BRISBANE residential developer Devine Limited (ASX: DVN) today reported a net profit increase for FY11 of 147 per cent to $20.2 million.
The company recorded earnings per share of 3.2 cents, up from 1.8 cents in the 2010 financial year and will pay a final dividend of 1 cent per share fully franked bringing the total dividend paid for FY11 year to 2 cents per share fully franked.
The strong profit was achieved through an improvement in operating margins despite a reduction in total land settlements.
Devine managing director David Keir (pictured), says the strong result supported the company’s strategy of diversifying its product offering, market reach and geographic locations.
“Despite the challenging market conditions that existed through much of the past year, Devine has delivered a very solid profit result for the 2010/11 financial year,” says Keir.
“With a strong balance sheet and operating cash flow and low gearing, Devine is well positioned to pursue its growth strategy over the coming years.”
The company significantly increased its development pipeline, securing almost 8400 equivalent lots and new dwelling opportunities across 10 sites in high-growth metropolitan and regional locations.
This took Devine’s total development pipeline to 16,000 equivalent lots and dwellings. The expansion was undertaken in a capital efficient manner which maintained the company’s strong balance sheet.
Among the key projects advanced during the period, Devine secured development approval for a $1.4 billion master-planned residential community in Gladstone in Central Queensland which will be the largest residential project ever undertaken in the region.
The Gladstone project will house around 7500 people in up to 2900 dwellings to be constructed over the next 15 years.
Devine’s presence in Gladstone, one of Australia’s fastest growing housing markets, has significant strategic value and the company has already been awarded large-scale ‘wholesale’ home building contracts for clients servicing the coal-seam gas industry.
In Brisbane, construction of the first two residential towers at Hamilton Harbour is ahead of schedule and under budget due to an excellent performance by Devine Constructions. The project is now due for completion in the first half of the 2012 financial year.
Sales are reportedly strong and Devine Constructions has been awarded a $60 million contract to build a third residential tower.
Devine also secured a new development opportunity at Teneriffe in Brisbane’s CBD fringe. The project will deliver 107 apartments, with planning approval expected in the first half of the 2012 financial year.
Leighton Holdings increased its shareholding in the company to 50.06 per cent during the period.
Keir says Devine continued to focus on the residential sector and maintained a growth strategy centred around product, market and geographic diversity undertaken in a capital efficient manner.
“In pursuing our growth strategy, we will further expand and diversify our product offering, price points and the geographic locations in which we operate,” he says.
“This will include launching an expanded product range incorporating medium-density housing options in response to both housing affordability opportunities and government focus on increased densities across Australia’s urban landscape.”
Keir says Devine will leverage off its ‘in-house’ design, marketing and delivery capabilities to drive its competitive advantage in delivering housing products to the market in a competitive and efficient manner.
The company will also focus on the Gladstone market which offered significant opportunities for partnering with companies involved in the mining and gas industries as well as providing housing solutions for owner occupiers and investors.
Several new projects will commence trading in the period to June 2012 and it is expected that these will make a valuable contribution to the results for the FY12 year.
Devine shares are trading at $0.24 per unit.
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