Lendlease Group · ASX:LLC
Lendlease — FY2022 Earnings Presentation
72 slides from Lendlease's earnings presentation, Aug 22, 2022
Slide 1: Lendlease Group 2022 Full Year Results Announcement, Presentation and Appendix
22 August 2022 Lendlease Group 2022 Full Year Results Announcement, Presentation and Appendix Lendlease Group today announced its results for the year ended 30 June 2022. Attached is the FY22 Results Announcement, Presentation and Appendix. A summary of Lendlease's Major Urban Projects can be found
Slide 2: Reset year impacts performance; solid momentum into FY23
22 August 2019 19 2022 2018 Reset year impacts performance; solid momentum into FY23 For the year ended 30 June 2022: • Statutory Loss after Tax of $99m • Core operating1 Profit after Tax of $276m: o Full year distributions of 16 cps, payout ratio of 40%: ▪ Final distribution of 11 cps o Earnings Pe
Slide 3: Strategic initiatives
22 August 2019 19 2022 2018 Specifically, the Group advanced numerous strategic initiatives: • Refreshed leadership and structure of organisation • Reducing the cost structure, exceeding our savings target of >$160m per annum; • Simplified the Group by exiting our Non core businesses with the divest
Slide 4: Simplification has prepared the Group for continued acceleration
22 August 2019 19 2022 2018 change in strategy on a small number of underperforming development projects incurred an impairment expense of $289m pre tax. “Our simplification has prepared the Group for continued acceleration in development activity and growth across the investments platform. We have
Slide 5: We remain on track to meet our more than $8b completion backlog
22 August 2019 19 2022 2018 backlog and revenue will recover over time. Outlook The Group enters the new financial year with solid momentum, providing confidence in the Create phase of our five-year roadmap. While our integrated model enables a high degree of control in executing our strategy, we wi
Slide 6: For further information, please contact
22 August 2019 19 2022 2018 FOR FURTHER INFORMATION, PLEASE CONTACT: Investors: Media: Justin McCarthy Stephen Ellaway Mob: +61 422 800 321 Mob: +61 417 851 287 2022 Key Dates for Investors Securities quoted ex-distribution on the Australian Securities Exchange 26 August Final distribution record da
Slide 7: Full Year Results
2022 Full Year Results 22 August 2022 London: Elephant Park
Slide 8: Acknowledgement of Traditional Owners
Lendlease FY22 Financial Results 2 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 9: Group Performance
Lendlease FY22 Financial Results 3 Use image on page 206 of AR Group Performance Tony Lombardo Global CEO Singapore: Comcentre redevelopment Artist’s impression
Slide 10: FY22 snapshot
Lendlease FY22 Financial Results 4 FY22 snapshot Group • Refreshed leadership and organisation structure • Recalibrated cost base $2.8b2 $3.0b1 • Exit Non core businesses International Comcentre Quarter redevelopment, • Portfolio divestments London3 Singapore3 • Operating momentum into FY23 Investme
Slide 11: FY22 Result
Lendlease FY22 Financial Results 5 Financial performance Cyclical low point for activity and profitability, statutory result impacted by restructuring charges $276m ($99m) Strong FY22 Core operating1 Profit after Tax Statutory Loss after Tax Financial position Result 40.1c 4.0%2 Earnings per Return
Slide 12: Momentum in H2
Lendlease FY22 Financial Results 6 Momentum in H2 Strong H2 performance across key Financial and Operating metrics Core Operating1 Profit after Tax Core Operating Earnings per Security H2 H1 H2 H1 H2 Momentum $28m $248m 4.1c 36.1c Investments Development Construction2 Funds Under Management Revenue
Slide 13: Financial Summary
