Devine : 2018 Annual Report

2018 ANNUAL REPORT

DIRECTORS

D P Robinson - Chairman

GSassine JM Campbell

CHIEF EXECUTIVE OFFICER

JM Campbell

CHIEF FINANCIAL OFFICER & COMPANY SECRETARY

J S L Mackay

PRINCIPAL REGISTERED OFFICE IN AUSTRALIA

Level 2, KSD1, 485 Kingsford Smith Drive Hamilton Queensland 4007

07 3608 6300

SHARE REGISTER

Computershare Investor Services Pty Limited

Level 1, 200 Mary Street

Brisbane Queensland 4000

1300 787 474

AUDITOR

Ernst & Young

Level 51, 111 Eagle Street

Brisbane Queensland 4000

PRINCIPAL BANKERS

Australia and New Zealand Banking Group Limited Level 19, 242 Pitt Street

Sydney New South Wales 2000

SECURITIES EXCHANGE LISTINGS

Devine Limited shares are listed on the Australian Securities Exchange

(ASX Code: DVN)

WEBSITES

www.devine.com.au

www.devinegroup.com.au

CONTENTS	PAGE
Chairman's and Chief Executive Officer's Review	2
Directors' Report	4
Operating and Financial Review	7
Remuneration Report	15
Auditor's Independence Declaration	21
Financial Statements	23
Consolidated Statement of Comprehensive Income	24
Consolidated Statement of Financial Position	25
Consolidated Statement of Changes in Equity	26
Consolidated Statement of Cash Flows	27
Notes to the Consolidated Financial Statements	28
Directors' Declaration	80
Independent Auditor's Report to the Members	81
Shareholder Information	87

Devine Limited's Corporate Governance Statement is available on our website, in the section titled 'Investor Relations'.

(www.devinegroup.com.au/about/board-and-governance.aspx)

ANNUAL GENERAL MEETING

The annual general meeting of Devine Limited will be held at the offices of Devine Limited

Level 2, KSD1, 485 Kingsford Smith Drive, Hamilton, Brisbane Time: 3.00 pm (AEST).

Date: Wednesday 22 May 2019

DEVINE 2018 ANNUAL REPORT

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CHAIRMAN'S AND

CHIEF EXECUTIVE OFFICER'S REVIEW

During FY2018 Devine further stabilised its business, with settlement or resolution of several legacy items as well as renewal of the Group's main funding facility. We provide this overview of the year just passed and the outlook for 2019.

FINANCIAL RESULTS FY2018

The 2018 financial result for Devine comprised a:

>> loss before tax from continuing operations of $23.9 million; and a

>> total loss after tax of $25.2 million.

The 2018 result was impacted by asset impairments of $41.9 million taken across the following Communities business projects: Riverparks in Townsville, Mountview and Brookside in Redbank Plains in Ipswich, Queensland; Mawson Green in Meadows, South Australia; and Newbridge in Wallan, Victoria. Offsetting these impairments by $22.9 million was the favourable settlement of two insurance claims and the extension of a land management agreement.

Devine continues to pursue a number of other contractual and insurance claims for the reimbursement of costs arising from its construction contracts

which might either result in commercial resolutions during 2019 or longer legal processes.

Operationally, the land development business has continued to return cash to the Company, assisting with Devine's further financial stability. Also, the Company's operations continue to generate efficiencies and cost-savings as a result of re-sizing initiatives undertaken in prior years, further providing a stable platform to support growth when the market allows.

Devine Communities

Devine Communities continues to develop the Stonehill community at Bacchus Marsh in Victoria, releasing a further eight stages of land during 2018. The presales achieved the potential for delivery of more than 200 residential lots during 2019, which would result in a positive return and cash flow to the business for 2019.

Devine Communities has also progressed its joint venture land development project Newbridge, at Wallan in Victoria. A total of 59 residential lots have been settled to date and, as at the date of this report, the remaining 356 lots have been brought to market. Of these, more than 260 lots have been pre-sold, which will assist Devine to recycle capital from the project.

Devine Communities' projects in South Australia

(Mawson Green at Meadows and Orleana Waters at Evanston Gardens) continue to generate stable turnover with sales rates in line with the market in Adelaide.

Land sales in the Queensland markets of Gladstone and Townsville continue to experience low demand. Devine continues to monitor these markets, and

is ready to respond when demand returns.

Devine is continuing to investigate new development opportunities of appropriate scale in market corridors with existing demand in order to enhance its future development pipeline.

Mode Apartments

Sales at Devine's Mode Apartments joint venture at Newstead, Queensland have concluded with all 157 apartments now settled.

OPERATIONAL BUSINESS REVIEW

Some of the key highlights for the year included:

>> The performance of the Stonehill project (Victoria) with the continued release of land to the market to capitalise on demand for residential land across greater Melbourne;

>> The extension of a land management agreement; >> The provision of a funding facility from ANZ for

two years;

>> The pay down of a number of the project debt facilities within the Group; and

>> The settlement of a further two Devine Constructions insurance claims.

Funding

The Company's primary funding facility of $70 million, provided by ANZ, was renewed in March 2018 for a term of two years, expiring 29 March 2020. This new facility allows the Company to fully focus on its core Communities land development business unit. The facility is secured by a guarantee provided by Devine's majority shareholder, CIMIC Group Limited.

The Company has been able to review and reduce the level of securities (bank guarantees and insurance bonds) required to be provided as part of its business operations, with a reduction of $2.9 million over the year to $18.8 million as at 31 December 2018.

2DEVINE 2018 ANNUAL REPORT

BOARD AND MANAGEMENT

The Board is comprised of David Robinson as Chairman, John Campbell as CEO and Director, and George Sassine as Director. James Mackay is Chief Financial Officer and Company Secretary.

OUTLOOK

Devine will continue to execute its property development objectives, principally by advancing its existing projects in the Communities land development business and further positioning itself for the purchase of new development sites .

The Company will also continue to progress the remaining contractual and insurance claims in the construction business.

Additionally, the Company will continue to monitor the commercial opportunities within its portfolio which are centred on the KSD2 site in the Brisbane suburb of Hamilton.

The Company's financial outlook has stabilised, and it will continue to monitor and respond to developments in

the economy, the interest rate environment and the availability of credit.

We would like to take this opportunity to thank you, our shareholders, for your support and express our gratitude to our employees for their continued diligence and focus.

We look forward to updating you further at the Company's Annual General Meeting on Wednesday 22 May 2019.

Sincerely

David Robinson

Chairman

John Campbell

CEO

DEVINE 2018 ANNUAL REPORT

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