Lendlease Group · ASX:LLC
Lendlease — FY2023 Earnings Presentation
66 slides from Lendlease's earnings presentation, Aug 14, 2023
Slide 1: Lendlease Group 2023 Full Year Results Announcement, Presentation and Appendix
14 August 2023 Lendlease Group 2023 Full Year Results Announcement, Presentation and Appendix Lendlease Group today announced its results for the full year ended 30 June 2023. Attached is the FY23 Results Announcement, Presentation and Appendix. ENDS FOR FURTHER INFORMATION, PLEASE CONTACT: Investor
Slide 2: Turnaround underway: Continued FUM growth; Overall result affected by challenging conditions
14 August 2023 Turnaround underway: Continued FUM growth; Overall result affected by challenging conditions For the year ended 30 June 20231: • Core Operating2 Profit after Tax (Core OPAT) of $257m, down 7 per cent o Core Operating Earnings Per Security of 37.3 cents o Full year distribution of 16.0
Slide 3: CEO comments and items affecting Statutory result
Global Chief Executive Officer and Managing Director, Tony Lombardo said, “We made significant progress during the year towards being Investments-led and further simplifying the Group. However, our financial performance was impacted by a number of issues related to prior projects and activities. Des
Slide 4: Gearing, finance costs and operating segments
Gearing was within the 10-20 per cent target range at 14.8 per cent. The business continues to actively manage its capital and liquidity position, with total available liquidity of $2.6b. Net finance costs were lower due to Treasury gains relating to the partial buy back of the Group’s Sterling bond
Slide 5: Development and Construction segments
Development The Development segment generated a ROIC of 3.3 per cent, up from 2.2 per cent in the prior year. There were $3.6b of completions, up 44 per cent on FY22, including Sydney Place, which was divested in the prior year, Blue & William in North Sydney and City Lights Point at Elephant Park,
Slide 6: Workforce reduction and outlook
Reduction in global workforce Following the successful FY22 cost reduction program, the Group announced a further 10 per cent workforce reduction as it continues its turnaround. We have taken action to reduce the cost base by a further $150m pre-tax per annum, with approximately 50 per cent within o
Slide 7: For further information, please contact
FOR FURTHER INFORMATION, PLEASE CONTACT: Investors: Media: Michael Vercoe Stephen Ellaway Head of Investor Relations Executive General Manager, Corporate Affairs Mob: +61 488 245 205 Mob: +61 417 851 287 2023 Key dates for Investors Security price quoted ex-dividend 18 August Record date 21 August L
Slide 8: Full Year Results 2023
2023 Full Year Results 14 August 2023 Sydney: Barangaroo
Slide 9: Acknowledgement of Traditional Owners
Lendlease FY23 Financial Results 2 As an investor, 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 10: Overview
Lendlease FY23 Financial Results 3 Overview Tony Lombardo Global CEO London: View from City Lights Point
Slide 11: Transitioning to an Investments-led real estate Group
Lendlease FY23 Financial Results 4 Transitioning to an Investments-led real estate Group… …with a simplified, leaner and more focused business, leveraged to a recovery in markets ▪ Simplifying the Group’s businesses with further capital partnering − Processes underway including Communities, Keyton (
Slide 12: Performance
Lendlease FY23 Financial Results 5 Performance Tony Lombardo Global CEO London: 21 Moorfields Artist’s impression
Slide 13: FY23 progress – focused on delivering our strategic road map
Lendlease FY23 Financial Results 6 FY23 progress – focused on delivering our strategic road map Continuing our turnaround with good progress across each operating segment Accelerate funds growth Scale development Execution excellence Investments Development Construction • 9% FUM growth underpinned b
Slide 14: FY23 result
