Lendlease Group · ASX:LLC
Lendlease — Investor Day (May 2011)
90 slides from Lendlease's investor day presentation, May 25, 2011
Slide 1: Lend Lease Investor Day presentations
ASX Announcement Lend Lease Investor Day presentations For personal use only 25 May 2011 Attached are the presentations to be given today by Lend Lease senior executives at its Investor Day. For further information, please contact: Investor Relations: Corporate Affairs: Sally Cameron Iwona Polski Gr
Slide 2: Lend Lease Investor Day
Lend Lease Investor Day 25 May 2011 For personal use only
Slide 3: Important notice
Important notice For personal use only 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 information contained in the presentation (any of which
Slide 4: Agenda
Agenda For personal use only 9.00 Strategy and business overview 9.45 Financial overview 10.15 Morning tea 10.45 Infrastructure update 12.00 Americas update 12.30 Australia update 1.15 Lunch 2.15 Major projects update 3.00 Closing comments
Slide 5: Strategy and Business Overview
For personal use only Steve McCann Group Chief Executive Officer & Managing Director Strategy and Business Overview
Slide 6: Agenda
Agenda For personal use only 1. Update on safety 2. External business environment 3. Key priorities for the Group 4. Pipeline of opportunities 5. Strategy update 6. Continued focus on key trends 7. Progress on strategy to date 8. Key strategic deliverables 2011 9. Operational update Asia 10. Operati
Slide 7: Good progress on safety
Good progress on safety For personal use only Total Lost Time Injuries per Region 1 800 600 400 200 0 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 As at AUSTRALIA ASIA AMERICAS EMEA May Total Fatalities per Region 1 10 9 8 7 6 5 4 3 2 1 0 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 As at AUSTRALIA
Slide 8: External environment favourable
External environment favourable For personal use only Region Outlook Opportunity/ Impact for Lend Lease Favourable economic conditions present attractive opportunities across most sectors, particularly infrastructure Short term impact from weak consumer sentiment Australia Concerns of two spee
Slide 9: Key priorities for the Group
Key priorities for the Group For personal use only Integrate Valemus infrastructure business and deliver on earnings accretion Integration of business on track Strong infrastructure backlog driven by Abigroup Progress major projects • Focus on portfolio management • Position offshore busines
Slide 10: Significant pipeline of opportunities
Significant pipeline of opportunities For personal use only Dec 2010 Funds under management (A$b) 10.7 End development value of urban regeneration projects (A$b) 25.0 Construction backlog revenue (A$b) (including Valemus) 11.9 Retail assets under management (A$b) 9.4 Backlog of residential units 89,
Slide 11: Strategy update
For personal use only Strategy update
Slide 12: Our strategic direction
Our strategic direction Our Strategic To be the Leading International Property and For personal use only Direction: Infrastructure Group Leading International Sectors Segments Property and Development Be in the top 3 Infrastructure are our Construction Focus on 4 core industry leaders within cor
Slide 13: Our segment position
Our segment position For personal use only Investment Development Construction Services Ownership Management Strong capabilities in project A leading Focused A leading investment predominately on management, Property, asset development management co-investments design and and facilities ma
Slide 14: Continued focus on key trends
For personal use only Continued focus on key trends Leading urban renewal projects in Australia, UK and Singapore Urban Regeneration Focus on delivery and execution No. 1 senior living platform in Australia Ageing Population 70 retirement villages and 32 aged care facilities Australia - si
Slide 15: Our strategic pathway
Our strategic pathway LEAD Outperformance For personal use only BUILD Disciplined Expansion World class property and RESTORE Right Structure Reshape portfolio infrastructure solutions RESTORE A Focused Core Business company Growth platforms Right structure Strong integrated offering
Slide 16: Key strategic deliverables
