Lendlease Group · ASX:LLC
Lendlease — H1 2016 Earnings Presentation
40 slides from Lendlease's earnings presentation, Feb 17, 2016
Slide 1: Lendlease 2016 Half Year Results
Lendlease 2016 Half Year Results 17 February 2016
Slide 2: Indigenous engagement and reconciliation
LENDLEASE – 1H16 FINANCIAL RESULTS 2 Indigenous engagement and reconciliation 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, sustainable business growt
Slide 3: Performance and Results Highlights, International, Financial Review, Outlook, Q&A, Appendices
3 Performance and 1 Results Highlights 2 International 3 Financial Review 4 Outlook 5 Q&A 6 Appendices Image: Barangaroo South, Sydney
Slide 4: 1H16 Safety
4 1H16 Safety 1.95 (2.1 in 1H15) Lost Time Injury Frequency Rate in the last 12 months 83% (82 in 1H15) % of operations have not had a critical incident in the last 12 months Image: Barangaroo Point Reserve, Sydney
Slide 5: Performance and Results Highlights
Section 1 Performance and Results Highlights Steve McCann Group Chief Executive Officer and Managing Director Image: Anadara, Barangaroo South
Slide 6: Double digit earnings growth, strong cash generation and positive growth outlook
LENDLEASE – 1H16 FINANCIAL RESULTS 6 Double digit earnings growth, strong cash generation and positive growth outlook Securityholder returns • Strong start in the half year ended 31 December 2015, with profit after tax of $354 million and earnings per stapled security of 60.9 cents, both up 12%1 • I
Slide 7: Group Financial Highlights
LENDLEASE – 1H16 FINANCIAL RESULTS 7 Group Financial Highlights EBITDA by Operating Segment Key metrics1 1H16 1H15 • EBITDA $512.0 million é 10% Investment Management • PAT $353.8 million é 12% • Earnings per stapled security é 12% 60.9 cents Construction • Residential pre sold revenue of é 49% $5.4
Slide 8: Key earnings drivers
LENDLEASE – 1H16 FINANCIAL RESULTS 8 Key earnings drivers Development Pre Sold Revenue Construction Funds Under Pipeline ($bn) ($bn) Backlog Revenue Management 50 6 20 25 ($bn) ($bn) 19 45 5 20 18 40 4 17 15 35 3 16 15 10 30 2 14 25 1 5 1H15 1H16 FY14 FY15 1H15 1H16 FY14 FY15 1H15 1H16 FY14 FY15 1H1
Slide 9: Growing earnings underpinned by a strong base of recurring income
LENDLEASE – 1H16 FINANCIAL RESULTS 9 Growing earnings underpinned by a strong base of recurring income 100% Circa 60%-70% of earnings 80% are derived from residential, commercial and Operating EBITDA $m retail development 60% activities and from construction/services margin 40% Circa 30%-40% of earn
Slide 10: Urbanisation remains a key driver of future growth for the Group
LENDLEASE – 1H16 FINANCIAL RESULTS 10 Urbanisation remains a key driver of future growth for the Group 1H16 Urbanisation 100% of estimated remaining end development value 50 $44.9 $46.6 Developments by region billion billion $37.2 $37.4 $37.7 40 $34.7 billion billion billion billion $35.0 billion 30
Slide 11: Strong apartment pre sales and settlement trends in line with historic norms
LENDLEASE – 1H16 FINANCIAL RESULTS 11 Strong apartment pre sales and settlement trends in line with historic norms Zoned apartment backlog (units)1 • Zoned backlog is circa 17,000 apartments Australia UK Asia Americas 17,806 17,355 across all regions, with a further circa 4,000 unzoned apartments. T
Slide 12: Australian Financial Highlights
LENDLEASE – 1H16 FINANCIAL RESULTS 12 Australian Financial Highlights EBITDA1 by Segment Key metrics2 1H16 1H15 • EBITDA $518.5 million é 37% Investment Management • PAT $386.0 million é 30% • Residential pre sold revenue of Construction é 45% $3.7 billion3 • Residential settlements 2,085 é 44% Infr
Slide 13: Australian Segment Highlights
LENDLEASE – 1H16 FINANCIAL RESULTS 13 Australian Segment Highlights Strong performance from Property Development1 • EBITDA up 79% driven by residential settlements • Gross value of land lot settlements up 14% on the prior half year • Average price per land lot pre sold up 9% to $240,000 reflecting p
Slide 14: Australian Segment Highlights
