Annual Report 2022
AVJennings Limited
ABN 44 004 327 771
Housing matters.
Community matters.
Celebrating 90 years
of creating communities.
2
CR E ATING BR IGHTER FUTUR E S
FOR 90 YE ARS .
In 1932, a young man, later known as Sir Albert Victor Jennings, started his home-building business.
His goal was a simple one – to help more people fulfil their dream of buying a home.
In the 90 years since then, that goal has never changed. Not for a day. Sir Albert’s dream was made
real by following three down-to-earth principles. Give people a quality home in an attractive community
at a fair price. These principles also remain unchanged.
For 90 years they have stood strong because what matters most to people stays the same across the
generations.
Family. Friends. Connection. Security. Privacy. Good health. Happiness. Shared memories. The communities
we create today capture the spirit of contemporary living. Places where you can be active and connected.
Places that celebrate diversity in all its forms.
As we have for the past 90 years, AVJennings will continue to give people homes to be proud of
in innovative and sustainable communities, for generations to come.
AVJennings Limited - Annual Report 2022 3
Contents.
COMPANY OVERVIEW
Chairman’s Report
2022 Summary
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
4
6
8
9
10
12
15
20
26
30
FINANCIAL STATEMENTS
55
Consolidated Statement of Comprehensive Income
56
Consolidated Statement of Financial Position
57
Consolidated Statement of Changes in Equity
58
Consolidated Statement of Cash Flows
59
Notes to the Consolidated Financial Statements
Directors’ Declaration
105
Independent Auditor’s Report to the Members of AVJennings Limited 106
ADDITIONAL INFORMATION
Shareholder Information
Company Particulars
111
114
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited - Annual Report 2022 4
Chairman’s Report.
Dear fellow shareholders, on behalf
of the Board of Directors, I am pleased
to present our 2022 Annual Report.
Financial year 2022, marks the
90th year in AVJennings’ proud and
successful journey.
2022 was another challenging year with
the business experiencing the ongoing
effects of COVID-19 disruptions on our
stakeholders including staff, suppliers and
sub-contractors. Supply chain issues led
to material shortages and cost increases
affecting important and critical products
including timber, steel and concrete.
Skilled labour shortages impacted the
sub-contractor trade base, local councils
and authorities. Most of all, the persistent
relentless adverse weather events
affected our projects in New South Wales,
Queensland and Auckland (New Zealand).
These all impacted the ability to meet
production targets.
Despite all the challenges in FY22, the
business remained profitable, increased
gross margins, continued to pay fully
franked dividends and maintained a
strong financial position.
During the year, the Company also saw
some changes at the management level.
Our long serving CEO Peter Summers
retired. On behalf of the Board, I want
to thank Peter for his demonstrated
leadership and contributions to the
Company over almost 37 years. Sadly,
Larry Mahaffy, the Company’s respected
Chief Financial Officer, passed away
after a long illness. We pay our respects
to Larry’s family and remain grateful for
Larry’s ten years of dedicated service to
the Company.
The Board was delighted to appoint
Philip Kearns, AM as CEO in November
2021. Prior to his appointment, Phil was
a Non-Executive Director of AVJennings
for two years and has had a relationship
with the Company going back over ten
years. His knowledge of the Company
and its operations was considered
invaluable. As was Phil’s leadership
experience and success as the former
Captain of the Australian Rugby Union
team, The Wallabies, combined with
over fifteen years’ experience in leading
financial services organisations, where
he led significant cultural change and
was instrumental in building a client base
and introducing investors to innovative
opportunities. Phil brings quality and
leadership that fits very well with the
Board’s strategic direction for the
Company, and he will be a great asset.
Despite risks including the rising interest
rate environment and inflationary
pressures, we continue to see positive
underlying dynamics which support our
business across the short to medium term.
The massive infrastructure projects like
the inland rail and the second Sydney
airport need sustained strong population
growth to succeed. Across Australia and
New Zealand there is a shortage of labour
with unemployment in Australia being
the lowest it has been in history. While
migration came to a standstill during the
pandemic, the government now forecasts
over 200,000 net migrants to Australia
each year.
There remains an undersupply of
affordable housing and we are confident
our business model and positive industry
dynamics will deliver benefits for all our
stakeholders in coming years.
We have
implemented
a growth
strategy focused
on growing
Earnings per
Share and
Return on Equity
We have implemented a growth strategy
focused on growing Earnings per Share
and Return on Equity. Recent acquisitions
in the south-east of Melbourne and
south-west of Brisbane have further
diversified our land bank and will
contribute to future growth.
AVJennings Limited - Annual Report 2022 Ara Hills Sales Centre, Orewa, NZ
5
Throughout AVJennings’ 90-year history,
we have been focused on creating
communities. The feeling of community
is deeply entrenched in the AVJennings
psyche. We support sporting and lifestyle
groups across our sites and shareholders
will know our longevity in supporting
the Steve Waugh Foundation. Since our
involvement with Steve, we have raised
over $1.2 million for his foundation. This
year, we also supported the Humpty
Dumpty Foundation including fundraising
initiatives by our dedicated employees,
leading to the purchase of equipment for
hospitals including The Northern Hospital
in Victoria and the Ipswich Hospital in
Queensland, both in close proximity to
the communities we create. We know this
equipment could one day save the life
of a child in our community.
I would like to thank our Directors for
their continuing leadership, direction and
commitment. During the year we were
pleased to welcome Mr Lye Mun Mak as
a Non-Executive Director. Mr Mak is also
a director of two Singapore listed
companies and an independent
non-executive director of SC Global
Developments Pte Ltd, AVJennings’
majority shareholder. His extensive
experience and his financial expertise
adds to the Board’s strong mix and depth
of skills, knowledge and experience.
The appointment of Mr Mak followed the
retirement of Director Mr Boon Leong Tan
which was announced at the Company’s
2021 Annual General Meeting. The Board
is extremely grateful to Mr Tan for his years
of dedicated service as a Director and
wish him the very best for the future.
Finally, I would like to thank every one
of you who have walked with us on our
90th year journey. Our management,
employees, community stakeholders,
partners, government agencies,
shareholders, financiers and customers.
Your continued commitment and support
in the Company form the foundations for
our future success and sustained growth.
Simon Cheong
Chairman
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 6
2022 Summary.
Traditional
Markets.
Quality
Asset Base.
Revenue
Portfolio
$222.8m
down $88.3m
28.4%
Profit before tax
$17.9m
down $8.8m
32.8%
12,733 lots
(Includes land under option)
Net funds employed
spread geographically.
Cash receipts
from customers
Work in
progress
$275.6m
1,888 lots
Strong
Stability.
Total fully franked
dividends
1.77 cps
Net debt
$105.9m
Gearing
14.5%
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)
FY22
$222.8m
$17.9m
$13.1m
28.8%
FY21
$311.1m
$26.7m
$18.7m
22.6%
$405.2m
$406.3m
$1.00
3.22
1.77
$1.00
4.62
2.50
Change
(28.4)%
(32.8)%
(30.1)%
6.2pp
(0.3)%
(0.3)%
(30.3)%
(29.2)%
AVJennings Limited - Annual Report 2022 2022 Summary.
Contract signings (Lots)
953
853
697
7
• Contract signings volume and
value is a positive indicator for future
revenue and earnings confidence.
•
•
683 presold lots (contract value
$245m) were carried over the
year-end balance date, 642 of
which are expected to settle or be
revenue-recognised in FY23.
A further 34 lots have been contract
signed in July 2022, collectively
supporting FY23 results.
FY20
FY20
FY21
FY21
FY22
FY22
Results Summary
Settlements (lots)
Settlements (Lots)
Settlements (Lots)
905
Revenue ($m)
Revenue ($m)
Revenue ($m)
311.1
608
222.8
FY21
FY21
FY20
FY22
FY22
FY21
FY21
FY21
FY20
FY21
FY22
FY22
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
8
Property Portfolio.
Number of lots at 30 June 2022.
6000
5000
4000
3000
2000
1000
0
5,425*
3,383
1,504
1,731
VIC
QLD
SA
NSW
585
NZ
105
WA
*includes 3,500 lots at Caboolture (under option).
Net funds employed by region.
PCP
19%
QLD
19%
PCP
26%
NSW
27%
PCP
20%
NZ
15%
PCP
26%
VIC
VIC
30%
PCP
2%
WA
1%
PCP
7%
SA
SA
8%
PCP = Prior corresponding period (FY21).
Percentages are regional splits of total company NFE.
AVJennings Limited - Annual Report 2022
Project Pipeline.
At 30 June 2022.
9
Pre-delivery phase
Development phase
Region Communities
Remaining
no. of lots.
Pre
FY2023
FY2024
FY2025
FY2026
Post
92
13
396
52
7
527
56
194
390
12
177
39
990
205
169
333
3,500
585
83
1,624
236
87
185
942
226
29
51
164
1,260
39
2
52
12
S
E
L
A
W
H
T
U
O
S
W
E
N
D
N
A
L
S
N
E
E
U
Q
Argyle, Elderslie
Evergreen, Spring Farm (South)
Evergreen, Spring Farm (East Village)
Arcadian Hills, Cobbitty
Arcadian Grove, Cobbitty
Rosella Rise, Warnervale
Prosper, Kogarah
Huntley
Calderwood
Creekwood, Caloundra
Glenrowan, Mackay
Arbor, Rochedale 2
Riverton, Jimboomba
Deebing Springs, Deebing Heights
Cadence, Ripley
Ripley 3
Caboolture, Rocksberg
Z
N
Ara Hills, Orewa
I
A
R
O
T
C
V
I
Lyndarum, Wollert
Lyndarum North, Wollert JV
Aspect, Mernda
Harvest Square, Brunswick
Waterline Place, Williamstown
Clyde
Clyde North
H
T
U
O
S
A
I
L
A
R
T
S
U
A
Pathways, Murray Bridge
Riverhaven, Goolwa North
St Clair
Eyre, Penfield
Subiaco Fine China Precinct
A Indigo China Green,
I
L
A
R
T
S
U
A
N
R
E
T
S
E
W
The Heights, Kardinya
Parkview, Ferndale
Viridian China Green,
Subiaco Fine China Precinct
Excludes 4 residual lots
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
10
Chief Executive Officer’s
Report.
I was extremely honoured to be appointed
by the Board in November 2021 to lead
this iconic and successful business. For
90 years AVJennings has been creating
communities and the brand has long been
valued and recognised as one of the most
trusted in Australia.
The 2022 financial year was challenging
and followed on the heels of extremely
difficult years in 2020 and 2021. Not long
after I took over from Peter Summers as
CEO, I talked about leading the business
towards normalcy and how much we
looked forward to that. Those remarks
were contextualised by the unforeseen
circumstances created by the global
pandemic which severely disrupted
operations in 2020 and 2021.
As we all know that perspective turned
out to be optimistic. Extraordinary rain
events, the continuation of different
forms of COVID-19, war, supply chain
issues, inflation and interest rate rises all
contributed to difficult trading conditions
for many industries across Australia
and the world, including the residential
development market.
In difficult times it is often best to ‘stick to
your knitting’ and that’s what we continue
to do at AVJennings. We remain focused on
developing and selling affordable master
planned communities in sought after
locations and buying land or obtaining
controlling interests in it.
At all stages in our developments, we
consider what is right for our communities
and what is right for our environment as we
engage with issues such as energy, water,
biodiversity, climate and waste. All these
factors play a role in the master planning
and house designs that we put into our
communities. We are in fact raising the bar
in this area and we have commissioned
a new role, Head of the Future and
Sustainability, as we look out to what our
customers, communities and partners want
to see from AVJennings over the next 20-30
years.
One of my initial priorities was to define
and clarify our Company’s strategic focus.
Over the next few years, we plan to extract
greater productivity and efficiency with
our current resources. We are looking to
make more capital efficient transactions
as the market evolves through this interest
rate cycle and this includes acquisitions in
regional areas. This is important as society
explores some shift to regional areas
and the work from home model becomes
entrenched in our culture.
We are committed to increasing the volume
and proportion of built form product we
put on our land and into our communities.
Financially our focus is fairly and squarely
on lifting Return on Equity (ROE) and
increasing Earnings per Share (EPS).
We continue to ensure that our portfolio is
diverse as it helps to mitigate market risk
and we now have over 12,700 lots across
all major states and in New Zealand which
is another area we see growth.
During the year we secured acquisitions in
Clyde in Victoria and Ripley in Queensland.
Clyde, in the south-east of Melbourne, is a
strong growth area and further diversifies
our book into an area we have not ventured
into for a while but has a dynamic story.
The 333 lots acquired in Ripley, Brisbane
are close to an area we know from
our Cadence project, and we feel the
fundamentals in that area remain strong as
it is a much sought-after location.
As I mentioned above, the abnormal wet
weather along the east coast of Australia
and New Zealand had a major impact
in delaying settlements with some sites
suffering over 100 working days in wet
weather stoppages. Global issues such
as supply chain challenges leading to
material shortages added to labour
shortages and COVID-19 have affected
the whole industry and we have not been
exempted from these.
The Company
remains committed
to delivering
outcomes for
our customers,
stakeholders
and the broader
community.
While the result was lower due to the
reasons stated previously, there are some
shining lights. Whilst our profit before
tax was down over 30% to $17.9 million
it was at the upper end of the range we
had forecast and our gross margins were
28.8%, up from 22% the previous year.
A final dividend of 0.67 cents per share was
declared for FY22, bringing total dividends
for the year to 1.77 cents per share,
representing a fully franked yield of 5.5%
on the June 2022 average volume weighted
average share price (VWAP).
Australia wasn’t the only jurisdiction
troubled by weather, supply chain
challenges and COVID-19. New Zealand
revenue was also affected and, Ara Hills,
our majestic project suffered big delays
of 85 working days which will see its 2022
revenue leak into 2023.
AVJennings Limited - Annual Report 2022 Arbor Townhomes, Rochedale, Qld
(Artist’s impression)
11
Despite these challenges, our financial
position is strong with our Club facility
increased by our banks to $300 million
whilst our borrowings were reduced to
$109 million. Our total assets increased to
$729 million. Despite the dip in settlements
and revenue, cash flow from operations
remained healthy with $33.1 million
generated.
Given where interest rates have moved
and there is potential for market slowdown,
our capital management settings have
been prudent and leave us with the ability
to achieve our growth ambitions.
Prior to closing off my Report, I too would
like to acknowledge the sad passing in
June 2022 of the Company’s respected
and popular Chief Financial Officer, Larry
Mahaffy. Larry served the Company with
great distinction since he joined in 2012
and he will be sadly missed by his family,
colleagues and many contacts across
the residential property and banking
industries.
Our 2023 financial year is underwritten
by 683 contracts on hand with the vast
majority to settle through the year. Our
growth strategy is in place which includes
more built product, our financial position
is strong as our levels of unsold stock are
at record lows and most importantly,
we feel our industry fundamentals
support a strong story for the residential
development sector with migration set
to increase and a housing shortage
nationally.
The Company remains committed to
delivering outcomes for our customers,
stakeholders and the broader community.
The Board and I believe we are on the right
trajectory to grow revenue and earnings in
financial year 2023.
Finally, thank you to all our customers,
contractors, employees, and the Board.
Everyone has endured a challenging year
but the future for AVJennings is as exciting
and promising as it was 90 years ago.
Philip Kearns, AM
Chief Executive Officer
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 12
Our Communities.
New South Wales.
Rosella Rise at Warnervale on the Central Coast
is a hive of activity with the sales office and
display homes now open. We have 2 stages under
construction (2a & 2b) which will complete in FY23.
Built form construction on our first retail houses
will commence in HY23.
At Evergreen (Spring Farm) and Arcadian Hills
(Cobbitty) projects where there is a mix of built
form and land development, we have seen strong
demand throughout FY22 with demand outstripping
supply in FY22. At Arcadian Hills we saw the last
major civil construction completed and at Arcadian
Grove we expect to close out our built form
construction and the project in FY23.
Queensland.
The Queensland business focused on delivery of
sold-out stages and projects. This saw the trade out
of Anise (Bridgeman Downs) , Parkside (Bethania)
and Creekwood (Caloundra) as well as the final
close on Leichhardt in FY22.
