Lendlease Group · ASX:LLC
Lendlease — Non-Deal Roadshow (July 2004)
85 slides from Lendlease's roadshow presentation, Jul 14, 2004
Slide 1: UK Investor Roadshow - Stock Exchange Announcement
14 July 2004 The Manager The Manager Companies Section Companies Section Australian Stock Exchange Limited New Zealand Exchange Limited Pages: eighty five (85) pages Dear Sir STOCK EXCHANGE ANNOUNCEMENT LEND LEASE CORPORATION LIMITED UK INVESTOR ROADSHOW — 12 & 13 JULY 2004 With reference to the Inv
Slide 2: Bovis Lend Lease — Europe, Middle East & Africa (EMEA)
Bovis Lend Lease Bovis Lend Lease — Europe, Middle East & Africa (EMEA) 13% July 2004
Slide 3: Bovis Lend Lease UK
Bovis Lend Lease UK
Slide 4: CEMEA Organisation Chart
CEMEA Organisation Chart
Slide 5: Bovis Lend Lease — Geographic spread
d ic sprea h fap i) Al od a 2 = 6 o 0 = a =I 5 a = Ss = ge a a ° a fl = Bovis Lend Lease — Geo
Slide 6: Bovis Lend Lease — UK
Bovis Lend Lease Bovis Lend Lease — UK
Slide 7: Bovis Lend Lease UK - Overview
eo. Bovis Lend Lease UK - Overview _ Bovis Workload volume : £1.4bn Five regional operations 1,600 staff Sector diversity and product range Strong asset client base with long term contracts UK market leader Consistent growth in profitability ) Scotti 2 North Et Z Nota (GG wee (Z Sovth South West lea
Slide 8: Range of services
Range of services * Construction Management * Management Contracting * Two Stage Lump Sum and Guaranteed Maximum Price including design * Project Management 2 Design & Build Lum sum me Construction Management “s Guaranteed Maximum Price * Programme Management * Other consultancy services
Slide 9: Current projects
Bovis Lend Lease Current projects
Slide 10: The Scottish Parliament
The Scottish Parliament Client: Scottish Parliamentary Corporate Body Contract: Construction Management Construction Value: £335m HM Treasury Client: Exchequer Partnership pic (Stanhope & Bovis Lend Lease JV) Contract: PFI. Design & Build Value: West: £112.5m East: £142.5m 8
Slide 11: SLAM Prime Contract
SLAM Prime Contract Client: Defence Estates Contract: Prime Contract Design, Manage & Construct Value: Capex: £525m Opex: £75m South West Regional Prime Client: Defence Estates Contract: Prime Contract Design, Manage & Construct Value: Capex: £175m Opex: £325m 9
Slide 12: Manchester Arndale / Manchester Civil Justice Centre
Manchester Arndale Manchester Civil Justice Centre Client: Client: Prudential Assurance Company Ltd Allied London Properties Contract: Contract: Two stage Design & Build Design and Build Two stage Lump Sum Value: Value: £112m £113m 10
Slide 13: BBC Broadcasting House
BBC Broadcasting House Client: Land Securities for British Broadcasting Corporation Contract: Two stage Design & Build Value: £402m BBC White City Client: Land Securities Trillium Contract: Two stage Design & Build Value: £250m 11
Slide 14: Current project
Current project Chapelfield, Norwich Bridgewater Place, Leeds Client: Client: Lend Lease Properties Ltd Bridgewater Place Ltd Contract: Contract: Construction Management Design and Build Two stage Value: Lump Sum £120m Value: £59m 12
Slide 15: BP Alliance
BP Alliance + Commenced in UK in 1996 + Design, rebuild, new build and maintenance of all BP retail outlets across Europe, US and Mexico. + 50-180 stations delivered each year in Europe + Turnover £0.23bn p.a. Worcester Hospital Client: Catalyst Healthcare (Worcester) Pie Contract: PFI Two Stage Des
Slide 16: Paternoster Square
