Writedowns at UK housing arm and property devaluation drag full-year profit to barely half 2007 level

Australian property group Lend Lease has confirmed a 47% fall in net profit for the year ended 30 June 2008, largely as a result of the writedown at its UK housing arm, Crosby Homes.

In line with the developer's warning to the market earlier this month, net profit fell to A$265.4m (£123.7m), down from A$497.5m (£232.0m) the previous year.

The fall was caused by the A$121.5m (£56.6m) writedown at Crosby Homes - caused by the UK housing slump - and the A$60.2m (£28.1m) negative impact of property investment revaluations.

Before taking these two items into account, the headline net operating profit was A$447.1m (£208.3m), an 8.1% rise on the previous year.

Greg Clarke
Clarke: "Lend Lease is in a solid position… to manage its way through these market headwinds."

The group's project management and construction business, Bovis Lend Lease, returned to profit in all its key markets, with the Australian arm showing a 115% increase in new work delivered, to A$350.5m (£163.4m).

The group reported a strong development pipeline across the UK and Asia Pacific of A$4.8bn (£2.2bn). Construction began during the year on two major projects in the Asia Pacific: the 313@Somerset project in Singapore and Mid City in Sydney's central business district.

Lend Lease has also this year signed an interim development management agreement with the UK Olympic Delivery Authority for construction of the Athletes' Village in Stratford for the London 2012 Olympics.

Greg Clarke, managing director and chief executive officer, said: “We have delivered a solid operating result, strong operating cash flows and continue to have low gearing in the face of continuing volatility in the global credit and property markets. This highlights the strength of our diversified portfolio and conservative approach to capital management.”

On the future outlook, he said: “We expect the current property market volatility to remain for the foreseeable future with the timing of recovery in property markets in the US and UK dependent on the recovery of liquidity in the financial markets. In comparison, the Australian market is stronger and, while slowing, should not see the same level of impact.

“Lend Lease is in a solid position, because of its diversified earnings business model and financial strength, to manage its way through these market headwinds.”

The group declared a final dividend of 34 cents (16p) per share, bringing total dividends for the year to 77 cents (36p) per share, in line with the previous full-year dividend.