Riverton (Jimboomba) and Cadence (Ripley)
developments are in full production mode with
both projects impacted by weather but making
significant progress in FY22. Each of the projects
have a mix of land and housing options which
are currently being delivered. These projects will
underpin the QLD region results over the coming
financial years.
Planning work on the Caboolture project continues
with ongoing negotiations with the Queensland
Government, Council and Service Authorities on
key infrastructure items.
Acquisitions was busy with 2 sites secured in the
Ripley Priority Development Area on Daleys Road
and Coleman Road.
New Zealand.
At Ara Hills in Orewa, north of Auckland, Stages 3a
and 2 are under construction with stage 3a due to
complete in HY23. There is strong demand for land
at Ara Hills with stage 3a effectively sold out.
Our first residents have moved into stage 1 with
approximately 20 houses now occupied. Redwood
Park has opened and is being enjoyed by our
residents and the public.
All AVJennings obligations for land development at
the award winning Hobsonville Point have now been
closed out.
Rosella Rise, Warnervale, NSW
Riverton, Jimboomba, Qld
Ara Hills, Orewa, NZ
AVJennings Limited - Annual Report 2022 Eyre Sports Park, Eyre, SA
Lyndarum North Park, Wollert, Vic
13
South Australia.
Eyre residential community remains
very popular with demand outstripping supply and
recent releases across land and built form selling
out in FY22. There are currently 2 stages under
construction and a significant increase in the built
form being undertaken by AVJennings meeting an
affordability niche in the market.
At St Clair, town home construction continues on
the sold-out Piper townhomes.
Returning capital from older projects continues
with a focus at Pathways (Murray Bridge) and
Riverhaven (Goolwa North), with the final stages
of each project under construction. We have seen
strong customer and builder support for both
projects.
Victoria.
At Lyndarum North (Wollert) demand remained
strong in FY22 with this masterplanned community
maturing with over 700 lots sold from inception.
The high-quality parks remained a key drawcard
for the project along with a diversity of housing
enabling choice to suit the budget and lifestyle
needs of our customers. There are currently 4 stages
under construction on the site and we expect our
first social infrastructure of a Childcare Centre to
open in early FY23.
At Aspect (Mernda) sales and construction on
this 230 lot development has seen strong demand
with the first stage of the project now complete
and 2 further stages under construction.
At Harvest Square (Brunswick West) our public
housing renewal project construction of basement
works has commenced for the 3 apartment
buildings on the site.
In FY22 we acquired 4 sites in Melbourne’s South
East totaling circa 1,100 lots once complete. Works
on the first project at Thompsons Road Clyde
have commenced.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 14
Merchant Apartments, Waterline Place, Williamstown Vic (Artist’s impression)
AVJennings Limited - Annual Report 2022 Corporate Governance.
15
At AVJennings, we recognise that a good corporate governance framework is vital to
support a culture that values integrity, respect and ethical behaviour. We are committed to
maintaining high standards of corporate governance in the delivery of AVJennings’ strategic
objectives, so that our decisions and actions are based on transparency, integrity and
commitment to the long-term sustainability and on-going success of our business.
Our Values
The AVJennings Board
A refresh of the Company’s core values
was undertaken during FY22, with core
values identified as:
Accountability
We own our words, our actions
and our impact
Safety
We are committed to safety
and wellness
People
We are a business of people,
for people and by working together
will achieve great outcomes
Integrity
We build trust through high standards
of moral and ethical conduct
Respect
We treat everyone with dignity,
fairness and professionalism
Excellence
We strive for excellence in what
we do, deliver and stand for
The values statement is currently
being refined and the values will
be communicated throughout the
organisation through leadership,
training, recognition, communication and
reinforcement.
The Board is responsible for ensuring
AVJennings’ continued prosperity by
setting its business strategy, directing its
affairs, setting its governance framework
and monitoring performance, whilst also
meeting the interests and expectations
of its shareholders and other relevant
stakeholders. It is responsible for
identifying areas of significant business
risk and ensuring adequate frameworks
are in place to manage those risks. The
Board Charter, which sets out the Board’s
key accountabilities, structure and how
it conducts itself and the Company’s
business can be found in the investor
section of AVJennings’ website,
www.avjennings.com.au.
The Board has identified a range of core
skills, competencies and attributes as
desirable of its members, to fulfil its role
of oversight effectively. These include
industry experience, risk management,
compliance oversight, development of
strategy and policy, financial literacy,
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.
The Board currently comprises of seven
Non-Executive Directors and one
Executive Director.
Tenure
As at 30 June 2022, the tenure profile of
the Board was as follows:
0-1 year
1 – 4 years
5 – 10 years
> 10 years
= 1 Director
= 2 Directors
= None
= 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, Mr Mak Lye Mun, was appointed
to the Board on 15 October 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 seven 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.
Committee charters are published in the
investor section of AVJennings’ website,
www.avjennings.com.au.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited - Annual Report 2022 16
Risk Management
Risk Oversight, Monitoring
and 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.
The Board bears overall responsibility
for the Company’s risk management
framework and is responsible for setting
the overall risk culture. It 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.
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. During the year,
the Board also reviewed and approved
AVJennings’ Risk Appetite Statement,
which is published in the investor section
of AVJennings’ website www.avjennings.
com.au.
The Board meets in the second quarter of
each calendar year to review the strategic
direction of AVJennings and to consider
initiatives and strategies designed to
ensure its continued growth and success.
At this meeting, the Board also reviews the
Company’s risk management framework to
satisfy itself that it continues to be sound,
to determine whether there have been any
changes in the material business risks it
faces and to ensure it is operating within
the risk appetite set by the Board. The
Board met in April 2022 to review, assess
and set AVJennings’ strategic objectives
for the next three years.
Our Principal Risks and How We Address Them
Risk
Property Market Risk
These include fluctuations in general economic conditions
globally and locally, resulting in changes in prevailing market
conditions such as a sustained downturn in property markets,
change in consumer sentiment, reduced demand for AVJennings’
product and reduction in the value of its land bank.
Regulatory Risk
AVJennings’ operations span five States in Australia and New
Zealand. Legislation and regulations governing its activities
vary in each State. AVJennings is dependent on various State
Regulatory Bodies and Councils granting the requisite licenses
and approvals required for it to carry on its business. Changes
and developments in legislation, regulation and policy in
the jurisdictions in which it operates, land resumptions by
government authorities and major infrastructure projects may
impact AVJennings’ operations.
Financial Risk
These include variations in interest rates and inflation impacting
AVJennings’ earnings, the inability to obtain funding to finance
current and future development activities, potential uninsured
losses or under-insurance and changes in commodity prices
resulting in increased cost of works, fluctuations in exchange
rate and foreign currency risk which could result in a loss,
counterparty risks such as purchaser or other third party
defaults, insolvencies or financial distress, which could lead to
reduced financial liquidity or loss.
Management Approach
The Board and management seek to minimise adverse impacts
by monitoring markets in which AVJennings operates on an
ongoing basis, adopting strategies that minimise adverse
impact, regularly reviewing the value of its land bank, monitoring
competitor activity and tailoring commercial decisions (such
as land acquisition, volume of work-in-progress) to the forecast
commercial environment.
Developing relationships with regulatory bodies, making
representations through various industry groups of which
AVJennings has membership and having processes to
expeditiously deal with issues, including staff with specialised
skills and knowledge in town planning, building regulation and
other related disciplines, are some of the measures used to
mitigate potential risks.
AVJennings seeks to mitigate these risks by maintaining a strong
balance sheet with appropriate gearing levels, increasing and
diversifying its sources of funding, insuring the company’s
assets, main potential liabilities and personnel under a
comprehensive insurance program tailored to it’s business
activities and entering into fixed or guaranteed maximum price
construction and supply contracts to mitigate fluctuations in
prices.
AVJennings Limited - Annual Report 2022 17
Risk
Operational Risk
Management Approach
These include impact on profitability as a result of delays or non-
completion of Company projects, legal proceedings arising from
operations leading to losses and delays.
The Company has processes in place to monitor and assess
project performance on an ongoing basis. Management is
required to provide quarterly reports to the Board on ongoing
and potential legal issues, so that the impact of such issues, if
any, can be monitored and managed.
Construction Activity Related Risks
These include the inability of sub-contractors to perform their
work in accordance with their obligations, defective work and
latent defects arising from incorrect design or poor workmanship,
liquidated damages for late delivery, cost overruns and
professional liability claims arising from allegations of negligence.
Environmental Risk
Changes in climatic conditions affecting AVJennings’ business
activities (including adverse weather conditions), soil and water
contamination or runoff from project land, the presence of
previously unidentified threatened flora and fauna species on
project land (which may influence the amount of land available
for development) are some of the risks the Board seeks to manage
in this area. It also includes cultural heritage issues in particular
cultural heritage items, relics and sites of First Nations peoples on
land which may be owned by or of interest to the Company.
People and Culture Risks
AVJennings relies on motivated and high quality staff to deliver
business strategy and ensure its operations are effectively
managed. Dependence on key personnel and loss of such
personnel can affect AVJennings’ results and operations.
Workplace Health and Safety Risk
Accidents at work sites resulting in claims and penalties are
potential risks AVJennings faces in this area.
AVJennings has in place guidelines for the engagement of
suitably licensed and insured sub-contractors and trades people
and, to the extent possible, also has in place indemnity insurance
to cover any potential claims.
Management is required to provide regular reports on potential
environmental issues affecting development projects under their
purview, so that any potential adverse impact can be assessed
and managed. Work is also done to minimise any adverse
effect on the environment through environmental management
plans, cultural heritage management plans and other measures,
including use of efficient design, planning and procurement
practices.
Development and maintenance of an inclusive group culture,
recognition and reward systems, employee assistance
programs, compensation and benefit arrangements, training
and development are some of the measures used to retain high
calibre managers and staff.
These are managed by the implementation of stringent
workplace health and safety practices, education and training
of employees in safe work methods (initiatives such as safe work
month, workshops, toolbox meetings and similar mechanisms)
and regular review and monitoring.
Supply Chain Risks
AVJennings has a range of suppliers who provide a diverse range
of goods and services to its business. Supply of sub-standard
product, business practices of our suppliers and reliability
of service providers can impact AVJennings’ operations and
targets.
Mitigation measures may include selective engagement,
rigorous selection criteria, building long-term relationships,
pre-qualification processes, appropriate protection mechanisms
including warranties, insurance requirements, retentions or other
security arrangements as appropriate.
Information Technology and Cyber Risks
These may include breaches of AVJennings’ networks and cyber
security systems, unlawful access, misuse or publication of data,
outdated business systems and processes.
AVJennings is committed to ensuring that information in its
possession (including those of its customers) are properly
managed in accordance with privacy laws and business
requirements. The Company has invested in robust protection
systems and is continually looking for ways to enhance its digital
capability, harness opportunities to deliver better customer
experiences and remain relevant in a world where technology is
changing at a rapid pace.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited - Annual Report 2022 18
Our COVID-19 Response
With the lifting of government-imposed
restrictions and return of our staff
and customers in FY22, many of the
lessons learnt in adapting to changing
circumstances positioned us well to
manage impacts of sporadic lockdowns
and isolation requirements that continued
as health authorities sought to bring new
waves of infection under control. Flexible
and remote working arrangements have
continued, with staff encouraged to
return to the office to foster connectivity
and teamwork. Cleaning and hygiene
practices at our offices and sales centres
have continued, with pre-arranged
appointments, contactless check-in
and social distancing measures for our
customers still in place.
We continue to engage with our suppliers
to manage COVID-19 related supply
disruptions, to identify local supply
channels were possible and to determine
where alternative or substitute materials
can be procured and used, if shortages
have been experienced.
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
•
• Overseeing the performance of
the Internal and External Auditor
Reviewing the Company’s full and
half year disclosures
Reviewing the Company’s tax
regime and associated compliance
Reviewing related party transactions
•
•
AVJennings Limited - Annual Report 2022 19
The Company has in place internal
controls intended to identify and manage
significant business risks. These include
the review of development proposals
and the management of their ongoing
performance. Management prepares the
Risk Management Plan and the Board is
responsible for reviewing and approving it.
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. 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.
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 and operating in New Zealand
for the past 15 years.
Celebrating 90 years of creating vibrant
and thriving communities, 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.
•
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.
Ensuring that staff understand their
responsibilities with respect to risk
management; and
Fostering a risk-aware culture
within their area of responsibility.
•
•
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
• 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.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited - Annual Report 2022 20
Your community developer.
Sustainability
matters (ESG)
We understand that a sustainable
business model enables us to manage
operations efficiently and effectively and
to create value for customers, employees,
investors and other key stakeholders.
Furthermore, AVJennings recognises
that the sustainable development of a
business is multifaceted. Therefore, by
comprehensively understanding the
issues that are material to our business
and important to our stakeholders, we
can improve or implement new measures
that will promote growth, create positive
impact, and add value in the long term.
With this objective in mind, this year
we carried out an environmental, social
and governance (ESG) assessment to
identify key ESG issues that may impact
our business and our ability to support
sustainability practices relative to industry
standards as well as those that may
represent opportunities for our business.
The ESG assessment consisted of
comprehensive research to understand
global, national, and industry ESG
trends impacting our business. This was
further complemented by a review of ESG
investment trends that may impact our
business risk exposure. We also analysed
the material ESG topics determined
by selected peers and considered
expectations expressed in global ESG
frameworks and standards, including
the Global Reporting Initiative (GRI), the
Value Reporting Foundation Sustainability
Accounting Standards Board (SASB), the
Task Force on Climate-Related Financial
Disclosures (TCFD), and leading ESG
rating agencies. Additionally, the analysis
considered our business nature as a
residential property developer.
The ESG assessment identified the key
ESG risks and opportunities that have an
impact on our ability to create value in the
long term. These ESG issues include:
• Governance and responsible
business practices: corporate
governance, corporate behaviour,
environmental and socioeconomic
compliance.
As we embark on the path to further
improvements to our sustainable
business model, our next step will be to
determine which of these ESG issues are
most material to our business and our
stakeholders in order to generate our
sustainability framework.
Below we provide a snapshot of our
sustainability practices for the
FY22 period.
•
•
•
•
Business model and innovation:
product design – lifecycle
management (design for resource
efficiency and community impact
of new developments), product
design – innovation (multi-purpose
homes), product design – health
(healthy homes), product certification
(certified homes) and business model
resilience to climate change.
Human capital: talent recruitment
and retention, development and
engagement, diversity and inclusion
and health and safety.
Social capital: product quality
and safety (structural integrity
and safety), human rights (modern
slavery, indigenous people and other
human rights), affordable housing
and customer experience.
Environment: Ecological impact,
waste, energy and emissions
management.
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. 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
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.
AVJennings Limited - Annual Report 2022 Symphony Park, Cadence,
Ripley, Qld
21
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited - Annual Report 2022 22
Project X (internal)
Project X (internal)
Project X, Evergreen at Spring Farm, NSW
AVJennings Limited - Annual Report 2022 23
How These Objectives
are Implemented
Our Master-planned
Communities
With a focus on connectivity, our
greenfield projects are located within
government designated growth corridors,
close to major transport corridors where
infrastructure already exists or is being
built, creating walkable catchments to
local parks and services, encouraging
cycling through the creation of dedicated
cycling routes and 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 shopping precincts and other
amenities, 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. Efficient block sizes make
them more affordable, particularly for first
home buyers who make up a significant
proportion of our customers.
Designing for the walkable catchment is
a core principle where we provide high
quality usable amenity within the walkable
catchment. This 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 through the 2021 lockdowns
and the re-localisation of our communities.
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 Riverton, Jimboomba (QLD)
community features will include
approximately 46 hectares of multiple
family-friendly parks and reserves, a
walking trail along the Logan River, areas
of nature reserves 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.
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.
Recent Design Initiatives
Our design and construction team
recently undertook a successful follow up
to our - prefabricated composite walling
house. Where we have extended the
prefabrication scope to include windows
and roofing and are seeing very positive
results in our energy efficiency testing and
an expectation that we can significantly
exceed the minimum 6 star rating with
our early reports on thermal efficiency
of a star rating of circa 8.5. The system
is sourced from an Australian owned
producer.
The prefabricated system replaces
traditional on-site wall construction
which uses separate and independent
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. We are seeking to build
around 30 of these homes across our
stand alone housing and terrace housing
range in FY23 across projects in QLD, NSW
and VIC.
