Lendlease Group · ASX:LLC
Lendlease — FY2016 Earnings Presentation
52 slides from Lendlease's earnings presentation, Aug 19, 2016
Slide 1: Lendlease 2016 Full Year Results
Lendlease 2016 Full Year Results 19 August 2016
Slide 2: Contents
2 Contents Group Performance and Results Highlights Steve McCann - Group Chief Executive Officer and Managing Director Financials Tarun Gupta - Group Chief Financial Officer Operational Update Steve McCann - Group Chief Executive Officer and Managing Director Appendices Image: Barangaroo South, Sydn
Slide 3: Indigenous engagement and reconciliation
LENDLEASE – FY16 FINANCIAL RESULTS 3 Indigenous engagement and reconciliation Lendlease’s vision for Reconciliation is one in which all our employees acknowledge and celebrate the proud heritage of Australia’s First Peoples and promote opportunities for career development, sustainable business growt
Slide 4: FY16 Safety
4 FY16 Safety 1.8 (2.2 in FY15) Lost Time Injury Frequency Rate in the last 12 months 86% (83 in FY15)% of operations have not had a critical incident in the last 12 months Image: 56 Leonard Street, New York
Slide 5: Group Performance and Results Highlights
Section 1 Group Performance and Results Highlights Steve McCann Group Chief Executive Officer and Managing Director Image: Barangaroo South, Sydney
Slide 6: Double digit earnings growth with strong cash generation
LENDLEASE – FY16 FINANCIAL RESULTS 6 Double digit earnings growth with strong cash generation Securityholder returns1 • Profit after Tax of $698.2 million, up 13%, and earnings per stapled security of 120.1 cents, up 12% • Final distribution of 30.0 cents per security, bringing the full year distrib
Slide 7: Strong operating cash flow despite continued investment
LENDLEASE – FY16 FINANCIAL RESULTS 7 Strong operating cash flow despite continued investment Development inventories $m Development inventories (LHS) $m 4,000 Change in development inventories (RHS) 950 3,500 • Production capital in development inventories has 750 increased by more than $1.3 billion
Slide 8: Financials
Section 2 Financials Tarun Gupta Group Chief Financial Officer Image: 432 Park Avenue, New York
Slide 9: Re-segmentation and transition to Integrated Reporting
LENDLEASE – FY16 FINANCIAL RESULTS 9 Re-segmentation and transition to Integrated Reporting Re-segmentation Integrated reporting • Three reporting segments: Development, Construction • Annual Report prepared with reference to the and Investments International Integrated Reporting Council’s framework
Slide 10: Financial performance
LENDLEASE – FY16 FINANCIAL RESULTS 10 Financial performance $ million FY15 FY16 Change Development 386.1 500.2 30% • Strong residential and commercial contribution in Australia and Europe Construction 279.0 288.1 3% • Higher revenue offset by weaker offshore margins Investments 477.8 457.7 (4%) • De
Slide 11: Cash flow movements ($b)
LENDLEASE – FY16 FINANCIAL RESULTS 11 Denotes major movements Cash flow movements ($b)1 Barangaroo Commercial +$2.1b, Urban Regen ($2.6b), other Urban Regen +$1.2b, Communities ($0.6b) Communities +$0.8b Equity contribution to (3.4) LLITST2 and LLOneITST3 ($0.4b) 4.3 Net Multi Option Facility ($0.5b
Slide 12: Financial position
LENDLEASE – FY16 FINANCIAL RESULTS 12 Financial position $ million 30 June 15 30 June 16 Change Assets Key areas of capital employed Cash and cash equivalents 750.1 1,008.4 34% • Development inventories of $3.7 billion Inventories 4,104.2 4,602.9 12% • Investments of $3.0 billion including: Equity a
Slide 13: Operational Update
Section 3 Operational Update Steve McCann Group Chief Executive Officer and Managing Director Artist impression: Paya Lebar Quarter, Singapore
