Lendlease Group · ASX:LLC
Lendlease — H1 FY2023 Earnings Presentation
71 slides from Lendlease's earnings presentation, Feb 13, 2023
Slide 1: Lendlease Group 2023 Half Year Results Announcement, Presentation and Appendix
13 22 February 2023 August 2022 Lendlease Group 2023 Half Year Results Announcement, Presentation and Appendix Lendlease Group today announced its results for the half year ended 31 December 2022. Attached is the HY23 Results Announcement, Presentation and Appendix. ENDS FOR FURTHER INFORMATION, PLE
Slide 2: HY23 Result Summary
13 19 February 22 August 2023 2019 2018 vative Improved Core operating profit and strong funds management growth; Statutory result impacted by retrospective UK Government action For half year ended 31 December 20221 • Core operating2 Profit after Tax of $105m compared with $28m o Earnings Per Securi
Slide 3: Provision due to retrospective UK Government action
13 19 February 22 August 2023 2019 2018 Provision due to retrospective UK Government action The Group’s HY23 Statutory result was impacted by a provision as a consequence of industry wide action by the UK Government relating to residential buildings. This action has retrospective effect by extending
Slide 4: Financials and Operating Segments: Investments
13 19 February 22 August 2023 2019 2018 Development capital is currently at $5.9b as development expenditure accelerates along with Work in Progress and subsequent completions. Invested capital is planned to be re-weighted towards the Investments segment from FY24. “We’re firmly focused on growing t
Slide 5: Construction and Outlook
13 19 February 22 August 2023 2019 2018 Construction The Construction segment was impacted by a claim on a past non-residential project in the UK. Without this claim, the segment delivered a steady performance. This was despite the continued pandemic related productivity delays, inclement weather co
Slide 6: For further information, please contact
13 19 February 22 August 2023 2019 2018 FOR FURTHER INFORMATION, PLEASE CONTACT: Investors: Media: Janine Graetz Stephen Ellaway Mob: +61 416 238 728 Mob: +61 417 851 287 2023 Key Dates for Investors Securities quoted ex-distribution on the Australian Securities Exchange 17 February Interim distribu
Slide 7: Provisions and Cash and Cash Equivalents notes
Financial Statements 43 18. Provisions Employee Development Construction Benefits Projects Projects Other Total $m $m $m $m $m Balance as at 1 July 2022 164 130 384 110 788 Provisions made during the period 33 33 38 200 304 Provisions used during the period (32) (3) (101) (29) (165) Provisions rever
Slide 8: Half Year Results February 2023
2023 Half Year Results 13 February 2023 Sydney: Sydney Place
Slide 9: Acknowledgement of Traditional Owners
Lendlease HY23 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: Performance
Lendlease HY23 Financial Results 3 Use image on page 206 of AR Performance Tony Lombardo Global CEO London: 21 Moorfields Artist’s impression
Slide 11: Five year road map
Lendlease HY23 Financial Results 4 Five year road map FY23 marks the start of the two-year Create phase of the Group’s five-year Reset; Create; Thrive roadmap. Reset Create Thrive FY22 FY23 – 24 FY25 – 26+ Reset platform for Focus and execute Global property leadership built delivery and growth on e
Slide 12: HY23 Create phase
Lendlease HY23 Financial Results 5 HY23 Create phase Solid achievements in each of our operating segments demonstrates progress against the Group’s strategy. Accelerate funds growth Scale development Execution excellence Investments Development Construction • 8% FUM growth underpinned by: • Major ac
Slide 13: HY23 Result Financial performance
Lendlease HY23 Financial Results 6 HY23 Result Financial performance Core operating Profit up $105m ($141)m Sound on HY22 Core operating1 Profit after Tax Statutory Loss after Tax Financial position 15.2c 3.1%2 ($7)m 16.8%5 Earnings per Return Non core segment Loss Gearing stapled security on Equity
Slide 14: HY23 Result Operating performance