Lendlease FY22 Financial Results 7 Financial Summary Simon Dixon Group Chief Financial New York: 1 Java Street Officer Artist’s impression
Slide 14: Financial performance
Lendlease FY22 Financial Results 8 Financial performance1 $m FY21 FY22 Change Core Investments 276 497 80% • Higher funds management fees, investment portfolio income and profits on divestments Development 469 181 (61%) • Lower completions including settlement delays and prior year contribution from
Slide 15: Strategic initiatives
Lendlease FY22 Financial Results 9 Annualised operating cost savings in FY221 ($m) Savings exceed >$160m target Completed annualised savings of $172m 1,2 • >$90m achieved in FY22 • Headcount reduction >4003 Strategic Target Target >$160m • Tenancy reduced by c.29,000 sqm4 initiatives Restructuring c
Slide 16: Cash flow
Lendlease FY22 Financial Results 10 Cash flow movements Core underlying operating cash inflow $514m: Underlying investing cash outflow $482m: • Predominantly from Investments segment • Investments (cash outflow) $1.6b: Cash • Low development settlements − Development expenditure of $1.2b on projects
Slide 17: Financial position
Lendlease FY22 Financial Results 11 Invested capital1 Treasury management FY21 FY22 $b Change Net debt $m 695 1,060 Investments $3.7b $0.1b Gearing % 5.0% 7.3% Financial Development $5.4b $1.0b Interest cover times 6.4 5.6 Other ($1.0b) ($0.7b) position Average drawn debt maturity years 4.9 6.6 Tota
Slide 18: Operational Update
Lendlease FY22 Financial Results 12 Operational Update Tony Lombardo Chicago: Lakeshore East Global CEO
Slide 19: Global presence, local expertise
Lendlease FY22 Financial Results 13 Global presence, local expertise1 London • Thamesmead Waterfront • Euston Station • Silvertown • International Quarter London • Elephant Park • High Road West • Smithfield, Birmingham Chicago • Southbank San Francisco • Lakeshore East • San Francisco Bay Area Proj
Slide 20: Health and Safety
Lendlease FY22 Financial Results 14 FY22 highlights • Key performance indicators at best ever rates Health and • Employee survey results reinforce outstanding safety culture Safety • Safety innovations include world leading perimeter screens for high rise steel building Critical Incident Frequency R
Slide 21: Environmental, Social and Governance
Lendlease FY22 Financial Results 15 FY22 key achievements Released Switched to Environmental, 100% $1.2b $107.3m Stepping Up the 87% Pace: Social and renewable of waste diverted raised in social value created Fossil Fuel Free electricity from landfill Green 42.9% Construction Governance across Europ
Slide 22: Investments
Lendlease FY22 Financial Results 16 Management EBITDA ($m) Management earnings Operational performance1 94 FY21 FY22 • Funds Management EBITDA $94m, up 25% 90 75 − Revenue2 $172m, up 19% Investments − Higher fees from FUM growth and acquisitions 47 − Expenses higher to support initiatives for platfo
Slide 23: Investments
Lendlease FY22 Financial Results 17 Investment portfolio1 EBITDA ($m) Investment Portfolio earnings FY21 FY22 Performance3 • EBITDA $356m, up from $111m: 356 − Portfolio yield c.5% up from c.3% in FY21 Investments − Recovery in underlying investment income − $167m from sale of 28% of Military Housin
Slide 24: Development
Lendlease FY22 Financial Results 18 EBITDA ($m) Operational performance1 Urban portfolio: EBITDA $165m, Invested Capital $4.5b: FY21 FY22 427 − Prior year contribution from Towers 1 & 2, One Sydney Harbour − Sydney Place Development − North East Link and Frankston Hospital PPPs 165 Australia Communi
Slide 25: Development
Lendlease FY22 Financial Results 19 Pipeline and Capital by Operational phase Operational performance Focus on converting the pipeline Operational phase Pipeline Capital • Forthcoming acceleration reflected in higher capital base • >$8b of pipeline received Masterplanning approval: FY211 Development