Paternoster Square Client: Mitsubishi Estate Company/Stanhope Contract: Construction Management with Guaranteed Maximum Price Value: £127m W8 Regent Street Client: Crown Estates/Stanhope Contract: Construction Management with Guaranteed Maximum Price Value: £47m 14
Slide 17: Current projects
‘Current projects Chelsea Bridge Wharf Bankside 1 Client: Client: Berkeley Homes Land Securities Contract: Contract: Construction Management Two Stage Design and Build Lump Sum Value: Value: £154m £106m 15
Slide 18: Future projects
Bovis Lend Lease Future projects
Slide 19: Future projects
Future projects Manchester Hospital Leeds Hospital Client: Client: Department of Health Leeds General Hospital Trust Contract: Contract: PFI Design and Build PFI Design and Build Value: Value: £370m £173m 17
Slide 20: Battersea Power Station
Battersea Power Station Client: Parkview International Contract: Two stage Guaranteed Maximum Price Value: £1bn Grand Arcade, Cambridge Client: Grosvenor Contract: Two Stage Lump Sum Value: £78m 18
Slide 21: Pacific Quay, Glasgow / Royex House
: > VIOIC ¥ Pacific Quay, Glasgow Royex House Client: Client: Land Securities Scottish Widows Contract: Contract: Two Stage Lump Sum Two Stage Design and Build Lump Sum Value: Value: £68m £72m 19
Slide 22: Warrington Golden Square
Warrington Golden Square Client: Legal & General/Lend Lease JV Contract: Two Stage Design and Build Value: £70m P&O Drake Circus, Plymouth Client: P&O Developments Contract: Two Stage Lump Sum Value: £68m 20
Slide 23: Construction: UK market growth forecast 2002-2012
Construction: UK rarkel growth _ forecast 2002-201 2 Sustained growth expected Lend Lease position in addressable market CAGR % Outlook Rank Share 129.3 Increase in UK Government . . Lead 5% = 4 housing budget from £4.8bn saan ° 100 7 40.8 | 4.0% (02/03) to £5.9bn (03/06) Health spending increased b
Slide 24: Bovis Lend Lease is exploiting market dynamics
Bovis Lend Lease is exploiting market dynamics _ 1600 —[ ere 3 Multiplex 120 z 80 — _— —$—— _—.----— _—. _& Bovistend Lease Average © [ag a project Jo a size (£m) 40 — -— — —— R McAlpine 14 Laing O'Rourk on ST 11 Laing O'Rourke © 64 2 — HBG a ae 95 ri 6 2000 2002 2003 Source: Glennigans Project Data
Slide 25: Strong consistent growth
‘Strong consistent growth Gross Profit Margin (GPM) risen from £27.4m in 1996 to £59.6m in 2003 Strong overhead control has led to increase in profitability ratio of currently 49% Average margins across all sectors currently 4% Sector diversity, product expansion and focus on key client account mana
Slide 26: Bovis Lend Lease GPM shows sector diversity
Bovis Lend Lease GPM shows sector diversity Focus on a balanced sector portfolio 2003/04 commercial - Private Commercial - public Health Bi Defence DBRetail BAlliance @ Urban @ Other 2007/2008 12% err 3% 7% 12% 26% 24
Slide 27: Bovis Lend Lease UK GPM by client
eo. Bovis Lend Lease UK GPM by client avis Focus on long term client relationships 2003/04 2007/2008 41% 5% 5% 4% Wl Asset clients MM NHS [_|MOD [_]BP | Other 25
Slide 28: Asset Clients
Asset Clients Asset clients represent more than 50% of the GPM in 2003/04 BLL UK: GPM % by client type 2003/04 2007/2008 22.81% Asset Clients Stanhope Land Securities British Land John Lewis Development Securities Integrated Asset MOD (Debut) Department of Health (Catalyst) INTEGRATED ASSET MOD (Deb
Slide 29: Asset clients
_ Asset clients Blue chip clients providing long term revenue ¢ BBC ¢ Department of Health ¢ BP ¢ Development Securities ¢ Berkeley Homes PLC ¢ British Land ¢ John Lewis Partnership ¢ Chelsfield ¢ Land Securities Trillium ¢ Grosvenor ¢ Network Rail ¢ Defence Estates ¢ Peel ¢ Department for « Prudent
