Probably the most optimistic result out of LLC for a little while.

The actual result itself is terrible, but that’s mainly backward looking. We know things have been tough.

The most important part of the story is the lift in the completion rate. The pandemic-related stop-start-down-tools-delayed-activity greatly affected LLC’s output (completions). Work to do, work in progress, continued to ratchet up, but that’s not what “pays the bills”.

That said, overall, we are pleased that the development pipeline is enormous, with enough work to do for many years.

Again, we get glimpses, as per the EBITDA graph on the left, of what normalised conditions can look like.

In any case, we are very pleased to see the “first increase” in completions in a while, as per the first graph. That really is the key to a material recovery in earnings.

LLC is a fund manager, and so gathering assets, attractive investors, growing the platform is also key, particularly as projections from the development pipeline can transmission into the investments arm, in a “virtuous circle”.

LLC continues to do well in this regard.

The construction book is slated to shrink, and this is part of the “right sizing” of LLC’s overall capability, they really want the construction arm to mostly service in house projects, and only engage in 3rd party where they feel they have a lock on the outcome. Superficially, that seems fine, sounds plausible, makes sense. It is consistent with the strategy that LLC have laid out, although it is an admission that construction margins just aren’t good enough, reliable enough, predictable enough to bother with.

The balance sheet is within guidance for gearing, 10-20%, however, given the enormity of the pipeline the challenge is attracting enough third-party capital to fund it all without straining the balance sheet (which they couldn’t possibly do).

Overall, we liked the forward-looking aspects of the result, even as the backwards looking result (provisions, impairments) is poor.

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