Slide 26: Construction
Lendlease FY22 Financial Results 20 Backlog revenue ($b) Operational performance and outlook1 • EBITDA $131m, down from $173m 5.3 (6.6) • EBITDA margin 2.0%, down from 2.7%: − Resilient performance with mitigation strategies offsetting: Construction 11.3 0.5 10.5 o COVID impacts o Supply chain disru
Slide 27: Outlook
Lendlease FY22 Financial Results 21 Outlook Tony Lombardo Milan: Milan Innovation District (MIND) Global CEO Artist’s impression
Slide 28: Outlook
Lendlease FY22 Financial Results 22 Outlook Group • Confidence as we enter our CREATE phase • Anticipate improved financial performance in FY23 Image to be updated • Risks: Inflation, supply chain and interest rates • ROE Target of 8-11% expected to be met from FY24 Tokyo data centre1 60 Guest Stree
Slide 29: Questions
Lendlease FY22 Financial Results 23 Questions
Slide 30: Full Year Results Appendix
2022 Full Year Results Appendix 22 August 2022 London: Elephant Park
Slide 31: Overview
Lendlease FY22 Financial Results 2 Overview London: Park & Sayer, Elephant Park Artist’s impression
Slide 32: Lendlease FY22 Financial Results
Lendlease FY22 Financial Results 3
Slide 33: Lendlease FY22 Financial Results
Lendlease FY22 Financial Results 4
Slide 34: Group Financials
Lendlease FY22 Financial Results 5 Group Financials Sydney: Daramu House, Barangaroo South
Slide 35: Income Statement (Statutory Result)
Lendlease FY22 Financial Results 6 $m FY211 FY22 Revenue from contracts with customers 9,022 8,822 Other revenue 121 142 Income Cost of sales Gross profit (8,435) 708 (8,135) 829 Statement Share of profit of equity accounted investments 100 181 (Statutory Other income Other expenses 487 (884) 358 (1
Slide 36: Reconciliation of Core Operating Profit
Lendlease FY22 Financial Results 7 $m FY21 FY22 Core operating profit after tax 377 276 Add / (less): Investment properties revaluations2 (1) 4 Reconciliation Add / (less): Financial assets revaluations2 46 58 of Core Add / (less): Equity accounted investments revaluations2 (19) 8 Operating Total In
Slide 37: FY22 Core Underlying Operating Cash Flow
Lendlease FY22 Financial Results 8 FY22 Core underlying operating cash flow of $514m $m Statutory Adjustments Underlying Overview Cash Flows from Operating Activities • Core underlying operating cash flow is derived by adjusting statutory cash flows to FY22 Core Cash receipts in the course of operat
Slide 38: Portfolio Management Framework
Lendlease FY22 Financial Results 9 Target FY21 FY22 Total Group Metrics Core Operating ROE 8-11% 5.4% 4.0% Portfolio Distribution payout ratio1 40-60% 49% 40% Gearing 10-20% 5.0% 7.3% Management Core Business EBITDA Mix Framework Investments 35-45% 30% 61% Development 40-50% 51% 23% Construction 10-
Slide 39: Segment Financial Metrics
Lendlease FY22 Financial Results 10 Operating Profit after Tax ($m) Operating EBITDA ($m) FY21 FY22 FY21 FY22 497 Segment 361 342 469 Financial 213 276 Metrics 181 173 111 100 131 68 Investments Development Construction Investments Development Construction ROIC1,2 (Investments, Development) Invested
Slide 40: FY22 Regional EBITDA to PAT
Lendlease FY22 Financial Results 11 Operating Operating $m Net Interest D&A2 PBT Tax EBITDA1 PAT1 Australia Investments 177 - (5) 172 (40) 132 FY22 Development 199 (1) (3) 195 (62) 133 Construction 121 (1) (12) 108 (28) 80 Regional Total Australia 497 (2) (20) 475 (130) 345 EBITDA to Asia Investment
Slide 41: Exchange Rates
Lendlease FY22 Financial Results 12 Income Statement1 Statement of Financial Position2 Local Foreign FY21 FY22 Local Foreign FY21 FY22 AUD USD 0.75 0.72 AUD USD 0.75 0.69 Exchange AUD AUD GBP EUR 0.55 0.63 0.55 0.65 AUD AUD GBP EUR 0.54 0.63 0.57 0.66 Rates AUD SGD 1.00 0.98 AUD SGD 1.01 0.96 1. Ave