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.
The outcome of this research has been the
development of a COVID-19 responsive
design prototype, Project X, which has
been constructed 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. We are looking
now how we incorporate the best features
from Project X into our housing range.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited - Annual Report 2022 24
Lyndarum North, Wollert, Vic
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,
with the commencement of basement
construction underway.
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. We
are currently researching having solar
as standard for all of our house offerings
and are targeting this to be implemented
within the medium term.
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 drier 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.
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 in SA and Water
Efficiency Labelling & Standards (WELS)
rated appliances specified for installation
at Harvest Square, Brunswick West (Vic).
AVJennings Limited - Annual Report 2022 25
At our Riverton, Jimboomba (QLD) project
we have just completed our first stage of
revegetation of the endangered Melaleuca
Irbyana planting 7500 Irbyana seedlings
grown from seed harvest from the site and
a further 7500 native endemic species as
part of our works to protect and enhance
this threatened species.
At our Evergreen, Spring Farm community,
8 hectares of land was dedicated for the
preservation of critically endangered
Cumberland Woodland 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
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 Nations 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 Nations peoples across
Australia. The Reconciliation Action Plan
will take a number of years to complete.
The process is being championed by
a volunteer steering committee of
AVJennings staff. Guidelines are also
being developed for engagement with
New Zealand’s Maori 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. We note that
there was no inundation on our QLD and
NSW projects where there was flooding in
the immediate vicinity of the projects.
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
requirements for buffer zones in the urban
design process for the development and
housing design standards, which must be
complied with.
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. 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.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited - Annual Report 2022 26
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 90 years,
we have helped our customers build a brighter future by creating high quality residential
communities that they feel connected to and have ownership over.
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 ecologically sustainable 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
Evergreen Project in Spring Farm (NSW)
has proven to be very popular with our
residents. In Queensland, the first of
the community parks at Riverton in
Jimboomba has been completed and the
major park at Cadence in Ripley is also
complete adding great amenity for our
new residents.
We regularly engage with our communities
to 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
& FY22 due the ongoing impacts of
COVID-19, but in 2022 we successfully ran
a range of events across our communities
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 continually seek feedback from our
customers to ensure that we are the best
that we can be. Brand research tells us our
customers consider us to be ‘professional,
affordable’ and ‘reliable’.
Our ongoing customer survey program
invites customer comments and assesses
levels of customer satisfaction as our new
purchasers and residents move through
their homebuying journey with us.
We believe in engaging with our customers
and communities. From an initial property
enquiry through to residency and beyond,
our customers can connect with us
virtually or in person at our Sales and
Information Centres, digitally via our
website, live chat, social media or online
community groups or face to face at our
community events and family fun days.
Our research tells us that nearly 95%
of our customers were satisfied with the
customer service they received while
purchasing their property, 90% of our
customers are satisfied with the quality
of their home and 95% of customers feel
that their home represents good value for
money.
Some quotes from our happy
customers in FY22:
“I feel AVJennings was professional,
experienced and helpful, and no
improvement necessary.”
- Home buyer, Evergreen, NSW.
“The team at AVJennings went above
and beyond to ensure our property was
completed on time. The team ensured
everything was completed and prioritised
our house to be completed.”
- Home buyer, Arcadian Grove, NSW.
“It was a marvellous experience. It was
our first home buying and we never
had any sort of problems. It was indeed
a new experience for us. Thank you
AVJennings.”
- Land buyer, Lyndarum North, Vic.
“Trusted. Experienced. Reliable.”
- Land buyer, Riverton, Qld.
“We are at very early stages of our
relationship with AVJennings and are
very satisfied so far.”
- Land buyer, Riverhaven, SA.
“We’re very satisfied with everything.”
- Home buyer, Waterline Place, Vic.
“I am absolutely happy with Anise in all
aspects, especially with environmentally
friendly construction designs.”
- First home buyer, Anise, Qld.
We continue to promote and reward our
customers’ loyalty with our Refer a Friend
and Repeat Purchaser programs.
AVJennings Limited - Annual Report 2022 27
Learning and Development
The past two years of the pandemic and
the results of our engagement survey
have underscored the importance of
a skills based and inclusive approach
to development of our people. New
initiatives include the rollout of a learning
management system (during Q1 FY23);
security awareness training to educate
on the various threats that we all face
using technology today and an Executive
Authentic Confidence programme
designed to develop our Women in AVJ.
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.
We also recognise our people through our
Service Awards program (retention), and
our annual employee awards including the
prestigious CEO Award.
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
FY22, over 1,000 inspections focusing
on Health, Safety and Environment
were completed across our workplaces.
Included in this number are inspections, as
required, for COVID-19 related matters.
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
also satisfy the density requirements
of councils and regulators and reduce
urban sprawl. A quarter 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.
Builders/
Developers
23%
First Home
Buyers
25%
Government
7%
Investors
19%
Subsequent
Home Buyers
26%
Pleasingly, in FY22, work commenced
on our Harvest Square, Brunswick West
project in Victoria, a well located inner
Melbourne suburb. 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.
Womens Housing Initiative,
Victorian Government’s Big
Build, Lyndarum Wollert Victoria
We were able to partner with Women’s
Housing Ltd to participate in the Victorian
Government’s $5.3B Big Build initiative
to deliver 11 dwellings at our Lyndarum
development. The homes are under
construction and due for completion
in FY23.
Our People
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.
Employee Engagement
Our employee engagement surveys
measure satisfaction levels across
various areas such as overall employee
engagement, teams, safety and wellbeing,
working environment, career development
and leadership. Pleasingly, improvements
in overall scores were recorded in our
last survey in June 2021 across the
areas of working environment, teamwork,
and safety and wellbeing compared to
the previous survey (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
4.02 (out of a possible 5) was recorded,
compared to 3.90 in FY20.
Our parental leave policy has seen 100%
of employees on parental leave returning
to work during FY22. We continue to
review our flexible working arrangements
to ensure that it works for both the
business and all our employees.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited - Annual Report 2022 28
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,
MLC staff superannuation fund and HSBC
banking as part of its Corporate Partners
Program.
Wellbeing initiatives to improve employee
engagement and wellbeing include
focussed health weeks for all of our
workforce, Safe Work Month in October
each year, mental health webinars and
EAP awareness month.
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 FY22, 49% of our workforce was
female. The proportion of women in
senior management positions and on the
Board was 30% and 12.5% respectively.
We will continue to pursue opportunities
to promote and attract more females to
management and 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 endeavour to build productive,
long-term business relationships with
key suppliers who share our values and
who support us in sourcing products
ethically and sustainably, to deliver on
our commitments. We regularly engage
with key suppliers and subcontractors to
ensure ongoing support for our business.
We are committed to timely payment to
our suppliers to support the viability of
their businesses.
We also engaged with our suppliers to
identify and address risks of unfair labour
practices within their businesses and
supply chains and in FY22 published our
second Modern Slavery Statement. To
ensure our suppliers share our commitment
to limiting the risk of modern slavery
infiltrating our supply chains, a Modern
Slavery Policy setting out AVJennings’
position was developed in FY22 and
communicated to major suppliers. A
Supplier Code of Conduct setting out
AVJennings’ expectations of its suppliers
in the areas of Labour and Human
Rights, Workplace Health and Safety,
Governance, Ethical Behaviour and
Conflicts of Interest and Environmental
Sustainability was approved by the Board
in the latter part of FY22. The Code will be
communicated to all AVJennings suppliers
in the coming months and will also be
provided to new suppliers as part of the
on-boarding process.
Our Shareholders
As a listed public Company, we take our
disclosure obligations and responsibility
to create shareholder value seriously. Our
Australian based Directors, particularly
our Deputy Chairman, Managing Director,
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), an ad-hoc basis
(at other times during the year) and
at the Annual General Meeting. These
interactions allow AVJennings to articulate
its strategy and to also understand our
investors’ views on our strategy, financial
performance and governance.
In August 2021, we held our FY21 results
announcement presentation via a webinar
conferencing facility, which enabled
shareholders to participate virtually and
ask questions via the webinar portal.
Our Annual General Meeting was also
held virtually in October 2021, providing
an opportunity for shareholders on
our Singapore register to participate
in the meeting in real time. The ease
of attendance facilitated by the virtual
meeting allowed a larger number of
shareholders to participate in the meeting,
compared to physical meetings held in
previous years. The FY22 Annual General
Meeting will be held in person (to comply
with legal requirements) but we expect
that future Annual General Meetings will
be held virtually, or at least include a
virtual component.
Proud sponsors of
AVJennings Limited - Annual Report 2022 29
Riverton, Queensland6
Community
Engagement
Our Valued Partnerships
Housing Matters, Community Matters,
is at the heart of everything we do at
AVJennings. This means we not only create
great places to live, we also contribute to
the broader community through a range
of activities, grants and partnerships. Our
Company ambassadors, Laura Geitz and
Steve Waugh AO hold these same values.
Laura, former Australian ‘Diamonds’
netball captain led her country with
distinction and continues to work actively
in the community, through promoting a
healthy and active lifestyle. Steve, former
Australian cricket captain, has pursued
his philanthropic work and, through the
Steve Waugh Foundation (SWF), provides
much-needed support and equipment to
the families of children and young people
suffering from rare diseases.
AVJennings was the inaugural partner
of the Foundation and we are pleased
to be able to continue to support its
great work. To date we have raised over
$1.2 million for the Foundation through
various fundraising activities. One of the
major initiatives involves the construction
of The Renee series of homes, and this
year we built the Renee 6 at our Riverton
community in Jimboomba, Qld. Through
the endeavours of the AVJennings team
along with the generosity of our supplier
partners pitching in with labour and
materials, we provide the SWF with
proceeds of the sale.
This year AVJennings was pleased to
assist the Humpty Dumpty Foundation
through its Balmoral Burn initiative.
Humpty Dumpty provides hospitals and
health services with vital, life-sustaining
equipment which may otherwise not
be able to be obtained. This year, four
AVJennings team members took up the
challenge of the Burn which involves
running 420 metres up an excruciatingly
steep hill to raise funds for this cause.
Friends and family attended to cheer on
the team.
We continue to proudly support the
Queensland Firebirds in the Super Netball
League and St Kilda Football Club’s AFL
and AFLW teams. Through these initiatives
our customers, staff, suppliers and the
wider community can engage and enjoy
unique experiences.
In addition to these major partnerships, we
are actively involved in the communities
in which our projects are located to
promote healthy and active lifestyles
as well as support grass roots clubs
and organisations to grow and thrive.
Through our grants programs we have
provided assistance and donated funds
to schools and learning centres, sports
and recreational facilities, through to
essential services and sustainability-based
enterprises. For example Lyndarum North
estate, in Wollert (Victoria) supported the
purchase of equipment for the Epping
Little Athletics Club while at Jimboomba
State School (Queensland), much needed
funds went to programs and training
on personal safety for children through
the grants program at Riverton estate.
In South Australia, our longstanding
partnership with the Eyre Sports Park
Association supports the local Rugby
League, Soccer and Cricket Clubs.
Our people make these partnerships
the success that they are, through
volunteering their time in fundraising
activities. They epitomise community spirit.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited - Annual Report 2022
30
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 2022. 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
P Kearns
Non-Executive Chairman
Non-Executive Deputy Chairman
Chief Executive Officer and Managing Director
(appointed CEO on 10 January and MD on 17 February 2022, formerly Non-Executive Director)
B Chin
Non-Executive Director
BG Hayman
Non-Executive Director
TP Lai
L Chung
LM Mak
Non-Executive Director
Non-Executive Director
Non-Executive Director (appointed 15 October 2021)
PK Summers Chief Executive Officer and Managing Director (retired 1 January 2022)
BL Tan
Non-Executive Director (retired 14 October 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 $13.1 million (2021: $18.7 million).
DIVIDENDS
Dividends paid during the financial year were as follows:
Cash dividends declared and paid
2021 interim dividend of 0.7 cents per share,
paid 26 March 2021. Fully franked @ 30% tax
2021 final dividend of 1.8 cents per share,
paid 23 September 2021. Fully franked @ 30% tax
2022 interim dividend of 1.1 cents per share,
paid 25 March 2022. Fully franked @ 30% tax
Total cash dividends declared and paid
2022
$’000
-
7,312
4,469
2021
$’000
2,843
-
-
11,781
2,843
Subsequent to the end of the financial year, the Directors have declared a fully franked final dividend of 0.67 cents per share to be
paid on 22 September 2022 (2021: 1.8 cents).
Directors’ Report.AVJennings Limited - Annual Report 2022 31
OPERATING AND FINANCIAL REVIEW
OPERATING AND FINANCIAL REVIEW
Financial Results
Business Overview
AVJennings’ Profit Before Tax (PBT) of $17.9M for the year
ended 30 June 2022, is down on the prior year (30 June
2021 PBT: $26.7M). Profit After Tax was $13.1M (30 June 2021:
$18.7M).
The FY22 financial result is in line with the ASX market
announcement released on 1 July 2022 which indicated
that PBT would fall within the range of $16M to $18M. The
operating results have been significantly impacted by
persistent and abnormal wet weather particularly affecting
our Sydney, Brisbane and Auckland projects. In addition,
production delays as a result of supply chain blockages,
material and labour shortages as well as ongoing COVID-19
related interruptions have delayed timing of settlements.
The result of the factors above has meant land development
and house building construction activities have been delayed.
Particular projects affected are Rosella Rise at Warnervale
and Evergreen at Spring Farm in New South Wales (NSW),
Ara Hills at Orewa in New Zealand (NZ), Lyndarum-North
in Victoria (Vic) and Cadence at Ripley and Riverton at
Jimboomba in Queensland (Qld) amongst others.
Contract signings of 250 lots, generating revenue of $98M
(excl GST) which were expected to settle during the financial
year are now expected to settle in the first half of FY23. The
Company had 683 sale contracts on hand at 30 June 2022,
the vast majority of which are expected to settle during FY23.
Average gross margins of 28.8% improved from the prior
year (FY21: 22.6%), indicating strong pricing growth during
the year which more than offset cost increases experienced
through the business.
Dividend
The lower than expected result was caused mainly by timing
differences for revenue recognition as discussed above,
however the strong financial position of the Company has
allowed the Directors to declare a final dividend of 0.67 cents
per share fully franked. Together with the interim dividend of
1.1 cents per share fully franked declared for the first half, this
brings the total dividend declared, fully franked, in respect of
FY22 to 1.77 cents per share. Based on VWAP of 46.12 cents
per share (June 22), this represents a yield of 3.8% before
franking credits (fully franked 5.5% grossed up). The DRP will
remain suspended.
The business experienced a series of unprecedented events
including ongoing effects of COVID-19 disruptions on our
staff and that of suppliers and sub-contractors. Supply
chain issues led to material shortages and cost increases
mainly affecting timber, steel, tiles, gyprock, glass, concrete
and aluminium amongst other products. Additionally, skilled
labour shortages affecting the sub-contractor trade base,
local councils and authorities and, most of all, the persistent
relentless adverse weather events affected our projects in
NSW, Qld and Auckland (NZ). These all impacted the ability to
meet production targets. NSW alone has experienced three
natural disaster flooding events over the last 15 months.
The timing and combination of these events in the life cycle
of the development process has been particularly significant
and has resulted in consequential delays across the portfolio
and contributed to a lower second half result. Traditionally,
the pattern of earnings in recent times has seen second half
results generally stronger than the first half.
Sales have remained solid through FY22 in line with stock
availability. Our new projects launched towards the end
of FY21, Rosella Rise at Warnervale in NSW and Aspect at
Mernda in Vic, have experienced strong sales in the release
of the first two stages, with demand for the next stages
remaining high.
In NSW, Arcadian Hills at Cobbitty and Evergreen at Spring
Farm continued to perform well in FY22 with escalated price
growth.
In Auckland, Ara Hills remains sought after as a premium
development on the North Side and all lots released have sold.
The demand for good quality land in a sought after location
by our partner builders continued to be solid in FY22.
In Qld, Riverton at Jimboomba and Cadence at Ripley
continued strong sales momentum in FY22 with all stages
released sold out.
