1H25 Results Presentation

• Revenue increased 9.1% to $131.4m, driven by higher apartment settlements
• Gross margin impacted by product mix, cost escalation, and capital recycling initiatives
• Disciplined overhead management despite cost inflation

AVJennings Ltd reported its 1H25 financial results, with revenue increasing 9.1% to $131.4m driven by higher apartment settlements. Gross margin was 22.2%, down from 25.8% in the prior corresponding period, impacted by product mix, cost escalation in built-form housing, and capital recycling initiatives. The company maintained disciplined overhead management, with employee, management, and admin expenses down 2.6% despite cost inflation. Profit before tax was $3.6m, down 14.3% from the prior corresponding period. The company's strategy to transform, modernise, and grow remains focused on flexible product offerings, modernising its foundations, and building annuity income streams through initiatives like the Pro9 walling system. The company's balance sheet remains strong, with increased financial flexibility following a debt facility modernisation. No new acquisitions were made in 1H25, as the company focused on completing apartment projects and funding increased built-form housing construction. The company expects a significant revenue and earnings skew to the second half of FY25, with ongoing risks related to the recovery in the Victorian and New Zealand markets and achieving full production within the Pro9 factory. Three new projects are on track to start development in the next 12 months, providing greater future earnings visibility.

FY25 gross margin (%) is expected to be down on FY24 due to the greater skew towards apartments and built-form housing.

Segmentation across regional markets is expected to persist throughout FY25, with Queensland and South Australia likely to continue outperforming, while affordability constraints may impact New South Wales, Victoria, and New Zealand. The recent commencement of interest rate cuts in New Zealand has already led to improved buyer sentiment, with similar trends anticipated in Australia following the recently announced interest rate cuts. The company's expectations for a significant revenue and earnings skew to the second half of FY25 remain, with ongoing risks related to recovery in the Victorian and New Zealand markets and achieving timely full production within the Pro9 factory.