Lendlease FY23 Financial Results 7 FY23 result Financial performance impacted by provisions and market valuations $257m ($232m) Stable Core operating1 Profit after Tax Statutory Loss after Tax Financial position 37.3c 3.8%2 ($19m) 14.8%5 Earnings per Return Non-core segment Loss Gearing stapled secu
Slide 15: FY23 result: portfolio well positioned when markets stabilise
Lendlease FY23 Financial Results 8 FY23 result1 A resilient operating performance against a difficult market backdrop Investments Development2 Construction3 $48b 9% $23b $7.2b 9% Funds Under Management Work in Progress 24% Revenue $33b 9% $3.6b 44% $4.7b (11%) Assets Under Management Completions New
Slide 16: Investments
Lendlease FY23 Financial Results 9 Investments Investments EBITDA ($m) Management earnings Operational performance1 FY22 FY23 497 • Funds Management: Growth ambition of $70b − Revenue2 $177m, up 3%. EBITDA $82m, down 13% 356 332 FUM by FY26 Management EBITDA − Margins lower due to cost of platform b
Slide 17: Development
Lendlease FY23 Financial Results 10 Development1 EBITDA ($m) Operational performance2 Urban portfolio: FY22 FY23 • Completions of $2.8b 283 • The Exchange TRX realisation of development earnings Targeting WIP above • MSG North and Arena sales 181 $20b as we accelerate 165 141 142 completions in FY24
Slide 18: Construction
Lendlease FY23 Financial Results 11 Construction Backlog revenue ($b) Operational performance and outlook1 EBITDA $90m, down 31% 4.7 (7.2) • EBITDA margin 1.2%, down from 2.0%: High visibility on the • Subdued performance given industry headwinds: 10.5 − Inflationary pressures, supply chain issues p
Slide 19: Financial Summary
Lendlease FY23 Financial Results 12 Financial Summary Simon Dixon Los Angeles: Habitat Global CFO Artist’s impression
Slide 20: Financial performance
Lendlease FY23 Financial Results 13 Financial $m FY22 FY23 Change performance1 Core • Impacted by reduced portfolio assets (Keyton sale), provision for Americas Telecommunications Investments 497 332 (33%) receivable ($74m) and partial sale of US Military Housing asset income stream Development 181
Slide 21: Net debt
Lendlease FY23 Financial Results 14 Net debt Net Debt1 ($b) Development Investments 0.8 (0.6) High deployment of 0.5 2.4 0.6 capital in the year, 0.4 (0.6) 1.1 0.2 supporting WIP delivery and Investments growth FY22 Net Co-investments Capital recycling One Circular One Sydney Other Net Gross PLLACes
Slide 22: Invested capital
Lendlease FY23 Financial Results 15 Invested Invested capital1 Capital growth and allocation capital Segment Invested capital1 ▪ Shifting the capital mix from Development to Investments − Targeting 60/40 Investments/Development split of capital by FY26 to aid FUM growth and improve earnings quality
Slide 23: Capital management & Treasury
Lendlease FY23 Financial Results 16 Capital Treasury overview Capital and liquidity management ▪ Current gearing of 14.8% within the target 10-20% range, FY22 FY23 management Net debt Proportion of fixed debt $m % 1,060 88 2,381 64 with $2.6b of available liquidity − No material refinancing events u
Slide 24: Cost initiatives and further optimisation
Lendlease FY23 Financial Results 17 Cost initiatives and further optimisation Further progress on cost efficiencies, with more than $150m 1 of targeted annualised savings, pre-tax Create phase cost initiatives Cost savings ▪ Growth areas preserved, including Investments platform and active ▪ More th
Slide 25: Portfolio Management Framework (PMF)
Lendlease FY23 Financial Results 18 Portfolio Management Framework (PMF) Providing structure to manage business and capital decisions PMF through-the-cycle targets Target FY22 FY23 ▪ PMF maintained to support our transformation ambition Group Metrics Core Operating ROE 8-10% 4.0% 3.8% − Target frame
Slide 26: Strategic Road map & Outlook
Lendlease FY23 Financial Results 19 Strategic Road map & Outlook Tony Lombardo Kuala Lumpur: The Exchange TRX Global CEO
Slide 27: Performance against FY26+ strategic road map
