Lendlease Group · ASX:LLC
Lendlease — H1 2001 Earnings Presentation
28 slides from Lendlease's earnings presentation, February 2001
Slide 1: December 2000 Half Year Results
December 2000 Half Year Results • Lend Lease is part of the way to transitioning our operations to a global real estate business. • So far we have completed major acquisitions. • Over the next 12 months we are focusing on priorities in this transition. • These are: - in Real Estate Investments to ge
Slide 2: Results - December 2000
RESULTS - DECEMBER 2000 Operating profit after tax $108.8M Earnings per share 23.1cps Pre-amortisation eps 32.4cps Dividends per share (unfranked) 13.0cps • Our operating profit for the half year was $108.8M after tax. • The result was impacted by provisions on Fox Studios and internet investments.
Slide 3: Business Unit Operating Profit After Tax
BUSINESS UNIT OPERATING PROFIT AFTER TAX Dec 2000 Dec 1999 $m $m Real Estate Investments 87.3 64.3 Property Development 3.3 89.6 Project Management and Construction 41.2 26.4 TOTAL 131.8 180.3 • At the business unit level, you can see the comparison with the previous period. • You should note we hav
Slide 4: Markets
MARKETS • US market – interest rates – stock market – investment • Europe and the Euro • Project Management & Construction • Capital markets in the US have got tough and will get tougher: - We had the interest rate rise early in 2000 which impacted our HCI and Debt businesses. - However, of greater
Slide 5: Building Global Recurrent Earnings
BUILDING GLOBAL RECURRENT EARNINGS • Acquisition of Bovis • Acquisition of Boston Financial • Acquisition of 5 AMRESCO businesses • We have reduced debt by over $1B since December 1999, and have sold capital assets such as Darling Park and Aurora Place. • And the acquisition of Bovis, Boston Financi
Slide 6: Real Estate Investments
REAL ESTATE INVESTMENTS PROFIT AFTER TAX Real Estate Investments Dec 2000 Dec 1999 $m $m Australia 8.4 7.1 North America 56.5 36.4 Asia (2.3) 2.9 Europe 15.3 11.5 Total Real Estate Investments 77.9 57.9 Capital Services Australia and Pacific 7.0 (2.0) Europe 2.4 8.4 Total Capital Services 9.4 6.4 TO
Slide 7: Analysis of US REI Result
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Slide 8: Margins
MARGINS • Objective - Pre Tax Profit Margin to Revenue in US REI – 23% in 01/02 – 27% in 02/03 – 30% in 03/04 • Overhead reduction program • I am addressing the cost base in US REI. • This is the whole strategy behind Enterprise, which is our major technology investment over the last 3 years, with b
Slide 9: Assets Under Management
ASSETS UNDER MANAGEMENT FUM at 30 FUM at 31 % June 2000 Dec 2000 change North America USDB 34.5 35.6 +3.2% Australia and Pacific AUDB 10.0 10.7 +7.0% Asia USDB 0.5 0.6 +20.0% Europe GBPB 1.0 1.3 +30.0% TOTAL AUDB 70.9 84.0 +18.5% * * Total AUM increase excluding currency impact + 5.4% • Turning to A
Slide 10: New Developments
NEW DEVELOPMENTS • Multifamily • Lend Lease Global Fund - US$2b • GLL Real Estate Partners • Lend Lease International Distressed Debt Fund However, there have been positives in the US: • One highlight has been Multifamily where we have raised capital for our new co-mingled Arch Street III Fund, for
Slide 11: Co-Investments
CO-INVESTMENTS Investment at Future Total 31 Dec 2000 commitments commitments $Am $Am $Am North America 229 115 344 Asia 92 222 314 Europe 77 200 277 Australia 50 4 54 TOTAL 448 541 989 • Part of the REI strategy involves Lend Lease co-investing, where appropriate, in the Funds alongside clients. •
Slide 12: REI - Fund Performance
REI - FUND PERFORMANCE Net One Year Since One Year Asset Annualised Inception Years Annualised Fund Investment Value Return Return Since Benchmark Type Strategy Millions After Fees After Fees Inception Return Prime Property Fund Private Equity Core USD2,190 13.3% 8.0% 27.0 11.7% Value Enhancement Fu
Slide 13: REI Future
REI FUTURE Expectations for: • Second half 2001 • 2002 • For the second half for REI, in the US: - We don’t have the HCI business transaction fees as they are earned in the December quarter. - We have fairly small incentive fees as there are no major fund realisations. - We need to secure more capit
Slide 14: Property Development
PROPERTY DEVELOPMENT • Partnering strategy with key land holders • Third party capital • Intellectual and community capital • Skills expansion, knowledge transfer • In our Property Development business our approach focuses on: - Key relationships with key land holders - such as Commonwealth and Stat
Slide 15: Property Development