Lendlease HY23 Financial Results 7 HY23 Result Operating performance Progress made across Investments Development the majority of key $48b 8% $18b Funds Under Management Work in Progress operating metrics despite a challenging operating $33b 9% $2.8b 94% Assets Under Management Completions environme
Slide 15: Global presence, local expertise
Lendlease HY23 Financial Results 8 Global presence, local expertise1 London • Thamesmead Waterfront • Euston Station • Silvertown • International Quarter London • Elephant Park • High Road West • Smithfield, Birmingham Chicago • Southbank San Francisco • Lakeshore East • San Francisco Bay Area Proje
Slide 16: Investments
Lendlease HY23 Financial Results 9 Investments Management EBITDA ($m) Management earnings Operational performance1 HY22 HY23 40 • Funds Management: 37 Our develop to core − Revenue2 $92m, up 16% pipeline products, − Fees growing in line with FUM 20 − Expenses higher to support resourcing for platfor
Slide 17: Investments
Lendlease HY23 Financial Results 10 Investments Investment portfolio1 EBITDA ($m) Investment Portfolio earnings HY22 HY23 Performance3 • Lifted by $78m pre tax partial divestment of asset management 140 Retaining a larger income stream from the US Military Housing portfolio • Asset level performance
Slide 18: Development
Lendlease HY23 Financial Results 11 Development EBITDA ($m) Operational performance1 Urban portfolio: HY22 HY23 • Leasing at The Exchange TRX 57 We remain on track to • Acquisition fees from One Circular Quay 45 achieve our c.$8b • Leasing at Blue & William, North Sydney and Sydney Place 32 completi
Slide 19: Development
Lendlease HY23 Financial Results 12 Development Pipeline and Capital by Operational phase Operational performance Converting the pipeline Operational phase Pipeline Capital • Capital More than $6b of work is − Acceleration of development pipeline reflected in higher FY22 HY23 FY22 HY23 expected to c
Slide 20: Construction
Lendlease HY23 Financial Results 13 Construction Backlog revenue ($b) Operational performance and outlook1 • EBITDA $68m, down from $84m 2.3 (3.7) 10.5 • EBITDA margin 1.8%, down from 2.6%: Working collaboratively 0.5 9.6 − Expected performance with proactive management of: with partners has been o
Slide 21: Financial Summary
Lendlease HY23 Financial Results 14 Use image on page 206 of AR Financial Summary Simon Dixon Global Chief Financial Officer San Francisco: Hayes Point Artist’s impression
Slide 22: Financial performance
Lendlease HY23 Financial Results 15 Financial performance1 $m Core HY22 HY23 Change • Lifted by profit on partial divestment of US Military Housing asset Investments 141 197 40% management income stream Operating Profit after Tax Development 39 89 128% • Leasing driving revaluations; acquisition fee
Slide 23: Portfolio Management Framework (PMF)
Lendlease HY23 Financial Results 16 Portfolio Management Framework (PMF) Refinements at the November 2022 strategy update reflect the evolution of the Group’s strategy to be ‘Investment led’ Denotes a change 2 Business model (EBITDA mix) Previous New HY23 Investments 35-45% 40-50% 56% Development 40
Slide 24: Net debt
Lendlease HY23 Financial Results 17 Net debt Net Debt1 ($b) 0.2 2.6 0.1 Co-investment funding to 0.7 0.1 drive FUM Growth. 0.2 (0.1) 0.1 0.2 1.1 Development spend of $0.8b with $18b in WIP. FY22 Net Debt 21 Moorfields Other US One Circular Net Construction Non core Interest and tax HY23 Net Co-inves
Slide 25: Invested capital
Lendlease HY23 Financial Results 18 Invested Segment Invested capital1 • Growth in Investments capital to drive FUM: capital $b Change − $70b FUM by FY26 Investments $4.4b $0.7b − Targeting $7b invested capital by FY26 Our transition to being Development $5.9b $0.5b • Capital light development model
Slide 26: Treasury
Lendlease HY23 Financial Results 19 Treasury Treasury management Drawn debt maturity ($m) FY22 HY23 Bank Debt Bond Net debt $m 1,060 2,623 1,326 The Group remains • 74% of the Group’s total facilities are Gearing1 % 7.3% 16.8% sustainable financings confident it has financial Interest cover times 5.
