Thursday 8 November 2007

Listed diversified property group Devine (ASX: DVN) has today announced a one-for five renounceable rights issue to raise approximately $62.5 million to capitalise on future property development opportunities.

Shares in the rights issue will be offered at a price of $1.32 each, a 12 per cent discount to the volume weighted average price for Devine for the five trading days up to and including 7 November. Yesterday Devine's share price closed at $1.52.

The rights issue is being underwritten by ABN AMRO Morgans Corporate Limited and sub-underwitten by Leighton Holdings Limited, which acquired a 40 per cent stake in Devine earlier this year and has already indicated it will take up its full entitlement of new shares.

The offer document will be sent to shareholders on 22 November with a 6 December deadline for the receipt of acceptance notices.

Completion of the transaction is scheduled for 14 December 2007 and will bring Devine's total shares on issue to 284 million.

Devine launched the rights issue at the company's Annual General Meeting in Brisbane today, where it also re-elected two Directors - Doug Ridley and Rick Parris, and elected two Directors - Vyril Vella, formerly Managing Director of Leighton Properties; and Graeme McOrist, a former senior executive with Leighton and currently a director of Thiess Pty Limited.

Devine Chairman Darryl Somerville said the rights issue would support a period of rapid expansion for the company.

"It has been a landmark year for Devine, with the completion of the investment by Leighton Holdings in the Company in May, fast-tracking our diversification and expansion programs," he said.

"We have since secured large tracts of strategic land holdings in high growth corridors in Queensland, Victoria and South Australia where there is established infrastructure and ongoing population growth and we are on track to achieve our target of building a national land bank of 10,000 lots by mid 2010.

"The funds from the rights issue will enable us to progress this portfolio of projects, creating a pipeline of future work that, when fully developed and sold, will have an end value of more than $3 billion.

"The proceeds from the rights issue will also enable us to immediately capitalise on a number of attractive future opportunities that have been identified.

"This will allow us to further benefit from the current phase of the property cycle, strengthen our balance sheet and secure a strong platform for the company's future growth."
Mr Somerville said the rights issue also provided a "top-up" facility to enable shareholders to acquire additional shares in excess of their entitlement out of any shortfall in shares not being taken up. This top-up offer is not available to Leighton Holdings.
"During the discussions in the lead-up to Leighton's investment in Devine our shareholders expressed interest in a special rights issue and we have responded to this feedback."

Mr Somerville said the rights issue would position Devine to continue to build on the strong performance of its Property Development division.

Devine reported an after tax profit of $21.36 million for the 2006/07 year. This represented a 13.2 per cent increase on the previous year's profit and was achieved on revenues totaling $547.9 million.

The result was underpinned by an excellent increase in profits achieved by the company's Property Development division, which reported a before tax profit of $37.6 million, up from $21.7 million the previous year.

"The success of our property development activities demonstrates that our recent diversification into the commercial and mixed-use sectors was strategic and continues to achieve strong results," Mr Somerville said.

Devine's first office tower development at 333 Ann Street in the Brisbane CBD has been pre-sold to Mirvac's Domaine Property Trust for $120 million and was 100 per cent committed in terms of leasing nine months ahead of the building's due completion date. Devine has also pre-sold its near city A-grade commercial development in Brisbane, ICB Central, to Mirvac's Domaine SEQ Growth Fund for $73.5 million.

In September, Devine announced plans for a second $300 million office tower in the Brisbane CBD at 145 Ann Street.

Devine's Housing and Land division has also been particularly active and has successfully increased Devine's national land bank by 51 per cent during 2006-07. As at 30 June 2007 the company owned 4,580 lots across Queensland, Victoria and South Australia. Following a series of strategic recent purchases in south-east Queensland and Victoria, Devine now controls in excess of 7,000 lots.

"It is an exciting time for the company and the outlook is positive as we continue to build a solid pipeline of future development opportunities through geographic and sector diversification," Mr Somerville said.

"Devine expects to increase land settlements from 961 lots in 2006-07 to around 1,600 lots in 2007-08, an increase of 66 per cent. By 2010, the company plans to be selling around 2,000 lots per annum, with 1,200 Devine built homes."

Devine's basic earnings per share were 14.3 cents for the 2006-07 year and Directors declared a final dividend of 4.0 cents per share fully franked, making the full year dividend 8.0 cents per share, fully franked. Shareholders were paid the final dividend on 18 October. The full year dividend matched the previous year's distribution and resulted in 71 per cent of the company's after tax earnings being distributed to shareholders for the 2006-07 year.

For further information please contact:
David Devine, Managing Director, Devine Limited on (07) 3233 1402
Kathy Mac Dermott, Rowland on (07) 3229 4499 or 0448 844 508