Annual Report 2023
AVJennings Limited
ABN 44 004 327 771
Housing matters.
Community matters.
Creating communities for over
90 years that people love to call home.
2
Waterline Place,
Williamstown, VIC
AVJennings Limited – Annual Report 2023 3
Contents.
COMPANY OVERVIEW
Chairman’s Report
Chief Executive Officer’s Report
2023 Highlights
Who We Are
Property Portfolio
Project Pipeline
Our Communities
GOVERNANCE & SUSTAINABILITY
Corporate Governance
Your Community Developer
Creating and Supporting Communities
DIRECTORS’ REPORT
Directors’ Report
4
6
8
9
10
11
12
14
20
26
32
FINANCIAL STATEMENTS
53
Consolidated Statement of Comprehensive Income
54
Consolidated Statement of Financial Position
55
Consolidated Statement of Changes in Equity
56
Consolidated Statement of Cash Flows
57
Notes to the Consolidated Financial Statements
Directors’ Declaration
104
Independent Auditor’s Report to the Members of AVJennings Limited 105
ADDITIONAL INFORMATION
Shareholder Information
Company Particulars
110
113
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 4
Chairman’s Report.
Dear fellow shareholders,
FY2023 has been characterized by a
rapid rise in interest rates, supply chain
disruptions and global inflation. Despite
these headwinds, I am delighted to share
that our business has shown remarkable
resilience and progress while navigating
through difficult market conditions.
We achieved strong revenue and net
profit growth and improved our gross
margins. During the year, we declared an
interim dividend of 1.1 cents but not a final
dividend. This decision was prudently made
with consideration of the current trading
conditions and forward market uncertainty.
It also demonstrates our commitment
to the long-term stability and growth of
the Company on which the Board and
management is fully focused.
AVJennings has long recognised the
importance of sustainable practices
and initiatives in the housing industry.
After several years of collaboration, the
Company has entered into a Joint Venture
with Pro9 Global (Pro9) to manufacture its
highly durable and energy-efficient Pro9
walling systems in Australia, demonstrating
our commitment to build not just homes but
thriving and harmonious communities that
contribute to a sustainable future. The use
of prefabricated walls significantly reduces
construction time and improves quality to
the homebuilding process. Furthermore,
the Pro9 walling system improves the
energy efficiency of homes.
‘Community Matters’ is part of the
AVJennings ethos and something that
we are proud of. Over the past three
years, our contributions and support for
community has doubled. We continue
our long-term commitment to the Steve
Waugh Foundation and are in our second
year of supporting the Humpty Dumpty
Foundation. Additionally, our Community
Grants program, supports various local
charitable organisations where AVJennings’
communities are based.
During the year, the Company introduced
Shanna Souter as the new Chief Financial
Officer. With the combined experience,
efforts and commitment of Phil and the
management team, we are confident
that the Company is well placed for the
year ahead.
‘Community
Matters’ is
part of the
AVJennings
ethos and
something
that we are
proud of.
Pro9 walling system installation,
Riverton, Jimboomba, QLD”
AVJennings Limited – Annual Report 2023 5
Planned Stellar Collection (Pro9) Townhomes, Lyndarum North, Wollert, VIC
Laura Geitz, AVJennings Ambassador
Turnkey home, QLD
Despite the ongoing risks presented by
rising interest rates and inflationary
pressures, our optimism for the business
is unwavering. This confidence is
underpinned by the ongoing scarcity
of affordable housing (forecast by the
National Housing Finance and Investment
Corporation to be 175,000 homes by
2027), high levels of immigration and
overall growth in population, which
undoubtedly presents a significant
opportunity for AVJennings.
Looking ahead, we are well-prepared to
embrace future challenges and capitalise
on emerging opportunities. We are
committed to driving innovation and
exploring new technologies to enhance
our offerings and improve operational
efficiencies. Our focus on sustainable
practices and environmentally responsible
construction will continue to be a
cornerstone of our business strategy.
Finally, I would like to thank all our
customers, shareholders, financiers,
partners and advisors for your continued
trust and support in AVJennings and
my fellow Directors, management and
employees for your diligent effort and
commitment to the Company.
Simon Cheong
Chairman
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 6
Chief Executive Officer’s
Report.
I am proud to present the Annual Report
for AVJennings for the year ended
30 June 2023 (FY23), showcasing a year
of significant achievement and progress
despite challenging market conditions.
FY23 was also marked by progress on a
number of strategic initiatives.
In FY23, AVJennings demonstrated a
positive financial performance, delivering
revenue of $274 million, a 23% increase
over the previous year. This was driven
largely by a 20% increase in settlement
volumes with 732 lots settled during the
year. Land settlements were a substantial
contributor to the 36% increase in gross
margin to $87 million and a 2.9% lift
in gross margins, bringing it to 31.7%.
Pleasingly, the Company recorded a
Profit Before Tax of $30.8 million and
earnings per share of 5.2 cents, an
increase of 72% and 63% respectively.
Strong demand for AVJennings’ land
offering was seen as the impact of
the previous year’s sales, driven by
HomeBuilder stimulus, settled. Lyndarum
North (VIC), Riverton (QLD), Ara Hills (NZ),
Cadence (QLD) and Aspect (VIC) were the
key project contributors to settlements.
Throughout FY23, we maintained a prudent
approach to capital deployment. Due
to forward market uncertainty, we did
not declare a final FY23 dividend and
suspended the share buyback in June
2023. We continue to be diligent in relation
to capital management and our current
capital management initiatives will remain
under review so long as the forward market
outlook is highly uncertain.
More recently, we are seeing a shift in
customer preference towards integrated
housing as customers favor the peace
of mind, quality and delivery certainty
provided by our AVJ Turnkey homes. To
meet this shift, we have adjusted our
Work In Progress (WIP) mix more towards
built-form housing. At the end of FY23,
62% of our WIP portfolio related to built-
form product, representing a significant
increase from 50% in FY22.
AVJennings retains a robust and
geographically diversified land bank for
future growth. As at 30 June 2023, we have
a pipeline of 14,094 lots under control,
an 11% increase on FY22 following some
restocking of the project pipeline in the
first half in southwest Sydney in NSW and
in southeast Queensland. More recently
and in response to market uncertainty
and ongoing price expectations, we have
reduced our acquisition efforts until
buying conditions become more favorable,
aligning with our focus on disciplined
capital management.
Our commitment to sustainability
and environmental responsibility was
strengthened with the creation of a Joint
Venture (JV) with Pro9. Pro9’s advanced
technology delivers a highly durable,
energy-efficient walling system and with
the establishment of the JV, it will be
produced in Australia for the first time.
This investment is well aligned with our
goal of providing more environmentally
sustainable housing solutions to our
customers and proactively responding
to increasing customer demands in this
space. The 9.4 NatHERS rating recently
achieved in Queensland with the Pro9
system will deliver significant benefits to
our customers.
The AVJennings Pro9 homes, called the
Stellar Collection, have initially been
constructed in New South Wales and
Queensland with a pipeline of homes
planned for 2024 across more AVJennings
communities in Queensland, New South
Wales and Victoria.
AVJennings
continues to meet
the challenges
confronting
the Australian
housing and
construction
industry
head on.
In the middle of unprecedented interest
rate rises, our integrated business model
allows us to swiftly adapt to current market
conditions. Only 11% of our portfolio
was under active construction in FY23
compared to 15% in FY22. Sales contracts
signed in FY23 substantially declined,
at $155 million (348 lots) compared to
$305 million in FY22, off the back of low
consumer confidence. As we head in to
FY24, 321 lots are presold at a value of
$132 million. Enquiry levels are consistent
with our historical averages, suggesting
a backlog of demand to come through as
consumer confidence improves.
AVJennings Limited – Annual Report 2023 7
Riverton, Jimboomba, QLD
9.4
During the year, I was delighted to appoint
Shanna Souter as the new Chief Financial
Officer. Prior to joining AVJennings, Shanna
dedicated 11 years to Mirvac, where
she held senior positions in Finance and
Operations. With Shanna’s proven track
record and profound understanding of
the industry, the Board and I believe that
Shanna’s expertise will be immensely
valuable to the Company.
As we move forward, AVJennings will
continue to focus on prudent capital
deployment and optimising our product
mix, with a shift towards built-form
offerings in response to customer demand.
Our commitment to sustainable practices
will persist, and we are excited about the
opportunities presented by our JV with
Pro9 to manufacture more energy-efficient
homes.
AVJennings continues to meet the
challenges confronting the Australian
housing and construction industry head
on. We are confident about the medium-
term prospects for the residential housing
sector driven by the growing structural
imbalance between population growth
and housing supply. Our ability to respond
to these prospects presents promising
opportunities for the future.
In conclusion, I want to express my
gratitude to our customers, contractors,
employees, and the Board for their
untiring commitment to AVJennings. We
have operated in Australia for over 90
years, and our resilience, adaptability,
and determination continue to be the
driving force behind our success. As
market conditions improve, we will be well-
positioned to continue to improve on our
returns for our valued shareholders.
Philip Kearns, AM
Chief Executive Officer
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 8
2023 Highlights.
Delivering strong results in a challenging year
31.7%
Gross Margin
$30.8m
Profit before tax
3 percentage points
72% PCP
732
Lots settled
20% PCP
$274m
Revenue
23% PCP
5.2c
EPS
63% PCP
$582m
NFE
13% PCP
14,094
Lots in pipeline
$155m
Contract signings
11% PCP
49% PCP
PCP = Prior Corresponding Period
Aspect, Mernda, VIC (Streetscape, Home Renders)
AVJennings Limited – Annual Report 2023 9
Who We Are.
Creating communities for over
90 years that people love to call home
We have been building the great Australian dream since 1932.
Today we are a leading residential property development company
operating across Australia and New Zealand with up to 30
geographically diverse projects in progress, across master-
planned residential communities to apartments and integrated
housing developments across greenfield and infill sites.
AVJennings remains one of the most recognised and trusted names
in property. 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 vision is to
create a lasting,
positive legacy in
everything that
we do.
Our strategy
Developing communities for a sustainable future
Flexible Product
Offering
Modernising Our
Foundations
Building Annuity
Income
Land
Built-form Housing
Low/Mid-rise Apartments
Systems
Capital
People
Pro9
Development Services
Land Lease
Improve Return on Equity (ROE)
Disciplined Capital Management
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 10
Property Portfolio.
14,094 Pipeline Lots
By region
By development status*
NZ
528
SA
1,340
WA
NZ
52
528
WA
52
SA
1,340
NSW
2,651
NSW
2,651
Work in
progress
1,460
Completed
Stock
279
Completed
Stock
279
Unzoned
1,333
Unzoned
1,333
Work in
progress
1,460
QLD
6,414
VIC
3,109
QLD
6,414
VIC
3,109
Planning
approved
3,876
Planning
Zoned
approved
no planning
3,876
7,094
Zoned
no planning
7,094
* Does not include 52 lots under project management in WA.
Total Net Funds Employed (NFE)
By region
By product type
NZ
14%
NZ
14%
WA
1%
WA
1%
SA
5%
SA
5%
QLD
18%
QLD
18%
NSW
28%
NSW
28%
VIC
34%
VIC
34%
Apartments
14%
Apartments
14%
Housing
Housing
36%
36%
Total NFE up 13% YOY to $582m
Land
50%
Land
50%
AVJennings Limited – Annual Report 2023 11
Project Pipeline.1
At 30 June 2023
Region Communities
Remaining
no. of lots
Product
Type
FY24
FY25
FY26
FY27
FY28+
Argyle, Elderslie
92
Evergreen, Spring Farm (East Village)
351
S
E
L
A
W
H
T
U
O
S
W
E
N
D
N
A
L
S
N
E
E
U
Q
Arcadian Hills, Cobbitty
Rosella Rise, Warnervale
Prosper, Kogarah
Huntley
Calderwood
Mundamia
Macarthur
Glenrowan, Mackay
Arbor, Rochedale
Riverton, Jimboomba
Deebing Springs, Deebing Heights
Cadence, Ripley
Cadence 2, Ripley
Rocksberg, Caboolture
Kerry Rd, Beaudesert
Z
N
Ara Hills, Orewa
Lyndarum, Wollert
40
483
56
194
390
308
725
177
17
910
205
126
333
3,500
1,146
528
82
Lyndarum North, Wollert JV
1,409
I
A
R
O
T
C
V
I
Aspect, Mernda
Harvest Square, Brunswick West
Waterline Place, Williamstown
Clyde
Somerford, Clyde North
St Clair
Eyre, Penfield
Various
A
S
A
W
Other
Various
184
87
184
942
221
124
1,212
L,IH
52
16
APT, IH
L
L,IH
L,IH
IH
L,IH
APT
L,IH
L
L
APT
L
IH
L,IH
L
L,IH
L
L
L
L
L,IH
L,IH
L,IH
IH, APT
IH, APT
L
L,IH
L
Total lots under control
14,094
Pre-delivery phase
Development phase
Product type: L = Land, IH = Integrated Housing, APT = Apartments
1. Does not include pipeline lots dependent on planning outcomes.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023
12
Our Communities.
New South Wales
Rosella Rise, Warnervale
• The first land and development housing
settlements of the project occurred during
the year.
Cobbitty
• Arcadian Grove completed during FY23.
Argyle, Elderslie
• Civil works commenced for the final project
stages. Two-storey terrace product to be
brought to market shortly.
Prosper, Kogarah
• Groundbreaking ceremony held March 23
with excavation works underway.
Evergreen, Spring Farm
• Two Stellar Collection homes delivered
to customers.
Victoria
Waterline Place, Williamstown
• Construction of the last apartment
stage progressing well.
Somerford, Clyde North
• Project launched to market.
• Civil works underway for the first stage.
Harvest Square, Brunswick West
• All three apartment buildings achieved
topping out stage.
Lyndarum North, Wollert
• Delivered the first built-form housing
within the project.
Aspect, Mernda
• First stages completed with residents
moving in.
• Construction of five Stellar Collection
homes underway.
Rosella Rise, Warnervale
Aspect, Mernda, VIC (Home Render)
AVJennings Limited – Annual Report 2023 13
Arbor, Rochedale
Queensland
Riverton, Jimboomba
• Delivered the first two Stellar Collection
(Pro9) homes.
Cadence, Ripley
• Opened the project’s entry park,
Symphony, to the local community.
Arbor, Rochedale
• Settled the first stage of townhomes,
welcoming 21 families to the community.
Deebing Springs, Deebing Heights
• Commenced works on the project’s
first stages.
Eyre, Penfield (Brittlewood, Home Render)
South Australia
Eyre, Penfield
• No completed unsold stock available.
• Progressing planning approvals for
subsequent stages.
St Clair, St Clair
• Civil construction complete.
• Balance of site to be sold as
medium-density sites.
Murray Bridge / Goolwa North
• Project on track for FY24 completion.
Ara Hills, Orewa
New Zealand
Ara Hills, Orewa
• Civil construction complete for Stage 3a
(89 lots) with civil works commenced on
the next stage of 136 lots.
• Held our first community event with over
80 residents.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 14
Corporate Governance.
At AVJennings, we recognise that a good corporate governance framework is vital to support
a culture that values integrity, respect and ethical behaviour. Our approach to corporate
governance is based on a set of values and behaviours that underpin our day-to-day
activities, and are designed to promote transparency, fair dealing and the protection of
stakeholder interests, including our customers, our shareholders, our employees and our
communities. It includes aspiring to the highest standards of corporate governance, which
we see as fundamental to the long-term sustainability and on-going success of our business.
The AVJennings Board
The Board is responsible for AVJennings’
continued prosperity by setting its
strategic direction, approving and
monitoring implementation of strategic
plans and initiatives, assessing potential
risks and opportunities related to
AVJennings’ strategic objectives, directing
its affairs, setting its governance
framework and monitoring compliance
and 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 is available 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.
Cadence, Ripley, QLD
AVJennings Limited – Annual Report 2023 15
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
Committee and Audit Committee and
approved by the Board. AVJennings’ Risk
Appetite Statement is published in the
investor section of AVJennings’ website
www.avjennings.com.au. AVJennings also
has in place internal controls intended
to identify and manage significant
business risks, which includes the review of
development proposals by the Investments
Committee and management of their
ongoing performance.
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 2023 to review, assess
and set AVJennings’ strategic objectives
for the next 3 - 5 years.
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.
Empress Apartment, Waterline Place, Williamstown, VIC
Tenure
Board Committees
As at 30 June 2023, the tenure profile
of the Board was as follows:
= None
= 3 Directors
0-1 year
1 – 4 years
5 – 10 years = None
> 10 years
= 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.
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 five of the seven Non-Executive
Directors are independent.
To assist it with carrying out its
responsibilities, the Board has established
the following Committees:
•
•
•
•
•
Audit
Nominations
Remuneration
Investments
Risk (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 the AVJennings
website, www.avjennings.com.au.
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.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 16
Our Principal Risks and How We Address Them
Risk
Property Market Risk
Management Approach
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.
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 AVJennings’ land
bank, monitoring competitor activity and tailoring commercial
decisions (such as land acquisitions, volume of work-in-progress)
to the forecast commercial environment.
Regulatory Risk
AVJennings’ operations span five States in Australia and New
Zealand. Legislation and regulations governing its activities vary
in each jurisdiction in which it operates. 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
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 appropriate disciplines, are some of the measures used to
mitigate potential risks.
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.
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 where possible, entering into fixed or guaranteed
maximum price construction and supply contracts to mitigate
fluctuations in prices.
Operational Risk
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.
Construction Activity Related Risk
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.
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.
AVJennings has in place procedures 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. We are increasingly looking at
technology to help us monitor and minimise construction risks.
AVJennings Limited – Annual Report 2023 17
Risk
Environmental Risk
Management Approach
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.
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, as well as comprehensive due diligence prior to
acquiring development sites.
People and Culture Risk
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.
Development and maintenance of an inclusive group culture,
recognition and reward systems, employee assistance
programs, compensation and benefit arrangements, flexible
working arrangements, training and development are some of
the measures used to retain high calibre employees. These are
monitored through our engagement survey.