Slide 14: Development
LENDLEASE – FY16 FINANCIAL RESULTS 14 Development 40% of operating Performance highlights1 Commercial building completion profile3 ($b) EBITDA • Proceeds received on Tower Two and By end value Paya Lebar Commercial, Tower Three at Barangaroo South Darling Square Commercial, Complete following comple
Slide 15: Apartment presales - by location and customer
LENDLEASE – FY16 FINANCIAL RESULTS 15 Apartment presales - by location and customer Presales (by value, as at 30 June 2016)1 Run-off profile by location2 By customer 39% 36% FY17 FY18/19 Other offshore, 18% 35% 22% 20% Mainland China, 23% 15% 15% 7% 3% 4% Local, 59% Sydney Melbourne London Brisbane
Slide 16: Construction
LENDLEASE – FY16 FINANCIAL RESULTS 16 Construction 23% of operating Performance highlights1 Backlog ($b) EBITDA • Strong result from Australian operations, with EBITDA up 52% • Australian construction margin improvement of over 100 14.6 (12.0) 0.8 bps to 3.7% 20.7 17.3 • Asia and Europe broadly brea
Slide 17: Investments
LENDLEASE – FY16 FINANCIAL RESULTS 17 Investments 37% of operating Performance highlights1 Investments EBITDA by activity ($m) EBITDA • FUM of $23.6 billion, up 11% FY15 FY16 363.5 349.4 • Approximately $3.0 billion2 of additional secured FUM across the Group’s urbanisation projects • New equity rai
Slide 18: Outlook
Section 4 Outlook Steve McCann Group Chief Executive Officer and Managing Director Artist impression: International Quarter London
Slide 19: Outlook
LENDLEASE – FY16 FINANCIAL RESULTS 19 Outlook • Despite mixed market conditions, we are well placed heading into FY17 with: − Financial strength - low gearing, high levels of liquidity and access to third party capital − Earnings visibility from the growing pipeline across our business segments • Re
Slide 20: Earnings visibility from growing pipeline across all segments
LENDLEASE – FY16 FINANCIAL RESULTS 20 Earnings visibility from growing pipeline across all segments Development pipeline Record residential presold Construction backlog revenue of $48.8 billion FUM of $23.6 billion revenue of $5.9 billion1 of $20.7 billion (76.4% urbanisation projects) Development R
Slide 21: Q&A
Section 5 Q&A Steve McCann Group Chief Executive Officer and Managing Director Tarun Gupta Group Chief Financial Officer Dan Labbad Chief Executive Officer, International Operations Image: Fulton Street Transit, New York
Slide 22: Appendices
Appendices Artist impression: The Darling Exchange, Sydney
Slide 23: Group Financials
2 Group Financials
Slide 24: Income Statement
LENDLEASE – FY16 FINANCIAL RESULTS 3 Income Statement Income Statement ($ million) Jun-15 Jun-16 Revenue 13,280.9 15,088.5 Cost of sales (11,613.3) (13,388.5) Gross profit 1,667.6 1,700.0 Other income 251.8 256.9 Other expenses (1,051.8) (1,136.3) Results from operating activities 867.6 820.6 Financ
Slide 25: Statement of Financial Position
LENDLEASE – FY16 FINANCIAL RESULTS 4 Statement of Financial Position Statement of Financial Position ($ million) Jun-15 Jun-16 Statement of Financial Position ($ million) Jun-15 Jun-16 Current Assets Current Liabilities Cash and cash equivalents 750.1 1,008.4 Trade and other payables 5,036.1 4,328.8
Slide 26: Statement of Cash Flows
LENDLEASE – FY16 FINANCIAL RESULTS 5 Statement of Cash Flows Statement of Cash Flows ($ million) Jun-15 Jun-16 Cash Flows from Operating Activities Cash receipts in the course of operations 11,896.7 16,028.4 Cash payments in the course of operations (11,866.7) (15,154.9) Interest received 15.2 12.8
Slide 27: Securityholder returns