In Vic, Lyndarum-North experienced elevated demand with all
stages released having sold out.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 32
OPERATING AND FINANCIAL REVIEW (CONTINUED)
The Company remains active in acquiring land for future
growth, profits and shareholder returns. Pleasingly
throughout FY22, the Company made a number of strategic
acquisitions including:
• 1,168 lots to be developed across 4 projects in Clyde, a
fast growing area in the City of Casey in the south-east
of Melbourne. This increases and further diversifies the
Company’s land bank given the Company has no existing
community developments within the region; and
• 333 lots acquired via development rights across a new
project at Ripley, south-west of Brisbane. This project
provides continuity in the area from our strong Cadence
project with high demand for land and built form product to
be offered in a sought-after location.
The Company also remains active with a number of strong
opportunities in the growth corridors of Sydney, Melbourne,
Brisbane and regionally, including the Southern Highlands,
South Coast and Western regions of NSW and Geelong in Vic.
Pleasingly, sales activity in some lower margin South
Australian (Riverhaven at Goolwa North and Pathways at
Murray Bridge) and Queensland projects has continued,
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. It is expected that these
projects will complete during FY23.
Planning approvals were obtained, and physical works
commenced during FY22 at Harvest Square in Brunswick
West (Vic), 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 completed planning on
both the Merchant at Waterline Place in Williamstown (Vic)
and Kogarah (NSW) apartment projects with construction
forecast to commence in 1H23. Progress was also made in
relation to the planning and approval process for our large-
scale, master-planned project at Caboolture (Qld).
As of 30 June 2022 the Company had 1,888 lots under
development (FY21: 1,537 lots). This continues the momentum
carried forward from FY22 where increases in land and
housing construction activity was ramped up to meet
demand.
Balance Sheet and Land Holdings
While settlements of 608 lots were lower than FY21 at 905
lots, the Company’s cash position remains strong with cash
from operations at $33.1M. This enabled the Company to
reduce net debt and gearing to $105.9M and 14.5% (net debt/
total assets) respectively (FY21: $125.4M and 20.1%), 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.
Total inventory including land under option stood at 12,733
lots (FY21: 12,180 lots), the highest inventory total in over
14 years, reflecting progress in the strategy to grow the
development pipeline.
Outlook
Market fundamentals for our industry remain solid with
low unemployment levels (currently at full employment),
underlying housing demand remaining greater than supply,
wages starting to lift, and immigration forecast to return to
pre-pandemic levels by 2024, all despite recent interest rate
rises and inflationary pressures. This provides the Company
a solid platform for the future. Despite recent increases
in the Australian and NZ cash rates we have not seen any
settlements default. Sales pricing remains steady and we have
not seen reductions in house values as evidenced in some
established markets or, indeed, in prestige markets.
There has been some softening in enquiry levels as a result
of a combination of uncertainty over global factors, lack of
stock and rising interest rates. However, the lack of suitable
affordable housing in the markets we operate in provides the
Company the basis to grow the built form on our projects. We
are now at the early stages of introducing a prefabrication
and modular housing strategy to radically cut built form
construction time frames, improve energy ratings of the
dwellings and improve their affordability at time of purchase
and for ongoing living costs.
As international borders open and immigration starts to reach
pre - pandemic levels, the need for housing will increase and
we will be well placed to deliver land and housing to meet that
demand.
Directors’ Report.AVJennings Limited - Annual Report 2022
33
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 and various State
Governments introduced COVID-19 pandemic-related
activity constraints for certain periods throughout the
pandemic aimed at protecting public health. These have
chiefly consisted 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 2022,
following which economic activity in the Company’s key
markets gradually strengthened. If such measures were to be
reintroduced post-balance date, such reintroduction would
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.
As we have seen from recent announcements, State and
Federal Government assistance packages including stamp
duty concessions and low deposit mortgage schemes to
first home buyers remain at the forefront to drive economic
activity despite recent interest rate rises from the RBA.
High rents due to virtually little or no investment stock has also
further shifted the buy versus rent equation towards the buy
option.
Whilst head-winds remain from supply chain issues,
construction cost increases and potential future interest
rate rises, the Company believes that our customer base
will remain active as the need for good quality affordable
land and housing remains fundamental to the needs of
the community. The Company will also be focused on
Environmental, Social, and Governance (ESG) outcomes
and incorporating ESG opportunities such as a focus on
energy efficient houses, into our production and procurement
processes to achieve improved results. A recent restructure
within the operations area in particular will focus more on
delivery and production timeframes to meet the needs of our
customers.
AVJennings remains committed to deliver the outcomes our
customers, stakeholders and the community expect given
the 90 year anniversary milestone recently achieved. With
the support of our staff, all stakeholders including sub-
contractors, suppliers and finance providers, the Board
believes AVJennings is on the right trajectory to deliver
sustainable profits expected by all our shareholders.
SIGNIFICANT EVENTS AFTER
BALANCE SHEET DATE
No matter or circumstance has arisen since 30 June 2022 that
has significantly affected, or may significantly affect:
(a) the Group’s operations in future financial years; or
(b) the results of those operations in future financial years; or
(c) the Group’s state of affairs in future financial years.
FUTURE DEVELOPMENTS, PROSPECTS
AND BUSINESS STRATEGIES
The prospects and business strategies of the Group are
discussed in the operating and financial review of this Report.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 34
INFORMATION ON THE DIRECTORS
Responsibilities:
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 until
2010. He served on the Board of the Institute of Real Estate
Studies, National University of Singapore from 2008 to 2011
and was a board member of the Republic Polytechnic Board
of Governors from 2008 to 2011. He was also a Council
Member of the Singapore Business Federation, a position
he held from 2007 to 2010. 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.
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.
Philip Kearns AM BA (Economics); Grad Dip (Applied Finance)
Mr Kearns has been a Director of AVJennings Limited since
21 March 2019. He was subsequently appointed Chief
Executive Officer and Managing Director of AVJennings
Limited in early 2H-FY22. Mr Kearns has over 15 years’
corporate leadership experience and has been instrumental
in driving cultural change, building new revenue streams and
improving stakeholder engagement in banking, insurance and
financial planning, all with involvement in the property sector.
Until recently, Mr Kearns was a Director of Venues NSW, a
Government Board that owns and operates multiple sports
and entertainment venues across New South Wales. He was
also 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 and property funds. Mr Kearns
is a Director of Coolabah Capital Investments, a private
fixed interest funds management business, and the Front
Row Group. He is a member of the NSW “Game Changers”
Ministerial Advisory Board for Women in Sport.
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. Mr Kearns is a resident of
Sydney.
Responsibilities:
Chief Executive Officer and Managing Director.
Directorships held in other listed entities:
None.
Directors’ Report.AVJennings Limited - Annual Report 2022 35
INFORMATION ON THE DIRECTORS (CONTINUED)
Bobby Chin CA (ICAEW) B.Acc.
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 from 1986 to 1987.
Mr Lai joined Oversea-Chinese Banking Corporation
Limited (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,
including Head of Information Technology and Central
Operations, Chairman OCBC Asset Management, Head Risk
Management and Head Audit. Following his retirement from
executive positions in April 2010, Mr Lai served as a Board
Director of OCBC from June 2010 to December 2019, OCBC
AL-Amin Bank Bhd (2011 to 2018) and OCBC Bank Malaysia
Bhd (2011 to 2019). He was appointed Board Chairman of
Bank of Singapore in October 2021.
Besides banking roles, Mr Lai was a Non-Executive Director
of United Engineers Ltd (1992 to 2011) and WBL Corporation
Ltd (1993 to 2014). Both were Singapore listed companies
engaged in diversified regional businesses, including property
development. 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
(Appointed Board Chairman on 1 October 2021).
Director since 18 October 2005. Mr Chin is currently
Chairman of the Singapore Corporate Governance Advisory
Committee and the Housing & Development Board. He is a
Director of Singapore Labour Foundation and a senior adviser
to NTUC Fairprice Co-operative Ltd. 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.
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
previously 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.
Mr Hayman served as CEO of the Australian Rugby Union and
as Chairman of the Board of the Rugby Club Ltd. He retired as
a Director and Deputy Chair of Diabetes NSW & ACT after 16
years of service. Mr Hayman is currently Chairman of the Ella
Foundation. 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.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 36
INFORMATION ON THE DIRECTORS (CONTINUED)
Lisa Chung AM LLB, FIML, FAICD
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, the
Committee for Sydney, the Sydney Community Foundation
and Warren and Mahoney Limited. She is Chair of The Front
Project and a Trustee of the Foundation of the Art Gallery of
NSW. Ms Chung 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, Member of Remuneration Committee.
Directorships held in other listed entities:
Australian Unity Limited.
Mr Mak Lye Mun B.Civ.Eng. (First Class Hons) University
of Malaya, MBA (UT, Austin)
Director since 15 October 2021. Mr Mak is currently
Executive Chairman of Intraco Limited and an independent
non-executive director of Boustead Singapore Limited. He
is also an independent non-executive director of SC Global
Developments Pte Ltd, AVJennings’ majority shareholder.
Mr Mak joined the CIMB Group (an ASEAN universal bank
listed in Malaysia) following the acquisition of GK Goh
Securities Pte. Ltd. in 2005, where he served as the Head of
Corporate Finance. He was CEO of CIMB Bank Singapore and
its Country Head from 2008 until his retirement in December
2019. Previously, Mr Mak was the Head of Mergers &
Acquisitions Advisory Department with DBS Bank Ltd (formerly
known as The Development Bank of Singapore). He held
various senior positions in the Corporate Finance divisions of
Vickers Ballas & Co. Pte. Ltd., Ernst & Young, Oversea-Chinese
Banking Corporation Limited and Citicorp Investment Bank
(Singapore) Limited.
Mr Mak is also a Member of the Inaugural Singapore Stock
Exchange (SGX) Listings and Advisory Committee, and a
member of the Listing Committee for ADDX, a Singapore-
based digital securities platform. In January 2021, Mr Mak
was appointed as a governing board member of the Duke-NUS
Medical School (a graduate medical school in Singapore).
Responsibilities:
Non Executive Director, Member of Investments Committee
Directorships held in other listed entities:
Intraco Limited, since 29 April 2021 (Appointed Executive
Chairman on 15 July 2022)
Boustead Singapore Limited, since 29 July 2021
INFORMATION ON THE COMPANY SECRETARY
Carl D Thompson LLB B. Comm
Company Secretary since 12 January 2009. Mr Thompson
previously held the company secretary and general counsel
role at Downer EDI Ltd. Prior to that he was a partner at
national law firm Corrs Chambers Westgarth, practising in
corporate and commercial work. Resident of Melbourne.
Directors’ Report.AVJennings Limited - Annual Report 2022 37
REMUNERATION REPORT (AUDITED)
A. Introduction
B. Persons covered by the Report
The AVJennings Limited Board is pleased to present the
Remuneration Report for FY22 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 sets out the approach to remuneration for Key
Management Personnel (KMP) and all staff.
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 and safety.
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 FY22 whose
remuneration is disclosed in this Report is set out below:
(i) Directors
S Cheong
RJ Rowley
P Kearns
B Chin
BG Hayman
TP Lai
L Chung
LM Mak
PK Summers
BL Tan
(ii) Executives
Non-Executive Chairman
Non-Executive Deputy Chairman
Chief Executive Officer and
Managing Director
(appointed CEO on 10 January
and MD on 17 February 2022,
formerly Non-Executive Director)
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
(appointed 15 October 2021)
Chief Executive Officer and Managing
Director (retired 1 January 2022)
Non-Executive Director
(retired 14 October 2021)
CD Thompson Company Secretary/General Counsel
SC Orlandi
L Mahaffy
Chief Operating Officer
Chief Financial Officer
(passed away 24 June 2022)
Chief Commercial Officer
(appointed 7 February 2022)
General Manager, Human Resources
A Carter
L Hunt
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.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 38
REMUNERATION REPORT (AUDITED) (CONTINUED)
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.
3. Securities Trading Policy
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
The Remuneration Committee engaged Godfrey Remuneration
Group (GRG) on 4 April 2022 to conduct a comprehensive
review of its executive remuneration and incentive arrangements,
including the current equity component, with those offered by
comparable competitor companies and which is tailored to the
Company’s particular circumstances. The review will aid the
Committee in retaining and attracting senior executive talent and
maintaining competitive remuneration practices.
The Committee reviewed the reports and draft recommendations
from GRG at its meeting on 29 June 2022. The Committee
was supportive of the recommendation in principle, but with
refinements required to reflect AVJennings’ requirements.
Recommendations which are ultimately adopted will be for
implementation from 1 January 2023. The Board is satisfied the
draft remuneration recommendations were made free from undue
influence by any member of the key management personnel
because of the communication arrangements established
between GRG and the Remuneration Committee.
6. Employment Contracts
i) Chief Executive Officer
Mr Kearns’ employment contract includes a Term of Agreement of
five (5) years from commencement date with renewal discussions
at end of year 4. The Company will pay Mr Kearns the sum of
$375,000, less applicable tax, as a sign-on payment on the first
anniversary of the execution of the CEO Employment Agreement
(1 November 2022) other than where the employment relationship
has been terminated for cause or Mr Kearns gives notice of
resignation.
The contract does not stipulate a termination payment. However,
it specifies a six-month notice period. Details regarding the
remuneration paid to Mr Kearns are contained in the table on
page 48.
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.
7. Remuneration of KMP
Details of the nature and amount of each element of remuneration
of Directors and executives are set out in the tables on pages
42 and 48. The Directors are the same as those identified in the
Directors’ Report.
8. Remuneration Report at FY21 Annual General Meeting (AGM)
At the Company’s 2021 Annual General Meeting (AGM), of the
eligible votes cast on the Remuneration Report, 26.26% were
against the Report. This meant that the Company recorded a
First 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. The “No” vote represented only
3.39% of the total capital as a substantial proportion of shares
were not permitted to vote on the resolution, thus inflating the
effect of the “No” vote.
In determining vesting of STIs for quarter 1 and quarter 2 of FY22,
the Remuneration Committee took into account the significant
sacrifice made by Executives during FY20 and FY21 which saw
them forego:
The current remuneration structure will remain in place until
replaced. Fees charged by GRG amounted to $56,000. No other
advice or service was provided other than provision of a general
KMP remuneration review guide for $3,500 which is available to
the public for the same price.
• STI payments;
•
LTI vestings; and
• Retention vestings.
Directors’ Report.AVJennings Limited - Annual Report 2022 39
REMUNERATION REPORT (AUDITED) (CONTINUED)
9. Addressing feedback
The Company is aware of previous commentary on the
Company’s Remuneration Report from proxy advisers. The
Company takes these comments seriously and has in the past
made changes to address express concerns. 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 because it used market capitalisation
as a proxy for equity. The Remuneration Committee replaced
the ROE hurdle with a Total Shareholder Return (TSR) hurdle
for all grants made in FY21 and beyond;
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 is a separate incentive component
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; 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.
• Clearer explanation of Key Performance Indicators (KPIs) and
incentive payments. This matter is addressed in section F.
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 Non-Executive Directors (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.
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 usually paid in cash.
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.
The TSR measure was introduced in February 2020 to replace
the former ROE component of the Performance Rights. The TSR
hurdle applies to grants under the LTI from FY21 onwards. The old
ROE hurdle will only apply to earlier unvested grants.
Retention Component – this is an equity award and is granted
annually with vesting of one third respectively on 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 executive ranks; and
to ensure that all executives had a meaningful shareholding in
the Company to align interests with shareholders.
As fixed remuneration is set at or below market median, a portion
of remuneration is “at risk” and assessed under the STI. 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).
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 40
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
46.4
70
75
53.6
30
25
50
50
50
-
25
25
50
25
25
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 at the end
of 3 years from grant date.
The Remuneration Committee met on several occasions to
consider changes to the STI performance measurement structure.
This involved setting and assessing performance on quarterly
targets in addition to assessment of annual performance to take
into consideration the uncertain operating environment. The
Remuneration Committee has since reverted to setting annual
KPM targets beyond FY22. However, for FY22, quarterly targets
were retained for quarter 1 and quarter 2 and six monthly for the
second half of FY22.
