Lendlease Group · ASX:LLC
Lendlease — FY2024 Earnings Presentation
60 slides from Lendlease's earnings presentation, Aug 19, 2024
Slide 1: Lendlease Group 2024 Full Year Results Announcement, Presentation and Appendix
19 August 2024 Lendlease Group 2024 Full Year Results Announcement, Presentation and Appendix Lendlease Group today announced its results for the full year ended 30 June 2024. Attached is the FY24 Results Announcement, Presentation and Appendix. ENDS FOR FURTHER INFORMATION, PLEASE CONTACT: Investor
Slide 2: Execution of strategic initiatives progressing; result impacted by strategy impairment costs
19 August 2024 Execution of strategic initiatives progressing; Result impacted by strategy impairment costs Financial1: • Operating performance up, with Core Operating EBITDA increasing 23% on the prior year • Core Operating2 Profit after Tax (Core OPAT) of $263m, up 2% o Core Operating Earnings Per
Slide 3: Group CEO Tony Lombardo commentary and items affecting statutory result
Group Chief Executive Officer, Tony Lombardo said: “Our results for FY24 reflected challenging business conditions and the early actions from our refreshed strategy. We have made significant progress towards our target of recycling $2.8 billion of capital in FY25, with further cost savings realised
Slide 4: Investments segment EBITDA of $174m was down 48 per cent
Capital invested across Investments and Development decreased by 4 per cent to $9.7b. Investments capital decreased 5 per cent to $3.8b, with revaluation impacts and asset sales partially offset by $150m of capital deployed into APPF Retail. Development capital decreased 3 per cent to $5.9b. Investm
Slide 5: Strategy update and outlook
Strategy update In May 2024 a refreshed strategy was announced to improve securityholder value and position the Group for profitable future growth. Significant progress has already been achieved, including: • Progressing $1.9b5 of sales from a target to recycle $2.8b of assets in FY25 • Removing reg
Slide 6: Full Year Results
Full Year Results August 2024 F tendlease /
Slide 7: Acknowledgement of Country
@ Acknowledgement of Country As an investor, developer, builder and manager of assets on land across Australia, we pay our respects to the Traditional Owners, especially their Elders, past and present, and value their custodianship of these lands.
Slide 8: Our strategic direction
Our strategic direction Positioning Lendlease to be Australia’s leading integrated real estate business with a strong international investment management capability Vv >» Simplifying the organisation and reducing costs » Lowering the risk profile of the Group and divesting lower return businesses »
Slide 9: Performance and Operations
Performance and Operations ©
Slide 10: Strategic and operational performance — FY24
Strategic and operational performance — FY24 * Strong underlying FUM growth, delivering $3.4b of new additions . 9b" . - l 5 . . - Announced $1.9b! of $2.8b FY25 on-market asset sales program. against ongoing valuation headwinds supporting future debt reduction and balance sheet strengthening * Acti
Slide 11: FY24 result
FY24 result 38.1c 4.4% Earnings per Return stapled security on Equity 16.0cps* 42% Full Year distribution Payout ratio $1,756m* Non-operating items $9m Non-core segment loss 21%® Gearing $2.2b Available liquidity + Core operating Profit after Tax impacted by announced delays to the sale of Communiti
Slide 12: Operational highlights
Operational highlights Australia + Communities sale announced; pending ACCC + Completion of Residences One, OSH * One Circular Quay 70% pre-sold * Build to rent focus; MQ West progress * Strong construction preferred book Asia + Established Life Sciences Joint Venture + Completed $2.0b TRX retail an
Slide 13: Investments
Investments | International capability with strong foundations in Australia and Asia Operating performance & Outlook Investment management platform ($b) Investment management 2% Ba Werkpiace + Funds Under Management reduced 2% to $47.3b: ox - New FUM of $3.4b was more than offset by $3.5b of negativ