Slide 27: Outlook
Lendlease HY23 Financial Results 20 Outlook Tony Lombardo Sydney: Circular Quay renewal Global CEO Artist’s impression Planning and design partner comprises Capella Capital, Lendlease Construction; and BESIX Watpac.
Slide 28: Outlook
Lendlease HY23 Financial Results 21 Outlook Well positioned to achieve improved operating returns. Group • Portfolio optimisation • Risks: Inflation, supply chain and interest rates • ROE target of 8-10% expected to be met by FY24 Spark One Melbourne Quarter Milano Santa Giulia Investments Developme
Slide 29: Questions
Lendlease HY23 Financial Results 22 Questions
Slide 30: Half Year Results Appendix
2023 Half Year Results Appendix 13 February 2023 London: Elephant Park Sydney: Sydney Place
Slide 31: Health and Safety
Lendlease HY23 Financial Results 2 HY23 highlights • Key performance indicators at record rates Health and • Safety transformation: Three P Strategy: Safety − Physical safety; Product safety; Psychological safety Critical Incident Frequency Rate1 Operations without a critical incident2 (%) Lost Time
Slide 32: Environmental, Social and Governance
Lendlease HY23 Financial Results 3 HY23 key achievements Environmental, Published 2nd Joined the annual 2022 Launched Social and Global Lendlease Imported first renewable Published 2022 Modern Expanded Governance Cooksafe Europe diesel Slavery FY22 ESG Coalition1 Mission Zero into Australia Statemen
Slide 33: Lendlease HY23 Financial Results
Lendlease HY23 Financial Results 4
Slide 34: Lendlease HY23 Financial Results
Lendlease HY23 Financial Results 5
Slide 35: Group Financials
Lendlease HY23 Financial Results 6 Group Financials Sydney: Daramu House, Barangaroo South
Slide 36: Income Statement (Statutory Result)
Lendlease HY23 Financial Results 7 $m HY22 HY23 Revenue from contracts with customers 4,148 5,103 Other revenue 70 61 Income Cost of sales Gross profit (3,849) 369 (4,811) 353 Statement Share of profit of equity accounted investments 105 49 (Statutory Other income Other expenses 67 (863) 95 (556) Re
Slide 37: Reconciliation of Core Operating Profit
Lendlease HY23 Financial Results 8 $m HY22 HY23 Core operating profit after tax 28 105 Add/(less): Investment properties revaluations2 4 (9) Reconciliation Add/(less): Financial assets revaluations2 33 (3) of Core Add/(less): Equity accounted investments revaluations2 20 (27) Operating Total Investm
Slide 38: Portfolio Management Framework
Lendlease HY23 Financial Results 9 Target HY22 HY23 Total Group Metrics Core Operating ROE 8-10% 0.8% 3.1% Portfolio Distribution payout ratio1 2 30-50% 125% 32% Gearing 10-20% 7.3% 16.8% Management Core Business EBITDA Mix Framework Investments 40-50% 53% 56% Development 40-50% 15% 25% Construction
Slide 39: Segment Financial Metrics