These are managed by the implementation of stringent
workplace health and safety practices, induction, 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 Risk
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 Risk
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 2023 18
AVJennings Risk Oversight & Governance Framework
Board
Audit Committee & Risk Committee
(100% independent)
CEO & Senior Leadership Team
Line Managers & Supervisors
Internal Audit
function
Employees
External Audit
function
Roles and Responsibilities
The Risk Committee is responsible for:
•
Reviewing the risk management
framework, advising the Board of any
changes required to the framework or
to the risk appetite set by the Board
• Overseeing implementation of the risk
•
•
management framework
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
• Monitoring work health & safety, the
Company’s treasury function and
insurance program
•
Review any material incident involving
fraud or a breakdown of the entity’s
risk controls and the “lessons learned”
•
• Considering reports from
management on new and emerging
risks and the adequacy of risk
controls and mitigation measures that
management has put in place to deal
with those risks
The Audit Committee is responsible for:
• Overseeing reviews of activities to
determine the effectiveness of risk
management and internal control
processes in consultation with the Risk
Committee
Review and monitor the effectiveness
of AVJennings’ internal financial
control systems and processes
•
Review and monitor the
appropriateness of applicable
accounting policies and methods,
particularly those involving significant
estimates and judgements, and
making recommendations to the
Board
• Overseeing the performance of the
Internal and External Auditor
Reviewing the Company’s full and half
year disclosures
Reviewing the Company’s tax
regime, governance and associated
compliance
Reviewing related party transactions
•
•
•
AVJennings Limited – Annual Report 2023 19
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.
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
Separation of the Risk Management
and Internal Audit roles is now in progress,
with each function to be overseen by
separate individuals.
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
mis-statements
•
The CEO and members of the Senior
Leadership 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.
• Operates independent of
management
Terrace living, Prosper, Kogarah, NSW (Artist’s Impression)
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 20
Your Community Developer.
AVJennings continues to be one of the most recognised and trusted names in quality,
affordable housing. Celebrating 91 years of creating vibrant and thriving communities, we
have been building the great Australian dream since 1932 and operating in New Zealand
for the past 16 years. Our reputation is 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.
Housing matters.
Sustainability matters.
We believe housing matters.
We believe sustainability matters.
Quality well considered design considers
the changing nature of how people live and
work and how they connect with the people
around them. A home is an extension of
someone’s personality, and we celebrate
those differences by delivering a variety of
homes to suit the people that will ultimately
call them home.
Community matters.
We believe that community matters.
Our homes are part of a community,
which is why at AVJennings, we make sure
our communities are designed to bring
neighbours together by creating parklands,
play spaces, pathways, picnic areas and
even cycling tracks for our residents to
enjoy, meet and interact with each other.
By facilitating events for our residents
including meet and greet opportunities
with our Corporate Ambassadors and each
other, barbeques and games, we provide
opportunities for them to meet and get to
know others in their community.
A sustainable business model enables
us to manage our 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.
By comprehensively understanding and
responding to the issues and opportunities
that are important to our stakeholders and
material to our business, we can improve
on, or implement, new measures that will
promote growth, create positive impact
and add value in the long term.
With this objective in mind, we carried out
an Environmental, Social and Governance
(ESG) assessment to identify key ESG
risks and opportunities 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, or that could impact on, our
business or the residential development
industry more broadly. This was further
complemented by a review of ESG
investment trends that may impact our
business risk exposure.
The ESG assessment identified the key ESG
risks and opportunities which could impact
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.
•
•
•
•
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), creation of
employment opportunities, dividend
payments to shareholders, affordable
housing and customer experience.
Environment
Ecological impact, climate impacts,
waste, energy and emissions
management.
As we embark on the path to further
improvements to ensure the sustainability
of AVJennings, our next step will be to
prioritise and respond to the ESG risks and
opportunities that are most material to our
business and our stakeholders.
AVJennings Limited – Annual Report 2023
21
Below we provide a snapshot of our sustainability practices for the FY23 period
Residents community gathering, Arbor, Rochedale, QLD
Environmental
sustainability
How these objectives
are implemented
Residential development activities
inherently impact on the environment
however, our goal is to undertake
responsible development and minimise
impact, whilst providing much-needed
housing for Australians and New
Zealanders and leaving communities better
off. 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.
• Continue to look at new technology
that supports improved environmental
outcomes.
Our Communities
Focussing on connectivity, we seek out
development opportunities that make
connection to a broader community easier,
helping to minimise the environmental
impact of the people that call our
communities home.
Our greenfield projects are located within
government designated urban growth
areas, close to major transport corridors
where infrastructure already exists or is
being built, to encourage use of public
transport where possible.
Designing for the walkable catchment is a
core design principle, focused on delivering
high-quality, usable amenity within our
projects. 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. Our masterplans incorporate
these recreational areas into our projects.
Our apartment and medium-density
projects, such as Harvest Square in
Brunswick West and Waterline Place in
Williamstown (VIC) 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.
Our large greenfield project, Arcadian
Hills, Cobbitty (NSW), whilst being within
one kilometre of a proposed rail transport
corridor, is also within driving distance of
neighbouring Camden and Oran Park,
which offer a diverse range of quality
services and amenities including shopping
precincts, community centres, schools,
hospitals, cafes and community hubs.
The Central Coast of New South Wales
continues to be one of the country’s most
popular places to build a future and at
our Rosella Rise project, we are building a
community in the traditional township of
Warnervale with significant infrastructure
already in place from schools, shopping
to health and public transport. With
its own parks, pathways and even an
amphitheatre, everything has been
designed to bring neighbours together,
so families can thrive and enjoy an active
lifestyle.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 22
Cycling/Walking Track,
Riverton, Jimboomba, QLD
Nestled close to the heart of the
Jimboomba town centre, our Riverton
community in Jimboomba (QLD) benefits
from all the conveniences of modern living
at our residents’ doorstep with cafes,
supermarkets and even top-notch medical
care only minutes away. Two new parks
including community facilities of shelters,
play equipment and kick around space
were recently added to the project.
At our Somerford, Clyde North (VIC) project
which commenced development in FY23,
close to one hectare of land has been set
aside for a public park.
Efficient design
Our planning outcomes carefully balance
density with community outcomes.
Increases in dwelling densities reduce 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.
We understand the increasing cost of
energy is a growing challenge for our
residents and aim to integrate energy
efficiency considerations into the design
and construction of AVJennings built-
form housing. Our built-form products
are assessed against the Nationwide
House Energy Rating Scheme (NatHERS)
to achieve, or exceed, 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
land lot 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 that
maximise solar outcomes for all homes.
Recent design initiatives
Recognising the importance of achieving
higher quality, more durable and
better insulated homes to reduce our
carbon footprint, AVJennings is the first
major Australian developer to utilise
new technology to deliver improved
sustainability outcomes in homes via a
prefabricated composite walling system.
The walling system is manufactured
by Pro9 and after multiple successful
pilots and positive customer feedback,
AVJennings recently entered into a 50/50
Joint Venture with Pro9 Global (Pro9) to
utilise Pro9s technology to manufacture
the highly durable and energy efficient
Pro9 walling systems in Australia.
Pro9’s walls combine a strong, galvanised
steel frame with a dense foam insulation
core that reduces energy usage and thus,
energy costs for a home’s occupants as
well as increasing thermal comfort. The
NatHERS energy ratings achieved utilising
the Pro9 walls are considerably better
than those typically achieved in homes
constructed with traditional stick-built
methods, where 6 stars is the current
standard.
AVJennings Limited – Annual Report 2023 23
The Joint Venture with Pro9 will give
AVJennings access both to this
transformative product as well as
the benefit of financial exposure to a
growing business that addresses the
growing challenges facing the Australian
construction industry.
Harvest Square,
Brunswick West (VIC)
Harvest Square, Brunswick West will
consist of 79 private dwellings including
townhouses and apartments, 111
apartments over two buildings dedicated
to social housing and eight community
housing dwellings specifically for Women’s
Housing. The project is well underway with
all three apartment buildings topping out.
Construction of the first social building is
anticipated to be completed early 2024.
At Harvest Square, buildings have been
designed to meet 5-Star Green Star
(independently certified by Green Building
Council Australia) and an average of
7-star NatHERS rating. To achieve these
standards, the design contemplates a
holistic approach to design, construction
and ongoing operation. Key performance
criteria include indoor environment
quality, energy consumption, transport,
water, materials selection, land use and
ecology (reuse of previously developed
land, remediation, improving ecological
value of site and reducing the heat island
effect), emissions (including stormwater,
light pollution, refrigerant impact and
microbial control) and innovation practices.
What it will mean for our residents is
energy consumption reduction, emissions
reduction and an increase in liveability
and sustainability. Achieving 5-Star Green
Star is considered Australian excellence
and only a small number of residential
housing projects have achieved this
benchmark in Australia.
Energy
All homes constructed by AVJennings
include energy efficient appliances and
either have solar PV panels installed or
provision for panel installation on roofs.
Solar panels are now a standard inclusion
for AVJennings delivered housing in
New South Wales.
To further reduce the carbon footprint of
our dwellings, we are beginning a shift to
all-electric homes. All future townhouses
at Waterline Place in Williamstown (VIC)
and at Somerford, Clyde North (VIC) will
have all electric appliances. Townhouses
in Waterline Place will also have provision
for solar panels on the roofs and Merchant
Apartments (also at Waterline Place)
will have future-proofing infrastructure
allowing solar panel installation on the
roof of the building. At Harvest Square,
all dwellings will have solar panels.
Materials
Combustible cladding on apartment
and office buildings has been a focus of
building authorities across Australia. In our
apartment projects, all external materials
are assessed to ensure that they comply
with the regulations associated with
combustible cladding. At Waterline Place
in Williamstown (VIC), all the apartment
buildings have external sprinkler systems
on balconies to further help mitigate
against the risk of external (balcony) fires
on these buildings.
All materials used in our built-form
products conform to applicable Australian
standards. Our suppliers, particularly trade
suppliers (such as plumbers, electricians
etc), are required to certify that all
materials provided for installation in built-
form product meet required specifications,
comply with applicable Australian
Standards, the National Construction
Code of Australia and have been installed
correctly.
Dwellings built with Pro9 walls can readily
achieve the forthcoming Australian
National Construction Code (NCC)
standard of a 7-star NatHERS energy rating
without further modification. Combining
the Pro9 walls with factory installed,
double-glazed windows results in an even
higher rating of a minimum of 8 stars out
of 10, with a 9.4 rating already obtained
on an AVJennings home in Queensland.
In addition to energy efficiency, the Pro9
walls cannot rot, warp or be eaten by
termites, and are highly fire-resistant due
to the construction materials used.
Once manufactured, the Pro9 walls are
able to be delivered to site and erected
in a few days bringing considerable
time savings to achieving lock-up stage,
increased certainty of delivery and higher
quality to the home-building process.
Once the Australian manufacturing facility
is established, the Joint Venture will be
capable of producing over 1,000 homes
annually on a single shift. Multiple
shifts will enable production capacity
to be further increased.
Called the Stellar Collection, five
AVJennings Pro9 homes are planned for
construction at Aspect in Mernda (VIC),
12 at Lyndarum North at Wollert (VIC) and
12 in Argyle at Elderslie (NSW). A pipeline
of Stellar Collection homes is planned for
calendar 2024 in AVJennings communities
across the country.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 24
Riverside Esplanade Park,
Riverton, Jimboomba, QLD
Water
In the areas in which we operate, we
are seeing on average an increase in
temperature and drier landscapes.
Accordingly, 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 is
undertaken to maintain or improve
downstream water quality through water
sensitive urban design. Wetlands, rain
gardens and stormwater detention basins
are typically constructed as part of our
civil and landscape works in a variety of
combinations within 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.
Our goal 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 and Standards (WELS)
rated appliances specified for installation
at Harvest Square, Brunswick West (VIC).
At our Merchant Apartments in Waterline
Place, Williamstown (VIC) an 80,000 litre
detention tank is being constructed in the
basement for rainwater harvesting and
reuse. At Somerford in Clyde North (VIC),
all lots will have provision for connection
to recycled water. Rainwater recycling for
bathroom and laundry use is standard
across our built-form product in NSW.
Waste
We are constantly looking at ways to
reduce and recycle waste generated
through development. Civil works on our
sites are a source of waste and our civil
works contractors use heavy equipment
to move large amounts of soil and rock
across sites to achieve development and
landscape levels. We work with our civil
contractors to reduce vehicle movement
across sites and where possible, reuse
excess soil and rocks elsewhere within the
project as fill or for landscaping.
In Queensland, rumble entrance points
to civil works sites mitigate the spread of
sediment into local waterways. At Riverton
in Jimboomba (QLD), recycled timber from
the stables of the original homestead were
reused in landscaping and trees removed
in some developments have been mulched
onsite for use in revegetation works.
At Somerford in Clyde North (VIC),
approximately 10 tonnes of siltstone
rock will be crushed and used as fill in
suitable areas.
At our Aspect, Mernda (VIC) project, we
are planning to install recycled plastic
park benches in lieu of traditional steel
and timber seating.
Contaminants and hazardous waste
found on site are disposed of in line with
applicable government regulations.
AVJennings Limited – Annual Report 2023 25
Protecting biodiversity
We understand the importance flora and
fauna biodiversity plays in sustaining
healthy ecosystems and in supporting
the health and wellbeing of communities.
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. Mitigating the impact
of development activities is a key focus
from the planning outset.
Mitigation measures include revegetation,
relocation, allocation of land for
woodlands, provision of offset sites,
and open spaces and reserves. Habitat
preservation of significant fauna and
flora identified on our sites, using the
principles of Water Sensitive Urban Design
to manage rainwater runoff and protect
wetlands habitat is also utilised.
At Riverton in Jimboomba (QLD), the
AVJennings team worked with the Federal
Government to plant 15,000 new plants
in a revegetation area with 7,500 of these
grown from seed harvested on site from
Irbyana Melaleuca plants, an endangered
species.
Our approach to landscaping includes
many native species that are endemic to
the area of the development, requiring
less water and supporting local wildlife.
At Aspect in Mernda (VIC), significant
specimens of existing native trees within
the project have been retained to provide
quality and aged habitat for native
wildlife. Topsoil, tree trunks and mulch from
excavation and tree removal activities on
site are being reused as future habitat
within tree reserves on site.
At Somerford in Clyde North (VIC), an area
of approximately one hectare of existing
gravel road will be converted into a tree
reserve and some existing trees within the
development will be retained for habitat
protection. A rooftop organic vegetable
community garden is being planned for our
Merchant Apartments at Waterline Place,
Williamstown (VIC).
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.
All AVJennings’ Queensland developments
have implemented exclusion zones around
bushfire sources including requirements
for adjacent housing to comply with ember
proofing in line with predicted bushfire
attack levels.
Climate resilience
AVJennings identifies and assesses
risks posed by climate during the pre-
acquisition phase by undertaking due
diligence investigations, obtaining advice
from relevant consultants and where
possible negotiating appropriate contract
conditions to accommodate unquantifiable
climate risks.
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 that adapt to changing conditions.
All our developments are constructed in
accordance with authority requirements
and expert recommendations to mitigate
the impact of climate change. Where
developments are constructed in proximity
to a flood plain or area of inundation,
housing is constructed with freeboard
to a minimum of 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. At Riverton in Jimboomba (QLD),
our latest stages of development have
been lifted two meters higher than Q100
flood level prediction in the area, to comply
with recent changes imposed by Council.
Extreme weather events in QLD, NSW
and NZ with prolonged rain and flooding
in early calendar 2023 did not affect
AVJennings projects in those regions.
Developments located on the urban
fringe, or adjacent to areas of grassland
or bushland, are assessed against the
potential threat of fire with relevant
controls embedded in urban design and
housing design standards to minimise risk.
At Aspect in Mernda (VIC), a 19m buffer
has been created around the entire site
to reduce the bushfire attack level. This
was achieved by creating a 16-metre-
wide road along the interface of Council’s
future Quarry Hills Regional Park reserve
and minimum 3-meter front offsets for
house builds in these interface lots. We
are continuing to look at new technology
to fireproof our homes and ensure all our
communities can access insurance.
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. For
example, at our Deebing Springs (QLD)
project, a very strong relationship has
been developed with the Yuggera Ugarapul
People (YUP) which proved instrumental
in allowing the Company to recommence
development operations on the project
with consideration given to cultural
heritage of the area.
Reconciliation Action Plan
An AVJennings Reconciliation Action Plan,
currently in development, will provide
guiding principles as to how we more
proactively engage with First Nations
peoples across Australia. The next phase
of the Reconciliation Action Plan will
commence in calendar 2024 and will
include consultation with a range of
significant stakeholders. Guidelines are
also being developed for engagement with
New Zealand’s Maori people.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 26
Creating and Supporting
Communities.
Our valued customers
Since 1932, we have been dedicated to
making the dream of home ownership a
reality for our customers. It’s a legacy we
cherish and are proud to continue.
•
Symphony Park opening, Cadence, Ripley QLD
Our communities
We understand that housing and
community is a fundamental part of the
human spirit; it’s the desire to belong
and have a place to call home. For more
than 90 years, we have been dedicated
to helping our customers build a brighter
future by creating exceptional residential
communities that foster a strong sense of
connection and ownership.
Our communities are woven into
Australia’s and New Zealand’s urban
fabric. We believe that well-connected
communities, where neighbours can get
to know and support one another, make
for better places to live. That’s why we
prioritise building infrastructure and
social spaces that seamlessly integrate
with neighbouring communities and the
surrounding landscapes.
We take pride in designing master-planned
communities that offer convenience
and cater to the needs of our residents.
Important amenities such as shopping,
schools and medical facilities are close by
to service our residents. Our projects are
strategically located near major transport
hubs and train stations, providing flexibility
and encouraging sustainable options in
public transport and reducing the reliance
on cars.
We respect the natural environment
and aim to leave a positive impact. Our
communities feature thoughtfully designed
parks, inviting ovals, welcoming community
hubs, and excellent sporting facilities. We
believe in creating spaces that foster a
sense of unity, where neighbours can come
together, enjoy the outdoors, and make
memories.
To that end, the loyalty and satisfaction
from our customers is the impetus for us
to continuously strive to improve. Our
customers consider us ‘professional,
affordable and trustworthy,’ as indicated
by our brand research. We actively
seek input through our customer survey
program, assessing satisfaction levels as
customers embark on their homebuying
journey with us.
According to our research, 90% of our
customers expressed satisfaction with
their home and more than 90% stated
their home provided excellent value for
money and were satisfied with the home’s
quality. A concerted focus is placed on
attaining a world class level of service for
our customers. As part of this commitment,
all our departments are dedicated to
reviewing and enhancing the customer
journey. From the initial purchase to the
settlement of their properties and the
moment they become members of our
communities, we strive to ensure a great
experience for our purchasers.
Some of our recent enhancements
designed to benefit the customer
experience include:
•
The implementation and rollout of
our National Quality Assurance &
Handover Process. This establishes
well-defined timelines for quality
assurance coordination between
departments, ensuring a seamless
transition into the settlement process.
This implementation introduces a
structured framework for conducting
thorough inspections and maintaining
comprehensive documentation,
guaranteeing our homes meet the
highest standards before being
delivered to our valued customers.