Slide 30: New Work Secured
New Work Secured 2000/01 2001/02 2002/03 28
Slide 31: Market leader
market leader eae projects water (5) Bovis Lend Lea: (15) Imterserve 18600 are f+) Alfred icalpine 10.00 ! nan (3) Kier . ai
Slide 32: Market opportunity
Market opportunity Good opportunities in large identified market Very large market 1:2 hit rate Negotiated and limited competition Controlled overhead negotiated Di limited competition Bl other Pipeline value £3.3bn 30
Slide 33: Contribution to Lend Lease
Contribution to Lend Lease * Positive cash flow * Significant profit after tax contribution * High return on capital business with negative working capital * Provides a low capital and risk platform for entry into new markets/geographies * Provides a large network for accessing new partners, clients
Slide 34: Secured long term income streams
Secured long term income streams SLAM SW Prime BP Alliance BBC Broadcasting House Peter Jones Scottish Parliament Chelsea Bridge Wharf HM Treasury Network Rail Victoria & Albert Museum Strategic Rail Authority LandSecuritiesTrillium 7 years 7 years 5 years 5 years 5 years 5 years 3 years 4 years 10
Slide 35: Future long term projects
Future long term projects Central Prime Battersea Manchester Hospital Leicester Hospital Stanhope programme Peel programme 7 years 5 years 5 years 7 years 5 years 4 years 33
Slide 36: Risk management
Risk management Robust risk procedures Processes for two stage lump sum projects, from submission to close out _ . Project Go/No Go _ Bid Process Construction + Go/No Go * Tender Period Checklist + Limits of Authority * Limits of Authority + Limits of Authority + Limits of Authority + Key Document F
Slide 37: Incident & Injury Free (IIF)
Incident & Injury Free (IIF) Lend Lease will operate Incident & Injury Free and we are committed to realising this wherever we have a presence
Slide 38: IIF implementation to date
oye. IIF implementation to date | = Bovis IF is becoming a differentiator and supports Corporate Social Governance * Launch in Europe Oct 2002 * Safety Leadership Teams * Vision and Plans * IF for Designers * Report of Findings ¢ IF for Clients * Leadership Commitment * |IF Communications Workshops
Slide 39: Awards
CIOB Construction Manager of the Year - 1 Gold, 1 Silver Contract Journal Awards — Global Alliance Long Term Partnering. Building Health & Safety Awards - 5 awards British Council for Offices Awards - Treasury ICSC Solal Marketing awards — Bluewater Construction News Highly Commended for safety Euro
Slide 40: Benefits of Merged Entity
Benefits of Merged Entity * Increases resources to exploit investment opportunities in growing markets with attractive returns - Retail - Urban - Continental Europe * Underpins Bovis Lend Lease’s competitive advantage in bidding and winning major contracts - PFI - Key clients 38
Slide 41: Grow number of Asset Clients
Grow number of Asset Clients Continue to be an ‘employer of choice’ Create new opportunities and synergies through sector collaboration i.e. Retail and Greenwich Create new sector through ‘Pathfinder Education Bundling opportunity Retain No1 status in terms of new business for financial year 2004 Ma
Slide 42: In summary
In summary. rat Lend Lease UK has z a ips Bovis e strong competitive position Land Lease * Healthy growing market * Excellent organic growth opportunities * Powerful brand, strong covenant * Sector diversity * Private/Public sector balance ¢ Strong core asset client base ¢ Top three position in Offi