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 2018
30 June 2019
30 June 2020
30 June 2021
30 June 2022
Profit
After Tax
$’000
31,347
16,439
9,041
18,716
13,078
Basic
EPS
Cents
8.13
4.09
2.23
4.62
3.22
TSR*
Cents
10.0
( 12.5 )
( 4.8 )
17.2
( 15.1 )
Market
Capitalisation
$’000
278,074
218,953
188,897
255,462
182,579
Return on Market
Capitalisation
%
11.27
7.51
4.79
7.33
7.16
* TSR is the aggregate of the movement in the share price and dividends paid per share during the year ended 30 June.
Directors’ Report.AVJennings Limited - Annual Report 2022 41
REMUNERATION REPORT (AUDITED) (CONTINUED)
D. Non-Executive Directors (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.
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.
NEDs do not receive any leave entitlement benefits or
performance-based remuneration. Australian based NEDs
receive superannuation payments.
NEDs Remuneration
(a) Approach to setting fees
2. SC Global Nominee Directors
For FY22, SC Global had two nominees on the Board,
Mr S Cheong and Mr LM Mak (who replaced Mr BL Tan on
15 October 2021). 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;
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.
• Assistance in sourcing and facilitating financial and banking
requirements particularly from Asian-based and other
institutions;
(b) Review
• 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.
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.
(c) Board and Committee fees
Board
Audit
Risk
Nominations
Remuneration
Investments
Deputy
Chair
Member
Chair
Member
Chair
Member
Chair
Member
Chair
Member
Chair
Member
$70,000 $60,000
$30,000 $12,000
$30,000 $12,000
$15,000
$6,000
$15,000
$6,000
N/A
$8,000
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
42
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 FY22 is set out in the table below:
S Cheong(1)
RJ Rowley(6)
B Chin
BG Hayman(6)
TP Lai
BL Tan(1) (3)
P Kearns(5)
L Chung
LM Mak (1) (4)
Total
Total
Short-Term
Fees
$
Post Employment
Superannuation(2)
$
-
-
120,909
113,151
96,000
94,400
108,182
82,618
86,000
85,000
-
-
37,949
71,842
67,503
5,479
-
-
516,543
452,490
-
-
12,091
10,749
-
-
10,818
7,849
-
-
-
-
3,795
6,825
6,750
521
-
-
33,454
25,944
Total
$
-
-
133,000
123,900
96,000
94,400
119,000
90,467
86,000
85,000
-
-
41,744
78,667
74,253
6,000
-
-
549,997
478,434
Year
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
(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 the actions taken to manage
overheads in response to the COVID-19 pandemic. Total fee paid for the year was $600,000 (2021: $590,000).
(2) Payments to Defined Contribution Plans consist of Superannuation Guarantee Contribution payments as well as employee voluntary contributions.
(3) Retired 14 October 2021.
(4) Appointed 15 October 2021.
(5) Appointed CEO on 10 January and MD on 17 February 2022. Details of P Kearns’ remuneration as CEO and MD are shown on page 48.
(6) Special exertion fees were paid to RJ Rowley and BG Hayman for oversight of appointment of the new CEO and associated transition arrangements.
RJ Rowley was paid $7,000 and BG Hayman paid $18,000.
Directors are reimbursed for airfares (other than the international airfares for those Directors referred to in (1) above) and expenses relating to provision
of their services.
Directors’ Report.AVJennings Limited - Annual Report 2022
43
REMUNERATION REPORT (AUDITED) (CONTINUED)
(g) Other transactions and balances with KMP and their related parties
Prior to P Kearns’ role as CEO and MD, the Board authorised him 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 $113,637
(2021: $222,950) were incurred.
During the year, the Company made the following payments:
• $700 to JK Florals - a business owned by a party related to the CEO; and
•
$2,750 to FrontRow Group (The Events Group) - a business in which the CEO is a director and shareholder.
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 48.
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. A 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.
The Remuneration Committee decided that for FY22, STIs and the associated KPMs would continue to be set and determined on a
quarterly basis for the first half, to ensure the Company remained agile and is responsive to changes in the operating environment.
This changed to 6 monthly for the second half.
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.
The Remuneration Committee also set individual KPIs which underpin the KPMs. These were set for each individual executive, taking
into account their role in the organisation, and their accountabilities.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
44
REMUNERATION REPORT (AUDITED) (CONTINUED)
KPIs included:
Financial – measures including PBT and Revenue (as per approved budget), drivers for ROE growth (e,g, production levels) and
acquisition funding options to support growth strategy.
Strategic – advancement of landbank targets, progress against key milestones for Environmental, Social and Governance (ESG)
strategy and implementation of Enterprise Resource Planning (ERP) system.
People and Culture – focus on leadership and culture of learning and development. Driving a customer centric and safety culture
from the inside out. During the second half of FY22, our framework to retain and attract talent in a competitive market was critical
and our agility to quickly implement new training and development programs to create career pathways for our people.
Performance against KPIs for each Executive were considered by the CEO with his recommendations provided to the Remuneration
Committee. The Committee separately considered the CEO’s performance and determined that whilst his performance would
ordinarily warrant a STI payment, in this instance the payment of the sign-on bonus is due in November 2022 and no further
STI payment should be made.
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 2022 45
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
Safety and Environment
• Employee retention and engagement.
• Progress longer term inclusion and diversity objectives.
• 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%
20%
The Remuneration Committee determines the STI to be paid based on an assessment of the extent to which the KPMs are met. For
FY22, quarterly targets applied for Q1 and Q2 (given the COVID-19 pandemic was particularly disruptive over this period and short-
term focus critical) and six monthly for the second half of FY22 (as the disruptive impact of COVID-19 became less severe and a more
longer term focus could be reintroduced to remuneration and performance considerations).
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 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 46
REMUNERATION REPORT (AUDITED) (CONTINUED)
G. Long Term Incentive (LTI)
conditions are not satisfied when they are tested, the Rights are
immediately forfeited.
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.
In the event of a change in control of the Company, the Board
can elect to vest unvested Rights.
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.
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 ROE hurdle
will apply to earlier grants.
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
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%
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
Directors’ Report.AVJennings Limited - Annual Report 2022 47
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.
Retention component -
years of service
Percentage of
rights vesting
one year
two years
three years
Rationale for Retention Rights
33.33%
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.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 48
REMUNERATION REPORT (AUDITED) (CONTINUED)
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Directors’ Report.AVJennings Limited - Annual Report 2022
49
REMUNERATION REPORT (AUDITED) (CONTINUED)
Remuneration to Executive KMP in FY22
A summary of the statutory remuneration tables prepared in accordance with the Australian Accounting Standards is provided in the
table on page 48.
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.
J. Equity disclosures
Rights have been granted to Executive KMP as detailed in the table below.
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 September 2021 Grant was made for the FY22 year (with final performance conditions testing in September 2024).
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.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 50
REMUNERATION REPORT (AUDITED) (CONTINUED)
The following is the status of Rights granted to Executive KMP under the LTI Plans:
KMP
PK Summers(1)
PK Summers(1)
PK Summers(1)
P Kearns
CD Thompson
CD Thompson
CD Thompson
CD Thompson
SC Orlandi
SC Orlandi
SC Orlandi
SC Orlandi
L Mahaffy(2)
L Mahaffy(2)
L Mahaffy(2)
L Mahaffy(2)
A Carter
L Hunt
L Hunt
L Hunt
L Hunt
Total
Year of
Grant
Fair Value at
Grant date
Rights at
1 July 2021
Rights
granted
Rights
vested
Rights
forfeited
Rights at
30 June 2022
$395,702
531,068
$405,605
765,725
$187,179
450,996
-
-
-
( 85,162 )
( 445,906 )
( 105,840 )
( 659,885 )
( 66,866 )
( 384,130 )
-
-
-
$187,523
-
461,141
-
-
461,141
( 19,488 )
( 63,772 )
-
$69,652
83,260
$71,395
127,675
$71,385
171,999
-
-
-
$57,463
68,689
$66,669
119,224
$85,706
206,503
-
-
-
( 24,219 )
( 25,501 )
( 22,615 )
( 30,617 )
$74,099
-
147,213
-
( 16,077 )
( 52,612 )
-
$88,963
-
176,744
-
$63,682
76,123
$65,275
116,731
$65,267
157,256
-
-
-
( 116,731 )
( 157,256 )
( 17,817 )
( 58,306 )
$67,747
$25,419
-
-
134,594
( 134,594 )
55,111
-
$43,044
51,454
$44,122
78,904
$44,116
106,295
-
-
-
( 14,967 )
( 15,760 )
$45,793
-
90,978
-
( 12,043 )
( 39,411 )
-
$2,225,806
3,111,902
1,065,781
( 865,553 )
( 1,704,022 ) 1,608,108
-
-
-
103,456
146,498
147,213
-
-
-
96,609
175,886
176,744
-
-
-
-
55,111
-
-
-
-
-
-
-
63,937
90,535
90,978
FY19
FY20
FY21
FY22
FY19
FY20
FY21
FY22
FY19
FY20
FY21
FY22
FY19
FY20
FY21
FY22
FY22
FY19
FY20
FY21
FY22
(1)
(2)
Retired 1 January 2022.
Passed away on 24 June 2022 and all unvested Rights vested.
Directors’ Report.AVJennings Limited - Annual Report 2022 51
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 2022
Directors
S Cheong
RJ Rowley
BG Hayman
P Kearns
Executives
CD Thompson
SC Orlandi
L Hunt
Former KMP
PK Summers(1)
L Mahaffy(2)
Total
For the year ended 30 June 2021
Directors
S Cheong
PK Summers
RJ Rowley
BG Hayman
P Kearns
Executives
CD Thompson
SC Orlandi
L Mahaffy
L Hunt
Total
Opening
Balance
Vested as
Remuneration
Closing
Balance
219,112,839
370,223
235,000
25,000
-
-
-
-
219,112,839
370,223
235,000
25,000
1,860,987
565,480
385,523
69,208
69,309
42,770
1,930,195
634,789
428,293
4,959,951
293,366
257,868
426,398
5,217,819
719,764
227,808,369
865,553
228,673,922
219,112,839
4,959,951
370,223
235,000
25,000
1,860,987
565,480
293,366
385,523
227,808,369
-
-
-
-
-
-
-
-
-
-
219,112,839
4,959,951
370,223
235,000
25,000
1,860,987
565,480
293,366
385,523
227,808,369
(1)
Retired on 1 January 2022. Shareholdings are amounts at the date he ceased to be a KMP.
(2)
Passed away on 24 June 2022. Shareholdings are amounts at the date he ceased to be a KMP.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 52
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
5
5
5
5
5
5
5
5
5
5
Attended
5
5
5
5
5
5
5
3
2
2
Held
-
3
-
3
3
-
-
-
-
-
Attended
-
3
-
3
3
-
-
-
-
-
Meetings of Committees
Remuneration
Held
5
-
5
-
5
5
-
-
-
-
Attended
5
-
5
-
5
1
-
-
-
-
Nominations
Held
1
1
1
1
-
-
-
-
-
-
Attended
1
1
1
1
-
-
-
-
-
-
Risk Management
Attended
-
-
4
4
-
4
4
-
-
-
Held
-
-
4
4
-
4
4
-
-
-
S Cheong
B Chin
BG Hayman
RJ Rowley
TP Lai
L Chung(1)
P Kearns(2)
LM Mak(3)
BL Tan(4)
PK Summers(5)
(1) Appointed a member of the Remuneration Committee on 14 February 2022 and eligible to attend one meeting.
(2) Ceased to be a member of the Risk Management Committee effective 17 February 2022 after appointment as MD.
(3) Appointed on 15 October 2021 and eligible to attend three meetings. Attended two meetings in 2021 prior to his appointment at the invitation of the Board.
(4) Retired on 14 October 2021 and eligible to attend two meetings.
(5) Retired on 1 January 2022 and eligible to attend two meetings.
The Investments Committee does not formally meet in person.
It conducts physical inspections of certain major development
sites and receives detailed briefings from management on
all major development sites prior to consideration of formal
acquisition proposals which are dealt with by way of
circular resolution.
DIRECTORS' INTERESTS
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed to
indemnify its auditors, Ernst & Young, as part of the terms of its
audit engagement agreement against claims by third parties
arising from the audit (for an unspecified amount). No payment
has been made to indemnify Ernst & Young during or since the
financial year.
The relevant interests of the Directors in the shares of the
Company at the date of this Report are:
ROUNDING
Director
S Cheong
RJ Rowley
BG Hayman
P Kearns
Number
219,112,839
370,223
235,000
25,000
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 54.
INDEMNIFYING OFFICERS
During the year, the Group paid a premium in respect of a
contract insuring its Directors and employees against liabilities
that may be incurred in defending civil or criminal proceedings
that may be brought against the Officers in their capacity as
Officers of entities in the Group. In accordance with common
practice, the insurance policy prohibits disclosure of the nature
of the liability insured against and the amount of the premium.
Directors’ Report.AVJennings Limited - Annual Report 2022 53
NON-AUDIT SERVICES
The Group’s auditor, Ernst & Young provided certain non-audit services as outlined in note 32. 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
25 August 2022
Philip Kearns
Director
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 54
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditor’s Independence Declaration to the directors of AVJennings Limited
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
As lead auditor for the audit of the financial report of AVJennings Limited for the financial year ended
30 June 2022, I declare to the best of my knowledge and belief, there have been:
relation to the audit.
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
Auditor’s Independence Declaration to the directors of AVJennings Limited
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
c. No non-audit services provided that contravene any applicable code of professional conduct in
As lead auditor for the audit of the financial report of AVJennings Limited for the financial year ended
30 June 2022, I declare to the best of my knowledge and belief, there have been:
relation to the audit.
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit.
This declaration is in respect of AVJennings Limited and the entities it controlled during the financial
year.
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
c. No non-audit services provided that contravene any applicable code of professional conduct in
relation to the audit.
Ernst & Young
This declaration is in respect of AVJennings Limited and the entities it controlled during the financial
year.
Glenn Maris
Partner
25 August 2022
Ernst & Young
Glenn Maris
Partner
25 August 2022
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
AVJennings Limited - Annual Report 2022
Financial Statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Continuing operations
Revenue from contracts with customers
Revenue
Cost of sales
Gross profit
Share of profit/(loss) of joint ventures
Change in equity accounted investment provisions
Change in inventory loss provisions
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):
Basic earnings per share
Diluted earnings per share
To be read in conjunction with the accompanying notes.
55
Note
2022
$'000
2021
$'000
2
3
25
3
3
8
3
3
3
3
3
4
222,814
222,814
( 158,702 )
64,112
311,090
311,090
( 240,832 )
70,258
1,647
( 1,489 )
-
( 4 )
( 3,469 )
( 28,815 )
( 4,950 )
( 7,472 )
( 1,743 )
127
( 303 )
296
( 2,295 )
1,554
( 1,793 )
180
( 4,998 )
( 22,148 )
( 5,650 )
( 6,944 )
( 1,860 )
170
( 330 )
532
17,937
( 4,859 )
26,676
( 7,960 )
13,078
18,716
( 1,755 )
( 1,755 )
( 185 )
( 185 )
11,323
18,531
13,078
18,716
11,323
18,531
33
33
3.22
3.22
4.62
4.61
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 56
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
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.