PROPERTY DEVELOPMENT PROFIT AFTER TAX Dec 2000 Dec 1999 $m $m Australia (39.6) 11.3 North America (0.7) (0.6) Asia 2.1 (1.9) Europe 41.5 80.8 TOTAL 3.3 89.6 • Overall, Development only made a marginal contribution in the half year. • The decrease in profit in Australia mainly reflected the provision
Slide 16: St Marys
ST MARYS • Our key capability in Australia is creating communities. • Our current focus here is on residential and land management projects which are staged developments for durations of up to 15 years. • These projects provide a lower risk profile through managed exit strategies and more predictabl
Slide 17: Bovis Lend Lease
BOVIS LEND LEASE • Enhanced client pipeline • Global scale and capacity • Global brand • Ability to leverage other Lend Lease real estate capabilities • Added recurrent profit streams • Bovis Lend Lease has made the most progress in this transition period. • BLL: - Delivers global clients in long te
Slide 18: New Developments
NEW DEVELOPMENTS • Acquisition of IRW • Increased demand in sectors such as Semi- conductors and Pharmaceuticals • On-line global project control system • Withdrawal from AECventure • Our acquisition of IRW added critical extra capacity in a revitalised German market. • There could be further acquis
Slide 19: Bovis Lend Lease
BOVIS LEND LEASE PROFIT AFTER TAX Dec 2000 Dec 1999 $m $m Asia Pacific 16.6 23.1 Americas 13.0 3.9 Europe 7.9 0.7 Global Markets & Clients & Alliances 14.1 3.4 Global Management (Costs) (10.4) (4.7) TOTAL 41.2 26.4 • After tax profit was $41.2M for the half year, but note that the previous correspon
Slide 20: New Work Secured
NEW WORK SECURED New work secured New work secured (Revenue) to Dec 2000 (Margin) to Dec 2000 $m $m Asia Pacific 649.5 54.0 Americas 2,503.7 103.6 Europe 1,144.4 47.4 Global Market & Clients & Alliances 149.3 44.2 TOTAL 4,446.9 249.2 • This slide shows in two columns the revenue to flow from new con
Slide 21: Backlog Profit Margin
BACKLOG PROFIT MARGIN Opening backlog Plus new work Less backlog Closing backlog Gross profit margin secured (Margin) to Gross profit margin Gross profit margin Jun 2000 $m Dec 2000 $m used to Dec 2000 $m at Dec 2000 $m Asia Pacific 63.4 54.0 (67.0) 50.4 Americas 142.2 103.6 (88.2) 157.6 Europe 136.
Slide 22: Recurring Income Streams
RECURRING INCOME STREAMS BACKLOG PROFIT MARGIN 12 months to Post June June 2002 % 2002 % 37% 25% • At the start of each financial year, Bovis Lend Lease management targets 50%+ of the new year’s gross profit margin to be already secured in the opening backlog for that period. As at December 2000: -
Slide 23: Private Finance Initiatives / Build Operate Transfer
PRIVATE FINANCE INITIATIVES / BUILD OPERATE TRANSFER Long Term Management Contract Investment value Assets value $m $m Calderdale (under construction) 0.5 216.4 Worcester (under construction) 0.1 224.7 Exchequer Partnership (Treasury) (under construction) 0.5 306.8 Da Chang Water Treatment Plant (co
Slide 24: Real Estate Solutions
REAL ESTATE SOLUTIONS • 50% of Bovis Lend Lease gross profit margin from Client Alliances and Real Estate Solutions by 2004 • Adds to Assets Under Management and Investment Performance in REI • Real Estate Solutions is our ability to provide a comprehensive service to clients from all our businesses
Slide 25: Buy-back/Reinvestments
BUY-BACK/REINVESTMENTS • Off-market buy-back completed in October 2000 – $1,755 million in cash returned to shareholders – $1,137 million in franking credits distributed – 88.3 million shares cancelled • 70% of cash at June 2000 returned to shareholders $m % Cash at June 2000 3,484 Returns to Shareh
Slide 26: Buy-back/Reinvestments
BUY-BACK/REINVESTMENTS • Balance sheet remains underleveraged at December 2000 • Strong financial capacity to grow business through reinvestment/acquisition • Further buy-backs remain an option if no economically sound acquisitions present themselves • We remain well placed to grow through acquisiti
Slide 27: Forecast Earnings Mix June 2002
FORECAST EARNINGS MIX JUNE 2002 % Australia (1) 20 Non Australia 80 (1) Excludes Group financing and amortisation costs, Westpac hedge unwind • We have said that dividends after 2001 will be based on available franking credits and we will return further value to shareholders in other ways. • Based o
Slide 28: Summary
SUMMARY • Transition period • Full year PAT range $210 - 230m for 2000/01 • 2001/02 prospects In summary: • The changes we have made in Lend Lease have been significant, but they were very necessary. • Our objective has been to build global recurrent income streams because, if we stood still as a la