The sale of Lendlease’s engineering arm cost $368 million in what was a “disappointing financial result” for the multinational construction, property and infrastructure company.
The group sold the division for $160 million subject to final conditions while retaining three major projects, including the NorthConnex tunnel and upgrade to Kingsford Smith Drive.
Lendlease will continue with the Cross Yarra Partnership consortium to resolve issues in relation to the scope and costs of the project.
Lendlease stocks plunged in November 2018 after the group announced it had made a writedown provision of $350 million due to the underperformance of its troubled engineering arm.
The group is also facing two class action lawsuits relating to its engineering division. US firm Rosen Law Firm said it was investigating potential securities claims resulting from allegations that Lendlease may have issued materially misleading business information to the investing public.
Meanwhile, Covid-19 led to a significant deterioration in operating conditions including delays in development, weak trading, mandated shutdowns and a drop in real estate values.
The group had a statutory loss of $310 million for the financial year with full year distributions of 33.3 cents per stapled security.
The exit costs and loss in non-core business equated to $406 million while core-business made a $96 million profit after tax, following a $212 million loss in the second half due to Covid-19.
The financial results coincided with resignation of London-based non-executive director Margaret Ford due to “disruption caused by the Covid-19 pandemic” including travel bans, expanded schedules and timezone challenges.
Lendlease chief executive Steve McCann said they experienced a disappointing financial result as the group brought to account costs for the exit of the engineering business, while the core business was impacted by Covid-19 in the second half.
“The group has made good progress in finalising the sale of the engineering business,” McCann said.
“Notwithstanding the challenging environment, the group advanced its strategic agenda in the financial year 2020.
“Significant progress was made on growing and converting the development pipeline, including securing additional major urbanisation projects, achieving important planning milestones and creating new investment partnerships to support projects moving into delivery.”
The development pipeline grew to $113 billion up from $76 billion with the addition of two new major urbanisation project worth $37 billion in Thamesmead Waterfront in London and a partnership with Google in the San Francisco Bay area.
In Australasia, the group completed a lifestyle precinct in Singapore called Paya Lebar Quarter added $3.3 billion in funds to assets under management and achieved strong presales in TRX Residences in Kuala Lumpur and One Sydney Habour, Barangaroo South.
The $1.2 billion Victoria Cross commercial tower was also approved in Sydney as part of the NSW government’s third tranche of project approvals.