Performance against FY26+ strategic road map Lendlease FY23 Financial Results 20 On-track to achieve FY26+ business transformation to an Investments-led business Reset platform for Focus and execute Global property leadership built delivery and growth on existing strategy on sustainable foundations
Slide 28: FY24 Outlook
Lendlease FY23 Financial Results 21 FY24 Outlook Group guidance and key drivers Group guidance Key drivers of Core Operating Profit ▪ Targeting ROE of 8%+ ▪ Continued growth in FUM, in line with recent performance (at the lower end of our ▪ In Development: 8-10% target range) − More than $8b in comp
Slide 29: Questions
Lendlease FY23 Financial Results 22 Questions
Slide 30: Full Year Results Appendix 2023
2023 Full Year Results Appendix Sydney: Barangaroo
Slide 31: An integrated global real estate group
Lendlease FY23 Financial Results 2 An integrated global real estate group1 London • Thamesmead Waterfront • Euston Station • Silvertown • International Quarter London • Elephant Park • High Road West • Smithfield, Birmingham Chicago • Southbank San Francisco • Lakeshore East • San Francisco Bay Area
Slide 32: Our operating segments
Lendlease FY23 Financial Results 3 Our operating segments We leverage our integrated Investments Development Construction business model of The segment comprises investment and The segment is predominantly focused on The segment provides project Investments, Development asset management platforms an
Slide 33: Health and Safety
Lendlease FY23 Financial Results 4 FY23 highlights • Safety transformation: a revised health and safety strategy which addresses what we have defined as the '3Ps’ strategy Health and Safety Physical safety Product safety Psychological safety Risk of incidents from Risk of failure from the work activ
Slide 34: Environmental, Social and Governance
Lendlease FY23 Financial Results 5 FY23 key achievements Environmental, Social and On track to achieve our Net Governance Zero Carbon ambition by 2025 18% reduction $186m 46% 9% 49% of our $21.9b Urban in gross Scope 1 and of social value1 of electricity used by Development work in of fuel used by 2
Slide 35: Group Financials
Lendlease FY23 Financial Results 6 Group Financials Sydney: One Circular Quay Artist’s Impression
Slide 36: Income Statement (Statutory Result)
Lendlease FY23 Financial Results 7 $m FY22 FY23 Revenue from contracts with customers 8,822 10,229 1 Other revenue 142 144 Income Cost of sales Gross profit (8,135) 829 (9,642) 731 Statement Share of profit of equity accounted investments 2 181 28 (Statutory Other income Other expenses 3 358 (1,429)
Slide 37: Reconciliation of Core Operating Profit
Lendlease FY23 Financial Results 8 $m FY22 FY23 Core operating profit after tax 276 257 Add/(less): Investment properties revaluations2 4 (16) Reconciliation Add/(less): Financial assets revaluations2 58 (67) of Core Add/(less): Equity accounted investments revaluations2 8 (92) Operating Total Inves
Slide 38: Segment Financial Metrics
Lendlease FY23 Financial Results 9 Operating Profit after Tax ($m) Operating EBITDA ($m) 361 FY22 FY23 497 FY22 FY23 Segment 245 Financial 192 332 283 Metrics 111 181 131 68 90 32 Investments Development Construction Investments Development Construction ROIC1,2 (Investments, Development) Invested Ca
Slide 39: Investments Segment
Lendlease FY23 Financial Results 10 Investments Segment Milan: Milano Santa Giulia Spark Two
Slide 40: Investments Earnings Drivers
Lendlease FY23 Financial Results 11 FUM $48.3b, AUM $32.8b Investments Invested capital Earnings Drivers $4.0b Management Earnings Investment Portfolio Earnings Commercial Residential Co-investment Funds asset asset positions in Keyton4 Other4,5 management management1 management2 managed funds3,4 (R
Slide 41: Investments
Lendlease FY23 Financial Results 12 Overview Financial summary1 FY22 FY23 • The Investments segment comprises a leading investment and asset Core operating business EBITDA mix % 61 47 management platform and the Group’s investment portfolio across ROIC % 9.7 6.1 the residential, workplace, retail, r