Key strategic deliverables – 12 to 24 months For personal use only BUILD Major Development Successful delivery and execution of secured Projects projects Successful integration of the business Infrastructure Establish appropriate risk framework Reshape portfolio Extract synergies Growth
Slide 17: Operational update
For personal use only Operational update
Slide 18: Earnings split
Earnings split Sector Earnings Split 1 For personal use only June 2010 Proforma2 June 2010 Actual Investment Project Management Management Investment 22% & Construction Management Project 20% 28% Management & Construction 37% Infrastructure Development 11% Infrastructure Development Development 14%
Slide 19: Asia business update
Asia business update For personal use only Dec Dec Key Metrics 2010 2009 Additional mixed use development Operating Profit after tax (A$m) 15.8 21.5 sites coming to market in Singapore Construction new work 412.0 156.8 Global client strategy in pharma and secured (A$m) Opportunities life science
Slide 20: Europe business overview
Europe business overview Dec Dec Key Metrics 2010 2009 For personal use only Profit after tax (million) 94.6 64.0 Focus on large projects (Greenwich Construction new work secured (m) 764.5 540.0 Peninsula, Elephant & Castle, Stratford Dec June International Quarter) 2010 2010 Construction backlog
Slide 21: Financial Overview
For personal use only Brad Soller Group Chief Financial Officer Financial Overview
Slide 22: Agenda
Agenda For personal use only 1. Capital allocation 2. Future capital allocation 3. Sources of capital 4. Key debt metrics 5. Debt maturity profile 6. Pipeline 7. Key financial targets
Slide 23: Capital allocation
Capital allocation TARGET Risk Adjusted Capital 1 For personal use only Europe Australia 19% Region >~60% All other regions Amercias No more than ~20% each 14% Asia Australia 5% 62% Services Development 5% ~35 – 45% Construction Development 38% ~30 – 40% Ownership Segment Investment Management 23% ~
Slide 24: Future capital allocation
Future capital allocation Investment pipeline of between A$1-1.5b over next 3 years1 For personal use only Region Sector Australia Major development projects Lend Lease communities Co-investment in funds PPP equity positions Americas Lend Lease DASCO healthcare pipeline Asia Retail devel
Slide 25: Sources of capital
Sources of capital For personal use only Source of Capital Expected position Retained earnings Current dividend payout ratio of between 40% to 60% of net operating profit after tax DRP to remain active Portfolio Management Have sold circa A$2.3b of assets since 2006 Number of mature assets t
Slide 26: Key debt metrics
Key debt metrics For personal use only Dec 2010 June 2010 Credit Rating - S&P/Moody’s BBB- / Baa3 BBB- / Baa3 (Stable) (Stable) Net (cash) / debt1 (A$m) 29.5 (19.7) Gearing excluding Valemus 2 0.4% Net cash position Pro forma gearing including Valemus 6.7% Undrawn facilities (A$m) 571.5 688.6 Weight
Slide 27: Debt maturity profile
Debt maturity profile For personal use only Debt Facilities Maturity Profile A$m - Post Proposed A$ Club Refinance 800 700 600 Bluewater 500 400 300 USPP A$ Club UK RCF New A$ UK Bond 200 New A$ 100 A$ Term USPP 0 USPP FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY22 26
Slide 28: Pipeline delivers certainty of future earnings
Pipeline delivers certainty of future earnings For personal use only FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 Barangaroo South RNA Elephant & Castle Stratford International Quarter Australian residential Lend Lease DASCO Jurong 27
Slide 29: Key financial targets – tracking well
Key financial targets – tracking well For personal use only Metric Target 31 Dec 2010 Return on Equity Greater than 15% per annum 13.4%1 Committed to investment grade BBB- / Baa3 Credit Rating credit rating (Stable) Gearing2 <20% 6.7%3 Interest Coverage Ratio >5x 6.5x Annuity Income 20% of
Slide 30: Infrastructure Update
For personal use only Scott Charlton - Group Director of Operations Peter Brecht - Managing Director, Infrastructure Infrastructure Update
Slide 31: Agenda
Agenda For personal use only 1. Strategic rationale 2. Market dynamics 3. Integration review 4. Synergies 5. Capabilities and markets 6. Safety 7. Trading update 8. Major projects 9. Risk approach 10. Backlog/revenue split
Slide 32: Acquisition in line with strategy
