This article is from the Australian Property Journal archive
A LACK of transactions has hampered Lend Lease's ability to deliver a higher profit result for FY09.
Lend Lease yesterday posted a net operating profit after tax of $307.5 million for the year to June 30 – a decrease of 29% compared to the previous corresponding period.
Lend Lease CEO Steve McCann said the group has performed well, despite the very challenging market conditions.
He added that a key impact on the business over the last 12 months was a lack of transaction activity, which hindered Lend Lease’s asset recycling ambitions.
“However, Lend Lease is not a distressed seller of assets and we will only sell assets where we believe it will optimise longer term shareholder value,” he added.
The group’s statutory loss after tax was $653.6 million as a result of assets write-downs were principally due to an increase in capitalisation rates.
Overall, the retail business contributed operating profit of $60.3 million down from $66.1 million from the previous year. The business was boosted by the Asia Pacific which reported NOI growth of 4.4%. But in Europe, difficult trading conditions negatively impacted NOI and in the Americas, Lend Lease devalued its King of Prussia by 14%.
The communities division contributed $88.3 million – down from $100.3 million last year. Asia Pacific delivered $99.9 million up from $82.7 million. Elsewhere in Europe, it was an operating loss of $10.4 million compared to a profit of $21.1 million last year.
Lend Lease Public Private Partnership business grew substantially from $59 million in the previous year to $74.4 million this year.
Project management and construction also lifted operating profits from $150 million last year to $168.9 million.
However, the investment management business took big hits and posted an operating profit of $28.9 – well below the previous year’s $137.3 million. Lend Leaes noted that were no capital recycling during the year.
Lend Lease declared a final dividend of 16 cents per share – down from 34 cps in the previous period. This is due to changes in the dividend policy in order to increase the group’s investment capacity.
The group’s net debt at June 30 was $195.8 million. Gearing remains low at 2.9% and Lend Lease has a strong liquidity position with cash and cash equivalents of $1.12 billion at 30 June 2009. In addition, the group had un-drawn committed bank facilities of $612.0 million.
The group continues to maintain an investment-grade credit rating.
McCann said the group has very strong liquidity and is well capitalised.
“This sets Lend Lease up well to take advantage of its leading market positions as the cycle begins to turn. Finally, our business model and reputation for partnering enables Lend Lease to maintain a strong and diverse project pipeline, underpinning long-term earnings potential,” McCann said.
Despite the strong capital position and solid result in current market conditions, Lend Lease shares fell 49 cents or 5.16% to close at $9.01 yesterday.
Australian Property Journal