Slide 42: Investments Earnings & Portfolio
Lendlease FY23 Financial Results 13 EBITDA ($m) Invested Capital ($b) Management EBITDA1 Investment Portfolio EBITDA2 Invested Capital ROIC Investments 497 5.7% 5.8% 5.9% 9.7% 6.1% Earnings & 141 332 4.0 Portfolio 278 300 276 104 3.7 3.7 3.6 3.6 144 198 165 356 228 134 102 111 FY19 FY20 FY21 FY22 FY
Slide 43: Funds & Assets Under Management
Lendlease FY23 Financial Results 14 FUM ($b) AUM ($b) Inception of FUM strategy: 45.0 CAGR² of 10.4% Funds & 44.4 48.3 40.0 Assets Under 35.2 36.0 39.6 35.0 28.7 29.3 28.5 30.0 32.8 30.0 Management1 25.0 20.0 15.0 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 FY23 FUM by region FY23 AUM by regio
Slide 44: Funds Under Management By Region
Lendlease FY23 Financial Results 15 Group ($b) 55.0 5.3 (1.0) (1.4) Funds Under 50.0 44.4 1.0 48.3 45.0 Management1 40.0 By Region 35.0 30.0 25.0 20.0 FY22 Additions Divest- Revaluations FX and 2 FY23 ments Other By region ($b) FY22 Additions Divestments Revaluations FX and Other FY23 Australia 31.1
Slide 45: Major Fund Summary
Lendlease FY23 Financial Results 16 Major Fund Summary1 FY23 funds management platform Total No. of Weighted assets Gearing Co-investment Region Sector assets Leased avg. cap rate $b % % $m # % % Australian Prime Property Fund Commercial 6.6 24.7 8.0 380 Aus Workplace 21 94.7 4.8 Lendlease Internati
Slide 46: Assets Under Management By Product
Lendlease FY23 Financial Results 17 Group ($b) 1.9 (0.8) 1.7 32.8 30.0 - Assets Under Management1 By Product FY22 Additions Divest- Revaluations FX and FY23 ments Other By product ($b) FY22 Additions Divestments Revaluations FX and Other FY23 Commercial2 15.2 1.5 (0.8) (0.1) 1.1 16.9 Residential3 14
Slide 47: Keyton (formerly Retirement Living)
Lendlease FY23 Financial Results 18 Value drivers FY22 FY23 Ownership1 % 25.1 25.1 Keyton Equity investment Long term growth rate $b % 0.5 3.5 0.5 3.5 (formerly Discount rate % 12.1 12.1 Queensland 13 villages Retirement Operating return % 5.3 4.9 c2,990 units Living) Northern Territory Western Aust
Slide 48: Development Segment
Lendlease FY23 Financial Results 19 Development Segment Sydney: Sydney Place
Slide 49: Development Earnings Drivers
Lendlease FY23 Financial Results 20 Development pipeline1 $124.3b Development Earnings Drivers Invested capital $6.1b Development Phase In Conversion Master Planned Work in Progress $50.6b1 $50.8b1 $22.9b1 pipeline pipeline pipeline $0.3b $2.3b2 $3.5b2 capital capital capital Completions target of >
Slide 50: Development
Lendlease FY23 Financial Results 21 Overview Performance FY22 FY23 • The Development segment is predominantly focused on the creation Core business EBITDA mix % 23 40 of mixed-use urban precincts that comprise build to rent1 and build to Total EBITDA $m 181 283 sell1 apartments, workplaces and assoc
Slide 51: Development Capital
Lendlease FY23 Financial Results 22 $6.1b of invested capital controls $124b development pipeline FY23 Capital – Development Stage FY23 Capital – Structure Other Urban Projects Deconsolidated JVs In Conversion Master planned WIP Development Communities Impaired Projects 5% 5% Capital 36% 17% $6.1b 3
Slide 52: Development Earnings / Work In Progress
Lendlease FY23 Financial Results 23 EBITDA ($m) Invested Capital ($b) Invested Capital ROIC 8.0 793 11.6% 4.7% 7.2% 2.2% 3.3% Development 7.0 6.1 5.4 Earnings / 6.0 4.8 4.8 469 5.0 4.4 Work In 322 4.0 283 Progress 181 3.0 2.0 1.0 - FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 WIP1 roll forward
Slide 53: Development Pipeline
Lendlease FY23 Financial Results 24 Pipeline1 ($b) Pipeline1 roll forward ($b) Build to sell 4 Build to rent 4 Workplace and Other Communities Development 113.0 113.6 117.0 124.3 117.0 3.5 (3.6) 7.4 124.3 Pipeline 76.1 FY19 FY20 FY21 FY22 FY23 FY22 New work Completions FX and Other FY23 secured Pipe
Slide 54: Major Urban Project Summary
