Lend Lease has continued its strong performance in a challenging market. Our enviable development and construction pipeline and funds management platform underpin our position as a leading international property and infrastructure Group.
Solid financial performance
Lend Lease has delivered continuing profit growth for the financial year ended 30 June 2013, with Statutory Profit after Tax for the year of $551.6 million, up 10 per cent on the prior year. Operating Profit after Tax of $553.0 million was up nine per cent on the prior year (excluding net property revaluation losses of $1.4 million after tax). This result reflects the successful execution of our strategy and the benefits of our integrated property model. Our development business was a key driver of earnings growth this year, with contributions from the Barangaroo South urban regeneration project in Sydney; the sale of our stakes in the Greenwich Peninsula regeneration project in London and the Jem® development in Singapore; and a strong performance from our infrastructure development business.
Securityholders will receive a final distribution of 20.0 cents per security, unfranked. This brings the full year distribution to 42.0 cents per security, an increase of 11 per cent on financial year 2012.
Financial strength
The Group retained a strong financial position through the year, with cash of $1,538.4 million as at 30 June 2013, gearing of 6.1 per cent and undrawn capacity of $1,099.4 million. The strength of our balance sheet and access to third party capital means we have the financial flexibility to fund our pipeline and invest in other opportunities, in line with our strategy.
Integrated property model
Our integrated model is a strong competitive advantage for Lend Lease. We have the capacity to source, plan, design, finance, structure and deliver large scale mixed use projects and to manage the complexities of multiple stakeholders. The ability to combine these skills and apply them within a strong social responsibility framework have been instrumental in securing major projects such as Barangaroo South and Darling Harbour Live (Australia) and Elephant & Castle (London).
Creating safe and sustainable places
Safety is our number one priority. We continue to make significant progress, reporting no fatalities on a Lend Lease controlled operation in the last financial year. This outcome demonstrates our uncompromising commitment and resolve to operate Incident & Injury Free.
We strive to create innovative and sustainable property and infrastructure solutions for our clients, investors and communities. Internationally, we are already benefiting from our commitment to creating sustainable property solutions, with more than 90 per cent of the major projects in our development pipeline achieving or targeting green certification. This year our key city regeneration projects Barangaroo South (Sydney), Victoria Harbour (Melbourne) and Elephant & Castle (London) were recognised by the C40 Cities Climate Positive Development Program for their strategies and approach to achieving climate positive outcomes. We are very proud of this result, and will continue our leadership position in green development globally.
Our people
During the year a number of senior appointments were made, strengthening the operational capabilities of the Group and supporting our growth strategy. We have continued our focus on developing our leaders through our Leadership Development Programs, with a greater number of leaders attending in 2013.
New career and development tools were introduced for all employees to assist in supporting their development for future roles. We will continue to support the development of our people and will implement further programs in early 2014.
Our commitment to diversity is equally important. Lend Lease is committed to growing and sustaining a diverse and inclusive workplace and in the past year we have maintained our diversity target, with 19 per cent of senior executive positions held by women. Now in the second year of our Reconciliation Action Plan (RAP) we are working towards our goal to increase the representation of Aboriginal and Torres Strait Islander People in professional roles in Lend Lease. In 2013 we had ten Indigenous university interns working across the business as well as 40 year 10 and 11 students who participated in our Careers for the Future program which aims to support teenagers in completing high school.
Board composition
During the year there were changes to the composition of the Board. After more than six years as an Independent Director, Julie Hill retired in November 2012. Ms Hill brought great energy and insight to the Board, in particular with her efforts to promote the Group’s diversity agenda.
The Board Nomination Committee met numerous times this year to review Board composition and ensure it is comprised of individuals who, in combination, bring a mix of expertise, skills, experience and diversity to contribute to the oversight and effective corporate governance at Lend Lease. To that end, I was pleased to announce the appointment of Nicola Wakefield Evans to the Lend Lease Board, effective 1 September 2013. Ms Wakefield Evans is well known as one of the Asian regions leading Mergers & Acquisitions, corporate governance and resources and energy lawyers and brings significant experience to the Board.
Outlook
In the last few years we have embarked on a clear strategy, building an enviable pipeline of integrated project opportunities and creating a point of difference for Lend Lease. We have good visibility of a strong earnings growth trajectory over the next three years and are targeting a return on equity over the medium term of 15 per cent. Despite challenging macro-economic conditions, we believe Lend Lease is well placed for 2014 and beyond.
My thanks to fellow Board members, as well as the Lend Lease leadership team and all employees, whose dedicated efforts throughout the year have seen us grow our returns for securityholders and put us clearly on a path to achieving our goals.
David Crawford AO
Chairman