Lendlease Group · ASX:LLC
Lendlease — H1 FY22 Earnings Presentation
78 slides from Lendlease's earnings presentation, Feb 21, 2022
Slide 1: Lendlease Group 2022 Half Year Results Announcement, Presentation and Appendix
21 February 2022 Lendlease Group 2022 Half Year Results Announcement, Presentation and Appendix Lendlease Group today announced its results for the half year ended 31 December 2021. Attached is the HY22 Results Announcement, Presentation and Appendix. A summary of Lendlease’s Major Urban Projects ca
Slide 2: Resetting for growth; subdued financial result; second half recovery
21 19 February 22 August 2022 2019 2018 Resetting for growth; subdued financial result; second half recovery For the half year ended 31 December 2021: • Statutory Loss after Tax of $264m • Core operating1 Profit after Tax of $28m o Interim distribution of 5 cps o Earnings Per Security of 4.1 cents R
Slide 3: Strategic priorities advanced and segment commentary
21 19 February 22 August 2022 2019 2018 Specifically, the Group advanced several strategic priorities including: • establishing approximately $6b of new investment partnerships to grow funds under management; • the achievement of significant development planning milestones; • the repositioning of th
Slide 4: Financials
21 19 February 22 August 2022 2019 2018 The Group retains 72% of the asset management income stream as well as the existing income streams relating to property management, development management and construction management in addition to the $209m equity investment in the portfolio. Financials The G
Slide 5: Outlook
21 19 February 22 August 2022 2019 2018 The Non core loss in the period included a tenancy impairment and a gain on sale of Services. Outlook The first phase of the five year roadmap for delivering sustainable performance, which involves resetting the platform for delivery and growth, is progressing
Slide 6: For further information, please contact
21 19 February 22 August 2022 2019 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 25 February Interim distri
Slide 7: Half Year Results
2022 Half Year Results 21 February 2022 London: International Quarter London Artist’s impression
Slide 8: Acknowledgement of Country
Lendlease HY22 Financial Results 2 Acknowledgement of Country As a 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 HY22 Financial Results 3 Use image on page 206 of AR Group Performance Tony Lombardo North Sydney: Blue & William Global CEO On Cammeraygal Country Artist’s impression
Slide 10: HY22 snapshot
Lendlease HY22 Financial Results 4 HY22 snapshot Group • Optimising structure and businesses • Recalibrating cost base $0.6b1 $0.3b1 The Turing Blue & • Completed development portfolio review Building William, International North • Enhanced market disclosures Quarter Sydney3 London3 • Ongoing COVID
Slide 11: HY22 result
Lendlease HY22 Financial Results 5 Financial performance HY22 Reflects foreshadowed weak first half and impact of restructuring charge and development impairment result $28m ($264)m Strong Core operating1 Profit after Tax Statutory Loss after Tax Financial position 4.1c 0.8%2 ($30)m 12.0%4 Earnings
Slide 12: Financial Highlights
Lendlease HY22 Financial Results 6 Financial Highlights Simon Dixon Group Chief Financial Sydney: Sydney Place Officer On Gadigal Country Artist’s impression
Slide 13: Financial performance
Lendlease HY22 Financial Results 7 Financial performance1 $m HY21 HY22 Change Core Investments 121 141 17% • Higher investment portfolio income Development 244 39 (84%) • North East Link PPP fees; leasing and delivery progress at Sydney Place; low completions Construction 104 84 (19%) • EBITDA margi
Slide 14: Cost reduction and Development review
Lendlease HY22 Financial Results 8 Cost reduction Operating cost savings identified1 ($m) Cost savings and restructuring charge and On track for targeted savings of >$160m1: H1 FY22 Remaining Development (120) • Actions to date have realised c.$100m annualised cost savings: review (30) − Headcount r
Slide 15: Cash flow
Lendlease HY22 Financial Results 9 HY22 Cash flow movements Cash flow Underlying operating cash outflow $388m: Underlying investing cash outflow $373m: • Core business cash outflow $0.4b: • Investments $0.8b: − Low profitability − Development expenditure of $0.6b on projects − Operating expenses − N
Slide 16: Financial position
Lendlease HY22 Financial Results 10 Invested capital1 Treasury management Financial FY21 HY22 $b Change position Investments $3.9b $0.3b Net debt $m 695 1,696 Gearing % 5.0% 12.0% Development $5.0b $0.6b Interest cover times 6.4 2.9 Other ($0.5b) ($0.2b) Average debt maturity years 4.9 7.2 Total $8.