Lendlease FY23 Financial Results 25 Residential Commercial Estimated Project Delivery Completion backlog backlog end value Land payment Region Project secured commenced date units sqm ‘0002 ($b)3 model Major Urban Australia Victoria Cross4, Sydney Barangaroo South, Sydney FY19 FY09 FY20 FY12 FY25 FY
Slide 55: Urban Development Completions FY23
Lendlease FY23 Financial Results 26 Urban Development Completions FY23 $2.8b of Urban Completions in FY23 (excludes Communities) Sqm (k) / Presold Project end Net end City Project Sector Capital model1 Ownership2 Presales4($b) Completion7 units 3 %4 value5 ($b) value6 ($b) Sydney Sydney Place Workpl
Slide 56: Urban Development Completions Pipeline
Lendlease FY23 Financial Results 27 Urban Development Completions Pipeline FY24 Urban Completions pipeline of $7.5b, including 226k sqm of workplace and other development and 2,492 units Sqm (k) / Presold Project end Net end City Project Sector Capital model1 Ownership2 Presales4($b) Completion7 uni
Slide 57: Urban Development Completions Pipeline (continued)
Lendlease FY23 Financial Results 28 Urban Development Completions Pipeline (continued) Urban Completions pipeline of $14.4b from FY25 to FY27, including 297k sqm of workplace and other development and 2,915 units Sqm (k) / Presold Project end Net end City Project Sector Capital model1 Ownership2 Pre
Slide 58: Apartment Settlements
Lendlease FY23 Financial Results 29 Ownership Units $m $m (net) Australia Melbourne Quarter – East Tower 50% 127 92 46 Apartment Total Australia 127 92 46 Settlements1 Europe Elephant Park – City Lights Point 100% 104 62 62 Potato Wharf – Block 4 100% 40 20 20 Other 17 24 16 Total Europe 161 106 98
Slide 59: Indicative Commencements on Existing Urban Development Pipeline
Lendlease FY23 Financial Results 30 Indicative Commencements on Existing Urban Development Pipeline 1 Seeking to balance commencements and completions over time to maintain WIP, subject to market conditions Delivery of pre-commencement pipeline ($b)2 ▪ Total identified commencement pipeline to FY27
Slide 60: Australia Communities
Lendlease FY23 Financial Results 31 Sales & Settlements Sales Settlements FY22 FY23 FY22 FY23 Lots $m Lots $m Lots $m Lots $m Australia Queensland 1,389 414 1,018 323 681 169 1,181 360 Communities New South Wales Victoria 329 1,195 185 371 179 437 116 132 64 585 37 158 272 676 103 215 South Australi
Slide 61: Construction Segment
Lendlease FY23 Financial Results 32 Construction Segment Melbourne: Melbourne Quarter
Slide 62: Construction Earnings Drivers
Lendlease FY23 Financial Results 33 Backlog1 $8.7b Construction Preferred2 Earnings Drivers $9.9b Australia Asia Europe Americas Revenue Revenue Revenue Revenue in the last 12 months in the last 12 months in the last 12 months in the last 12 months $3.7b $0.3b $0.7b $2.5b Backlog1 Backlog1 Backlog1
Slide 63: Construction
Lendlease FY23 Financial Results 34 Overview Performance FY22 FY23 • The Construction segment provides external project management, Core business EBITDA mix % 16 13 design and construction services, predominantly in the social EBITDA margin % 2.0 1.2 infrastructure, defence and office sectors, as we
Slide 64: Construction Earnings / Backlog / New Work Secured
Lendlease FY23 Financial Results 35 EBITDA ($m) Backlog ($b)1 30 0 35 000 .0% EBITDA Margin 2.2% 1.3% 2.7% 2.0% 1.2% 12.6 Construction 25 0 30 000 .0% 211 10.6 11.3 10.5 Earnings / 25 000 .0% 20 0 173 8.7 20 000 .0% 131 Backlog / New 15 0 101 15 000 .0% 10 0 90 Work Secured 50 10 000 .0% 50 00.0 % -
Slide 65: Construction Backlog by Region
Lendlease FY23 Financial Results 36 Group ($b) Australia ($b) 2.4 (3.7) Construction 4.7 (7.2) Backlog by 10.5 7.0 - 5.7 0.7 8.7 Region1,2 Book to bill³: 0.6 Book to bill³: 0.7 FY22 New work Revenue FX & Other FY23 FY22 New work Revenue FX & Other FY23 secured secured Europe($b) Americas ($b) 2.1 (2
Slide 66: Important Notice
Lendlease FY23 Financial Results 37 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 as the Lend