Lendlease Group · ASX:LLC
Lendlease — H1 FY2010 Earnings Presentation
48 slides from Lendlease's earnings presentation, February 2010
Slide 1: Half Year Results February 2010
Not for distribution in the United States or to US Persons Half Year Results February 2010 Securing long term value
Slide 2: Disclaimer
Not for distribution in the United States or to US Persons Disclaimer Important information This presentation 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 in
Slide 3: Result Summary
Not for distribution in the United States or to US Persons Result Summary Statutory Profit after Tax of A$204.9m including net property investment revaluations of A$17.0m Profit ProfitAfter AfterTax Tax Difficult market environment, particularly in offshore construction Stapling proposal appro
Slide 4: The Key Points
Not for distribution in the United States or to US Persons The Key Points Continued deal momentum – added cA$12b to development pipeline Strong Deal Disciplined capital allocation – investing at the bottom of the cycle Momentum Have established market leading positions and well placed for grow
Slide 5: High Quality Deal Momentum
Not for distribution in the United States or to US Persons High Quality Deal Momentum Secured Pipeline Projects Business Unit Size A$b Opportunity Business Unit Status Elephant & Castle UK Communities 2.7 Stratford UK Communities Ongoing discussions RNA Asia Pacific 2.5 Parkville Comprehensive Asia
Slide 6: Barangaroo
Not for distribution in the United States or to US Persons Barangaroo Regaining Leadership In Home Market Transaction Overview / Capital Model Significant de-risking has already taken place End development value - A$6b 3rd party investors have conditionally committed to jointly Timeframe - 10-
Slide 7: ING Retail
Not for distribution in the United States or to US Persons ING Retail The “Capital light” Model In Action Transaction Overview / Capital Model Strategic Rationale for the Transaction A Lend Lease led consortium has been Secures relationship with a new sovereign wealth fund appointed preferred bi
Slide 8: Alkimos
Not for distribution in the United States or to US Persons Alkimos Broader Market Reach, Better Diversification Transaction Overview / Capital Model Strategic Rationale for the Transaction End development value - A$400m for Stage 1 Establishes Delfin in the Western Australian market Timeframe
Slide 9: Lend Lease Primelife
Not for distribution in the United States or to US Persons Lend Lease Primelife Leadership In A Growth Market Transaction Overview / Capital Model Update on the Integration Process In Dec 2009, Lend Lease acquired the Lend Lease will merge Primelife with its RbD business remaining 56.8% of the s
Slide 10: Group Operating Profit After Tax
Not for distribution in the United States or to US Persons Group Operating Profit After Tax Conditions Mixed, But Improved Result Dec 2009 Dec 2008 (A$m) (A$m) Retail 31.5 37.4 Sale of Communities 71.4 71.1 Romford Public Private Partnerships 49.5 30.8 Impact of Investment Management 12.4 20.9 marke
Slide 11: Diversified Earnings Base
Not for distribution in the United States or to US Persons Diversified Earnings Base Smoothing Mixed Conditions Retail Communities Public Private Project Investment Partnerships Management & Management Construction Core Activities Asset ownership, Masterplanned Military housing, Project management A
Slide 12: Retail
Not for distribution in the United States or to US Persons Retail 14% Valuations stabilising Asia Pacific – increased fees from development projects and Operating Dec 2009 Dec 2008 reduced overheads Profit after Tax A$m A$m Operating Europe – declined due to a decrease in retail income, Asia Pac
Slide 13: Communities
Not for distribution in the United States or to US Persons Communities 33% Significant pipeline conversion and improved trading conditions Asia Pacific – lower profit due to capital recycling in prior Operating Dec 2009 Dec 2008 period Profit after Tax A$m A$m Operating Acquired remaining securi
Slide 14: Public Private Partnerships
Not for distribution in the United States or to US Persons Public Private Partnerships 22% Entered Canadian and Australian markets Americas – increased development fees due to financial Operating Dec 2009 Dec 2008 close on PAL Phase 1 Profit after Tax A$m A$m Operating Europe – sale of Romford a
Slide 15: Project Management & Construction
Not for distribution in the United States or to US Persons Project Management & Construction 25% Record profit in Asia Pacific offset by weak markets elsewhere Asia Pacific – record profit Operating Dec 2009 Dec 2008 Americas – loss due to poor trading conditions, restructuring Profit after Tax
Slide 16: Investment Management