Acquisition in line with strategy For personal use only Strategic In line with strategy to capitalise on key growth trend of infrastructure rationale Ability to self perform internal Lend Lease infrastructure work Large platform in the growing engineering and construction sector with significa
Slide 33: Market dynamics
Market dynamics Market Outlook Key Insights For personal use only Market outlook for engineering / civil construction more robust than identified in the due diligence process Strong growth predictions over medium to long term: Asia’s resource demand likely to influence resource sector growth i
Slide 34: Integration review
Integration review For personal use only Infrastructure business reporting into the Group Infrastructure Limits of Authority arrangements and matrix implemented reporting Probity arrangement and procedures established No new material project issues identified Underway to identify best oper
Slide 35: Synergies
Synergies Quick win cost synergies have been identified to date in corporate spend For personal use only areas Potential revenue synergies identified Marine and utilities infrastructure on Barangaroo South Infrastructure delivery on communities/residential projects Infrastructure services
Slide 36: Capabilities and markets
Capabilities and markets For personal use only Capabilities Civil infrastructure Building Specialist engineering and asset management services Market sectors Roads, bridges, tunnels, water, rail, marine Oil & gas, power, telecommunications, mining Social and correctional facilities, comm
Slide 37: Safety
Safety For personal use only Leveraging best practice between Lend Lease and infrastructure businesses Continued year on year reduction in Lost Time Injury Frequencies Safety goal of zero harm – this aligns with Lend Lease goal of Incident & Injury Free All companies are focusing on lead ind
Slide 38: Trading update
Trading update For personal use only Good start to the calendar year with A$756m of new work Non residential building slow but opportunities in health and defence Shortlisted on A$1b Victorian Comprehensive Cancer Centre Shortlisted on a number of defence contracts Engineering/infrastructu
Slide 39: New secured and pending projects – 2011
New secured and pending projects – 2011 Project Total *Project Type of Contract Location For personal use only Value A$m Adelaide Convention Centre 350 Managing contractor SA Holbrook Bypass 168 Schedule of rates NSW City Central Tower 8 164 Design and construct SA Reid Alexander Interchange 48 Desi
Slide 40: Risk approach
Risk approach For personal use only Solid risk management discipline Comprehensive limits of authority and probity arrangements have been put in place Largest fixed price contract size circa A$1b No new material project issues identified Alignment and best practice sharing of risk manageme
Slide 41: Backlog/ revenue split – December 2010
Backlog/ revenue split – 31 December 2010 Backlog by market Revenue by market For personal use only Services Services 12% 17% Engineering Building construction 23% 48% Engineering construction Building 65% 35% Backlog by contract type Revenue by contract type Services 12% Services 17% Fixed price Fi
Slide 42: Core Competencies and Growth Markets
For personal use only David Jurd – Managing Director, Abigroup Ian Luck – Managing Director, Baulderstone David Marchant – Managing Director, Conneq Core Competencies and Growth Markets
Slide 43: Agenda
Agenda For personal use only 1. Abigroup core competency 2. Peninsula Link update 3. Abigroup growth markets 4. Baulderstone core competency – Building/ defence 5. Baulderstone growth markets 6. Conneq core competencies
Slide 44: Abigroup core competency - roads
Abigroup core competency - roads For personal use only Market position One of the leading players in road sector Large earthmoving fleet and self performing culture key competitive advantages in tendering for road projects Current Major Projects A$1.95b Ipswich Motorway Upgrade Alliance (Qld)
Slide 45: Peninsula Link update
Peninsula Link update Project on time and budget For personal use only Awarded February 2010, completion December 2012 Design 95% complete Peak monthly expenditure of A$25m achieved Peninsula Link - Independent Certified Progress $700 $650 $600 $550 $500 $450 $400 $350 $300 $250 $200 $150 $1
Slide 46: Abigroup growth market - rail
