The Report on Lendlease Group
Added on 2022-08-21
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LENDLEASE GROUP
FINANCIAL ANALYSIS &
BENCHMARKING
1
LENDLEASE GROUP
FINANCIAL ANALYSIS &
BENCHMARKING
BRENDAN LLOYD – STUDENT 13683575
BMBA70-870 ACCOUNTING FOR MANAGERS
PROF KEITH DUNCAN
FINANCIAL ANALYSIS &
BENCHMARKING
1
LENDLEASE GROUP
FINANCIAL ANALYSIS &
BENCHMARKING
BRENDAN LLOYD – STUDENT 13683575
BMBA70-870 ACCOUNTING FOR MANAGERS
PROF KEITH DUNCAN
LENDLEASE GROUP
FINANCIAL ANALYSIS &
BENCHMARKING
Figure 1 - Lendlease Group Share Price 2010 – 2020
2
FINANCIAL ANALYSIS &
BENCHMARKING
Figure 1 - Lendlease Group Share Price 2010 – 2020
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LENDLEASE GROUP
FINANCIAL ANALYSIS &
BENCHMARKING
Executive Summary
This report provides an in-depth analysis of the financial benefits and drawbacks that
arise as a result of diversification from the principal business activity and expansion by bench
marking Lendlease Group Limited against three other companies namely, the Stockland
Group, CIMIC and the Downer Group. These three companies have their roots in Australia
but have significant international presence and share quite a significant number of industries
with Lendlease. The techniques used to carry out the analysis include Discount cash flow
analysis (DCF), Private Equity ratio, Return on Equity (ROE) and Return on Assets (ROA)
trade-off frameworks among others. All the illustrations and info graphics can be found
within the report document. The results obtained from the analysis carried out act as clear
indicators that evolving markets that boast of huge, global competitor numbers are the main
reason why companies such as Lendlease Group Limited should come up with a way in
which they can create or direct laser-like focus on their formative niche, instead of constantly
trying to come up with cutting-edge techniques of diversifying their business operations
towards larger and high risk industries. The report finds that despite the fact that the
diversification of a company from its principal business activity may prove to be a wise
investment choice in the long run, business firms need to carry out in-depth market valuations
and risk analysis before any investment decision is made. The recommendations that are
discussed in the report include:
Carrying out in-depth market investigations before embarking on any
expansion projects.
Investments that involve expansion and diversification should only be
implemented as long term projects and not as short term projects.
If a firm chooses to carry out an expansive short term investment, then
the timing of the aforementioned investment should be very accurate to ensure that
maximum profits are reaped from the aforementioned investment.
The recommendations made on this report are based on the results of the analysis that
were fruitfully carried out accompanied with an in-depth study and analysis of the
3
FINANCIAL ANALYSIS &
BENCHMARKING
Executive Summary
This report provides an in-depth analysis of the financial benefits and drawbacks that
arise as a result of diversification from the principal business activity and expansion by bench
marking Lendlease Group Limited against three other companies namely, the Stockland
Group, CIMIC and the Downer Group. These three companies have their roots in Australia
but have significant international presence and share quite a significant number of industries
with Lendlease. The techniques used to carry out the analysis include Discount cash flow
analysis (DCF), Private Equity ratio, Return on Equity (ROE) and Return on Assets (ROA)
trade-off frameworks among others. All the illustrations and info graphics can be found
within the report document. The results obtained from the analysis carried out act as clear
indicators that evolving markets that boast of huge, global competitor numbers are the main
reason why companies such as Lendlease Group Limited should come up with a way in
which they can create or direct laser-like focus on their formative niche, instead of constantly
trying to come up with cutting-edge techniques of diversifying their business operations
towards larger and high risk industries. The report finds that despite the fact that the
diversification of a company from its principal business activity may prove to be a wise
investment choice in the long run, business firms need to carry out in-depth market valuations
and risk analysis before any investment decision is made. The recommendations that are
discussed in the report include:
Carrying out in-depth market investigations before embarking on any
expansion projects.
Investments that involve expansion and diversification should only be
implemented as long term projects and not as short term projects.