LENDLEASE – FY16 FINANCIAL RESULTS 6 Securityholder returns Return on equity1 Distributions cents 18.2%2 80 54% 13.5% 13.6% 60 13.0% 12.4% 48% 49 30 40 27 20 22 42% 20 27 30 22 22 16 0 36% FY12 FY13 FY14 FY15 FY16 FY12 FY13 FY14 FY15 FY16 Interim distribution (LHS) Final distribution (LHS) Payout ra
Slide 28: Operating EBITDA
LENDLEASE – FY16 FINANCIAL RESULTS 7 Recurring income 100% 90% 80% Approximately 60% - 70% of earnings are derived from 70% residential, commercial, Operating EBITDA 60% infrastructure and retail development activities and from 50% construction/services margin 40% 30% Approximately 30% - 40% of 20%
Slide 29: Revenue and EBITDA by segment and geography
LENDLEASE – FY16 FINANCIAL RESULTS 8 Revenue and EBITDA by segment and geography $ million Revenue EBITDA EBITDA by segment ($m) FY15 FY16 FY15 FY16 Development ` 1,400 Australia 1,508.6 2,034.4 336.8 391.5 FY15 FY16 Asia 1.0 17.5 (11.7) (19.1) 1,200 Europe 317.6 431.7 66.3 139.5 1,000 Americas 48.2
Slide 30: Revenue and EBITDA by segment and geography, local currency
LENDLEASE – FY16 FINANCIAL RESULTS 9 Revenue and EBITDA by segment and geography, local currency Europe EBITDA, local currency (m) Local currency Revenue EBITDA FY15 FY16 100 FY15 FY16 FY15 FY16 Europe, GBP million 80 Development 168.3 215.9 35.1 69.8 60 Construction 666.7 670.7 12.2 2.8 40 Investme
Slide 31: Debt metrics
LENDLEASE – FY16 FINANCIAL RESULTS 10 Debt metrics 30 June 2015 30 June 2016 Net debt $ million 1,758.5 1,052.4 Borrowings to total equity plus borrowings % 32.2 26.6 Net debt to total tangible assets, less cash % 10.5 6.5 Interest coverage1 times 6.6 8.0 Average cost of debt including margins % 5.2
Slide 32: Debt facilities and maturity profile
LENDLEASE – FY16 FINANCIAL RESULTS 11 Debt facilities and maturity profile Debt facilities ($m)1 Facility Drawn 1,500 714 531 531 529 529 476 476 275 275 179 0 33 33 Syndicated Multi- UK Bond Issue Club Revolving US$ Reg. S notes US Private Singapore Bond Australian Medium Option Facility Credit Fac
Slide 33: Exchange rates
LENDLEASE – FY16 FINANCIAL RESULTS 12 Exchange rates The table below outlines the impact on the Income Statement and Statement of Financial Position of a +/- 10 percentage movement in exchange rates Income Statement Statement of Financial Position Local Foreign FY151 FY162 Local Foreign FY153 FY164
Slide 34: Re-segmentation
LENDLEASE – FY16 FINANCIAL RESULTS 13 Re-segmentation • Three reporting segments: Development, Construction and Investments • The table below outlines the key changes under the revised segment reporting structure adopted in FY16 Operational area Prior segment New segment Retirement Ownership Develop
Slide 35: Development
14 Development
Slide 36: Development earnings/pipeline by geography
LENDLEASE – FY16 FINANCIAL RESULTS 15 Development earnings/pipeline by geography EBITDA by geography ($m) Development pipeline by geography ($b) Urbanisation % of total: FY15: 73.1%; FY16: 76.4% 48.8 500.2 44.9 FY15 FY16 FY15 FY16 391.5 386.1 336.8 26.9 29.0 139.5 9.4 10.5 66.3 5.8 5.9 2.8 3.4 (11.7
Slide 37: Development inventories ($b)
LENDLEASE – FY16 FINANCIAL RESULTS 16 Development inventories ($b)1 Unsold inventory (incl. Bluewater up to FY13) Capital employed in production Capital employed in land and infrastructure 1.9 2.3 2.3 2.4 3.2 3.7 100% 80% 60% 40% 20% 0% FY11 FY12 FY13 FY14 FY15 FY16 1. Indicative view based on devel
Slide 38: Apartments and Communities - Presales
LENDLEASE – FY16 FINANCIAL RESULTS 17 Apartments and Communities - Presales1 Apartments presales2 By units By $b (1,203) 1,661 (1.2) 1.7 5,456 5,914 5.2 4.7 FY15 Sales Settlements FY16 FY15 Sales Settlements FY16 Communities presales3 By units By $b (3,402) 4,058 (0.8) 1.0 2,794 2,138 0.7 0.5 FY15 S
Slide 39: Apartment settlement profile