Slide 14: Development
Development | Growing the Australian Development pipeline; accelerating the release of capital Operating performance & Outlook Development activity ($b) Urban portfolio Hi Completions + Work in Progress $14.5b (Australia $8.3b, International $6.2b) 22.9 . : 7 Il Commencements - $8.2b of completions
Slide 15: Construction
Construction ! Difficult operating conditions persist; strong, established risk-management practices Operating performance & Outlook FY24 Backlog revenue 2 Operational changes + Wind down of the West Coast and Central US operations and agreed terms for the sale of US East Coast operations * Life Sci
Slide 16: Financial Performance
Financial Performance @
Slide 17: Group financial performance
Group financial performance | $m FY23 FY24 % change Core Investments 332 174 (48%) Development 283 509 80% Construction 90 126 40% Segment EBITDA 705 809 18% Corporate costs (161) (140) (13%) Operating EBITDA 544 669 23% Depreciation and amortisation (140) (120) (14%) Net finance costs (88) (238) n/
Slide 18: Segment financial performance
Segment financial performance Investments ($m) FY23 FY24 % change Investments commentary Management revenue 275 272 (1%) + Management EBITDA improved 9%, primarily from lower expenses, despite lower FUM from negative revaluations EBITDA 332 174 (48%) + Management EBITDA margin expanded to 41.5% + Co
Slide 19: Segment financial performance (cont.)
Segment financial performance (cont. Development ($m) FY23 FY24 % change Development commentary EBITDA 283 509 80% * Development activity increased with $8.2b of completions and $1.9b of commencements - Urban 141 461 n/m + Higher Urban EBITDA from the completion of Residences One $183m, a payment 6
Slide 20: • ‒ 0.8 3.2 (1.6) • 0.2 (0.1) (0.9) 2.4 0.8 • (0.8) ‒
• ‒ 0.8 3.2 (1.6) • 0.2 (0.1) (0.9) 2.4 0.8 • (0.8) ‒ ‒
Slide 21: Capital management and treasury
Capital management and treasury Peak development capex in FY24 Treasury overview Capital and liquidity management FY23 FY24 Net debt $m 2,381 3,176 Proportion of fixed debt % 64 38 Gearing! % 148 214 Interest cover® times 3.0 27 Average drawn debt maturity ears 44 34 Average cost of debt % 43 54 Ava
Slide 22: Progress on cost initiatives
Progress on cost initiatives Statutory disclosures on overhead costs Overhead cost savings achieved since FY22 Note 7 - financial statements FY24 vs FY23 . Since FY22, $169m in net overhead savings have been achieved, primarily $m FY22 FY23 FY24 $ % from reduced employee and lease costs Total Employ
Slide 23: Financial impacts to accelerate our strategy
Financial impacts to accelerate our strategy ' FY24 impairments and charges taken are within the previously estimated range Impairments and charges taken at FY24 to accelerate the release of capital een FY24 actual FY24 actual oe (pre-tax) (post-tax) Construction goodwill, deferred tax assets, and o
Slide 24: Delivering our Strategy
Ne Delivering our Strategy @®
Slide 25: Key actions to simplify Lendlease
Key actions to simplify Lendlease Removed regional $2.8b of assets Targeting trade sales $1.7b of assets management structure on market as going concerns; Agreed available for sale '? terms for US East Coast $125m of initial pre-tax Announced sales: Military No new Development run-rate cost savings
Slide 26: Outlook
Outlook @®
Slide 27: FY25 Financial Outlook
FY25 Financial Outlook ! We are focussed on growing and improving the performance of the Investments, Development and Construction (IDC) segments. The primary focus of the Capital Release Unit (CRU) is to accelerate the release of capital (NTA of CRU currently $3.19 per security) Vv Group EPS of 54
Slide 28: Enhancing securityholder value
Enhancing securityholder value > Lower risk profile and lower cost base > $2.8b of capital release anticipated in FY25 to: — Reduce gearing and strengthen balance sheet — Return capital to securityholders through buy-backs! — Invest in future growth in proven segments with stringent return hurdles >
