AVJennings H1 net profit up 42% to S$11.87m

RESIDENTIAL property developer AVJennings Ltd marked a 42.1 per cent jump in its net profit for its fiscal first half ended Dec 31, 2014 to S$11.87 million on the back of higher revenue and lower provision for loss on inventories.

Revenue for the six-month period grew 13.7 per cent from a year ago to S$118.5 million. Provision for loss on inventories fell 27.8 per cent year on year to S$3.7 million.

AVJennings noted that increased production levels in previous periods, based on improving market conditions, were the catalyst for the strong first-half results. This trend continued in the six months to Dec 31, 2014, with work-in-progress levels rising a further 21.8 per cent from June 30, 2014.

"The level of contracts signed in the first half will underpin settlements in the second given that, as in prior periods, the company's results are biased towards the second half due to production staging and seasonality," the group said on Monday.

"The directors believe that it is appropriate to provide guidance of contract signings for the year ending June 30, 2015 in the range of 1,700 to 1,900 lots; previously 1,500 to 1,700 lots," it added.

The group has declared an interim dividend of one cent per share to be paid in April.

AVJennings noted that market fundamentals remained positive over the second half ending June 30, despite some headwinds internationally, with continued strong consumer confidence bolstered by low interest rates and inflation, underlying housing shortages in some markets (especially Sydney, Brisbane and Auckland) and continued strong population growth in both Australia and New Zealand.

It is expecting strong cash generation from mature projects over the next two years, "so prudent stock replenishment is an increasing priority".