has many years
of commercial management experience with over 20 of those
at operational Chief Executive or General Manager level. He is
currently Chairman of Chartwell Management Services. 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
Deputy Chair of Diabetes NSW & ACT. Resident of Sydney.

Responsibilities:

Non-Executive Director, Chairman of Nominations Committee,
Member of Remuneration Committee, Member of Investments
Committee, Member of Risk Management Committee.

Directorships held in other listed entities:

None.

Lai Teck Poh BA 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 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, Chairman of Remuneration Committee,
Member of Audit Committee, Member of Investments Committee.

Directorships held in other listed entities:

PT Bank OCBC NISP Tbk (Commissioner) since 4 September
2008.

Other Directorships:

Bank of Singapore Limited since 1 January 2020.

Tan Boon Leong DipUrbVal (Auckland University, NZ)

Director since 9 June 2017. Mr Tan has over 36 years of
experience in real estate investment and asset management. He
is a non-executive Director of SC Global Developments Pte Ltd.,
the Company’s major shareholder.

Mr Tan last held the position of Group Chief Operating Officer
cum Chief Executive Officer (Singapore Investments) in
Mapletree Investments Pte Ltd, a real estate company wholly-
owned by Temasek Holdings (Private) Limited. Prior to his career
in Mapletree Investments, Mr Tan served in Temasek Holdings
(Private) Limited from 1995 to 2003 and held the position of
Managing Director (Strategic Investments). His portfolio included
Temasek Holdings’ investments in real estate in Asia and
Australia. His eight-year career in Temasek Holdings included
stints in venture capital investments in the IT sector, infrastructure
investments in the energy and transportation sectors, and
investments in financial services.

Mr Tan had also served in the Inland Revenue Authority of
Singapore (IRAS) from 1975 to 1995 where he last held the position
of Tax Director in the Superscale grade. Resident of Singapore.

Responsibilities:

Non-Executive Director, Member of Investments Committee.

Directorships held in other listed entities:

None.

Philip Kearns AM BA (Economics); Grad Dip (Applied Finance)

Director since 21 March 2019. Mr Kearns has over 15 years’
experience leading financial services organisations where he led
significant cultural change and was instrumental in building a
client base and introducing investors to innovative opportunities,
including in the property sector. Until recently he was a Director
of Venues NSW, a Government Board that owns and operates
multiple sports and entertainment venues across New South
Wales. He is a director of Coolabah Capital Investments, a
private fixed interest funds management business. He was
previously the Managing Director and CEO of InterRISK Australia
Pty Ltd, a division of ASX listed AUB Group and prior to that CEO
of Centric Wealth where he gained experience in the private
equity world.

Mr Kearns was appointed a Member of the Order of Australia in
2017 for significant service to the community through support
for charitable organisations, to business, and to rugby union at
the elite level. He played 67 tests for the Australia national rugby
union team, Wallabies (1989-1999) and captained the team ten
times. Resident of Sydney.

Responsibilities:

Non-Executive Director, Member of Investments Committee,
Member of Risk Management Committee.

Directorships held in other listed entities:

None.

Directors’ Report.AVJennings Limited - Annual Report 202133

INFORMATION ON THE DIRECTORS
(CONTINUED)

INFORMATION ON THE COMPANY
SECRETARY

Lisa Chung AM LLB, FIML, FAICD

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 Ltd. Prior to that he was a partner at national law
firm Corrs Chambers Westgarth, practising in corporate and
commercial work. Resident of Melbourne.

Director since 1 June 2021. Ms Chung is an experienced non-
executive director and is currently a Director of Australian Unity
Limited, Artspace/Visual Arts Centre Limited and Warren and
Mahoney Limited. She is also Chair of The Front Project and a
Trustee of the Foundation of the Art Gallery of NSW. She was
previously the Chair of Urbis Pty Limited and The Benevolent
Society, a non-executive director of APN Outdoor Limited and the
Deputy President of Trustees of the Museum of Applied Arts and
Sciences (Powerhouse Museum).

Ms Chung has a diverse background, with senior and board
level experience in sectors including commercial property, urban
development and infrastructure, outdoor advertising and mass
media, professional services, education and training, visual and
creative arts and social and community services.

Ms Chung had a successful 30-year career in the legal
profession. During this time, she specialised in the area of
commercial property and was a Partner at firms Maddocks and
Blake Dawson (now Ashurst). She is a skilled negotiator with
extensive commercial legal experience acting for government
and the private sector in property, development, urban renewal
and infrastructure transactions.

In 2004, Ms Chung completed the Advanced Management
Program at INSEAD in France. She is a Fellow of the Australian
Institute of Company Directors and is also a member of Chief
Executive Women, an organisation comprising women leaders
committed to enabling other women leaders.

In 2020, Ms Chung became a Member of the General Division of
the Order of Australia for significant service to the community
through charitable and cultural organisations. Resident of
Sydney.

Responsibilities:

Non-Executive Director, Member of Risk Management Committee.

Directorships held in other listed entities:

Australian Unity Limited.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION34

REMUNERATION REPORT (AUDITED)

A. Introduction

B. Persons covered by the Report

The AVJennings Limited Board is pleased to present the
Remuneration Report for FY21 in accordance with the
requirements of the Corporations Act 2001 (the Act). The Report
has been audited as required by section 308(3C) of the Act.

This Report not only sets out the long term approach to
remuneration for Key Management Personnel (KMP) and all staff,
but also the effect of initiatives adopted in FY20 in response to
the impact of the COVID-19 pandemic which flowed into FY21.

The Board intends that the Report provides clear and transparent
communication of the remuneration arrangements in place for
the Company’s Directors and executives. These arrangements
are intended to align remuneration with the Company’s values,
purpose, strategy and performance.

Our purpose is straightforward: “Housing Matters. Community
Matters.” This is achieved through our people who live our Values,
which include integrity, accountability, customer focus, safety
and teamwork.

The Company’s remuneration arrangements are structured to
attract and retain high quality people and remunerate them for
achieving against our objectives and acting consistently with our
values and purpose. Remuneration arrangements are reviewed
regularly by the Remuneration Committee and adjustments
and redesign made where considered appropriate, balancing
alignment with the Company’s own specific circumstances,
fairness to executives and taking into account market
expectations and industry standards.

This Report sets out the remuneration arrangements in place for
KMP, which comprises the Directors of the Company (executive
and non-executive) and those members of the AVJennings
executive team who have authority and responsibility for
planning, directing and controlling the activities of the Company
(Executive KMP).

The name and position of each KMP for FY21 whose remuneration
is disclosed in this Report is set out below:

(i) Directors
S Cheong
RJ Rowley
PK Summers

B Chin
BG Hayman
TP Lai
BL Tan
P Kearns
L Chung

(ii) Executives

Non-Executive Chairman
Non-Executive Deputy Chairman
Managing Director and Chief Executive
Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
(appointed on 1 June 2021)

CD Thompson Company Secretary/General Counsel
SC Orlandi
L Mahaffy
L Hunt

Chief Operating Officer
Chief Financial Officer
General Manager, Human Resources

C. Remuneration Framework

1. Remuneration Governance

The Board has established a Remuneration Committee
comprising not less than three Non-Executive Directors (NEDs)
which is responsible for determining and reviewing remuneration
arrangements for KMP, other senior management personnel and
general staff.

2. Remuneration Objectives

AVJennings’ remuneration objectives are to remunerate fairly,
attract and retain talent, drive performance, promote adherence
to values, and are aligned with shareholder interests. They are
also designed to provide an appropriate balance between fixed
and at-risk components to support the Company’s objectives and
strategy and promote sustained growth in shareholder value.

Directors’ Report.AVJennings Limited - Annual Report 202135

REMUNERATION REPORT (AUDITED) (CONTINUED)

3. Securities Trading Policy

7. Remuneration of KMP

The Company has adopted a Securities Trading Policy
(available on the Company’s website Investor Centre). In
accordance with this Policy, executives are prohibited from
hedging the risk associated with unvested equity-based
incentives. Breach of this requirement could lead to disciplinary
action including dismissal and forfeiture of equity-based
incentives. The Policy also provides for blackout periods for
trading in the Company’s shares around reporting season
as well as prohibitions on insider trading and breach of
confidentiality obligations to the Company.

4. Cessation of Employment

Where an executive resigns or is terminated for cause, any
unvested awards are forfeited unless otherwise determined by
the Board. In exercising this discretion, the Board considers the
circumstances of the cessation of employment.

5. 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 2021.

6. 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 45.

ii) Other Executives

Other executives are full time permanent employees with
employment contracts. Their 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 39 and 45. The Directors are the same as those
identified in the Directors’ Report.

The discussion in this Report mainly addresses the formal
remuneration structure which is in place and applies to
remuneration arrangements in a typical year. The unexpected
COVID-19 crisis has had a significant impact on the Company,
the residential property industry and more broadly, on the
Australian economy in both FY20 and FY21. The Company put in
place a range of initiatives approved in May 2020 to address the
impact of the COVID-19 pandemic. Many of these initiatives had
an impact well into FY21.

The initiatives adopted and referred to above included a number
of changes to remuneration arrangements and these are outlined
below:

•

NED fees were reduced by 20% for the three months May to
July 2020.

The SC Global Management and Consultancy fee was
reduced by 20% for the three months May to July 2020.

Executive KMP and other executives agreed to forgo any
Short Term Incentive (STI) award in respect of FY20 which
would have been paid in August 2020.

Executive KMP and other executives agreed to cancel all
Retention Rights due to be tested for vesting in July 2020.

Executive KMP and other executives agreed to cancel all
Long Term Incentive (LTI) Rights due to be tested for vesting in
September 2020.

Implemented Annual Leave management strategies, which
ran until the end of December 2020.

Cancellation of the Retention Rights and the Performance Rights
saved the Company the cost of acquiring shares on market to
meet vesting obligations. Refer to Section I for details.

8. Remuneration Report at FY20 Annual General Meeting (AGM)

At the Company’s 2020 Annual General Meeting (AGM), of the
eligible votes cast on the Remuneration Report, 18.37% were
against the Report. This meant that the Company did not record
a Second Strike on the Report. The Company has periodically
reached out to certain shareholders to ascertain whether there
were any specific concerns, but no response has been provided.
The Company did not receive any specific feedback at the AGM
on its remuneration arrangements.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION36

REMUNERATION REPORT (AUDITED) (CONTINUED)

9. Addressing Feedback

The Company is aware of previous commentary on the
Company’s Remuneration Report for the last two years from
proxy advisers. This feedback indicated that concerns were held
in relation to the following:

•

The Return on Equity (ROE) component of the LTI Plan
was not considered appropriate. In response to this, the
Remuneration Committee determined at a meeting in
February 2020 to replace the ROE hurdle with a Total
Shareholder Return (TSR) hurdle for all grants made in FY21
and beyond. Further details are provided on page 42;

The Retention component was said not to satisfy the
generally accepted term of measurement (3 years) for an
LTI Plan. The Retention component of the remuneration
structure is not part of the LTI Plan. It was designed as a tool
to promote stability in executive ranks; minimise disruption,
cost and adverse effects of high turnover in executive
ranks; and to ensure that all executives had a meaningful
shareholding in the Company to align interests with
shareholders. For this reason, it was determined to make
the retention award as a grant of rights rather than a cash
payment;

•

The readability of the Report could be improved. As a result,
the Report has been revamped to make it easier to follow
and provide more detail; and

• Concern with the level of disclosure in relation to the LTI

Plan, specifically in relation to a change of control event and
whether Rights participated in dividends. These matters are
addressed in section G.

The Company will continue to consult with shareholders and their
representatives to ensure its remuneration practices balance the
need to meet the objectives of the remuneration practices and
the need to be consistent with prevailing community standards.

10. Framework

The remuneration framework is designed to align executive
interests with Company success and long- term shareholder
value. The framework discussed below is the structure which
applies in a typical year. The structure consists of several
components:

For NEDs – this is Directors’ fees. These are annual fees paid
monthly to Australian based Directors (together with the
superannuation guarantee payment) and paid quarterly to
Singapore based Directors (to which no superannuation
payment is applicable). These arrangements do not include
SC Global nominated Directors, as noted in section D2. NEDs
agreed to a reduction in their fees of 20% for the period
1 May to 31 July 2020.

For Executive KMP, this is made up of:

Fixed remuneration – which is made up of base salary and
superannuation guarantee payments. Target fixed remuneration
is set at or below market median which creates a deferred salary
component which is “at risk” under the STI component.

Short Term Incentives – which is at risk and is based on satisfying
key performance measures which include a range of financial
and non-financial targets. This award is paid in cash and
was historically paid in August each year. For the FY20 year,
executives agreed to forgo the STI payment which would have
been paid in August 2020.

Long Term Incentives – this is a long term (3 year) equity plan
under which Performance Rights are granted annually subject
to performance conditions. The Rights are granted with 50%
subject to the Earnings Per Share (EPS) hurdle and 50% to the
TSR hurdle from FY21. The Rights are tested against performance
hurdles at the end of 3 years from grant date in September of
the relevant year. In June 2020, executives agreed to cancel all
Performance Rights which were due to be tested in September
2020 to determine vesting.