Note
5
6
7
4(c)
9
6
7
8
25
10
11
12
9
13
15
4(c)
16
13
14
15
4(d)
16
2022
$’000
2021
$’000
3,274
14,566
150,448
922
3,283
13,099
46,030
152,155
222
3,613
172,493
215,119
1,155
538,396
1,756
5,053
2,059
5,783
2,816
-
163
388,662
1,760
4,895
2,010
4,923
2,816
4,920
557,018
410,149
729,511
625,268
93,935
1,252
523
6,732
32,335
1,189
1,342
7,070
102,442
41,936
88,141
109,190
4,962
15,599
1,148
15,545
138,549
4,054
15,066
1,009
219,040
174,223
321,482
216,159
408,029
409,109
17
18(a)
18(c)
173,506
6,810
227,713
173,740
8,953
226,416
408,029
409,109
Financial Statements.AVJennings Limited - Annual Report 2022 57
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity
holders of AVJennings Limited
Total equity
Contributed
Equity
Note
$'000
174,179
-
-
-
( 439 )
-
-
-
( 439 )
17b)
31(a)
31(a)
19
Foreign
Currency
Translation
Reserve
Share-based
Payment
Reserve
Retained
Earnings
$'000
3,028
-
( 185 )
( 185 )
-
-
-
-
-
$'000
5,380
$'000
$'000
210,543
393,130
-
-
-
-
( 70 )
800
-
730
18,716
-
18,716
-
-
-
( 2,843 )
( 2,843 )
18,716
( 185 )
18,531
( 439 )
( 70 )
800
( 2,843 )
( 2,552 )
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
- Share-based payment expense
- Dividends paid
Total transactions with owners in their
capacity as owners
At 30 June 2021
173,740
2,843
6,110
226,416
409,109
At 1 July 2021
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
- Share-based payment expense
- Dividends paid
Total transactions with owners in their
capacity as owners
173,740
2,843
6,110
226,416
409,109
-
-
-
-
( 1,755 )
( 1,755 )
17(b)
31(a)
31(a)
19
( 234 )
-
-
-
( 234 )
-
-
-
-
-
-
-
-
-
( 969 )
581
-
13,078
-
13,078
( 1,755 )
13,078
11,323
-
-
-
( 234 )
( 969 )
581
( 11,781 )
( 11,781 )
( 388 )
( 11,781 )
( 12,403 )
At 30 June 2022
173,506
1,088
5,722
227,713
408,029
To be read in conjunction with the accompanying notes.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 58
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 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
Note
2022
$’000
2021
$’000
3
4(c)
20
10
3
275,568
331,084
( 229,406 )
( 253,876 )
( 7,271 )
( 5,783 )
( 8,231 )
( 5,008 )
33,108
63,969
( 253 )
127
( 126 )
( 366 )
170
( 196 )
96,934
78,787
( 126,293 )
( 130,348 )
15
17(b)
19
( 1,429 )
( 234 )
( 11,781 )
( 1,500 )
( 439 )
( 2,843 )
Net cash used in financing activities
( 42,803 )
( 56,343 )
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effects of exchange rate changes on cash and cash equivalents
( 9,821 )
13,099
( 4 )
7,430
5,703
( 34 )
Cash and cash equivalents at end of the year
5
3,274
13,099
To be read in conjunction with the accompanying notes.
Financial Statements.AVJennings Limited - Annual Report 2022 59
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:
Includes activities relating to Land Development, Integrated Housing and Apartments Development conducted within our jurisdictions.
Other:
Includes revenue from the sale of apartments in Western Australia and numerous low value items.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Financial Statements.AVJennings Limited - Annual Report 2022
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
62
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 2022
NSW
$'000
VIC
$'000
QLD
$'000
SA
NZ
$'000
$'000
Other*
$’000
Total
$'000
Types of goods or services
Sale of land
Sale of integrated housing
Sale of apartments
Property development & other services
18,898
16,753
36,039
8,774
11,488
57,791
24,864
21,009
4,027
-
-
13,999
2,649
-
-
-
-
-
-
-
-
-
91,952
107,691
6,523
20,522
-
2,649
Total revenue from contracts with customers
76,689
58,265
57,048
12,801
11,488
6,523
222,814
Timing of revenue recognition
Goods transferred at a point in time
76,689
55,616
57,048
12,801
11,488
6,523
220,165
Services transferred over time
-
2,649
-
-
-
-
2,649
Total revenue from contracts with customers
76,689
58,265
57,048
12,801
11,488
6,523
222,814
*Relates to Western Australia.
Operating Segments
30 June 2021
Types of goods or services
Sale of land
Sale of integrated housing
Sale of apartments
Property development & other services
NSW
$'000
VIC
$'000
QLD
$'000
SA
NZ
$'000
$'000
Other*
$’000
Total
$'000
19,565
16,263
50,271
10,836
42,850
56,755
20,644
13,453
11,164
1,515
-
-
139,785
103,531
-
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
Financial Statements.AVJennings Limited - Annual Report 2022 63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2. REVENUES FROM CONTRACTS WITH CUSTOMERS
(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.
(iii) Financing components
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.
(continued)
(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.
• 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.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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
Provision/(reversal) - equity accounted investment
Increase in inventory loss provisions
Note
2022
$'000
2021
$'000
2
7
25
7
222,814
311,090
222,814
311,090
( 2,359 )
6,975
( 774 )
8,783
1,489
-
( 1,554 )
1,793
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.
Employee expenses include:
JobKeeper payment credits
Retirement payment to Key Management Personnel
Depreciation and amortisation expense
Depreciation of owned assets
Amortisation of right-of-use assets
Total depreciation and amortisation expense
Finance income
-
2,983
204
1,539
1,743
( 2,840 )
-
236
1,624
1,860
10
11
Interest from financial assets held for cash management purposes
127
170
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
6,989
282
7,271
7,911
320
8,231
( 6,968 )
( 7,901 )
303
330
105
191
296
96
436
532
Financial Statements.AVJennings Limited - Annual Report 2022 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
65
2022
$’000
2021
$’000
4,591
( 229 )
311
186
6,896
35
1,029
-
4,859
7,960
(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
17,937
26,676
Tax at Australian income tax rate of 30%
Net share of equity accounted joint venture (profit)/loss
Other non-deductible /(non-assessable) items
Foreign jurisdiction losses
Effect of lower tax rate in foreign jurisdiction
Adjustment for prior year
Income tax expense
Effective tax rate
5,381
( 494 )
96
( 30 )
( 51 )
( 43 )
4,859
27%
8,003
689
( 588 )
-
( 179 )
35
7,960
30%
(c) Numerical reconciliation from income tax expense to income taxes paid
Income tax expense
4,859
7,960
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
( 497 )
229
( 107 )
( 523 )
922
900
( 1,029 )
( 35 )
9
( 1,342 )
222
( 777 )
Cash taxes paid per the Consolidated Statement of Cash Flows
5,783
5,008
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 66
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 2022:
Opening
balance
$’000
Expense
/(benefit)
$’000
Foreign
exchange
variance
$’000
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 2021:
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
3,492
1,770
1,808
-
1,510
39
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
55
8,452
( 17,999 )
(183)
( 1,068 )
( 44 )
( 845 )
( 1,713 )
( 639 )
( 22,491 )
( 14,039 )
( 708 )
( 510 )
( 82 )
447
300
( 5 )
( 558 )
( 1,236 )
1
2,082
( 43 )
-
( 270 )
( 473 )
61
( 497 )
305
1,012
78
( 822 )
( 390 )
( 16 )
167
888
( 54 )
( 1,888 )
( 13 )
-
295
( 424 )
( 1,196 )
( 1,029 )
-
-
(1)
-
-
-
(1)
28
-
( 63 )
-
-
-
-
( 35 )
( 36 )
-
-
-
-
-
-
-
-
-
2
-
-
-
-
2
2
2,784
1,260
1,725
447
1,810
34
8,060
( 18,319 )
( 236 )
( 935 )
( 100 )
( 845 )
( 1,688 )
( 1,536 )
( 23,659 )
( 15,599 )
3,492
1,770
1,808
-
1,510
39
8,619
( 17,111 )
( 237 )
( 2,954 )
( 57 )
( 845 )
( 1,418 )
( 1,063 )
( 23,685 )
( 15,066 )
Financial Statements.AVJennings Limited - Annual Report 2022 67
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 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Section A3 Balance Sheet information
5. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Accounting
2022
$’000
2021
$’000
3,274
13,099
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
Related party receivables
Other receivables
Total non-current receivables
(i) Accounting
2022
$’000
11,458
1,199
1,909
14,566
1,044
111
1,155
2021
$’000
43,414
1,613
1,003
46,030
163
-
163
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 2022 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6. RECEIVABLES (continued)
(ii) Expected credit losses
Negligible expected credit losses (2021: $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
11,458
11,458
43,414
43,414
-
-
-
-
-
-
-
-
-
-
2022
2021
# 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 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
70
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
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 non-current inventories
Total inventories
Note
7(a)
7(a)
7(a)
7(a)
7(a)
7(a)
2022
$’000
2021
$’000
8,129
464
( 2,944 )
5,649
43,218
52,417
25,494
11,249
132,378
8,532
2,927
962
-
12,421
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
150,448
152,155
414,360
29,292
( 6,306 )
437,346
55,188
22,315
3,508
19,448
100,459
434
178
11
( 32 )
591
261,111
24,446
( 6,890 )
278,667
53,465
31,778
1,872
21,990
109,105
413
475
34
( 32 )
890
538,396
388,662
688,844
540,817
Financial Statements.AVJennings Limited - Annual Report 2022 71
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 5.26% (2021: 4.19%).
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.
Movement in impairment provisions
At beginning of year
Amounts utilised
Amounts provided
At end of year
8. INVESTMENT PROPERTY
2022
$’000
11,641
( 2,359 )
-
9,282
2021
$’000
10,622
( 774 )
1,793
11,641
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 30 June 2022 has been determined by Directors with reference to the most recent external valuation performed by Knight Frank
on 24 November 2021.
The Capitalisation Approach using a capitalisation rate of 5.75% (30 June 2021: 6.50%), and Direct Comparison Approach methods
have been adopted in determining the fair value.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8. INVESTMENT PROPERTY (continued)
Opening balance at 1 July
(Loss) / gain from fair value remeasurement
Closing balance at 30 June
2022
$’000
1,760
( 4 )
1,756
2021
$’000
1,580
180
1,760
Investment properties are measured as Level 3. Refer to note 22(v) for explanation of the levels of fair value measurement.
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
Total other current assets
10. 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
2022
$’000
2,687
596
3,283
-
-
2022
$’000
1,315
( 544 )
771
2021
$’000
2,950
663
3,613
4,920
4,920
2021
$’000
1,271
( 391 )
880
2,935
( 1,647 )
1,288
2,735
( 1,605 )
1,130
2,059
2,010
Financial Statements.AVJennings Limited - Annual Report 2022
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10. PLANT AND EQUIPMENT (continued)
(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:
Consolidated
For the year ended 30 June 2022
Carrying amount at 1 July 2021
Additions
Depreciation charge
Carrying amount at 30 June 2022
For the year ended 30 June 2021
Carrying amount at 1 July 2020
Additions
Disposals
Depreciation charge
Carrying amount at 30 June 2021
(ii) Accounting
Leasehold
improvements
$'000
Plant and
equipment
$'000
Note
3
3
880
44
(153)
771
1,028
-
-
( 148 )
880
1,130
209
(51)
1,288
855
366
( 3 )
( 88 )
1,130
Total
$'000
2,010
253
(204)
2,059
1,883
366
( 3 )
( 236 )
2,010
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 $1,113,000 (2021: $999,000) relating to expenditure for upgrade of the ERP system.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11. 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:
For the year ended 30 June 2022
Note
As at 1 July 2021
Additions
Amortisation expense
As at 30 June 2022
Current
Non-current
Total
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
Accounting
3
3
Motor
vehicle
lease
$’000
Right-of-use assets
Office
premises
lease
$’000
IT
equipment
lease
$’000
Total
$’000
255
370
( 225 )
400
-
400
400
481
30
( 256 )
-
255
-
255
255
91
75
( 80 )
4,577
1,954
( 1,234 )
4,923
2,399
( 1,539 )
86
-
86
5,297
-
5,297
5,783
-
5,783
86
5,297
5,783
189
9
( 107 )
-
5,308
1,305
( 1,261 )
( 775 )
5,978
1,344
( 1,624 )
( 775 )
91
-
91
4,577
-
4,577
4,923
-
4,923
91
4,577
4,923
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 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12. INTANGIBLE ASSETS
Brand name at cost
Less: accumulated amortisation
Total intangible assets
75
2022
$’000
9,868
( 7,052 )
2,816
2021
$’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 2022, 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.
13. 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
Total non-current payables
2022
$’000
61,332
20,825
150
961
575
3,244
6,848
2021
$’000
7,410
9,190
225
1,155
5,946
5,152
3,257
93,935
32,335
86,249
1,503
389
88,141
14,251
634
660
15,545
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
13. 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 (other than land creditors), their carrying amount is assumed to approximate their
fair value. Current and non-current land creditors have been discounted using a rate of 5.96% (2021: 3.61%).
14. BORROWINGS
Non-current
Bank loans
Total non-current interest-bearing liabilities
Accounting
Borrowing costs
2022
$’000
109,190
109,190
2021
$’000
138,549
138,549
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 2022 77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14. BORROWINGS (continued)
Financing arrangements
The Group has access to the following lines of credit:
30 June 2022
Main banking facilities
- bank overdraft
- bank loans
- performance bonds
Contract performance bond facilities
- performance bonds
30 June 2021
Main banking facilities
- bank overdraft
- bank loans
- performance bonds
Contract performance bond facilities
- performance bonds
Note
14(a)
14(b)
14(a)
14(b)
Available
$'000
Utilised
$'000
Unutilised
$'000
5,000
280,000
15,000
300,000
-
109,190
6,094
115,284
5,000
170,810
8,906
184,716
75,000
34,764
40,236
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
At 30 June 2022 main banking facilities are interchangeable up to $47 million (2021: $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 2024. 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 24). The weighted average interest rate including margin on the main banking facilities
at 30 June 2022 was 2.65% (2021: 1.41%).
The Group increased its main banking facility limit from $250 million to $300 million during the year. The $50 million limit increase
was entirely contributed to bank loans by one of the existing lenders.
(b) Contract performance bond facilities
The Group has entered into Contract performance bond facilities of $75,000,000 (2021: $60,000,000) which are subject to review
annually. $25,000,000 of the facilities expire on 31 March 2023, $35,000,000 of the facilities expire on 1 May 2023 and the balance
of the facilities expire in June 2023, The Company increased the number of Contract performance bond providers from two to
three in June 2022. The increase in the Contract performance bond facilities by $15,000,000 is a result of the additional Contract
performance bond provider. 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 24.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
15. LEASE LIABILITIES
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 effects which have been incorporated in calculating lease liabilities.
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 lease liabilities recognised and the movements during the year:
As at 1 July 2021
Additions
Payments
As at 30 June 2022
Current
Non-current
Total
As at 1 July 2020
Additions
Payments
Disposal
As at 30 June 2021
Current
Non-current
Total
Motor
vehicle
lease
$’000
257
370
( 227 )
400
190
210
400
Lease Liabilities
IT
equipment
lease
$’000
Office
premises
lease
$’000
4,889
1,955
( 1,118 )
5,726
1,030
4,696
Total
$’000
5,243
2,400
( 1,429 )
6,214
1,252
4,962
97
75
( 84 )
88
32
56
88
5,726
6,214
485
197
5,920
6,602
30
( 258 )
-
257
158
99
257
9
( 109 )
-
1,305
( 1,133 )
( 1,203 )
97
81
16
4,889
950
3,939
1,344
( 1,500 )
( 1,203 )
5,243
1,189
4,054
97
4,889
5,243
The Group recognised rent expense from short-term leases of $96,000 (2021: $103,000) and leases of low-value assets of $212,000
(2021: $260,000).
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.
Financial Statements.AVJennings Limited - Annual Report 2022 79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
15. LEASE LIABILITIES (continued)
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 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 Group has no renewal options for leases of plant and equipment or motor vehicles.
16. PROVISIONS
For the year ended 30 June 2022
At 1 July 2021
Arising during the year
Utilised
At 30 June 2022
Current
Non-current
Total
For the year ended 30 June 2021
At 1 July 2020
Arising during the year
Utilised
At 30 June 2021
Current
Non-current
Total
Accounting
Rectification
$’000
Restructuring
$’000
Employee
entitlements
$’000
1,322
200
( 447 )
1,075
575
500
1,075
725
622
( 25 )
1,322
1,022
300
1,322
-
89
-
89
89
-
89
300
-
( 300 )
-
-
-
-
6,757
2,790
( 2,831 )
6,716
6,068
648
6,716
5,772
3,175
( 2,190 )
6,757
6,048
709
6,757
Total
$’000
8,079
3,079
( 3,278 )
7,880
6,732
1,148
7,880
6,797
3,797
( 2,515 )
8,079
7,070
1,009
8,079
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 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
17. CONTRIBUTED EQUITY
Ordinary shares
Treasury shares
Share capital
2022
Number
2021
Number
2022
$’000
2021
$’000
406,230,728
( 498,815 )
406,230,728
( 735,799 )
177,961
( 4,455 )
177,961
( 4,221 )
405,731,913
405,494,929
173,506
173,740
(a) Movement in ordinary share capital
Number
Number
$’000
$’000
At beginning and end of year
406,230,728
406,230,728
177,961
177,961
(b) Movement in treasury shares
At beginning of year
On market acquisition of shares
Employee share scheme issue
At end of year
2022
Number
2021
Number
( 735,799 )
( 498,815 )
735,799
-
( 735,799 )
-
2022
$’000
( 4,221 )
( 234 )
-
2021
$’000
( 3,782 )
( 439 )
-
( 498,815 )
( 735,799 )
( 4,455 )
( 4,221 )
During the year, 498,815 treasury shares were purchased by the AVJ Deferred Employee Share Plan Trust (AVJDESP) at a cost of
$234,000.
