Annual Report 2015 Contents
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ANNUAL REPORT 2015 CONTENTS Chairman’s Report 4 Chief Executive Officer’s Report 5 Corporate Governance Statement 6 Directors’ Report 17 Lead Auditor’s Independence Declaration 75 Five Year Profile 77 Consolidated Financial Statements 78 Securityholder Information 142 Portfolio Report 146 Corporate Directory 167 Lend Lease Corporation Limited ABN 32 000 226 228 Lend Lease Responsible Entity Limited ABN 72 122 883 185 AFS Licence 308983 as responsible entity for Lend Lease Trust ABN 39 944 184 773 ARSN 128 052 595 04 ANNUAL REPORT 2015 | LEND LEASE LEND LEASE | ANNUAL REPORT 2015 05 Chairman’s Report Chief Executive Officer’s Report Lend Lease delivered a strong financial result for the 2015 Lend Lease has an established growth platform which includes an financial year with $619 million in Profit after Tax and a international pipeline of development projects, record growth in Distribution per Security of 54.0 cents. Our portfolio of funds under management and solid construction backlog revenue. development opportunities is well placed to deliver strong We are focused on the successful delivery of our pipeline, releasing returns for securityholders over the medium term. embedded earnings and driving growth over the medium term. Strong Financial Performance These new risk event requirements will be For the year ended 30 June 2015, 29 per cent of Delivering on Our Strategy Our Construction operations increased backlog Our People non negotiable and are aimed at achieving our employees are women and 21 per cent of revenue to $17.3 billion, up 7 per cent on the prior Lend Lease delivered a strong performance Since 2009, Lend Lease has delivered on its Our people are at the heart of everything we do, consistent and robust performance across senior executive positions are held by women. year, with $11.8 billion of new work secured and for the financial year ended 30 June 2015, strategy to become a leading international so we continue to look for ways to support their all of our operations, irrespective of location Currently, we have two female Board members another $7 billion of building and engineering with Profit after Tax of $619 million, versus property and infrastructure group in the core health and wellbeing. or line of business. and two female direct reports to the Group work at preferred status or secured post $823 million in the financial year ended markets in which it operates. Our strategy CEO and Managing Director. balance date. Since October 2014, we have launched a 30 June 2014, which included profit from the We will not waiver in our uncompromising underpins our vision to create the best places number of initiatives aligned to the Health and sale of Lend Lease’s 30 per cent interest in commitment to operate incident and injury free Over the year, Lend Lease has achieved some and is the framework for how we operate. To support our future growth, we have invested Wellbeing framework including ‘wellbeing the Bluewater Shopping Centre in Kent in or our adherence to standardised GMRs across prominent awards acknowledging our leadership circa $2.2 billion of production capital into our Successful delivery of our ‘Restore, Build, Lead’ leave’ to assist our people in focusing on their the UK. Overall our operating businesses had all the projects and assets that Lend Lease controls. as an employer for the Lesbian, Gay, Bisexual, development pipeline, and now have 25 major strategy placed the Group in a strong position. physical and mental wellbeing, and enhanced a strong year, with record settlements in our Transgender and Intersex (LGBTI) community. residential apartment buildings and five commercial Creating Sustainable Places As we look to the future, our focus is on safely our global leave policies for new parents. Australian residential operations, record For the fourth year running, we have been buildings in conversion or delivery globally, with realising the value of our large pipeline of residential pre sold revenue of $5.2 billion1 Sustainability is a key component of Lend Lease’s recognised as a top ten employer in the Australian pre sales reaching a record $5.2 billion.1 Every two years, Lend Lease conducts an development opportunities and leveraging our and funds under management exceeding business strategy. We believe that environmental, Workplace Equality Index for LGBTI inclusion, employee engagement survey, with a partial integrated model. We are focused on optimal Building a Competitive Advantage $20 billion. social and economic factors form an integral part the only property and construction organisation survey conducted across a sample of delivery and are targeting disciplined growth in of the management and value creation process in the top thirty. In Australia, we continue to At Lend Lease, we have created a differentiated employees in alternate years. A full employee Securityholders will receive a final distribution of our core sectors. across the property and infrastructure value chain. engage with the Australian Aboriginal community business