Lendlease Group (LLC) | SNAPSHOT
Profile: Lendlease Group (LLC) is a global property and infrastructure group headquartered in Australia. Lendlease has three key divisions: Development, where LLC develops, apartments, communities, commercial assets and infrastructure; Investments, which includes LLC’s wholesale investment platform and its ownership stake in property and infrastructure; and Construction, where LLC provides project management, design and construction services.
History: Lend Lease Corporation was established in 1958 and listed on the ASX in 1962. In 1971, LLC expanded operations to the US, before expanding into Singapore in 1973 and the UK in 1991. In 1999, LLC acquired Bovis. LLC acquired Valemus Australia (Abigroup, Baulderstone and Conneq) in 2011.
Earnings composition: The Development segment generated $261m, or 40%, of LLC 1H19 EBITDA, while Investments generated $273m (42%) and Construction excluding engineering and services generated $111.4m (18%). Engineering and Services (E&S), which is now classified as a non-core segment, produced a loss of $474m. LLC is targeting a future segment EBITDA mix comprising: Development (40-50%), Investments (35-45%) and Construction ex. E&S (10-20%).
Most recent result – 1H19: Group EBITDA was $83.1m, down 88% from $720.6m in 1H18. This was driven by a c.$500m pre-tax impact from expected losses on underperforming projects in the E&S division. Operating EBITDA (ex. E&S) was down 34% to $645m, with declines across all segments. Development EBITDA was down 41% on the prior corresponding period (pcp) with management noting a strong prior period and earnings skew to the second half. Construction (ex. E&S) EBITDA fell 24% on the pcp, while Investments was down 29% due to lower revaluations. NPAT was $15.7m, down 96% compared to $425.6 in the pcp. LLC declared an unfranked distribution of 12 cents, down from 34 cents in the pcp.
Company guidance: LLC expects apartment settlements to be skewed to 2H19, with c.1,500 residential apartments for sale and c.700 rental apartments to settle in 2H19 compared to 145 settlements in 1H19. In communities, LLC expects c.1,600 lots to be settled in 2H19 vs 908 in 1H19. Meanwhile, the development pipeline increased to $74.5bn in 1H19, while the construction backlog increased to $21.4bn. FUM rose to $34.1bn.
Important dates: LLC is scheduled to announce full year results on 19 August 2019. Ex-distribution date is 23 August 2019. Payment date is 16 September 2019.
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