Lendlease Group · ASX:LLC
Lendlease — H1 FY2002 Earnings Presentation
32 slides from Lendlease's earnings presentation, February 2002
Slide 1: Half Year Results December 2001
Half Year Results December 2001 1 • Let’s begin with our results for the half year which we have announced to the ASX this morning. I am pleased with the overall performance for this first half which puts us in a good position to achieve our previous forecast for the full year to June 2002. 1
Slide 2: December 2001 Half Year Results: Profit After Tax $126.4M
December 2001 Half Year Results Profit After Tax $126.4M Up 16% on Dec 2000 Dividend Up 1¢ to 9¢ on June 2001 Fully franked 2 • For the half year to December 2001 we have delivered a profit after tax of $126.4 million, up 16% on the same period last year. • Our 2002 interim dividend is 9 cents per s
Slide 3: Earnings Per Share Growth
Earnings Per Share Growth Cents per share Earnings per share (eps) Dec 2000 Dec 2001 Core Real Estate businesses 20.3 30.3 Westpac 9.1 6.6 Group Treasury/Financing 6.3 (0.3) Amortisation (8.5) (9.4) Non-core investments (4.1) 2.2 Total eps 23.1 29.4 Pre-amortisation eps 31.6 38.8 3 • This slide show
Slide 4: Real Estate Solutions - Highlights
Real Estate Solutions - Highlights • Bovis Lend Lease increased profit and Backlog • Acquisition/integration of Delfin • Commenced globalisation of land management model - Greenwich Peninsula • Good progress on leasing and pre-sales, reducing development risk 4 • It’s been a busy 6 months for Real E
Slide 5: Real Estate Solutions - Business Environment
Real Estate Solutions - Business Environment • Tough global conditions • U.K. construction market resilient • Increased Government spending (U.K., U.S.) • U.K. retail sales recover • Strong Australian residential sector 5 • The geographic and sector diversification benefits I mentioned earlier are c
Slide 6: Real Estate Solutions Profit After Tax
Real Estate Solutions Profit After Tax Total 83.3 90 80 70 34.5 Total 44.5 60 50 3.3 A$M 40 30 48.8 20 41.2 10 0 Dec 2000 Dec 2001 Bovis Lend Lease Property Development 6 • Real Estate Solutions was a strong contributor to the Group’s half year result, with the December 2001 profit of $83 million up
Slide 7: Bovis Lend Lease
Bovis Lend Lease Profit after tax Up 18% to $48.8M Backlog gross profit margin Up 17% since June 2001 to $606M PFI facilities management 6% of Backlog and expected to grow Focus on key clients – delivers record U.K. sales 7 • Bovis Lend Lease have continued to perform well for us and has delivered a
Slide 8: Bovis Lend Lease Diversity of Earnings
Bovis Lend Lease Diversity of Earnings Microele ctronics/ Oth er Technolo gy 10% 3% Commercial/Offic e Transporta tio n 23% 4% In dustrial 4% In frastructu re/ Government 6% Retail 12% Education 6% Healthcare 7% Pharmaceutical Resid ential Mixed-Use 7% 12% 6% 8 • While the volatility associated with
Slide 9: Property Development Profit After Tax
Property Development Profit After Tax A$M Dec 2001 Dec 2000 Australia 26.0 5.8 Solihull 19.8 - Bluewater - 50.0 Aurora Place - 19.6 Fox Studios Australia - (65.0) Other (1) (11.3) (7.1) 34.5 3.3 (1) Mainly Europe and Asia overheads 9 • The Property Development result reflects the changed development
Slide 10: Property Development Land Management Model
Property Development Land Management Model Australian Urban Major Projects Communities * Jacksons Landing * North Lakes * Newington * St Marys * Victoria Harbour, * Caroline Springs Docklands * Edgewater Property Development Land Management Model U.K. Urban Military Housing - U.S. Regeneration * For
Slide 11: Property Development Third Party Capital Model
Property Development Third Party Capital Model Property Development Third Party Capital Model Forward Sale or Pre-sold Development Services Developments U.K. Australia Bovis Lend Managed - Solihull - Hickson Road Lease clients Funds - Norwich 11 • The other part of our Development business relates t
Slide 12: Real Estate Investment Management - Highlights
Real Estate Investment Management - Highlights • GLL Real Estate Partners completes transactions • Growth in Australia - GPT and APPF acquisitions • Increased U.S. Commercial Credit business volumes • Tough conditions for U.S. equity business 12 • Turning to Real Estate Investment Management. • We h
Slide 13: Real Estate Investment Management - Business Environment
Real Estate Investment Management - Business Environment • Main impact of recession felt in U.S. • Different to recession in early 90s 13 • The most significant impact of the difficult economic climate has been on our U.S. Real Estate Investment Management business, particularly the equity business.
