DEVINE Limited's back to basics strategy has paid off. A surge in house and land package sales has bolstered the company's first half year earnings.
In the six months to December 31 2009, Devine reported a 24% increase in underlying earnings to $14.42 million compared to $11.59 million in the previous corresponding period.
But Devine’s net profit after tax was $1.22 million – down 89.5% from $11.59 million in the pcp. This was due largely to charges and impairments in its portfolio which was a result of a review of the strategy for the company’s property development division and the decision not to proceed with planned commercial projects and the French Quarter development in the Brisbane CBD as originally planned.
Devine’s acting CEO Viv Grayson indicated that this maybe the last write down, as the company does expect any further impairments in the second half.
The company’s revenue jumped 54% to $304.40 million compared to $197.87 million, largely due to asset sales and the positive operating performance of the housing and land business.
Grayson said the result is a strong vindication of the board’s decision to reduce exposure to the commercial sector and focus on high and medium-density residential projects.
He added that the first half result was underpinned by the continuing strong performance of the company’s core housing and land division, particularly in Victoria and South Australia.
Devine’s housing and land division continued to gain strength in the first half with total revenues of $201.77 million, up 38% on the previous corresponding half. The result reflects the settlement of 968 residential lots and 451 house commencements.
Grayson said the outlook for the residential sector remained attractive with a growing deficit in housing stock in most major markets in Australia, tight land supply, a low interest rate environment by historical standards and continuing low unemployment.
“The company’s Victorian and South Australian operations continue to perform well and there were encouraging signs that the market in south-east Queensland was turning the corner albeit that housing affordability remains a major issue adversely impacting on sales,” he continued.
Meanwhile Grayson said subject to the company’s performance over the next six months, the company is also confident of declaring a final dividend based on the full year’s results.
Australian Property Journal