The TSR measure was introduced in February 2020 to replace
the former ROE component of the Performance Rights which
uses market capitalisation as a proxy for equity. The TSR hurdle
applies to grants under the LTI from FY21 onwards. The old ROE
hurdle will apply to grants which were made in FY19 and FY20.

Retention Component – this is an equity award and is granted
annually and vesting as to one third after the first, second
and third anniversaries of the grant. Rights are granted and
these may vest into shares once the service conditions are met.
The Retention Rights are a retention tool designed to promote
stability in the executive ranks and minimise disruption, cost and
adverse effects of high turnover. In June 2020, executives agreed
to cancel all Retention Rights which were due to vest in July 2020.

In lieu of a higher fixed remuneration base, a portion of
remuneration is “at risk”. 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).

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REMUNERATION REPORT (AUDITED) (CONTINUED)

Allocation of Remuneration between Components is as follows:

Fixed
Remuneration
(%)

Total
at Risk
(%)

STI
at Risk (%)

Split of Total at Risk
Retention
at Risk (%)

LTI
at Risk (%)

CEO

COO

Other executives

The proportions of STI, LTI and retention components take into account:

•

The objectives that the Board seeks to achieve and the behaviours which support that outcome;

The desirability of Executives having equity interest in the Company so as to better align their interest with shareholders;

• Market practice; and

•

The service period before Executives can receive equity rewards.

11. Group Performance

The STI and LTI are linked to performance against Key
Performance Measures (KPMs). These are itemised in sections
F and G. KPMs include performance measures linked to the
financial performance of the Company, implementation of
Company strategy and shareholder value, and are structured
to foster achievement of certain financial metrics. The STI is
focussed on short term performance over the preceding 12
months. The KPMs under the LTI are measured over the 3 years
from grant date.

The Remuneration Committee met on several occasions during
2020 to consider changes to the performance measurement
structure. This has involved setting and assessing performance
on quarterly targets in addition to assessment of annual
performance. The Remuneration Committee has assessed
targets and performance on a quarterly basis during FY21 and
re-set targets as is considered necessary or appropriate in the
circumstances, to ensure the Company remains agile and is
responsive to changes in the operating environment.

The KPMs are also linked to other non-financial metrics
considered critical, including safety performance, people and
leadership, risk management, and alignment with values and
Company purpose.

The table below shows the Group’s earnings performance
as well as the movement in the Group’s EPS, TSR and Market
Capitalisation over the last 5 years.

Financial
Report
Date
30 June 2017
30 June 2018
30 June 2019
30 June 2020
30 June 2021

Profit
After Tax
$’000
35,717
31,347
16,439
9,041
18,716

Basic
EPS
Cents
9.31
8.13
4.09
2.23
4.62

TSR*
Cents
15.0
10.0
( 12.5 )
( 4.8 )
23.5

Market
Capitalisation
$’000
253,164
278,074
218,953
188,897
255,462

Return on Market
Capitalisation
%
14.11
11.27
7.51
4.79
7.33

*TSR is the aggregate of the movement in the share price and dividends paid per share during the year ended 30 June.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION38

REMUNERATION REPORT (AUDITED) (CONTINUED)

D. NED Remuneration Arrangements

1. NED Fee Pool

At the AGM in 2019, shareholders approved an increase in the
maximum annual aggregate fee pool to $650,000 for NEDs. The
allocation 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, in particular chairmanship of committees and fees paid to
directors of comparable companies.

NEDs do not receive any leave entitlement benefits or
performance-based remuneration. Australian based NEDs
receive superannuation payments.

2. SC Global Nominee Directors

For FY21, SC Global had two nominees on the Board,
Mr S Cheong and Mr BL Tan. These two Directors do not receive
fees. However, AVJennings pays a consulting fee to the Ultimate
Parent Entity, SC Global Developments Pte Ltd. This consulting
fee is not included in the NEDs fee pool.

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. This review has been undertaken annually
over the past few years and the Australian-based NEDs have,
on each occasion, concluded that the fee is appropriate in all
the circumstances. The annual fee payable is $600,000 and has
been fixed at this level for over ten years. The agreement may
be terminated by either party giving six months notice or by the
Company on 30 days notice for cause. SC Global agreed to a
20% reduction in the consulting fee for the period 1 May to
31 July 2020.

3. NEDs Remuneration

(a) Approach to setting fees

NEDs receive a base fee for service as a Director and an additional fee for participation in a Committee. The Chair of a
Committee receives a higher fee, reflecting the additional responsibility of that position. The Company’s policy is to pay fees
which are reflective of peer practice in the property sector and similarly sized entities, and which attract and retain directors with
the desired attributes, skills and experience. The fees also reflect the time commitment which directors are expected to provide
and the increased complexities and expectations of the office.

(b) Review

NED fees are reviewed on an ad hoc basis as considered necessary. As a matter of practice, fees have been stable for many years
and the NED fee pool cap was not increased for almost 20 years until 2019.

Board

Audit

Risk

Nominations

Remuneration

Investments

Deputy
Chair
$70,000

Member

Chair

Member

Chair

Member

Chair

Member

Chair

Member

Chair

Member

$60,000

$30,000

$12,000

$30,000

$12,000

N/A

$6,000

N/A

$6,000

N/A

$8,000

As noted above, NEDs agreed to a 20% reduction in fees for July 2020.

No fee was payable for chairing the Nominations Committee, the Remuneration Committee and the Investments Committee for FY21.

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REMUNERATION REPORT (AUDITED) (CONTINUED)

(d) Indemnification

Article 112 of the Company’s constitution provides that to the extent permitted by law, it indemnifies a person who is or has been,
an officer of the Company or any related bodies corporate against any liability incurred by the person as such an officer, to
another person and against a liability for costs and expenses incurred by the person in successfully defending proceedings.

(e) Insurance premiums

Article 112 of the Company’s constitution also provides that to the extent permitted by law the Company may pay or agree to pay
a premium in respect of a contract insuring a person who is or has been an officer of the Company or its related bodies corporate
against a liability incurred by the person as such an officer, and for costs and expenses incurred by the person in defending
proceedings as such an officer, whatever the outcome.

During the year the Company paid premiums for policies insuring directors and officers of the Company and its related bodies
corporate against certain liabilities, to the extent permitted by law and subject to certain exclusions. The amount of the premiums
paid in respect of these policies has not been disclosed in accordance with usual practice.

(f) Fees paid

Fees paid to NEDs in FY21 is set out in the table below:

S Cheong(1)

RJ Rowley(3)

E Sam(1)(6)

B Chin(3) (4)

BG Hayman(3)

TP Lai(3) (4)

BL Tan(1)

P Kearns(3)

L Chung(5)

Total

Year

2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020

2021

2020

Short-Term
Fees $

Post Employment
Superannuation(2) $

-
-
113,151
111,233
-
-
94,400
116,800
82,618
81,218
85,000
104,200
-
-
71,842
70,624
5,479
-

452,490

484,075

-
-
10,749
10,567
-
-
-
-
7,849
7,716
-
-
-
-
6,825
6,709
521
-

25,944

24,992

Total $

-
-
123,900
121,800
-
-
94,400
116,800
90,467
88,934
85,000
104,200
-
-
78,667
77,333
6,000

478,434

509,067

(1) These Directors were not paid fees. A consulting fee of $50,000 per month is payable to the Ultimate Parent Entity SC Global Developments Pte Ltd which
covers the services of these Directors. The fee for the month of July 2020 was reduced by 20% to $40,000 as part of actions taken to manage overheads
in response to the COVID-19 pandemic. Total fee paid for the year was $590,000.

(2) Payments to Defined Contribution Plans consist of Superannuation Guarantee Contribution payments as well as employee voluntary contributions.

(3) NEDs also agreed to a 20% reduction in fees for the month of July 2020.

(4) A portion of the FY20 increase in fees paid to B Chin and TP Lai were due to a one-off timing of a payment.

(5) Appointed 1 June 2021.

(6) Retired 30 June 2020.

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.

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REMUNERATION REPORT (AUDITED) (CONTINUED)

(g) Other transactions and balances with KMP and their related parties

During the year, the Board authorised a director, P Kearns to undertake negotiations with a range of parties in an effort to secure
access to a pipeline of projects and alternative funding sources; to determine an appropriate corporate and financial structure
to undertake these transactions; and to engage advisers to assist the process and document and implement these arrangements.
Under the Board authority, special exertion fees were payable in respect of this undertaking to a related party of P Kearns of
which he is a director and controlling shareholder. During the year, special exertion fees amounting to $222,950 were incurred (of
which $75,000 were outstanding at 30 June 2021). The Board’s authorisation expired on 30 June 2021.

E. Executive Fixed Remuneration

Executive remuneration includes a mix of fixed and variable remuneration. Variable remuneration includes short term incentives, long
term incentives and retention components.

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. As a starting point, the TEC is typically set at or below market median for the position with
adjustment as necessary to take account of the factors above, the need to secure talent and to motivate the right people to deliver on
the Company’s strategy.

The fixed component of remuneration of Executive KMPs is detailed on page 45.

F. Short Term Incentive (STI)

Executives participate in a STI plan which assesses achievement against KPMs. Each executive has KPMs that are aligned to
company, business unit and individual performance. An STI payment is made to the extent performance is achieved against the KPMs
set at the beginning of the financial year, as appropriate, and with regards to relevant business units and company performance.

As a response to the impact of COVID-19, Executive KMP and other executives agreed to forgo any STI award in respect of FY20. In
addition, the Remuneration Committee had decided that for FY21, STIs and the associated KPMs will be set and determined on a
quarterly basis, to ensure the Company remains agile and is responsive to changes in the operating environment.

STI payments are based on the scorecard measures and weightings disclosed below. These targets are set by the Remuneration
Committee and align with the Group’s strategic and business objectives. They are reviewed annually.

For FY21, the Chief Executive Officer (CEO) has a target STI opportunity of 70% of TEC, the Chief Operating Officer (COO) has a
target STI opportunity of 21% and remaining Executive KMP and other executives have a STI opportunity of 17% of TEC.

The Remuneration Committee reviewed the overall weightings between Fixed and “At Risk” components of the executive remuneration
arrangements. Reflecting where CEO fixed remuneration is positioned in comparison to competitors, the Committee approved
an adjustment in weightings for the CEO, increasing the STI component for FY21 (in the context of COVID-19). The Committee also
adjusted the “At Risk” component for the COO as shown in the table.

The performance conditions are designed to promote achievement of the Company’s financial and strategic goals, which in turn
should lead to shareholder returns. Targets are also designed to achieve strong operational disciplines. Non-financial targets are
focussed on maintaining a sustainable business through improved safety performance; focus on customer satisfaction and service;
and to implementation of strategy.

Directors’ Report.AVJennings Limited - Annual Report 2021
41

REMUNERATION REPORT (AUDITED) (CONTINUED)

The table below provides an overview of the STI against key financial and non-financial performance measures and the weightings for
each component.

Financial and Business Performance

CEO

COO

Other SET(1)

Underlying Profit Performance

Business Performance

Strategic Initiatives

Individual Performance
objectives

Organisational Performance

• Group profit before tax.
• Return on Net Funds Employed (NFE).
• Operating cashflow.
• Gross margins.
• Appropriate and efficient capital management

(efficiency of the Balance Sheet).

• Alignment of priorities and allocation of resources to
bring about implementation of company strategy.

• Time (operational delivery against agreed

timeframes) and quality (built form product).

• Improvement in underlying health of the Company.
• Risk management.
• Strategy objectives focussed on exploring growth

opportunities for AVJennings.

• Development and implementation of strategy plans
including growth through organic and corporate
means, new business streams and strategic
alignments.

• Growth in lots under control (three year).

40%

50%

30% to 40%

30%

10%

• Aligned to strategic objectives.

20%

40% to 50%

Customer and Stakeholder
Performance

• Customer Advocacy.

People

objectives.

• Employee retention and engagement.
• Progress longer term inclusion and diversity

Safety and Environment

• Leadership – maintain a high performing team.
• Succession planning for key positions.
• Providing a safe work environment.
• Minimise the impact of our activities on the

environment.

(1) SET is an abbreviation for the Senior Executive Team.

CEO

COO

Other SET(1)

30%

20%

The Remuneration Committee determines the STI to be paid based on an assessment of the extent to which the KPMs are met.
Effective FY21, STIs are calculated quarterly and typically paid within two months of the end of the relevant quarter. The Committee
has the discretion to adjust STIs upwards or downwards in light of unexpected circumstances or unintended consequences.

In making its assessments, the Committee considers the following factors:

•

Performance in implementing Company strategy.

Performance in the prevailing market.

The financial result.

Performance against individual KPMs.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION42

REMUNERATION REPORT (AUDITED) (CONTINUED)

G. Long Term Incentive (LTI)

LTI grants are only made to executives who have the ability to
impact the Group’s performance and create shareholder value
over the longer term.

LTI remuneration is provided by the issue of Rights with
performance conditions. The use of Performance Rights as
an incentive reduces upfront cash requirements (as shares do
not need to be acquired for allocations). Shares are acquired
on market by the Plan Trustee to satisfy the grant of shares in
respect of rights which have vested. Participants do not receive
dividends on Rights (as distinct from shares).

The allocation of Performance Rights is designed to align
executives’ interests with shareholders and to consider
themselves like shareholders. The Rights are subject to real risk of
forfeiture during the vesting period.