If a firm chooses to carry out an expansive short term investment, then
the timing of the aforementioned investment should be very accurate to ensure that
maximum profits are reaped from the aforementioned investment.
The recommendations made on this report are based on the results of the analysis that
were fruitfully carried out accompanied with an in-depth study and analysis of the
3
LENDLEASE GROUP
FINANCIAL ANALYSIS &
BENCHMARKING
behavioural patterns of Lendlease Group, Stockland Group, CIMIC and the Downer Group
against their historical performances.
Introduction and Objectives
Lendlease Group is an ASX 100 company which is famous for property development
in the Australian real estate market. Lendlease Group Company draws heavily on corporate
and social responsibity within its workplaces and projects. As a result of the active corporate
social responsibility, Lendlease Group has been recognised on several occasions for their
innovative appetite, inclusivity, broad mindedness and the ability to be able to generate
alternate & sustainable methods of work (Parker, 2018). The Lendlease Group undertake
building and development works as their core business activity. However, within a span of
the last ten years, the Group has moved towards diversification and sustainability in the
“booming” Australian roads, rail and tunnels sector, with acquisitions of key companies that
have civil engineering capabilities thus forming the Group’s engineering business. Obviously,
by diversifying, Lendlease Group’s goal was to increase their profit margins (Tarrant and
Hooper, 2018). However, according to media statements, as per the company’s Annual
Reports, although solid growth and a foothold in the sector’s pipeline seemed to have been
achieved, Lendlease Group was unable to realize their long term profit margins. In the
beginning of Lendlease Group’s diversification efforts the Company was able to portray a
strong sense of growth in their core business and continued to show signs of a highly robust
revenue base, profit margin increases and shareholder confidence. However, in 2018,
Lendlease Group’s lack seemed to have changed when the Company started to incur losses
amounting to several millions therefore forcing the company’s management board to sell both
their engineering and services businesses so as to focus on their core-business which is
Building and development (Gale, 2019).
This report seeks to carry out an in-depth analysis of the benefits and drawbacks of
diversification and expansion from a business firm’s core business activity in today’s market.
Lendlease Group limited has been benchmarked against the Stockland Group, CIMIC and
Downer Group – three Australian companies with international presences in industries shared
4
FINANCIAL ANALYSIS &
BENCHMARKING
behavioural patterns of Lendlease Group, Stockland Group, CIMIC and the Downer Group
against their historical performances.
Introduction and Objectives
Lendlease Group is an ASX 100 company which is famous for property development
in the Australian real estate market. Lendlease Group Company draws heavily on corporate
and social responsibity within its workplaces and projects. As a result of the active corporate
social responsibility, Lendlease Group has been recognised on several occasions for their
innovative appetite, inclusivity, broad mindedness and the ability to be able to generate
alternate & sustainable methods of work (Parker, 2018). The Lendlease Group undertake
building and development works as their core business activity. However, within a span of
the last ten years, the Group has moved towards diversification and sustainability in the
“booming” Australian roads, rail and tunnels sector, with acquisitions of key companies that
have civil engineering capabilities thus forming the Group’s engineering business. Obviously,
by diversifying, Lendlease Group’s goal was to increase their profit margins (Tarrant and
Hooper, 2018). However, according to media statements, as per the company’s Annual
Reports, although solid growth and a foothold in the sector’s pipeline seemed to have been
achieved, Lendlease Group was unable to realize their long term profit margins. In the
beginning of Lendlease Group’s diversification efforts the Company was able to portray a
strong sense of growth in their core business and continued to show signs of a highly robust
revenue base, profit margin increases and shareholder confidence. However, in 2018,
Lendlease Group’s lack seemed to have changed when the Company started to incur losses
amounting to several millions therefore forcing the company’s management board to sell both
their engineering and services businesses so as to focus on their core-business which is
Building and development (Gale, 2019).
This report seeks to carry out an in-depth analysis of the benefits and drawbacks of
diversification and expansion from a business firm’s core business activity in today’s market.
Lendlease Group limited has been benchmarked against the Stockland Group, CIMIC and
Downer Group – three Australian companies with international presences in industries shared
4
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