Not for distribution in the United States or to US Persons Investment Management 6% Significant new Funds Under Management secured Operating Dec 2009 Dec 2008 Asia Pacific profit lower as no performance fees Profit after Tax A$m A$m Operating Europe – loss includes investment in new business Asi
Slide 17: Outlook
Not for distribution in the United States or to US Persons Outlook Well placed for growth in the long term Australian economy remains resilient Australian residential market momentum positive Asian opportunities emerging Market View UK market is likely to underperform in the medium term US
Slide 18: Group Financial Results
Not for distribution in the United States or to US Persons Group Financial Results Brad Soller Chief Financial Officer
Slide 19: Maintaining Financial Discipline
Not for distribution in the United States or to US Persons Maintaining Financial Discipline Asset recycling is core to the Group’s strategy Capital Recycling Lend Lease sells mature assets and reinvests the proceeds into the business Lend Lease has a track record of recycling assets Access t
Slide 20: Group Profit/ (Loss) After Tax
Not for distribution in the United States or to US Persons Group Profit/ (Loss) After Tax Key Financial Points Dec 2009 Dec 2008 (A$m) (A$m) Group Services reduced Operating Businesses 220.7 248.3 Group Services & Amortisation (26.9) (40.5) Lower drawdown in Group Treasury (5.9) (22.4) UK revolver f
Slide 21: Statement of Cash Flows
Not for distribution in the United States or to US Persons Statement of Cash Flows 1350 107.3 (263.7) 1200 1,120.8 81.2 (78.1) 1050 967.5 900 750 Acquisition of remaining interest in A$m 600 Primelife and PTN assets 450 300 The Group 150 continues to have significant cash reserves 0 21
Slide 22: Key Liquidity Metrics
Not for distribution in the United States or to US Persons Key Liquidity Metrics Key Liquidity Metrics Dec 2009 June 2009 Weighted average debt maturity 6 years 8 years Fixed / floating debt 60% / 40% 76% / 24% Cash (A$m) 967.5 1,120.8 Undrawn bank facilities (A$m) 536.8 612.0 Net debt1 (A$m) 749.9
Slide 23: Strategy & Capital Raising Overview
Not for distribution in the United States or to US Persons Strategy & Capital Raising Overview Steve McCann Chief Executive
Slide 24: We Have Made Significant Progress On Our Strategy
Not for distribution in the United States or to US Persons We Have Made Significant Progress On Our Strategy Disciplined Outperformance A Focused Core Business Expansion LEAD BUILD World Class Property Reshape Portfolio Solutions Company RESTORE Growth Platforms Strong Integrated Offering
Slide 25: Capital Raising and Rationale
Not for distribution in the United States or to US Persons Capital Raising and Rationale A$806 million pro-rata Single-bookbuild Accelerated Renounceable Entitlement Capital Raising Offer In May 2009 Lend Lease announced the intention to invest A$1b-A$2b of capital over 3 yrs Acquisition of Le
Slide 26: Recent Acquisitions
Not for distribution in the United States or to US Persons Recent Acquisitions Three acquisitions completed recently – A$1.2b capital deployed Recent Acquisitions Privatisation of Lend Lease Primelife Acquisition of the A$1.4b (investment ~A$0.9b); and ING Retail Fund Acquisition of (investment ~A$0
Slide 27: Recent Project Wins
Not for distribution in the United States or to US Persons Recent Project Wins Lend Lease has been successful in securing key projects Recent project wins offer potential for attractive returns – Lend Lease intends to commit additional capital Development Project Wins1 Preferred developer for Pr
Slide 28: Rationale for Lend Lease Investment Strategy
Not for distribution in the United States or to US Persons Rationale for Lend Lease Investment Strategy Why now? The right time in the cycle to make investments Right point in the property cycle for investment1 Lend Lease’s Hurdle Rates Hurdle Rates for New Type of Project Projects Strong cost Devel
Slide 29: Identified Capital Opportunities
Not for distribution in the United States or to US Persons Identified Capital Opportunities Accelerating growth opportunities of Lend Lease Identified potential capital opportunities of ~$1.6b 1 Secured development projects 2 PPP opportunities 3 Targeted new developments 6 projects secured in the
Slide 30: Secured development projects
Not for distribution in the United States or to US Persons 1 Secured development projects Potential to increase exposure to selected projects Share of Incremental Expected to Expected to Indicative Selected Projects Project3 Investment1,2 Commence4 Complete4 Returns5 (%) Melbourne A$150m - A$200m ~5
Slide 31: Secured development projects
Not for distribution in the United States or to US Persons 1 Secured development projects The Group has not changed its approach to development Market timing: Assess the market cycle and supply/demand fundamentals Risk mitigation: Approach to Tenancy pre-commitments Development Apartment pre
Slide 32: PPP Opportunities