LENDLEASE – 1H16 FINANCIAL RESULTS 14 Australian Segment Highlights Improved Construction performance1 Construction backlog revenue • Backlog revenue up to $10.8 billion 12,000 • Recent wins in Engineering backlog include 10,000 Gateway Upgrade North (circa $630 million) and 8,000 Kingsford Smith Dr
Slide 15: International
Section 2 International Dan Labbad Chief Executive Officer International Operations Image: The International Quarter, London
Slide 16: International Financial Performance
LENDLEASE – 1H16 FINANCIAL RESULTS 16 International Financial Performance Property Development EBITDA1 Infrastructure Development EBITDA1 1H16 1H15 1H16 1H15 Asia Asia N/A Europe Europe Americas Americas $m $m -50 -25 0 25 50 75 100 -10 0 10 20 30 40 50 Construction EBITDA1 Investment Management EBI
Slide 17: International Financial Performance
LENDLEASE – 1H16 FINANCIAL RESULTS 17 International Financial Performance1 • EBITDA $81.1 million é 2% Europe • PAT $73.2 million ê 3% • Property Development pipeline $11.5 billion é 29% • Pre sold revenue $1.7 billion2 é 59% • Construction backlog revenue $1.6 billion é 106% Americas • Funds under
Slide 18: International - project highlights
LENDLEASE – 1H16 FINANCIAL RESULTS 18 International - project highlights The International Quarter • Strong progress at £2.4 billion (A$5.1 billion) joint venture development with London Continental Railways, The International Quarter • Commenced two commercial office buildings totalling 780,000 squ
Slide 19: International - project highlights
LENDLEASE – 1H16 FINANCIAL RESULTS 19 International - project highlights Paya Lebar Central (PLC) • Circa S$3.2 billion (A$3.1 billion) project secured in April 2015 in joint venture with the Abu Dhabi Investment Authority (ADIA) • The site comprises two adjacent parcels separated by Sims Avenue and
Slide 20: International - project highlights
LENDLEASE – 1H16 FINANCIAL RESULTS 20 International - project highlights Riverline (formerly River South) • Circa US$1.5 billion (A$2.1 billion) project secured in 2015 in joint venture with CMK Companies • A 13-acre riverfront site situated near the heart of downtown Chicago • Initial master-planni
Slide 21: Financial Review
Section 3 Financial Review Tony Lombardo Group Chief Financial Officer Image: Barangaroo Point Reserve, Sydney
Slide 22: Financial performance by segment
LENDLEASE – 1H16 FINANCIAL RESULTS 22 Financial performance by segment Property $251 $46.6 26.4% 2,128 Development million billion PAT PAT Mvmt 1H15 EBITDA margin Pipeline Residential Settlements $28 $415 Infrastructure 67.5% 5 million million Development PAT Mvmt 1H15 EBITDA margin PPP Projects Com
Slide 23: First phase of apartment settlements have occurred in 1H16
LENDLEASE – 1H16 FINANCIAL RESULTS 23 First phase of apartment settlements have occurred in 1H16 Pre Pre sold Pre sold and in delivery / conversion FY16 FY17 FY18 FY19 sold %1 revenue $m1 Barangaroo South • Anadara and Alexander Completed in 1H16 ~$300m • 6 apartment buildings: Darling Square • 538
Slide 24: Development capital
LENDLEASE – 1H16 FINANCIAL RESULTS 24 Development capital Total development inventories $b1 • Significant increase in production capital since FY12 - delivering strong $1.9b $2.3b $2.3b $2.4b $3.2b $3.5b growth in the number of apartment 100% projects and commercial towers at major urban regeneratio
Slide 25: Capital deployed in businesses generating recurring income
LENDLEASE – 1H16 FINANCIAL RESULTS 25 Capital deployed in businesses generating recurring income Infrastructure Retirement Investment Management Development Development Qld, 19% WA, 10% Europe, 5% Urbanisation, Australia, 65% Communities, Americas, 29% Offshore, 26% 20% Asia, 38% NZ, 14% Vic, 30% $1
Slide 26: Indicative net cash flow from major projects
LENDLEASE – 1H16 FINANCIAL RESULTS 26 Indicative net cash flow from major projects In-delivery / conversion at 31 December 20151 Overview FY16 FY17 FY18 FY19 Net cash proceeds Cash Cash Cash Cash Communities Assuming >2,000 annual lot settlements Positive Positive Positive Positive Net cash proceeds
