Lendlease Group · ASX:LLC
Lendlease — Investor Day (May 2012)
110 slides from Lendlease's investor day presentation, May 16, 2012
Slide 1: Lend Lease Investor Day presentations
ASX Announcement Lend Lease Investor Day presentations For personal use only 16 May 2012 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: For personal use only
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 8.30 Strategy overview and operational update 9.00 Financial overview and portfolio update 9.30 Panel Q&A 10.00 Australian construction update 10.30 Panel Q&A Australian construction business 11.00 Coffee break 11.30 Major project update 12.00 Barangaroo South update 12.
Slide 5: Strategy overview and operational update
For personal use only Strategy overview and operational update Steve McCann Group Chief Executive Officer & Managing Director
Slide 6: Agenda
Agenda For personal use only 1. Safety commitment 2. Vision and values 3. New York investigation 4. Senior management bench strength 5. Strategy update 6. How do we measure success? 7. Pathway to achieving ROE target 8. Operational update 9. External environment and key priorities
Slide 7: Safety commitment – to be Incident & Injury Free
Safety commitment – to be Incident & Injury Free For personal use only So far this year items of note include: 81% of our operations did not record a Flash, HiPo, Critical or Lost Time Incident Our Critical incident frequency rate is trending down when compared with the same period in FY11 Rev
Slide 8: Our vision
For personal use only Our vision 7
Slide 9: Our core values
For personal use only Our core values 8
Slide 10: New York investigation
New York investigation For personal use only Investigation now concluded Related to past billing practices and use of minority business enterprises which occurred in the New York branch of the Bovis construction business and they were stopped in 2009 Payments provided for in amounts previously
Slide 11: Senior management bench strength
Senior management bench strength Group Chief Executive Officer For personal use only and Managing Director Steve McCann 7 years at Lend Lease Group Chief Group Chief CEO Australia CEO Americas CEO Asia Operating Officer/ Financial Officer Chief Strategy Mark Menhinnitt Bob McNamara Rod Leaver CEO EM
Slide 12: Strategy update
For personal use only update Strategy
Slide 13: Our strategic direction
Our strategic direction Our Strategic To be the Leading International Property and For personal use only Direction: Infrastructure Group Segments Sectors Leading International Development Property and Construction Infrastructure are our Be in the top three Focus on four core Investment core se
Slide 14: Our segment position
Our segment position For personal use only Investment Development Construction Services Ownership Management Strong capabilities in project A leading Focused Leading investment predominately on management, Property, asset development management co-investments design and and facilities mana
Slide 15: Continued focus on key trends
Continued focus on key trends Leading urban regeneration portfolio in Australia and UK For personal use only Urban Regeneration Focus on delivery and execution Number one senior living platform in Australia Ageing Population 70 retirement villages Australia - significant opportunities from
Slide 16: Commercialising sustainability
Commercialising sustainability For personal use only 15
Slide 17: Strategy first introduced May 2009
Strategy first introduced May 2009 For personal use only LEAD Outperformance 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 integrate
Slide 18: Key strategic achievements 2012
Key strategic achievements 2012 Achievements first half 2012 For personal use only Barangaroo South and Showgrounds Hill (RNA) commenced construction BUILD Infrastructure backlog revenue of A$6.8b as at 31 December 2011. Reports into Australian region from 1 February 2012 Higher profitability
Slide 19: How do we measure success?
