- Property developer AVJennings (AVJ) says it has implemented a number of measures to offset the impact of COVID-19, and is in a solid position to outlast a marginal downturn in business
- Its resilience was largely attributed to acquisitions made last year, which have helped to spread both risks and rewards between the company's associated parties
- To lessen COVID-19's economic effects, employees have moved to a four-day workweek, and the board of directors have accepted a reduction in their fees
- To date, the settlements of pre-sales are continuing largely in line with AVJ's expectations
- AVJennings stock is flat in midday trade, with shares selling for 38.5 cents each
Property developer AVJennings (AVJ) says it has implemented a number of measures to offset the impact of COVID-19, and is in a solid position to outlast a marginal downturn in business.
Based in Victoria, the company acknowledged in its latest announcement that the pandemic is, first and foremost, “a serious health crisis.” As such, it has initiated a range of policies to ensure the wellbeing of its employees, suppliers, customers and the wider community.
In Friday's announcement, AVJennings noted the strong position from which it entered the pandemic. This included a healthy balance sheet, good liquidity and sufficient funding for the medium-term.
Further to this, the company attributed its resilience largely to acquisitions made last year, which have not unnecessarily exposed it to short-term fluctuations in asset values.
These large packages of land, such as those in Caboolture, Queensland, were acquired on capital-efficient terms. This has helped to spread both risks and rewards between the associated parties, thereby reducing the impact on AVJennings’ balance sheet.
In addition, the company has made efforts to stem the flow of its operating costs. Most employees have moved to a four-day workweek, the board of directors has accepted a reduction to their fees, and the Federal Government’s ‘JobKeeper’ subsidy has been secured.
In further positive news, the settlement of pre-sales are continuing largely in line with expectations, albeit with a marginal increase in deferrals. AVJennings also noted several rescissions, which have previously been uncommon. Overall, sales are continuing to occur.
However, both sales and enquiry levels have been reported at a lower level than which might be expected in a coronavirus-free economy, but still remain above short-term expectations.
There has also been a drop-off in net contract signings. February reported a total of 100 signings, while March and April reported 57 and 51 respectively. Contract signings for May are expected to be in line with those in April.
Many of these transactions were made with builders and other corporate customers, rather than retail buyers. AVJennings believes that this is an indication of underlying confidence in the medium to long-term outlook for the market.
Despite these marginal declines, the company maintains that its full-year results for the 2020 financial year will be stronger than the year before.
AVJennings stock is flat in midday trade, with shares selling for 38.5 cents each at 12:58 pm AEST.