This article is from the Australian Property Journal archive
LEND Lease has had a changed of guards with Steve McCann officially taking over from Greg Clarke and like his predecessor six years earlier, McCann has his work cut out, to steer the group through the global economic crisis.
Clarke has officially step down as managing director of Lend Lease after he took the job six years during turbulent times and rebuilt it from a “broken down company”.
And yesterday, McCann took over charged with leading Lend Lease through the worst economic conditions since the Great Depression in the 1940s.
In his maiden interim result, McCann announced an operating profit after tax $185.4 million in the six months ended 31 December 2008, representing a decline of 27% from $254.1 million in the previous corresponding period.
McCann said the result was primarily due to lower profit from capital recycling and tough market conditions in Lend Lease’s communities businesses.
As a result the interim dividend declared was 25 cents per security – down from 43 cps.
The group’s statutory loss after tax was $596.4 million compared to net profit after tax of $250.9 million in the pcp.
This half year result was mired by
· a $190.7 million write down relating to Crosby Lend Lease, the communities businesses in Australia and the United States and the retail business in the United Kingdom;
· The impairment of the carrying value of the goodwill in Crosby of $172.4 million;
· Losses in the Australian communities business of $80.5 million;
· Other write downs of $150.0 million including a reduction in the carrying value of the group’s interests in both UK and Australian retail and communities projects and a mark to market loss of A$35.7 million after tax on the Group’s exposure to the FKP Property Group;
· A $169.6 million write down to the retail property investment portfolio;
· Cost savings initiatives incurring one-off costs of $48.9 million;
· And the curtailment of the Bovis UK pension scheme resulted in a net gain of $30.3 million.
McCann also said Lend Lease will axe 2000 jobs, taking its global workforce to about 10,000 as part of cost saving measures.
Meanwhile he added Lend Lease maintains its strong financial position and as at December had cash reserves of over $1.5 billion and low gearing of 5.2%. The earliest maturity date for a material group debt facility is November 2010 for an amount of £350 million.
He affirmed that Lend Lease remains on track to achieve Net Operating Profit After Tax for FY09 of between $380 million and $400 million, representing a 10-15% reduction to the FY08 reported Net
Operating Profit After Tax of $447.1 million.
And whilst there no retail property sales were recorded in the first half year, McCann said there are a number of transactions that are expected to contribute in the second half year, to achieve this profit guidance including capital recycling and reaching financial close on projects in which Lend Lease is the preferred bidder.
“While some capital recycling initiatives included in this year’s guidance have already occurred, these further transactions account for approximately 30% of this year’s guidance. In light of the continuing lack of liquidity in debt markets and current economic conditions, Lend Lease cannot be certain that these transactions will occur in the current financial year.
“There is no doubt that 2009 is challenging as the effects of the global financial crisis continue to be felt. Lend Lease is not immune to these factors, but the group’s strong financial position, focus on cash flow management and the maintenance of its significant liquidity buffer provides a strong foundation to withstand these pressures,” he concluded.
Lend Lease shares soared 16 cents or 3.27% to trade at $5.06 yesterday.
Australian Property Journal