Slide 27: Our residential and commercial pre sales book provides strong visibility on profit and cash
LENDLEASE – 1H16 FINANCIAL RESULTS 27 Our residential and commercial pre sales book provides strong visibility on profit and cash $5.4 billion1 pre sold residential Circa $3.0 billion Barangaroo contracted Transactions in 1H16 revenue - indicative cash receipt profile commercial development revenue
Slide 28: Distributions
LENDLEASE – 1H16 FINANCIAL RESULTS 28 Distributions Distribution per security • Distribution policy targets a payout of 40 – 60% of earnings 50 • 1H16 payout ratio of 49% 45 • Continued growth in the 40 contribution from stapled 35 Lendlease Trust • Interim distribution of 30.0 cents, 30 cents 30 un
Slide 29: Investment grade ratings, access to capital, liquidity and funding
LENDLEASE – 1H16 FINANCIAL RESULTS 29 INVESTMENT ACCESS TO CAPITAL LIQUIDITY & GRADE RATINGS • Disciplined capital FUNDING • Company commitment management program • Circa $1.6 billion of cash to maintenance of • Demonstrated access to and undrawn facilities as investment grade 3rd party capital at 3
Slide 30: Outlook
Section 4 Outlook Steve McCann Group Chief Executive Officer and Managing Director Image: One The Elephant, Elephant & Castle
Slide 31: Outlook
LENDLEASE – 1H16 FINANCIAL RESULTS 31 Outlook • Strong position with continued momentum in property markets in both Australia and UK • International markets delivering further geographic diversity and growth opportunities • Circa $5.4 billion1 of pre sold residential revenue across communities and a
Slide 32: Q&A
Section 5 Q&A Image: Darling Square, Sydney
Slide 33: Appendices
Section 6 Appendices Image: South Gardens, Elephant & Castle, London
Slide 34: Group overview by segment
LENDLEASE – 1H16 FINANCIAL RESULTS 34 Group overview by segment Development Construction Investment Management Property & Property & Property Infrastructure Infrastructure Infrastructure 1H16 1H15 1H16 1H15 1H16 1H15 1H16 1H15 Revenue 1,228.8 410.4 59.0 120.1 5,961.3 5,260.3 98.4 106.3 EBITDA 324.8
Slide 35: Portfolio of major urban regeneration projects
LENDLEASE – 1H16 FINANCIAL RESULTS 35 Portfolio of major urban regeneration projects Project End value1 FY16 FY17 FY18+ Integrated development projects Barangaroo South, Sydney A$6.9 billion ü ü ü Darling Square (including ICC Hotel), Sydney A$2.6 billion ü ü ü Victoria Harbour, Melbourne A$5.5 bill
Slide 36: Cash movements during the half year
LENDLEASE – 1H16 FINANCIAL RESULTS 36 Cash movements during the half year 1000 900 200.7 800 (369.5) 700 (13.6) 600 2.3 $ million 500 400 750.1 300 570.0 200 100 0 30 Jun 15 Closing 1H16 Cashflow - 1H16 Cashflow - 1H16 Cashflow - 1H16 FX effects 31 Dec 15 Closing Cash Balance operating activites inv
Slide 37: Debt Profile
LENDLEASE – 1H16 FINANCIAL RESULTS 37 Debt Profile Drawn at 31 Millions Face value Facility1 Available Expiry December 20151 Syndicated multi-option $1,500.0 $1,499.0 $978.9 $520.1 Various2 facility UK bond issue £300.0 $606.8 $606.8 - Oct 21 Club revolving credit £330.0 $673.5 $220.4 $453.1 Various
Slide 38: Key debt metrics
LENDLEASE – 1H16 FINANCIAL RESULTS 38 Key debt metrics 31 December 2015 31 December 2014 Credit Rating – Fitch/Moody’s/S&P BBB-/Baa3/BBB- (Stable) na/Baa3/BBB- (Stable) Gross borrowings to total tangible assets1 14.9% 16.8% Net debt to total tangible assets less cash 12.1% 12.4% Interest coverage2 7
Slide 39: Key dates for investors
LENDLEASE – 1H16 FINANCIAL RESULTS 39 Key dates for investors Date 1H16 results released to market/interim distribution declared 17 February 2016 Securities quoted ex-distribution on the Australian Securities Exchange 23 February 2016 Interim distribution record date 25 February 2016 Interim distrib
Slide 40: Important Notice
LENDLEASE – 1H16 FINANCIAL RESULTS 40 Important Notice 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 presentati