Lendlease Annual Report 2024

8 Lendlease Annual Report 2024 Group Chief Executive Officer’s Report Transforming our company into one that delivers sustainable financial returns to securityholders has been my priority since becoming CEO three years ago. And while we made substantial inroads delivering against the five-year turnaround plan announced in FY22, a prolonged market downturn combined with a high proportion of capital allocated to long dated developments in offshore businesses has impacted returns and has necessitated substantial further action. In May 2024, we announced a refreshed strategy to position Lendlease for financial success. A strategy that leans into our proven core strengths and competitive advantages. Its key elements are: • Simplify our organisational structure and achieve further cost reductions • Focus on our market-leading Australian business and international Investments platform • Divest international Construction • Recycle $4.5b of capital by completing divestment transactions and accelerating capital release from offshore development projects and assets. Strategy in action The business has moved quickly to implement the changes we believe are required to become the leading integrated real estate business in Australia with an international Investments platform. Central to the strategy is the establishment of the Capital Release Unit (CRU) designed to liberate more than $4.5b of capital from the business, including $2.8b from the divestment of on-market assets; the divesting of international Construction operations; and the release of $1.7b of capital primarily from international Development. Of the $2.8b of assets on market targeted to be divested in FY25, more than half of the transactions have already been announced. These include the sale of our integrated life sciences interests in Asia into a new joint venture; the sale of 12 Australian master-planned Communities projects; and the sale of our US Military Housing business. In parallel, we are realising a further $125m of pre-tax cost savings across the business as we simplify our management structure and move to being a leaner and more focussed organisation. From a capital allocation perspective, our priorities are to strengthen the balance sheet, return up to $500m of capital to securityholders and invest in our high return Australian operations. We’ll also continue to build on our Australian development pipeline to support future earnings and focus on profitable growth within our Investments platform. By reshaping our business to concentrate on our core competencies in markets where we have proven capabilities and a strong competitive advantage, the financial and operational risk profile is expected to be lower, and the quality of our earnings ultimately higher and more sustainable. Financial and operating performance Reflecting impairments and restructuring charges primarily associated with the divesting of international construction and the capital release from offshore development projects, the Group recorded a Statutory Loss after Tax of $1,502m. Core Operating Profit after Tax was modestly higher at $263m, compared with $257m in the prior year. The completion of Residences One, Barangaroo and The Exchange TRX in Kuala Lumpur, as well as consideration received for value created at the San Francisco Bay Area project, contributed to the result. Investments Our funds under management (FUM) ended the year at $47.3b. Despite ongoing challenging market conditions resulting in negative revaluations, several developments were completed that support future FUM growth. Boosting our sustainable workplace portfolio, Melbourne Quarter Tower was completed. We also added a build to rent asset in Chicago and the first phase of our data centre project in Tokyo. Contributing to assets under management, The Exchange TRX opened in Kuala Lumpur, and is exceeding performance expectations. There are currently eight international projects underway with key capital partners that are expected to add more than $6b in FUM over coming years, enhancing our existing international platform of more than $19b of FUM and Australian platform of $28b. Development Development activity increased, with $8.2b of completions and $1.9b of commencements. Residential buildings in Sydney, New York and Kuala Lumpur were completed, along with various products contributing to FUM, listed in the Investments section of this Report. Leveraging our placemaking capability and supporting the replenishment of our Australian development pipeline, we secured the $1.3b Gurrowa Place project at the Queen Victoria Market site in Melbourne. Construction In our Construction segment, a disciplined approach to cost management has been a priority. We took steps in the US by winding down West Coast and Central operations, and recently agreed terms for the sale of the East Coast operations. As we transition to focus on our Australian business, which has a backlog of $3.9b and a strong preferred book, we’ll look to build upon our strong capabilities in the defence, social infrastructure and workplace (including life sciences) sectors. Focussing on the things that set Lendlease apart Physical safety and wellbeing The health and safety of our people, our subcontractors and those who interact with the places we create and manage is our highest priority. We have continued to embed a culture of care across the organisation, which encompasses physical and product risks as well as psychological safety. Across more than 400 operations encompassing more than 80 million hours worked, this year there were no fatalities recorded, which is an outstanding effort from our people and supply chain partners.

RkJQdWJsaXNoZXIy NjM4NDM=