Abigroup growth market - rail Competitive advantages For personal use only Ownership of plant and equipment Self performing culture Specialist skills Current projects Lawson alliance (NSW) Pacific National (QLD) Significant opportunities Regional rail link (VIC) Package B – A$500m (40%
Slide 47: Baulderstone core competencies – building/ defence
Baulderstone core competencies – building/ defence Building For personal use only Significant opportunities remain in areas of strength - health, education (universities) and corrections, hospitality and commercial Actively working to foster long-term relationships with blue-chip clients – both
Slide 48: Baulderstone growth market - marine
Baulderstone growth market - marine For personal use only Marine Fastest growing infrastructure sector in Australia Key to boosting Australia’s mining exports Opportunity to leverage off innovative design solution at Port Botany Excellent relationship with dredging company Jan De Nul Prove
Slide 49: Conneq core competencies
Conneq core competencies For personal use only Power Design and construction of generation and transmission assets Asset management of generation, transmission and distribution assets Infrastructure Design and construction of gas transmission and broadband Asset management of water, gas, tel
Slide 50: Conneq core competencies
Conneq core competencies For personal use only Resource Materials handling and coal seam gas collection and processing Asset management of mining and mineral processing and oil and gas assets Industrial Design and construction of chemical plants, fuel terminals and piping Asset management of
Slide 51: Business Update - Americas
For personal use only Bob McNamara Chief Executive Officer, Americas Business Update - Americas
Slide 52: Agenda
Agenda For personal use only 1. Overview of business environment 2. Lend Lease in the Americas 3. Project Management & Construction 4. Infrastructure development 5. Development – Lend Lease DASCO 6. Key priorities
Slide 53: Overview of business environment
Overview of business environment For personal use only Sector Outlook Opportunity/ Impact for Lend Lease General economic conditions GDP growth of 2.9% in FY2012 Construction sector New work secured greater than backlog burn Military program coming to an end but long tail of work Infrastructur
Slide 54: Lend Lease in the Americas
Lend Lease in the Americas Key Areas of Focus Project Management & Construction For personal use only Ranked 1st in multifamily, 5th in healthcare 260 projects Profit coming off low base / resized cost base Canada Infrastructure Development 22 military bases – market share of 18.2% Unite
Slide 55: Project Management & Construction
Project Management & Construction For personal use only Dec Dec Settlement reached with NY City DOI – restores Key Metrics 2010 2009 standing to win NYC agency work Operating profit after (3.2) (19.9) tax (A$m) WTC – liabilities, if any, are now limited to Operational available insurance Constru
Slide 56: Project Management & Construction project experience
Project Management & Construction project experience For personal use only Chase Bank Rebranding, Various Locations, US One Museum Park East, Chicago, Illinois El Aleph, Buenos Aires, Argentina 55
Slide 57: Infrastructure development
Infrastructure development For personal use only Dec Dec Key Metrics 2010 2009 Secured US$350m second phase (Group B) of Operating profit after tax 20.2 27.2 Operational Privatization of Army Lodgings program (A$m) Update Reached financial close on US$377m Number of projects 22 20 Wainwright Gre
Slide 58: Infrastructure development project experience
Infrastructure development project experience For personal use only Camp Lejeune, Camp Lejeune, North Carolina Army Hawaii Family Housing, Oahu, Hawaii Fort Drum Mountain Community Homes, Fort Drum, New York 57
Slide 59: Development – acquisition of Lend Lease DASCO
Development – acquisition of Lend Lease DASCO For personal use only National leader in the development, financing, leasing and management of medical facilities Acquisition price of US$10m and an earn out What they do over a 4 year period Existing development pipeline consisting of 10 projects
Slide 60: Healthcare project experience
Healthcare project experience For personal use only HCA Sky Ridge Medical Center, Lone Tree, Colorado New York-Presbyterian Hospital - Vivian and Seymour Milstein Family St. Joseph's Hospital, North Lutz, Florida Heart Center, New York, NY 59