Slide 17: Operational Update
Lendlease HY22 Financial Results 11 Operational Update Tony Lombardo Kuala Lumpur: Global CEO The Exchange TRX Artist’s impression
Slide 18: Global presence, local expertise
Lendlease HY22 Financial Results 12 Global presence, local London expertise1 • Thamesmead Waterfront • Euston Station • Silvertown Quays • International Quarter London • Elephant Park • High Road West Chicago • Smithfield, Birmingham • Southbank San Francisco • Lakeshore East • San Francisco Bay Are
Slide 19: Health and Safety
Lendlease HY22 Financial Results 13 Key performance indicators Health and • Key metric of critical incidents at record low frequency rate of 0.50; 79% lower than first reported level (FY14) Safety • Operations not experiencing a critical incident at a record high of 97% Critical Incident Frequency R
Slide 20: Environmental, Social and Governance
Lendlease HY22 Financial Results 14 HY22 key achievements Environmental, Social and Launched Raised Launched Published Published Governance global £250 million Mission Zero Modern Slavery inaugural Sustainable sustainable via debut decarbonisation Statement timber partnership with roadmaps covering
Slide 21: Investments
Lendlease HY22 Financial Results 15 Management EBITDA ($m) Management earnings Investments Operational performance1 • Funds Management EBITDA $40m HY21 HY22 − Revenue2 steady at $79m 48 40 − Higher base fees offset by lower performance fees − Expenses higher on resourcing to support c.$6b3 initiativ
Slide 22: Investments
Lendlease HY22 Financial Results 16 Investment Portfolio1 EBITDA ($m) Investment Portfolio earnings Investments Performance2 HY21 HY22 82 • EBITDA $82m, up from $50m: − Recovery in underlying investment income − Improved performance from the Retirement Living business 50 • Investment portfolio $3.8b
Slide 23: Investments
Lendlease HY22 Financial Results 17 US Military Housing portfolio Post balance date event Investments • Multi decade partnership with US Department of Defense: • Financial partner acquires asset management income stream: − Established 1999 − 28% interest for c.$170m − Remaining portfolio life 35 yea
Slide 24: Development
Lendlease HY22 Financial Results 18 EBITDA ($m) Operational Performance1 Development 199 Urban portfolio: EBITDA $45m, Invested Capital $4.1b: HY21 HY22 − North East Link PPP − Sydney Place Communities: EBITDA ($6m), Invested Capital $0.9b − Settlements 504 lots, down 52% − Sales 1,522 lots, up 90%
Slide 25: Development
Lendlease HY22 Financial Results 19 Pipeline and Capital by Operational phase Outlook Development Focus on converting the pipeline Operational phase Pipeline Capital • Forthcoming acceleration reflected in higher capital allocation • >$5b of pipeline progressed into Master planned or Work in FY21 HY
Slide 26: Construction
Lendlease HY22 Financial Results 20 Backlog revenue ($b) Operational performance and outlook1 Construction 2.4 (3.2) • EBITDA $84m, down from $104m 11.3 0.4 10.9 • EBITDA margin 2.6%, down from 3%: − Solid result despite COVID impacts • Revenue of $3.2b, down 6%: − Australia, Asia, Europe higher rev
Slide 27: Outlook
Lendlease HY22 Financial Results 21 Outlook Tony Lombardo New York: Global CEO 1 Java Street Existing site
Slide 28: Outlook
Lendlease HY22 Financial Results 22 Outlook Group • Well progressed on new operating model • On track for savings target >$160m pa • Profitability expected to significantly improve from H2 FY22 • Financial capacity to deliver five year plan Lakeshore Yarrabilba3 East3 • ROE target expected to be met
Slide 29: Questions
Lendlease HY22 Financial Results 23 Questions
Slide 30: Half Year Results Appendix
2022 Half Year Results Appendix 21 February 2022 London: International Quarter London Artist’s impression
Slide 31: Overview
Overview Malaysia: Setia City Mall
Slide 32: Lendlease HY22 Financial Results
Lendlease HY22 Financial Results 3
Slide 33: Lendlease HY22 Financial Results
Lendlease HY22 Financial Results 4
Slide 34: Lendlease HY22 Financial Results
Lendlease HY22 Financial Results 5
Slide 35: Lendlease HY22 Financial Results
Lendlease HY22 Financial Results 6
Slide 36: Lendlease HY22 Financial Results
Lendlease HY22 Financial Results 7
Slide 37: Lendlease HY22 Financial Results
Lendlease HY22 Financial Results 8
Slide 38: Lendlease HY22 Financial Results