Slide 42: Investments Segment
Lendlease FY22 Financial Results 13 Investments Segment Boston: 60 Guest Street Artist’s impression
Slide 43: Earnings Drivers Investments
Lendlease FY22 Financial Results 14 Earnings Drivers ROIC target 6-9%1 Investments Invested capital $3.7b Management Earnings Investment Portfolio Earnings Commercial Residential Co-investment Funds asset asset positions in Retirement management management management managed funds2 Living2 Other2 $4
Slide 44: Investments
Lendlease FY22 Financial Results 15 Overview Performance1 FY21 FY22 • The Investments segment comprises a leading investment and asset Core operating business EBITDA mix % 30 61 management platform and the Group’s investment portfolio across ROIC % 5.9 9.7 the residential, office, retail, industrial
Slide 45: Investments Earnings & Portfolio
Lendlease FY22 Financial Results 16 EBITDA ($m) Invested Capital ($b) Management EBITDA1 Investment Portfolio EBITDA2 Invested Capital ROIC 497 Investments 7.0 10.0% 6.0 7.6% 5.7% 5.8% 5.9% 9.7% 8.0% Earnings & 369 141 5.0 6.0% 4.0% 300 Portfolio 133 278 276 4.0 3.3 3.6 3.7 3.6 3.7 2.0% 0.0% 3.0 -2.
Slide 46: Funds & Assets Under Management
Lendlease FY22 Financial Results 17 FUM ($b) AUM3 ($b) CAGR² of 10.2% Funds & 39.6 44.4 35.2 36.0 30.0 Assets Under 30.1 28.7 29.3 28.5 Management1 12.7 FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22 FY22 FUM by region FY22 AUM by region Australia Asia Europe Americas Australia Asia Europe Americ
Slide 47: Funds Under Management By Region
Lendlease FY22 Financial Results 18 Group ($b) 2.1 0.9 44.4 3.4 (1.6) Funds Under 39.6 Management1 By Region FY21 Additions Divest- Revaluations FX and FY22 ments Other By region ($b) FY21 Additions Divestments Revaluations FX and Other FY22 Australia 27.6 2.1 (0.6) 2.0 - 31.1 Asia 8.4 0.5 (0.5) 0.1
Slide 48: Major Fund Summary
Lendlease FY22 Financial Results 19 Major Fund Summary1 FY22 funds management platform Weighted Total assets Gearing Co-investment Region Sector No. of assets Occupancy avg. cap rate $b % % $m # % % Australian Prime Property Fund Commercial 6.9 21.6 8.0 412 Aus Office 21 96.5 4.5 Lendlease Internati
Slide 49: Assets Under Management By Product
Lendlease FY22 Financial Results 20 Group ($b) 0.3 1.3 30.0 28.5 0.1 (0.2) Assets Under Management1 By Product FY21 Additions Divest- Revaluations FX and FY22 ments Other By product ($b) FY21 Additions Divestments Revaluations FX and Other FY22 Commercial 14.8 0.1 (0.2) 0.3 0.2 15.2 Residential 13.7
Slide 50: Retirement Living
Lendlease FY22 Financial Results 21 Value drivers1 FY21 FY22 Ownership % 50 25 Retirement Equity investment Long term growth rate $b % 0.9 3.5 0.5 3.5 Living Discount rate % 12.4 12.1 Queensland 13 villages Operating return % 4.4 5.3 c2,980 units Northern Territory Western Australia New South Wales
Slide 51: Development Segment
Lendlease FY22 Financial Results 22 Development Segment Chicago: Cirrus, Lakeshore East
Slide 52: Earnings Drivers Development
Lendlease FY22 Financial Results 23 ROIC target 10-13% Earnings Drivers Invested capital $5.4b Development Pipeline1 $117.0b Development Phase In Conversion Master Planned Work in Progress $56.7b $41.9b $18.4b pipeline pipeline pipeline $0.4b $2.2b $2.8b capital capital capital Completions target of
Slide 53: Development
Lendlease FY22 Financial Results 24 Overview Performance FY21 FY22 • The Development segment is predominantly focused on the creation Core business EBITDA mix % 51 23 of mixed use precincts that comprise apartments, workplaces and Total EBITDA $m 469 181 associated leisure and entertainment amenity.