In response to the impact of COVID-19, Executive KMP and other
executives agreed to cancel all Performance Rights due to be
tested for vesting in September 2020. These Performance Rights
were cancelled in June 2020.

LTI and Performance

The TSR measure was introduced in February 2020 to replace the
former ROE component of the Performance Rights which used
market capitalisation as a proxy for equity. The TSR hurdle will
apply to grants under the LTI from FY21 onwards. The old ROE
hurdle will apply to grants which were made in FY19 and FY20.

50% of Performance Rights granted vest depending on
AVJennings’ average growth rate in EPS over the three financial
years of performance measurement.

50% of Performance Rights granted vest depending on
AVJennings’ TSR over the three financial years of performance
measurement against the ASX 300 Real Estate Index, a
comparator group including peers in the residential property
sector. The comparator group is not directly comparable to
AVJennings as the Index contains non-residential property
participants. However, this comparator group was chosen as
the best approximation as the pool of directly comparable listed
developers was too small to provide a reliable and meaningful
comparator group.

Both elements of the Performance Rights (EPS and TSR, formerly
ROE) are also subject to a service condition. The recipient must
be employed by AVJennings as at 30 June of the year in which
the performance conditions of the Rights are tested. The Rights
only vest if both the service condition and the performance
conditions are satisfied.

The performance conditions are tested at the end of the three-
year measurement period, in the September following release of
the financial statements for that year. There is no re-testing. If the
conditions are not satisfied when they are tested, the Rights are
immediately forfeited.

In the event of a change in control of the Company, the Board
can elect to vest unvested Rights.

As the LTI Plan is a Rights Plan, the securities do not qualify for
dividend payments until the rights have vested.

The operation of the EPS, ROE and the new TSR hurdles are set
out below.

AVJennings’ EPS growth rate over
the three year performance period

Percentage of rights
vesting

< 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

AVJennings’ ROE over the three
year performance period

Percentage of rights
vesting

< 12%

12%

15%

> = 18%

Nil
50% of the allocation
for the hurdle
75% of the allocation
for the hurdle
100% (Straight line
interpolation between
12% and 18%)

This ROE hurdle was removed in February 2020 and replaced
with the TSR hurdle for grants for FY21 and beyond.

AVJennings’ TSR rank against ASX
300 RE Index at 30 September

< median

At the median

> median but < 75th percentile

> 75th percentile

Percentage vesting

Nil
50% of the allocation
for the hurdle
Pro-rata between 50th
and 75th percentiles
100% of the allocation
for the hurdle

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REMUNERATION REPORT (AUDITED) (CONTINUED)

H. Retention

Retention Rights are granted in three equal tranches which vest in each of the three succeeding years following the year of grant.

In response to the impact of COVID-19, Executive KMP and other executives agreed in June 2020 to cancel all Retention Rights due to
vest in July 2020 (which included three tranches covering FY18, FY19 and FY20).

Retention component -
years of service

Percentage of
rights vesting

one year

two years

three years

Rationale for Retention Rights

33.33%

33.34%

The Company recognises that the TEC is generally set at around mid-market. It is also recognised that the market for quality
executives is dynamic and that high turnover in executive ranks is undesirable, costly and disruptive. Accordingly, Retention Rights are
granted to support a number of objectives:

• Address the issue of retaining executives;

• Avoid the disruption of turnover in executive ranks;

• Avoid the costs of recruitment of replacement executives; and

• Avoid the impact on operations, performance and productivity of executive turnover.

Unvested Retention Rights are subject to real risk of forfeiture, for example where an executive ceases employment for any reason.

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REMUNERATION REPORT (AUDITED) (CONTINUED)

I. Remuneration Related Measures Taken in Response to COVID-19

PK Summers
CD Thompson
SC Orlandi
L Mahaffy
L Hunt

Executive KMP

Other Executives

Total

Maximum
STI
Opportunity
Forgone
$
218,397
71,393
66,667
65,272
44,121

465,850

272,784

Rights Cancelled

Service
Rights
Number
268,505
61,440
53,044
56,174
37,970

477,133

256,927

LTI
Performance
Rights
Number
403,993
57,777
46,758
52,825
35,706

597,059

255,635

738,634

734,060

852,694

had been acquired at around that price, just for the Executive
KMP (excluding other executives) the Company would have
acquired 477,133 shares at a cost of $226,781 plus brokerage. In
addition, the cancellation resulted in additional savings being
made by avoiding the acquisition of shares for other executives.
That is a real cash saving to the Company.

The Performance Rights were due to have the performance
conditions tested to determine vesting in September 2020.
The Performance Rights were cancelled in late June 2020
and therefore no testing took place in September 2020.
Executives including Executive KMP agreed to cancellation of
the Performance Rights and so saved the Company the cost of
acquiring shares on market to meet any vesting obligation which
may have arisen.

In addition, all employees (other than site and sales staff)
including executives agreed to leave management arrangements
over the period May – December 2020 to reduce the Company’s
leave liabilities.

Executives agreed to a number of changes to remuneration
arrangements in response to the COVID-19 crisis. The measures
are outlined below:

•

Executive KMP and other executives agreed to forgo any STI
award in respect of FY20, which would have been paid in
August 2020.

Executive KMP and other executives agreed to cancel all
Retention Rights due to vest in July 2020.

Executive KMP and other executives agreed to cancel all LTI
Rights due to be tested for vesting in September 2020.

All office-based staff (including Executive KMP) agreed
to arrangements to take annual leave over the period
July 2020 to end December 2020 thereby reducing the
Company’s leave liabilities.

The cancelled Retention Rights were due to vest in early July
2020, subject to the executives being employed by the Company
at 30 June 2020. All relevant executives (but for two who had
resigned by 30 June), including all Executive KMP remained
employed at that date and so all the Retention Rights would have
vested, but for their cancellation in late June.

Cancellation of the Retention Rights saved the Company the
cost of acquiring shares on market to meet vesting obligations.
The share price at the time when those shares would have been
acquired (early July) being the Volume Weighted Average Price
for the first 5 trading days of July 2020 was $0.4753. If shares

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AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION

REMUNERATION REPORT (AUDITED) (CONTINUED)

Remuneration to Executive KMP in FY21

A summary of the statutory remuneration tables prepared in accordance with the Australian Accounting Standards is provided in the
table on page 45.

Disclosures required in the remuneration report by the Corporations Act 2001, particularly the inclusion of accounting values for LTI
rights awarded but not vested, including rights cancelled, can vary significantly from the remuneration actually paid to Executive
KMP. As a general principle, Australian Accounting Standards require the value of share-based payments to be calculated at the
time of grant and expensed over the vesting period. This may not reflect what Executive KMP actually received or became entitled to
during the year.

Actual remuneration which crystallised in FY21

The table below is a voluntary non-statutory disclosure which is not prepared in accordance with Australian Accounting Standards.
It is designed to provide greater transparency for shareholders and shows the actual remuneration each Executive KMP received (or
was entitled to receive) during FY21.

PK Summers
CD Thompson
SC Orlandi

L Mahaffy
L Hunt

Total

Salary
$

578,066
410,410
381,806

373,373
244,046

STI
Cash Bonus
$

436,795
71,393
85,714

65,273
44,121

Other(1)
$
26,693
-
-

-
-

Superannuation
$
21,694
21,694
21,694

21,694
21,694

1,987,701

703,296

26,693

108,470

LTI
Vested
$
-
-
-

-
-

Total
$
1,063,248
503,497
489,214

460,340
309,861

2,826,160

(1) ‘Other’ relates to the value of motor vehicle benefits.

Directors’ Report.AVJennings Limited - Annual Report 202147

REMUNERATION REPORT (AUDITED) (CONTINUED)

K. Equity Disclosures

Rights have been granted to Executive KMP as detailed in the table below.

The September 2017 Grant was made for the FY18 year (with final performance conditions testing in September 2020).

The September 2018 Grant was made for the FY19 year (with final performance conditions testing in September 2021).

The September 2019 Grant was made for the FY20 year (with final performance conditions testing in September 2022).

The September 2020 Grant was made for the FY21 year (with final performance conditions testing in September 2023).

The fair value of the Rights at the date of the Grant is determined by the Plan manager 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.

The following is the status of Rights granted to Executive KMP under the LTI Plans:

KMP

PK Summers

Year of
Grant

Fair Value at
Grant date

Rights at
1 July 2020

Rights
granted

FY19

FY20

FY21

$395,702

531,068

$405,605

765,725

$187,179

450,996

CD Thompson

FY19

$69,652

83,260

CD Thompson

FY20

$71,395

127,675

CD Thompson

FY21

$71,385

171,999

SC Orlandi

L Mahaffy

L Hunt

Total

FY19

FY20

FY21

FY19

FY20

FY21

FY19

FY20

FY21

$57,463

68,689

$66,669

119,224

$85,706

206,503

$63,682

76,123

$65,275

116,731

$65,267

157,256

$43,044

51,454

$44,122

78,904

$44,116

106,295

Rights
vested

Rights
forfeited

Rights
cancelled

Rights at
30 June 2021

531,068

765,725

450,996

83,260

127,675

171,999

68,689

119,224

206,503

76,123

116,731

157,256

51,454

78,904

106,295

$1,736,262

2,018,853

1,093,049

3,111,902

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION48

REMUNERATION REPORT (AUDITED) (CONTINUED)

Shareholdings of KMP

The number of shares in the Company held during the financial year by each KMP of the Group, including their related parties, are set
out below.

For the year ended 30 June 2021

Directors
S Cheong
PK Summers(1)
RJ Rowley
BG Hayman
P Kearns
Executives
CD Thompson
SC Orlandi
L Mahaffy
L Hunt

Total

For the year ended 30 June 2020
Directors
S Cheong
E Sam(2)
PK Summers
RJ Rowley
BG Hayman
P Kearns
Executives
CD Thompson
SC Orlandi
L Mahaffy
L Hunt

Opening
Balance

Vested as
Remuneration

On market
Purchase/
(disposal)

Closing
Balance

219,112,839
4,959,951

370,223
235,000
25,000

1,860,987
565,480
293,366
385,523

227,808,369

218,881,388
224,820
4,830,262
270,223

-
-

1,550,309
492,293
211,031
329,871

-
-
-
-
-

-
-
-
-

-
-
-
-
-

-
-
-
-

219,112,839
4,959,951
370,223
235,000
25,000

1,860,987
565,480
293,366
385,523

227,808,369

-
-
479,689
-
-
-

90,054
73,187
82,335
55,652

231,451
-
( 350,000 )
100,000
235,000
25,000

219,112,839
224,820
4,959,951
370,223
235,000

25,000

220,624
-
-
-

1,860,987
565,480
293,366
385,523

Total

226,790,197

780,917

462,075

228,033,189

(1) Subsequent to the end of the financial year, the shareholding increased by 257,868.

(2) Retired on 30 June 2020.

Directors’ Report.AVJennings Limited - Annual Report 202149

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
4

Attended
4
4
4
4
4
4
4
4
1

Held
-
3
-
3
-
3
-
-
-

Attended
-
3
-
3
-
3
-
-
-

Meetings of Committees

Remuneration
Held
3
-
-
-
3
3
-
-
-

Attended
3
-
-
-
3
3
-
-
-

Nominations

Held
1
1
-
1
1
-
-
-
-

Attended
1
1
-
1
1
-
-
-
-

Risk Management
Attended
-
5
-
-
5
-
-
5
-

Held
-
5
-
-
5
-
-
5
-

S Cheong
RJ Rowley
PK Summers
B Chin
BG Hayman
TP Lai
BL Tan
P Kearns
L Chung*

*Appointed on 1 June 2021 and was eligible to attend one full meeting of Directors.

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

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.

AUDITOR’S INDEPENDENCE DECLARATION

The Auditor’s Independence Declaration is set out on page 51.

The relevant interests of the Directors in the shares of the
Company at the date of this Report are:

Director
S Cheong
PK Summers
RJ Rowley
BG Hayman
P Kearns

Number
219,112,839
4,959,951
370,223
235,000
25,000

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.

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.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION50

NON-AUDIT SERVICES

The Group’s auditor, Ernst & Young provided certain non-audit services as outlined in note 33. 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 reason:

•

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

27 August 2021

Peter Summers

Director

Directors’ Report.AVJennings Limited - Annual Report 202151

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Continuing operations
Revenue from contracts with customers
Revenue
Cost of sales
Gross profit

Share of loss of joint ventures
Change in equity accounted investment provisions
Change in inventory loss provisions
Fair value adjustment to financial asset
Fair value adjustment to investment property
Selling and marketing expenses
Employee expenses
Other operational expenses
Management and administration expenses
Depreciation and amortisation expenses
Finance income
Finance costs
Other income

Profit before income tax
Income tax

Profit after income tax

Other comprehensive income (OCI)
Foreign currency translation loss

Other comprehensive loss

Total comprehensive income

Profit attributable to owners of the Company

Total comprehensive income attributable to
owners of the Company

Earnings per share (cents per share):
Basic earnings per share
Diluted earnings per share

To be read in conjunction with the accompanying notes.