Lendlease HY22 Financial Results 9
Slide 39: Group Financials
Group Financials Chicago: The Cooper, Southbank
Slide 40: Income Statement (Statutory Result)
Lendlease HY22 Financial Results 11 HY211 Income $m Revenue from contracts with customers 4,524 HY22 4,148 Statement Other revenue 62 70 (Statutory Cost of sales Gross profit (4,155) 431 (3,849) 369 Result) Share of profit of equity accounted investments 18 105 Other income 211 67 Other expenses (35
Slide 41: Reconciliation of Core Operating Profit
Lendlease HY22 Financial Results 12 Reconciliation $m HY21 HY22 of Core Core Operating Profit After Tax Add / (less): Investment properties revaluations2 205 - 28 4 Operating Add / (less): Financial assets revaluations2 5 33 Profit1 Add / (less): Equity accounted investments revaluations2 (12) 20 Ad
Slide 42: HY22 underlying operating cash flow
Lendlease HY22 Financial Results 13 HY22 HY22 underlying operating cash flow of $(388)m Overview underlying $m Statutory Adjustments Underlying • Underlying operating cash flow is operating cash Cash Flows from Operating Activities derived by adjusting statutory cash flows to better reflect operatin
Slide 43: Portfolio Management Framework
Lendlease HY22 Financial Results 14 Target HY21 HY22 Portfolio Total Group Metrics Management Core Operating ROE 8-11% 5.9% 0.8% Framework Distribution payout ratio1 40-60% 50% 125% Gearing2 10-20% 5.0% 12.0% Core Business EBITDA Mix Investments 35-45% 26% 53% Development 40-50% 52% 15% Construction
Slide 44: Segment financial metrics
Lendlease HY22 Financial Results 15 Operating Profit after Tax ($m) Operating EBITDA ($m) Segment financial HY21 HY22 HY21 HY22 metrics 177 244 96 111 141 121 104 59 54 84 39 13 Investments Development Construction Investments Development Construction ROIC1 (Development and Investments), Invested ca
Slide 45: Exchange rates
Lendlease HY22 Financial Results 16 Income Statement1 Statement of Financial Position2 Exchange Local Foreign HY21 FY21 HY22 Local Foreign HY21 FY21 HY22 rates AUD USD 0.73 0.75 0.73 AUD USD 0.77 0.75 0.73 AUD GBP 0.55 0.55 0.54 AUD GBP 0.56 0.54 0.54 AUD EUR 0.62 0.63 0.63 AUD EUR 0.63 0.63 0.64 AU
Slide 46: HY22 Regional EBITDA to PAT reconciliation
Lendlease HY22 Financial Results 17 HY22 Regional $m Operating EBITDA1 Net interest D&A2 PBT Tax Operating PAT1 EBITDA to PAT Australia Investments 76 - (3) 73 (14) 59 reconciliation Development Construction 68 58 (1) - (1) (4) 66 54 (20) (11) 46 43 Total Australia 202 (1) (8) 193 (45) 148 Asia Inve
Slide 47: Key dates for investors
Lendlease HY22 Financial Results 18 Key dates for HY22 results released to market / interim distribution declared Date 21 February 2022 investors Securities quoted ex distribution on the Australian Securities Exchange 25 February 2022 Interim distribution record date 28 February 2022 Interim distrib
Slide 48: Investments Segment
Investments Segment Boston: Clippership Wharf
Slide 49: Earnings drivers Investments
Lendlease HY22 Financial Results 20 Earnings drivers ROIC target 6-9%1 Investments Invested capital $3.9b Investment Portfolio Earnings Management Earnings Co-investment Commercial Residential positions in Retirement Funds asset asset managed funds Living Other management management management $2.4b
Slide 50: Investments HY22 Overview
Lendlease HY22 Financial Results 21 Overview Performance1 HY21 HY22 Investments • The Investments segment comprises a leading investment and asset Core operating business EBITDA mix % 26 53 management platform and the Group’s investments across the HY22 residential, office, retail, industrial and re
Slide 51: Investment Portfolio / Management earnings
Lendlease HY22 Financial Results 22 Investment Portfolio1 EBITDA ($m) Management2 EBITDA ($m) Investment 82 Portfolio / 71 59 Management 50 earnings HY21 HY22 HY21 HY22 Investment Portfolio3 by sector ($b) FUM/AUM ($b) Residential Office Retail Industrial Retirement Other HY21 FY21 HY22 3.7 3.5 3.8
Slide 52: Funds Under Management (FUM)
Lendlease HY22 Financial Results 23 FUM ($b) Funds Under CAGR² of 10.4% Management1 39.6 42.0 35.2 36.0 (FUM) 30.1 FY18 FY19 FY20 FY21 HY22 HY22 FUM by sector HY22 FUM by region Office Retail Residential Industrial Other Australia Asia Europe Americas 5% 4% 4% 5% 6% 21% $42.0b 56% $42.0b 29% 70% 1.
