Lendlease Group · ASX:LLC
Lendlease — Investor Day (October 2016)
43 slides from Lendlease's investor day presentation, Oct 20, 2016
Slide 1: Lendlease Investor Day presentation
20 October 2016 Lendlease Investor Day presentation For personal use only 20 October 2016 Attached is the presentation to be given today by Lendlease senior executives at its Investor Day. The event will be webcast live via www.lendlease.com ENDS FOR FURTHER INFORMATION, PLEASE CONTACT: Investors: M
Slide 2: Lendlease Investor Strategy Day
For personal use only Lendlease Investor Strategy Day 20 October 2016
Slide 3: Agenda
2 Agenda For personal use only Strategy Update and Q&A Steve McCann - Group Chief Executive Officer and Managing Director Portfolio Management Framework Tarun Gupta - Group Chief Financial Officer Vikas Kaul - Group Head of Research Closing and Final Q&A Steve McCann - Group Chief Executive Officer
Slide 4: Indigenous engagement and reconciliation
INVESTOR DAY 2016 3 Indigenous Our vision engagement and reconciliation For personal use only Lendlease’s vision for Reconciliation is one in which all our employees acknowledge and celebrate the proud heritage of Australia’s First Peoples and promote opportunities for career development, sustainabl
Slide 5: Strategy Update
For personal use only Section 1 Strategy Update Steve McCann Group Chief Executive Officer and Managing Director Illustration: Barangaroo South, Sydney
Slide 6: Our vision and strategic framework
INVESTOR DAY 2016 5 Our vision Our strategic framework For personal use only FOCUS We focus on delivering optimal performance safely at our target returns GROW We target disciplined growth in sectors aligned with global trends and with a focus on our target global Gateway Cities Our pillars of value
Slide 7: Global trends influencing our strategy
INVESTOR DAY 2016 6 Global trends influencing our strategy For personal use only Lendlease leadership By 2014, 54% of the world’s • $37b2 Urban Regeneration pipeline population were estimated to live in Urbanisation urban areas; this will reach 60% by • 12 major urban regeneration 20301 projects3 ac
Slide 8: Our competitive advantage
INVESTOR DAY 2016 7 Our competitive advantage For personal use only We distinguish ourselves through our integrated model, financial strength and strong track record of execution 1 INTEGRATED MODEL Capability and scale to deliver large, $23.6b $48.8b long term, complex projects that Funds Under Deve
Slide 9: Execution excellence remains our priority
INVESTOR DAY 2016 8 Execution excellence remains our priority For personal use only Over the past 5 years Lendlease has delivered… Return on Equity1(%) Earnings per Stapled Security3 (cents) 18.2% 13.5% 13.6% 12.4% 13.0% 142.7 106.8 120.1 87.7 95.6 2 2 FY12 FY13 FY14 FY15 FY16 FY12 FY13 FY14 FY15 FY
Slide 10: Urbanisation continues to underpin our growth strategy
INVESTOR DAY 2016 9 Urbanisation continues to underpin our growth strategy For personal use only Our focus on major urban regeneration projects1 in global Gateway Cities has underpinned 50 our record pipeline position and will deliver long term securityholder value 50 12 major urban 45 45 regenerati
Slide 11: Development pipeline provides long term earnings visibility
INVESTOR DAY 2016 10 Development pipeline provides long term earnings visibility1 For personal use only Record secured pipeline of $48.8b controlled by invested capital of $2.9b lots lots Communities and 3,5872,903 53,820 lots Estimated Retirement Settled Presold annual Expected to settle during FY1
Slide 12: Development deal structuring tailored to local market
INVESTOR DAY 2016 11 Development deal structuring tailored to local market For personal use only Urban Regeneration Communities / Retirement Apartments Commercial JV Structure / LP-GP1 (Australia, Europe) Forward Sale • Jordan Springs, • Darling Square, Sydney • Barangaroo (ITS), • Paya Lebar Quarte
Slide 13: Construction
INVESTOR DAY 2016 12 Construction For personal use only Design and delivery capability is key to origination and execution across platform Backlog revenue by region2 • Backlog revenue of $20.7b at 30 June 2016, Europe Asia, $0.6b representing 8% compound annual growth over the last 5 years1 $1.5b Au
Slide 14: Investments