Note

2021
$'000

2020
$'000

26
3
3
10
8

3
3
3
3

311,090
311,090
( 240,832 )
70,258

262,354
262,354
( 202,461 )
59,893

( 2,295 )
1,554
( 1,793 )
-
180
( 4,998 )
( 22,148 )
( 5,650 )
( 6,944 )
( 1,860 )
170
( 330 )
532

( 66 )
( 947 )
( 1,629 )
( 516 )
( 190 )
( 5,044 )
( 23,531 )
( 6,210 )
( 7,805 )
( 2,125 )
1,264
( 393 )
457

26,676
( 7,960 )

13,158
( 4,117 )

18,716

9,041

( 185 )

( 1,228 )

( 185 )

( 1,228 )

18,531

7,813

18,716

9,041

18,531

7,813

34
34

4.62
4.61

2.23
2.23

Financial Statements.AVJennings Limited - Annual Report 202153

Note

5
6
7
4(c)
9

6
7
8
26
10
11
12
13
9

14
16
4(c)
17

14
15
16
4(d)
17

2021
$’000

2020
$’000

13,099
46,030
152,155
222
3,613
215,119

163
388,662
1,760
4,895
-
2,010
4,923
2,816
4,920
410,149

5,703
23,036
185,366
1,223
3,522
218,850

12,042
401,997
1,580
5,636
1,695
1,883
5,978
2,816
2,700
436,327

625,268

655,177

32,335
1,189
1,342
7,070
41,936

16,540
1,542
413
5,848
24,343

15,545
138,549
4,054
15,066
1,009
174,223

27,546
190,110
5,060
14,039
949
237,704

216,159

262,047

409,109

393,130

18
19(a)
19(c)

173,740
8,953
226,416

174,179
8,408
210,543

409,109

393,130

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Current assets
Cash and cash equivalents
Receivables
Inventories
Tax receivable
Other assets
Total current assets

Non-current assets
Receivables
Inventories
Investment property
Equity accounted investments
Financial asset
Plant and equipment
Right-of-use assets
Intangible assets
Other assets
Total non-current assets

Total assets

Current liabilities
Payables
Lease liabilities
Tax payable
Provisions
Total current liabilities

Non-current liabilities
Payables
Borrowings
Lease liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities

Total liabilities

Net assets

Equity
Contributed equity
Reserves
Retained earnings

Total equity

To be read in conjunction with the accompanying notes.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION54

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Attributable to equity
holders of AVJennings Limited

Total equity

Foreign
Currency
Translation
Reserve

Share-based
Payment
Reserve

Retained
Earnings

Contributed
Equity

Note

$'000

174,509

4,256

4,626

212,886

396,277

( 416 )

174,509

4,256

4,626

212,470

395,861

( 1,228 )

9,041

( 1,228 )

9,041

7,813

18(b)

( 330 )

32(a)

( 330 )

( 225 )

979

( 225 )

979

( 10,968 )

754

( 10,968 )

( 10,544 )

174,179

3,028

5,380

210,543

393,130

( 185 )

18,716

( 185 )

18,716

18,531

18(b)

( 439 )

32(a)

( 439 )

( 70 )

800

( 70 )

800

( 2,843 )

730

( 2,843 )

( 2,552 )

At 1 July 2019

Effect of adoption of new
leases accounting standard

At 1 July 2019 (restated)

Comprehensive income:

Profit for the year

Loss for the year

Total comprehensive income for the year

Transactions with owners in their capacity
as owners:

- Treasury shares acquired

- Share-based payment expense

reversed (lapsed rights)

- Share-based payment expense

- Dividends paid

Total transactions with owners in
their capacity as owners

At 1 July 2020

Comprehensive income:

Profit for the year

Loss for the year

Total comprehensive income for the year

Transactions with owners in their capacity
as owners:

- Treasury shares acquired

- Share-based payment expense

reversed (lapsed rights)

- Share-based payment expense

- Dividends paid

Total transactions with owners in their
capacity as owners

At 30 June 2020

174,179

3,028

5,380

210,543

393,130

At 30 June 2021

173,740

2,843

6,110

226,416

409,109

To be read in conjunction with the accompanying notes.

Financial Statements.AVJennings Limited - Annual Report 2021
CONSOLIDATED STATEMENT OF CASH FLOWS

Cash flow from operating activities

Receipts from customers (inclusive of GST)

Payments to other suppliers and employees (inclusive of GST)

Interest paid

Income tax paid

Net cash from operating activities

Cash flow from investing activities

Payments for plant and equipment

Interest received

Net cash (used in)/from investing activities

Cash flow from financing activities

Proceeds from borrowings

Repayment of borrowings

Principal elements of lease payments

Net payment for treasury shares

Dividends paid

Net cash used in financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of the year

Effects of exchange rate changes on cash and cash equivalents

2021

2020

Note

$’000

4(c)

18(b)

331,084

275,933

( 253,876 )

( 246,123 )

( 8,231 )

( 5,008 )

( 10,144 )

( 9,031 )

63,969

10,635

( 366 )

170

( 196 )

( 1,145 )

1,264

119

78,787

( 130,348 )

( 1,500 )

( 439 )

( 2,843 )

85,460

( 95,685 )

( 1,761 )

( 330 )

( 10,968 )

( 56,343 )

( 23,284 )

7,430

5,703

( 34 )

(12,530)

18,209

Cash and cash equivalents at end of the year

13,099

5,703

To be read in conjunction with the accompanying notes.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION56

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Section A – How the numbers are calculated

Section A1 Segment information

1. OPERATING SEGMENTS

The Group 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:

Land Development, Integrated Housing and Apartments Development activities are conducted within our jurisdictions.

Other:

This includes revenue from the sale of apartments in Western Australia and numerous low value items.

Financial Statements.AVJennings Limited - Annual Report 202157

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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Financial Statements.AVJennings Limited - Annual Report 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Section A2 Profit and loss information

2. REVENUES FROM CONTRACTS WITH CUSTOMERS

(a) Disaggregated revenue information

The disaggregation of the Group’s revenue from contracts with customers is set out below:

Operating Segments

30 June 2021

NSW

$'000

VIC

$'000

QLD

$'000

Other*

$’000

Total

$'000

Types of goods or services

Sale of Land

19,565

16,263

50,271

10,836

42,850

Sale of Integrated Housing

56,755

20,644

13,453

11,164

1,515

139,785

103,531

Sale of Apartments

Property Development & Other Services

54,653

317

2,516

10,288

64,941

2,833

Total revenue from contracts with customers

76,637

94,076

63,724

22,000

44,365

10,288

311,090

Timing of revenue recognition

Goods transferred at a point in time

76,320

91,560

63,724

22,000

44,365

10,288

308,257

Services transferred over time

317

2,516

2,833

Total revenue from contracts with customers

76,637

94,076

63,724

22,000

44,365

10,288

311,090

NSW

$'000

VIC

QLD

Other*

$'000

$’000

Total

$'000

*Relates to Western Australia.

Operating Segments

30 June 2020

Types of goods or services

Sale of Land

48,324

19,512

31,409

7,457

25,317

Sale of Integrated Housing

65,299

23,909

8,700

8,759

7,747

Sale of Apartments

Property Development & Other Services

13,161

247

2,513

Total revenue from contracts with customers

113,870

59,095

40,109

16,216

33,064

Timing of revenue recognition

Goods transferred at a point in time

113,623

56,582

40,109

16,216

33,064

Services transferred over time

247

2,513

Total revenue from contracts with customers

113,870

59,095

40,109

16,216

33,064

132,019

114,414

13,161

2,760

262,354

259,594

2,760

262,354

(b) Revenue recognition accounting policy

(i) Sale of land, integrated housing and apartments

Revenue from the sale of land, houses and apartments is recognised
at a point in time when control is transferred to the customer. Except
for certain contractual arrangements discussed below, this occurs at
settlement when legal title passes and an enforceable right to
payment exists.

For the following contractual arrangements, revenue is recognised
prior to settlement where the customer has obtained control, and a
right to payment exists:

•

Revenue from sales of land on deferred terms to builders in New
Zealand. The builder gains control of the land at the point when
the contract is unconditional, physical works are complete and
building can be commenced.

Sales of englobo land on deferred terms. Control passes when
the contract is unconditional, physical works are complete and
the customer has unfettered rights to the land before settlement.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION60

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2. REVENUES FROM CONTRACTS WITH CUSTOMERS

(iii) Financing components

(continued)

•

Revenue from sales of land to builders in Australia where
the builder is the ultimate purchaser and not a conduit
between AVJennings and a retail purchaser. The builder
gains control of the land at the point when the contract is
unconditional, physical works are complete and building
can be commenced.

(ii) Property development and other services

AVJennings Properties Ltd provides property development and
other services to joint venture arrangements entered into by
other entities within the Group. The performance obligation
is satisfied over time and revenue is progressively recognised
based on the terms of the service agreement.

3. INCOME AND EXPENSES

Revenues

Revenue from contracts with customers

Total revenues

Cost of sales include:

Utilisation of inventory provisions

Amortisation of finance costs capitalised to inventories

Impairment of assets

(Reversal)/provision - equity accounted investment

Increase in inventory loss provisions

The Group does not expect to have any contracts for the sale
of land, integrated housing and apartments where the duration
between the transfer of the goods to the customer and payment
by the customer exceeds one year in Australia.

In the case of certain contracts for the sale of land in New
Zealand and the provision of services in Australia, the duration
may exceed one year.

Note

2021
$'000

2020
$'000

311,090

262,354

311,090

262,354

( 774 )

8,783

( 1,554 )

1,793

( 456 )

7,730

947

1,629

For the year ended 30 June 2021, the movement in inventory provision resulted from a realignment of future assumptions with current market
conditions relating to projects in South Australia and Western Australia. For the prior year, the movement related to projects in Queensland and
South Australia.

Depreciation and amortisation expense

Depreciation of owned assets

Amortisation of right-of-use assets

Total depreciation and amortisation expense

Finance income

236

1,624

1,860

284

1,841

2,125

Interest from financial assets held for cash management purposes

170

1,264

Finance costs

Bank loans and overdrafts

Interest on lease liabilities

Total finance costs

Less: Amount capitalised to inventories

Finance costs expensed

Other income

Rent from investment property

Sundry income

Total other income

7,911

320

8,231

( 7,901 )

330

436

532

9,809

335

10,144

( 9,751 )

393

125

332

457

Financial Statements.AVJennings Limited - Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4. INCOME TAX

(a) Income tax expense

The major components of income tax are:

Current income tax

Current income tax charge

Adjustment for prior year

Deferred income tax

Current temporary differences

Adjustment for prior year

Income tax reported in the Consolidated
Statement of Comprehensive Income

2021

$’000

2020

$’000

6,896

1,029

4,822

226

( 764 )

( 167 )

7,960

4,117

(b) 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

26,676

13,158

Tax at Australian income tax rate of 30%

Net share of equity accounted joint venture loss

Other (non-assessable)/non-deductible items

Foreign jurisdiction losses

Effect of lower tax rate in foreign jurisdiction

Adjustment for prior year

Income tax expense

Effective tax rate

8,003

689

( 588 )

( 179 )

7,960

30%

3,947

205

( 16 )

( 98 )

4,117

31%

Income tax expense

7,960

4,117

Timing differences recognised in deferred tax

Adjustment for prior year

Exchange rate translation difference

Current year tax payable at year end

Current year tax receivable at year end

Prior year tax paid in current year

Cash taxes paid per the Consolidated Statement of Cash Flows

( 1,029 )

( 35 )

( 1,342 )

222

( 777 )

5,008

931

( 226 )

( 7 )

( 413 )

1,223

3,406

9,031

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION62

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4. INCOME TAX (continued)

(d) Recognised deferred tax assets and liabilities

Deferred income tax movement for the year ended
30 June 2021:

Opening
balance

Expense/
(benefit)

Effect of (1) adoption
of new accounting
standard

Foreign
exchange
variance

Closing
balance

$’000

Deferred tax assets

- inventories

- accruals

- employee entitlement provisions

- fair value other assets

- lease liabilities

- other

Deferred tax assets

Deferred tax liabilities

- inventories

- fair value investment property

- unearned revenue

- prepayments

- brand name

- right-of-use assets

- other

Deferred tax liabilities

Net deferred tax liabilities

Deferred income tax movement for the year ended
30 June 2020:

Deferred tax assets

- inventories

- accruals

- employee entitlement provisions

- fair value other assets

- lease liabilities

- other

Deferred tax assets

Deferred tax liabilities

- inventories

- fair value investment property

- unearned revenue

- prepayments

- brand name

- right-of-use assets

- other

3,187

305

758

1,012

1,730

822

1,900

8,452

( 822 )

( 390 )

( 16 )

167

( 17,999 )

( 183 )

888

( 54 )

( 1,068 )

( 1,888 )

( 44 )

( 845 )

( 13 )

( 1,713 )

295

( 639 )

( 424 )

( 22,491 )

( 1,196 )

( 14,039 )

( 1,029 )

2,835

624

1,674

352

134

822

665

455

5,588

( 400 )

1,629

( 18,274 )

( 992 )

( 66 )

( 845 )

( 584 )

275

( 183 )

( 101 )

( 656 )

( 55 )

1,235

( 1,057 )

Deferred tax liabilities

( 20,761 )

( 698 )

( 1,057 )

Net deferred tax liabilities
(1) For the year ended 30 June 2020, this is the effect of the Leases Accounting Standard.

