Property development and residential construction firm AV Jennings has lost money for the second year in a row as revenue plummeted amid extremely weak housing market.
The company says, however, that it expects better performance going forward as home building conditions improve.
In its latest announcement, AV Jennings says it suffered a net loss after tax of $15.3 million for the year ended June 30 2013 – down from losses of $29.8 million in the 12 months to June last year.
The company blamed the latest result on low demand (overall revenue dropped from $188.8 millon to $158.5 million).
It says, however, that it witnessed significant improvement during the second half of the year with second half revenue ($105.6 million) being almost double that of the first half and a doubling of lots under development from 318 in June last year to 715 as of June 30 this year amid much stronger signings. AV Jennings said it achieved these gains without undue margin sacrifice or offering significant inducements.
Furthermore, it says conditions are now improving in key markets.
“Consumer confidence in the key New South Wales market seems to have lifted over the last six months in particular, reversing a decade-long trend, while that in southern Queensland has shown more recent signs of improvement as pricing has realigned with historical relativities to the other eastern capitals,” AV Jennings said in its statement.
The company also says the numbers presented in the financial results are misleadingly low and do not adequately reflect the latest uptick in market conditions because of long working capital cycles in residential development.
Supporting the company’s contention, Housing Industry Association data indicates that after bottoming out in September last year, sales of new homes throughout the country rose in eight of the last nine months of 2012/13.
Although consecutive losses have inevitably impacted its financial position, AV Jennings says it remains compliant with all lending covenants and is actively diversifying its funding sources.
Thanks to the raising of $40 million through an entitlement offer, the company says its net debt fell from $129.2 million in June 2012 to $83.3 million as at June 2013.