Lendlease HY23 Financial Results 10 Operating Profit after Tax ($m) Operating EBITDA ($m) HY22 HY23 HY22 HY23 197 Segment 142 Financial 111 141 Metrics 54 54 89 84 68 30 39 13 Investments Development Construction Investments Development Construction ROIC1,2 (Investments, Development) Invested Capita
Slide 40: HY23 Regional EBITDA to PAT Reconciliation
Lendlease HY23 Financial Results 11 Operating Operating $m Net Interest D&A2 PBT Tax EBITDA1 PAT1 Australia Investments 67 - (2) 65 (16) 49 HY23 Development 102 2 (4) 100 (30) 70 Construction 61 - (9) 52 (16) 36 Regional Total Australia 230 2 (15) 217 (62) 155 EBITDA to Asia Investments 38 - (1) 37
Slide 41: Exchange Rates
Lendlease HY23 Financial Results 12 Income Statement1 Statement of Financial Position2 Local Foreign HY22 FY22 HY23 Local Foreign HY22 FY22 HY23 AUD USD 0.73 0.72 0.67 AUD USD 0.73 0.69 0.68 Exchange AUD AUD GBP EUR 0.54 0.63 0.55 0.65 0.57 0.66 AUD AUD GBP EUR 0.54 0.64 0.57 0.66 0.56 0.64 Rates AU
Slide 42: Investments Segment
Lendlease HY23 Financial Results 13 Investments Segment Boston: 60 Guest Street Artist’s impression
Slide 43: Earnings Drivers Investments
Lendlease HY23 Financial Results 14 Earnings Drivers ROIC target 6-9%1 Investments Invested capital $4.4b Management Earnings Investment Portfolio Earnings Commercial Residential Co-investment Funds asset asset positions in Retirement management management management managed funds2 Living2 Other2 $4
Slide 44: Investments
Lendlease HY23 Financial Results 15 Overview Performance1 HY22 HY23 • The Investments segment comprises a leading investment and asset Core operating business EBITDA mix % 53 56 management platform and the Group’s investment portfolio across ROIC % 5.9 7.1 the residential (including retirement), wor
Slide 45: Investments Earnings & Portfolio
Lendlease HY23 Financial Results 16 EBITDA ($m) Invested Capital ($b) Management EBITDA1 Investment Portfolio EBITDA2 Invested Capital ROIC Investments 224 197 7.0 6.0 5.7% 5.8% 5.9% 9.7% 7.1% Earnings & 156 120 141 57 5.0 4.4 Portfolio 70 121 4.0 3.6 3.7 3.6 3.7 59 3.0 71 140 2.0 86 104 82 1.0 50 -
Slide 46: Funds & Assets Under Management
Lendlease HY23 Financial Results 17 FUM ($b) AUM ($b) CAGR² of 8.9% Funds & 48.0 32.8 44.4 Assets Under 35.2 36.0 39.6 28.7 29.3 28.5 30.0 Management1 FY19 FY20 FY21 FY22 HY23 FY19 FY20 FY21 FY22 HY23 HY23 FUM by region HY23 AUM by region Australia Asia Europe United States Australia Asia Europe Uni
Slide 47: Funds Under Management By Region
Lendlease HY23 Financial Results 18 Group ($b) 2.9 (0.3) 0.2 0.8 48.0 44.4 Funds Under Management1 By Region FY22 Additions Divest- Revaluations FX and HY23 ments Other By region ($b) FY22 Additions Divestments Revaluations FX and Other HY23 Australia 31.1 1.1 (0.3) 0.2 - 32.1 Asia 9.4 - - - 0.6 10.