LENDLEASE – FY16 FINANCIAL RESULTS 18 Apartment settlement profile Presold Presales1 Delivery2 Project Building Units (%) ($m) FY16 FY17 FY18 FY19 Barangaroo South Anadara and Alexander - Completed in FY16 159 - - l Wirth House, St Leon and Darling One 539 100% ~585 l Darling Square Darling North, H
Slide 40: Commercial building completion profile
LENDLEASE – FY16 FINANCIAL RESULTS 19 Commercial building completion profile1 Project Capital model sqm ('000) Building FY16 FY17 FY18 FY19 International Quarter London2 Fund through 73 Stage 1 Commercial (2 buildings) Paya Lebar Quarter 93 Commercial (3 buildings) Joint venture 44 Retail 26 Commerc
Slide 41: Construction
20 Construction
Slide 42: EBITDA and margins
LENDLEASE – FY16 FINANCIAL RESULTS 21 EBITDA and margins EBITDA ($m) Construction margins (%) 350 FY15 FY16 FY15 FY16 6% 300 279.0 288.1 3.7% 4% 3.3% 2.6% 2.6% 2.4% 250 231.8 1.8% 2% 1.4% 0.4% 200 152.6 0% 150 116.9 (2%) (1.7%) 100 56.4 (4%) 50 23.0 (13.5) (5.6) 5.5 (6%) 0 (6.0%) (8%) Australia Asia
Slide 43: New work secured revenue/backlog revenue
LENDLEASE – FY16 FINANCIAL RESULTS 22 New work secured revenue/backlog revenue $ million Australia Asia Europe Americas Total Jun-15 Jun-16 Jun-15 Jun-16 Jun-15 Jun-16 Jun-15 Jun-16 Jun-15 Jun-16 1 New work secured revenue Building 3,894.5 4,518.6 424.3 462.0 1,566.3 1,289.8 3,206.3 4,531.5 9,091.4
Slide 44: Backlog revenue by region ($b)
LENDLEASE – FY16 FINANCIAL RESULTS 23 Backlog revenue by region ($b) Group Australia Book to bill1: 1.2 Book to bill1: 1.3 14.6 (12.0) 0.8 (6.3) 8.3 20.7 17.3 11.9 9.9 FY15 New work Revenue Other FY16 FY15 New work Revenue FY16 secured realised secured realised Europe Americas Book to bill1: 1.0 Boo
Slide 45: Backlog realisation by region (%)
LENDLEASE – FY16 FINANCIAL RESULTS 24 Backlog realisation by region (%) Australia Asia 5% 2% 7% 27% 23% 26% 24% 30% 49% 47% 69% 91% FY15 FY16 FY15 FY16 Next 12 months 12 - 24 months Beyond 24 months Next 12 months 12 - 24 months Beyond 24 months Europe Americas 9% 12% 22% 18% 25% 17% 25% 33% 66% 71%
Slide 46: Australian market outlook - Engineering ($b)
LENDLEASE – FY16 FINANCIAL RESULTS 25 Australian market outlook - Engineering ($b)1 National major road construction (project commencements, real terms)2 7 Forecast 5.8 5.8 5.5 6 5.3 5.1 5 4.2 4.0 3.8 4 3.3 3.1 3.1 3 2 1.5 1.6 1.4 1.3 1.2 1 0.6 0 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY1
Slide 47: Investments
26 Investments
Slide 48: FUM by region ($b)
LENDLEASE – FY16 FINANCIAL RESULTS 27 FUM by region ($b) Group Australia (0.8) 1.0 (0.2) 0.9 2.3 (0.3) 2.1 23.6 16.5 21.3 13.8 FY15 Acquired Divested Net Other FY16 FY15 Acquired Divested Net FY16 revaluations revaluations Asia Europe 0.2 (0.1) 0.2 (0.4) 0.1 (0.4) 5.3 5.6 2.2 1.5 FY15 Acquired Dives
Slide 49: Valuation drivers - Retirement Living
LENDLEASE – FY16 FINANCIAL RESULTS 28 Valuation drivers - Retirement Living Retirement value drivers Retirement investments1 Retirement Living 1,580.2 1,488.3 Valuation drivers FY15 FY16 Long term growth rate 3.7% 3.7% Discount rate 13.3% 13.3% Average length of stay - ILUs (years) 11.0 11.0 Number
Slide 50: Other
29 Other
Slide 51: Key dates for investors
LENDLEASE – FY16 FINANCIAL RESULTS 30 Key dates for investors Date FY16 results released to market/final distribution declared 19 August 2016 Securities quoted ex-dividend on the Australian Securities Exchange 24 August 2016 Final distribution record date 25 August 2016 Final distribution payable 14
Slide 52: Important notice
LENDLEASE – FY16 FINANCIAL RESULTS 31 Important notice This presentation (including the appendices) has been prepared in good faith, but no representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates, opinions or other information