How do we measure success? Metric Target For personal use only Return on Equity1 Greater than 15% per annum Credit Rating Committed to investment grade credit rating Gearing2 <20% Interest Coverage Ratio >5x Annuity Income >15% of operating EBITDA Distribution Payout Ratio 40% to 60% of
Slide 20: Pathway to achieving return on equity target
Pathway to achieving return on equity target For personal use only Growth to be driven by development, investment management and infrastructure Grow platforms Capital invested into key growth platforms across the Lend Lease segments and sectors – circa A$1.0b-1.5b over next three years Realign
Slide 21: Pathway to achieving ROE target
Pathway to achieving ROE target For personal use only Drive operational efficiencies through the Group transformation project Operational Continue to focus on margin improvement excellence / cost Finance, HR and IT transformation projects focus Strategy sourcing program Continued focus on
Slide 22: Operational update
For personal use only update Operational
Slide 23: Earnings split – reweighting portfolio in line with strategy
Earnings split – reweighting portfolio in line with strategy Geographic split 1 For personal use only 31 December 2011 31 December 2010 Americas Americas Europe 6% 10% 14% Asia Europe Australia 10% 34% 50% Australia 70% Asia 6% Segment earnings split1 31 December 2011 31 December 2010 Investment Dev
Slide 24: Australia business update
Australia business update Dec Dec For personal use only Key Metrics 2011 2010 Operating Profit after tax 207.1 136.7 Increasing density of urban (A$m) boundaries supports growth in large Construction new work secured (A$m) 5,057.2 750.3 mixed used development projects Dec June 2011 2011 Strong g
Slide 25: Australia business update (continued)
Australia business update (continued) For personal use only Deliver key development projects - Barangaroo South, Showground Hill, Victoria Harbour Grow construction backlog in traditional markets Leverage infrastructure growth in rail Key priorities and marine sectors and expand presence in re
Slide 26: Asia business update
Asia business update For personal use only Dec Dec Strong fundamentals in Asia Key Metrics 2011 2010 Operating Profit after tax Pursuing additional mixed use (A$m) 28.8 15.8 Opportunities/ opportunities in Singapore and Asia Construction new work 312.6 412.0 outlook Robust outlook for Asian se
Slide 27: Europe business update
Europe business update Dec Dec Residential in early stages of recovery Key Metrics 2011 2010 For personal use only with London expected to outperform Profit after tax (A$m) 43.0 94.6 Fits well with timing of major Construction new work secured 411.6 764.5 (A$m) projects Dec June Foreign invest
Slide 28: Americas business update
Americas business update Dec Dec Increased activity in key markets Key Metrics 2011 2010 For personal use only Profit after tax (A$m) 18.1 28.9 including New York and Chicago Construction new work secured Social infrastructure public private (A$m) 899.0 1,244.2 Opportunities/ partnerships Dec Ju
Slide 29: External environment and key priorities
For personal use only External environment and key priorities
Slide 30: External outlook – continued volatility
External outlook – continued volatility Australia For personal use only Strong growth outlook in infrastructure sector Commercial construction market remains challenging however strong internal development pipeline to support backlog Residential market conditions remain weak Asia Strong fund
Slide 31: Key priorities for the Group FY12-FY14
Key priorities for the Group FY12-FY14 For personal use only Achieve a balanced and diversified portfolio Recycle capital toward higher yielding assets / businesses • Drive operational efficiencies through the Group transformation project • Maximise productivity through people initiatives • Deli
Slide 32: Financial overview and portfolio update
For personal use only Financial overview and portfolio update Tony Lombardo Group Chief Financial Officer
Slide 33: Agenda
Agenda For personal use only 1. Portfolio management approach 2. Capital allocation Source of funds Use of funds Future capital allocation 3. Financial position
Slide 34: Portfolio management approach
For personal use only Portfolio management approach
Slide 35: Lend Lease portfolio management approach
Lend Lease portfolio management approach For personal use only Construction Investment Operating management Our capital is invested Services Understanding in both operating and and measuring our capital capital intensive business units Capital Development intensive Ownership 34
Slide 36: Risk adjusted capital