Slide 53: Assets Under Management (AUM)
Lendlease HY22 Financial Results 24 AUM2 ($b) Assets Under Management1 (AUM) 28.7 29.3 28.5 28.8 12.7 FY18 FY19 FY20 FY21 HY22 HY22 AUM by sector HY22 AUM by region Residential Retail Office Australia Asia Europe Americas 10% 22% 46% $28.8b 49% $28.8b 41% 27% 5% 1. The Group’s assessment of market v
Slide 54: FUM by region
Lendlease HY22 Financial Results 25 FUM1 by Group ($b) region 39.6 2.0 (1.1) 0.9 0.6 42.0 FY21 Additions Divest- Revaluations FX and HY22 ments Other By region ($b) FY21 Additions Divestments Revaluations FX and Other HY22 Australia 27.6 1.1 (0.6) 0.9 0.4 29.4 Asia 8.4 0.3 - - 0.2 8.9 Europe 1.9 0.5
Slide 55: Major fund summary
Lendlease HY22 Financial Results 26 Major fund summary1 HY22 funds management platform Weighted Total assets Gearing Co-investment Region Sector # of assets Occupancy avg. cap rate $b % % $m # % % Australian Prime Property Fund Commercial 6.2 15.5 8.0 403 Aus Office 19 96.8 4.5 Lendlease Internation
Slide 56: AUM by product
Lendlease HY22 Financial Results 27 AUM1 by Group ($b) product 28.5 (0.2) 0.1 0.4 28.8 FY21 Divest- Revaluations FX and HY22 ments Other By product ($b) FY21 Additions Divestments Revaluations FX and Other HY22 Commercial 14.8 - (0.2) 0.2 - 14.8 Residential 13.7 - - (0.1) 0.4 14.0 Group 28.5 - (0.2)
Slide 57: Retirement Living
Lendlease HY22 Financial Results 28 Retirement Value drivers1 HY21 HY22 Living Ownership 2 % 75 50 Queensland Equity investment $b 1.4 1.0 13 villages Long term growth rate % 3.5 3.5 c2,970 units Discount rate % 12.4 12.1 Average length of stay – ILUs years 11 11 Number of established units no. 12,9
Slide 58: Development Segment
Development Segment London: The Turing Building International Quarter London Artist’s impression.
Slide 59: Earnings drivers Development
Lendlease HY22 Financial Results 30 ROIC target 10-13% Earnings drivers Invested capital $5.0b Development Pipeline1 $111.8b Development Phase In Conversion Master planned Work in Progress $52.0b $43.7b $16.1b pipeline pipeline pipeline $0.4b $1.9b $2.7b capital capital capital Completions target of
Slide 60: Development HY22 Overview
Lendlease HY22 Financial Results 31 Overview Development • The Development segment is predominantly focused on the creation Performance Core business EBITDA mix % HY21 52 HY22 15 HY22 of mixed use precincts that comprise apartments, workplaces and associated leisure and entertainment amenity. The Gr
Slide 61: Development earnings / pipeline
Lendlease HY22 Financial Results 32 EBITDA ($m) Pipeline1 ($b) Development earnings / 113.0 113.6 111.8 pipeline 76.1 71.1 244 39 HY21 HY22 FY18 FY19 FY20 FY21 HY22 HY22 pipeline1 by product Completions2 ($b) Apartment for sale Apartment for rent Commercial Communities 5.6 12% 5.0 4.0 34% 3.8 31% $1
Slide 62: Apartment Settlements
Lendlease HY22 Financial Results 33 Apartment Settlements HY22 apartment settlements Ownership Units $m Australia Melbourne Quarter - East Tower 50% 12 9 Total Australia 12 9 Europe Elephant Park – West Grove (Building 1 & 2) 100% 10 19 Other 4 9 Total Europe 14 28 Total Americas 33 166 Total apartm
Slide 63: Communities Sales and Settlements
Lendlease HY22 Financial Results 34 Communities Communities settlements Sales and Lots HY21 $m Lots HY22 $m Settlements Queensland New South Wales 434 188 92 67 204 55 57 33 Victoria 339 92 172 39 South Australia 20 2 3 -1 Western Australia 62 15 70 17 Total Australia 1,043 268 504 146 Europe 12 54
Slide 64: Apartment settlements and completion profile
Lendlease HY22 Financial Results 35 Apartment Total Units Presales1 Delivery settlements and City Project Apartments for sale Building units Ownership Presold presold 1 ($b) Date2 completion Manchester Potato Wharf Potato Wharf Block 3 & 4 191 100% 73% 139 0.1 FY22 profile Chicago London Lakeshore E
Slide 65: Commercial completions profile