( 15,173 )

931

178

3,492

1,770

1,808

1,510

8,619

( 17,111 )

( 237 )

( 2,954 )

( 57 )

( 845 )

( 1,418 )

( 1,063 )

( 23,685 )

( 15,066 )

3,187

758

1,730

822

1,900

8,452

( 17,999 )

( 183 )

( 1,068 )

( 44 )

( 845 )

( 1,713 )

( 639 )

( 22,491 )

( 14,039 )

Financial Statements.AVJennings Limited - Annual Report 202163

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4. INCOME TAX (continued)

(e) Tax consolidation legislation

AVJennings Limited and its wholly owned Australian controlled entities are in a Tax Consolidated Group (TCG).

The entities in the TCG have entered into a Tax Sharing Agreement which limits the joint and several liabilities of the wholly owned
entities in the case of a default by the head entity, AVJennings Limited.

The entities in the TCG have also entered into a Tax Funding Agreement to fully compensate/be compensated by AVJennings Limited
for current tax balances and deferred tax assets or unused tax losses and credits transferred.

(f) 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.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION64

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Section A3 Balance Sheet information

5. CASH AND CASH EQUIVALENTS

Cash at bank and in hand

Accounting

2021
$’000

13,099

2020
$’000

5,703

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.

6. RECEIVABLES

Current

Trade receivables

Related party receivables

Other receivables

Total current receivables

Non-current

Trade receivables

Related party receivables

Total non-current receivables

(i) Accounting

2021

$’000

43,414

1,613

1,003

46,030

163

2020

$’000

19,451

822

2,763

23,036

8,963

3,079

12,042

A receivable represents the Group’s right to an amount of consideration that is unconditional (i.e., only the passage of time is
required before payment of the consideration is due). Receivables are initially recognised at fair value and subsequently measured at
amortised cost using the effective interest rate method, less an allowance for impairment.

The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or
loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows
that the Group expects to receive, discounted at an approximation of the original effective interest rate.

For trade receivables, the Group applies the Standard’s simplified approach in calculating ECLs. Therefore, the Group does not track
changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.

Financial Statements.AVJennings Limited - Annual Report 202165

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

6. RECEIVABLES (continued)

(ii) Expected credit losses

Negligible expected credit losses (2020: $Nil) have been recognised by the Group in the current year.

At 30 June, the ageing analysis of trade receivables is as follows:

Total
$'000

Not due
$'000

0-30
$'000

31-60
$'000

61-90
$'000

+ 91
$'000

+ 91#
$'000

Number of days overdue

43,414

28,414

2021

2020

# Considered impaired

The carrying value of receivables is assumed to approximate their fair value.

The Group does not have any significant credit risk exposure to a single customer. Receivables in respect of land and built form
require full settlement prior to passing of title.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
66

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7. 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
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

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 non-current inventories

Total inventories

Note

7(a)

2021
$’000

2020
$’000

23,399
3,187
( 3,800 )
22,786

29,822
24,574
19,302
5,980
79,678

30,056
17,680
2,874
( 919 )
49,691

19,577
2,858
( 1,983 )
20,452

31,860
31,098
29,749
6,436
99,143

37,338
25,069
3,497
( 133 )
65,771

152,155

185,366

261,111
24,446
( 6,890 )
278,667

53,465
31,778
1,872
21,990
109,105

413
475
34
( 32 )
890

295,363
30,631
( 8,473 )
317,521

30,464
29,356
5,194
14,502
79,516

3,458
1,190
345
( 33 )
4,960

388,662

401,997

540,817

587,363

Financial Statements.AVJennings Limited - Annual Report 202167

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7. INVENTORIES (continued)

(a) Borrowing costs attributable to qualifying assets are capitalised. These include interest and fees and have been capitalised at a

weighted average rate of 4.19% (2020: 4.83%).

Accounting

Inventories are carried at the lower of cost and net realisable value (NRV).

Cost includes costs of acquisition, development, interest capitalised 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.

NRV is the estimated selling price in the ordinary course of business less the estimated costs to complete and sell the inventory. NRV
is estimated using the most reliable evidence at the time, including expected fluctuations in selling price and estimated costs to
complete and sell.

As at 30 June 2021, significant judgement was required in determining the appropriate estimates and assumptions to be used in
determining the carrying value of inventory. COVID-19 and the Government’s response to it significantly impacted our operations. Key
assumptions and estimates impacted by COVID-19 include:

•

forecast future sales and costs, based on the location, type and quality of residential property, recognise and incorporate the
impact of COVID-19.

the impact of government subsidies on the sale of residential property.

Movement in impairment provisions

At beginning of year
Amounts utilised
Amounts provided

At end of year

8. INVESTMENT PROPERTY

2021
$’000
10,622
( 774 )
1,793

2020
$’000
9,449
( 456 )
1,629

11,641

10,622

The Group has an investment property at Waterline Place, Victoria. This relates to a retail space asset being held for long term yield
and capital appreciation.

The Group accounts for its investment property at fair value and revaluations are recognised through profit and loss. The fair value at
reporting date has been determined by the Directors with reference to the most recent external valuation performed by Knight Frank
as at 21 November 2018.

The Capitalisation Approach using a capitalisation rate of 6.50% (30 June 2020: 7.00%), and Direct Comparison Approach methods
have been adopted in determining the fair value.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION68

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8. INVESTMENT PROPERTY (continued)

Opening balance at 1 July
Gain/(loss) from fair value remeasurement
Closing balance at 30 June

2021
$’000

1,580
180
1,760

2020
$’000

1,770
( 190 )
1,580

Investment properties are measured as Level 3. Refer to note 23(v) for explanation of the levels of fair value measurement.

The impact of COVID-19 and the Government’s response to it, has been incorporated in the measurement of fair value.

It is the policy of the Group for the Directors to review the fair value of each property every year, with reference to the most recent
external valuation. The fair value for investment properties will be based on periodic, but at least triennial, valuations by qualified
external independent valuers.

9. OTHER ASSETS

Current
Prepayments

Deposits

Total other current assets

Non - Current
Development costs capitalised

Other Assets

Total other current assets

10. FINANCIAL ASSET

Property Fund Units

2021
$’000

2,950

663

3,613

4,920

2020
$’000

2,792

730

3,522

2,632

2,700

2021
$'000

2020
$'000

1,695

These unlisted property fund units which didn’t have an active market, were measured at fair value through profit and loss in the prior
year.

On 2 October 2020, the remaining units in the unlisted property fund were purchased by the Group for a total consideration
of $9,735,000. This resulted in the Group acquiring certain Trusts whose assets included completed apartments and land. The
transaction was accounted for as an asset acquisition.

In the prior year, unlisted property fund units were measured as Level 3 financial instruments. Refer to note 23(v) for explanation of the
levels of fair value measurement.

Financial Statements.AVJennings Limited - Annual Report 2021
69

2021
$’000

1,271
( 391 )
880

2020
$’000

1,488
( 460 )
1,028

2,735
( 1,605 )
1,130

2,663
( 1,808 )
855

2,010

1,883

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

11. PLANT AND EQUIPMENT

Leasehold improvements
At cost
Less: accumulated depreciation
Total leasehold improvements

Plant and equipment
At cost
Less: accumulated depreciation
Total plant and equipment

Total plant and equipment

(i) 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 2021

Note

Carrying amount at 1 July 2020
Additions
Disposals
Depreciation charge

Carrying amount at 30 June 2021

For the year ended 30 June 2020

Carrying amount at 1 July 2019
Additions
Disposals
Depreciation charge

Carrying amount at 30 June 2020

(ii) Accounting

Leasehold
improvements
$'000

Plant and
equipment
$'000

1,028
-
-
( 148 )

880

707
458
( 9 )
( 128 )

1,028

855
366
( 3 )
( 88 )

1,130

352
687
( 28 )
( 156 )

855

Total
$'000

1,883
366
( 3 )
( 236 )

2,010

1,059
1,145
( 37 )
( 284 )

1,883

Plant and equipment are stated at historical cost less accumulated depreciation and impairment.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets using the following rates which are
consistent with the prior year:

Plant and equipment

3-10 years

Leasehold improvements

5-10 years or lease term if shorter

Asset under development

Included in plant and equipment is an amount of $999,000 (2020: $669,000) relating to expenditure for upgrade of the ERP system.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
70

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

12. RIGHT-OF-USE ASSETS

The Group has lease contracts for various office premises, motor vehicles and IT equipment used in its operations. Lease of office
premises generally have lease terms between 3 and 5 years, while motor vehicles and IT equipment have lease terms between 3 and
4 years. The Group’s obligations under its leases are secured by the lessor’s title to the leased assets. Some of the lease contracts for
office premises include extension options.

The Group also has certain leases with terms of 12 months or less and leases of office equipment with low value. The Group applies
the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.

Set out below are the carrying amounts of right-of-use assets recognised and the movements during the year:

Note

Motor
vehicle
lease
$’000

Right-of-use assets
Office
premises
lease
$’000

IT
equipment
lease
$’000

Total
$’000

481
30
( 256 )
-

255
-
255

255

464
313
( 296 )
-

481
-
481

481

189
9
( 107 )
-

91
-
91

5,308
1,305
( 1,261 )
( 775 )

4,577
-
4,577

5,978
1,344
( 1,624 )
( 775 )

4,923
-
4,923

4,577

4,923

316
14
( 136 )
( 5 )

189
-
189

2,744
4,169
( 1,409 )
( 196 )

5,308
-
5,308

3,524
4,496
( 1,841 )
( 201 )

5,978
-
5,978

189

5,308

5,978

For the year ended 30 June 2021

As at 1 July 2020
Additions
Amortisation expense
Disposal

As at 30 June 2021
Current
Non-current

Total

For the year ended 30 June 2020

As at 1 July 2019
Additions
Amortisation expense
Disposal

As at 30 June 2020
Current
Non-current

Total

Accounting

The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for
use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct
costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group
is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are
depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to
impairment.

Financial Statements.AVJennings Limited - Annual Report 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

13. INTANGIBLE ASSETS

Brand name at cost
Less: accumulated amortisation

Total intangible assets

2021
$’000
9,868
( 7,052 )

2,816

2020
$’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 are reviewed each
year. A review carried out at 31 December 2009 determined that the brand name had indefinite life. This change in accounting
estimate was applied prospectively with amortisation ceasing as of 31 December 2009.

At 30 June 2021, there were no indicators of impairment. However, an annual impairment test was performed and no impairment
identified.

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.

Intangible assets with indefinite useful lives are not amortised but tested annually for impairment. The assessment of indefinite life is
reviewed annually to determine whether it continues to be supportable. If not, the change in useful life from indefinite to finite is made
on a prospective basis.

14. PAYABLES

Current
Land creditors
Trade creditors
Related party payables
Deferred Income
Contractual amounts payable to landowners
Property and payroll taxes payable
Other creditors and accruals

Total current payables

Non-current
Land creditors
Deferred Income
Contractual amounts payable to landowners
Other creditors and accruals

Total non-current payables

2021
$’000

7,410
9,190
225
1,155
5,946
5,152
3,257

2020
$’000

1,323
9,954
130
38
-
613
4,482

32,335

16,540

14,251
634
660
-

15,545

23,360
589
3,039
558

27,546

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION72

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

14. PAYABLES (continued)

Accounting

Trade and other payables are initially recognised at fair value and subsequently carried at amortised cost. They represent liabilities
for goods and services provided to the Group prior to the end of the financial year which are unpaid.

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 3.61% (2020: 3.84%).

15. BORROWINGS

Non-current
Bank loans

Total non-current interest-bearing liabilities

Accounting

Borrowing costs

2021
$’000

2020
$’000

138,549

190,110

138,549

190,110

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of
the cost of that asset whilst in active development. Qualifying assets are assets that take a substantial period of time to get ready for
their intended use or sale. Other borrowing costs are expensed as incurred.

Borrowing costs consist of interest and other costs incurred in connection with the borrowing of funds.

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, interest-bearing loans and borrowings are measured at amortised cost using the effective interest method.

Borrowings are classified as current liabilities unless there is an unconditional right to defer repayment for at least 12 months after the
reporting date.

Financial Statements.AVJennings Limited - Annual Report 202173

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

15. BORROWINGS (continued)

Financing arrangements

The Group has access to the following lines of credit:

30 June 2021
Main banking facilities
- bank overdraft
- bank loans
- performance bonds

Contract performance bond facilities
- performance bonds

30 June 2020
Main banking facilities
- bank overdraft
- bank loans
- performance bonds

Contract performance bond facilities
- performance bonds

Note

15(a)

15(c)

15(a)

15(c)

Available
$'000

Utilised
$'000

Unutilised
$'000

5,000
230,000
15,000
250,000

138,549
5,987
144,536

5,000
91,451
9,013
105,464

60,000

22,004

37,996

5,000
265,000
30,000
300,000

190,110
16,925
207,035

5,000
74,890
13,075
92,965

60,000

30,377

29,623

At 30 June 2021 main banking facilities are interchangeable up to $47 million (2020: $47 million) between the bank loans and
performance bonds.

During the current and prior year, there were no defaults or breaches of any covenants relating to the facilities.

Significant terms and conditions

(a) Main banking facilities

The Group’s main banking facilities mature on 30 September 2023. These 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. 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 25). The weighted average interest rate including margin on the main banking facilities
at 30 June 2021 was 1.41% (2020: 1.47%).