• We have developed an extensive
Quality Assurance checklist for our
homes, comprising over 300 questions
to ensure our homes are thoroughly
inspected and tested before
considered complete. The checklist
standardises our inspection approach
throughout the business and
establishes the AVJennings benchmark
for quality in our homes.
The Customer Inspection Report
provides our customers with a detailed
overview of their home including
warranty details, product information,
user guides and maintenance tips
for the home’s longevity. The report
is completed during the customer’s
home presentation with any identified
issues documented and photographed
for AVJennings to close out prior
to settlement taking place. Upon
completion, a signed electronic copy
of the report is issued to the customer,
serving as a testament to the
impeccable condition of their home.
Some of our customer feedback
in the past year:
“ excellent, friendly, knowledgeable and
extremely helpful.” Chris, Arcadian Hills
“ professional and an excellent customer
service.” Liz, Evergreen
“ always willing to place client’s
requirements first and ensure they’re
assisted.” Christie, Evergreen
We offer multiple avenues for buyers to
contact us, through virtual interactions or
face-to-face engagement; we are available
to speak with buyers and the broader
community at our Sales and Information
Centres, or via our website, live chat, social
media or community events and family fun
days. As purchasers undertake more than
90% of their property searches online,
we ensure that our digital platforms offer
important buying guides, and how-to
information as well as comprehensive
details of our properties and projects.
Digital publications where buyers can
engage and customize the information to
suit their needs, is readily available and our
interactive masterplan software and AR/
VR facilities provide an immersive buying
opportunity for people seeking a more
innovative approach.
AVJennings Limited – Annual Report 2023 27
Laura Geitz, AVJennings Ambassador
Turnkey home, QLD
Inspiring community
connections
With the challenges of COVID-19 all but
behind us, AVJennings customers and
residents were able to take full advantage
of some great events and activities across
the year. The opening of Symphony Park
at Cadence, Ripley (QLD) gave residents
and friends a chance to enjoy some great
entertainment while taking in the glorious
springtime sunshine. At Rosella Rise,
Warnervale (NSW) our very first purchasers
were able to mingle with their neighbours
and our team, in a friendly meet and greet
soiree, while in Victoria the very engaged
residents of Lyndarum North experienced
a once in a lifetime chance to meet and
play cricket with their hero, AVJennings
Ambassador, Steve Waugh, AO. At Ara Hills,
Orewa (NZ) the AVJ team and suppliers put
on a friendly BBQ to welcome newcomers
to the area. These are only a few of
the numerous social events where our
communities were able to come together
and form lasting connections.
We strive to not only create exceptional
living spaces, we want to make a positive
difference in the broader community
through various activities, grants, and
partnerships. Our valued company
ambassadors, Laura Geitz and Steve
Waugh AO, share these core values and
actively contribute to their respective
communities. Laura, the former Australian
‘Diamonds’ netball captain, led her country
with distinction and continues to make a
meaningful impact by promoting a healthy
and active lifestyle.
Steve, the former Australian cricket
captain, dedicates himself to philanthropic
endeavours through the Steve Waugh
Foundation (SWF), providing crucial
support and equipment to families of
children and young people suffering from
rare diseases. As the inaugural partner
of the SWF, AVJennings has raised over
$1.2 million for the Foundation through
various fundraising initiatives. One notable
endeavour involves the construction of
The Renee series of homes built in an
AVJennings community. Made possible
with generous support of our builders
and suppliers, completed homes in the
Renee series are sold and profits donated
directly to the Steve Waugh Foundation.
Last year, we proudly built the Renee 6 at
our Riverton community in Jimboomba
(QLD) and we are gearing up for Renee 7
in calendar year 2024 at our new Aspect
community in Mernda (VIC).
For the second consecutive year,
AVJennings was honoured to assist the
Humpty Dumpty Foundation through
the Balmoral Burn initiative. The Humpty
Dumpty Foundation plays a crucial role
in providing hospitals and health services
with vital life-sustaining equipment that
may otherwise be challenging to obtain.
This year, four dedicated AVJennings team
members took on the challenging Burn,
sprinting up a steep hill of 420 meters
to raise funds for this noble cause. The
presence of friends and family cheering
them on made the event even more
special. Through the donations made by
AVJennings, staff were able to visit and see
first-hand the benefits to the patients such
as the donation of a RAD-7 Pulse Oximeter
with Paediatric Sensor to the Sunshine
Children’s Ward of Ipswich Hospital.
Our support for the Queensland Firebirds
in the Super Netball League and St Kilda
Football Club’s AFL and AFLW teams has
provided unforgettable experiences for
our customers, staff and suppliers over
the years. As we turn our focus to grass
roots programs, we are realigning our
partnerships at a local level to ensure we
make a meaningful and genuine impact
in our communities. We are expanding our
support to local clubs and organisations,
empowering them to grow and thrive.
Through our grants programs, we have
offered assistance and donated funds
to schools, learning centres, sports and
recreational facilities, as well as essential
services and sustainability-based
enterprises. Defenders for Hope, a charity
run by volunteers to support those affected
by family violence and homelessness,
the Jimboomba Cricket Club and Lalor
Landcare were just a few of the many
organisations receiving grants across
the year.
The success of our events and partnerships
is made possible by the dedication of our
team members, who selflessly volunteer
their time in various fundraising and
customer-based activities. They truly
embody the essence of community spirit.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 28
Topping out ceremony, Harvest Square, Brunswick West, VIC
Top out stage, Harvest Square,
Brunswick West, VIC
Housing affordability
We recognise that rising house prices in
Australia and New Zealand is of increasing
concern for many potential home buyers,
particularly first home buyers. Every
person deserves access to safe, quality
affordable housing. Affordable housing
is vital to protect the liveability of our
cities. As a leading developer of master
planned communities, we are committed
to supporting this need by offering
affordable, 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 significant percentage
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.
First Home
Buyers
20%
Subsequent
Home Buyers
30%
Investors
38%
Builders/
Developers
12%
FY23 contract signings by customer type
Social housing
Supporting more than 700 jobs during
construction, development of our Harvest
Square, Brunswick West (VIC) project
is progressing, with three apartment
buildings having reached top-out stage.
Brunswick West is located within
6 kilometres of the Melbourne city centre
and Harvest Square will incorporate
approximately 3,200 square meters of
publicly accessible open, green spaces
with an 18m wide green access link
forming a key part of the design and
providing linkage to and from Albion Street
commercial / retail facilities to Dunstan
Reserve. The project is a partnership with
the State Government of Victoria that will
deliver 111 social housing dwellings and
eight dwellings specifically for community
housing provider Women’s Housing Limited.
At least 5 per cent of the new social
housing homes will be easy to access for
residents with disabilities. This includes
drop-off areas, paths, lifts and car parking.
Inside the homes, kitchens, bathrooms and
storage will also be very accessible.
In addition, the project will incorporate
a private development comprising 29
townhouses and a 50-dwelling apartment
block, adding to Victoria’s much needed
housing supply.
AVJennings Limited – Annual Report 2023 29
Our people
We are a business of people, for people
and by working together will achieve
great outcomes.
AVJennings knows what it takes to build
a community, and our people are key to
making that happen. Our values are core to
our culture. They are the basis for success,
the guiding standards for how we run both
as teams and as an organisation – and
they include always acting ethically.
We call these values “ASPIRE”.
We aim to reflect these values in everything
we do, including through the policies and
procedures we adopt as a business.
Our commitment to learning and
development continues to evolve and
grow as we launch the AVJennings
Learning Hub, our learning management
system. We have also prioritised educating
our workforce on the risks posed by
phishing, software downloads and system
security with 100% of our employees
participating in comprehensive cyber
security awareness training.
Our Executive Authentic Confidence (EAC)
Program was introduced in 2022 for the
women of AVJennings. In 2023 we have
expanded it to all interested employees
across all roles within Australia and
New Zealand. The goal of this program is
to embrace and enhance the incredible
potential in our organisation. We believe if
these talents and the diversity of thought
are deeply nurtured, we can make real,
positive change towards building an
exceptional organisation for the future.
We started with a pilot of eight women
to test the program and didn’t look back
from there. We saw some really interesting
statistical changes based on surveys taken
at the start and end of the program –
participants saw stress levels drop by 27%,
happiness levels go up by 13% and energy
levels rise by 8%.
In March 2023, we were all together at the
AVJ Conference - Change Beyond 2023!
Following on from this and the theme of
embracing change, we held two in person
events with Caroline Brewin, EAC’s founder,
joining our CEO Phil Kearns in early
May 2023.
Our success also requires maintaining
workforce continuity and developing a
pipeline of talent for key positions across
the business. During the past year we
have made several internal appointments
and promotions. Our focus now will be
completing a talent assessment for all
functions and then begin succession
planning for critical roles and continue to
build leadership skills through our learning
and leadership development programs.
ACCOUNTABILITY
We own our own 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 we 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.
A
S
SP
I
R
E
“Change Beyond 2023” conference: staff site tour UOW,
Sustainability Building Research Centre, Wollongong, NSW
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 30
Engagement
No organisation can be successful unless
its people feel motivated and engaged.
Our employee engagement survey
measures satisfaction levels across
various areas such as overall employee
engagement, teams, safety, health and
wellbeing, working environment and career
development and leadership.
Our 2023 survey was conducted during
May 2023 and we scored a 4.07 (out of a
possible 5). This is an improvement from
4.02 in 2021 (and 3.90 in 2020). Categories
with a notable improvement in 2023 (+0.12
or higher) were across career development,
leadership, values and line manager.
Key engagement metrics
Engagement 4.07
at AVJennings 90%
Proud to work
Our parental leave policy continues to see
100% of employees accessing parental
leave returning to work. We continue to
review our flexible working arrangements to
ensure that it works for both the business
and all our employees.
We also recognise our people through our
Service Awards program (retention), and
our annual employee awards including the
prestigious CEO Award.
Health, safety and
wellbeing
Diversity, equity
and inclusion
The health and wellbeing of our
employees remains a top priority.
We recognise that a talented and diverse
workforce is a key competitive advantage.
Living our value of Safety, we are
committed to the health, safety and
wellbeing 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 Workplace,
Health and Safety management and to
fulfil our legal obligations with regard to
health and safety at all times.
To ensure support for our site-based
teams, formal site inspections occur
on all AVJennings controlled sites and
during FY23, over 1,000 inspections were
conducted.
AVJennings is committed to identifying and
addressing psychosocial hazards within
the business. To do this, we partnered
with People at Work releasing a national
survey, so we could better understand the
psychosocial hazards and factors that
influence employee health and safety.
The overall level of risk assessed from
this survey was ‘minimal concern’ which
is “good, but monitor”. To do this, the
results from the People at Work survey
will be used to start conversations so we
can understand where we have issues to
solve and we will identify strategies we
can implement to ensure we maintain a
workplace free from psychological harm.
Our Employee Assistance Program
(EAP) continues to be there to support
our employees and their families. This
complements our AVJennings Wellness
Hub, which 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.
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.
We have a question in our employee
engagement survey that measures their
sense of inclusion within the business and
the 2023 survey results are that 8 out of 10
employees feel there is a commitment to
diversity and inclusion.
Following the completion of our 2023
Workplace Gender Equality (WGEA)
Report, we will continue to take steps to
either reduce or eliminate known pay
equity disparities. We are committed to
monitoring this data and taking necessary
action as needed.
In FY23, we set a goal to strengthen the
level of gender diversity in management
positions. Female representation in senior
management has grown and in our key
state operational roles the gender balance
in now 50/50. As of 30 June 2023, 49%
of our workforce was female.
AVJennings Limited – Annual Report 2023 31
KMP composition
(includes MD/CEO)
5 total members
40% female
Board composition
(includes MD/CEO)
8 total members
12.5% female
We also engaged with our suppliers to
identify and address risks of unfair labour
practices within their businesses and
supply chains and in FY23 published
our third 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 and Supplier Code of
Conduct have been put in place, which
have been communicated to all major
AVJennings suppliers. The code sets out
AVJennings’ expectations of its suppliers
in the areas of Labour and Human Rights,
Workplace Health and Safety, Governance,
Ethical Behaviour, Conflicts of Interest and
Environmental Sustainability.
Our suppliers
Our shareholders
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.
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,
Chief Operating Officer, Chief Financial
Officer and Company Secretary engage
regularly with institutional investors,
research analysts and individual investors
through briefings on a scheduled (release
of half and full year results), and ad-hoc
basis (at other times during the year)
and the Chairman and all Directors are
available to engage with shareholders at
General Meetings. These interactions allow
AVJennings to articulate its strategy and
to also understand our investors’ views on
our strategy, financial performance and
governance.
In August 2022, we held our FY22 results
announcement presentation via a
webinar conferencing facility, which gave
shareholders an opportunity to participate
virtually and ask questions via the webinar
portal. Our Annual General Meeting was
held in person in November 2022 for the
first time since the lifting of COVID-19
restrictions, providing an opportunity for
shareholders to meet and engage with the
entire Board of Directors in person if they
so wished.
Dividends
Since 2014, we have paid our shareholders
approximately $118 million in dividends,
returning that portion of profits back
into the community. With the benefit of
franking, this amounts to approximately
$168 million in fully franked dividends.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 32
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 2023. 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
Non-Executive Chairman
RJ Rowley
Non-Executive Deputy Chairman
P Kearns
Managing Director and Chief Executive Officer
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
PRINCIPAL ACTIVITY
The principal activity of the Group during the year was
Residential Development.
OPERATING AND FINANCIAL REVIEW
FINANCIAL RESULTS
AVJennings’ Profit Before Tax (PBT) of $30.8m for the year ended
30 June 2023, is up 72% on the prior year (FY22 PBT: $17.9m). Profit
After Tax was $21.3m (FY22: $13.1m).
Significant growth was achieved in lot settlements with 732 lots
settled during the year compared to 608 in the prior year. This
represents a 20% increase, primarily driven by strong demand
for AVJennings’ land as the impact of the previous year’s sales,
driven by HomeBuilder stimulus, settle.
Gross margins showed meaningful improvement, rising 2.9
percentage points to 31.7% (FY22: 28.8%) and driven by strongly
performing land projects. This underscores AVJennings’ ability
to manage costs effectively and optimise pricing through
uncertain periods.
Recognising the impact of project delays and cost increases on
some projects, provisions of $4.5m were made during the year.
This proactive measure addresses likely future risks associated
with project execution and reinforces our commitment to
responsible financial management.
Macroeconomic conditions, including the impact of 12 interest
rate rises in Australia since May 2022, and general uncertainty
around home builders for land purchases have collectively
contributed to reduced buyer confidence and market
uncertainty. As a result, contract signings experienced a decline
with 348 signings during the year (FY22: 853). Despite these
challenges, 321 lots are presold, at a value of $130m, to be
carried into FY24. This, along with enquiry rates in line with our
longer-term averages, indicate an underlying level of demand,
although tempered by external factors in the short-term.
AVJennings’ net operating cashflow in FY23 of ($41m) was down
$74m on FY22, driven by a significant increase in production
activities across apartments, built-form housing and large land
projects in early stages of development.
Net operating cashflows included $42m of investment related to
restocking activities during the year. Net financing cash inflows
were $53m as more debt was drawn down to fund production
and acquisition activities.
A conservative approach to debt management was maintained
with gearing levels remaining at the lower end of the range at
18.2%. A share buyback program was initiated during the year,
resulting in the repurchase of 77,271 shares. However, due to
macroeconomic headwinds and forward market uncertainty,
the share buyback was suspended in June 2023.
A final dividend was not declared in FY23 also in response
to forward market uncertainty resulting in a total dividend
declared, fully franked, in respect to FY23 of 1.10 cents per share.
The DRP will remain suspended. Collectively, these decisions
demonstrate AVJennings’ commitment to financial stability and
risk mitigation in the current environment.
OPERATIONS OVERVIEW
During FY23, AVJennings successfully navigated a dynamic
landscape marked by significant weather events and shifting
market conditions. The key points that shaped our operations
and strategies throughout the year are highlighted below.
The first half of FY23 was affected by significant wet weather on
the east coast, leading to construction delays and disruptions.
Additionally, extreme weather events in New Zealand throughout
the year further impacted construction programs and overall
project timelines. Our teams worked diligently throughout to
mitigate the effects of weather-related impacts and to ensure
delivery of our projects. Weather conditions improved markedly
in the second half of FY23.
Recognising the slowdown in demand driven by macroeconomic
factors, we have capitalised on the ability to slow production
to balance capital management, market supply and purchaser
demand. Our focus remains on being ‘shovel ready’ to swiftly
respond to the market recovery when it occurs and capitalise on
future opportunities.
Directors’ Report.AVJennings Limited – Annual Report 2023 33
OPERATING AND FINANCIAL REVIEW (CONTINUED)
OPERATIONS OVERVIEW (continued)
Supply chain shortages that shaped the last 18 months have
mostly abated and the rate of cost escalation has moderated.
This has allowed us to manage our costs, and the impact on
project budgets, more effectively. While supply chains have
improved, labour shortages and wage pressures were a notable
challenge during FY23, particularly for built-form product. These
constraints have required us to adapt our delivery approach as
we do not see labour costs abating in the short-term.
An encouraging, more recent shift in demand towards built-form
product presents a strategic opportunity for us. Our internal
design and construction teams enable us to rapidly adjust
delivery of our project pipeline to meet these changing customer
demands.
In response to recent supply chain and labour challenges, as well
as the growing demand for built-form housing, we invested in
a joint venture with Pro9 Global (Pro9) during the year. Pro9 is
a manufacturer of a prefabricated walling system that delivers
outstanding sustainability benefits to both customers and our
production programs. The 9.4 NatHERS energy ratings recently
achieved on an AVJennings home in Queensland with Pro9
product is testament to the superior sustainability outcomes for
our customers. The investment in Pro9 will see its manufacturing
capability brought onshore, allowing greater integration of
the Pro9 solution into our built-form offering and ultimately,
providing alternative solutions to labour shortages and the ability
to quickly respond to changes in demand.
FY23 lot settlements were primarily comprised of land
settlements with key FY23 settlement contributors including
Lyndarum North (VIC), Ara Hills (NZ), Riverton (QLD), Cadence
(QLD) and Aspect (VIC). The breadth of these settlements
underscores our commitment to delivering sustainable growth
across a diverse portfolio.
The Company retains a very strong, and geographically
diversified, pipeline as the basis for future growth with 14,094
lots under control. With 1,510 lots currently under development,
we remain focused on delivering high-quality developments
that meet our customers’ expectations. Approximately 62% of the
lots under development are intended to be held for built-form
housing development in the near term. As at the end of FY23,
we have 72 unsold completed lots for sale.