Risk adjusted capital Risk adjusted capital application in Lend Lease For personal use only Rationale for risk adjusted capital Methodology Tool to allocate risk capital between The risk adjusted capital required for each businesses and geographies individual business unit / major asset is Ana
Slide 37: Strategic capital allocation achieved
Strategic capital allocation achieved TARGET Current risk adjusted capital 1 For personal use only Europe Australia 21% Region >~60% Amercias All other regions 7% No more than ~20% each Asia 5% Australia Services 67% Development 3% ~35 – 45% Investment management Construction 1% Ownership 11% ~30 –
Slide 38: Capital allocation
For personal use only Capital allocation
Slide 39: Sources of capital – medium term FY12-FY14
Sources of capital – medium term FY12-FY14 For personal use only Source of Capital Expected position Retained earnings Current distribution payout ratio of between 40% to 60% of operating profit after tax Distribution reinvestment plan to remain active Portfolio Management A$3.0b of capital rec
Slide 40: Use of funds
Use of funds Investment pipeline of between A$1.0 -1.5b over next three years1 For personal use only Region Sector Australia Major development projects Co-investment in funds Public private partnership equity positions Americas Lend Lease healthcare developments opportunities Asia Retail d
Slide 41: Target returns
Target returns For personal use only Investment Property Business units targets Development Construction management ownership Gross margin/yield c. 15-25% c. 6-10% c. 40% c. 5-7% Risk adjusted equity return >17% >20% >20% >10% Hurdle Rates for new projects Type of development project (Ungeared IRR,
Slide 42: Integrated property model example
Integrated property model example For personal use only Key assumptions Lend Lease owned Potential pre-tax profit (pre overhead) available if Lend Lease takes 25% equity End development value A$1b Development profit = A$49-65m Construction value A$500m Development management fees = A$20-40m Gr
Slide 43: Secured work
Secured work As at 31 Backlog Backlog Profit and timing Capital model For personal use only December 2011 Development End value of major Residential land – Profits to be Lend Lease to urban regeneration 68,182 units released over contribute between projects in excess Built-form – 23,848 pr
Slide 44: Secured work continued
Secured work continued As at 31 Backlog Backlog Profit and timing Capital model For personal use only December 2011 Investment Funds under 8 funds Profits recurring in New capital required management A$11.8b A number of individual nature for growth only – Lend management Lease will take a
Slide 45: Portfolio snapshot – major projects
Portfolio snapshot – major projects Project Key statistics % Project status Profit timing Acquisition of complete site For personal use only Calendar End value Masterplanning Pre-sales & Production Financial year year secured approval leasing Barangaroo South, 2009 A$6b 0% 2012+ Staged land Sydney
Slide 46: Financial position
For personal use only position Financial
Slide 47: Disciplined capital management
Disciplined capital management Sound financial position For personal use only $2.4b cash and undrawn facilities at 31 December 2011 Diverse funding sources Balanced domestic and overseas debt providers 31 Dec 2011 Average debt maturity 5.1 years (on total 1% UK Bond facilities) 5% Upcoming
Slide 48: Performance history
Performance history Revenue Operating profit after tax For personal use only 16 14 CAGR -22% 600 10% 12 500 CAGR 29% 8% 10 400 A$m 6% 8 A$b 300 6 4% 200 4 100 2% 2 0 0 0% FY09 FY10 FY11 FY09 FY10 FY11 Operating Profit after Tax Operating Profit after Tax margin Operating EBITDA ReturnononEquity Retu
Slide 49: Summary
Summary For personal use only Continued capital allocation and portfolio management in line with strategic targets to drive long term securityholder value Access to a variety of capital sources to fund pipeline Expect gearing to increase as we invest in our development pipeline Will continue
Slide 50: Australian construction update
For personal use only Australian construction update Peter Brecht Managing Director, Construction, Australia
Slide 51: Agenda
Agenda For personal use only 1. Key strategic focus areas for Australia’s construction business 2. Key growth priorities 3. Construction market size 4. Competitive landscape 5. Major projects in delivery 6. Trading update 7. Risk approach 8. Portfolio – market/ contract type 9. Selected major projec
Slide 52: Australian construction business
Australian construction business For personal use only Project Baulderstone Abigroup Infrastructure Management and Services Construction Design, project Multidisciplinary building Multidisciplinary building Asset design, installation management and and engineering and engineering and associated oper
