This article is from the Australian Property Journal archive
LEND Lease has maintained a strong front despite facing tough conditions in the United Kingdom and United States, and the group's record low gearing will allow it to make new investments to build its bottom line for the future.
The group has posted a statutory profit after tax of $259.6 million for the six months ended December 2007, 49% higher than for the prior half year period.
The result included a $118.8 million after tax provision taken against the UK construction, but included the one-off interest of $32.2 million after tax from the Australian Taxation Office and a net revaluation loss in property investments of $3.2 million.
Lend Lease’s directors have declare an interim dividend of 43 cents per share 40% franked, up from 35 cents a year ago.
Lend Lease’s managing director Greg Clarke said Lend Lease like most other companies, faced increasing headwinds from the slowing US economy, tightened credit markets and softer property markets in the UK.
“This is a strong result that reinforces the robustness of our business model and earnings diversity. Financial conservatism is protecting us from the worst of the volatility we are now seeing around the world, particularly in the property sector.
“Actus Lend Lease in the US turned in a very good result, as did the Investment Management business. We are clearly making good progress in returning Bovis Lend Lease to earnings growth, which was one of the key undertakings we gave to the market this time last year. Both the Retail and Communities businesses delivered solid performances, especially in Australia and Singapore.
“We continued to recycle capital during the half, taking profits and reinvesting in the Group’s already substantial development pipeline. The Group’s financial strength and track record have enabled it to continue to see excellent deal flow and to execute when the right opportunities come along,” he continued.
In the year ahead, Clarke said the group’s operating earnings would include some major asset sales such as Bluewater and King of Prussia shopping centres.
“However, we are in the fortunate position of not being a forced seller of assets and, with current markets lacking transactional liquidity, we may decide to defer any such sales in the short term.
“For full year 2008, even without a major asset sale, we are expecting to come in slightly under our target annual average EPS growth of 10% per annum over a five-year period.” Clarke said.
The group remains well positioned with a very strong balance sheet and conservative debt profile. At December 2007, Lend Lease had approximately $1.0 billion in undrawn facilities, and a further $1.1 billion in cash and negotiable instruments. Gross borrowings remained conservative at 15.1%.
Group finance director Steve McCann said the group is not at risk with any short term debt maturities and remain comfortable with its funding strategy for the Group’s committed development pipeline irrespective of the tightened credit market conditions.
“Our strong financial position means we have the flexibility to pursue appropriate acquisition and investment opportunities that might emerge in the short to medium term, but we will continue to be patient and cautious,” McCann concluded.
Lend Lease’s shares closed 20 cents lower to finish the day at $14.50.
Australian Property Journal