Slide 43: Bovis Lend Lease — Continental Europe, Middle East & Africa (CEMEA)
Bovis Lend Lease Bovis Lend Lease — Continental Europe, Middle East & Africa (CEMEA)
Slide 44: CEMEA Organisation Chart
CEMEA Organisation Chart =——>_ Bawls 42
Slide 45: Bovis Lend Lease — Geographic spread
Bovis Lend Lease — Geographic spread UKG ween eel || Main operations Lrnited activities [J BP Alliance only i) No presence 43
Slide 46: Bovis Lend Lease CEMEA: Lower risk business
Bovis Lend Lease CEMEA: Lower pp. le Bovis | fiskbusiness—mediumreturns ==‘ Project Management Construction Management Consultancy PFI + selected Guaranteed Maximum Price (GMP) 44
Slide 47: CEMEA GPM by product
CEMEA 2004 & 2005 GPM by Low risk business with diversified product portfolio 2004/05 GPM by Product Type 2003/04 GPM by Product Type 9% 5% G Project Management 15% 1% m@ Construction Management 27% Fr = | som 0 Consultancy 22% ] _ / / 62% O PFV/Selected GPM 45
Slide 48: CEMEA GPM by sector
CEMEA 2004 SecuredGPM Bovis by Sector Good sector diversity 2003/04 GPM by Sector 3% 5% @ Commercial/Office @ industrial OD Retail O Transport @ Sports & Leisure & Public Building @ Others 51% 46
Slide 49: Key European clients
Key European clients Platform to support pan European clients hold ack & Decker MW D PB Cargill Cisco DHL EADS Generali WwwowDw > * GlaxoSmithKline * GSK * Hilton * Holiday Inn Express * HSBC ¢ |nterContinental Hotels Nokia Pfizer Philip Morris Roche Sanitas ¢ Shell * Lucent Technologies ° ¢ Merck «
Slide 50: Key Current Projects
Key Current Projects EI Prat Airport, Barcelona- Spain Project Value: €1,440m Telefonica Business Park, Madrid — Spain Project Value: €300m Project Management Development Services / PM H&S Coordination 48
Slide 51: Current Projects
Current Projects 2 D Barcelona Las Areans Leisure & Retail Center - Spain Holiday Express Roll Out Programme “20 Hotels”- Spain Project Value: €100m Project Value: €96m Construction Management Construction Management 49
Slide 52: Key Current Projects
Key Current Projects Europa Project - Terminal North 2, Prague —- Czech Republic Brno University- Czech Republic Project Value: €300m Project Value: €140m Project Management Project Management 50
Slide 53: Key Current Projects
Key Current Projects Be ZZ. atin eas Olympia Shopping Centre Pilsen, Czech Republic Hala Sazka Prague, Czech Republic Project Value: €43m Project Value: €200m Construction Management Project Management 51
Slide 54: Key Current Projects
Key Current Projects Brescia Phase | Hospital, PFI - Italy Roma Exhibition Centre, Italy Project Value: €35m Project Value: €250m PFi/ D&B Project Management §2
Slide 55: Key Current Projects
Key Current Pr s if di AOI ABD NED Blue City Retail Center, Warsaw Philip Morris Factory Extension, St.Petersburg Project Value: €70m Project Value: €130m Construction Management Construction Management 53
Slide 56: Key Current Projects
Key Current Projects Terminal 3, Sheremetyevo Airport Moscow, Russia Project Value: €250m Project Management Moscow Capital Group Towers, Russia Project Value: €250m Project & Construction Management 54
Slide 57: Philip Morris Ukraine / Sakura International Apartments
Philip Morris Ukraine Greenfield Project Kharkiv, Ukraine Sakura International Apartments - Baku — Azerbaijan Project Value: €67m Project Value: €50m Construction Management Project Management 55
Slide 58: Key Current Projects