The Company reduced the number of its lenders from five to four banks during the year under review, and in so doing also reduced its
main banking facility limit from $300 million to $250 million. The $50 million limit tranche foregone was not drawn during fiscal 2021
and its cancellation resulted in a cost saving to the Company.

(b) Project funding facilities

At reporting date, there were no project funding facilities.

The Group has entered into Contract performance bond facilities of $60,000,000 (2020: $60,000,000) which are subject to review
annually. $25,000,000 of the facilities expire on 31 March 2022 with the balance expiring on 1 May 2022. 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 25.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION74

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

16. LEASE LIABILITIES

Set out below are the carrying amounts of lease liabilities recognised and the movements during the year:

As at 1 July 2020
Additions
Payments
Disposal

As at 30 June 2021
Current
Non-current

Total

As at 1 July 2019

Additions
Payments

Disposal

As at 30 June 2020
Current
Non-current

Total

Motor
vehicle
lease
$’000
485
30
( 258 )
-

257
158
99

257

Lease Liabilities
IT
equipment
lease
$’000
197
9
( 109 )
-

Office
premises
lease
$’000
5,920
1,305
( 1,133 )
( 1,203 )

97
81
16

4,889
950
3,939

Total
$’000
6,602
1,344
( 1,500 )
( 1,203 )

5,243
1,189
4,054

4,889

5,243

471

323

3,324

4,118

313
( 299 )

14
( 134 )

4,169
( 1,328 )

4,496
( 1,761 )

485
253
232

485

( 6 )

( 245 )

( 251 )

197
107
90

5,920
1,182
4,738

6,602
1,542
5,060

197

5,920

6,602

The Group recognised rent expense from short-term leases of $103,000 (2020: $334,000) and leases of low-value assets of $260,000
(2020: $224,000).

Accounting

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed payments less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments
also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for
terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not
depend on an index or a rate are recognised as an expense in the period in which the event or condition that triggers the payment
occurs.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date
if the interest rate implicit in the lease is not readily determinable.

Short-term leases and leases of low-value assets:

The Group applies the short-term lease recognition exemption to its short-term leases of plant and equipment (i.e., those leases that
have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease

Financial Statements.AVJennings Limited - Annual Report 202175

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

16. LEASE LIABILITIES (continued)

of low-value assets recognition exemption to leases of office equipment that are considered of low value (i.e., below $5,000). Lease
payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease
term.

Significant judgement in determining the lease term of contracts with renewal options:

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option
to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is
reasonably certain not to be exercised.

The Group has the option, under some of its office leases to lease the assets for additional terms of up to three years. The Group
applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant
factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses the
lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise (or not
to exercise) the option to renew (e.g., a change in business strategy).

The Group included the renewal period as part of the lease term for leases of office space due to the significance of these assets
to its operations. The renewal options if any, for leases of plant and equipment and motor vehicles were not included as part of the
lease term because the Group has a record of not exercising any renewal options for such leases.

17. PROVISIONS

For the year ended 30 June 2021
At 1 July 2020
Arising during the year
Utilised

At 30 June 2021

Current
Non-current

Total

For the year ended 30 June 2020
At 1 July 2019
Arising during the year
Utilised

At 30 June 2020

Current
Non-current

Total

Accounting

Rectification
$’000

Restructuring
$’000

Employee
entitlements
$’000

725
622
( 25 )

1,322

1,022
300

1,322

582
680
( 537 )

725

425
300

725

300
-
( 300 )

-
-

216
300
( 216 )

300

300
-

300

5,772
3,175
( 2,190 )

6,757

6,048
709

6,757

6,531
1,143
( 1,902 )

5,772

5,123
649

5,772

Total
$’000

6,797
3,797
( 2,515 )

8,079

7,070
1,009

8,079

7,329
2,123
( 2,655 )

6,797

5,848
949

6,797

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.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present
obligation at the reporting date. The non-current portion is discounted using corporate bond rates.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION76

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

18. CONTRIBUTED EQUITY

Ordinary shares
Treasury shares

Share capital

2021
Number

2020
Number

2021
$’000

2020
$’000

406,230,728
( 735,799 )

406,230,728

177,961
( 4,221 )

177,961
( 3,782 )

405,494,929

406,230,728

173,740

174,179

(a) Movement in ordinary share capital

Number

$’000

At beginning and end of year

406,230,728

177,961

(b) Movement in treasury shares

At beginning of year
On market acquisition of shares
Excess funds received from AVJDESP
Employee share scheme issue

At end of year

2021
Number

2020
Number

2021
$’000

-
( 735,799 )
-
-

( 762,619 )
( 757,523 )
-
1,520,142

( 3,782 )
( 439 )
-
-

2020
$’000

( 3,452 )
( 435 )
105
-

( 735,799 )

( 4,221 )

( 3,782 )

During the year, 735,799 treasury shares were purchased by the AVJ Deferred Employee Share Plan Trust (AVJDESP)
at a cost of $439,000.

Holders of ordinary shares are entitled to dividends and to one vote per share at shareholder meetings.

Accounting

Incremental costs directly attributable to the issue of ordinary shares are shown in equity as a deduction, net of tax,
from the proceeds.

Shares held by the AVJDESP Trust are disclosed as treasury shares and deducted from contributed equity.

19. RESERVES AND RETAINED EARNINGS

(a) Reserves

At 1 July 2019
Foreign currency translation
Share-based payment expense
At 30 June 2020
Foreign currency translation
Share-based payment expense

At 30 June 2021

Foreign Currency
Translation
Reserve
$'000

Share-based
Payment
Reserve
$'000

4,256
( 1,228 )
-
3,028
( 185 )
-

2,843

4,626
-
754
5,380
-
730

6,110

Note

32(a)

Total
$'000

8,882
( 1,228 )
754
8,408
( 185 )
730

8,953

Financial Statements.AVJennings Limited - Annual Report 202177

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

19. RESERVES AND RETAINED EARNINGS (continued)

(b) Nature and purpose of reserves

Foreign currency translation reserve

Exchange differences arising on translation of foreign operations are recognised in other comprehensive income as explained in note
40(d) 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 rights to shares or shares issued to employees, with a
corresponding increase in employee expense in the Consolidated Statement of Comprehensive Income.

Movements in retained earnings were as follows:
At beginning of year
Effect of adoption of new leases accounting standard
At beginning of year (restated)
Profit after income tax
Dividends declared and paid

At end of year

20. DIVIDENDS

Cash dividends declared and paid

2019 final dividend of 1.5 cents per share,
paid 20 September 2019. Fully franked @ 30% tax

2020 interim dividend of 1.2 cents per share,
paid 27 March 2020. Fully franked @ 30% tax

2021 interim dividend of 0.7 cents per share,
paid 26 March 2021. Fully franked @ 30% tax

Total cash dividends declared and paid

Dividends proposed

2021 final dividend of 1.8 cents per share,
to be paid 23 September 2021. Fully franked @ 30% tax

Total dividends proposed

The Company’s Dividend Reinvestment Plan remains suspended.

2021

$'000

2020

$’000

210,543

210,543
18,716
( 2,843 )

226,416

212,886
( 416 )
212,470
9,041
( 10,968 )

210,543

2021
$’000

2020
$’000

6,093

4,875

2,843

10,968

7,312

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
78

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

20. DIVIDENDS (continued)

Dividend franking account

2021
$’000

2020
$’000

Franking credits available for subsequent financial years based on a tax rate of 30%

31,813

28,730

The above balance is based on the balance of the dividend franking account at 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 year-end.

Section A4 Cash Flow information

21. CASH FLOW STATEMENT RECONCILIATION

Reconciliation of profit after tax to net cash flow from operating activities

Profit after tax
Adjustments for non-cash items:
Depreciation and amortisation
Net gain on disposal of right-of-use assets
Net loss on disposal of plant and equipment
Interest revenue classified as investing cash flow
Share of loss of joint ventures
Change in inventory loss provisions
Share-based payments expense
Fair value adjustment to investment property
Fair value adjustment to financial asset
(Reversal)/provision - equity accounted investment
Change in operating assets and liabilities:
Decrease in inventories
Increase in receivables
Increase in other assets
Increase/(decrease) in deferred tax liability
Increase/(decrease) in net current tax liability
Increase/(decrease) in payables
Increase/(decrease) in provisions

Net cash from operating activities

2021
$’000

18,716

1,860
( 428 )
3
( 170 )
2,295
1,019
730
( 180 )
-
( 1,554 )

47,222
( 11,115 )
( 2,311 )
1,027
1,925
3,648
1,282

63,969

2020
$’000

9,041

2,125
( 51 )
37
( 1,264 )
66
1,173
754
190
516
947

36,473
( 11,988 )
( 1,799 )
( 955 )
( 3,959 )
( 20,139 )
( 532 )

10,635

Financial Statements.AVJennings Limited - Annual Report 202179

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Section B – Risk

22. 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.

Timing of revenue recognition:

This includes the determination of whether revenue recognition
criteria have 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 include:

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 to complete and sell.

Significant judgement was required in determining the
appropriate estimates and assumptions to be used in
determining the carrying value of inventory. COVID-19 and
the Government’s response to it significantly impacted our
operations. Key assumptions and estimates impacted by
COVID-19 include:

•

forecast future sales and costs, based on the location,
type and quality of residential property, recognise and
incorporate the impact of COVID-19.

the impact of Government subsidies on the sale of
residential property.

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.

Fair value measurement:

Judgement is exercised in determining:

•

fair value of financial asset carried at fair value through profit
and loss.

•

fair value of investment property.

The impact of COVID-19 and the Government’s response to it, has
been incorporated in the measurement of fair value.

23. FINANCIAL RISK MANAGEMENT

The Group’s principal financial assets and financial liabilities
comprise receivables, payables, borrowings and cash.

The Group’s treasury department focuses on the following main
financial risks:

•

interest rate risk;

foreign currency risk;

credit risk; and

liquidity risk.

Financial risk activities are governed by appropriate policies
and procedures and 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 these policies.

(i) Interest rate risk

Interest rate risk is the risk that the fair value of a financial
instrument or associated future cash flows 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 loan maturity
and cash flow profiles and the outlook for interest rates.

The Group has often used various techniques, including interest
rate swaps, caps and floors to hedge the risk associated with
interest rate fluctuations. These derivatives would not qualify for
hedge accounting and changes in fair value would be recognised
in profit and loss. However, the forecast cash position together
with the current benign outlook for medium term interest rates
has resulted in the Group retaining all of the drawn debt at
variable rates of interest.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION80

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

23. FINANCIAL RISK MANAGEMENT (continued)

(i) Interest rate risk (continued)

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 Group had the following cash and variable rate borrowings:

Cash
Bank loans

Net financial liabilities

Borrowings not hedged

2021

2020

Weighted
average
interest rate
%
0.11
1.41

Balance
$'000
( 13,099 )
138,549

125,450

Weighted
average
interest rate
%
0.36
1.47

Balance
$'000
( 5,703 )
190,110

184,407

The following table shows the impact on Profit After Tax if interest rates changed by 50 basis points. The calculation is based on
borrowings and cash held at year-end. It assumes that interest is capitalised to qualifying assets as disclosed in note 3:

With all other variables held constant, Profit After Tax would have been affected as follows:

+50 basis points
-50 basis points

The effect on the basis that no interest is capitalised, would be as follows:

+50 basis points
-50 basis points

Profit After Tax
Higher/(Lower)

2021
$'000
( 77 )
77

2020
$'000
( 100 )
100

Profit After Tax
Higher/(Lower)

2021
$'000
( 439 )
439

2020
$'000
( 645 )
645

Financial Statements.AVJennings Limited - Annual Report 202181

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

23. FINANCIAL RISK MANAGEMENT (continued)

(ii) Foreign currency risk

Foreign currency risk arises from NZD denominated assets (balance sheet risk) or from transactions or cash flows denominated in
NZD (cash flow risk).

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 equity would have been affected as follows:

Profit After Tax
Higher/(Lower)

Equity
Higher/(Lower)

2021
$'000

( 18 )
18

2020
$'000

( 24 )
24

2021
$'000

( 37 )
37

2020
$'000

( 147 )
147

AUD/NZD +10%
AUD/NZD -10%

(iii) Credit risk

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, receivables, and from granting of financial guarantees.

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.

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 typically applied to repay drawn loans to minimise borrowing costs. Counterparties are limited to
financial institutions approved by the Board.

The granting of financial guarantees also exposes the Group to credit risk, being the maximum amount that would have to be paid if
the guarantee is called on. As the amounts payable under the guarantees are not significantly greater than the original liabilities, this
risk in not material. See note 37 for details regarding financial guarantees.

The Group has no significant concentrations of credit risk.

(iv) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.

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 Group’s main banking facilities mature on 30 September 2023 and are therefore non-current. 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.

At 30 June 2021, none (2020: none) of the Group’s interest-bearing loans and borrowings will mature in less than one year.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
82

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

23. FINANCIAL RISK MANAGEMENT (continued)

(iv) Liquidity risk (continued)

The table below summarises the maturity profile of the Group’s financial assets and liabilities based on contractual undiscounted
payments.

