Residential construction boosts Lendlease

Lendlease built a record number of apartments as a big lift in housing completions helped the property giant to an annual profit of almost $760 million.

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Lendlease’s net profit for the year to June 30 rose 8.7 per cent as the company finished major commercial projects in Australia and New York and more than doubled the number of completed residential apartments.

“Residential development was a highlight, with a 20 per cent increase in completions to 5,769, driven by the delivery of a record 2,533 apartments,” Lendlease group chief executive Steve McCann said in a statement on Monday.

“We have settled approximately 90 per cent of these apartments to date, with a default rate of less than one per cent.”

Lendlease also finished building New York’s tallest residential tower and some large projects in Australia, including Sydney’s International Convention Centre and Tower One at Barangaroo South, and the Sunshine Coast University and New Bendigo hospitals.

The company said its investments division, which includes interests in retirement living, office blocks and military housing, has also performed well, generating 36 per cent of the group’s operating earnings.

Funds under management grew by 11 per cent to $26.1 billion.

Mr McCann said Lendlease was well placed for the future, with the company the preferred bidder in more than $10 billion of construction work, including the Google headquarters in London.

The company is working on urbanisation projects in Chicago, Boston, New York and Kuala Lumpur and has secured new projects in Milan and San Francisco.

Also, the Haringey Council in London has selected Lendlease as its preferred partner on the $7 billion Haringey Development Vehicle , a 50:50 partnership between Haringey Council and Lendlease to develop some of the council’s land.

Lendlease said it is progressing well in the residential-for-rent sector, with three buildings under construction in the Americas

“These projects further support our stated objective of rebalancing capital and earnings towards out international operations to drive growth,” Mr McCann said.

Lend lease shares closed 10 cents higher on Monday at $16.55.

APARTMENTS HELP DRIVE LENDLEASE PROFT LIFT

* Full-year net profit up 8.7pct at $758.6m

* Revenue up 10.4pct at $16.7b

* Final dividend of up three cents to 33 cents per security

Shoe-seller RCG looks to online sales kick

RCG Corporation, owner of The Athlete’s Foot shoe chain, will use three-hour delivery as a drawcard for its online operations to combat the presence of Amazon and amid weak consumer spending.

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The shoe retailer, which is also distributor of a string of footwear brands including Vans, Platypus, Merrell and Dr Martens, impressed investors on Monday with earnings at the top of its guidance.

The group’s underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $78.3 million for the year to July 2 was up 30 per cent on the prior year, while its underlying profit rose 21 per cent to $39.9 million.

RCG had downgraded its earnings guidance twice, first in February and then in May from an initial target of $90 million down to $74 million to $80 million.

Co-chief executive Hilton Brett said a decline in consumer spending had hurt sales, particularly during the key December and January trading period.

“We are pleased with the result but we certainly did not achieve what we set out to achieve at the beginning of the financial year,” Mr Brett told AAP.

“Over the last five years there have been basically no wage growth and now we are starting to see employment numbers improve and there are some signs of wage growth.”

However, he said rising power prices and interest rates are still holding back spending and RCG is focusing on digital strategy to boost sales, beat competitors and grow market share.

“We have been working on our digital strategy long before Amazon confirmed it was coming to Australia,” Mr Brett said.

Mr Brett said RCG, which has 430 stores across Australia and New Zealand, plans to launch three-hour delivery to most population centres this financial year, and to roll out more click-and-collect centres.

The rollout of 50 new stores and the August, 2016 acquisition of hip sneaker business Hype DC a year ago helped the strong underlying profit.

However, the group’s $29.2 million statutory net profit was down 2.6 per cent on the prior year after accounting for acquisition-related costs.

The group’s Accent business, which includes Platypus, Skechers, Vans and Timberland, delivered $67.1 million of underlying earnings, up 57 per cent on the prior year.

Earnings for The Athlete’s Foot fell eight per cent to $12.6 million as sales growth slowed while EBITDA in RCG Brands – which includes Merrell, CAT and Saucony – fell 62 per cent to $3 million.

Analysts from investment bank Citi said RCG’s like-for-like sales growth of one per cent during the first seven weeks of the current financial year was weaker than the 2.6 per cent growth it had a year ago.

RCG shares closed five cents higher – a 6.3 per cent gain – at 84 cents.

RCG CAPITAL HEADLINE RESULTS:

* Full-year net profit down 2.6pct to $29.2 million

* Underlying net profit up to 21pct to $39.9 million

* Revenue up 43.7pct to $636.15 million

* Final dividend of three cents a share, fully franked, up from 2.5 cents

Watchdog to ‘surgically’ focus on CBA

Malcolm Turnbull says the banking watchdog’s inquiry into Commonwealth Bank will take six months whereas Labor’s idea of a sector-wide royal commission would at best take three years.

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The Australian Prudential Regulation Authority on Monday announced it was setting up an inquiry after a series of issues at the Commonwealth Bank that have raised concerns about its governance, culture and accountability.

It will run in tandem with money movement regulator AUSTRAC’s prosecution of CBA over an alleged money-laundering scandal.

Opposition Leader Bill Shorten described it as yet another inquiry into the banks.

“When will the Turnbull government finally do what it knows needs to be done … which is to have a royal commission into our banks,” he told reporters in Melbourne.

But the prime minister said APRA will “surgically” focus on the CBA and report back in six months.

“If you had a royal commission in the banks … you would be flat out getting an outcome in three years,” Mr Turnbull told reporters in Cooma, southern NSW.

