Avjennings : Appendix 4E - 30 June 2017 Preliminary Final Report Opens in a new Window

AVJennings Limited ABN: 44 004 327 771

30 June 2017 Preliminary Final Report

Appendix 4E

This Financial Report does not include all the notes of the type normally included in an Annual Financial Report. Accordingly, it is recommended that this Report be read in conjunction with the Annual Report for the year ended 30 June 2016 and any public announcements made by AVJennings Limited during the year ended 30 June 2017 in accordance with the continuous disclosure requirements of the Listing Rules of the Australian Securities Exchange.

AVJennings Limited ABN 44 004 327 771 - Page 1

30 June 2017 Preliminary Final Report

Contents

Results for Announcement to the Market. 3

Directors' Report. 4

Consolidated Statement of Comprehensive Income 9

Consolidated Statement of Financial Position 10

Consolidated Statement of Changes in Equity 11

Consolidated Statement of Cash Flows 12

Notes to the Consolidated Financial Statements. 13

1. Corporate information 13

2. Basis of preparation and accounting policies. 13

3. Revenues and expenses 14

4. Income tax 15

5. Dividends 16

6. Contributed equity 17

7. Operating segments 18

8. Net tangible asset backing 21

9. Interest in joint operations. 21

10. Investments accounted for using the equity method. 22

11. Interest-bearing loans and borrowings. 22

12. Contingencies. 23

13. Significant events after the balance sheet date 23

14. Status of review of accounts. 23

For the year ended 30 June 2017

Your Directors present their Report on the Company and its controlled entities for the year ended 30 June 2017.

The names of the Company's Directors in office during the year and until the date of this Report are as below. Directors were in office for the entire period unless otherwise stated.

S Cheong Non-Executive Chairman

RJ Rowley Non-Executive Deputy Chairman

PK Summers Managing Director and Chief Executive Officer

E Sam Non-Executive Director

B Chin Non-Executive Director

BG Hayman Non-Executive Director

TP Lai Non-Executive Director

D Tsang Non-Executive Director (resigned 9 June 2017)

BL Tan Non-Executive Director (appointed 9 June 2017)

Summary

In recent years, the Company has seen its operations expand in many key areas. Most directly, an increase in work in progress levels saw profits rise substantially. In FY15 profit was up 78.3% and in FY16 it was up 22.0%.

During the 2017 financial year, the Company continued to increase activity levels, partly in response to continuing sound market conditions but also in reflection of changing dynamics within the business.

Essentially, the business entered a phase where there were two significant influences on its operations: firstly, the increased momentum generated in prior years that underpinned profit growth from existing or older projects reached maturity, and secondly the focus shifted to the next stage of the Company's development, which involved the commencement of a number of new projects, many of significant scale.

While similar levels of activity were generated in FY17 by those older projects their contribution will progressively diminish, although this will be more than offset as new projects gradually reach the profit recognition stage. The nature of residential land development is that new projects take time to ramp up. Additionally, some of these projects necessarily have a greater built form component that will ultimately generate greater profitability due to the higher value-capture from the work completed, albeit it takes longer to achieve.

Pleasingly, the business made substantial progress in this second phase of its evolution while at the same time generating good results for FY17. Underlying contract signings were approximately the same as last year. As explained further below, bad weather on the eastern seaboard during the months of March and April did create some additional delays in getting contracts to profit recognition stage. This affected around 98 contracts which, had they settled in FY17, would have meant the result for FY17 would have been similar to that for the previous year.