Slide 29: Analyst Q&A
a Analyst Q&A
Slide 30: Appendix
Appendix
Slide 31: We leverage our investment management and asset creation skills
We leverage our investment management and asset creation skills — including development and construction — to deliver city shaping projects and create strong and connected communities 1. Residential. 2 external clien Investments The segment comprises international fund and asset management platforms
Slide 32: Our history
Our history _ of excellence in Australia wegat 7] - cs Sat *\ is ommonweath ee |pintraffic @ontrol
Slide 33: Health and Safety
Health and Safety FY 24 highlights Key performance indicators at record rates + No corporate reportable fatalities across the organisation in FY24 Critical Incident Frequency Rate’ + Maintained a low frequency rate for Critical Incidents and Lost Time injuries following the record lows recorded in F
Slide 34: Environmental, Social and Governance
Environmental, Social and Governance FY24 key achievements On track to achieve our Net Zero by 2025 for Scope 1 & 2 emissions & $250m Social Value by 2025 targets 53%! P reduction in gross 65%? see Neate 1&2 lobal electrici Fs ° Scope & global electricity Whitda CURES i@ 2023 GRESB emissions since w
Slide 35: Pro forma segment and financial information
Pro forma segment and financial information @
Slide 36: Investments
Investments ©
Slide 37: Investments
Investments International capability with strong foundations in Australia and Asia Global network of long-standing client relationships Historical performance (incl. international) * — Average Ml EBITDA Margin 45.9% Real estate skills to add value at the asset level 42.5% 42.0% S76% 37.8% 40.1% 4. A
Slide 38: Funds Under Management by Product
Funds Under Management! by Product New FUM additions of $3.4b more than offset by revaluation impacts FUM ($b) By product ($b) 84 {o.8) 6.6) FY23° Additions Divestments _Revals FX & Other? FY24 oc 02) 482 Workplace 26.9 4.0 - (2.9) O41 254 2.6 04 - (0.2) - 28 Retail 183 1.6 (0.7) (0.3) (0.1) 13.8 Da
Slide 39: Investment platforms by Region
Investment platforms by Region Focussed on improving profitability in Europe and the Americas Strong returns have been sm FY19 FY20 Fy2t FY22 FY23 FY24 achieved in established FUM ($5) * 255 26.2 287 323 318 28.9 Australia and Asia platforms Revenue ** iat ‘2 vee we ie i EBITDA25 74 68 66 59 66 60 E
Slide 40: Co-investment and Fund Summary
Co-investment and Fund Summary FY24 funds management platform Total No. of Weighted assets! Gearing Co-investment Region Sector assets Leased WALE _ avg. cap rate $b % % $m # % Years % Australian Prime Property Fund Commercial 58 305% 8.0% 303 Australia Workplace 21 92.5% 53 57% Lendlease Internatio
Slide 41: Development
Develooment @
Slide 42: Development
Development Australia-only ' developer with leading urban regeneration capability Experience across a range of sectors and products Historical performance (Australia) 23 MROIC M Average Strong relationships with governments Sie one% Market leader in urban regeneration 16.4% 11.4% 12.0% 7 7.8% 7.3% 8
Slide 43: Summary of major Australian projects
Development Summary of major Australian projects Invested capital? PreSld/ Eng values Margin® Delivery timeline Pre let 5 2 3 Target Project City Sector Model Ownership = FY23, FY24 % $b % Start Profit realised completion Development (Australia only) One Sydney Harbour R2 Sydney Residential (BTS) Jo
Slide 44: Australian Development pipeline
Australian Development pipeline Focussed on domestic origination; ~$40b of targeted opportunities Development origination solely focussed on Australia, with $13b of identified opportunities we are actively competing on and $27b of additional opportunities End value! No. of projects by stage Advanced
Slide 45: Construction
Construction @
Slide 46: Construction
