Financial Statements and Related Announcement::Full Yearly Results

Results for Announcement to the Market

Appendix 4E for the year ended 30 June 2021

Explanation of results

The Operating and Financial Review in the Directors' Report provides an explanation of the results.

AVJennings Limited ABN 44 004 327 771 - Page 3 30 June 2021 Preliminary Final Report

Directors' Report

For the year ended 30 June 2021

The Directors present their Report on the Company and its controlled entities for the year ended 30 June 2021.

DIRECTORS

The names of the Company's Directors in office during the year and until the date of this Report are as below. Directors were in office for the entire period unless otherwise stated.

OPERATING AND FINANCIAL REVIEW

Financial Results

AVJennings earned Profit Before Tax of $26.7M for the year ended 30 June 2021, well up on the prior year (30 June 2020 PBT: $13.2M) and its best result since 2018 (FY19 PBT: $23.8M and FY18 PBT $45.1M). Profit After Tax was $18.7M (30 June 2020: $9.0M).

In FY21, revenue increased to $311.1M up from $262.4M for 2020. Contract signings of 953 lots were well up on the prior period (FY20: 697 lots), with some 431 contracts amounting to $127.1M carried across balance date. Around 402, amounting to $111.6M, of these contracts are expected to settle during FY22, which will help underpin future results. The results included $2.8M in JobKeeper receipts.

Average gross margin remained stable at 22.6%, while the average net margin improved slightly. The result was achieved after allowing for $1.8M in additional provision (having no cash impact), that was largely confined to two projects in South Australia.

Dividend

The quality of the result coupled with the strong level of presales carried over balance date led directors to declare a final fully franked cash dividend of 1.8 cents per share, which together with the interim dividend of 0.7 cents per share declared for the first half, brings the total dividends declared, fully franked, in respect of FY21 to 2.5 cents per share. Based upon VWAP of 60.1366 cents per share (June 2021), this represents a yield of 4.2% before franking credits (fully franked 5.9% grossed up). The DRP will remain suspended.

AVJennings Limited ABN 44 004 327 771 - Page 4 30 June 2021 Preliminary Final Report

Directors' Report

For the year ended 30 June 2021

OPERATING AND FINANCIAL REVIEW (continued)

Business Overview

Strong contributions were generated by our major regions, highlighting the benefits of geographical diversification. The first stage of our flagship project 'Ara Hills' in New Zealand was completed and achieved significant revenue recognition. 'Arcadian Hills' and 'Spring Farm' in New South Wales performed well, generating strong margins from net price escalation as demand outstripped supply. In Victoria, the latest stages of 'Lyndarum North' sold out and the bulk of apartments in the 'Empress' building at 'Waterline Place' settled. In Queensland, the current stages of 'Cadence' and 'Riverton' sold and settled.

Pleasingly, after a period of hiatus, activity in some lower margin South Australian and Queensland projects was stimulated, enabling us to accelerate the recovery of capital which will be redeployed with the intention of improving the mix of average Company margins in the future.

The FY21 period also saw significant milestones achieved which are critical to future results. The Company commenced development at Rosella Rise, Warnervale (New South Wales) and Aspect, Mernda (Victoria), in strong growth areas. Planning approvals were obtained, and physical works commenced at Harvest Square, Brunswick West, which is a project conducted in partnership with the Victorian Government that will see a much needed increase in the supply of high quality social housing in a great community setting. The Company also commenced planning for the next and largest apartment building at Waterline Place, Williamstown (Victoria). Excellent progress was also made in relation to the planning and approval process for our large-scale,master-planned project at Caboolture.

During FY21 the Company also increased the level of housing under construction at our projects. The year saw 181 dwellings started, compared with 132 dwellings in FY20 and we plan to increase this further in FY22. Increasing the level of built form not only provides more choice to customers, but also enables the Company to enhance returns by extracting maximum value from each project.

As the economy opened up and market conditions improved, work-in-progress levels increased. As at 30 June 2021 the company had 1,537 lots under development (FY20: 1,117 lots.) This has increased significantly from the earliest phase of the pandemic when the Company preserved capital and intentionally delayed the commencement of building activity unless it was directly connected with a sales contract. In addition to new starts during FY22, we expect to complete around 787 of these carried-over lots in FY22 (comprises land-only lots, houses and apartments), of which some 265 will be improved with low-rise dwellings.

Balance Sheet and Land Holdings

Strong settlements of 905 lots (FY20: 827 lots) drove net cash from operations of $64.0M, well up on FY20 ($10.6M). This enabled the Company to reduce net debt and gearing to $125.4M and 20.1% (net debt/total assets) (FY20: $184.4M and 28.1%) respectively, creating headroom to fund increased investment in work-in-progress and a programme of future acquisitions in line with the Company's significant growth ambitions.

Total inventory including land under option stood at 12,180 lots (FY20: 12,134 lots).

AVJennings Limited ABN 44 004 327 771 - Page 5 30 June 2021 Preliminary Final Report