Treasurer Scott Morrison said it was appropriate the regulators undertake such inquiries.

“They are taking action now,” the treasurer said.

Shadow treasurer Chris Bowen, while backing APRA’s investigation, is bemused Mr Morrison believes a royal commission is not required.

During the past 18 months alone there had been more than $300 million in fines and compensation paid from across the sector, Mr Bowen said in a joint statement with Labor’s financial services spokeswoman Kay Gallagher.

“The simple fact is we need to ensure Australia’s banking system is customer focused and the best it can be across the board,” they said.

Crowdfunding sought for WA GST legal fight

A West Australian Liberals-led High Court constitutional challenge over the state’s GST share will be financed by crowdfunding and attempt to force the hand of both federal leaders.

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The state opposition has talked tough on the unfairness of the GST carve-up but failed to secure any changes during its eight years in government.

The party is now rattling the tin to cover the legal costs of its challenge as it continues to push for bipartisan support from Canberra to change the GST system.

Opposition Leader Mike Nahan said he tried as WA treasurer to get a better deal through negotiations with the federal Liberals and Labor, but the position in the eastern states had since “hardened”.

“Our argument will be the GST is discriminatory against Western Australia and other places, both in terms of the overall allocation and the way it’s administered, and we think we have a good case,” he told 6PR radio on Monday.

Dr Nahan will wait until the Productivity Commission report into the GST distribution is handed down in January and says he expects it to bolster the case.

He denied he was trying to blackmail Prime Minister Malcolm Turnbull, who he said was the only federal leader fighting for a fundamental reform of GST through the Productivity Commission review.

Premier Mark McGowan said he did not want to discourage Dr Nahan, but was told the Barnett government received advice a legal challenge would fail because the current arrangements were “constitutionally sound”.

“Good luck to him and if he wants to take High Court action, I would welcome him proceeding down that course,” Mr McGowan told reporters.

Attorney-General John Quigley said he had received legal advice suggesting the idea was “wishful thinking”.

Mr McGowan has also urged the prime minister to bring a GST solution to the Liberal state conference this weekend.

Meanwhile, federal Treasurer Scott Morrison has derided as a “sugar hit” federal Labor’s plan for a $1.6 billion infrastructure fund to help WA through its GST woes.

Bill Shorten’s plan, announced at the Labor state conference on Saturday, would boost commonwealth funding for WA to the equivalent of a 70 cent floor.

WA’s share is currently about 34 cents.

Mr Morrison says the federal government has already provided top-ups for three years to “stop the drop” in WA’s GST share.

“Bill Shorten has just made another promise like Wayne Swan made promises about setting up funds and Kevin Rudd made promises,” he told reporters in Canberra.

“None of it ever happened.”

IS hold on Tal Afar almost completely gone

Tal Afar is one of the last IS-held towns in Iraq.

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But after just eight days of fighting, the Iraqi army now controls 90 per cent of the city.

With militants cleared from all but one neighbourhood, celebrations have already begun.

The Iraqi national flag has been raised in the heart of Tal Afar, while soldiers have begun dismantling IS flags across the city.

Lieutenant General Abdul Jabbar, a commander in the Iraqi army’s 16th Division, has dismissed IS’s resistance.

“Today, we have advanced very quickly, because IS has been completely destroyed and our heroes have protected us from their car bombs and broken through their defences.”

Tal Afar is the latest offensive in the United States-backed war against IS, also known as Daesh.

It comes a month after Iraq’s second-largest city, Mosul, was fully liberated.

US military adviser Lieutenant Colonel James Downing says the operation to recapture Tal Afar, 70 kilometres to the west, has been swift because the militants are weakened now.

“I think a lot of it has to do with, you know, Daesh took a heavy loss in Mosul. And I think they threw a lot of their best fighters and things like that to help defend that location. And so, when you look at what’s different now versus Mosul, I think that’s a big chunk of it.”

In the weeks before the Tal Afar offensive began, up to 90,000 people were still in the city.

While many have fled, the United Nations has estimated 30,000 civilians are trapped.

Local resident Tarfa Hassan says the fighting has been relentless.

“The army has been fighting so much. Today and yesterday, it was very heavy fighting. It was like hell. They didn’t stop all night.”

Many of the civilians who have fled are being sent to displaced-persons camps across the country.

One of those is Rifaa Khilo, who says, if she had stayed, she would have died.

“There was no electricity, no food, nothing to eat. We were almost dying. There was no work and no medicine. My kidneys have almost failed. It has been three years without medicine or anything.”

In recent months, US-backed Iraqi and Syrian forces have advanced against IS on a number of fronts, although militants still control a few towns in Iraq and large areas in Syria.

In an IS enclave at the Syria-Lebanon border, where IS has fought the Lebanese army on one front and Hezbollah and Syrian troops on the other, a ceasefire has now been reached.

It comes as bodies believed to be those of Lebanese soldiers kidnapped by IS three years ago have been found near the border.

Lebanon’s chief of general security, Abbas Ibrahim, says he is waiting for the DNA test results but it is likely they are the bodies of the missing soldiers.

“We will hand over the bodies to the military hospital and await DNA tests. The science will end all doubts.”

The locating of the bodies was part of a deal reached between the Lebanese army and IS that allows militants to be evacuated to eastern Syria.

The Syrian army, along with Hezbollah, also agreed to the deal, declaring a ceasefire in their own attack against IS.

The deals indicate a level of weakness on IS’s part, with Lebanese sources saying the IS fighters have “succumbed under fire and asked for negotiations.”