Slide 53: Key strategic focus areas for Australia's construction business
Key strategic focus areas for Australia’s construction business For personal use only Project Controlled growth in areas Management Baulderstone Abigroup Infrastructure of key specialisation and Services Construction Structured and conservative entry into new market sectors Continued focus on
Slide 54: Key growth priorities
Key growth priorities For personal use only Continue to grow the business particularly in the resource based states of Queensland and Western Australia Selectively pursue major building and engineering Public Private Partnership projects Continue penetration into the telecommunications sector
Slide 55: Substantial engineering construction work pipeline
Substantial engineering construction work pipeline For personal use only Infrastructure Work Pipeline A$b Engineering construction is expected to $b 160 underpin growth with total activity in forecast Australia rising to A$108.5 billion in 140 2011/12 driven by mining investments and industrial pr
Slide 56: Construction market size
Construction market size For personal use only Relevant sectors – engineering construction 2011/12 Engineering construction market size - A$108b Mining and heavy Water supply and Railways Harbours industry storage Market size: A$8.6b Market size: A$5.5b Market size: A$47.3b Market size: A$5.0b Pipel
Slide 57: Construction market size continued
Construction market size continued For personal use only Relevant sectors – Building 2011/12 Building market size - A$84b Non-residential Non-residential social commercial and Residential and institutional industrial Market size: A$48.5b Market size: A$17.7b Market size: A$17.9b New other Offices Ac
Slide 58: Competitive landscape
Competitive landscape For personal use only Building market remains highly competitive with Tier one and Tier two contractors bidding at tight margins Alliance contracts are a diminishing delivery model replaced by design and construct models Major competitors in the building market are Brookf
Slide 59: Major projects in delivery
Major projects in delivery For personal use only Construction Contract Secured Completion Project Sector Value A$m type date date Gold Coast University Hospital 1,227 GMP Healthcare 2010 2013 The New Royal Children’s 1,080 Lump sum Healthcare 2008 2015 Hospital Barangaroo South (tower 1) 985 GMP Com
Slide 60: Abigroup
Abigroup Key sector focus For personal use only Rail Water storage and supply Mining and heavy industry / resources Pipelines (Liquefied Natural Gas) Current major projects Origin Alliance A$908m (roads) Queensland Children’s Hospital A$885m (healthcare) Peninsula Link A$655m (roads) O
Slide 61: Baulderstone
Baulderstone Key sector focus For personal use only Mining and heavy industry Ports Healthcare Education Current major projects Tintenbar to Ewingsdale A$531m (roads) Adelaide Oval Redevelopment A$350m (entertainment) Mackay Base Hospital A$328m (healthcare) Opportunities North West
Slide 62: Project Management and Construction
Project Management and Construction For personal use only Key sector focus Healthcare and education Continue penetration into the telco sector Grow the company’s WA building business Current major projects Gold Coast University Hospital A$1.2b (healthcare) The New Royal Children’s Hospital
Slide 63: Infrastructure Services
Infrastructure Services For personal use only Key sector focus Power Water Roads maintenance Mining and heavy industry / resources Industrial Current major projects Loy Yang A Power Station (maintenance) BHP Newman & Port Headland (maintenance) Ergon Energy Electrical Network Service
Slide 64: Risk approach
Risk approach For personal use only Strict adherence to pursuing only those projects where Lend Lease has a record of competency Joint venturing select larger projects with financially sound partners who provide complementary construction skills and resources Structured process in the review o
Slide 65: Backlog / revenue split – December 2011
Backlog / revenue split – 31 December 2011 Backlog Revenue by market Revenue by market Services For personal use only 5% Services 9% Engineering construction 33% Non Non Engineering construction residential residential 36% building 61% building 51% Residential building Residential 1% building 4% Bac
Slide 66: Selected major pipeline of circa A$10.0b
Selected major pipeline of circa A$10.0b Project For personal use only Internal Lend Lease pipeline (Barangaroo South, Showground Hill) Surat Basin Rail Sunshine Coast University Hospital Sydney International Convention, Exhibition & Entertainment Precinct Pacific Highway – Oxley Highway to Kundabun
Slide 67: Summary