Key Current Projects Oil Sector Complex, Kuwait. Shell HQ, The Hague, The Netherlands Project Value: €115m Project Value: €300m Construction Management Construction Management 56
Slide 59: Key Current Projects
Key Current Projects shopping Center Antas, Hotel & Studio Residence, Oporto - Portugal Roche HQs, Lisbon — Portugal Project Value: €65m Project Value: €10m Construction Management / H&S Coordination Construction Management §7
Slide 60: CEMEA Key Prospects
CEMEA Key Prospects | ProjectValue _ Project €'million | Location Dubai Nakheel Tower € 900} Middle East Abu Dhabi 50-Tower Project € 800}Middle East Re-development of Fiera District, Milan € 800}italy Abu Dhabi Al-Mushrif Palace € 500] Middle East NATO Head Quarter € 400|Belgium DIFC Tower € 300|Mi
Slide 61: CEMEA Key Prospects
CEMEA Key Prospects : | Project Value © Project ne ___ __ €' million _ Location Brescia Il Lot A € 100] Italy Lisbon Carrefour Shopping Centre € 100] Portugal Benidorm Shopping Centre Development € 85|Spain Rodamco Chodov AM Development € 85|Czech Rep St. Petersburg RBI Retail Centre € 80]Russia Gar
Slide 62: Citylife Consortium project
Client: Citylife Consortium Contract: Project Management Value: €800m 15,000 new inhabitants in a central lot of 260,000sqm of parks, high rise buildings, entertainment centres, a design museum & 200,000sqm of residential buildings. 80
Slide 63: Key Healthcare Prospects
Key Healthcare Prospects a oe | Project Value 7 Location | Hospital Project | € ‘000 Status Proposal submitted. Italy Brescia Ii € 159] Preferred bidder by Dec 04 Niguarda Milan € 400 RFP out in six months Spain Majadahonda Madrid € 250 RFP out in Aug 04 San Sebastian de los Reyes Madrid € 250 RFP o
Slide 64: PFI in Europe
PFljin Europe | ¢ Lower bid costs than UK ¢ Closer liaison with local construction firms — Share of delivery risk through JV with local general contractors « Lower Lend Lease equity requirements * Clear exit strategy * Limited facilities management risk * Very short conversion period — 6 to10 months
Slide 65: Key Business Objectives 2004/05
——. Key Business Objectives 2004/05 Bavis ¢ Complete CEMEA re-organisation ¢ Consolidation of Central & Eastern Europe into one single business unit to deliver synergies and efficiencies ¢ Foster consolidation of Middle East business. Convert current key focus projects « Penetrate key areas in expan
Slide 66: Key Business Objectives 2004/05
——. Key Business Objectives 2004/05 Bovis * Secure Brescia II PFI Hospital. Investment €200m * Bid/Convert Madrid Majadahonda PFI Hospital. Investment € 250m * Secure Generali Piacenza Logistic Park Guaranteed Maximum Price form of contract (€120m) * Consolidate position with key pan-European client
Slide 67: Growth in Bovis Lend Lease EMEA 2000 - 2003
Growth in Bove llend Lease _EMEA 2000 - 2003 2000* 2001 2002 2003 f@ GPM 155 193.7 187.6 209.4 @ PBT 37.7 57.4 66.8 83.3 * Results for 2000 only include 8 months of operating financials since acquisition by Lend Lease. This has been extrapolated for 12 months for illustrative purposes. Source: publi
Slide 68: Lend Lease EMEA Private Finance Initiative (PFI)
Lend Lease Lend Lease Europe, Middle East & Africa (EMEA) Private Finance Initiative (PFI) 13 July 2004
Slide 69: Content
Lend Lease Content f = Size of PFI market in the UK = Health and Education PFI Market = Competition = PFI contract structure = Returns and risks = A model for sustainable growth
Slide 70: UK PFI Market