Year ended 30 June 2021

Financial Assets
Cash and cash equivalents
Receivables

Financial Liabilities
Payables
Interest-bearing loans and borrowings*
Lease liabilities
Financial Guarantees

Net maturity

Year ended 30 June 2020

Financial Assets
Cash and cash equivalents
Receivables

Financial Liabilities
Payables
Interest-bearing loans and borrowings*
Lease liabilities
Financial Guarantees

Net maturity

< 6 months
$'000

6 -12 months
$'000

> 1-5 years
$'000

Total
$'000

13,099
35,543
48,642

23,434
982
724
1,049

26,189

22,453

-
10,487
10,487

8,901
976
465
-

10,342

145

-
163
163

13,099
46,193
59,292

15,931
140,996
4,054
-

160,981

(160,818)

48,266
142,954
5,243
1,049

197,512

(138,220)

< 6 months
$'000

6 -12 months
$'000

> 1-5 years
$'000

Total
$'000

5,703
13,799
19,502

14,996
1,398
738
1,031

18,163

1,339

-
9,237
9,237

1,544
1,391
804
-

3,739

5,498

-
12,042
12,042

28,959
193,594
5,060
-

5,703
35,078
40,781

45,499
196,383
6,602
1,031

227,613

249,515

(215,571)

(208,734)

* Expected settlement amounts of interest-bearing loans and borrowings include an estimate of the interest payable to the date of

expiry of the facilities.

At reporting date, the Group has approximately $143 million (2020: $123 million) of unused credit facilities available. Please refer to
note 15.

Financial Statements.AVJennings Limited - Annual Report 202183

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

23. 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 2021

Year ended 30 June 2020

Quoted
prices
in active
markets
(Level 1)
$'000

Significant
observable
inputs
(Level 2)
$'000

Significant
unobservable
inputs
(Level 3)
$'000

Total
$'000

Quoted
prices in
active
markets
(Level 1)
$'000

Significant
observable
inputs
(Level 2)
$'000

Significant
unobservable
inputs
(Level 3)
$'000

Total
$'000

1,695

138,549

190,110

Financial assets
Financial asset

Financial liabilities
Interest-bearing loans
and borrowings

Management assessed that the fair values of cash and short-term deposits, trade receivables, trade payables, bank overdrafts and
other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

Investment property is considered Level 3. Refer to note 8.

24. CAPITAL MANAGEMENT

In managing capital, management’s objective is to achieve an efficient capital structure which optimises the weighted average cost of
capital commensurate with business requirements and prudential considerations.

During the year ended 30 June 2021, a total dividend of $2,843,000 was paid (2020: $10,968,000).

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

2021
$'000

2020
$'000

138,549

( 13,099 )

125,450

409,109

625,268

30.7%

20.1%

190,110

( 5,703 )

184,407

393,130

655,177

46.9%

28.1%

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION84

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Section C – Group Structure

25. CONTROLLED ENTITIES

(a) Investment in controlled entities

The following economic entities are the controlled entities of AVJennings Limited:

ECONOMIC ENTITY (1)

2021

2020

2021

2020

% 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
Montpellier Gardens Pty Limited(3)
AVJennings (Cammeray) Pty Limited(3)
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(3)
AVJennings Properties SPV No 4 Pty Limited(3)
AVJennings Wollert Pty Limited(3)
AVJ Erskineville Pty Limited(3)
AVJ Hobsonville Pty Limited(3)
AVJennings Properties SPV No 9 Pty Limited(3)
AVJennings SPV No 10 Pty Limited
AVJennings SPV No 19 Pty Limited(3)
AVJennings SPV No 20 Pty Limited
AVJennings SPV No 22 Pty Limited(3)
AVJennings SPV No 23 Pty Limited
AVJennings SPV No 24 Pty Limited
AVJennings SPV No 25 Pty Limited
AVJennings SPV No 26 Pty Limited
Creekwood Developments Pty Limited(3)
Portarlington Nominees Pty Limited(3)

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
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
No
No
No
Yes
Yes

No
No
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes

Yes
Yes
No
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
No
No
No
Yes
Yes

Financial Statements.AVJennings Limited - Annual Report 202185

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

25. CONTROLLED ENTITIES (continued)

(a) Investment in controlled entities (continued)

% Equity Interest

Included in Banking
Cross Deed of Covenant (2)

ECONOMIC ENTITY (1)

2021

2020

2021

2020

Entities excluded from the Closed Group (continued)
AVJennings St Clair Pty Limited(3)
St Clair JV Nominee Pty Limited(3)
AVJennings Properties Wollert SPV Pty Limited
AVJennings Waterline Pty Limited
Cusack Lane Nominees Pty Ltd
AVJennings NZ Management Services Ltd(4)

100
100
100
100
100
-

100
100
100
100
100
100

Yes
Yes
No
Yes
Yes
-

Yes
Yes
No
Yes
Yes
No

(1) All entities with the exception of AVJennings NZ Management Services Ltd are incorporated in Australia. With the exception of AVJ Hobsonville Pty Limited
which has a branch in New Zealand and AVJennings NZ Management Services Ltd which was incorporated and operated 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 15(a).

(3) These entities, including AVJennings Limited, are included in the Deeds of Indemnity for performance bond facilities referred to in note 15(c).

(4) Deregistered during the year.

(b) Ultimate parent

AVJennings Limited is the ultimate Australian Parent Entity. SC Global Developments Pte Ltd is the Ultimate Parent Entity.

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 Corporations Instrument 2016/785 issued by the Australian Securities and Investments Commission (ASIC).
Those entities included in the Closed Group are listed in note 25(a). These entities represent a “Closed Group” for the purposes of the
Corporations Instrument, 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”.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION86

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

25. CONTROLLED ENTITIES (continued)

(d) Corporations Instrument closed group

Certain controlled entities were granted relief by ASIC (under provisions of the Corporations Instrument) 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 25(c)).

The Extended Closed Group referred to in the Directors’ Declaration therefore comprises all of the entities within the Corporations
Instrument. Certain entities falling outside of the Extended Closed Group are listed in note 25(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 sales
Other expenses

Profit/(loss) before income tax
Income tax

Profit/(loss) after income tax

Closed Group

2021
$’000

2020
$’000

141,807
( 104,202 )
( 36,249 )

1,356
( 543 )

813

142,622
( 108,449 )
( 39,085 )

( 4,912 )
1,191

( 3,721 )

Financial Statements.AVJennings Limited - Annual Report 2021
87

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

25. CONTROLLED ENTITIES (continued)

(d) Corporations Instrument 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
Receivables
Inventories
Tax receivable
Other assets
Total current assets

Non-current assets
Receivables
Inventories
Equity accounted investments
Financial asset
Plant and equipment
Right-of-use assets
Intangible assets
Other assets
Total non-current assets
Total assets

Current liabilities
Payables
Lease liabilities
Tax payable
Provisions
Total current liabilities

Non-current liabilities
Payables
Interest-bearing loans and borrowings
Lease liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities

Net assets

Equity
Contributed equity
Reserves
Retained earnings

Total equity

2021
$’000

2020
$’000

8,226
118,560
83,091
-
2,694
212,571

163
153,944
4,895
-
2,010
4,727
2,816
4,920
173,475
386,046

14,021
1,160
1,342
7,100
23,623

15,702
97,600
3,871
12,163
1,009
130,345
153,968

1,172
189,839
69,040
1,223
1,911
263,185

2,835
149,375
5,636
1,695
1,883
5,711
2,816
2,653
172,604
435,789

7,745
1,485
-
5,410
14,640

19,560
149,000
4,848
13,002
949
187,359
201,999

232,078

233,790

173,740
6,110
52,228

174,179
5,380
54,231

232,078

233,790

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION88

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

25. CONTROLLED ENTITIES (continued)

(d) Corporations Instrument 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
Effect of adoption of new leases accounting standard
Comprehensive income:
Profit/(loss) for the year
Total comprehensive income/(loss) for the year
Transactions with owners in their capacity as owners
- Treasury shares acquired
- Share-based payment expense
- Exchange variation on deregistration of foreign entity
- Dividends paid
Total transactions with owners in their capacity as owners

Closed Group

2021

$’000

233,790

813
813

( 439 )
730
27
( 2,843 )
( 2,525 )

2020

$’000

248,471
( 416 )

( 3,721 )
( 3,721 )

( 330 )
754
-

( 10,968 )
( 10,544 )

At end of year

232,078

233,790

26. EQUITY ACCOUNTED INVESTMENTS

Joint Ventures

Accounting

2021
$’000

2020
$’000

4,895

5,636

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.

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 aggregate of the Group’s share of profit or loss after tax of joint ventures is disclosed in the Consolidated Statement of
Comprehensive Income. Dividends received from 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 joint venture are eliminated to the extent
of the interest in the joint venture, until the underlying assets are realised by the joint venture on consumption or sale.

If there is objective evidence that the investment in the joint venture is impaired, the Group calculates the amount of impairment
as the difference between the recoverable amount of the investment and it’s carrying value and recognises it in the Consolidated
Statement of Comprehensive Income.

Financial Statements.AVJennings Limited - Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

26. EQUITY ACCOUNTED INVESTMENTS (continued)

Interest in Joint Ventures

Joint Venture and principal activities
Pindan Capital Group Dwelling Trust - Building Construction

Movements in carrying amount
At beginning of year
Share of loss
At end of year before provision for loss
Provision for loss on investment

At end of year (1)

The Group’s share of the 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

Interest held

2021

33.3%

2021
$’000

5,636
( 2,295 )
3,341
1,554

4,895

2021
$’000

617
6,647
7,264

2,075
294
2,369

4,895

2020

33.3%

2020
$’000

6,649
( 66 )
6,583
( 947 )

5,636

2020
$’000

380
8,552
8,932

218
1,524
1,742

7,190

(1) For 2020, the difference between the carrying amount and the share of net assets relates to provision for loss recognised by the Group. The provision held

at 30 June 2020 was $1,554,000. This was reversed in the current year.

Share of revenues and expenses
Revenues
Cost of sales
Expenses
Loss before income tax

Loss after income tax

2,559
( 4,299 )
( 555 )
( 2,295 )

( 2,295 )

1,447
( 1,093 )
( 420 )
( 66 )

( 66 )

At 30 June 2021, there were no significant commitments entered into by the Joint Venture.

Part of the Pindan Group has been placed into Administration. A Pindan entity is the current Trustee of the Trusts that hold the above
investments. Pindan does not hold any beneficial interest in the trusts or the underlying projects. The beneficial interest is owned
by various unit holders which include AVJennings. The unit holders are in the process of either replacing the Trustee or acquiring the
Trustee from the Administrator (Ernst & Young). There is no reason to believe Pindan’s administration will impact the above investment.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION90

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

27. INTEREST IN JOINT OPERATIONS

A controlled entity has entered into a Joint Operation. Information relating to the Joint Operation is set out below:

Joint Operation name, principal place of business and principal activities
Wollert Joint Venture (Victoria) - Land Development and Building Construction

Accounting

Interest held

2021

49%

2020

49%

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. Their interests in the assets, liabilities, revenues and expenses of the Joint Operation have been recognised in the Financial
Statements under the appropriate headings.

The Group’s share of the Joint Operation’s 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
Cost of sales
Other expenses
Profit before income tax
Income tax

Profit after income tax

Total comprehensive income for the year

2021
$'000

12,197
22,496
34,693

8,622
215
8,837

2020
$'000

14,935
24,714
39,649

2,889
6,136
9,025

25,856

30,624

17,746
( 11,907 )
( 807 )
5,032
( 1,510 )

3,522

20,826
( 13,069 )
( 1,150 )
6,607
( 1,982 )

4,625

Financial Statements.AVJennings Limited - Annual Report 202191

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Section D – Other information

28. CORPORATE INFORMATION

The Consolidated Financial Statements of AVJennings Limited for the year ended 30 June 2021 were authorised for issue in
accordance with a resolution of the Directors on 27 August 2021.

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 53.94% 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.

29. STATEMENT OF COMPLIANCE

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).

30. BASIS OF PREPARATION

These Financial Statements have been prepared on a going concern basis, using historical cost convention with the exception of
financial assets at fair value through profit and loss. 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.

Consistent accounting policies have been applied in the current and prior years.

31. 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.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
92

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

31. RELATED PARTY DISCLOSURES (continued)

(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

2021
Number

2020
Number

224,703,013

224,927,833

219,112,839 ordinary shares equating to 53.94% of the total ordinary shares on issue (2020: 219,112,839 and 53.94% respectively) were
held by SC Global Developments Pte Ltd and its subsidiaries in the Parent Entity at 30 June 2021. 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

The Group recognises an allowance for expected credit losses (ECLs) for all related party receivables. Negligible ECLs over these
amounts have been assessed as at 30 June 2021.

(e) Transactions with related parties

Entity with significant influence over the Group:
SC Global Developments Pte Ltd
Consultancy fee paid/payable

Other:
Related party of P Kearns*
Special Exertion fee paid/payable

Joint Operations:
Wollert JV
Management fee received/receivable
Accounting services fee received/receivable

* P Kearns is a Director of AVJennings. This is further discussed in the Directors’ Report.

2021
$

2020
$

590,000

580,000

222,950

2,516,433
50,000

2,513,092
50,000

Financial Statements.AVJennings Limited - Annual Report 202193

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

31. RELATED PARTY DISCLOSURES (continued)

(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 26 and 27.

