2014 HALF YEAR RESULTS PRESENTATION 13 August 2014 DAVID KEIR Managing Director & CEO CRAIG BELLAMY Chief Financial Officer
2012 - 2013 FULL YEAR RESULTS 2014 HALF YEAR RESULTS PRESENTATION 13 August 2014 DISCLAIMER While every effort is made to provide accurate and complete information, Devine does not warrant or represent that the information in this presentation is free from errors or omissions or is suitable for your intended use. The information provided in this presentation may not be suitable for your specific situation or needs and should not be relied upon by you in substitution of you obtaining independent advice. Subject to any terms implied by law and which cannot be excluded, Devine accepts no responsibility for any loss, damage, cost or expense (whether direct or indirect) incurred by you as a result of any error, omission or misrepresentation in information in this presentation. All information in this presentation is subject to change without notice. The material contained in this presentation is for information purposes only and does not constitute financial product advice. The information contained in this presentation had been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. Before making any investment decision, you should consider, with or without the assistance of a financial adviser, whether an investment is appropriate in light of your particular investment needs, objectives and financial circumstances. Nothing in this presentation is a promise or representation as to the future. Statements or assumptions in this presentation as to future matters may prove to be incorrect and the differences may be material. 2
2012 - 2013 FULL YEAR RESULTS 2014 HALF YEAR RESULTS PRESENTATION 13 August 2014 CONTENTS 1. Overview 2. Corporate Sale Update 3. Period Highlights 4. Financial Performance 5. Business Unit Performance 6. Strategy 7. Market Snapshot 8. Pipeline Summary 3
1. OVERVIEW Half year results • Total revenue up 21% to $175.2 million • Land settlements of 392 allotments for the period • 314 home commencements in the six months • Construction work-in-hand of $179 million secured • Development business delivered strong profit result • Pre-tax profit of $5.6 million (compared to a pre-tax loss of $6.9 million for same period last year) • Delivered positive operating cash flow surplus of $41.8 million (compared to $10.3 million for the same period last year) • Balance sheet enhanced with debt reduction and gearing reduced to 16% • No dividend declared for the period • Company sale process commenced in August 2014 4
2. CORPORATE SALE UPDATE Company sale process established and commenced • On 25 June 2014, Devine (DVN) announced that majority shareholder Leighton Holdings Limited (LEI) was seeking potential purchasers for its 50.6% investment in DVN • The Company advised that given the stated desire of its majority shareholder, Directors believe a company led process examining the sale of all shares was warranted • DVN and LEI have entered into arrangements in relation to the sale process • The process will be administered solely by DVN and overseen by an Independent Board Committee of DVN in consultation with LEI and its advisers • The Expressions of Interest process has commenced, with EOI’s to be lodged by 25 August 2014 • Shortlisted proponents will be granted access to due diligence, subject to appropriate confidentiality arrangements, during September 2014 • There are no assurances that a sale of DVN will be finalised or what form the transaction (if any) will ultimately take 5
3. PERIOD HIGHLIGHTS Recovery on track • Residential land settlements of 392 lots met expectations for the period; with 85% of the full year target settled or subject to contract as at 30 June 2014 • Housing commencements on target with 314 starts; and 80% of the full year forecast construction commencements either started or subject to contract • Settlements at Hamilton Harbour remained strong; with only 1 apartment of 660 in total remaining unsold • Sale and settlement of the Camelot CBD site and the KSD1 Commercial and Central Retail Buildings at Hamilton Harbour achieved during the period • DoubleOne3 sales nearing 90% of total project. Settlements commenced in July 2014 with 78 apartments settled during the month • The Company sold its 50% share in the Parramatta apartment opportunity in Sydney during the period • Pre-sales commenced at the157 apartment Mode project in the Brisbane, with 70% pre-sold or reserved as at 30 June 2014 • Devine Constructions awarded the contract to deliver the Westmark Milton project in Brisbane, with construction expected to commence in 2014 • Devine Constructions’ work-in-hand of $179 million, with projects to be delivered over the next 24 months 6