Slide 54: Development Earnings / Work In Progress
Lendlease FY22 Financial Results 25 EBITDA ($m) Invested Capital ($b) 8.0 Invested Capital ROIC Development 673 793 7.0 13.4% 11.6% 4.7% 7.2% 2.2% 5.4 Earnings / 6.0 4.8 4.8 5.0 4.3 4.4 Work In 322 469 4.0 Progress 181 3.0 2.0 1.0 - FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22 WIP1 roll forward
Slide 55: Development Pipeline
Lendlease FY22 Financial Results 26 Pipeline1 ($b) Pipeline1 roll forward ($b) 117.0 4.1 (2.5) 1.8 117.0 113.0 113.6 113.6 Development Pipeline 76.1 71.1 FY18 FY19 FY20 FY21 FY22 FY21 New work Completions FX and Other² FY22 secured Pipeline1 by product ($b) Commencements by product ($b) Apartment fo
Slide 56: Development Completions
Lendlease FY22 Financial Results 27 Apartments for sale completions End value2 City Project Building Ownership3 Units ($b) Development Manchester Potato Wharf Potato Wharf Block 3 & 4 100% 191 0.1 Completions Chicago Lakeshore East Total apartments for sale completions Cirrus 43% 350 541 0.6 0.7 Apa
Slide 57: Apartment Settlements
Lendlease FY22 Financial Results 28 Ownership Units $m Australia Melbourne Quarter – East Tower 50% 49 31 Apartment Other 2 6 Settlements Total Australia 51 37 Europe Potato Wharf – Block 3 & 4 100% 110 51 Elephant Park – West Grove (Building 1 & 2) 100% 15 27 Other 17 38 Total Europe 142 116 Americ
Slide 58: Apartments Completions Profile
Lendlease FY22 Financial Results 29 Total Units Presales1 Delivery City Project Building Ownership Presold 1 units presold ($b) Date2 Apartments for sale Apartments London Elephant Park City Lights Point 104 100% 100% 104 0.1 FY23 -3 -3 -3 Completions New York Sydney 100 Claremont Barangaroo South C
Slide 59: Commercial Completions Profile
Lendlease FY22 Financial Results 30 sqm Completion City Project Building Capital model Ownership '0001 date2 Sydney Sydney Place Salesforce Tower Joint Venture - 57 FY23 Commercial Sydney Blue & William Blue & William Fund Through3 - 14 FY23 Melbourne Melbourne Quarter Melbourne Quarter Tower Fund T
Slide 60: Australia Communities
Lendlease FY22 Financial Results 31 Sales & Settlements Sales Settlements FY21 FY22 FY21 FY22 Lots $m Lots $m Lots $m Lots $m Australia Queensland 704 175 1,389 414 873 187 681 169 Communities New South Wales Victoria 234 831 93 237 329 1,195 185 371 265 857 100 233 64 585 37 158 South Australia 22
Slide 61: Conversion of Secured Apartments
Lendlease FY22 Financial Results 32 Indicative conversion timing1 of residential for sale pipeline to FY27 City Units FY23 FY24 FY25 FY26 FY27 2 Conversion of London San Francisco3 2,770 333 York4 Secured Melbourne5 196 1,367 Apartments Milan6 Chicago7 776 317 Pipeline1 Kuala Lumpur8 Birmingham9 1,6
Slide 62: Conversion of Secured Commercial
Lendlease FY22 Financial Results 33 Indicative commencements timing1 of commercial pipeline to FY27 Conversion of City Project Sectors sqm FY23 FY24 FY25 FY26 FY27 '0002 Secured San Francisco 30 Van Ness Office 27 Commercial Milan Los Angeles Milan Innovation District - Stage 1 La Cienega Office / R