In the first half of FY23, we made strategic acquisitions to
enhance our portfolio including:
-
Beaudesert (QLD) – 1,146 land lots
- Macarthur (NSW) – 725 apartments
- Mundamia PDA (NSW) – 308 land lots
-
South Ripley PDA (QLD) – 400 land lots
In light of market uncertainty and sustained price expectations,
we have more recently scaled back our acquisition activities until
buying conditions improve and as we prioritise prudent capital
management.
Planning challenges continue to persist across a number of
projects, leading to protracted planning outcomes on many
projects. While these conditions have posed obstacles, we
continue to work collaboratively with the necessary authorities
to obtain successful planning outcomes.
OUTLOOK
As we navigate through the evolving landscape of the residential
property market, we continue to see several macroeconomic
opportunities that bode well for our growth prospects once
consumer confidence improves. Simultaneously, we are mindful
of the near-term risks that demand our attention and strategic
planning.
The substantially heightened inflow of immigration, currently
at its highest since 2008, presents a significant opportunity for
AVJennings. As the population increases, so too does demand
for housing and at a time when supply is well below long-
term levels. The National Housing Finance and Investment
Corporation (NHFIC) forecasts this to worsen with a shortfall of
175,000 homes by 2027. This limited availability of housing across
land, built-form housing and apartments continues to drive
demand in the market.
Although demand is currently tempered, we expect an increase
in consumer confidence to translate through to increased
demand once the macroeconomic environment stabilises. The
recent growth in house prices in the established market usually
has the effect of pushing potential home buyers into the market.
As a residential property developer with a diversified product
offering, AVJennings is uniquely positioned to capitalise on this
trend by quickly responding to changes in market sentiment and
increasing supply to market in line with demand.
While we believe we are near the top of the interest rate cycle,
the possibility of further increases in interest rates and rising
costs of living both pose a risk to the housing market. These risks
typically deter potential borrowers, as seen in falling conversion
rates and a relatively low level of pre-sales carried in to FY24.
While enquiry levels are down on last year, they are consistent
with longer-term levels with green shoots of customer demand
beginning to appear. We expect muted sales levels to continue
until there is greater certainty in the interest rate cycle and
inflation moderation.
Equally, our business remains exposed to fluctuations in
financing costs and sustained, elevated interest rates may
impact our overall profitability.
AVJennings Limited – Annual Report 2023COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 34
OPERATING AND FINANCIAL REVIEW (CONTINUED)
OUTLOOK (continued)
While many of the supply chain risks of FY22 have settled,
labour rates continue to increase in conjunction with historically
low levels of unemployment. Our long-term relationships with
suppliers, strong visibility of our forward pipeline, fixed pricing
for larger projects and our high employee engagement score
of 4.07 out of 5 all help to offset the impact of these risks on
our profitability.
As we look ahead, to facilitate delivery of an increasing
proportion of built-form and to position the Company for
growth when the market recovers, current capital management
initiatives, along with the structure of our existing debt facilities,
are under active review. These activities are focused on ensuring
we are well positioned to take advantage of improving market
conditions into FY24 and beyond.
Following many builders facing financial difficulty over the past
18 months and the progressive nature of payments for separate
house and land purchases, we have recently noted a growing
trend of customers favouring built-form housing over more
traditional land-based purchases. This creates a competitive
advantage for AVJennings to capitalise on where we can flex to
deliver the mix of both high-quality built-form housing and land
lots within our communities based on demand.
Our recent investment in Pro9’s prefabricated wall system,
will help us to further expedite efficient delivery of built-form
housing across our projects once its Australian manufacturing
capability is established. Pro9 will also deliver significantly
improved customer outcomes in relation to sustainability,
quality and certainty, building on the already significant
achievements realised.
DIVIDENDS
Dividends paid during the financial year were as follows:
Cash dividends declared and paid
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
2022 final dividend of 0.67 cents per share,
paid 22 September 2022. Fully franked @ 30% tax
2023 interim dividend of 1.1 cents per share,
paid 24 March 2023. Fully franked @ 30% tax
Total cash dividends declared and paid
Despite the near-term risks, AVJennings remains confident about
the future due to the robust macroeconomic opportunities, our
commitment to adaptability and customer-focused products and
experiences and the modernisation work around our business
and capital structure already under way. These elements set
us up well to take advantage of the market recovery. We will
continue to prioritise quality, customer satisfaction, innovation
and disciplined capital management to position ourselves as
a resilient and leading player in the residential development
market. Our history of over 90 years is testament to our ability
to do so successfully.
2023
$'000
–
–
2,722
4,469
2022
$'000
7,312
4,469
–
–
7,191
11,781
The Group decided not to pay a final dividend in FY23 in response to forward market uncertainty. The DRP will also remain
suspended.
Directors’ Report.AVJennings Limited – Annual Report 2023 35
SIGNIFICANT EVENTS AFTER BALANCE
SHEET DATE
No matter or circumstance has arisen since 30 June 2023 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.
FUTURE DEVELOPMENTS, PROSPECTS
AND BUSINESS STRATEGIES
The prospects and business strategies of the Group are
discussed in the operating and financial review of this Report.
ENVIRONMENTAL REGULATION
The Group’s operations are subject to various environmental
regulations under both Commonwealth and State legislation,
particularly in relation to its property development activities. The
Group’s practice is to ensure that where operations are subject
to environmental regulations, those obligations are identified
and appropriately addressed. This includes the obtaining of
approvals, consents and requisite licences from the relevant
authorities and complying with their requirements.
INFORMATION ON THE DIRECTORS
Simon Cheong B.Civ.Eng. MBA
Director since 20 September 2001. Mr Cheong has over 35 years
experience in real estate, banking and international finance.
He is the Founder and Chairman 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.
To the best of the Directors’ knowledge, property development
activities have been, and are being, undertaken in compliance
with these requirements.
Directorships held in other listed entities:
Singapore Airlines Limited since 1 June 2017.
CHANGE IN STATE OF AFFAIRS
There have been no significant changes in the Group’s state
of affairs.
Jerome Rowley SF Fin, FAICD
Director since 22 March 2007. Mr Rowley has been a career
banker since the early 1970s with Citigroup, Morgan Grenfell
and ABN Amro. From 1992 until 2002, he served as Managing
Director and CEO of ABN Amro Australia and Head of
Relationship Management and Structured Finance for ABN
Amro, Asia Pacific. He has been active in both wholesale and
investment banking domestically and internationally. During
his career, Mr Rowley devoted considerable effort towards
the recognition, understanding and management of risk as a
means of profit optimization. Of particular significance was his
involvement in advising and funding including debt, equity and
hybrids, of infrastructure projects in both Australia and Asia
Pacific. Resident of Sydney.
Responsibilities:
Deputy Chairman of the Board, Non-Executive Director,
Chairman of Risk Committee, Member of Audit Committee,
Member of Investments Committee, Member of Nominations
Committee.
Directorships held in other listed entities:
None.
AVJennings Limited – Annual Report 2023COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 36
INFORMATION ON THE DIRECTORS (CONTINUED)
Philip Kearns AM BA (Economics); Grad Dip (Applied Finance)
Directorships held in other listed entities:
Mr Kearns has been a Director of AVJennings Limited since
21 March 2019. He was subsequently appointed Chief Executive
Officer on 10 January 2022 and as Managing Director on
17 February 2022. Mr Kearns has over fifteen 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. Mr Kearns
was previously a Director of Venues NSW, a Government Board
that owns and operates multiple sports and entertainment
venues across New South Wales. Additionally he was a member
of the NSW “Game Changers” Ministerial Advisory Board for
Women in Sport. He was CEO of Centric Wealth where he
gained experience in the Private Equity world which added to
his experience at Investec Bank in property funds, private clients
and his corporate finance relationships. Mr Kearns is a director
of Coolabah Capital Investments, a private fixed interest funds
management business, and the Front Row Group, a leading
provider of premium corporate hospitality. He was a director of
the committee to successfully get the Rugby World Cup (RWC)
to Australia in 2027 and 2029 and has been appointed to the
Board of the Organising Committee for those RWC’s.
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. After his rugby career he worked as a rugby commentator
with FOX Sports for 21 years. Mr Kearns is a resident of Sydney.
Responsibilities:
Managing Director and Chief Executive Officer.
Directorships held in other listed entities:
None.
Bobby Chin CA (ICAEW) B.Acc.
Director since 18 October 2005. Mr Chin is currently Chairman of
the Singapore Corporate Governance Advisory Committee and
a senior adviser to NTUC Fairprice Co-operative Ltd. He is also
a member of EDPR APAC Advisory Board (formerly known as
Sunseap Group). 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.
Ho Bee Land Limited, since 29 November 2006.
Frasers Property Limited since 19 September 2022.
Other Directorships:
Temasek Holdings (Private) Limited, since 10 June 2014.
Bruce G Hayman
Director since 18 October 2005. Mr Hayman has many years of
commercial management experience with over 20 of those at
an 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 Bowral, New South Wales.
Responsibilities:
Non-Executive Director, Chairman of Nominations Committee,
Member of Remuneration Committee, Member of Investments
Committee, Member of Risk Committee.
Directorships held in other listed entities:
None.
Lai Teck Poh BA Hons. (Economics)
Director since 18 November 2011. Mr Lai has been a career
banker since the late 1960s. He joined Citibank Singapore in
April 1968, rising through the ranks to become Vice President
and Head of the Corporate Banking Division. During his time
with Citibank, Mr Lai undertook international assignments with
Citibank in Jakarta, New York and London. His last position with
Citigroup was as Managing Director of Citicorp Investment
Banking Singapore Ltd 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.
Directors’ Report.AVJennings Limited – Annual Report 2023 37
INFORMATION ON THE DIRECTORS (CONTINUED)
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 Chairman on 1 October 2021).
Lisa Chung AM LLB, FIML, FAICD
Director since 1 June 2021. Ms Chung is an experienced non-
executive director and is currently Chair of Australian Unity
Limited and of The Front Project, a Director of Artspace/Visual
Arts Centre Limited, the Committee for Sydney, the Sydney
Community Foundation and Warren and Mahoney Limited. She
is also 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 Committee,
Member of Remuneration Committee.
Directorships held in other listed entities:
Australian Unity Limited.
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 and Well Chip Group
Sdn Bhd Malaysia. 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. In January
2021, he was appointed as a governing board member of
the Duke-NUS Medical School (a graduate medical school in
Singapore). Mr Mak resides 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 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.
AVJennings Limited – Annual Report 2023COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 38
REMUNERATION REPORT (AUDITED)
A. Introduction
The AVJennings Limited Board is pleased to present the
Remuneration Report for FY23 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.” Our purpose is implemented through our people who
live our Values – ASPIRE – Accountability, Safety, People, Integrity,
Respect and Excellence.
The Company’s remuneration arrangements are structured to
attract and retain high performing people and to remunerate
them for achieving our objectives and for 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 circumstances, fairness
to executives and considering market expectations and industry
standards.
B. Persons covered by the Report
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 FY23 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
Non-Executive Chairman
Non-Executive Deputy Chairman
Managing Director and
Chief Executive Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
(ii) Executives
CD Thompson
SC Orlandi
A Carter
L Hunt
SL Souter
Company Secretary/General Counsel
Chief Operating Officer
Chief Commercial Officer (Ceased
employment 28 November 2022)
General Manager, Human Resources
Chief Financial Officer (appointed
20 February 2023)
C. Remuneration Framework
1. Remuneration Governance
The Board has established a Remuneration Committee
which comprises four Non-Executive Directors (NEDs) and
is responsible for determining and reviewing remuneration
arrangements for KMP, other senior management personnel
and general staff.
2. Remuneration Objectives
AVJennings’ remuneration objectives are to remunerate fairly,
attract and retain talent, drive performance, promote adherence
to values, and align 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
align executive and shareholder interests.
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 on a case-by-
case basis.
5. External Advisers
The Remuneration Committee engaged Godfrey Remuneration
Group (GRG) on 4 April 2022 to conduct a comprehensive
review of AVJennings’ executive remuneration and incentive
arrangements, including the current equity component, as
compared to those offered by similar competitor companies and
which is tailored to the Company’s particular circumstances.
Directors’ Report.AVJennings Limited – Annual Report 2023 39
REMUNERATION REPORT (AUDITED) (CONTINUED)
C. Remuneration Framework (continued)
9. Framework
The Committee reviewed the reports and recommendations
from GRG at various meetings during FY23. The Board is
satisfied the remuneration recommendations made were free
from undue influence by any member of the Key Management
Personnel because of the communication arrangements
established between GRG and the Remuneration Committee.
No further grants will be made under the remuneration
structure applicable for FY23 and the new structure will apply
for FY24 and beyond. See Section K for further details of the
new remuneration structure. Fees charged by GRG amounted
to $35,000.
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 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 Remuneration Table (Section I) on page 45.
ii) Other Executives
Other executives are full-time, permanent employees with
employment contracts. Their employment contracts do not
have termination dates or termination payments. However, they
typically specify an employer 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 on
page 42 in item D(3)(f) Fees paid to NEDs and the Remuneration
Table (Section I) on page 45. The Directors are the same as
those identified in the Directors’ Report.
8. Remuneration Report at FY22 Annual General Meeting (AGM)
At the Company’s 2022 Annual General Meeting (AGM), 46.12%
of the eligible votes cast on the Remuneration Report were
against the Report. This meant the Company recorded a Second
Strike on the Report. The Company has periodically reached
out to certain shareholders to ascertain whether there were
any specific concerns, but no response has been provided. The
Company did not receive any specific feedback at the AGM on
its remuneration arrangements. The “No” vote represented only
10.48% 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.
As a result of the Second Strike, a Spill Meeting was held on
15 February 2023. At that meeting, all Directors (except the
Managing Director/CEO) retired and submitted themselves
for re-election. All Directors were re-elected with votes cast in
favour ranging from 87% to 91%.
The current 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, for FY23 this is made up of:
• Fixed remuneration – Which is made up of base salary
and superannuation guarantee payments. Target fixed
remuneration is set at the 50th Percentile of the market data
with a range of +/- 20% around the midpoint to account for
individual factors such as experience, calibre and merit-
based market positioning.
• Short-Term Incentives (STI) – 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 (LTI) – 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. The Rights are tested against performance
hurdles at the end of three years from grant date once the
financial results have been released for the relevant year.
• Retention Component – This was an equity award and was
granted annually with vesting of one third respectively on the
first, second and third anniversaries of the grant. Rights were
granted and these may vest into shares once the service
conditions are met. The Retention Rights were 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. The Retention Rights component has been
abolished for FY24 and beyond; but existing Retention Rights,
granted in 2021 and 2022, will vest in accordance with the
Plan Rules.
As outlined above, fixed remuneration is set at, or around, 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 2023COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 40
REMUNERATION REPORT (AUDITED) (CONTINUED)
C. Remuneration Framework (continued)
Allocation of Remuneration between Components is as follows:
CEO
CFO
COO
Other Senior Executives
Fixed
Remuneration
(%)
46.4
59
70
75
Total
at Risk
(%)
53.6
41
30
25
STI
at Risk
(%)
50
50
50
50
Equity
Retention
at Risk (%)
LTI
at Risk (%)
–
–
25
25
50
50
25
25
The proportions of STI, LTI and retention components take into account:
• The objectives 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.
10. 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 and 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
three years from grant date.
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 2019
30 June 2020
30 June 2021
30 June 2022
30 June 2023
Profit
After Tax
$'000
16,439
9,041
18,716
13,078
21,264
Basic
EPS
Cents
4.09
2.23
4.62
3.22
5.24
TSR*
Cents
( 12.5 )
( 4.8 )
17.2
( 15.1 )
( 3.2 )
Market
Capitalisation
$'000
218,953
188,897
255,462
182,579
162,147
Return on Market
Capitalisation
%%
7.51
4.79
7.33
7.16
13.11
* 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 2023
41
REMUNERATION REPORT (AUDITED) (CONTINUED)
D. Non-Executive Directors (NEDs) Remuneration Arrangements
1. NEDs Fee Pool
At the AGM in 2019, shareholders approved an increase in the
maximum annual aggregate fee pool to $650,000 for NEDs. The
allocation to individual NEDs is determined after considering
factors such as time commitment, the size and scale of the
Company’s operations, skill sets, participation in committee
work, in particular chairmanship of committees and fees paid to
directors of comparable companies.
NEDs do not receive any leave entitlement benefits or
performance-based remuneration. Australian-based NEDs
receive superannuation payments.
2. SC Global Nominee Directors
For FY23, SC Global had two nominees on the Board,
Mr S Cheong and Mr LM Mak. These two Directors do not
receive fees. However, AVJennings pays a consulting fee to the
Ultimate Parent Entity, SC Global Developments Pte Ltd. This
consulting fee is not included in the NEDs fee pool. The fees
are paid pursuant to a consultancy and advisory agreement
for the provision of the following:
• Services of at least two directors on the Board.
• Assistance in sourcing and facilitating financial and banking
requirements particularly from Asian-based and other
institutions.
• Assistance in secretarial and administrative matters in
connection with the Company’s Singapore listing.
• Sourcing and facilitating business, commercial and
investment opportunities.
• Ancillary advice.
The appropriateness of the agreement and the reasonableness
of the fees is assessed annually by the Australian-based
independent NEDs considering 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 Remuneration
(a) Approach to setting fees
NEDs receive a base fee for service as a Director and an
additional fee for participation in a Committee. The Chair of
a Committee receives a higher fee, reflecting the additional
responsibility of that position. The Company’s policy is to pay
fees which are reflective of peer practice in the property sector
and of 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 role.
(b) Review
NED fees are reviewed on an ad hoc basis as considered
necessary. As a matter of practice, fees have been stable for
many years and the NED fee pool cap was not increased for
almost 20 years until 2019.
(c) Board and Committee fees
Board
Audit
Risk
Nominations
Remuneration
Investments
Deputy
Chair
$70,000
Member
Chair Member
Chair Member
Chair Member
Chair Member
Chair Member
$60,000
$30,000
$12,000
$30,000
$12,000
$15,000
$6,000
$15,000
$6,000
N/A
$8,000
AVJennings Limited – Annual Report 2023COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 42
REMUNERATION REPORT (AUDITED) (CONTINUED)
(d) Indemnification
Clause 10.2 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
Clause 10.3 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 reasonable 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. In accordance with common
practice, the insurance policy prohibits disclosure of the nature of the liability insured against and the amount of the premium.