Slide 48: Major Fund Summary
Lendlease HY23 Financial Results 19 Major Fund Summary1 HY23 funds management platform Total No. of Weighted assets Gearing Co-investment Region Sector assets Occupancy avg. cap rate $b % % $m # % % Australian Prime Property Fund Commercial 7.0 22.7 8.0 410 Aus Workplace 21 95.8 4.5 Lendlease Intern
Slide 49: Assets Under Management By Product
Lendlease HY23 Financial Results 20 Group ($b) 1.9 (0.3) 0.1 1.1 32.8 30.0 Assets Under Management1 By Product FY22 Additions Divest- Revaluations FX and HY23 ments Other By product ($b) FY22 Additions Divestments Revaluations FX and Other HY23 Commercial 15.2 1.5 (0.3) 0.1 0.9 17.4 Residential 14.8
Slide 50: Retirement Living
Lendlease HY23 Financial Results 21 Value drivers1 HY22 HY23 Ownership % 50 25 Retirement Equity investment Long term growth rate $b % 1.0 3.5 0.5 3.5 Living Discount rate % 12.1 12.1 Queensland 13 villages Operating return % 4.7 6.1 c2,990 units Northern Territory Western Australia New South Wales
Slide 51: Development Segment
Lendlease HY23 Financial Results 22 Development Segment Chicago: Cirrus, Lakeshore East
Slide 52: Earnings Drivers Development
Lendlease HY23 Financial Results 23 ROIC target 10-13% Earnings Drivers Invested capital $5.9b Development Pipeline1 $120.6b Development Phase In Conversion Master Planned Work in Progress $57.4b $45.3b $17.9b pipeline pipeline pipeline $0.4b $2.4b $3.1b capital capital capital Completions target of
Slide 53: Development
Lendlease HY23 Financial Results 24 Overview Performance HY22 HY23 • The Development segment is predominantly focused on the creation Core business EBITDA mix % 15 25 of mixed use precincts that comprise apartments, workplaces and Total EBITDA $m 39 89 associated leisure and entertainment amenity. T
Slide 54: Development Earnings / Work In Progress
Lendlease HY23 Financial Results 25 EBITDA ($m) Invested Capital ($b) 8.0 Invested Capital ROIC 11.6% 4.7% 7.2% 2.2% 1.9% Development 261 272 7.0 5.9 244 Earnings / 5.4 6.0 4.8 4.8 5.0 4.4 Work In 4.0 Progress 89 3.0 2.0 39 1.0 - HY19 HY20 HY21 HY22 HY23 FY19 FY20 FY21 FY22 HY23 WIP1 roll forward ($
Slide 55: Development Pipeline
Lendlease HY23 Financial Results 26 Pipeline1 ($b) Pipeline1 roll forward ($b) 117.0 120.6 113.0 113.6 117.0 3.1 (2.8) 3.3 120.6 Development Pipeline 76.1 FY19 FY20 FY21 FY22 HY23 FY22 New work Completions FX and Other HY23 secured Pipeline1 by product ($b) Commencements by product ($b) Apartment fo
Slide 56: Development Completions
Lendlease HY23 Financial Results 27 Apartments for sale completions End value2 City Project Building Ownership3 Units ($b) Development London Elephant Park City Lights Point 100% 104 0.1 Completions Total 104 0.1 Apartments for rent completions End value2 City Project Building Ownership3 Units ($b)
Slide 57: Apartment Settlements
Lendlease HY23 Financial Results 28 Ownership Units $m Australia Melbourne Quarter – East Tower 50% 117 84 Apartment Total Australia 117 84 Settlements Europe Elephant Park – City Lights Point 100% 104 60 Potato Wharf – Block 4 100% 35 16 Other 3 7 Total Europe 142 83 United States Lakeshore East –
Slide 58: Apartments Completions Profile
Lendlease HY23 Financial Results 29 Total Units Presales1 Delivery City Project Building Ownership Presold units presold1 ($b) Date2 Apartments for sale Apartments Sydney Barangaroo South Residences One 315 75% 93% 292 1.9 FY24 Completions Kuala Lumpur The Exchange TRX London Elephant Park RESIDENSI
Slide 59: Workplace and Other Completions Profile
Lendlease HY23 Financial Results 30 Completion City Project Building Capital model Ownership sqm '0001 date2 Sydney Blue & William Blue & William Fund Through3 - 14 FY23 Workplace Melbourne Melbourne Quarter Melbourne Quarter Tower Fund Through3 - 75 FY24 Kuala Lumpur The Exchange TRX Retail Joint V
