Devine Limited 2010 Full Year Results Presentation 26 August, 2010 David Keir – Managing Director & CEO Paul Cochrane – Chief Financial Officer
Contents 1. Overview 2. Financial Year 2010 Highlights 3. Divisional Performance 4. Capital Management 5. Development Pipeline 6. Strategy & Outlook 7. Profile – Senior Executive Team 2
1. Overview 3
FY 10 Performance Overview � Underlying profit after tax of $21.4 million; up 28% on FY09 result � Net profit after tax of $8.2 million reflects one-off charges and impairments taken at the half year � Total revenue from operations of $571 million; up 33% on FY09 � Gearing (Net Debt / Total Assets) 23%; down from 49% in FY09 � Dividend of 1.0 cent per share fully franked � Positive operating cash flow of $139 million; up 101% on FY09 � $66.3 million capital raising completed in March 2010 � Evergreen core debt facility renegotiated and extended to July 2012 � Record allotment settlements of 2,200 in FY10 � Carry forward contracts for housing and land very strong with approximately 40% FY11 target secured 4
FY10 Operating Highlights Demonstrated Capability � 2,200 residential allotments settled in FY10 � 1,057 houses commenced in FY10 � 450 unconditional apartment sales in flagship Hamilton Harbour project since launch in April 2009 � Successfully secured construction finance of $163 million for funding of Hamilton Harbour Joint Venture with Leighton Properties � Early completion of Bourke Street Apartment Hotel Project (pre-sold for $136 million) Business Review Completed � Business to focus on residential sector resulting in: • Increased predictability of cashflows and earnings from operations • Release of capital tied-up in non-aligned projects Expanded Management Team � New and expanded management team appointed to deliver strategic growth and direction Growth Focus � Residential pipeline replenished with addition of 2,700 lots ($500 million end value) across three new projects in growth corridors � Adoption of a Growth Plan focused on the established and emerging markets in Australian residential sector 5
Platform for Growth Established Residential Brand � The Devine brand is one of the most recognised in the Australian residential property industry � Devine has created more than 18,500 homes and 3,000 apartments since it listed in 1993 � Opportunity to increase penetration via new projects, expanded product offer and geographic expansion Integrated Developer � The “Integrated Developer” business model is a strong competitive advantage • Underpins Devine’s profit margin and market share through a diversified product offering and by targeting a number of buyer segments • Provides flexibility to take advantage of changing market conditions and opportunities • Enables the efficient and seamless development of land and home construction – providing end-to-end delivery • Gives Devine greater access to the affordable housing market Clear Focus � Devine’s focus will remain on the residential sector, in particular: • Housing and communities within specific geographies and growth corridors • Density development from high rise inner city/near city apartments • Density development on lower scale mid and low rise residential projects 6
Market Conditions � Market conditions continue to be positive with underlying demand for residential property to increase with strong population growth � Residential demand continues to out-pace supply � Several years of ‘catch-up’ are required as a result of the imbalance and requires government interaction and reform � Residential house prices have recovered strongly through FY10, and are now stabilising with the annual capital city median house price growth at 10.5% to $465,000 at June 2010 1 � Recent interest rate movement has moderated Source: ANZ Economics consumer confidence � Affordability remains a challenge as a result of increased financing costs and housing prices: • Australian average of 32.6% of household income to service home loan 2 � Economic fundamentals remain stable: • Unemployment rate remains low • Vacancy rates remain low in all capital cities 1 Source: RP-Data Rismark Source: RP-Data Rismark 2 Source: PRD Nationwide Research 7
2. Financial Year 2010 Highlights 8