Slide 61: Key priorities for the Americas
Key priorities for the Americas Develop US healthcare strategy – For personal use only strong pipeline of opportunities Leverage project management & construction into market recovery Continue growth focus in Latin America with concentration of activity in Argentina and Mexico, and some client
Slide 62: Business Update - Australia
For personal use only Mark Menhinnitt Chief Executive Officer, Australia Business Update - Australia
Slide 63: Agenda
Agenda For personal use only 1. Overview of business environment 2. Lend Lease in Australia 3. Project Management & Construction 4. Infrastructure Development 5. Development – Mixed Use 6. Development – Communities 7. Overview of communities market 8. Communities portfolio strategy update 9. Senior
Slide 64: Overview of business environment
Overview of business environment Sector Outlook1 Opportunity/ Impact for Lend Lease For personal use only General economic Some short term weakness from natural disasters and interest rate environment conditions Expected to grow at 4% per annum for next 5 years, main contributor being Constructi
Slide 65: Lend Lease in Australia
Lend Lease in Australia Project Management & Construction For personal use only Operating profit after tax as at Leading player in commercial and healthcare 31 December 2010* Strong internal pipeline and healthcare opportunities Investment Infrastructure Development Management 12% Signific
Slide 66: Project Management & Construction
Project Management & Construction For personal use only Dec Dec Profit weighted to second half of financial year Key Metrics 2010 2009 Operating profit after tax Government activity including stimulus spend has 43.5 61.2 Operational supported recent business growth (A$m) Update BER schools pro
Slide 67: Infrastructure Development
Infrastructure Development For personal use only Small loss in the first half of the financial year due to costs of bidding on projects Dec Dec Operational 1 of 3 shortlisted on Victoria Comprehensive Key Metrics 2010 2009 Update Cancer Centre in Melbourne Operating profit after tax (A$m) (3.8)
Slide 68: Development - Mixed Use
Development - Mixed Use For personal use only Dec June Concept Plan amendment approved Key Metrics 2010 2010 Site clearing completed Number of zoned 8,625 6,635 built-form units Barangaroo Planning approval received for first office tower South Basement due to commence in July Number of unzo
Slide 69: Development - Communities
Development - Communities For personal use only NSW/ ACT remain strong, Victoria is solid while South Australia and South East Queensland are Dec June Key Metrics 2010 2010 Operational subdued Number of zoned Update Flood impacting sentiment in Queensland residential land lots 38,170 31,960 Ta
Slide 70: Overview of communities market
Overview of communities market Consumer Sentiment Index Monthly observations ending April 2011 Quality of enquiry at Lend Lease projects For personal use only 130 improving, however conversion time has 120 increased on back of decline in sentiment 110 Index (100=netural) 100 90 Affordability pre
Slide 71: Communities portfolio strategy update
Communities portfolio strategy update For personal use only Capital model to match size and nature of project – land management, joint ventures or direct ownership New project acquisitions focused on replenishing existing portfolio in affordable growth corridors Recent entry into WA market Maw
Slide 72: Senior Living
Senior Living For personal use only Dec June FY2011 reflects first full year of 100% Key Metrics 2010 2010 Operational ownership of Primelife Number of retirement villages 70 70 Update Aged Care – has increased EBITDA per bed by Number of retirement units 12,416 12,357 >35% since acquisition Num
Slide 73: Investment Management
Investment Management For personal use only Dec Dec FUM growth of over 15% per annum over last 5 Key Metrics 2010 2009 Operational years – strong growth expected to continue Operating profit after Tax (A$m) 17.2 11.9 Update Continued strong performance across key funds Dec June Integration of
Slide 74: Key priorities
Key priorities For personal use only Grow construction backlog Focus on health pipeline and convert internal opportunities Leverage multi-sites/ capital services platform Deliver key development projects Achieve key planning outcomes, secure tenants and capital partners Replenish communi