Summary For personal use only Portfolio diversified by geography, sector and contract type Project management and construction business has large, long-dated projects from internal development pipeline in addition to secured backlog Infrastructure business on track to deliver earnings accretio
Slide 68: Major project update
For personal use only Major project update David Hutton Group Head of Development
Slide 69: Agenda
Agenda For personal use only 1. A snapshot of our integrated model 2. Examples of Lend Lease’s delivery capabilities 3. Retail development pipeline 4. Major project update
Slide 70: A snapshot of our integrated model
A snapshot of our integrated model For personal use only We find We buy We fund We design We build We manage Specialisation across sectors – apartments, Managing risk through communities, retail, mixed use, commercial, senior living diversification and healthcare Portfolio of projects Funding de
Slide 71: Case study of our integrated model: Darling Quarter, Sydney
Case study of our integrated model: Darling Quarter, Sydney For personal use only Owner: Australian Prime Property Fund Commercial (APPFC), in joint venture with Lend Lease investment mandate client Two campus-style commercial office buildings with 58,000sqm of office space, car parking, leisure
Slide 72: Athletes' Village, London
Athletes’ Village, London - Showcases Lend Lease’s integrated delivery capabilities For personal use only Athletes’ Village for the London 2012 Olympic and Paralympic Games for the Olympic Development Authority All 63 buildings, on 11 plots, a school and a health centre, handed over to LOCOG on
Slide 73: Retail development pipeline
For personal use only Retail development pipeline
Slide 74: Caneland Central, Mackay, Queensland
Caneland Central, Mackay, Queensland For personal use only Owner: APPF Retail 100% Development cost A$221m Services provided by Lend Lease: Development management Design and construction Funds and asset management Property management Awarded Myer Best Property Supplier 2011 Ranked
Slide 75: Key retail development projects
Key retail development projects Development For personal use only Fund / Project cost Update ownership % A$m Craigeburn APPF Retail (75%) Construction commenced January 2012 with A$333m Central, Victoria Lend Lease (25%) delivery planned for October 2013 Lakeside APPF Retail (50%) / Council appr
Slide 76: Major project update
For personal use only Major project update
Slide 77: Global pipeline of large urban regeneration projects
Global pipeline of large urban regeneration projects For personal use only Greenwich Peninsula, London Elephant & Castle, London Americas Europe, Middle East and Africa The International Quarter, Stratford, London JEMTM, Singapore Asia Showground Hill, Brisbane Australia Waterbank, Perth Victoria Ha
Slide 78: Barangaroo South, Sydney
Barangaroo South, Sydney For personal use only Estimated $A6b end value Extension of the Sydney CBD Development period 10 to 15 years Planning consent received for all three commercial towers Construction well underway Lend Lease in detailed discussions with several tenants and in advanc
Slide 79: Showground Hill, Brisbane
Showground Hill, Brisbane For personal use only Project Development Agreement closed Estimated $A6 billion end value with the RNA (The Royal National Extension of the Sydney CBD Agricultural and Industrial Association of Development period 10 to 15 years Queensland) in December 2010 Planni
Slide 80: Victoria Harbour, Melbourne
Victoria Harbour, Melbourne Projects committed or delivered to date: For personal use only Commercial: 75% (floor space) Residential: 30% (floor space) Four residential projects under construction Serrata and Convesso on track for practical completion mid year 2012 Exo – under constructi
Slide 81: Victoria Harbour, Melbourne
Victoria Harbour, Melbourne For personal use only
Slide 82: Waterbank, Perth – preferred position
Waterbank, Perth – preferred position For personal use only Circa $A1b end value Development period: 2014 to 2021 Partnership between Metropolitan Redevelopment Authority and Lend Lease Currently finalising a Project Development Deed Approx Four hectare site Residential: 630 dwellings
Slide 83: Jem™, Singapore
Jem™, Singapore For personal use only End project value SGD$1.6b Large scale mixed use suburban development of 108,000 sqm 25% owned by Lend Lease, 75% by ARIF Construction on schedule: Retail scheduled to open pre June 2013 Commercial scheduled for completion by December 2013 100% of
Slide 84: Setia City Mall, Malaysia
Setia City Mall, Malaysia For personal use only End project value A$190m Mid market suburban retail development of 65,000sqm Integrated project - Lend Lease providing development management, construction, investment management and asset/property management 50% owned by Asian Retail Investmen
Slide 85: Elephant & Castle, London
