Lendlease Profit Up As Pipeline Approaches $50 Billion

Property group Lendlease has today delivered a 12 per cent increase in first half earnings with a profit after tax of $353.8 million for the six months to the end of December 2015.

Lendlease Group Chief Executive Officer and Managing Director Steve McCann said the company had delivered a strong result for the half year.

“Significant momentum has driven the first half of FY16, with increasing cash generation and a positive growth outlook,” said Mr McCann.

“Our development pipeline has grown to $46.6 billion, with approximately 75 per cent represented by urbanisation related projects. During the half we had strong sales momentum at residential projects at Victoria Harbour in Melbourne and Elephant & Castle in London and we secured planning approvals for a new urban regeneration project in Chicago,” he said.

Lendlease Managing Director Steve McCann[/caption]The Group declared an interim distribution of 30.0 cents per stapled security, unfranked.

Major milestones across the Development business included the sale of a 25 per cent investment in Lend Lease One International Towers Sydney Trust to a new investor, forward sale of the first two commercial buildings at The International Quarter in London and forward sale of a commercial building at Darling Square in Sydney. Residential pre sales reached a record $5.4 billion, up 49 per cent and residential settlements rose 45 per cent to 2,128.

“In the last six months we have settled over 650 apartments, with non-settlement at less than 1 per cent versus our historic average of less than 3 per cent. We maintain a disciplined approach to delivery risk and pre sales.”

Construction global backlog revenue rose 19 per cent to $18.6 billion with an improved performance from the Australian business. During the half year $6.1 billion of new work was secured globally, with a further circa $8 billion of work at preferred status.

“Our Australian Engineering business has secured a number of key contracts during the half including the Gateway Upgrade North and Kingsford Smith Drive in Brisbane and last week we were announced as preferred on the D9 Level Crossings Removal in Melbourne with our alliance partners. The business is well placed to secure a growing pipeline of infrastructure works.” Funds under management grew to $22 billion, an increase of 26 per cent, and the Group raised $1.2 billion of new third party capital in the last six months.

“Lendlease has established a strong Investment Management platform and continues to build its relationships with global pension, sovereign wealth and investment firms, who are a key element in the delivery of our development pipeline.” “Importantly, even with a substantial number of projects in delivery around the world, we strive to maintain the highest levels of safety. In the last year, 83 per cent of sites did not record a critical incident,” said Mr McCann.

Mr McCann said the company would continue its discipled approach to delivering on its strategic goals.

"Our development portfolio continues to deliver a diverse and growing earnings profile, underpinned by a substantial pre sales position. Through measured growth in international markets we have secured more than $20 billion of urbanisation related projects outside of Australia, further supporting international earnings diversification from FY18 and beyond.”

“Our internal development pipeline continues to provide a solid base of work for our Construction business globally, while our Australian Engineering business has recorded strong growth in its backlog position.”