(f) Fees paid
Fees paid to NEDs in FY23 are set out in the table below:
S Cheong(1)
RJ Rowley
B Chin
BG Hayman
TP Lai
P Kearns(2)
L Chung
LM Mak(1)
Total
Total
Short-Term
Fees
$
Post Employment
Superannuation(3)
$
–
–
114,027
120,909
96,000
96,000
91,403
108,182
95,000
86,000
–
37,949
70,588
67,503
–
–
467,018
516,543
–
–
11,973
12,091
–
–
9,597
10,818
–
–
–
3,795
7,412
6,750
–
–
28,982
33,454
Total
$
–
–
126,000
133,000
96,000
96,000
101,000
119,000
95,000
86,000
–
41,744
78,000
74,253
–
–
496,000
549,997
Year
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
(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. Total fee paid for the year was $600,000 (2022: $600,000).
(2) Appointed CEO on 10 January and MD on 17 February 2022. Details of P Kearns’ remuneration as CEO and MD are included in the Remuneration Table
(Section I) on page 45.
(3) Payments to Defined Contribution Plans consist of Superannuation Guarantee Contribution payments as well as employee voluntary contributions.
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.
(g) Other transactions and balances with KMP and their related parties
During the year, the Company paid $200 to JK Florals, a business owned by a party related to the CEO.
Directors’ Report.AVJennings Limited – Annual Report 2023 43
REMUNERATION REPORT (AUDITED) (CONTINUED)
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 set at the P50 of the market data with a range
of +/- 20% around the midpoint to account for individual 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 in the Remuneration Table (Section I) on page 45.
F. Short-Term Incentive (STI)
Executives participate in a STI plan which assesses achievement
against KPMs. Each executive has KPMs that are aligned to
company, business unit and individual performance. 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.
STI payments are based on the key performance 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 are set for each individual executive,
taking into account their role in the organisation, and their
accountabilities.
KPIs included:
• Financial – Measures including Profit Before Tax (PBT) and
Revenue (as per approved budget), drivers for Return on
Equity (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.
• Operational – Relating to the project outcomes, changes to
value creating processes, operational efficiency, innovation,
quality and customer (NPS) and achievement of Key
Performance Indicators.
• People and Culture – Focus on leadership and culture of
learning and development. Driving a customer centric and
safety culture from the inside out.
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.
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.
The table below provides an overview of the STI against key
financial and non-financial performance measures and the
weightings for each component.
Financial
Operational
Strategic
CEO
COO
CFO
60%
50%
60%
20%
30%
20%
Other Executives
30-40%
40-50%
20%
20%
20%
20%
Other Factors Considered: Safety, People and Culture, Hygiene
The Remuneration Committee determines the STI to be paid
based on an assessment of the extent to which the KPMs are met.
The Committee has the discretion to adjust STIs upwards
or downwards considering 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.
G. Long-Term Incentive (LTI)
LTI grants are only made to executives who can significantly
impact the Group’s performance and create shareholder value
over the longer-term.
LTI remuneration is provided by the issue of Performance 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 Performance 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.
AVJennings Limited – Annual Report 2023COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 44
REMUNERATION REPORT (AUDITED) (CONTINUED)
LTI and Performance
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. TSR is assessed against the ASX 300 Real
Estate Index (REI), a comparator group including peers in the
residential property sector. The comparator group is not directly
comparable to AVJennings as the REI contains non-residential
property participants. However, this comparator group was
chosen as the best approximation as the pool of directly
comparable listed residential developers was too small to
provide a reliable and meaningful comparator group.
Both elements of the Performance Rights (EPS and TSR) are also
subject to a service condition. The recipient must be employed
by AVJennings as at 30 June of the year in which the performance
conditions of the Rights are tested. The Rights only vest if both the
service condition and the performance conditions are satisfied.
The performance conditions are tested at the end of the three-
year measurement period, in the September following release of
the financial statements for that year. There is no re-testing. If the
conditions are not satisfied when they are tested, the Rights are
immediately forfeited.
In the event of a change in control of the Company, the Board
can elect to vest unvested Rights.
As the LTI Plan is a Rights Plan, the securities do not qualify for
dividend payments until the Rights have vested.
The operation of the EPS, TSR and the ROE hurdles for FY23
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’ TSR rank against
ASX 300 RE Index at 30 September
Percentage
vesting
< median
At the median
> median but < 75th percentile
> 75th percentile
Nil
50% of the allocation
for the hurdle
Pro-rata between
50th and 75th
percentiles
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.
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
33.33%
33.33%
33.34%
Rationale for Retention Rights
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.
• 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.
The Retention Rights component has been abolished for FY24
and beyond; but existing Retention Rights, granted in 2021 and
2022, will vest in accordance with the Plan Rules.
Directors’ Report.AVJennings Limited – Annual Report 2023 REMUNERATION REPORT (AUDITED) (CONTINUED)
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AVJennings Limited – Annual Report 2023COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION
46
REMUNERATION REPORT (AUDITED) (CONTINUED)
Remuneration to Executive KMP in FY23
A summary of the statutory remuneration tables prepared in accordance with the Australian Accounting Standards is provided in
the Remuneration Table (Section I) on page 45.
Disclosures required in the remuneration report by the Corporations Act 2001, particularly the inclusion of accounting values for
LTI rights awarded but not vested, including rights cancelled, can vary significantly from the remuneration actually paid to Executive
KMP. As a general principle, Australian Accounting Standards require the value of share-based payments to be calculated at the time
of grant and expensed over the vesting period. This may not reflect what Executive KMP actually received or became entitled
to during the year.
J. Equity disclosures
Rights have been granted to Executive KMP as detailed in the table below.
Rights granted to Executive KMP
Financial Year granted
Date of testing the final performance conditions
The September 2019 grant
The September 2020 grant
The September 2021 grant
The September 2022 grant
FY20
FY21
FY22
FY23
September 2022
September 2023
September 2024
September 2025
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.
Directors’ Report.AVJennings Limited – Annual Report 2023 47
REMUNERATION REPORT (AUDITED) (CONTINUED)
The following is the status of Rights granted to Executive KMP under the LTI Plans:
KMP
P Kearns
P Kearns
S Souter
CD Thompson
CD Thompson
CD Thompson
CD Thompson
SC Orlandi
SC Orlandi
SC Orlandi
SC Orlandi
A Carter(1)
A Carter(1)
L Hunt
L Hunt
L Hunt
L Hunt
Total
Year of
Grant
Fair Value at
Grant date
Rights at
1 July 2022
Rights
granted
Rights vested
Rights
forfeited
Rights at
30 June 2023
$187,523
461,141
–
$375,000
$58,816
–
–
1,174,076
211,760
–
–
–
–
–
–
461,141
1,174,076
211,760
( 24,219 )
( 79,237 )
–
( 22,617 )
( 73,992 )
–
$74,092
–
203,512
–
$71,395
103,456
$71,385
146,498
$74,099
147,213
–
–
–
$66,669
96,609
$85,706
175,886
$88,963
176,744
–
–
–
( 25,501 )
( 21,251 )
( 30,617 )
( 25,514 )
$88,955
–
244,336
–
$25,419
55,111
–
( 7,952 )
( 47,159 )
$60,998
–
167,545
–
( 167,545 )
$44,122
63,937
$44,116
90,535
$45,793
90,978
–
–
–
( 15,760 )
( 13,133 )
( 14,968 )
( 48,969 )
$45,789
–
125,770
–
–
–
–
120,997
125,962
203,512
–
–
–
–
–
–
145,269
151,230
244,336
–
–
–
74,775
77,845
125,770
$1,508,840
1,608,108
2,126,999
( 201,532 )
( 416,902 )
3,116,673
FY22
FY23
FY23
FY20
FY21
FY22
FY23
FY20
FY21
FY22
FY23
FY22
FY23
FY20
FY21
FY22
FY23
(1) Appointed 7 February 2022 and ceased employment 28 November 2022.
AVJennings Limited – Annual Report 2023COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 48
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.
Opening
Balance
Vested as
Remuneration
On Market
Purchase
Closing Balance
For the year ended 30 June 2023
Directors
S Cheong
RJ Rowley
BG Hayman
L Chung
P Kearns
Executives
CD Thompson
SC Orlandi
L Hunt
Total
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
219,112,839
370,223
235,000
–
25,000
–
–
–
–
–
1,930,195
634,789
428,293
70,971
78,748
43,861
–
–
–
110,000
–
–
–
–
219,112,839
370,223
235,000
110,000
25,000
2,001,166
713,537
472,154
222,736,339
193,580
110,000
223,039,919
219,112,839
370,223
235,000
25,000
–
–
–
–
1,860,987
565,480
385,523
69,208
69,309
42,770
4,959,951
293,366
257,868
426,398
227,808,369
865,553
–
–
–
–
–
–
–
–
–
–
219,112,839
370,223
235,000
25,000
1,930,195
634,789
428,293
5,217,819
719,764
228,673,922
(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.
Directors’ Report.AVJennings Limited – Annual Report 2023 49
REMUNERATION REPORT (AUDITED) (CONTINUED)
K. New remuneration structure
LTVR Component
The LTVR component is designed to:
• Provide variable remuneration which is linked to long-term
value creation.
• Align the interests of KMP participants and shareholders.
• Ensure executive KMPs have commonly shared goals.
The instrument is in the form of Performance Rights. The
measurement period is 1 July to 30 June three years after the
grant date (3-year measurement period). Each Right has a
term of 15 years from the date of grant.
The opportunity is expressed as a percentage of TEC stated
for each participating Executive for each of the Threshold and
Target levels. The grant calculation is determined by the volume
weighted share price over the 20 days trading following the
release of the prior year’s financial results.
There are two tranches of the LTVR of equal value, one subject to
a TSR hurdle and the other to a ROE hurdle.
The TSR component has a gate of positive TSR for the period.
There is no retesting under the LTVR plan rules.
Similar to the STVR, the LTVR incorporates Malus and Clawback
provisions to allow Board discretion to determine that some or
all Rights that are unvested or subject to an Exercise restriction
lapse on a specified date if, in the opinion of the Board, exercise
of the Rights would result in an inappropriate benefit to the
participating Executive.
The new structure to apply for FY24 and beyond incorporates
a Short-Term Variable Remuneration plan (STVR) and a Long-
Term Variable Remuneration plan (LTVR). The LTVR plan is
intended to align executive and shareholder interests so as to
create shareholder value over the longer-term. The purpose of
the STVR plan is to provide at-risk and incentive remuneration
components that are performance focussed and linked to value
creation and outcomes.
STVR Component
The STVR component also supports risk management by
exposing rewards for short-term performance to long-term
outcomes by deferral of a portion (into Rights) of the STVR
component (initially 25% rising to 30% by year 4).
The measurement period is 1 July – 30 June each year and the
opportunity is a percentage of TEC stated for each participating
Executive. Each KPI to have a Threshold and Target level.
Weightings are set for each Executive to cover Financial,
Strategic and Operational outcomes:
Financial Operational
Strategic
CEO
COO
CFO
Company Secretary/
General Counsel
General Manager,
Human Resources
70%
50%
60%
50%
50%
0%
30%
20%
30%
30%
30%
20%
20%
20%
20%
The STVR plan also incorporates Malus and Clawback provisions.
These allow Board discretion to determine that some, or all,
Rights that are unvested, or subject to an exercise restriction,
lapse on a specified date if, exercise of the Rights would result
in an inappropriate benefit to the participating Executive. Such
circumstances include but are not limited to:
• The Executive causes harm to the operations or reputation
of the Company.
• The Executive taking excessive risks.
• The Executive joins a competitor.
• Unacceptable ESG outcomes have been identified.
• An act of fraud, dishonesty or gross misconduct.
• Non-adherence to the Company’s values.
AVJennings Limited – Annual Report 2023COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 50
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
Attended
Held
Attended
Meetings of Committees
Remuneration
Held
Attended
Nominations
Risk
Held
Attended
Held
Attended
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
–
3
–
3
3
–
–
–
–
3
–
3
3
–
–
–
5
–
5
–
5
5
–
–
5
–
5
–
5
5
–
–
1
1
1
1
–
–
–
–
1
1
1
1
–
–
–
–
–
–
4
4
–
4
–
–
–
–
4
4
–
4
–
–
S Cheong
B Chin
BG Hayman
RJ Rowley
TP Lai
L Chung
P Kearns
LM Mak
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
L Chung
P Kearns
Number
219,112,839
370,223
235,000
110,000
25,000
INDEMNIFYING OFFICERS
During the year, the Group paid a premium in respect of a
contract insuring its Directors and employees against liabilities
that may be incurred in defending civil or criminal proceedings
that may be brought against the Officers in their capacity as
Officers of entities in the Group. In accordance with common
practice, the insurance policy prohibits disclosure of the nature
of the liability insured against and the amount of the premium.
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 52.
Directors’ Report.AVJennings Limited – Annual Report 2023 51
NON-AUDIT SERVICES
The Group’s auditor, Ernst & Young provided certain non-audit services as outlined in note 33. The Board has considered these
and based on advice received from the Audit Committee, is satisfied that provision of these services is compatible with, and did not
compromise, the auditor independence requirements imposed by the Corporations Act 2001, for the following reason:
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
•
the non-audit services do not undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board as they do not involve
reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the Group, acting as
advocate for the Group or jointly sharing economic risks or rewards.
Signed in accordance with a resolution of the Directors.
Simon Cheong
Director
30 August 2023
Philip Kearns
Director
AVJennings Limited – Annual Report 2023COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATION 52
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
As lead auditor for the audit of the financial report of AVJennings Limited for the financial year ended
30 June 2023, I declare to the best of my knowledge and belief, there have been:
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit.
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.
This declaration is in respect of AVJennings Limited and the entities it controlled during the financial
year.
Ernst & Young
Glenn Maris
Partner
30 August 2023
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
AVJennings Limited – Annual Report 2023
Financial Statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2023
Continuing operations
Revenue from contracts with customers
Revenue
Cost of sales
Gross profit
Share of (loss)/profit of equity accounted investments
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
Foreign currency translation gain/(loss)
Other comprehensive income/(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.
53
Note
2
26
3
3
8
3
3
3
3
3
4
2023
$'000
2022
$'000
274,309
274,309
( 187,379 )
86,930
222,814
222,814
( 158,702 )
64,112
( 169 )
–
( 4,475 )
( 88 )
( 4,953 )
( 27,537 )
( 6,561 )
( 10,754 )
( 1,656 )
400
( 589 )
282
1,647
( 1,489 )
–
( 4 )
( 3,469 )
( 28,815 )
( 4,950 )
( 7,472 )
( 1,743 )
127
( 303 )
296
30,830
( 9,566 )
17,937
( 4,859 )
21,264
13,078
866
866
( 1,755 )
( 1,755 )
22,130
11,323
21,264
13,078
22,130
11,323
34
34
5.24
5.24
3.22
3.22
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 54
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2023
Current assets
Cash and cash equivalents
Receivables
Inventories
Tax receivable
Other assets
Total current assets
Non-current assets
Receivables
Inventories
Investment property
Equity accounted investments
Financial assets at fair value through profit or loss
Plant and equipment
Right-of-use assets
Intangible 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
26
11
10
12
13
14
16
4(c)
17
14
15
16
4(d)
17
2023
$'000
2022
$'000
12,983
16,769
226,487
–
5,628
3,274
14,566
150,448
922
3,283
261,867
172,493
1,799
588,217
1,668
4,884
3,500
993
5,432
2,816
1,155
538,396
1,756
5,053
–
2,059
5,783
2,816
609,309
557,018
871,176
729,511
134,380
1,053
3,294
6,617
93,935
1,252
523
6,732
145,344
102,442
107,530
171,301
4,607
17,796
1,416
88,141
109,190
4,962
15,599
1,148
302,650
219,040
447,994
321,482
423,182
408,029
18
19(a)
19(c)
173,172
8,224
241,786
173,506
6,810
227,713
423,182
408,029
Financial Statements.AVJennings Limited – Annual Report 2023 55
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2023
Attributable to equity
holders of AVJennings Limited
Total equity
Contributed
Equity
Note
$'000
173,740
Foreign
Currency
Translation
Reserve
$'000
2,843
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
18(b)
32(a)
32(a)
20
–
–
–
–
( 1,755 )
( 1,755 )
( 234 )
–
–
–
( 234 )
–
–
–
–
–
Share-based
Payment
Reserve
$'000
6,110
–
–
–
–
( 969 )
581
–
Retained
Earnings
$'000
$'000
226,416
409,109
13,078
–
13,078
13,078
( 1,755 )
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
At 1 July 2022
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 expense reversed
– Share-based payment expense
– Share buyback and cancellation
– Dividends paid
Total transactions with owners in their capacity
as owners
173,506
1,088
5,722
227,713
408,029
–
–
866
866
–
–
21,264
21,264
22,130
22,130
18(b)
32(a)
32(a)
18(a)
20
( 299 )
–
–
( 35 )
–
–
–
–
–
–
–
( 93 )
641
–
–
–
–
–
–
( 299 )
( 93 )
641
( 35 )
( 7,191 )
( 7,191 )
( 334 )
–
548
( 7,191 )
( 6,977 )
At 30 June 2023
173,172
1,954
6,270
241,786
423,182
To be read in conjunction with the accompanying notes.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 56
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2023
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 (used in)/ from operating activities
Cash flow from investing activities
Payments for plant and equipment
Payments for financial assets at fair value through profit or loss
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
Share buyback on market
Net cash from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effects of exchange rate changes on cash and cash equivalents
Note
3
4(c)
21
10
3
16
18(b)
20
18(a)
2023
$'000
2022
$'000
298,894
275,568
( 323,137 )
( 229,406 )
( 13,120 )
( 3,621 )
( 7,271 )
( 5,783 )
( 40,984 )
33,108
( 827 )
( 2,156 )
400
( 2,583 )
( 253 )
–
127
( 126 )
171,377
96,934
( 109,266 )
( 126,293 )
( 1,266 )
( 299 )
( 7,191 )
( 35 )
( 1,429 )
( 234 )
( 11,781 )
–
53,320
( 42,803 )
9,753
3,274
( 44 )
(9,821)
13,099
(4)
Cash and cash equivalents at end of the year
5
12,983
3,274
To be read in conjunction with the accompanying notes.
Financial Statements.AVJennings Limited – Annual Report 2023 57
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 of each segment and makes decisions regarding the allocation
of resources to each segment. Each segment prepares a detailed finance report on a monthly basis which summarises the
historic results of the segment and forecast of the segment for the remainder of the year.
Reportable Segments
Jurisdictions:
This includes activities relating to land development, integrated housing and apartments development.