Elephant & Castle, London For personal use only £1.5b residential led, mixed use urban regeneration scheme over 15 years Conditional regeneration agreement with London Borough of Southwark signed July 2010 circa 2,500 new homes and 15,000sqm of retail, restaurant and leisure space Secured ad
Slide 86: The International Quarter, Stratford City, London
The International Quarter, Stratford City, London For personal use only £1.3 billion joint venture with London & Continental Railways Creation of a major new commercial district with nearly 400,000sqm of office space Masterplan approval in November 2011 Current focus on sourcing tenants and
Slide 87: Barangaroo South update
For personal use only Barangaroo South update Andrew Wilson Managing Director – Barangaroo South
Slide 88: Agenda
Agenda For personal use only 1. Barangaroo Overview Transport 2. Barangaroo South - vision and summary 3. Review of Barangaroo South plans Commercial Retail Residential 4. Construction update
Slide 89: Barangaroo
For personal use only Barangaroo
Slide 90: Barangaroo
For personal use only Barangaroo
Slide 91: Barangaroo in context
Barangaroo in context For personal use only From Barangaroo Wynyard 4 mins walk Martin Place 6 mins walk Governor Phillip Tower 8 mins walk 90
Slide 92: Wynyard walk
Wynyard walk For personal use only “Work will begin on a 110-metre underground pedestrian tunnel and a 100-metre bridge crossing Sussex Street in October 2012. The entire project would cost about $300 million.” Minister for Transport Gladys Berejiklian 91
Slide 93: Wynyard walk
For personal use only Wynyard walk 92
Slide 94: Barangaroo South
For personal use only South Barangaroo
Slide 95: Barangaroo South development summary
Barangaroo South Development summary For personal use only Commercial Three high-rise office towers 320,000sqm Five other commercial offices Residential Three high-rise residential One mid rise residential 100,000sqm Four low-rise residential Amenity 80-100 retail outlets 30,000sqm Int
Slide 96: Review of the approved plans
Review of the approved plans For personal use only Commercial towers C3 C5 C4 C3 C4 C5 95
Slide 97: Three commercial towers
Three commercial towers C3 C4 C5 For personal use only Height (RL): 209m (49 storeys) Height (RL): 180m (42 storeys) Height (RL): 168m (39 storeys) 105,605m2 commercial 95,571m2 commercial 83,854m2 commercial 7,021m2 retail 2,691m2 retail 5,315m2 retail 1,677m2 child care 183 cars, 401bikes 166 cars
Slide 98: Intelligent buildings
Intelligent buildings Fibre backbone For personal use only Wireless overlay precinct wide Tri-generation + grid Real time energy monitoring Linked info signage Lift cars Transport nodes Retailers Personal devices Swipe card or phone Retail purchase Lift destinations Visitor
Slide 99: Sustainable design
Sustainable design For personal use only Harbour heat rejection 98
Slide 100: Retail serving residents, visitors and workers
Retail serving residents, visitors and workers For personal use only Commercial Retail 99
Slide 101: Activated by ground level retail
Activated by ground level retail For personal use only 100
Slide 102: A premier residential address
A premier residential address For personal use only Commercial Retail Residential R8 R9 101
Slide 103: Construction update
For personal use only update Construction
Slide 104: Current site overview
Current site overview For personal use only Water Treatment Plant Harbour Protection Measures Silt curtain Water monitoring Site Accommodation Reinforcement C4 Piling Preparing for C3 Bentonite Yard underway piling Plants Archaeology Retention Wall Site Entry
Slide 105: Current works
Current works For personal use only Piling rig in operation for the first commercial building foundations, Barangaroo South, Sydney 104
Slide 106: Removing excavated material by ship
Removing excavated material by ship For personal use only Artist impression of loading basement excavated material onto a ship Barangaroo South, Sydney 105
Slide 107: Planning status
Planning status For personal use only Approved Masterplan approved in December 2010 Basement (mod 3) C3, C4 and C5 commercial towers 130 levels of large floor plate space 266,000 NLA 15,000sqm retail in tower podiums 106
Slide 108: Closing comments
For personal use only Closing comments Steve McCann Group Chief Executive Officer & Managing Director
Slide 109: Key priorities for the Group FY12-FY14
Key priorities for the Group FY12-FY14 For personal use only Achieve a balanced and diversified portfolio Recycle capital toward higher yielding assets / businesses • Drive operational efficiencies through the Group transformation project • Maximise productivity through people initiatives • Driv
Slide 110: For personal use only
For personal use only