INVESTOR DAY 2016 13 Investments For personal use only Fee and ownership returns deliver attractive recurring income streams • Strong growth in FUM supported by global ~150 institutional $1.4b co-investment in investor demand for quality product investors1 funds1 • Access to internal development pip
Slide 15: Our global diversified pipeline provides long term earnings visibility
INVESTOR DAY 2016 14 Our global diversified pipeline provides long term For personal use only earnings visibility1 $48.8b Development $20.7b $23.6b Construction FUM pipeline backlog revenue Europe Americas $10.5b Development pipeline $3.4b Development pipeline $1.5b Construction backlog revenue $6.7
Slide 16: Q&A Strategy Update
For personal use only Q&A Strategy Update 15
Slide 17: Portfolio Management Framework
For personal use only Section 2 Portfolio Management Framework Tarun Gupta Group Chief Financial Officer Vikas Kaul Group Head of Research Illustration: Melbourne Quarter, Melbourne
Slide 18: Portfolio Management Framework Introduction
INVESTOR DAY 2016 17 Portfolio Management Framework Introduction For personal use only Purpose of the framework • Shape and guide investment across geographies, segments and sectors based on in-house research • Provide clarity and transparency around capital allocation • Maximise long term securityh
Slide 19: Vikas Kaul, Group Head of Research
For personal use only Vikas Kaul Group Head of Research Illustration: Riverline, Chicago
Slide 20: What should our geographic and sectoral capital mix be?
INVESTOR DAY 2016 19 What should our geographic and sectoral capital mix be? For personal use only Shaped by our forward efficient frontier, current presence, business model and origination capability Market outlook Alpha factors Forward outlook for markets and sectors Risk factors Lendlease current
Slide 21: Leading economic indicators
INVESTOR DAY 2016 20 Leading economic indicators For personal use only Australia UK1 Italy USA Singapore Malaysia China Japan Outlook indicators Momentum indicators Legend Strengthening Neutral Weakening Note - Outlook based on comparison of current reading to 10YR average | Momentum based on compar
Slide 22: Australian outlook
INVESTOR DAY 2016 21 Australian outlook For personal use only • Sydney Office sector is benefitting from service sector led growth with a strong rent growth trajectory, which should support valuations • Sydney Apartments activity is peaking with Communities sector still marginally under-supplied. Hi
Slide 23: International outlook
INVESTOR DAY 2016 22 International outlook For personal use only • London Office faces a challenging environment due to Brexit but London has a history of resilience • London Residential to benefit from a low-rate environment against the backdrop of being one of the most under-supplied global cities
Slide 24: Global study to identify high potential Urban Regeneration cities
INVESTOR DAY 2016 23 Lendlease carried out an extensive global study to identify For personal use only high potential Urban Regeneration cities Phase 1: Phase 2: Phase 3: 206 countries 39 countries 18 countries 18 scale cities1 in Lendlease National GDP >$100b Economic Indicators footprint2 countrie
Slide 25: Footprint cities within the identified global Gateway Cities
INVESTOR DAY 2016 24 We have 17 footprint cities within the identified 38 global For personal use only Gateway Cities London Chicago Boston Milan San Francisco New York Beijing Rome Tokyo Los Angeles Shanghai Kuala Lumpur Singapore Perth Brisbane Sydney Melbourne Lendlease footprint cities Source: L
Slide 26: Our Gateway Cities continue to outperform their respective countries
INVESTOR DAY 2016 25 Our Gateway Cities continue to outperform their respective For personal use only countries….. Cities outperform +0.4% p.a. +0.4% p.a. +0.2% p.a. Cities Nations 3.2% 3.0% Economic Cities Nations Cities 1.9% performance 1.5% 1.3% Nations 0.9% Annual average 2010-2015 GDP growth Em
Slide 27: Gateway Cities attract the bulk of foreign investment into property
INVESTOR DAY 2016 26 … and attract the bulk of foreign investment into property For personal use only globally Global cities with largest foreign investment into property US$b, annual average 2012-2015 $32 Legend $28 Other cities identified $24 Lendlease footprint by Lendlease with high Non-target c
Slide 28: Tarun Gupta, Group Chief Financial Officer
For personal use only Tarun Gupta Group Chief Financial Officer Illustration: Paya Lebar Quarter, Singapore
