Developer Devine's yearly loss widens to $38 million, says in talks with lender ANZ

Residential developer Devine Limited (ASX: DVN) reported a loss of $38 million for the full year ending December 31, and said it was in talks with ANZ to extend its banking facility with the lender.

The directors’ report said the 2016 results were hurt as a result of trades’ procurement in an over-heated residential construction market in Queensland, while “major weather events” in Victoria and South Australia caused production delays.

The developer had a debt of $22 million (including bank guarantees) as of December 31, 2016, under the ANZ Multi Option Facility , which is due to mature on March 31, 2017. 

The directors’ report noted that they “do not expect the group to be compliant with the covenants of the ANZ MOF when the debt matures. 

“Under the terms of the ANZ MOF Agreement, a breach of a financial covenant entitles ANZ to request repayment of the facility on demand. In such an event, the Group currently does not have the immediate capacity to repay the facility in full nor does it currently have readily available alternate sources of liquidity,” said the report.

Owing to that, the report expressed doubts about whether the developer can continue as a going concern.

It said the developer and its major shareholder CIMIC Group Ltd were working closely with ANZ Bank to come to a solution. 

The company has said it is winding up operations in the medium density home building market, and completed more than 90% of its medium density projects.

The directors’ report noted it had sold three sites and its stake in two joint ventures.

Total revenue from continuing operations rose to $194.2 million from $190.2 million in the previous year. Operating loss before tax widened to $38.3 million from $33.1 million previously.

The group, established in 1983, became a leading brand in the residential property sector and has operations in Queensland, Victoria and South Australia. It listed on the ASX in 1993.

The company said as at December 31, 2016, its residential development pipeline included the equivalent of nearly 6,400 future homes.