Slide 63: Major Urban Project Summary
Lendlease FY22 Financial Results 34 Residential Commercial Estimated Project Delivery Completion backlog backlog end value Land payment Region Project secured commenced date units sqm ‘0002 ($b)3 model Major Urban Australia Barangaroo South, Sydney Sydney Place, Sydney FY09 FY12 FY12 FY17 FY26 FY23
Slide 64: Development Capital
Lendlease FY22 Financial Results 35 $5.4b of invested capital in land and infrastructure controls $117.0b development pipeline FY22 capital - Operational Stage FY22 capital - Structure Other Urban Projects Deconsolidated JVs In Conversion Master planned WIP Development Impaired Projects Communities
Slide 65: Investment partner funding model - example
Lendlease FY22 Financial Results 36 Investment partner funding model - example Case study: International Towers Sydney, Barangaroo Example assumes Lendlease retains 25% stake during Development phase South (Towers 2 & 3) • Secured in 2009 to regenerate large mixed use precinct • Concept plan approve
Slide 66: Construction Segment
Lendlease FY22 Financial Results 37 Construction Segment Melbourne: Melbourne Connect
Slide 67: Earnings Drivers Construction
Lendlease FY22 Financial Results 38 EBITDA margin Earnings Drivers target 2-3% Construction Backlog1 $10.5b Australia Asia Europe Americas Revenue Revenue Revenue Revenue in the last 12 months in the last 12 months in the last 12 months in the last 12 months $3.2b $0.3b $0.9b $2.2b Backlog1 Backlog1
Slide 68: Construction
Lendlease FY22 Financial Results 39 Overview Performance FY21 FY22 • The Construction segment provides project management, design and Core business EBITDA mix % 19 16 construction services, predominantly in the commercial, residential, EBITDA margin % 2.7 2.0 mixed use, defence and social infrastruc
Slide 69: Construction Earnings / Backlog / New Work Secured
Lendlease FY22 Financial Results 40 EBITDA ($m) Backlog ($b)1 EBITDA Margin 12.2 12.6 Construction 35 0 3.1% 2.2% 1.3% 2.7% 2.0% 10.6 11.3 10.5 296 Earnings / 30 0 211 Backlog / New 25 0 20 0 173 131 Work Secured 15 0 101 10 0 50 - FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22 FY22 New work secu
Slide 70: Construction Backlog by Region
Lendlease FY22 Financial Results 41 Group ($b) Australia ($b) 5.3 (6.6) 3.6 (3.2) Construction Backlog by 11.3 0.5 10.5 6.3 0.3 7.0 Region1,2 Book to bill3: 0.8 Book to bill3: 1.1 FY21 New work Revenue FX & Other FY22 FY21 New work Revenue FX & Other FY22 secured secured Europe ($b) Americas ($b) 0.
Slide 71: Construction New Projects Secured
Lendlease FY22 Financial Results 42 Contract Completion Region Project Location type3 date4 Sector Australia Frankston Hospital Redevelopment VIC PPP FY27 Social Infrastructure Construction Powerhouse Parramatta NSW D&C FY24 Social Infrastructure New Projects Liverpool Health and Academic Precinct N
Slide 72: Important Notice
Lendlease FY22 Financial Results 43 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 (together referred to as the Lend