(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 and others

Current payables
SC Global Developments Pte Ltd
Related party of P Kearns

(h) Amounts advanced to and received from related parties

Amounts advanced
Joint Ventures and others

(i) Remuneration of Key Management Personnel (KMP)

Short-term
- Salary/Fees
- Accrued annual leave
- STI
- Other (1)
Post employment
- Superannuation
Long-term
- Accrued Long service leave
Share-based payment

2021
$’000

2020
$’000

1,370

822

163

988

150
75

130
-

2021
$’000

243

2021
$

2020
$’000

2,090

2020
$

2,440,191
10,814
703,296
26,693

2,448,879
( 3,938 )
-
34,696

134,414

130,007

85,159
371,165

105,650
505,326

3,771,732

3,220,620

(1) ‘Other’ relates the value of motor vehicle benefits.

(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.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION94

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

32. 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

2021
$’000

2020
$’000

800

979

( 70 )

( 225 )

730

754

The share-based payment plan is described in note 32(b).

(b) Type of share-based payment plan

LTI grants are only made to executives who have the ability to
impact the Group’s performance and create shareholder value
over the long term.

LTI remuneration is provided by the Issue of Rights with
performance conditions. The use of Performance Rights as an
incentive reduces the upfront cash requirements (as shares do
not need to be acquired for allocations). Shares are acquired
on market by the Plan Trustee to satisfy the grant of shares in
respect of rights which have vested. Participants do not receive
dividends on Rights (as distinct from shares).

LTI and performance

comparator group including peers in the residential property
sector. The comparator group is not directly comparable to
AVJennings as the Index contains non-residential property
participants. However, this comparator group was chosen as
the best approximation as the pool of directly comparable listed
developers was too small to provide a reliable and meaningful
comparator group.

The operation of the EPS, ROE and the new TSR hurdles are set
out below.

AVJennings' EPS growth rate
over the three year performance
period

< 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% of the allocation
for the hurdle
75% of the allocation
for the hurdle
100% (Straight line
interpolation between
12% and 18%)

50% of Performance Rights granted vest depending on
AVJennings’ average growth rate in EPS over the three financial
years of performance measurement.

This ROE hurdle was removed in February 2020 and replaced
with TSR hurdle for grants for FY21 and beyond.

50% of Performance Rights granted vest depending on
AVJennings’ TSR over the three financial years of performance
measurement against the ASX 300 Real Estate Index, a

Financial Statements.AVJennings Limited - Annual Report 2021
95

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

32. SHARE-BASED PAYMENT PLANS (continued)

Accounting

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. No expense is
recognised for awards that do not ultimately vest because non-
market performance and/or service conditions have not been
met. Where awards include a market or non-vesting condition,
the transactions are treated as vested irrespective of whether
the market or non-vesting condition is satisfied, provided that
all other performance and/or service conditions are satisfied.
Where an award is cancelled during the vesting period other
than by forfeiture for failure to satisfy the vesting conditions,
it is treated as an acceleration of vesting, and the company
recognises immediately the amount that would otherwise have
been recognised for services received over the remainder of the
vesting period.

(b) Type of share-based payment plan (continued)

AVJennings TSR rank
against ASX 300 RE Index at
30 September
< median

At the median

> median but < 75th
percentile

> 75th percentile

Retention

Percentage vesting

Nil
50% of the allocation for the
hurdle
Pro-rata between 50th and 75th
percentiles
100% of the allocation for the
hurdle

Retention Rights are granted in three equal tranches which
vest in each of the three succeeding years following the year of
grant.

Retention component -
years of service

Percentage of rights vesting

One year

Two years

Three years

33.33%

33.34%

Unvested retention rights are subject to real risk of forfeiture, for
example where an executive ceases employment for any reason.

The following is the status of rights granted (both KMP and other executives) under share-based remuneration:

Total rights
granted

Rights vested
to date

Rights forfeited
to date

Rights cancelled
to date

Unvested rights at
30 June 2021

FY2019 Grant
FY2020 Grant
FY2021 Grant

Total

1,841,470
1,978,415
1,765,852

( 402,130 )

-
-

( 61,168 )
( 55,284 )
( 174,859 )

( 236,510 )
( 282,320 )

1,141,662
1,640,811
1,590,993

5,585,737

( 402,130 )

( 291,311 )

( 518,830 )

4,373,466

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION96

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

32. SHARE-BASED PAYMENT PLANS (continued)

The following table gives details and inputs in respect of the rights granted for the retention and performance components for the
years ended 30 June 2021 and 2020.

Number of rights granted
Weighted average fair value at measurement date
Dividend yield (%)
Risk-free interest rate (%)
Expected life (years)
Share price

33. AUDITOR’S REMUNERATION

Fees to Ernst & Young
Fees for auditing the statutory financial report of the parent covering the Group and audting the
statutory financial reports of controlled entities
Fees for other services

Total fees to Ernst & Young

2021
Retention

2021
Performance

785,431
$0.4666
6.27
0.17 to 0.23
0.80 to 2.80
$0.52

980,421
$0.3738
6.27
0.24
3.00
$0.52

2020
Retention

2020
Performance

846,970
$0.4913
7.37
0.67 to 0.77
0.90 to 2.89
$0.56

1,131,445
$0.4505
7.37
0.67
3.09
$0.56

2021
$

2020
$

295,495

318,682

31,007

6,367

326,502

325,049

Financial Statements.AVJennings Limited - Annual Report 202197

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

34. EARNINGS PER SHARE (EPS)

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

Weighted average number of ordinary shares for diluted EPS

Treasury shares

Weighted average number of ordinary shares for basic EPS

35. 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 for the year

(b) Guarantees entered into by the Parent Entity

2021
$’000

2020
$’000

18,716

9,041

2021
Number

2020
Number

406,230,728

( 735,799 )

405,494,929

406,230,728

2021
$’000

2020
$’000

69,969
233,255

69,679
232,965

6
6

173,739

174,179

6,110
53,400
233,249

5,380
53,400
232,959

The Parent Entity has not provided any guarantees other than those mentioned in notes 15(a), 15(c), 25(c) and 37.

Please refer to note 37 for details of the Parent Entity’s contingent liabilities.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION98

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

36. COMMITMENTS

Operating lease commitments – Group as lessee

Liabilities in respect of leases recognised in accordance with AASB 16 - Leases, are presented in note 16. The table below presents
liabilities in respect of short-term leases and leases of low-value assets for which the Group has applied the recognition exemption
available under the accounting standard.

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

2021
$’000

2020
$’000

246
100

346

234
112

346

269
92

361

350
11

361

37. CONTINGENCIES

Legal issues

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 25(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 25(a). Contingent
liabilities in respect of certain performance bonds, granted by
the Group’s financiers, in the normal course of business as at
30 June 2021 amounted to $22,004,000 (2020: $30,377,000).

No liability is expected to arise.

From time to time a controlled entity defends actions served on it
in respect of rectification of building faults and other issues. An
accrual is taken up for legal costs if a present obligation exists
and there is a high degree of certainty on the amount payable.
In cases where costs have been estimated after the exercise of
judgement, a provision is taken up.

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 25(a).

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 2021, amounted to
$4,938,000 (2020: $15,894,000). No liability is expected to arise.

Financial Statements.AVJennings Limited - Annual Report 202199

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

37. CONTINGENCIES (continued)

Financial guarantees

Financial guarantees granted by the Group’s bankers to unrelated parties in the normal course of business at 30 June 2021,
amounted to $1,049,000 (2020: $1,031,000). No liability is expected to arise.

38. SIGNIFICANT EVENTS AFTER BALANCE SHEET DATE

No matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect:

a)
b)
c)

the Group’s operations in future financial years; or
the results of those operations in future financial years; or
the Group’s state of affairs in future financial years.

39. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS

Accounting Standards, Interpretations and Amendments

Several amendments and interpretations apply for the first time in 2021, but do not have a significant impact on the Consolidated
Financial Statements of the Group. The Group has not early adopted any standards, interpretations or amendments that have been
issued, but are not yet effective. The Group is currently assessing the impact of standards which will be effective in future years.

40. 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
2021. 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.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION100

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

40. OTHER ACCOUNTING POLICIES (continued)

e) JobKeeper Payment Scheme

The Federal Government introduced a JobKeeper Payment
scheme to support businesses significantly affected by COVID-19
to help keep more Australians in jobs.

The Group was eligible for JobKeeper payments from 30 March
2020 to 3 January 2021. Payments have been accounted for
in accordance with AASB 120 – Accounting for Government
Grants and Disclosure of Government Assistance. A total amount
of $2,840,000 has been claimed in the year to 30 June 2021.
The credit has been recorded as an offset against employee
expenses in the Consolidated Statement of Comprehensive
Income.

c) 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; and

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.

d) 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.

Financial Statements.AVJennings Limited - Annual Report 2021101

DIRECTORS’ DECLARATION.

In accordance with a resolution of the Directors of AVJennings Limited, we state that:

In the opinion of the Directors:

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 2021 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 29; 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.

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 2021.

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 25 will be able to meet any obligations or liabilities to which they are or may become subject, by

virtue of the Deed of Cross Guarantee.

On behalf of the Board

Simon Cheong

Director

27 August 2021

Peter Summers

Director

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION

102

AVJennings Limited - Annual Report 2021

103

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION

104

AVJennings Limited - Annual Report 2021105



AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION106

AVJennings Limited - Annual Report 2021Shareholder Information.

107

As at 23 August 2021.

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

Australian Securities
Exchange

Singapore
Exchange

632

769

288

684

173

2,546

423

264

567

180

202

1,239

135

Total

896

1,336

468

886

199

3,785

558

Ordinary
Shares

219,112,839

53.94

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION108

Shareholder Information.

As at 23 August 2021.

3. TWENTY LARGEST SHAREHOLDERS ON THE AUSTRALIAN REGISTER

Name

The Central Depository (Pte) Ltd

Brazil Farming Pty Ltd

BNP Paribas Nominees Pty Ltd

HSBC Custody Nominees (Australia) Ltd

Citicorp Nominees Pty Ltd

Pacific Custodians Pty Ltd AVJ Def Emp Share Trust

Gillcorp Pty Limited

John E Gill Operations Pty Ltd

John E Gill Trading Pty Ltd

Horrie Pty Ltd

Luton Pty Ltd

JP Morgan Nominees Australia Pty Ltd

Jamplat Pty Ltd

Ago Pty Ltd

Mr Bradley John Newcombe

Anchorfield Pty Ltd

Dr D R M Gill and Mrs J M Gill

Di Iulio Homes Pty Ltd

Carlcorp Pty Ltd

Hillmorton Custodians Pty Ltd

Ordinary
Shares

225,035,703

17,165,233

16,742,495

13,505,400

12,182,403

6,533,810

6,343,003

5,609,105

5,598,712

3,747,931

3,310,264

3,214,013

2,891,000

2,661,975

2,525,000

2,000,000

1,958,511

1,401,472

1,368,609

1,293,054

55.40

4.23

4.12

3.32

3.00

1.61

1.56

1.38

0.92

0.81

0.79

0.71

0.66

0.62

0.49

0.48

0.34

0.32

Total

335,087,693

82.48

AVJennings Limited - Annual Report 2021Shareholder Information.

As at 23 August 2021.

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

Lim Chin Tiong or Sim Lye Wan

Tsang Sze Hang

DBS Nominees Pte Ltd

Rowland Wong Kwok Ho

Vesmith Investments Pte Ltd

Raffles Nominees (Pte) Ltd

Pansbury Investments Pte Ltd

Citibank Nominees Singapore Pte Ltd

Hexacon Construction Pte Ltd

UOB Kay Hian Pte Ltd

Teo Chiang Long

Ng Poh Cheng

OCBC Nominees Singapore Pte Ltd

Wee Kim Choo @ Elizabeth Sam

Chng Bee Suan

Chua Hung Koon Edmond

Total

109

47.38

2.95

0.44

0.39

0.35

0.22

0.21

0.20

0.17

0.13

0.11

0.09

0.07

0.06

0.05

Ordinary
Shares

192,463,638

11,967,002

1,782,618

1,570,170

1,408,420

899,283

838,233

804,175

681,796

670,574

532,828

452,507

368,480

293,414

269,172

263,931

244,737

224,820

224,220

216,873

216,176,891

53.24

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 406,230,728.

AVJennings Limited - Annual Report 2021COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION110

Company Particulars.

DIRECTORS

Mr Simon Cheong
Mr Jerome Rowley
Mr Bobby Chin
Mr Lai Teck Poh
Mr Bruce Hayman
Mr Tan Boon Leong
Mr Philip Kearns
Ms Lisa Chung
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
200 George Street
Sydney NSW 2000

BANKERS

Commonwealth Bank of Australia
DBS Bank Ltd
HSBC Bank Australia Ltd
United Overseas Bank Ltd

STOCK EXCHANGE LISTINGS

Australia
The Company is listed on:
The Australian Securities Exchange
Level 4, 525 Collins Street
Melbourne Vic 3000

Singapore
The Company’s shares are also quoted and traded on:
The Singapore Exchange
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)).

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

DIVIDENDS

An interim dividend of $0.007 for FY21
was paid on 26 March 2021.
A final dividend of $0.018 for FY21
will be paid on 23 September 2021.

AVJennings Limited - Annual Report 2021

Building
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