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16 August 2010
Lend Lease delivers profit growth of 5.2%
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 | Operating Profit after Tax of A$323.6 million for the year, 5.2% above prior year |
 | Statutory Profit after Tax of A$345.6 million for the year |
 | Final dividend of 12 cents per security, fully franked |
 | Full year Dividend Payout Ratio of 50% of Operating Profit after Tax |
 | Outstanding development backlog with significant project wins across the Group |
 | Strong balance sheet to fund development-led growth |
Lend Lease delivered Operating Profit after Tax for the financial year ended 30 June 2010 of A$323.6 million, despite difficult market conditions and a significant negative currency impact. The result is a 5.2% increase on the prior year. The Group's Statutory Profit after Tax for the year of A$345.6 million includes net property investment revaluation gains of A$22.0 million after tax.
Lend Lease added to its significant pipeline of opportunities in the second half of the financial year. Key projects secured include the £1.3 billion development of the second stage of Stratford City where a conditional framework agreement was signed, and a A$400 million masterplanned residential development site in Richmond, Victoria.
In Singapore, Lend Lease and one of its managed funds, the Asian Retail Investment Fund (“ARIF”), was awarded the Jurong Gateway site, a development which will include a regional shopping centre and a commercial tower. The asset will be owned 25% by Lend Lease and 75% by ARIF.
Lend Lease also continued to progress the large projects awarded in the first half of the financial year including signing project development agreements for the A$6.0 billion first stage of Barangaroo, the A$400 million first stage of the Alkimos masterplanned community in Western Australia and a conditional project development agreement for the A$2.5 billion RNA Showgrounds development in Brisbane. In the UK, Lend Lease finalised the conditional agreement for the £1.5 billion regeneration of Elephant & Castle.
Operating Performance
The Group’s Retail and Communities businesses, particularly in Asia Pacific, performed strongly. Trading conditions in residential markets in both Australia and the UK improved, resulting in higher settlements. The Project Management, Design & Construction business in Asia Pacific performed strongly delivering a record profit for the year. This was however offset by weaker results from our construction businesses in the US, Europe and the Middle East which continued to be impacted by a significant slowdown in construction markets and costs associated with the investigations being conducted by the US Attorney’s office and District Attorney in New York relating to allegations regarding, among other things, billing practices.
The Investment Management business increased Funds under Management primarily due to the acquisition of the ING Retail Property Fund portfolio. The Public Private Partnership business continues to pursue its entry strategy in Canada and Australia.
Operating Profit after Tax was negatively impacted by foreign exchange movements of approximately A$30 million due to a strengthening of the Australian dollar.
| June 2010
A$m | June 2009
A$m |
Operating Profit After Tax
Property investment revaluations
Other net write downs and charges | 323.6
22.0 | 307.5
(263.0)
(698.1) |
| Statutory Profit/(Loss) after Tax | 345.6 | (653.6) |
Final Dividend 1
Earnings Per Security (EPS) on Operating Profit after Tax 2 | 12 cps
65.1 cps | 16 cps
71.1 cps |
(1) The final dividend will be 100% franked.
(2) EPS is calculated based on Operating Profit after Tax and the weighted average number of securities on issue including treasury securities. June 2009 has been adjusted by a factor of 1.02 in respect of new securities issued during March and April 2010 via a 5 for 22 single book built accelerated renounceable entitlement offer at A$7.70 per new security.
Lend Lease declared a final dividend of 12 cents per security, fully franked. This results in a full year dividend of 32.1 cents per security, which is a payout ratio of 50% of Operating Profit after Tax which excludes net property investment revaluation gains. The payout includes the ‘in specie’ dividend of A$0.1 cents per security following the stapling of the Lend Lease Trust units to shares in the Company in November 2009.
Group Debt
The Group is in a strong liquidity position with cash reserves of A$1.6 billion and undrawn committed bank facilities of A$0.7 billion. The Group successfully renegotiated its £360 million UK syndicated bank facility which now matures in July 2013. The average maturity of the Group’s drawn debt facilities is 5.5 years and the Group’s interest coverage of 6.7 times significantly exceeds the Group’s banking covenant.
Group Chief Financial Officer, Brad Soller, said: “Lend Lease is in excellent financial shape, with significant capacity to fund growth opportunities. During the year the Group has put in place a total of A$1.2 billion of new and refinanced debt facilities and raised A$0.8 billion of equity. Our investment grade credit rating has been confirmed with a stable outlook and we have access to third party capital through the Group’s managed funds platform.”
Outlook and Strategy
Commenting on the outlook for Lend Lease, Group CEO and Managing Director, Steve McCann said: “Lend Lease delivered a solid result achieving our earnings guidance given earlier this year. We have had an exceptional year in Australia. Bovis Lend Lease performed strongly and the residential market showed positive momentum. We enjoyed success in securing development projects across Australia and are very optimistic regarding the outlook for our outstanding development pipeline. We have also secured leading urban regeneration positions in London and will invest capital as the markets strengthen. In the US, we will look for further signs of recovery before new capital for developments is invested”.
“Construction markets offshore remain difficult and construction volumes in Australia are likely to decline as government stimulus spending softens. However, it is very clear that the Group is well placed for growth and we expect our strong project pipeline to deliver over the medium term,” Mr McCann said.
Commenting on Lend Lease’s strategy, Steve McCann said: “In 2009, Lend Lease committed to a three stage journey of restore, build and lead. Over the past year, we have made significant progress in restructuring and repositioning the Group and have exceeded our targets in terms of enhancing our development pipeline.”
“Looking ahead Lend Lease is well positioned to capitalise on the major property trends of urban regeneration, retirement, sustainability, public private partnerships and growth in superannuation and sovereign wealth funds. We expect these to be the main trends that underpin our business internationally and our strategic plan has a strong focus on scaling up our businesses to leading positions in our core markets.”
For further information please contact:
Sally Cameron
Lend Lease Corporation
Tel: 02 9236 6464
Financial Reports
Lend Lease Corporation Limited today announces its full year results for the year ended 30 June 2010. Attached are the following documents:
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