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.
18. RESERVES AND RETAINED EARNINGS
(a) Reserves
At 1 July 2020
Foreign currency translation
Share-based payment expense
At 30 June 2021
Foreign currency translation
Share-based payment credit
At 30 June 2022
Note
31(a)
31(a)
Foreign Currency
Translation
Reserve
$'000
Share-based
Payment
Reserve
$'000
3,028
( 185 )
-
2,843
( 1,755 )
-
1,088
5,380
-
730
6,110
-
( 388 )
Total
$'000
8,408
( 185 )
730
8,953
( 1,755 )
( 388 )
5,722
6,810
Financial Statements.AVJennings Limited - Annual Report 2022 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18. 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 39(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.
(c) Retained earnings
Movements in retained earnings were as follows:
At beginning of year
Profit after income tax
Dividends declared and paid
At end of year
19. DIVIDENDS
Cash dividends declared and paid
2021 interim dividend of 0.7 cents per share,
paid 26 March 2021. Fully franked @ 30% tax
2021 final dividend of 1.8 cents per share,
paid 23 September 2021. Fully franked @ 30% tax
2022 interim dividend of 1.1 cents per share,
paid 25 March 2022. Fully franked @ 30% tax
Total cash dividends declared and paid
Dividends proposed
2021 final dividend of 1.8 cents per share,
paid 23 September 2021. Fully franked @ 30% tax
2022 final dividend of 0.67 cents per share,
to be paid 22 September 2022. Fully franked @ 30% tax
Total dividends proposed
The Company’s Dividend Reinvestment Plan remains suspended.
2022
$'000
2021
$'000
226,416
13,078
( 11,781 )
210,543
18,716
( 2,843 )
227,713
226,416
2022
$’000
2021
$’000
-
2,843
7,312
-
4,469
11,781
-
2,843
-
7,312
2,722
2,722
-
-
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. DIVIDENDS (continued)
Dividend franking account
2022
$’000
2021
$’000
Franking credits available for subsequent financial years based on a tax rate of 30%
29,536
30,675
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
20. 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 profit/(loss) of joint venture
Change in inventory loss provisions
Share-based payments expense
Fair value adjustment to investment property
Provision/(reversal) - equity accounted investment
Change in operating assets and liabilities:
(Increase)/decrease in inventories
Decrease/(increase) in receivables
Decrease/(increase) in other assets
Increase in deferred tax liability
(Decrease)/increase in net current tax liability
Increase in payables
(Decrease)/increase in provisions
Net cash from operating activities
2022
$’000
2021
$’000
13,078
18,716
1,743
-
-
( 127 )
( 1,647 )
( 2,359 )
( 388 )
4
1,489
( 145,668 )
30,472
5,250
533
( 1,457 )
132,384
( 199 )
33,108
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
Financial Statements.AVJennings Limited - Annual Report 2022 83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Section B – Risk
22. FINANCIAL RISK MANAGEMENT
21. JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The Group’s principal financial assets and financial liabilities
comprise receivables, payables, borrowings and cash.
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.
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 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 when appropriate 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. With our strong level of sale
contracts on hand and higher number of lots under development,
the Group expects forecast cashflows in the medium term to be
strong and lumpy and has resulted in the Group retaining all of the
drawn debt at variable rates of interest.
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.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22. FINANCIAL RISK MANAGEMENT (continued)
(i) Interest rate risk (continued)
At balance date, the Group had the following cash and variable rate borrowings:
Cash
Bank loans
Net financial liabilities
Borrowings not hedged
Weighted
average
interest rate
%
1.15
2.65
2022
2021
Balance
$'000
( 3,274)
109,190
105,916
105,916
Weighted
average
interest rate
%
0.11
1.41
Balance
$'000
( 13,099 )
138,549
125,450
125,450
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)
2022
$'000
( 65 )
65
2021
$'000
( 77 )
77
Profit After Tax
Higher/(Lower)
2022
$'000
( 371 )
371
2021
$'000
( 439 )
439
Financial Statements.AVJennings Limited - Annual Report 2022 85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22. 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)
2022
$'000
( 67 )
67
2021
$'000
( 18 )
18
2022
$'000
( 4,024 )
7,534
2021
$'000
( 6,478 )
6,849
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 36 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 2024 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 2022, none (2021: none) of the Group’s interest-bearing loans and borrowings will mature in less than one year.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22. 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 2022
Financial Assets
Cash and cash equivalents
Receivables
Financial Liabilities
Payables
Interest-bearing loans and borrowings*
Lease liabilities
Financial Guarantees
< 6 months
$'000
6 -12 months
$'000
> 1-5 years
$'000
Total
$'000
3,274
14,067
17,341
54,059
1,450
780
1,515
57,804
-
499
499
39,876
1,442
758
-
42,076
-
1,155
1,155
109,996
112,810
5,049
-
227,855
3,274
15,721
18,995
203,931
115,702
6,587
1,515
327,735
Net maturity
( 40,463 )
( 41,577 )
( 226,700 )
( 308,740 )
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
< 6 months
$'000
6 -12 months
$'000
> 1-5 years
$'000
Total
$'000
13,099
35,543
48,642
23,434
982
853
1,049
26,318
22,324
-
10,487
10,487
8,901
976
577
-
10,454
33
-
163
163
15,931
140,996
4,647
-
161,574
(161,411)
13,099
46,193
59,292
48,266
142,954
6,077
1,049
198,346
(139,054)
* 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 $225 million (2021: $143 million) of unused credit facilities available. Please refer to
note 14.
Financial Statements.AVJennings Limited - Annual Report 2022 87
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 2022
Year ended 30 June 2021
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
Financial liabilities
Interest-bearing loans
-
-
109,190
109,190
-
-
109,190
109,190
-
-
138,549
138,549
-
-
138,549
138,549
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.
23. 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 2022, a total dividend of $11,781,000 was paid (2021: $2,843,000).
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
2022
$'000
109,190
( 3,274 )
105,916
408,029
729,511
26.0%
14.5%
2021
$'000
138,549
( 13,099 )
125,450
409,109
625,268
30.7%
20.1%
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Section C – Group Structure
24. CONTROLLED ENTITIES
(a) Investment in controlled entities
The following economic entities are the controlled entities of AVJennings Limited:
ECONOMIC ENTITY (1)
2022
2021
2022
2021
% 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)(4)
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(3)
AVJennings SPV No 22 Pty Limited(3)
AVJennings SPV No 23 Pty Limited(3)
AVJennings SPV No 24 Pty Limited
AVJennings SPV No 25 Pty Limited
AVJennings SPV No 26 Pty Limited
AVJennings SPV No 27 Pty Limited(5)
AVJennings SPV No 28 Pty Limited(5)
AVJennings SPV No 29 Pty Limited(5)
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
No
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
No
No
No
No
No
No
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
-
-
-
Financial Statements.AVJennings Limited - Annual Report 2022 89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. CONTROLLED ENTITIES (continued)
(a) Investment in controlled entities (continued)
ECONOMIC ENTITY (1)
2022
2021
2022
2021
% Equity Interest
Included in Banking
Cross Deed of Covenant (2)
Entities excluded from the Closed Group (continued)
Creekwood Developments Pty Limited(3)
Portarlington Nominees Pty Limited(3)
AVJennings St Clair Pty Limited(3)
St Clair JV Nominee Pty Limited(3)
AVJennings Properties Wollert SPV Pty Limited
AVJennings Waterline Pty Limited(3)
Cusack Lane Nominees Pty Ltd(3)
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
(1) All entities are incorporated in Australia. With the exception of AVJ Hobsonville Pty Limited which has a branch in New Zealand, all entities operate
within Australia.
(2) These entities, including AVJennings Limited, are included under the Banking Cross Deed of Covenant referred to in note 14(a).
(3) These entities, including AVJennings Limited, are included in the Deeds of Indemnity for performance bond facilities referred to in note 14(b).
(4)
In the process of deregistration.
(5)
Incorporated on 6 October 2021.
(b) Ultimate parent
AVJennings Limited is the ultimate Australian Parent Entity. SC Global Developments Pte Ltd is the Ultimate Parent Entity.
(c) Deeds of cross guarantee
Certain entities within the Group are parties to deeds of cross guarantee under which each controlled entity guarantees the debts of
the others. By entering into these deeds, the controlled entities are relieved from the requirement to prepare Financial Statements and
Directors’ Reports under Corporations Instrument 2016/785 issued by the Australian Securities and Investments Commission (ASIC).
Those entities included in the Closed Group are listed in note 24(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 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 90
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. 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 24(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 24(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 before income tax
Income tax
Profit after income tax
Closed Group
2022
$’000
129,661
( 82,969 )
( 41,846 )
4,846
( 1,013 )
3,833
2021
$’000
141,807
( 104,202 )
( 36,249 )
1,356
( 543 )
813
Financial Statements.AVJennings Limited - Annual Report 2022
91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. 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
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
2022
$’000
2021
$’000
1,865
118,041
83,089
922
2,553
206,470
1,044
195,279
5,053
2,059
5,629
2,816
-
211,880
418,350
64,971
1,230
-
6,472
72,673
13,408
88,447
4,803
14,363
1,148
122,169
194,842
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
223,508
232,078
173,506
5,722
44,280
173,740
6,110
52,228
223,508
232,078
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. 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 the beginning of the year
Comprehensive income:
Profit for the year
Total comprehensive income for the year
Transactions with owners in their capacity as owners
- Treasury shares acquired
- Share-based payment (reversal)/expense
- Exchange variation on deregistration of foreign entity
- Dividends paid
Total transactions with owners in their capacity as owners
Closed Group
2022
$’000
2021
$’000
232,078
233,790
3,833
3,833
( 234 )
( 388 )
-
( 11,781 )
( 12,403 )
813
813
( 439 )
730
27
( 2,843 )
( 2,525 )
At the end of the year
223,508
232,078
25. EQUITY ACCOUNTED INVESTMENTS
Joint Ventures
Accounting
2022
$’000
2021
$’000
5,053
4,895
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 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
25. 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 profit / (loss)
At end of year before provision movement
(Provision) / reversal 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
Share of revenues and expenses
Revenues
Cost of sales
Expenses
Profit / (loss) before income tax
Profit / (loss) after income tax
93
Interest held
2022
33.3%
2021
33.3%
4,895
1,647
6,542
( 1,489 )
5,053
2022
$’000
1,457
5,359
6,816
261
13
274
6,542
5,636
( 2,295 )
3,341
1,554
4,895
2021
$’000
617
6,647
7,264
2,075
294
2,369
4,895
955
( 867 )
1,559
1,647
2,559
( 4,299 )
( 555 )
( 2,295 )
1,647
( 2,295 )
(1) For 2022, 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 2022 was $1,489,000.
At 30 June 2022, there were no significant commitments entered into by the Joint Venture.
A number of Pindan entities operated as trustees of the trusts that hold the above investments. In September 2021, Pindan Capital
Pty Limited (in liquidation) agreed to sell shares in the trustee entities to Dorado Syndicate 59 Pty Limited in trust for the unitholders.
As a result of that transaction, the Pindan Group holds no legal or beneficial interest in the trusts or the underlying projects. The legal
ownership is in Dorado Syndicate 59 Pty Limited on trust for the unitholders and the beneficial interest is held by the unitholders, which
include AVJennings. A provision for $1,489,000 has been recognised against this investment at 30 June 2022.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26. 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
2022
49%
2021
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
2022
$'000
8,900
25,538
34,438
6,204
1,006
7,210
2021
$'000
12,197
22,496
34,693
8,622
215
8,837
27,228
25,856
14,921
( 12,988 )
( 562 )
1,371
( 411 )
960
960
17,746
( 11,907 )
( 807 )
5,032
( 1,510 )
3,522
3,522
Financial Statements.AVJennings Limited - Annual Report 2022 95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Section D – Other information
27. CORPORATE INFORMATION
The Consolidated Financial Statements of AVJennings Limited for the year ended 30 June 2022 were authorised for issue in
accordance with a resolution of the Directors on 25 August 2022.
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.
28. 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).
29. 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.
30. 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 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30. 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
2022
Number
2021
Number
219,743,062
224,703,013
(c) Entity with significant influence over AVJennings Limited
219,112,839 ordinary shares equating to 53.94% of the total ordinary shares on issue (2021: 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 2022. 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 2022.
(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 fees paid/payable
Miscellenous items
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.
2022
$
2021
$
600,000
590,000
113,637
3,450
222,950
-
2,648,775
50,000
2,516,433
50,000
Financial Statements.AVJennings Limited - Annual Report 2022 97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30. 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 25 and 26.
(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
(1) Includes former KMP’s retirement payment.
2022
$’000
2021
$’000
956
1,370
1,044
163
150
-
150
75
2022
$’000
2021
$’000
243
243
2022
$
2021
$
4,168,405
74,317
476,934
3,009,862
2,440,191
10,814
703,296
26,693
168,039
134,414
49,632
( 129,055 )
85,159
371,165
7,818,134
3,771,732
(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 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31. 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 (credit) / expense arising
from share-based payment
transactions
2022
$’000
2021
$’000
581
800
( 969 )
( 70 )
( 388 )
730
The share-based payment plan is described in note 31(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
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 ROE hurdle
will apply to earlier grants.
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.
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%
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 2022
99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31. 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 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%
33.33%
33.34%
Unvested retention rights are subject to real risk of forfeiture, for
example where an executive ceases employment for any reason.
(c) Summary of rights granted
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 2022
FY2019 Grant
FY2020 Grant
FY2021 Grant
FY2022 Grant
Total
1,841,470
1,978,415
1,765,852
1,595,805
( 630,207 )
( 417,411 )
( 369,829 )
( 134,594 )
( 974,753 )
( 55,284 )
( 174,859 )
-
( 236,510 )
( 942,205 )
( 384,130 )
( 103,834 )
-
563,515
837,034
1,357,377
7,181,542
( 1,552,041 )
( 1,204,896 )
( 1,666,679 )
2,757,926
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31. SHARE-BASED PAYMENT PLANS (continued)
(c) Summary of rights granted (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 2022 and 2021.
Number of rights granted
Weighted average fair value at measurement date
Dividend yield (%)
Risk-free interest rate (%)
Expected life (years)
Share price
Number of rights granted
Weighted average fair value at measurement date
Dividend yield (%)
Risk-free interest rate (%)
Expected life (years)
Share price
32. AUDITOR’S REMUNERATION
Fees to Ernst & Young
Fees for auditing the statutory financial report of the parent covering the Group and auditing the
statutory financial reports of controlled entities
Fees for other services
Total fees to Ernst & Young
2022
Retention
2022
Performance
491,383
$0.5788
5.20
-0.16 to 1.23
0.38 to 2.84
$0.63
1,104,422
$0.4273
5.12
0.15 to 1.31
2.55 to 3.00
$0.61
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
2022
$
2021
$
309,441
298,632
36,500
31,007
345,941
329,639
Financial Statements.AVJennings Limited - Annual Report 2022 101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
33. 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
34. 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
2022
$’000
2021
$’000
13,078
18,716
2022
Number
2021
Number
406,230,728
406,230,728
( 498,815 )
( 735,799 )
405,731,913
405,494,929
2022
$’000
69,328
232,614
5
5
2021
$’000
69,969
233,255
6
6
173,506
173,739
5,703
53,400
232,609
-
-
6,110
53,400
233,249
-
-
The Parent Entity has not provided any guarantees other than those mentioned in notes 14(a), 14(b), 24(c) and 36.
(c) Contingent liabilities of the Parent Entity
Please refer to note 36 for details of the Parent Entity’s contingent liabilities.
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 102
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
35. COMMITMENTS
Short-term/low value lease commitments – Group as lessee
Liabilities in respect of leases recognised in accordance with AASB 16 - Leases, are presented in note 15. 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.