Other:
This includes activities relating to apartments in Western Australia and other numerous low value items.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Financial Statements.AVJennings Limited – Annual Report 2023
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023
60
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 2023
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
28,945
33,372
33,246
17,671
30,552
1,850
145,636
49,919
5,365
30,607
10,106
–
–
908
29,698
–
–
–
–
–
–
–
–
95,997
2,070
2,978
–
29,698
Total revenue from contracts with customers
78,864
69,343
63,853
27,777
30,552
3,920
274,309
Timing of revenue recognition
Goods transferred at a point in time
78,864
39,645
63,853
27,777
30,552
3,920
244,611
Services transferred over time
–
29,698
–
–
–
–
29,698
Total revenue from contracts with customers
78,864
69,343
63,853
27,777
30,552
3,920
274,309
Operating Segments
30 June 2022
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
$'000
NZ
$'000
Other*
$'000
Total
$'000
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.
Financial Statements.AVJennings Limited – Annual Report 2023 61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2. REVENUES FROM CONTRACTS WITH CUSTOMERS
(ii) Property development and other services
AVJennings Properties Limited 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
recognized at a point in time when control is transferred to the
customer. In most cases, transfer of control occurs at settlement
when legal title passes to the customer, and an enforceable right
to payment exists.
In certain contractual arrangements, as detailed below, the
customer obtains control before settlement. In these cases,
revenue is recognised prior to settlement once the customer
has obtained control and a right to payment exists.
• Revenue from the 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 on land are complete, and building can
be commenced.
• Sales of englobo land on deferred terms.
Control passes to the customer when the contract is
unconditional, physical works on land are complete, and
the customer has unconditional rights to the land before
settlement.
• Revenue from the sales of land to builders in Australia.
In this scenario, land is sold to the builder who is the
ultimate purchaser, rather than acting as a conduit between
AVJennings and a retail purchaser. The builder obtains control
of the land when certain conditions are met: the contract
becomes unconditional, physical works on the land are
completed, and building can be commenced.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 62
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 – equity accounted investment
Increase in inventory loss provisions
Employee expenses include:
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
Note
2
7
26
7
10
12
2023
$'000
274,309
274,309
2022
$'000
222,814
222,814
( 3,057 )
6,067
( 2,359 )
6,975
–
4,475
1,489
–
–
2,983
241
1,415
1,656
204
1,539
1,743
Interest from financial assets held for cash management purposes
400
127
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
12,806
314
13,120
( 12,531 )
589
129
153
282
6,989
282
7,271
( 6,968 )
303
105
191
296
Financial Statements.AVJennings Limited – Annual Report 2023 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
63
2023
$'000
2022
$'000
7,209
160
2,197
–
4,591
( 229 )
311
186
9,566
4,859
(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
30,830
17,937
Tax at Australian income tax rate of 30%
Net share of equity accounted joint venture loss/(profit)
Other non-deductible items
Foreign jurisdiction gain/(losses)
Effect of lower tax rate in foreign jurisdiction
Adjustment for prior year
Income tax expense
Effective tax rate
9,249
51
308
19
( 221 )
160
9,566
31%
5,381
( 494 )
96
( 30 )
( 51 )
( 43 )
4,859
27%
(c) Numerical reconciliation from income tax expense to income taxes paid
Income tax expense
9,566
4,859
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 (refunded)/paid in current year
Cash taxes paid per the Consolidated Statement of Cash Flows
( 2,197 )
( 160 )
( 55 )
( 3,294 )
–
( 239 )
3,621
( 497 )
229
( 107 )
( 523 )
922
900
5,783
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 64
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 2023:
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 2022:
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
Opening
balance
$'000
Expense
/(benefit)
$'000
Foreign exchange
variance
$'000
Closing
balance
$'000
2,784
1,260
1,725
447
1,810
34
8,060
425
58
88
124
( 170 )
183
708
( 18,319 )
( 2,640 )
( 236 )
( 935 )
( 100 )
( 845 )
( 1,688 )
( 1,536 )
( 23,659 )
( 15,599 )
3,492
1,770
1,808
–
1,510
39
8,619
27
( 454 )
26
–
103
33
( 2,905 )
( 2,197 )
( 708 )
( 510 )
( 82 )
447
300
( 5 )
( 558 )
( 17,111 )
( 1,236 )
(237)
( 2,954 )
( 57 )
( 845 )
( 1,418 )
( 1,063 )
( 23,685 )
( 15,066 )
1
2,082
( 43 )
–
( 270 )
( 473 )
61
( 497 )
–
–
1
–
–
–
1
3
–
( 4 )
–
–
–
–
( 1 )
–
–
–
( 1 )
–
–
–
( 1 )
28
–
( 63 )
–
–
–
–
( 35 )
( 36 )
3,209
1,318
1,814
571
1,640
217
8,769
( 20,956 )
( 209 )
( 1,393 )
( 74 )
( 845 )
( 1,585 )
( 1,503 )
( 26,565 )
( 17,796 )
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 )
Financial Statements.AVJennings Limited – Annual Report 2023 65
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.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Section A3 Balance Sheet information
5. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Accounting
2023
$'000
12,983
2022
$'000
3,274
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
GST Receivable
Other receivables
Total current receivables
Non-current
Related party receivables
Other receivables
Total non-current receivables
(i) Accounting
2023
$'000
2022
$'000
15,089
11,458
526
369
785
1,199
1,110
799
16,769
14,566
1,640
159
1,799
1,044
111
1,155
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 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6. RECEIVABLES (continued)
(ii) Expected credit losses
No expected credit losses (2022: 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
Number of days overdue
31-60
$'000
0-30
$'000
61-90
$'000
2023
2022
15,089
15,089
11,458
11,458
–
–
–
–
–
–
67
+ 91
$'000
–
–
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.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7. INVENTORIES
Current
Broadacres(1)
Land to be developed – 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 developed – at cost
Borrowing and holding costs capitalised
Impairment provision
Total broadacres
Work-in-progress
Land subdivided or in the course of being subdivided – at cost
Development costs capitalised
Houses and apartments under construction – at cost
Borrowing and holding costs capitalised
Impairment provision
Total work-in-progress
Completed inventory
Completed houses and apartments – at cost
Completed residential land lots – at cost
Borrowing and holding costs capitalised
Impairment provision
Total completed inventory
Total non-current inventories
Total inventories
(1) Broadacres refers to undeveloped land.
Note
7(a)
7(a)
7(a)
7(a)
7(a)
7(a)
2023
$'000
2022
$'000
16,423
2,935
( 6,953 )
12,405
55,842
42,377
67,969
18,944
185,132
8,772
18,135
2,207
( 164 )
28,950
8,129
464
( 2,944 )
5,649
43,218
52,417
25,494
11,249
132,378
8,532
2,927
962
–
12,421
226,487
150,448
429,078
30,195
( 955 )
458,318
53,290
45,014
5,432
11,385
( 2,263 )
112,858
571
13,194
3,641
( 365 )
17,041
414,360
29,292
( 6,306 )
437,346
55,188
22,315
3,508
19,448
–
100,459
434
178
11
( 32 )
591
588,217
538,396
814,704
688,844
Financial Statements.AVJennings Limited – Annual Report 2023 69
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 7.59% (2022: 5.26%).
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
2023
$'000
9,282
( 3,057 )
4,475
10,700
2022
$'000
11,641
( 2,359 )
–
9,282
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 values its investment property at fair value, and revaluations are recognised through the profit and loss statement.
Qualified external independent property valuers conduct valuations at least once every three years, in compliance with accounting
standards. The most recent external valuation was conducted by Knight Frank on 24 November 2021. In the intervening years, internal
valuations are prepared.
As of 30 June 2023, the property was valued at $1,668,000 using the income capitalisation approach, with a capitalisation rate of
6.20% (30 June 2022: 5.75%).
Opening balance at 1 July
Fair value adjustment to investment property
Closing balance at 30 June
2023
$'000
1,756
( 88 )
1,668
2022
$'000
1,760
( 4 )
1,756
Investment properties are measured as Level 3. Refer to note 23(v) for explanation of the levels of fair value measurement.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9. OTHER ASSETS
Current
Prepayments
Deposits
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
(i) Reconciliations
2023
$'000
4,945
683
5,628
2023
$'000
1,320
( 497 )
823
2022
$'000
2,687
596
3,283
2022
$'000
1,315
( 544 )
771
1,890
( 1,720 )
170
2,935
( 1,647 )
1,288
993
2,059
Reconciliations of the carrying amounts of each class of plant and equipment at the beginning and end of the year are set out below:
For the year ended 30 June 2023
Carrying amount at 1 July 2022
Additions
Disposals
Depreciation
Carrying amount at 30 June 2023
For the year ended 30 June 2022
Carrying amount at 1 July 2021
Additions
Depreciation
Carrying amount at 30 June 2022
Leasehold
improvements
$'000
Plant and
equipment
$'000
Note
771
537
( 318 )
( 167 )
1,288
290
( 1,334 )
( 74 )
823
170
880
44
( 153 )
771
1,130
209
( 51 )
1,288
3
3
Total
$'000
2,059
827
( 1,652 )
( 241 )
993
2,010
253
( 204 )
2,059
During the financial year ended 30 June 2023, the Group disposed the assets associated with the enhancement of the ERP system,
totalling $1,334,000 (2022: Nil), categorised under the Plant and Equipment classification.
Financial Statements.AVJennings Limited – Annual Report 2023 71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10. PLANT AND EQUIPMENT (continued)
(ii) Accounting
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
11. FINANCIAL ASSET AT FAIR VALUE THROUGH PROFIT OR LOSS
Non-current
Loan to Pro9 Joint Venture
Total loan
2023
$'000
3,500
3,500
2022
$'000
–
–
In June 2023, AVJennings provided a loan amounting to $3.5 million (30 June 2022: Nil) to the Pro9 Joint Venture (the JV). Further details
about the JV are available in note 26. This loan can be converted into an equity stake within the JV.
Accounting
The Group classifies certain financial assets as at fair value through profit or loss, including convertible loans, based on the financial
asset’s use and contractual terms. Financial Assets at fair value through profit or loss on initial recognition are measured at fair
value (generally transaction price).
Subsequent to initial recognition, financial assets at fair value through profit or loss, including convertible loans, are measured at
fair value. Changes in the fair value of these assets are recognised in profit or loss for the period in which they occur.
The equity conversion option embedded in the convertible loan instrument is not separately recognised on the balance sheet,
particularly when the loan component and the equity conversion option are inseparable and cannot be accounted for separately.
Derecognition of financial assets at fair value through profit or loss occurs when the contractual rights to receive cash flows from
the financial asset expire, are transferred, or otherwise settled.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12. RIGHT-OF-USE ASSETS
The Group has lease contracts for various office premises, motor vehicles and IT equipment used in its operations. Lease of office
premises generally have lease terms between 3 and 5 years, while motor vehicles and IT equipment have lease terms between 3 and
4 years. The Group’s obligations under its leases are secured by the lessor’s title to the leased assets. Some of the lease contracts for
office premises include extension options.
The Group also has certain leases with terms of 12 months or less and leases of office equipment with low value. The Group applies
the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the year:
For the year ended 30 June 2023
As at 1 July 2022
Additions
Amortisation expense
Disposal
As at 30 June 2023
Current
Non-current
Total
For the year ended 30 June 2022
As at 1 July 2021
Additions
Amortisation expense
As at 30 June 2022
Current
Non-current
Total
Motor
vehicle lease
$'000
Note
Right-of-use assets
Office
premises
lease
$'000
IT
equipment
lease
$'000
Total
$'000
3
3
400
134
( 205 )
–
329
–
329
329
255
370
( 225 )
400
–
400
400
86
51
( 41 )
–
96
–
96
5,297
3,063
( 1 ,1 69 )
( 2 ,1 84 )
5,007
–
5,007
5,783
3,248
( 1 ,41 5 )
( 2 ,184 )
5,432
–
5,432
96
5,007
5,432
91
75
( 80 )
86
–
86
4,577
1,954
( 1,234 )
4,923
2,399
( 1,539 )
5,297
–
5,297
5,783
–
5,783
86
5,297
5,783
The Group commenced a new office lease in March 2023. The additions under the office premises lease resulted from recognising
the new lease, while disposals arose from derecognising the previous lease.
Accounting
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct
costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group
is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are
depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of use assets are subject
to impairment.
Financial Statements.AVJennings Limited – Annual Report 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
13. INTANGIBLE ASSETS
Brand name at cost
Less: accumulated amortisation
Total intangible assets
73
2023
$'000
9,868
( 7,052 )
2,816
2022
$'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 2023, there were no indicators of impairment. However, an annual impairment assessment was conducted, no impairment
was identified.
Accounting
Intangible assets acquired separately are measured at cost on initial recognition. The cost of intangible assets acquired in a business
combination is their fair value as at the date of the acquisition. Following initial recognition, intangible assets are carried at cost less
any accumulated amortisation and accumulated impairment losses.
Intangible assets with indefinite useful lives are not amortised but tested annually for impairment. The assessment of indefinite life is
reviewed annually to determine whether it continues to be supportable. If not, the change in useful life from indefinite to finite is made
on a prospective basis.
14. PAYABLES
Current
Land creditors
Trade creditors
Related party payables
Deferred Income
Contractual amounts payable to landowners
Property and payroll taxes payable
Other creditors and accruals
Total current payables
Non-current
Land creditors
Deferred Income
Contractual amounts payable to landowners
Total non-current payables
2023
$'000
100,527
24,666
1,494
267
89
1,907
5,430
134,380
104,541
2,135
854
107,530
2022
$'000
61,332
20,825
150
961
575
3,244
6,848
93,935
86,249
1,503
389
88,141
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14. PAYABLES (continued)
Accounting
Trade and other payables are initially recognised at fair value and subsequently carried at amortised cost. They represent liabilities
for goods and services provided to the Group prior to the end of the financial year which are unpaid.
Due to the short-term nature of current payables (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 8.75% (2022: 5.96%).
15. BORROWINGS
Non-current
Bank loans
Total borrowings
Accounting
Borrowing costs
2023
$'000
2022
$'000
171,301
171,301
109,190
109,190
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 2023 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
15. BORROWINGS (continued)
Financing arrangements
The Group has access to the following lines of credit:
30 June 2023
Main banking facilities
- bank overdraft
- bank loans
- performance bonds
Contract performance bond facilities
- performance bonds
30 June 2022
Main banking facilities
- bank overdraft
- bank loans
- performance bonds
Contract performance bond facilities
- performance bonds
Note
15(a)
15(b)
15(a)
15(b)
Available
$'000
Utilised
$'000
Unutilised
$'000
5,000
280,000
15,000
300,000
–
171,301
8,699
180,000
5,000
108,699
6,301
120,000
75,000
30,227
44,773
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
At 30 June 2023, the main banking facilities are interchangeable up to $47 million (2022: $47 million) between the bank loans and
performance bonds within the main banking facility.
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 a cross deed of covenant with various controlled entities to guarantee obligations of those entities
in relation to the main banking facilities (see note 25). The weighted average interest rate including margin on the main banking
facilities at 30 June 2023 was 5.69% (2022: 2.65%).
(b) Contract performance bond facilities
The Group has entered into Contract performance bond facilities of $75 million (2022: $75 million) which are subject to review
annually. $25 million of the facilities expire on 31 March 2024, $15 million of the facilities expire on 30 June 2024 and the balance of
the facilities had an expiry date of 1 August 2023 which was extended to 31 July 2024. The performance bond facilities are secured by
Deeds of Indemnity between the Parent Entity and various controlled entities. Details of the controlled
entities, included in the Deeds of Indemnity are set out in Note 25.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16. 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 2022
Additions
Payments
Disposal
As at 30 June 2023
Current
Non-current
Total
As at 1 July 2021
Additions
Payments
As at 30 June 2022
Current
Non-current
Total
Motor
vehicle lease
$'000
400
134
( 203 )
–
331
180
151
331
257
370
( 227 )
400
190
210
400
Lease Liabilities
IT
equipment
lease
$'000
Office
premises
lease
$'000
5,726
3,063
( 1,024 )
( 2,536 )
5,229
837
4,392
Total
$'000
6,214
3,248
( 1,266 )
( 2,536 )
5,660
1,053
4,607
88
51
( 39 )
–
100
36
64
100
5,229
5,660
97
75
( 84 )
88
32
56
88
4,889
1,955
( 1,118 )
5,726
1,030
4,696
5,243
2,400
( 1,429 )
6,214
1,252
4,962
5,726
6,214
The Group recognised rent expense from short-term leases of $140,000 (2022: $96,000) and leases of low value assets of $277,000
(2022: $212,000). The additions under the office premises lease arose from recognising the new lease, while disposals arose from
derecognising the prior lease.
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 2023 77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16. 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 five 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.
17. PROVISIONS
For the year ended 30 June 2023
At 1 July 2022
Arising during the year
Utilised
At 30 June 2023
Current
Non-Current
Total
For the year ended 30 June 2022
At 1 July 2021
Arising during the year
Utilised
At 30 June 2022
Current
Non-Current
Total
Accounting
Rectification
$'000
Restructuring
$'000
Employee
entitlements
$'000
1,075
541
( 642 )
974
218
756
974
1,322
200
( 447 )
1,075
575
500
1,075
89
–
( 89 )
–
–
–
–
–
89
–
89
89
–
89
6,716
3,181
( 2,838 )
7,059
6,399
660
7,059
6,757
2,790
( 2,831 )
6,716
6,068
648
6,716
Total
$'000
7,880
3,722
( 3,569 )
8,033
6,617
1,416
8,033
8,079
3,079
( 3,278 )
7,880
6,732
1,148
7,880
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.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18. CONTRIBUTED EQUITY
Ordinary shares
Treasury shares
Share capital
2023
Number
2022
Number
2023
$'000
406,153,457
( 785,878 )
406,230,728
( 498,815 )
177,926
( 4,754 )
405,367,579
405,731,913
173,172
2022
$'000
177,961
( 4,455 )
173,506
(a) Movement in ordinary share capital
Number
Number
$'000
$'000
At beginning of year
Share buyback and cancellation
At end of year
406,230,728
( 77,271 )
406,230,728
–
177,961
( 35 )
406,153,457
406,230,728
177,926
177,961
–
177,961
(b) Movement in treasury shares
Number
Number
$'000
$'000
At beginning of year
On market acquisition of shares
Employee share scheme issue
At end of year
( 498,815 )
( 694,065 )
407,002
( 735,799 )
( 498,815 )
735,799
( 785,878 )
( 498,815 )
( 4,455 )
( 299 )
–
( 4,754 )
( 4,221 )
( 234 )
–
( 4,455 )
During the financial year, the Group engaged in an on-market share buyback and repurchased 77,271 shares (30 June 2022: Nil) at a
cost of $35,000. Following the repurchase, the acquired shares were cancelled.