Financial Year 2010 Highlights $ millions 2010 2009 % change Revenue 570.9 427.7 33% Gross profit incl. other revenue but excludes 138.8 136.1 one-off items Expenses excl. one-off items (87.5) (95.5) Depreciation and amortisation (0.6) (0.8) Equity accounted (profits)/losses (1.7) (1.8) EBIT from underlying operations 49.0 38.0 29% Finance costs (18.4) (16.4) Income tax expense on underlying (9.2) (4.9) operations NPAT from underlying operations 21.4 16.7 28% One-off items 1 (13.2) - NPAT 8.2 16.7 (51%) Basic EPS 1.8 cents 4.9 cents Diluted EPS 1.8 cents 4.8 cents 1 Net realised and unrealised impairments in FY10 are in relation to commercial and property development assets which have been exited or re-assessed. No impairments were recorded in the second half. 9
Balance Sheet Summary $ millions 30 June 2010 30 June 2009 Assets - Cash 20.0 0.7 - Receivables 78.8 67.6 - Inventories/Investments 452.7 579.1 - Other 8.2 25.8 Total Assets 559.7 673.2 Liabilities - Trade and other payables 69.0 60.4 - Interest bearing debt 109.5 267.5 - Non-interest bearing debt 35.8 62.4 - Other 9.0 17.6 Total Liabilities 223.3 407.9 Net assets/shareholder funds 336.4 265.3 Net Tangible Assets (NTA) 333.1 248.2 Gearing 1 23% 49% NTA per share 52.5 cents 78.7 cents 1 Gearing is defined as (interest bearing & non-interest bearing debt – cash held) / (total assets – cash held) 10
Operating Cash Flows Extract $ millions 2010 2009 Cash flows from operating activities Receipts from customers (inclusive of GST) 613.6 520.1 Payments to suppliers and employees (446.1) (422.2) (inclusive of GST) Net finance costs (24.3) (24.9) Income taxes (4.1) (3.7) Net cash inflow (outflow) from operating 139.1 69.3 activities 11
FY10 Divisional Results Revenue $ millions FY 2010 FY 2009 % change Housing and Land Revenue 448.8 322.5 39% Profit Before Tax 33.6 14.7 129% Apartments Revenue 126.4 110.5 14% Profit Before Tax (18.0) 10.7 (268%) Body Corporate 1 Revenue 2.2 12.9 NA 1 Profit Before Tax 0.1 1.3 NA 1 Corporate/other Revenue 2.1 2.9 (28%) Profit (Loss) Before Tax (4.1) (4.7) 13% 1 Disposal of this division was completed on 26 August 2009 12
� Devine Communities � Devine Homes 3. Divisional Performance � Devine Apartments � Devine Construction 13
Devine Homes & Devine Communities � Devine’s Housing and Land Division delivered Land Settlements a strong profit before tax of $33.6 million, up 129% for the year � Revenues grew 39% on the previous year to $448 million reflecting the strong market share � Targeted housing and land margins achieved in FY10 of 27% � Record 2,200 residential lots settled in the 12 Land Settlements Carry In at months to 30 June 2010 (FY09: 1,669 lots) Beginning of Year 1 � Residential backlog replenished by 2,700 dwellings during past six months with acquisition of three new projects in growth corridors with end value of $500 million � Strong carry forward contracts for land into FY11 representing approximately 35% of targeted settlements 1 Based on unconditional contracts 14
Devine Homes & Devine Communities Houses Commenced � 1,057 houses commenced (FY09: 923) � Strong profit performances from the Victorian and South Australian operations and a turnaround year for Queensland. � Home display program increasing awareness of Devine range and elevating quality positioning in the market. 27 homes on display throughout FY10 growing to 40 homes in FY11 Housing Starts Carry In at Beginning of Year 1 � In-house design and delivery experience providing ability to explore new markets and respond quickly to demand changes, particularly as higher density solutions are accepted � Strong carry forward contracts for housing into FY11 representing approximately 43% of targeted settlements FY10 Carry In FY11 Carry In 1 Based on unconditional contracts 15
Devine Apartments � Strong sales performance for Hamilton Harbour project with 91% of the first two stages at unconditional contract status � Commencement of construction of the first two residential towers of Hamilton Harbour in May 2010 � Successfully secured construction finance of $163 million for funding of Hamilton Harbour Joint Venture with Leighton Properties � Market release of the third residential tower (Riverside) with strong sales achieved to date � Completion of Serviced Apartment Hotel development in Bourke Street, Melbourne. Project completed six months ahead of schedule and pre- sold for $136 million � Development approval secured on the 17.3 hectare mixed-use development site at Southbank in the Townsville CBD. This project is also being undertaken in a joint venture with Leighton Properties Artist impression of Hamilton Harbour residential � tower Progress made in finalising the development options on the company’s two future residential apartment development sites in the Brisbane CBD 16
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