3. PERIOD HIGHLIGHTS Capital recycling plan activated • Capital recycling plan initiated in late 2013 to reduce debt and provide for higher margin opportunities in the future • All transactions initiated under the plan have been sold at or above book value • The “trade-out” of impaired projects remains ongoing with improved sales volumes across numerous projects New terrace homes at Devine’s Orleana Waters • Capital recycling plan has resulted in significant debt Community in South Australia reduction and modest gearing level at 16% • As an outcome of the capital recycling plan and the subsequent debt reduction, the company has accelerated activities across a number of projects as well as identified new opportunities. Spacious interiors add to the appeal of Devine’s DoubleOne3 apartments in Brisbane 7
4. FINANCIAL PERFORMANCE HY14 Financial Overview $ millions 6 months to 6 months to June 2014 June 2013 Net Profit before Tax 5.6 (6.9) Statutory Net Profit / Loss (after Tax) 0.5 (4.7) 1 Total Revenue 175.2 144.2 Earnings Per Share (cents) 0.3 (3.0) 1 Excludes revenues from equity accounted joint ventures • Total revenue up 21% on corresponding comparative period • Improved profit outcome recorded before and after tax • Tax expense high for the period due to sales of previously impaired assets • No tax was payable despite increased tax expense 8
4. FINANCIAL PERFORMANCE HY14 Divisional Results 1 Excludes revenue from joint ventures Development 1 Communities Housing Constructions Other Segment Revenue 66.9 54.8 10.4 42.6 0.6 6 months to June 2014 Profit / (Loss) Before 1.0 (2.1) 6.6 2.1 (1.9) ($ millions) Tax 1 Segment Revenue 66.8 57.2 3.1 16.6 0.4 6 months to June 2013 Profit / (Loss) Before 5.4 (4.2) (10.5)* 3.3 (0.9) ($ millions) Tax * Note: includes impairment charge of $10.0M • Communities’ result impacted by volume of Revenue settlements from impaired projects and slowing of Adelaide and Gladstone markets • Housing performance improving through structural and operational changes. Current result includes completion of existing workbook at lower margins • Development result includes sale of 50% interest in Parramatta apartment project 9
4. FINANCIAL PERFORMANCE Operating cash flow $ millions Six months to Six months to 30 June 2014 30 June 2013 Cash flows from operating activities Receipts from customers (inclusive of GST) 183.5 160.5 Payments to suppliers and employees (inclusive of GST) (134.9) (148.4) Profit distributions received from joint ventures - 2.8 Net finance costs (6.8) (4.9) Income taxes - 0.3 41.8 10.3 Net cash inflow from operating activities • Receipts from customers improved 14% on the corresponding comparative period • Operating cash surplus of $41.8 million for the six months • Re-investment opportunities emerging and being considered 10
4. FINANCIAL PERFORMANCE HY14 Balance Sheet Summary $ millions As at As at 30 June 2014 31 December 2013 23.5 11.3 Assets - Cash - Receivables 73.5 82.1 316.4 357.8 - Inventories/Investments - Other 11.4 17.8 424.8 469.0 Total Assets Liabilities - Trade and other payables 85.8 64.8 63.4 123.5 - Interest bearing debt - Non-interest bearing debt 25.5 30.0 4.6 6.0 - Other Total Liabilities 179.3 224.3 Net assets/shareholder funds 245.5 244.7 Net Tangible Assets (NTA) 242.2 241.4 NTA per share $1.53 $1.52 Gearing 1 16% 31% 1 Gearing is defined as (interest bearing & non-interest bearing debt – cash held) / (total assets – cash held) 11
4. FINANCIAL PERFORMANCE Improved position to pursue new opportunities Key Metrics As at As at $ millions 30 June 2014 31 December 2013 23.5 11.3 Cash 63.4 123.5 Total Interest Bearing Debt 16% 31% Gearing 1 100 44 Available facility 2 1 Gearing is defined as (interest bearing & non-interest bearing debt – cash held) / (total assets – cash held) 2 Subject to satisfactory security Gearing (%) 1 • Gearing at low levels as consequence of interest bearing debt being reduced by $60 million (49%) • Improved capacity to fund acquisitions to improve future earnings • Core debt facility matures August 2015 • Facility to be renegotiated over the next six months 12
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