Treasury shares are held by AVJ Deferred Employee Share Plan Trust (AVJDESP) and deducted from contributed equity. During the
year, 694,065 treasury shares (2022: 498,815) were purchased by the AVJDESP at a cost of $299,000 (2022: $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.
19. RESERVES AND RETAINED EARNINGS
(a) Reserves
At 1 July 2022
Foreign currency translation
Share-based payment expense
At 30 June 2023
At 1 July 2021
Foreign currency translation
Share-based payment credit
At 30 June 2022
Foreign Currency
Translation
Reserve
$'000
Share-based
Payment
Reserve
$'000
1,088
866
–
1,954
2,843
( 1,755 )
–
1,088
5,722
–
548
6,270
6,110
–
( 388 )
5,722
Note
32(a)
32(a)
Total
$'000
6,810
866
548
8,224
8,953
( 1,755 )
( 388 )
6,810
Financial Statements.AVJennings Limited – Annual Report 2023 79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. RESERVES AND RETAINED EARNINGS (continued)
(b) Nature and purpose of reserves
Foreign currency translation reserve
Exchange differences arising on translation of foreign operations are recognised in other comprehensive income as explained
in note 40(d) and accumulated in a separate reserve within equity. The cumulative amount is reclassified to the Consolidated
Statement of Comprehensive Income when the net investment is disposed of.
Share-based payment reserve
The share-based payment reserve is used to recognise the fair value of rights to shares or shares issued to employees, with a
corresponding increase in employee expense in the Consolidated Statement of Comprehensive Income.
(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
20. DIVIDENDS
Cash dividends declared and paid
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
2022 final dividend of 0.67 cents per share,
paid 22 September 2022. Fully franked @ 30% tax
2023 interim dividend of 1.1 cents per share,
paid 24 March 2023. Fully franked @ 30% tax
Total cash dividends declared and paid
Dividends proposed
2022 final dividend of 0.67 cents per share,
paid 22 September 2022. Fully franked @ 30% tax
Total dividends proposed
The Company’s Dividend Reinvestment Plan remains suspended.
Dividend franking account
Franking credits available for subsequent
financial years based on a tax rate of 30%
2023
$'000
2022
$'000
227,713
21,264
( 7,191 )
241,786
226,416
13,078
( 11,781 )
227,713
2023
$'000
–
–
2,722
4,469
7,191
2022
$'000
7,312
4,469
–
–
11,781
–
–
2,722
2,722
32,652
29,536
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.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023
80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Section A4 Cash Flow information
21. CASH FLOW STATEMENT RECONCILIATION
Reconciliation of profit after tax to net cash flow from operating activities
Profit after tax
Adjustments for non-cash items:
Depreciation and amortisation
Net gain on disposal of right-of-use assets
Net loss on disposal of plant and equipment
Interest revenue classified as investing cash flow
Share of loss/(profit) of equity accounted investments
Change in inventory loss provisions
Share-based payments expense
Fair value adjustment to investment property
Provision – equity accounted investment
Change in operating assets and liabilities:
Increase in inventories
(Increase)/decrease in receivables
(Increase)/decrease in other assets
Increase in deferred tax liability
Increase/(decrease) in net current tax liability
Increase in payables
Increase/(decrease) in provisions
Net cash (used in)/from operating activities
2023
$'000
2022
$'000
21,264
13,078
1,656
( 352 )
1,652
( 400 )
169
1,418
548
88
–
1,743
–
–
( 127 )
( 1,647 )
( 2,359 )
( 388 )
4
1,489
( 127,279 )
( 145,668 )
( 2,847 )
( 2,345 )
2,197
3,748
30,472
5,250
533
( 1,457 )
59,346
132,384
153
( 199 )
( 40,984 )
33,108
Financial Statements.AVJennings Limited – Annual Report 2023 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Section B – Risk
22. JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
23. FINANCIAL RISK MANAGEMENT
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.
The Group’s principal financial assets and financial liabilities
comprise receivables, payables, borrowings and cash.
The Group’s treasury department focuses on the following
main financial risks:
(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
•
•
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.
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:
The Board reviews and approves these policies.
(i) Interest rate risk
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.
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.
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.
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. Given forward market
uncertainty, the Group expects forecast cashflows in the medium
term to be lumpy but strong, the Group has therefore retained
all 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.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23. 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
2023
2022
Weighted
average interest
rate
%%
3.76
5.66
Weighted
average interest
rate
%%
1.15
2.65
Balance
$'000
( 3,274 )
109,190
105,916
Balance
$'000
( 12,983 )
171,301
158,318
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)
2023
$'000
( 59 )
59
2022
$'000
( 65 )
65
Profit After Tax
Higher/(Lower)
2023
$'000
( 554 )
554
2022
$'000
( 371 )
371
Financial Statements.AVJennings Limited – Annual Report 2023 83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23. FINANCIAL RISK MANAGEMENT (continued)
(ii) Foreign currency risk
Foreign currency risk arises from NZD denominated assets (balance sheet risk) or from transactions or cash flows denominated in
NZD (cash flow risk).
The following table demonstrates the sensitivity to a change in AUD/NZD exchange rates on exposures existing at balance date.
With all other variables held constant, Profit After Tax and equity would have been affected as follows:
Profit After Tax
Higher/(Lower)
2023
$'000
( 144 )
144
2022
$'000
( 67 )
67
Equity
Higher/(Lower)
2023
$'000
2022
$'000
( 8,521 )
4,364
( 4,024 )
7,534
AUD/NZD +10%
AUD/NZD -10%
(iii) Credit risk
Credit risk is the risk that a counterparty will not meet its contractual obligations under a financial instrument, leading to a financial
loss. Credit risk arises from cash and cash equivalents, receivables, and from granting of financial guarantees.
Contracts for Land, Integrated Housing and Apartments usually require payment in full prior to passing of title to customers and
collateral is therefore unnecessary. In the event that title is to pass prior to full payment being received, appropriate credit verification
procedures are performed before contract execution.
Credit risk from balances with banks and financial institutions is managed by the Group’s treasury department in accordance with
Group policy. Surplus funds are typically applied to repay drawn loans to minimise borrowing costs. Counterparties are limited to
financial institutions approved by the Board.
The granting of financial guarantees also exposes the Group to credit risk, being the maximum amount that would have to be paid if
the guarantee is called on. As the amounts payable under the guarantees are not significantly greater than the original liabilities, this
risk in not material. See note 37 for details regarding financial guarantees.
The Group has no significant concentrations of credit risk.
(iv) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group manages its liquidity risk by monitoring forecast cash flows on a fortnightly basis and matching the maturity profiles
of financial assets and liabilities. These are reviewed by the Chief Financial Officer and presented to the Board as appropriate.
The objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans and committed
available credit facilities.
The Group’s main banking facilities mature on 30 September 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 2023, none (2022: none) of the Group’s interest-bearing loans and borrowings will mature in less than one year.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023
84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23. FINANCIAL RISK MANAGEMENT (continued)
(iv) Liquidity risk (continued)
The table below summarises the maturity profile of the Group’s financial assets and liabilities based on contractual undiscounted
payments.
Year ended 30 June 2023
Financial Assets
Cash and cash equivalents
Receivables
Financial assets at fair value through profit or loss
Financial Liabilities
Payables
Interest-bearing loans and borrowings(1)
Lease liabilities(2)
Net maturity
Year ended 30 June 2022
Financial Assets
Cash and cash equivalents
Receivables
Financial Liabilities
Payables
Interest-bearing loans and borrowings(1)
Lease liabilities
Net maturity
< 6 months
$'000
6 -12 months
$'000
1-5 years
$'000
Total
$'000
12,983
13,283
–
26,266
136,424
4,865
698
141,987
(115,721)
–
3,486
–
3,486
204
4,838
677
5,719
(2,233)
–
1,799
3,500
5,299
128,796
173,747
2,106
304,649
12,983
18,568
3,500
35,051
265,424
183,450
3,481
452,355
(299,350)
(417,304)
< 6 months
$'000
6 -12 months
$'000
1-5 years
$'000
Total
$'000
3,274
14,067
17,341
54,059
1,450
780
56,289
(38,948)
–
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
326,220
(41,577)
(226,700)
(307,225)
(1) Expected settlement amounts of interest-bearing loans and borrowings include an estimate of the interest payable to the date of expiry of the facilities.
(2) The contractual undiscounted payments of $2,394,000 (2022: Nil) matures after a period of more than 5 years.
At reporting date, the Group has approximately $165 million (2022: $225 million) of unused credit facilities available. Please refer to
note 15.
Financial Statements.AVJennings Limited – Annual Report 2023 85
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 2023
Year ended 30 June 2022
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 assets
Investment property
Financial assets at fair
value through profit
or loss
Financial liabilities
Interest-bearing loans
and borrowings
–
–
1,668
1,668
–
–
1,756
1,756
–
–
–
–
–
–
3,500
3,500
5,168
5,168
171,301
171,301
–
–
171,301
171,301
–
–
–
–
–
–
–
–
1,756
1,756
109,190
109,190
–
–
109,190
109,190
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.
24. CAPITAL MANAGEMENT
In managing capital, management’s objective is to achieve an efficient capital structure which optimises the weighted average cost
of capital commensurate with business requirements and prudential considerations.
During the year ended 30 June 2023, a total dividend of $7,191,000 was paid (2022: $11,781,000).
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
2023
$'000
171,301
(12,983)
158,318
423,182
871,176
37.4%
18.2%
2022
$'000
109,190
(3,274)
105,916
408,029
729,511
26.0%
14.5%
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Section C – Group Structure
25. CONTROLLED ENTITIES
(a) Investment in controlled entities
The following economic entities are the controlled entities of AVJennings Limited:
ECONOMIC ENTITY (1)
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(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(3)
AVJennings SPV No 27 Pty Limited
AVJennings SPV No 29 Pty Limited
% Equity Interest
30 June
2023
30 June
2022
Included in Banking
Cross Deed of Covenant (2)
30 June
30 June
2022
2023
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
No
No
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
–
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
No
No
Yes
No
No
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
Financial Statements.AVJennings Limited – Annual Report 2023 87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
25. CONTROLLED ENTITIES (continued)
(a) Investment in controlled entities (continued)
ECONOMIC ENTITY (1)
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)
% Equity Interest
2023
2022
Included in Banking
Cross Deed of Covenant (2)
2023
2022
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 15(a).
(3) These entities, including AVJennings Limited, are included in the Deeds of Indemnity for performance bond facilities referred to in note 15(b).
(4) Deregistered 28 August 2022. Resigned from Banking Cross Deed of Covenant on 17 May 2022.
(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 25(a). These entities represent a “Closed Group” for the purposes
of the Corporations Instrument, and as there are no other parties to the deeds of cross guarantee that are controlled by AVJennings
Limited, they also represent the “Extended Closed Group”.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
25. CONTROLLED ENTITIES (continued)
(d) Corporations Instrument closed group
Certain controlled entities were granted relief by ASIC (under provisions of the Corporations Instrument) from the requirement to
prepare separate audited financial statements, where deeds of indemnity have been entered into between the Parent Entity and the
Controlled Entities to meet their liabilities as required (refer to note 25(c)).
The Extended Closed Group referred to in the Directors’ Declaration therefore comprises all of the entities within the Corporations
Instrument. Certain entities falling outside of the Extended Closed Group are listed in note 25(a) and are therefore required to prepare
separate annual financial statements.
The Consolidated Statement of Comprehensive Income for those controlled entities which are party to the deed is as follows:
Revenues
Cost of sales
Other expenses
Profit before income tax
Income tax
Profit after income tax
Closed Group
2023
$'000
160,700
( 101,231 )
( 45,202 )
14,267
( 4,798 )
9,469
2022
$'000
129,661
( 82,969 )
( 41,846 )
4,846
( 1,013 )
3,833
Financial Statements.AVJennings Limited – Annual Report 2023
89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
25. CONTROLLED ENTITIES (continued)
(d) Corporations Instrument closed group (continued)
The Consolidated Statement of Financial Position for those controlled entities which are party to the deed is as follows:
Current assets
Cash and cash equivalents
Receivables
Inventories
Tax receivable
Other assets
Total current assets
Non-current assets
Receivables
Inventories
Equity accounted investments
Plant and equipment
Financial assets at fair value through profit or loss
Right-of-use assets
Intangible 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
2023
$'000
2022
$'000
8,872
149,230
93,721
–
4,939
256,762
1,640
256,481
4,884
993
3,500
5,284
2,816
275,598
532,360
105,971
1,006
1,412
6,417
114,806
13,299
156,599
4,461
15,779
1,416
191,554
306,360
226,000
173,171
6,270
46,559
226,000
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
223,508
173,506
5,722
44,280
223,508
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 90
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
25. CONTROLLED ENTITIES (continued)
(d) Corporations Instrument closed group (continued)
The Consolidated Statement of Changes in Equity for those controlled entities which are party to the deed is as follows:
At 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
– Share buyback and cancellation
– Treasury shares acquired
– Share based payment expense/(reversal)
– Dividends paid
Total transactions with owners in their capacity as owners
Closed Group
2023
$'000
2022
$'000
223,508
232,078
9,469
9,469
( 35 )
( 299 )
548
( 7,191 )
( 6,977 )
3,833
3,833
–
( 234 )
( 388 )
( 11,781 )
( 12,403 )
At the end of the year
226,000
223,508
26. EQUITY ACCOUNTED INVESTMENTS
Joint Ventures
Accounting
2023
$'000
2022
$'000
4,884
5,053
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 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26. EQUITY ACCOUNTED INVESTMENTS (continued)
Interest in Joint Ventures
Joint Venture and principal activities
Pindan Capital Group Dwelling Trust – Building Construction
Pro9 Australia Pty Ltd – Prefabricated Walling System Manufacturing
Pindan Capital Group Dwelling Trust
Movements in carrying amount
At beginning of year
Share of (loss)/profit
At end of year before provision movement
Provision for loss on investment
At end of year
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
(Loss)/profit before income tax
(Loss)/profit after income tax
91
Interest held
2023
33.3%
5.0%
2023
$'000
5,053
( 169 )
4,884
–
4,884
1,425
5,141
6,566
1,669
13
1,682
4,884
662
( 619 )
( 212 )
( 169 )
( 169 )
2022
33.3%
–
2022
$'000
4,895
1,647
6,542
( 1,489 )
5,053
1,457
5,359
6,816
1,750
13
1,763
5,053
955
( 867 )
1,559
1,647
1,647
In September 2021, several Pindan entities acted as trustees for the trusts holding the investment in Pindan Capital Group Dwelling
Trust. During that time, Pindan Capital Pty Limited (liquidated) agreed to sell shares in the trustee entities to Dorado Syndicate 59 Pty
Limited on behalf of the unitholders. As a result, the Pindan Group no longer possesses any legal or beneficial interest in the trusts or
the underlying projects. The legal ownership of these assets now belongs to Dorado Syndicate 59 Pty Limited, acting as trustee for
the unitholders, while the beneficial interest lies with the unitholders, including AVJennings.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26. EQUITY ACCOUNTED INVESTMENTS (continued)
Pro9 Australia Pty Ltd
Pro9 Australia Pty Ltd is a Joint Venture established in June 2023 between AVJennings and Pro9 Global Limited. Its primary objective is
to manufacture the highly durable and energy-efficient Pro9 prefabricated walling system in Australia. As of 30 June 2023, AVJennings
holds a 5% equity interest in the Joint Venture, while Pro9 Global Limited holds a 95% equity interest. The investment is classified as a
joint venture since it is jointly controlled by both parties.
In June 2023, AVJennings provided a loan amounting to $3.5 million (30 June 2022: Nil) to the Joint Venture. Once the Australian
manufacturing plant is effectively set up by the Joint Venture, this loan, as well as any future loans, are convertible into an equity
interest of the Joint Venture. In total, the initial equity investment and the converted loans collectively will lead to a 50/50 Joint Venture
with Pro9 Global Limited.
Pro9 Australia Pty Ltd has yet to commence operational activities. As a result, there is no profit and loss to report for the Joint Venture.
On the balance sheet, the interest in the Joint Venture comprises a $5 equity investment and a $3.5 million loan advanced to the Joint
Venture (Note 11 has further information about the loan and the accounting policy).
27. INTEREST IN JOINT OPERATIONS
A controlled entity has entered into a Joint Operation. Information relating to the Joint Operation is set out below:
Joint Operation name, principal place of business and principal activities
Wollert Joint Venture (Victoria) – Land Development and Building Construction
Accounting
Interest held
2023
49%
2022
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
2023
$'000
14,915
18,098
33,013
2,005
1,086
3,091
2022
$'000
8,900
25,538
34,438
6,204
1,006
7,210
29,922
27,228
Financial Statements.AVJennings Limited – Annual Report 2023 93
2023
$'000
18,595
( 14,778 )
( 1,614 )
2,203
( 661 )
1,542
–
1,542
2022
$'000
14,921
( 12,988 )
( 562 )
1,371
( 411 )
960
–
960
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
27. INTEREST IN JOINT OPERATIONS (continued)
Share of revenues and expenses
Revenues
Cost of sales
Other expenses
Profit before income tax
Income tax
Profit after income tax
Other comprehensive income for the year
Total comprehensive income for the year
Section D - Other information
28. CORPORATE INFORMATION
The Consolidated Financial Statements of AVJennings Limited for the year ended 30 June 2023 were authorised for issue in
accordance with a resolution of the Directors on 30 August 2023.
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 53.95% 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.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
29. STATEMENT OF COMPLIANCE
These Consolidated Financial Statements are general purpose financial reports. They have been prepared in accordance with
Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board, the
Corporations Act 2001 and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB).
30. BASIS OF PREPARATION
These Financial Statements have been prepared on a going concern basis, using historical cost convention with the exception
of financial assets at fair value through profit and loss. All figures in the Financial Statements are presented in Australian dollars
and have been rounded to the nearest thousand dollars in accordance with ASIC Corporations Instrument 2016/191, unless
otherwise indicated.
Where necessary, comparative information has been restated to conform to the current year’s disclosures.
Consistent accounting policies have been applied in the current and prior years.
31. RELATED PARTY DISCLOSURES
(a) Ultimate parent
AVJennings Limited is the ultimate Australian Parent entity. SC Global Developments Pte Ltd (incorporated in Singapore) is the
Ultimate Parent entity.
(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
2023
Number
2022
Number
219,853,062
219,743,062
Financial Statements.AVJennings Limited – Annual Report 2023 95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31. RELATED PARTY DISCLOSURES (continued)
(c) Entity with significant influence over AVJennings Limited
219,112,839 ordinary shares equating to 53.95% of the total ordinary shares on issue following share buyback and cancellation
(2022: 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 2023. 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 2023.
