Lendlease Annual Report 2024
Performance and Outlook 53 Development segment Key financial and operational metrics FY23 FY24 Operating EBITDA ($m) 283 509 Urban EBITDA ($m) 141 461 Communities EBITDA ($m) 142 48 Operating Profit after Tax ($m) 192 320 Invested Capital ($b) 1 6.1 5.9 Work in Progress ($b) 22.9 14.5 Commencements ($b) 2 7.7 1.9 Completions($b) 3 3.6 8.2 1. Securityholder equity plus gross debt less cash on balance sheet. 2. Project end value on product commenced during a financial period (representing 100% of project value). Subject to changes in delivery program. 3. Project end value on product completed during a financial period (representing 100% of project value). Performance 1 EBITDA of $509m was up from $283m in the prior year, including a $461m contribution from Urban projects. The Development segment generated a ROIC of 5.0 per cent, up from 3.3 per cent in the prior year. Key drivers of the result included the completion of Residences One, One Sydney Harbour, generating $183m, a payment received relating to the San Francisco Bay Area project in the US, and $73m from the completion of TRX retail and residential projects, comprising a development gain of $39m and residential settlements of $34m. European projects also contributed positively, including the completion of Park & Sayer at Elephant Park and a land sale at Stratford Cross, each in London. The downward revaluation of the Victoria Cross Over Station development in North Sydney negatively impacted earnings by $57m. The Communities business generated EBITDA of $48m, compared with $142m in the prior year which benefitted from higher margin settlements and the sale of industrial land parcels. Settlements of 2,237 for the year were down marginally from 2,253 while sales of 1,721 were down 2 per cent. Operating performance for the Communities business was impacted by delays, resulting in the deferral of higher margin settlements. The sale of 12 Communities projects was announced in 1H24 with the expected transfer of ownership being delayed from 2H24 to FY25, pending a decision from the Australian Competition and Consumer Commission (ACCC), anticipated on 12 September 2024. Due to the delay, $40m of FY24 EBITDA, equating to $28m of OPAT, was booked in FY24 which would otherwise have been part of the sale. There were $8.2b of completions during the year including Residences One, One Sydney Harbour; Melbourne Quarter Tower; retail and residential product at TRX in Kuala Lumpur; residential product in New York, Chicago and London; and a life sciences building and data centre, both in Asia. There were $1.9b of commencements including build to sell apartments at Elephant Park, London, and Victoria Harbour, Melbourne. Leasing was achieved across workplace assets including Victoria Cross Over Station development and Town Hall Place in Melbourne. Invested capital reduced from $6.1 b to $5.9b, with capital released from the completion of Residences One, One Sydney Harbour, being mostly offset by development production across other large projects including: Residences Two and Watermans Residences, One Sydney Harbour; The Exchange TRX; One Circular Quay; as well as production in the Australian Communities business. Operations Work in Progress of $14.5b decreased from $22.9b on the prior year, due to project completions of $8.2b and $2.1b of other adjustments, including projects removed from WIP resulting from strategy related impacts, partially offset by commencements of $1.9b. The FY24 development pipeline reflects movements within the year and impacts from the strategy update, and comprises: • $11.8b of Australian Urban development opportunities • $15.1b of Communities projects, including $11.9b held for sale • $8.8b of international joint venture projects, including more than $6b of potential investment product to be completed; and • $57.4b of primarily land management agreements in Europe. The primary impact to the development pipeline, which reduced from $124.3b to $93.1b, was the removal of the San Francisco Bay Area Project. Development origination is solely focussed on Australia, with the existing Urban pipeline of $11.8b comprising $7.5b of WIP and $4.3b of master planned and in-conversion projects. Origination wins this year included $1.3b of new work secured relating to the Gurrowa Place project at Queen Victoria Market in Melbourne. The Group remains well positioned to further originate development projects across mixed-use, residential and workplace assets, leveraging its market leading placemaking capabilities. 1. Comparative period the year ended 30 June 2023.
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