Lendlease HY22 Financial Results 36 Commercial City Project Capital model Ownership sqm '0001 Building Completion date2 completions Milan Milan Milano Santa Giulia Milano Santa Giulia Fund Through3 Fund Through3 50% 50% 28 18 Spark One Spark Two FY22 FY22 profile Milan Milan Innovation District BOOT
Slide 66: Conversion of secured Apartments pipeline
Lendlease HY22 Financial Results 37 Conversion of Indicative conversion timing of secured apartments for sale pipeline to FY26 secured City Units FY22 FY23 FY24 FY25 FY26 Sydney2 212 Apartments London3 1,930 pipeline1 Kuala Lumpur4 York5 1,630 608 Melbourne6 1,435 Milan7 776 San Francisco8 333 Chica
Slide 67: Conversion of secured Commercial pipeline
Lendlease HY22 Financial Results 38 Conversion of Indicative conversion timing of secured commercial pipeline to FY26 City Project Sectors sqm FY22 FY23 FY24 FY25 FY26 secured Milan Milan Innovation District - Stage 1 Office / Retail / Hotel '0002 130 Commercial Greater Tokyo Boston Lendlease Data C
Slide 68: Major Urban project summary
Lendlease HY22 Financial Results 39 Major Urban Project Delivery Completion Residential Commercial Estimated backlog backlog end value Land payment project Region Project Australia Barangaroo South secured commenced FY09 FY12 date FY26 units 849 sqm ‘0002 1 ($b)3 4.3 model Staged payment summary1 Sy
Slide 69: Communities Pipeline Summary
Lendlease HY22 Financial Results 40 Communities Key metrics • $13.8b pipeline1 Pipeline • 16 projects across five Australian states, 1 US project Summary • c.44,000 of communities pipeline lots Queensland • Target settlements: 3,000 – 4,000 lots p.a. c.27,500 land lots • Elliot Springs • Springfield
Slide 70: Development capital
Lendlease HY22 Financial Results 41 $5.0b of invested capital in land and infrastructure controls $111.8b development pipeline Development HY22 capital - Structure capital HY22 capital - Operational Stage In Conversion Master planned WIP Other Urban Projects Deconsolidated JVs Impaired Projects Comm
Slide 71: Investment partner funding model - example
Lendlease HY22 Financial Results 42 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 Development management
Slide 72: Construction Segment
Construction Segment Melbourne: Melbourne Connect on Wurundjeri Country
Slide 73: Earnings drivers Construction
Lendlease HY22 Financial Results 44 EBITDA margin Earnings drivers target 2-3% Construction Backlog1 $10.9b Australia Asia Europe Americas Revenue Revenue Revenue Revenue in the last in the last in the last in the last 6 months 6 months 6 months 6 months $1.5b $0.2b $0.5b $1.1b Backlog1 Backlog1 Bac
Slide 74: Construction HY22 Overview
Lendlease HY22 Financial Results 45 Construction1 Overview • The Construction segment provides project management, design and Performance Core business EBITDA mix % HY21 22 HY22 32 HY22 construction services, predominantly in the commercial, residential, mixed use, defence and social infrastructure
Slide 75: Construction
Lendlease HY22 Financial Results 46 EBITDA ($m) & EBITDA margin (%) Backlog ($b)1 Construction 12.2 12.6 10.6 11.3 10.9 3.0% 2.6% 104 84 HY21 HY22 FY18 FY19 FY20 FY21 HY22 HY22 backlog by client HY22 backlog by sector Corporate Government Social Infrastructure Defence Commercial 6% Residential 8% Ot
Slide 76: Construction backlog by region
Lendlease HY22 Financial Results 47 Group ($b)2 Australia ($b) Construction backlog by region1 2.4 (3.2) 1.6 (1.5) 11.3 0.4 10.9 0.2 6.6 6.3 Book to bill³: 0.7 Book to bill³: 1.0 FY21 New work Revenue FX & Other HY22 FY21 New work Revenue FX & Other HY22 secured secured Europe ($b) Americas ($b) 0.1
Slide 77: Construction Major new projects secured
Lendlease HY22 Financial Results 48 Contract Completion Construction Project Location type3 date4 Sector Major new Australia Powerhouse Museum Parramatta NSW D&C FY24 Social Infrastructure projects Pathway to 144 Mental Health Beds VIC MC FY24 Social Infrastructure secured1,2 Liverpool Health and Ac
Slide 78: Important notice
Lendlease HY22 Financial Results 49 Important 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 a