(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
Miscellaneous items
Joint Operation:
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.
(f) Joint ventures and Joint operations in which related entities in the Group are venturers
Joint arrangements in which the Group has an interest are set out in notes 26 and 27.
2023
$
2022
$
600,000
600,000
–
200
113,637
3,450
2,617,329
50,000
2,648,775
50,000
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31. RELATED PARTY DISCLOSURES (continued)
(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
Non-current payables
Joint Ventures and others
(h) Amounts advanced to and received from related parties
Amounts advanced
Pro9 Joint venture
Other
(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
2023
$'000
2022
$'000
526
956
1,640
1,044
150
150
1,344
–
3,500
186
–
243
2023
$
2022
$
2,524,361
90,001
527,792
87,833
4,168,405
74,317
476,934
3,009,862
160,475
168,039
70,925
353,275
49,632
( 129,055 )
3,814,662
7,818,134
(1) Current year relates to A. Carter’s Motor Vehicle benefit and final payment.
(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.
Financial Statements.AVJennings Limited – Annual Report 2023 97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
32. SHARE-BASED PAYMENT PLANS
(a) Recognised share-based payment expenses
Total expenses arising from share-based payment transactions
and disclosed as part of employee benefit expenses are shown
in the table below:
Expense arising from equity-
settled share-based payment
transactions
Expense reversed on forfeiture
of shares
Total expense/(credit) arising
from share-based payment
transactions
2023
$’000
2022
$’000
641
581
( 93 )
( 969 )
548
( 388 )
The share-based payment plan is described in note 32(b).
(b) Type of share-based payment plan
LTI grants are only made to executives who can significantly
impact the Group’s performance and create shareholder value
over the longer-term.
LTI remuneration is provided by the issue of Performance 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 Performance 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.
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. TSR is assessed against the ASX 300 Real
Estate Index (REI), a comparator group including peers in the
residential property sector. The comparator group is not directly
comparable to AVJennings as the REI contains non-residential
property participants. However, this comparator group was
chosen as the best approximation as the pool of directly
comparable listed residential developers was too small to
provide a reliable and meaningful comparator group.
Both elements of the Performance Rights (EPS and TSR) 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
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’ TSR rank against
ASX 300 RE Index at 30 September
Percentage
vesting
< median
At the median
> median but < 75th percentile
> 75th percentile
Nil
50% of the allocation
for the hurdle
Pro-rata between
50th and 75th
percentiles
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 TSR hurdle for grants for FY21 and beyond.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
32. SHARE-BASED PAYMENT PLANS (continued)
Accounting
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
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.
The Retention Rights component has been abolished for FY24
and beyond; but existing Retention Rights, granted in 2021 and
2022, will vest in accordance with the Plan Rules.
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.
(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 2023
FY2020 Grant
FY2021 Grant
FY2022 Grant
FY2023 Grant
Total
1,978,415
1,765,852
1,595,805
2,716,170
( 549,333 )
( 515,536 )
( 263,967 )
–
( 486,877 )
( 273,721 )
( 150,079 )
( 333,829 )
( 942,205 )
( 384,130 )
( 103,834 )
–
–
592,465
1,077,925
2,382,341
8,056,242
( 1,328,836 )
( 1,244,506 )
( 1,430,169 )
4,052,731
Financial Statements.AVJennings Limited – Annual Report 2023 99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
32. 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 2023 and 2022
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
33. 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
2023
Retention
2023
Performance
572,114
$0.4233
4.22
2.64 to 2.99
0.88 to 2.87
$0.46
2,144,056
$0.3194
4.22
3.01
3.04
$0.46
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
2023
$
2022
$
359,951
–
359,951
309,441
36,500
345,941
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
34. EARNINGS PER SHARE (EPS)
Basic EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the Parent by the weighted
average number of ordinary shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit attributable to ordinary equity holders of the Parent by the sum of the
weighted average number of ordinary shares outstanding during the year (adjusted for treasury shares) and the weighted average
number of ordinary shares, if any, that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
The following reflects the income and share data used in the basic and diluted EPS computations:
Profit attributable to ordinary equity holders of the Parent
Weighted average number of ordinary shares for diluted EPS
Treasury shares
Weighted average number of ordinary shares for basic EPS
35. PARENT ENTITY FINANCIAL INFORMATION
(a) Summary financial information
The individual financial statements for the Parent Entity show the following aggregate amounts:
Balance Sheet
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders' equity
Contributed equity
Reserves
Share-based payment reserve
Retained earnings
Total equity
Profit for the year
Total comprehensive income for the year
(b) Guarantees entered into by the Parent Entity
2023
$'000
2022
$'000
21,264
13,078
2023
Number
2022
Number
406,153,457
406,230,728
( 785,878 )
( 498,815 )
405,367,579
405,731,913
2023
$'000
2022
$'000
69,637
232,923
69,328
232,614
5
5
5
5
173,171
173,506
6,346
53,401
232,918
–
–
5,703
53,400
232,609
–
–
The Parent Entity has not provided any guarantees other than those mentioned in notes 15(a), 15(b), 25(c) and 37.
(c) Contingent liabilities of the Parent Entity
Please refer to note 37 for details of the Parent Entity’s contingent liabilities.
Financial Statements.AVJennings Limited – Annual Report 2023 101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
36. 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 16. The table below presents
liabilities in respect of short-term leases and leases of low value assets for which the Group has applied the recognition exemption
available under the accounting standard.
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 relating to leases contracted for at the
reporting date but not recognised as liabilities:
Within one year
After one year, but not more than five years
Total 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
Joint Venture loan commitments
2023
$'000
2022
$'000
442
287
729
715
14
729
474
305
779
395
384
779
In June 2023, the Group provided a loan of $3.5 million (2022: Nil) to the Pro9 Joint Venture. Please refer to note 26 for detailed
information about the Joint Venture. The total loan commitment for the upcoming 18 months is $9.5 million.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 102
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
37. CONTINGENCIES
Unsecured
Cross guarantees
The Parent Entity has entered into deeds of cross guarantee
in respect of the debts of certain of its controlled entities as
described in note 25(c).
38. SIGNIFICANT EVENTS AFTER BALANCE SHEET DATE
No matter or circumstance has arisen since 30 June 2023 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.
Contract performance bond facilities
39. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
The Parent Entity has entered into Deeds of Indemnity with
various controlled entities to indemnify the obligation of those
entities in relation to the Contract performance bond facilities.
Details of these entities are set out in note 25(a). Contingent
liabilities in respect of certain performance bonds, granted by
the Group’s financiers, in the normal course of business as at
30 June 2023 amounted to $30,227,000 (2022: $34,764,000).
No material liability is expected to arise.
Legal issues
Accounting Standards, Interpretations and Amendments
Several amendments and interpretations apply for the first time
in 2023, 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.
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.
40. OTHER ACCOUNTING POLICIES
Significant accounting policies relating to particular items
are set out in the relevant notes. Other significant accounting
policies adopted in the preparation of the Financial Report
are set out below.
Secured
Banking facilities
The Parent Entity has entered into a cross deed of covenant with
various controlled entities to guarantee the obligations of those
entities in relation to the banking facilities. Details of these entities
are set out in note 25(a).
Performance guarantees
Contingent liabilities in respect of certain performance
guarantees, granted by the Group bankers in the normal course
of business to unrelated parties, at 30 June 2023, amounted to
$7,931,000 (2022: $4,579,000). No liability is expected to arise.
Financial guarantees
Financial guarantees granted by the Group’s bankers to
unrelated parties in the normal course of business at 30 June
2023, amounted to $768,000 (2022: $1,515,000). No material
liability is expected to arise.
(a) Basis of consolidation
The Consolidated Financial Statements comprise the financial
statements of AVJennings Limited and its subsidiaries as at
30 June 2023. 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.
Financial Statements.AVJennings Limited – Annual Report 2023 103
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
40. OTHER ACCOUNTING POLICIES (continued)
(d) Foreign currency translation
(b) Business combinations
(i) Functional and presentation currency
Business combinations are accounted for using the acquisition
method. This involves recognising at acquisition date, separately
from goodwill, the identifiable assets acquired, the liabilities
assumed and any non-controlling interest in the acquiree. The
identifiable assets acquired and the liabilities assumed are
measured at their acquisition date fair values. Acquisition-
related costs are expensed as incurred.
(c) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the
amount of GST except:
• when the GST incurred on a sale or purchase of assets or
services is not payable to or recoverable from the taxation
authority, in which case the GST is recognised as part of the
revenue or as part of the cost of acquisition of the asset or
the expense item as applicable; and
•
receivables and payables, which are stated with the amount
of GST included.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables or
payables in the Consolidated Statement of Financial Position.
Commitments and contingencies are disclosed net of the amount
of GST recoverable from, or payable to, the taxation authority.
Cash flows are included in the Consolidated Statement of
Cash Flows on a gross basis and the GST component of cash
flows arising from investing and financing activities, which
is recoverable from, or payable to, the taxation authority is
classified as part of operating cash flows.
The Group’s functional and presentation currency is
Australian Dollars.
(ii) Translation of Group Companies’ functional currency to
presentation currency
The results and financial positions of foreign operations that
have a functional currency different from the presentation
currency are translated into the presentation currency as follows:
• assets and liabilities for each Statement of Financial Position
presented are translated at the closing rate at the date of
that Statement of Financial Position;
•
income and expenses for each Statement of Comprehensive
Income are translated at average exchange rates; and
• all resulting exchange differences are recognised in other
comprehensive income.
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities are
recognised in other comprehensive income. When a foreign
operation is sold or any borrowings forming part of the net
investment are repaid, the associated exchange differences are
reclassified to profit or loss, as part of the gain or loss on sale.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 104
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 2023 and of their performance for the year ended
on that date; and
b) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and
Corporations Regulations 2001;
ii)
the Consolidated Financial Statements and Notes also comply with International Financial Reporting Standards as disclosed
in Note 29; and
iii) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
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 2023.
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 25 will be able to meet any obligations or liabilities to which they are or may become subject, by
virtue of the Deed of Cross Guarantee.
On behalf of the Board
Simon Cheong
Director
30 August 2023
Philip Kearns
Director
Financial Statements.AVJennings Limited – Annual Report 2023
105
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 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 2023, 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
Act 2001, including:
a)
b)
giving a true and fair view of the consolidated financial position of the Group as at 30 June
2023 and of its consolidated financial performance for the year ended on that date; and
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
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.
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 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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106
1. Net realisable value of inventories
Why significant
How our audit addressed the key audit matter
Inventories comprise 93% of the
Group’s total assets. Inventories are
carried at the lower of cost and net
realisable value and the directors
assess this with reference to the
following:
• Capitalised costs to date
• Forecast costs to complete
• Average historic and
forecast selling prices and
sales rates for each project
• Changes in macro-economic
conditions impacting
forecast assumptions
This was considered a key audit
matter as the assessment of net
realisable value involves a
significant degree of judgment and
can present a range of alternative
outcomes.
Disclosure of inventories is included
in Note 7 of the financial report.
Disclosure of significant judgments
is included in Note 22 of the
financial report.
Our audit procedures focused on assessing the judgments
and assumptions made by the Group in the feasibilities
underpinning the net realisable value assessments.
Our procedures included the following:
• Assessed the effectiveness of relevant controls
over cost accumulation and capitalisation
• Discussions with Project Managers to understand
the status and progress of a sample of
developments
• Assessed the impairment methodology, project
margin analysis and feasibility models prepared by
management for a sample of developments in
progress
•
Identified higher risk projects, based on our
judgment, and evaluated the assumptions adopted.
In doing so, we:
• Compared the forecast sales revenue
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
• Assessed contingency estimates for
remaining development risks
• Selected a sample of identified higher risk
projects in which we involved our internal
real estate valuation specialists to evaluate
the key sales revenue and cost assumptions
in these projects
• Performed sensitivity analyses in relation to the key
forward looking assumptions including sales price
achieved, cost per lot and escalation rates.
• Considered the impact of the current market
conditions, increasing costs and higher interest
rates on the Group’s forward-looking assumptions.
• Tested the mathematical accuracy of the
feasibilities selected.
• Considered the related financial report disclosures.
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AVJennings Limited – Annual Report 2023
107
How our audit addressed the key audit matter
How our audit addressed the key audit matter
Our audit procedures focused on assessing the judgments
Our audit procedures focused on assessing the judgments
and assumptions made by the Group and our procedures
and assumptions made by the Group and our procedures
included the following:
included the following:
• Assessed the reasonableness of the inputs and
• Assessed the reasonableness of the inputs and
assumptions used in the board approved cash flow
assumptions used in the board approved cash flow
forecasts against historical performance, economic
forecasts against historical performance, economic
and industry indicators, publicly available
and industry indicators, publicly available
information and the Group’s strategic plans
information and the Group’s strategic plans
• Assessed the Group’s calculation of financial
• Assessed the Group’s calculation of financial
covenant compliance, its considerations of forecast
covenant compliance, its considerations of forecast
compliance for the next 12 months and sensitivity
compliance for the next 12 months and sensitivity
analysis
analysis
• Obtained confirmation from lenders to confirm the
• Obtained confirmation from lenders to confirm the
outstanding balance of the facility, limit and
outstanding balance of the facility, limit and
maturity
maturity
• Considered the impact of the current market
• Considered the impact of the current market
conditions, increasing costs and higher interest
conditions, increasing costs and higher interest
rates on the Group’s forward-looking cash flow
rates on the Group’s forward-looking cash flow
assumptions.
assumptions.
2. Funding and cash flow forecasts
2. Funding and cash flow forecasts
Why significant
Why significant
As described in note 15, the Group’s
As described in note 15, the Group’s
principal banking arrangements are
principal banking arrangements are
a $300m facility which matures on
a $300m facility which matures on
30 September 2024. At 30 June
30 September 2024. At 30 June
2023 the group had utilised
2023 the group had utilised
$171.3m of this facility in relation
$171.3m of this facility in relation
to bank loans which is classified as a
to bank loans which is classified as a
non-current liability.
non-current liability.
The availability of adequate funding
The availability of adequate funding
and compliance with applicable
and compliance with applicable
financial covenants associated with
financial covenants associated with
borrowing facilities are important in
borrowing facilities are important in
the assessment of whether the
the assessment of whether the
going concern basis of preparation
going concern basis of preparation
of the financial statements is
of the financial statements is
appropriate.
appropriate.
This was considered a key audit
This was considered a key audit
matter as the availability of
matter as the availability of
adequate funding and the
adequate funding and the
assessment of whether the Group
assessment of whether the Group
expects to pay its debts as and when
expects to pay its debts as and when
they fall due and compliance of
they fall due and compliance of
facility covenants involves a
facility covenants involves a
significant degree of judgment and
significant degree of judgment and
can present a range of alternative
can present a range of alternative
outcomes that need to be
outcomes that need to be
considered.
considered.
Information Other than the Financial Report and Auditor’s Report Thereon
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2023 annual report, but does not include the financial report
information included in the Company’s 2023 annual report, but does not include the financial report
and our auditor’s report thereon.
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
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
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
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
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.
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
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.
other information, we are required to report that fact. We have nothing to report in this regard.
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023
108
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.
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:
•
•
•
•
•
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
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
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
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
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AVJennings Limited – Annual Report 2023
109
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
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
June 2023.
In our opinion, the Remuneration Report of AVJennings Limited for the year ended 30 June 2023,
complies with section 300A of the Corporations Act 2001.
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
30 August 2023
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023
110
Shareholder Information.
As at 21 August 2023.
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
622
712
262
539
162
2,297
677
276
552
172
197
26
1,223
326
Total
898
1,264
434
736
188
3,520
1,003
Ordinary
Shares
219,112,839
%%
53.95
AVJennings Limited – Annual Report 2023 As at 21 August 2023.
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
Jamplat Pty Ltd
Horrie Pty Ltd
Luton Pty Ltd
Mr Bradley J Newcombe
Ago Pty Ltd
JP Morgan Nominees Australia Pty Ltd
Anchorfield Pty Ltd
Mr Peter Summers
Pacific Custodians Pty Ltd AVJ Def Emp Share Trust
Dr D R M Gill and Mrs J M Gill
Di Iulio Homes Pty Ltd
Bond Street Custodians Limited
Total
111
Ordinary
Shares
%%
224,818,914
55.35
18,239,008
17,841,050
14,293,449
11,402,575
6,343,003
5,609,105
5,598,712
4,700,000
3,783,369
3,544,263
3,400,000
3,313,285
2,873,978
2,400,000
2,317,819
2,244,456
1,958,511
1,851,472
1,500,000
4.49
4.39
3.52
2.81
1.56
1.38
1.38
1.16
0.93
0.87
0.84
0.82
0.71
0.59
0.57
0.55
0.48
0.46
0.37
338,032,969
83.23
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 112
Shareholder Information.
As at 21 August 2023.
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
Ordinary
Shares
192,463,638
11,946,063
1,782,618
1,570,170
1,408,420
899,283
804,175
793,536
681,796
662,485
532,828
452,507
368,480
313,931
283,414
269,172
240,737
224,820
224,220
216,873
%%
47.39
2.94
0.44
0.39
0.35
0.22
0.20
0.20
0.1 7
0.16
0.1 3
0.1 1
0.09
0.08
0.07
0.07
0.06
0.06
0.06
0.05
216,139,166
53.22
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 406,153,457.
AVJennings Limited – Annual Report 2023 Company Particulars.
113
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 50, South Tower Rialto,
525 Collins Street
Melbourne VIC 3000
Singapore
The Company’s shares are also quoted and traded on:
The Singapore Exchange
11 North Buona Vista Drive #06-07
The Metropolis Tower 2
Singapore 138589
through SGX GlobalQuote (formerly known as
the Central Limit Order Book System (CLOB)).
SHARE REGISTRY
Australia
Link Market Services Ltd
Tower 4
727 Collins Street
Docklands VIC 3008
Telephone: +61 1300 554 474
Singapore
The Central Depository (Pte) Ltd
11 North Buona Vista Drive #06-07
The Metropolis Tower 2
Singapore 138589
Telephone +65 6535 7511
DIVIDENDS
An Interim Dividend of $0.011 for FY23
was paid on 24 March 2023.
A final dividend for FY23 was not declared.
COMPANY OVERVIEWGOVERNANCE & SUSTAINABILITYDIRECTORS’ REPORTFINANCIAL STATEMENTSADDITIONAL INFORMATIONAVJennings Limited – Annual Report 2023 114
Notes.
AVJennings Limited – Annual Report 2023 Building
on our past.
Shaping
your future.
Your
community
developer.