through our integrated property model engagement survey (conducted by Towers 27.0 cents per security, with the dividend component Our commitment is evidenced by 100 per cent of through activities in our Reconciliation Action Plan This last year saw Lend Lease significantly increase and established ourselves as a leading international Watson) was completed in June 2015. franked to 25 per cent. This brings the full year our major urban development projects ($30.1 billion) (RAP). This year, Lend Lease joined twelve other activity across projects around the globe. We property and infrastructure group. Our development distribution to 54.0 cents per security. The payout In addition to our regular survey questions, having achieved or targeting green certification. organisations in a ten year partnership with have improved the safety and sustainability of our pipeline includes major urban regeneration sites ratio for the year was 51 per cent, within the Board’s Lend Lease has moved beyond traditional CareerTrackers agreeing to provide a minimum business, expanded our development pipeline currently in delivery around the world including target range of 40 to 60 per cent of earnings. In the past year, Lend Lease has received more than measures of engagement and adopted a of 25 internship opportunities per year. to $44.9 billion, increased our funds under Barangaroo South and Darling Harbour Live in 69 awards recognising our environmental and sustainable engagement metric. We achieved an The final dividend component was franked to management to $21.3 billion and increased our Sydney, Victoria Harbour in Melbourne and social leadership. This includes our Australian Elephant & Castle and The International Quarter 85 per cent sustainable engagement score, an 25 per cent primarily due to franking credits that Our Board construction backlog revenue to $17.3 billion. Prime Property Fund Commercial (APPF in London. Urban regeneration projects now increase of five percentage points from 2014 and were received by Lend Lease from Australian This year we welcomed Steve Dobbs who joined Over the last five years, our strategy has delivered Commercial) ranking first globally out of 707 comprise approximately 70 per cent of our in line with Global High Performing Companies.2 joint venture dividends paid during the year. The the Board in January 2015. Steve has extensive a total securityholder return of circa 192 per cent. participants in the 2015 Global Real Estate $44.9 billion development pipeline. Group does not expect to be able to frank any experience in the construction and engineering Sustainability Benchmark (GRESB) for the Outlook distributions in FY16. industries. The Board Nomination Committee Safety second year running and five retail, industrial Barangaroo South Residential markets have remained strong in both met eight times during the year and reviews Lend Lease is committed to operating incident and development funds ranking first in their At our largest urban regeneration site, the Australia and the UK, delivering record residential Maintaining Financial Strength Board composition at each meeting. The Board and injury free wherever we have a presence. catagories in the UK, Asia and Australia; $6.9 billion Barangaroo South project in Sydney, settlements (up 24 per cent) and pre sold residential The Group maintained a strong financial position Nomination Committee believes the Lend Lease This remains central to our business and is and the US Energy Department recognising we recorded several milestones during the year. revenue (up 109 per cent). While demand through the year, with cash and equivalents of Board has the right composition of individuals embedded in all decision making. We are proud Lend Lease’s Military Housing portfolio Commercial Tower Two ‘topped out’ and at the currently remains strong, we are closely $750.1 million as at 30 June 2015, gearing of who, in combination, bring a mix of expertise, of our commitment and believe that Lend Lease (over 40,000 residential units) for achieving a end of the financial year the precinct welcomed watching lead indicators for a change in the 10.5 per cent and further undrawn capacity of skills, experience and diversity to contribute to is a leader in health and safety. 26 per cent energy saving five years ahead of its first tenant Westpac and two new leasing cycle and ensuring a disciplined approach to $1,423.5 million. The strength of the Lend Lease the oversight and effective corporate governance schedule against its target of 20 per cent in Diversified Earnings agreements were signed for Tower One with management of risks that may emerge. balance sheet and access to third party capital, at Lend Lease. the Obama Administration’s Better Buildings Marsh McClennan & Companies and Servcorp. means we have the financial flexibility to fund The solid FY15 financial result demonstrated The outlook for Lend Lease continues to be Challenge. We remain committed to the our development pipeline and invest in growth Outlook the benefits of our business and regional Tower One was sold into a new $2 billion strong.