Slide 75: Major projects update
For personal use only David Hutton Group Head of Development Major projects update
Slide 76: Agenda
Agenda For personal use only 1. Barangaroo South, Sydney 2. RNA Showgrounds, Brisbane 3. Victoria Harbour, Melbourne 4. Jurong Gateway, Singapore 5. Elephant & Castle, London 6. Stratford International Quarter, London
Slide 77: Barangaroo South, Sydney
Barangaroo South, Sydney For personal use only Estimated A$6b end value 7.5 hectare site area Extension of Sydney’s CBD Development period 10 to 15 years Up to 490,000 sqm total GFA Up to 288,000 sqm NLA office 30,000 sqm retail / food and beverage Approx 775 apartments 250 (approx
Slide 78: Proposed development stages
Proposed development stages For personal use only 2014/15 R10 R11 C1 C8 C2 C6 2016 R5 C3 C4 C5 R3 C7 R6 2017/18 R4 R7 2020 R2 R8 R9 R1 77
Slide 79: Premier commercial towers
Premier commercial towers For personal use only Floor plates of 2,200 – 2,400sqm Flexible and adaptable workspaces, with inter floor connectivity Fresh air and higher ceilings, abundant natural light, aspect and views State of the art technology with a precinct wide ICT infrastructure Clim
Slide 80: Current Status
Current Status For personal use only Planning Approvals Concept plan approved (490,000sqm including hotel) December 2010 Basement approved November 2010 C4 (first commercial tower) approved March 2010 Planning of next tower (C5) underway for lodgement - June 2011 3rd Commercial Tower (C3)
Slide 81: The RNA Showgrounds, Brisbane
The RNA Showgrounds, Brisbane For personal use only Estimated A$2.5b end value 22 hectare site with 5.5 hectares of land for Private Development Development period 15 years Commercial, Residential and Retail 340,000 sqm total GFA Renewal of RNA Facilities Industrial Pavilion commenced
Slide 82: Victoria Harbour, Melbourne
Victoria Harbour, Melbourne For personal use only Estimated A$4.5b end value 30 hectare site Developed in partnership with VicUrban Project commencement 2001 Project completion 2021 350,000sm total office GFA, 2,800 apartments, 22,000sqm retail and 20,000sqm of community space 45% comp
Slide 83: Jurong Gateway, Singapore
Jurong Gateway, Singapore Estimated SG$1.6b end value For personal use only 25% owned by Lend Lease, 75% by Asian Retail Investment Fund Heads of Terms for 100% office tower with Singaporean Government Ministry National Development Retail tenancy discussions progressing with 30% leased to da
Slide 84: Jurong Gateway, Singapore
Jurong Gateway, Singapore Planning approval Feb 2011, For personal use only commenced construction April 2011, completion 2014 108,000sqm large scale mixed use suburban development - 3rd largest suburban centre in Singapore Integrated approach 83
Slide 85: Elephant & Castle, London
Elephant & Castle, London For personal use only Buckingham Estimated £1.5b end value Palace Residential led, mixed use urban Bakerloo & Northern regeneration scheme over 15 years Tube c2,500 new homes with 25% affordable housing 15,000sqm of retail, restaurant and leisure space Conditional
Slide 86: Stratford International Quarter, London
Stratford International Quarter, London For personal use only Signed £1.3b Conditional Framework Agreement with London & Continental Railways Creation of a major new commercial district with nearly 400,000sqm of office accommodation across 22 acres Work is expected to start in 2013 Stratford
Slide 87: Closing Comments
For personal use only Steve McCann Group Chief Executive Officer & Managing Director Closing Comments
Slide 88: Key priorities for the Group
Key priorities for the Group For personal use only Integrate Valemus infrastructure business and deliver on earnings accretion Focus on execution and delivery of major projects Ongoing portfolio management • Position offshore businesses for market recovery Darling Quarter, Sydney, NSW 87
Slide 89: Positive outlook
Positive outlook Significant backlog, development pipeline and access to capital For personal use only Continued deal momentum Capital invested is supported by third party equity Focus on capital recycling Emphasis on quality and consistency of execution Strong long term outlook with positiv
Slide 90: Lend Lease Investor Day May 2011
Lend Lease Investor Day 25 May 2011 For personal use only