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AVJennings' FY2016 profit rises 19% to A$40.9m

AUSTRALIAN residential property developer AVJennings on Thursday posted a 19 per cent rise in its full-year net profit to A$40.9 million (S$42 million), lifted by higher revenue.

This represents earnings per share of 10.71 Australian cents, up 18.6 per cent.

For its financial year ended June 30, 2016, revenues grew 32.7 per cent year on year to A$421.9 million on the back of changes in product mix and project share. The company also benefited from announcements made in prior periods that it would acquire the interests of joint-venture partners in the "Argyle", Sydney and "St Clair", Adelaide projects.

Strong revenues in the second half of FY2016, substantial post-balance date cash inflows from the collection of receivables and confidence in the outlook for FY2017 enabled the directors to declare a fully franked final dividend of 3.5 Australian cents per share to be paid in September 2016.

This brings total dividends declared for 2016 to five Australian cents per share.

"Continuing high levels of production, sales and settlements together with stable gross margins in most jurisdictions contributed to the pleasing full year result. New South Wales, Queensland and New Zealand all continued to benefit from the net positive effect of active project and product mix changes that enabled the company to capitalise on the differing strengths of each market," AVJennings said.

Gearing remained low with net debt/total assets of only 17.9 per cent (total net debt of A$132.4 million), moderately above the position at June 30, 2015 (13.6 per cent) but well below that at Dec 31, 2015 (22.9 per cent).

In its outlook, the group said while specific micro-markets such as some inner-city areas of Sydney and Melbourne continue to experience strong price growth, it is not true of most of its estates where price growth is moderated by competition.

"The company is confident that demand for its products is sustainable given its clear strategy of delivering traditional housing solutions at affordable prices in well-planned communities rather than participating in more volatile segments."

Despite the disruption of a protracted federal election campaign and some ongoing policy uncertainties, it said the outlook for key residential property industry demand drivers remains positive, particularly in the context of traditional housing.

"Low interest rates and inflation, positive population growth and continuing shortages of detached and semi-detached houses and low rise apartments in Sydney, Melbourne and Auckland should all help underpin demand from the owner-occupiers and local investors targeted by AVJennings.

"While activity patterns and growth rates in some markets are changing, the usual bias of results towards the second half of the financial year will remain and contract signings in FY2017 are expected to be at a similar level to that achieved in 2016."