Short-term/low value 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 short-term/low value leases, and no short-term/low value leases contain restrictions on financing or other leasing
activities.
Future minimum rentals payable under non-cancellable short-term/low value leases are as follows:
Short-term/low value leases
Commitments in relation to leases contracted for at the
reporting date but not recognised as liabilities:
Within one year
After once year, but not more than five years
Total short-term/low value leases
Represented by:
Non-cancellable short-term/low value leases
Cancellable short-term/low value leases
Total short-term/low value leases
2022
$’000
2021
$’000
474
305
779
395
384
779
246
100
346
234
112
346
36. 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 24(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 24(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 2022 amounted to $34,764,000 (2021: $22,004,000).
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 24(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 2022, amounted to
$4,579,000 (2021: $4,938,000). No liability is expected to arise.
Financial Statements.AVJennings Limited - Annual Report 2022 103
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
36. CONTINGENCIES (continued)
Financial guarantees
Financial guarantees granted by the Group’s bankers to unrelated parties in the normal course of business at 30 June 2022,
amounted to $1,515,000 (2021: $1,049,000). No liability is expected to arise.
37. SIGNIFICANT EVENTS AFTER BALANCE SHEET DATE
No matter or circumstance has arisen since 30 June 2022 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.
38. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
Accounting Standards, Interpretations and Amendments
Several amendments and interpretations apply for the first time in 2022, 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.
39. 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
2022. 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 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 104
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
39. OTHER ACCOUNTING POLICIES (continued)
d) Foreign currency translation
c) Goods and services tax (GST)
(i) Functional and presentation currency
Revenues, expenses and assets are recognised net of the amount
of GST except:
The Group’s functional and presentation currency is
Australian Dollars.
•
•
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.
(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 2022 105
DIRECTORS’ DECLARATION.
In accordance with a resolution of the Directors of AVJennings Limited, we state that:
1)
In the opinion of the Directors:
i)
the Consolidated Financial Statements and Notes are in accordance with the Corporations Act 2001, including;
a) giving a true and fair view of the Group’s financial position as at 30 June 2022 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 28; and
iii) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
2)
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 2022.
3)
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 24 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
25 August 2022
Philip Kearns
Director
AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
106
Ernst & Young
200 George Street
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Sydney NSW 2000 Australia
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Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
Tel: +61 2 9248 5555
ey.com/au
Fax: +61 2 9248 5959
ey.com/au
Independent Auditor's Report to the Members of AVJennings Limited
Independent Auditor's Report to the Members of AVJennings Limited
Report on the Audit of the Financial Report
Report on the Audit of the Financial Report
Opinion
Opinion
We have audited the financial report of AVJennings Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30
We have audited the financial report of AVJennings Limited (the Company) and its subsidiaries
June 2022, the consolidated statement of comprehensive income, consolidated statement of changes
(collectively the Group), which comprises the consolidated statement of financial position as at 30
in equity and consolidated statement of cash flows for the year then ended, notes to the financial
June 2022, the consolidated statement of comprehensive income, consolidated statement of changes
statements, including a summary of significant accounting policies, and the directors’ declaration.
in equity and consolidated statement of cash flows for the year then ended, notes to the financial
statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a)
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June
2022 and of its consolidated financial performance for the year ended on that date; and
giving a true and fair view of the consolidated financial position of the Group as at 30 June
2022 and of its consolidated financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
b)
b)
Basis for Opinion
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
Report section of our report. We are independent of the Group in accordance with the auditor
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Report section of our report. We are independent of the Group in accordance with the auditor
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
the Code.
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
our audit of the financial report of the current year. These matters were addressed in the context of
a separate opinion on these matters. For each matter below, our description of how our audit
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
addressed the matter is provided in that context.
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
included the performance of procedures designed to respond to our assessment of the risks of
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
material misstatement of the financial report. The results of our audit procedures, including the
included the performance of procedures designed to respond to our assessment of the risks of
procedures performed to address the matters below, provide the basis for our audit opinion on the
material misstatement of the financial report. The results of our audit procedures, including the
accompanying financial report.
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
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AVJennings Limited - Annual Report 2022
Ernst & Young
200 George Street
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
Sydney NSW 2000 Australia
ey.com/au
GPO Box 2646 Sydney NSW 2001
Independent Auditor's Report to the Members of AVJennings Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of AVJennings Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30
June 2022, the consolidated statement of comprehensive income, consolidated statement of changes
in equity and consolidated statement of cash flows for the year then ended, notes to the financial
statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
giving a true and fair view of the consolidated financial position of the Group as at 30 June
2022 and of its consolidated financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
Act 2001, including:
a)
b)
Basis for Opinion
the Code.
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
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107
Ernst & Young
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Independent Auditor's Report to the Members of AVJennings Limited
1. Net realisable value (NRV) of inventories
Report on the Audit of the Financial Report
Why significant
How our audit addressed the key audit matter
Opinion
Approximately 94% of the Group’s
total assets comprise inventories.
Inventories are carried at the lower
of cost and net realisable value and
the directors assess this with
reference to the following:
Our audit procedures focused on assessing the judgments
and assumptions made by the Group in the feasibilities
We have audited the financial report of AVJennings Limited (the Company) and its subsidiaries
underpinning the net realisable value assessments.
(collectively the Group), which comprises the consolidated statement of financial position as at 30
June 2022, the consolidated statement of comprehensive income, consolidated statement of changes
in equity and consolidated statement of cash flows for the year then ended, notes to the financial
• Assessed and tested the effectiveness of relevant
statements, including a summary of significant accounting policies, and the directors’ declaration.
Our procedures included the following:
controls over cost accumulation
a)
b)
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
• Capitalised costs to date
• Forecast costs to complete
• Average historic and
giving a true and fair view of the consolidated financial position of the Group as at 30 June
2022 and of its consolidated financial performance for the year ended on that date; and
understand the status and progress of a sample of
developments
forecast selling price and
sales rate for each project
• Held discussions with Project Managers to
• Assessed the impairment methodology, project
•
Basis for Opinion
margin analysis and feasibility models prepared by
management for a sample of developments in
progress
• Changes to the underlying
complying with Australian Accounting Standards and the Corporations Regulations 2001.
assumptions based on
economic uncertainty,
ongoing COVID-19
disruptions, increasing
costs and higher interest
rates.
Identified higher risk projects, based on our
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
judgment, and evaluated the assumptions adopted.
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
In doing so, we:
Report section of our report. We are independent of the Group in accordance with the auditor
• Compared the forecast sales revenue
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
assumptions to the most recent historical or
comparable sales and external market data
• Corroborated the costs projected to signed
contracts or actual costs incurred for
current or comparable projects
This was considered a key audit
matter as the assessment of NRV
involves a significant degree of
judgment and can present a range
of alternative outcomes.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
• Assessed contingency estimates for
remaining development risks
Disclosure of inventories is included
in Note 7 of the financial report.
Disclosure of significant judgments
is included in Note 21 of the
financial report.
• Selected a sample of identified higher risk
Key Audit Matters
projects in which we involved our internal
Key audit matters are those matters that, in our professional judgment, were of most significance in
real estate valuation specialists to evaluate
our audit of the financial report of the current year. These matters were addressed in the context of
the key sales revenue and cost assumptions
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
in these projects
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
• Performed sensitivity analyses in relation to the key
forward looking assumptions including sales price
achieved, cost per lot and escalation rates.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
• Considered the impact of the current market
included the performance of procedures designed to respond to our assessment of the risks of
conditions, ongoing COVID-19 disruptions,
material misstatement of the financial report. The results of our audit procedures, including the
increasing costs and higher interest rates on the
procedures performed to address the matters below, provide the basis for our audit opinion on the
Group’s forward-looking assumptions.
accompanying financial report.
• Tested the mathematical accuracy of the
feasibilities selected.
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AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
108
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent Auditor's Report to the Members of AVJennings Limited
Information Other than the Financial Report and Auditor’s Report Thereon
Report on the Audit of the Financial Report
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2022 annual report, but does not include the financial report
and our auditor’s report thereon.
Opinion
We have audited the financial report of AVJennings Limited (the Company) and its subsidiaries
Our opinion on the financial report does not cover the other information and accordingly we do not
(collectively the Group), which comprises the consolidated statement of financial position as at 30
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
June 2022, the consolidated statement of comprehensive income, consolidated statement of changes
and our related assurance opinion.
in equity and consolidated statement of cash flows for the year then ended, notes to the financial
statements, including a summary of significant accounting policies, and the directors’ declaration.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
Act 2001, including:
If, based on the work we have performed, we conclude that there is a material misstatement of this
a)
other information, we are required to report that fact. We have nothing to report in this regard.
giving a true and fair view of the consolidated financial position of the Group as at 30 June
2022 and of its consolidated financial performance for the year ended on that date; and
Responsibilities of the Directors for the Financial Report
complying with Australian Accounting Standards and the Corporations Regulations 2001.
b)
The directors of the Company are responsible for the preparation of the financial report that gives a
Basis for Opinion
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
financial report that gives a true and fair view and is free from material misstatement, whether due to
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
fraud or error.
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
operations, or have no realistic alternative but to do so.
the Code.
Auditor's Responsibilities for the Audit of the Financial Report
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
Key Audit Matters
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
if, individually or in the aggregate, they could reasonably be expected to influence the economic
a separate opinion on these matters. For each matter below, our description of how our audit
decisions of users taken on the basis of this financial report.
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
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AVJennings Limited - Annual Report 2022
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2022 annual report, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
109
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent Auditor's Report to the Members of AVJennings Limited
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
Report on the Audit of the Financial Report
•
Opinion
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
We have audited the financial report of AVJennings Limited (the Company) and its subsidiaries
detecting a material misstatement resulting from fraud is higher than for one resulting from
(collectively the Group), which comprises the consolidated statement of financial position as at 30
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
June 2022, the consolidated statement of comprehensive income, consolidated statement of changes
override of internal control.
in equity and consolidated statement of cash flows for the year then ended, notes to the financial
statements, including a summary of significant accounting policies, and the directors’ declaration.
•
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
•
a)
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
giving a true and fair view of the consolidated financial position of the Group as at 30 June
2022 and of its consolidated financial performance for the year ended on that date; and
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
complying with Australian Accounting Standards and the Corporations Regulations 2001.
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
to the date of our auditor’s report. However, future events or conditions may cause the Group
Report section of our report. We are independent of the Group in accordance with the auditor
to cease to continue as a going concern.
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
•
Evaluate the overall presentation, structure and content of the financial report, including the
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
disclosures, and whether the financial report represents the underlying transactions and events
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
in a manner that achieves fair presentation.
the Code.
Basis for Opinion
•
b)
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
We communicate with the directors regarding, among other matters, the planned scope and timing of
for our opinion.
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
We also provide the Directors with a statement that we have complied with relevant ethical
our audit of the financial report of the current year. These matters were addressed in the context of
requirements regarding independence, and to communicate with them all relationships and other
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
matters that may reasonably be thought to bear on our independence, and where applicable, actions
a separate opinion on these matters. For each matter below, our description of how our audit
taken to eliminate threats or safeguards applied.
addressed the matter is provided in that context.
From the matters communicated to the directors, we determine those matters that were of most
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
significance in the audit of the financial report of the current year and are therefore the key audit
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
included the performance of procedures designed to respond to our assessment of the risks of
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
material misstatement of the financial report. The results of our audit procedures, including the
should not be communicated in our report because the adverse consequences of doing so would
procedures performed to address the matters below, provide the basis for our audit opinion on the
reasonably be expected to outweigh the public interest benefits of such communication.
accompanying financial report.
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AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
110
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent Auditor's Report to the Members of AVJennings Limited
Report on the Audit of the Remuneration Report
Report on the Audit of the Financial Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the Directors' Report for the year ended 30
Opinion
June 2022.
We have audited the financial report of AVJennings Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30
In our opinion, the Remuneration Report of AVJennings Limited for the year ended 30 June 2022,
June 2022, the consolidated statement of comprehensive income, consolidated statement of changes
complies with section 300A of the Corporations Act 2001.
in equity and consolidated statement of cash flows for the year then ended, notes to the financial
statements, including a summary of significant accounting policies, and the directors’ declaration.
Responsibilities
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
The directors of the Company are responsible for the preparation and presentation of the
Act 2001, including:
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
giving a true and fair view of the consolidated financial position of the Group as at 30 June
a)
accordance with Australian Auditing Standards.
2022 and of its consolidated financial performance for the year ended on that date; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Ernst & Young
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
Glenn Maris
Partner
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
25 August 2022
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
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AVJennings Limited - Annual Report 2022
Shareholder Information.
111
As at 22 August 2022.
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
631
743
275
582
159
2,390
672
272
549
174
200
26
1,221
309
Total
903
1,292
449
782
185
3,611
981
Ordinary
Shares
219,112,839
%
53.94
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the Directors' Report for the year ended 30
In our opinion, the Remuneration Report of AVJennings Limited for the year ended 30 June 2022,
complies with section 300A of the Corporations Act 2001.
June 2022.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Glenn Maris
Partner
25 August 2022
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AVJennings Limited - Annual Report 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
112
Shareholder Information.
As at 22 August 2022.
3. TWENTY LARGEST SHAREHOLDERS ON THE AUSTRALIAN REGISTER
Name
The Central Depository (Pte) Ltd
HSBC Custody Nominees (Australia) Ltd
Brazil Farming Pty Ltd
BNP Paribas Nominees Pty Ltd
Citicorp Nominees Pty Ltd
Gillcorp Pty Limited
John E Gill Operations Pty Ltd
John E Gill Trading Pty Ltd
Mr Peter Summers
Horrie Pty Ltd
Jamplat Pty Ltd
Mr Bradley J Newcombe
Luton Pty Ltd
Ago Pty Ltd
JP Morgan Nominees Australia Pty Ltd
Pacific Custodians Pty Ltd AVJ Def Emp Share Trust
Anchorfield Pty Ltd
Dr D R M Gill and Mrs J M Gill
Di Iulio Homes Pty Ltd
Carlcorp Pty Ltd
Ordinary
Shares
224,870,414
18,378,675
17,184,527
16,256,298
11,589,201
6,343,003
5,609,105
5,598,712
5,217,819
3,783,369
3,771,019
3,500,000
3,294,263
3,160,802
2,737,388
2,512,981
2,000,000
1,958,511
1,501,472
1,368,609
%
55.36
4.52
4.23
4.00
2.85
1.56
1.38
1.38
1.28
0.93
0.93
0.86
0.81
0.78
0.67
0.62
0.49
0.48
0.37
0.34
Total
340,636,168
83.85
AVJennings Limited - Annual Report 2022 Shareholder Information.
As at 22 August 2022.
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
Rowland Wong Kwok Ho
DBS Nominees Pte Ltd
Vesmith Investments Pte Ltd
Raffles Nominees (Pte) Ltd
Pansbury Investments Pte Ltd
Citibank Nominees Singapore Pte Ltd
Hexacon Construction Pte Ltd
Ng Poh Cheng
UOB Kay Hian Pte Ltd
Teo Chiang Long
OCBC Nominees Singapore Pte Ltd
Wee Kim Choo @ Elizabeth Sam
Chng Bee Suan
Chua Hung Koon Edmond
Total
113
%
47.38
2.94
0.44
0.39
0.35
0.22
0.20
0.20
0.17
0.16
0.13
0.11
0.09
0.08
0.07
0.07
0.06
0.06
0.06
0.05
Ordinary
Shares
192,463,638
11,960,005
1,782,618
1,570,170
1,408,420
899,283
804,175
801,805
681,796
661,885
532,828
452,507
368,480
309,131
283,414
269,172
244,737
224,820
224,220
216,873
216,159,977
53.21
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 2022COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 114
Company Particulars.
DIRECTORS
Mr Simon Cheong
Mr Jerome Rowley
Mr Bobby Chin
Mr Lai Teck Poh
Mr Bruce Hayman
Mr Mak Lye Mun
Ms Lisa Chung
Mr Philip Kearns
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
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 $0.011 for FY22
was paid on 25 March 2022.
A final dividend of $0.0067 for FY22
will be paid to shareholders on
22 September 2022.
AVJennings Limited - Annual Report 2022 Building
on our past.
Shaping
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Your
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developer.