Slide 14: Real Estate Investment Management - Business Environment
Real Estate Investment Management - Business Environment • U.S. real estate market remains an attractive and important investment market • The timing of any recovery in the U.S. economy is uncertain • Expected return to historic levels of transactions in 2003 14 • The U.S. real estate market remains
Slide 15: Real Estate Investment Management Profit After Tax
Real Estate Investment Management Profit After Tax 100 Total 86.7 Total 77.9 90 80 21.7 70 15.3 60 8.4 2.1 14.1 50 A$M 40 30 56.5 48.8 20 10 0 -2.3 -10 Dec 2000 Dec 2001 North America Australia/Pacific Asia Europe 15 • The global Real Estate Investment Management half year result was up 11% on the s
Slide 16: Real Estate Investment Management Assets Under Management
Real Estate Investment Management Assets Under Management Dec 2001 June 2001 North America US$B 35.0 36.0 Australia/Pacific A$B 12.3 11.0 Asia US$B 1.0 0.8 Europe £B 2.0 1.8 Total A$B 87.0 86.6 16 • Worldwide Assets Under Management were A$87 billion, slightly up from the June figure of A$86.6 billi
Slide 17: U.S. Real Estate Investment Management - Equity
U.S. Real Estate Investment Management - Equity • Assets under management down – Market iner tia - acquisition volumes down – Not client capital constrained - lack of appropriate acquisitions • Market recovery expected from 2003 • Early signs of some increased allocations to real estate 17 • U.S. in
Slide 18: Real Estate Investment Management - U.S. Housing & Community Investing
Real Estate Investment Management - U.S. Housing & Community Investing (HCI) • Business on track for increased transactions and revenue this year • Expect 2002 revenue to be broadly 50/50 first half/second half 18 • HCI is on track for increased transactions and revenue for the full year 2002. • As
Slide 19: Real Estate Investment Management - U.S. Commercial Credit
Real Estate Investment Management - U.S. Commercial Credit • Revenues up by 20% for the period CapMark Services • Loans Under Servicing up by 40% • Revenues impacted by lower earnings on the float as a result of lower interest rates Holliday Fenoglio Fowler • Revenues impacted by September 11 • Lowe
Slide 20: Real Estate Investment Management - Australia/Pacific
Real Estate Investment Management - Australia/Pacific • Assets under management up 12% • Strong market to raise capital for domestic and offshore investment 20 • We had an excellent performance by the Australian business over the last six months. There were a couple of items that contributed to the
Slide 21: Real Estate Investment Management - Asia
Real Estate Investment Management - Asia • Closed International Distressed Debt Fund • Global Fund acquisitions • Japanese real estate investment management business opportunity 21 • In Asia we closed the International Distressed Debt Fund, which raised US$350 million and has invested US$173 million
Slide 22: Real Estate Investment Management - Europe
Real Estate Investment Management - Europe • Strong Lend Lease Retail Partnership performance • Global Fund has realised profits for investors • GLL Real Estate Partners - initial transactions 22 • In the U.K. we have continued to provide above benchmark returns for investors in the Lend Lease Retai
Slide 23: Financials
Financials 23 • So, all in all, good progress with building both our global businesses. • Given the quite turbulent economic conditions, I am very pleased that we have been able to maintain our course for earnings growth. 23
Slide 24: Profit After Tax Composition
Profit After Tax Composition A$M Dec 2001 June 2002 Half Year Full Year Actual Expected Operating Profit 138 262+ Westpac Hedge Profit 28 28 Less: Amortisation (40) (80) (12) (52) Reported Profit 126 210+ 24 • Our policy has been to realise the accounting profit from Westpac broadly in line with our
Slide 25: Amortisation
Amortisation Earnings per share (eps) 6 months 12 months 6 months Dec 2001 June 2001 Dec 2000 ¢ ¢ ¢ Pre-amortisation profits 38.8 52.0 31.6 Amortisation expense (9.4) (18.3) (8.5) Reported profits 29.4 33.7 23.1 Annualised impact of (19.0) amortisation (approx.) 25 • We concur with the U.S. Standard
Slide 26: Capital Management
Capital Management • Lend Lease is in a strong financial position: – Group Cash A$733 million – Group Debt A$981 million • Interest expense ratio 6.9X • No share buy-back proposed 26 • Lend Lease remains in a strong financial position. We have cash of $733 million and debt of $981 million. • Our int
Slide 27: Business Repositioning
Business Repositioning • Positioning for growth • Operating efficiencies • No restructure provision 27 • As you are aware, the Group is currently undertaking a Business Repositioning initiative. • McKinsey are assisting in this process, which is expected to be implemented by June this year. • The pr
Slide 28: Outlook - Next 6-12 Months
Outlook - Next 6-12 Months Real Estate Solutions • Targeting further PFIs in U.K. and U.S. • Key client program • Conversion of Greenwich Peninsula • Pre-sale of Norwich, Opening of TresAguas • Growth in Urban Communities 28 • Thank you, Robert. • So, what does the next 6-12 months hold? • In Real E
Slide 29: Outlook - Next 6-12 Months
Outlook - Next 6-12 Months Real Estate Investment Management • Strategy unchanged • Achieve greater leverage from global platform • Global C EO to relocate to U.S. 29 • For Real Estate Investment Management, our overall strategy has not changed. • In the medium to longer term, the retirement of the
Slide 30: Outlook - Next 6-12 Months
Outlook - Next 6-12 Months Real Estate Investment Management • Strategy unchanged • Achieve greater leverage from global platform • Global C EO to relocate to U.S. • Tokyu joint venture • Continued growth in Europe and Australia 30 • Based together in Atlanta, David and Fred will now be able to coll
Slide 31: Summary
Summary • Strong financial position • Positioned for growth • On track to deliver profit in excess of $210 million in 2002 • Growth to continue in 2003 31 • To summarise, we are in a strong financial position. • And we are on track to deliver the 2002 profit in excess of $210 million after tax. • Co
Slide 32: Half Year Results December 2001
Half Year Results December 2001 32 32