Not for distribution in the United States or to US Persons 2 PPP Opportunities Identified new PPP opportunities (~A$23b of total project value) Identified opportunities of ~A$9.6b in project value Identified opportunities of ~A$5.6b in project value Created Capella Capital JV, secured SA schoo
Slide 33: Targeted new developments
Not for distribution in the United States or to US Persons 3 Targeted new developments Intention to continue growth in Australian pipeline Examples of targeted new developments A further 2 potential projects Right time in the cycle to invest in currently identified, 1 in SE Qld and development p
Slide 34: Capital employment opportunities
Not for distribution in the United States or to US Persons Capital employment opportunities Potential capital investment pipeline Targeted Capital Investment Additional Capital Sources Secured development Equity raising A$806m projects ~A$0.8b Cashflow from operations Capital recycling in PPP
Slide 35: Barangaroo Update
Not for distribution in the United States or to US Persons Barangaroo Update David Hutton COO, Lend Lease Asia Pacific
Slide 36: Barangaroo site pre and post redevelopment
Not for distribution in the United States or to US Persons BARANGAROO SITE PRE-REDEVELOPMENT BARANGAROO SITE POST-REDEVELOPMENT 36
Slide 37: The Location
Not for distribution in the United States or to US Persons BARANGAROO SNAPSHOT The Location • Estimated $A6 billion end value • Completion in 10 to 15 years • 7.5 hectare site area • 490,000 m² total GFA • Integrates and redefines Sydney’s CBD • New global sustainability benchmarks 37
Slide 38: An Extension of the Sydney CBD
Not for distribution in the United States or to US Persons AN EXTENSION OF THE SYDNEY CBD • 23,000 daytime workers • 65,000 within 5 minutes walk • Est. 25 million visitors p.a. • 2km’s of renewed waterfront • 355,000m² office • 30,000m² retail / food & beverage • 610 apartments • 250 key (approx) h
Slide 39: Next Generation Office
Not for distribution in the United States or to US Persons NEXT GENERATION OFFICE • Sydney CBD maturing, limiting supply • Unique site – scale, master plan, integrated uses • Possibly last new build/large floor plate CBD opportunity • World leading design, technology and sustainability outcomes • Wi
Slide 40: Barangaroo Today
Not for distribution in the United States or to US Persons PRECINCT WIDE SUSTAINABILITY Barangaroo Today Healthy buildings Renewable energy Active public spaces 6 Star Green Star minimum + Precinct Infrastructure Centralised Cooling Blackwater treatment Precinct waste management CARBON NEUTRAL ZERO
Slide 41: Annexures
Not for distribution in the United States or to US Persons Annexures
Slide 42: EPS & Dividend
EPS & Dividend EPS1 Dividend cents cents 77 77 120 108.73 80 103.32 88.7 61 100 46.5 72.5 60 42 34 80 41 46.8 70.5 31 60 26.4 40 16 40 62.2 20 35 43 20 41.9 32.8 46.1 40.9 30 25 20 0 0 4 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 1st Half 2nd Half Interim Final 1 Calculated based on net opera
Slide 43: Existing Debt Facilities as at 31 December 2009
Existing Debt Facilities as at 31 December 2009 Undrawn debt facilities A$536.8m as at 31 December 2009 Facility Mix – 31 December 2009 Cash and cash equivalents A$967.5m as at 31 December 2009 (Drawn & Undrawn) Interest rate profile as at 31 December 2009 Debt capital markets A$858.3m £300m
Slide 44: Bovis Project Wins / Backlog Growth
Bovis Project Wins / Backlog Growth New Work Secured Backlog GPM 400 800 350 700 300 600 500 250 400 200 300 200 150 196 387 329 283 209 173 625 717 788 690 546 100 100 0 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 Jun 06 Jun 07 Jun 08 Jun 09 Dec 09 A$m A$m 44
Slide 45: Bovis Lend Lease Backlog GPM by region and sector
Bovis Lend Lease Backlog GPM by region and sector As at 31 December 2009 Asia Pacific Americas Europe Total GPM % GPM % GPM % GPM % Commercial/Office 14 6 12 12 Communications 3 1 2 Education 15 22 18 17 Government/Civic 14 14 11 13 Healthcare 36 26 7 25 Industrial/Technology 4 1 2 Mixed-use 2 2 8 4
Slide 46: Earnings Composition – 31 December 2009
Earnings Composition – 31 December 2009 Earnings Composition by Geography1 Earnings Composition by Business Unit1 9% 6% 25% 14% 29% 62% 22% 33% Asia Pacific Investment Management Europe / UK Retail Americas Communities Public Private Partnerships Project Management & Construction 1 Based on operatin
Slide 47: Lend Lease is a leader in Sustainability
Lend Lease is a leader in Sustainability Our sustainability credentials are a key source of competitive advantage Lend Lease acts as a leader: Lend Lease is recognised on the following globally recognised sustainability reputation indices: Sustainable Buildings & Climate Initiative The Dow Jon
Slide 48: Half Year Results February 2010
Not for distribution in the United States or to US Persons Half Year Results February 2010