Slide 29: Portfolio Management Framework
INVESTOR DAY 2016 28 Portfolio Management Framework For personal use only ü Maximise long term securityholder value through a well diversified, risk-adjusted portfolio ü Leverage the competitive advantage of our integrated model Objectives ü Optimise our business relative to the outlook for our mark
Slide 30: Capital allocation
INVESTOR DAY 2016 29 1 Capital allocation For personal use only Continuing to increase exposure to International markets Current Target Expected Invested Capital1,2 Weighting3 Trend4 Australia $4.8b 74% 50-70% ↓ • Focus on identified Gateway Cities Asia $0.5b 8% 5-20% ↑ • International regions have
Slide 31: Business model: optimising synergies from our integrated model
INVESTOR DAY 2016 30 2 Business model For personal use only Optimising synergies from our integrated model • World-class Development pipeline leverages the capabilities of our integrated model • Recurring returns and fees from Investments support our investment grade credit rating • Construction seg
Slide 32: Business model: balanced segment mix
INVESTOR DAY 2016 31 2 Business model For personal use only Balanced segment mix including 30-40% earnings from Investments (prior target 20-30%1) Average last 3 years Target segment mix Key sector focus EBITDA mix Development and Development Investments Investments Development = 35-45% • Residentia
Slide 33: Target returns
INVESTOR DAY 2016 32 3 Target returns For personal use only Targeting our business to sustainable through-cycle returns1 Development Delivering economic return over Target ROIC: cost of equity through the cycle Capital 9-12% Group intensive segments Segment returns targeted adjusted for to ROIC2 Inv
Slide 34: Capital structure
INVESTOR DAY 2016 33 4 Capital structure For personal use only Ensuring financial strength to execute our strategy efficiently 1 Investment grade credit rating KEY CAPITAL STRUCTURE 2 Minimise Weighted Average Cost of Capital (WACC) OBJECTIVES 3 Sufficient buffer to manage cycles and risk Gearing (N
Slide 35: Distribution policy
INVESTOR DAY 2016 34 5 Distribution policy For personal use only Target 40-60% of earnings paid out to securityholders • Since FY10, the distribution Distributions (cents per share) and payout ratio policy has targeted a payout of 80 100% 40-60% of earnings 71 90% 70 • Lendlease has consistently pai
Slide 36: Portfolio Management Framework summary
INVESTOR DAY 2016 35 Portfolio Management Framework summary For personal use only Business model • Integrated model synergies • Target EBITDA mix: 35-45% Development 30-40% Investments 20-30% Construction Capital allocation Target returns • Focussed on Gateway Cities 2 • Group ROE 10-14% • 50-70% ca
Slide 37: Closing and Final Q&A
For personal use only Section 3 Closing and Final Q&A Steve McCann Group Chief Executive Officer and Managing Director Image: Barangaroo Reserve towards Barangaroo South, Sydney
Slide 38: Summary and outlook
INVESTOR DAY 2016 37 Summary and outlook For personal use only Development pipeline of $48.8b Record residential presold Construction backlog FUM of $23.6b1 (76.4% urbanisation revenue of $5.9b1,2 revenue of $20.7b1 projects)1 Development Residential Construction FUM pipeline presold revenue1 backlo
Slide 39: Q&A
For personal use only Q&A 38
Slide 40: Appendix
For personal use only Appendix 39
Slide 41: Segment financial metrics
INVESTOR DAY 2016 40 Segment financial metrics For personal use only Operating Profit after Tax ($m) EBITDA ($m) 523 699 409 378 366 371 500 478 434 458 277 386 191 272 279 288 144 159 FY14 FY15 FY16 FY14 FY15 FY16 ROIC1 (Development and Investments), Invested Capital (Development and Investments) (
Slide 42: Segment and region financial metrics
INVESTOR DAY 2016 41 Segment and region financial metrics For personal use only By segment Revenue ($m) EBITDA ($m) Profit After Tax ($m) Invested Capital ($b) FY14 FY15 FY16 FY14 FY15 FY16 FY14 FY15 FY16 FY14 FY15 FY16 1 Development 2,313 1,876 2,544 699 386 500 523 277 366 2.4 3.3 2.9 2 Investment
Slide 43: Important notice
INVESTOR DAY 2016 42 Important notice For personal use only This document (Document) has been prepared and is issued by Lendlease Corporation Limited (ACN 000 226 228) (Lendlease). This Document has been prepared without regard to the specific investment objectives, financial situation or needs of a