Construction ! Australia-only builder with deep sector expertise and client relationships Delivery capability for integrated model Exposure to a diverse range of sectors Heritage of operational excellence $3.9b backlog revenue FY24 12 $3.9b backlog revenue FY24 12 26% Wi Government WiSocial infrastr
Slide 47: Australia Revenue, Backlog and Preferred book
Australia Revenue, Backlog and Preferred book Backlog! ($b) Historical Revenue and Backlog! ($b) 7.0 te sa) 67 63 67 I Revenue I Backlog 9 3.2 29 3.2 Sv 34 © 57 FY20 FY21 FY22 FY23 FY24 39 Preferred® book by client type — FY24 + Book to bill: 0.5 2 $10.6b $10.6b 44% FY23 New work Revenue FX and FY24
Slide 48: Capital Release Unit
Capital Release Unit @
Slide 49: Returning capital through buy-backs
Returning capital through buy-backs ' Security buy-back program Committed to prioritising near-term return of capital to securityholders and debt reduction over redeployment 1. May 2024 Strategy Update Buy-back program guidelines upto $ Up to 10% of outstanding securities to be bought back, subject
Slide 50: Capital Release Unit
Capital Release Unit Maximising value capture from our international development projects Orderly capital release from overseas development projects while maximising value and preserving key stakeholder relationships Once completed, various joint ventures are expected to contribute more than $6b of
Slide 51: International Development — FY24 gross invested capital
International Development — FY24 gross invested capital Land & Inventory, Joint Ventures and Land Management Agreements City Project Sector Capital model Ownership Sqm (k) / units* Project end value($b) Invested capital ($m) Net end value ($b) Completion® Profit realised Land & Inventory 1,056 UK/US
Slide 52: • • • • • ‒ ‒ • • • • • • •
• • • • • ‒ ‒ • • • • • • • • • • • • • • • • • •
Slide 53: International Construction Backlog
International Construction Backlog! Targeting the divestment of international construction Europe ($b) Americas ($b) 14 (0.5) 18 (1.8) - 1.0 25 O41 2.6 —a +4 Book to bill®: 1.0 +4 il Book to bill®: 2.1 FY23 New work Revenue FX and FY24 FY23 New work Revenue FX and FY24 secured Other resentation purp
Slide 54: Financials
Financials @
Slide 55: Capital management and target EBITDA mix
Capital management and target EBITDA mix Group EBITDA target ' i 1 i 1 Capital structure Invested capital (post simplification) Consolidated Australia International @ Investments Development Mi Investments Development gearing 2 5-15% > ™ Construction Investment grade EBITDA® Distribution 9 ® 30-50%
Slide 56: Historical pro-forma financials — Segments
Historical pro-forma financials — Segments $m FYI9 FY20 FY21 FY22 FY23 FY24 — Gyravg $m FYI9 FY20 FY21 FY22 FY23 FY24 — Gyravg. Investments (incl. international) * Development (Australia only) 9 IM ($b) @ 363 368 «410457 493 4B 42.9 EBITDA 512 187354183 BA 198 256 FUM growth 162% 14% 118% 15% 7.8% (
Slide 57: Historical pro-forma financials — Group
Historical pro-forma financials — Group $m FYiI9 FY20 FY21 FY22 FY23 FY24 — 6yravg $m FYI9 FY20 _FY2t_FY22_FY23_FY24 Gyr avg. Segment EBITDA Other exceptional items © (ex CRU) > 62) SOC) D/C (ex-CRU) 8324991058744 43, 564 7076 (ex CRU) _ (262) __&)__ (60) Capital Release Unit —_@ (59) (295) (4459) (
Slide 58: Defined Development terms
Defined Development terms Completion Based on expected completion date of underlying buildings, subject to change in delivery program. Not indicative of cash or profit recognition Fund Through Funding model structured through a forward sale to a capital partner resulting in majority of profit recogn
Slide 59: Important notice
Important notice This document (including the Appendix) has been prepared and is issued by Lendlease Corporation Limited (ACN 000 226 228) (Lendlease) in good faith. Neither Lendlease (including any of its controlled entities), nor Lendlease Trust (collectively referred to as the Lendlease Group) ma
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