Slide 60: Australia Communities
Lendlease HY23 Financial Results 31 Sales & Settlements Sales Settlements HY22 HY23 HY22 HY23 Lots $m Lots $m Lots $m Lots $m Australia Queensland 617 161 476 149 204 57 437 114 Communities New South Wales Victoria 149 638 73 203 50 206 32 59 55 172 33 39 211 315 80 95 South Australia - - - - 3 - -
Slide 61: Conversion of Secured Apartments Pipeline
Lendlease HY23 Financial Results 32 Indicative conversion timing1 of secured residential for sale pipeline to FY27 FY23 FY24 FY25 FY26 FY27 City Units Sydney2 158 Conversion of London3 York4 3,595 392 Secured Melbourne5 Chicago6 1,332 317 Apartments Milan7 Birmingham8 776 580 Pipeline1 Kuala Lumpur9
Slide 62: Conversion of Secured Workplace and Other Pipeline
Lendlease HY23 Financial Results 33 Indicative commencements timing1 of secured commercial pipeline to FY27 sqm Conversion of City Project Sectors '0002 FY23 FY24 FY25 FY26 FY27 Milan Milan Innovation District - Stage 1 Office / Retail / Hotel 137 Secured Los Angeles La Cienega Office 24 Workplace S
Slide 63: Major Urban Project Summary
Lendlease HY23 Financial Results 34 Residential Commercial Estimated Project Delivery Completion backlog backlog end value Land payment Region Project secured commenced date units sqm ‘0002 ($b)3 model Major Urban Australia Barangaroo South, Sydney One Circular Quay, Sydney FY09 FY23 FY12 FY23 FY26
Slide 64: Development Capital
Lendlease HY23 Financial Results 35 $5.9b of invested capital in land and infrastructure controls $121b development pipeline HY23 capital - Operational Stage HY23 capital - Structure In Conversion Master planned WIP Other Urban Projects Deconsolidated JVs Development Impaired Projects Communities Ca
Slide 65: Investment partner funding model - example
Lendlease HY23 Financial Results 36 Investment partner funding model - example Case study: International Towers Sydney, Barangaroo Example assumes Lendlease retains 25% stake during Development phase South (Towers 2 & 3) • Secured in 2009 to regenerate large mixed use precinct • Concept plan approve
Slide 66: Construction Segment
Lendlease HY23 Financial Results 37 Construction Segment Melbourne: Melbourne Connect
Slide 67: Earnings Drivers Construction
Lendlease HY23 Financial Results 38 EBITDA margin Earnings Drivers target 2-3% Construction Backlog1 $9.6b Australia Asia Europe United States Revenue Revenue Revenue Revenue in the last 6 months in the last 6 months in the last 6 months in the last 6 months $1.9b $0.1b $0.4b $1.3b Backlog1 Backlog1
Slide 68: Construction
Lendlease HY23 Financial Results 39 Overview Performance HY22 HY23 • The Construction segment provides project management, design and Core business EBITDA mix % 32 19 construction services, predominantly in the commercial, residential, EBITDA margin % 2.6 1.8 mixed use, defence and social infrastruc
Slide 69: Construction Earnings / Backlog / New Work Secured
Lendlease HY23 Financial Results 40 EBITDA ($m) Backlog ($b)1 35 0 EBITDA Margin 12.6 Construction 30 0 2.1% 2.3% 3.0% 2.6% 1.8% 10.6 11.3 10.5 9.6 Earnings / 25 0 20 0 Backlog / New 15 0 111 101 104 84 Work Secured 10 0 50 68 - HY19 HY20 HY21 HY22 HY23 FY19 FY20 FY21 FY22 HY23 HY23 New work secured
Slide 70: Construction Backlog by Region
Lendlease HY23 Financial Results 41 Group ($b) Australia ($b) Construction 2.3 (3.7) 0.9 (1.9) Backlog by 10.5 0.5 9.6 7.0 - 6.0 Region1,2 Book to bill³: 0.5 Book to bill³: 0.6 FY22 New work Revenue FX & Other HY23 FY22 New work Revenue FX & Other HY23 secured secured Europe ($b) United States ($b)
Slide 71: Important Notice
Lendlease HY23 Financial Results 42 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