Lendlease Annual Report 2024

54 Lendlease Annual Report 2024 Construction segment Key financial and operational metrics FY23 FY24 Revenue ($m) 7,203 5,936 Operating EBITDA ($m) 90 126 Operating Profit after Tax ($m) 32 64 New Work Secured ($b) 1 4.7 4.8 Backlog ($b) 1 8.7 7.6 1. Construction revenue to be earned in future periods (excludes internal projects). Performance 1 The Construction segment delivered EBITDA of $126m, up 40 per cent on the prior year. A gain from the remeasurement of UK pension scheme liabilities and an improved contribution from Asia was partially offset by a lower contribution from Australia. Revenue of $5.9b was down 18 per cent. This was driven by reduced activity across all regions, with the largest revenue contributor, Australia, the least impacted, down 7 per cent to $3.4b. The US contributed to more than half of the revenue decline, following the earlier wind down of West Coast and Central US operations. Social infrastructure remained the key driver of revenue, up 3 per cent on the prior year at $2.3b. Other revenue categories were impacted by lower activity levels, particularly, residential, which decreased 47 per cent following a decision to no longer build external apartments for sale or construction projects below $150m in value. The EBITDA margin was 2.1 per cent, up from 1.2 per cent, with the gain from the remeasurement of the UK defined pension scheme contributing 0.7 percentage points. Australia’s EBITDA margin was 1.7 per cent, down from 2.8 per cent, due primarily to supplier insolvencies on Australian projects, requiring re-tendering for various goods and services. The estimate of the impact in FY24 of those insolvencies was in the order of $50m. New work secured was $4.8b, up 2 per cent on the prior year. A recovery in European activity led the growth, contributing $1.1b, while the US and Australia were the largest components. Social infrastructure projects remain the key sector for new work secured at $2.3b, followed by workplace at $1.1b. The Construction business is preferred for $15.3b in new projects, including $5.1b of social infrastructure projects, $4.7b of Defence and $2.9b of workplace, supporting the future pipeline of new work. A considerable proportion of the customer base is repeat business from deep and trusted relationships with government and corporate clients. Operations Backlog revenue reduced 12 per cent to $7.6b, led by a $1.8b decline in the Australian backlog. This was partly offset by a $0.6b increase in UK backlog, while the US and Asia remained broadly stable. Australia’s backlog revenue of $3.9b is weighted to social infrastructure and defence projects and is supported by a strong preferred book of $10.6b, providing visibility on future revenues. Key projects underway include the Frankston Hospital Redevelopment, various Australian Department of Defence projects, Powerhouse Parramatta and Liverpool Health and Academic Precinct. The US backlog revenue of $2.6b is expected to reduce significantly in line with the wind down of West Coast and Central operations and terms agreed in principle for the sale of the East Coast construction operations. The UK construction business has backlog revenue of $1.0b and is supported by a preferred book of $4.4b. The business is being prepared for sale, in line with the decision to divest international construction operations. 1. Comparative period the year ended 30 June 2023.