—— UK PFI Market Lend Lease = 563 signed projects with a total capital value of £35.5 billion. = Average capital value of signed projects is £63 Water & Was Ofer eee oe million. Education = 26% of projects have a capital value < £5 million. Govt. = Project coverage by sector: £bn Accommodation — Cou
Slide 71: Growth of PFI
— Growth of PFI Lend Lease Value 40- The UK Market Cumulative Total of Deals (Ebn) 304 204 10+ 0 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source: HMT — data up to July 2003 PricewaterhouseCoopers Infrastructure, Government & Utilities
Slide 72: Lend Lease PFI
Lend Lease Lend Lease PFI Focus to date has been Healthcare . _ Secured projects* Market Size Calderdale £80m Operational > £2bn r Worcester £83m Operational £2b yea Hexham £30m Operational Burnley £25m In construction Brescia £15m In construction Havering £185m In construction Target Roehampton £55
Slide 73: Potential Health Sector Projects 2004 - 2008
Potential Health Sector | — Projects 2004 - 2008 | econ rey Glasgow ; _ 4 Hexham, Northumberland Merseyside / Cheshire Bradford Reconfiguration |_, uddersfigide --- -— Leeds Phase 2, 3 Liverpool | Se @Glossop ® Salford ® Sheffield / Trent © Mansfield © Oswest ®@ Nottingham Walsall Leicester ‘Wolverh
Slide 74: Partnership for Schools
a Lend Lease Partnership for Schools | Public Private Partnerships with Local Authorities to replace or refurbish all Secondary schools in England by 2014 (24,000 Secondary Schools) = Government commitment for £2.2bn capital expenditure each year for next 10 years = 10 projects to market each year (
Slide 75: Competition in PFI Healthcare
— Lend Lease Competition in PFI Healthcare « Deal size, long bid timescales and high bid costs resulting in consolidation into “1st and 2nd Divisions” Amec, McAlpine, 21% Bouygues, Mowlem Skanska - £1.5bn (5 projects) 25% Carillion -£0.4bn 7” | (5 projects) 11% 19% Equion - £0.7bn Balfour Beatty - (
Slide 76: Generic PFI Structure
— Lend Lease Generic PFI Structure Design & Build aoe Lifecycle Soft Facilities BLL Ltd BL td BLL Ltd Management
Slide 77: Integrated Health Business
a Lend Lease Integrated Health Business ___ Bidding Design & Build Facilities Conces onl : j (D&B) Management (FM) 7 Mas Roger Thompson Jason Millett Peter Eatough w = Integrated business (bidding, equity, D&B, and FM) with single Profit & Loss = Consolidation of all PFl investments under Asset Mana
Slide 78: Generic Payment Mechanism
_Lend Lease Generic Payment Mechanism Unitary Payment__ A% (per annum) 1 4 7 10 1316 19 22 2 28 34 34 Concession Period (years) MLL Hard Services Soft Services WLL Life Cycle @ Project Company (SPV) OC Equity sub debt i Senior debt Mi Mezzanine debt 10
Slide 79: Equity/Sub Debt returns and risks
— Equity/Sub Debt Lend Lease RETURNS = Equity/Sub debt base case return >12% p.a. post tax = Higher target project equity returns being demanded = Strong demand from secondary investors = Sales to secondary market 1.5 to 2x original investment cost RISKS = Non recourse — limited to committed equity
Slide 80: Construction returns and risks
Lend Lease Construction RETURNS = 8-10% profit and overhead = Enhanced by client changes RISKS = Fixed price Design & Build = Supply chain market capacity = Retained estate = Performance guaranteed by Bovis Lend Lease, and Lend Lease (large schemes) and limited to 60% of capex price 12
Slide 81: Facilities Management / Lifecycle
Slide 82: Facilities Management deduction analysis
Slide 83: Creating sustainable growth
Slide 84: Merger Benefits
Slide 85: Summary