Lendlease Group · ASX:LLC
Lendlease — H1 FY2024 Earnings Presentation
58 slides from Lendlease's earnings presentation, Feb 19, 2024
Slide 1: Lendlease Group 2024 Half Year Results Announcement, Presentation and Appendix
19 February 2024 Lendlease Group 2024 Half Year Results Announcement, Presentation and Appendix Lendlease Group today announced its results for the half year ended 31 December 2023. Attached is the HY24 Results Announcement, Presentation and Appendix. ENDS FOR FURTHER INFORMATION, PLEASE CONTACT: In
Slide 2: Portfolio and business simplification progressing; improving operational outlook in the second half
19 February 2024 Portfolio and business simplification progressing; improving operational outlook in the second half For the half year ended 31 December 20231: • Core Operating2 Profit after Tax (Core OPAT) of $61m, down 42 per cent o Core Operating Earnings Per Security of 8.8 cents o Interim distr
Slide 3: CEO commentary and financials
Notwithstanding these challenges, a number of strategic initiatives were progressed including the announced sale of 12 Communities projects and further cost savings from streamlining our operations. Global Chief Executive Officer and Managing Director, Tony Lombardo said, “Despite challenging capita
Slide 4: CFO commentary and Investments segment
Global Chief Financial Officer, Simon Dixon, said “As Lendlease reached capital deployed on several major projects, contracted and announced cash inflows of ~$1.5b expected in the near term, highlight a clear pathway back to the Group’s target gearing range. Capital recycling and a further ~$1.1b of
Slide 5: Development
Development The Development segment generated a ROIC of 1.4 per cent, down from 1.9 per cent on the prior corresponding period. EBITDA of $112m was up 26 per cent, comprising $103m from Urban and $9m from Communities. A key contributor to Development EBITDA was a payment received in relation to the
Slide 6: Construction
Construction4 The Construction segment generated $3.0b of revenue for the period, down 18 per cent. The segment EBITDA margin of 1.7 per cent was impacted by a settlement in relation to a prior year project in the UK which lowered the EBITDA margin by 0.5 percentage points. New work secured was $2.6
Slide 7: Further information and 2024 key dates for investors
Further information regarding Lendlease’s results is set out in the Group’s financial results presentation for the period ended 31 December 2023 and is available on www.lendlease.com ENDS FOR FURTHER INFORMATION, PLEASE CONTACT: Investors: Media: Michael Vercoe Stephen Ellaway Head of Investor Relat
Slide 8: Half Year Results February 2024
2024 Half Year Results 19 February 2024 Melbourne: Melbourne Quarter West Tower
Slide 9: Acknowledgement of Traditional Owners
Lendlease HY24 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 and Operations
Lendlease HY24 Financial Results 3 Performance and Operations Tony Lombardo Global Chief Executive Officer Kuala Lumpur: The Exchange TRX
Slide 11: Business progress – HY24
Lendlease HY24 Financial Results 4 Business progress – HY24 Portfolio and business simplification progressing; improving operational outlook in the second half Global market backdrop 1H24 progress • Exposed to global markets, • $1.3b sale of 12 Communities projects, in line with capital recycling st
Slide 12: HY24 result
Lendlease HY24 Financial Results 5 HY24 result Financial performance reflects challenging trading conditions $61m $(136)m Stable Core operating1 Profit after Tax Statutory Loss after Tax Financial position 8.8c 1.9%2 $6m 22.9%5 Earnings per Return Non-core segment Profit Gearing stapled security on
Slide 13: Operational Highlights
Lendlease HY24 Financial Results 6 Operational Highlights Melbourne: Town Hall Place Melbourne Town Hall Place Australia • Communities sale announced Americas • Leasing activity across workplace assets • Completed 100 Claremont, New York (luxury • Deployed and recycled Investments capital residentia
Slide 14: HY24 operating performance
Lendlease HY24 Financial Results 7 HY24 operating performance A mixed operating performance with earnings and development activity skewed to 2H FY24 Investments Development3 Construction5 $48b1 $21b1 $3.0b2 18% Funds Under Management 1% Work in Progress 9% Revenue $34b1 3% $3.0b2 7% $2.6b2 13% Asset
Slide 15: Investments Performance
Lendlease HY24 Financial Results 8 Investments Performance Investment management1 Investment management platform ($b) FUM AUM2 • Funds Under Management reduced 1% to $48b: Targeting $70b of FUM − $0.9b of new FUM more than offset by $0.2b of retail and 2% residential divestments and $1.1b of negativ
Slide 16: Development operational performance
Lendlease HY24 Financial Results 9 Development1 Operational performance1 Urban portfolio Development activity ($b) • Work in Progress $20.8b Completions Commencements WIP • Completions $3.0b 25.0 22.9 Capital partners on more − The Exchange TRX; 100 Claremont; The Reed, Southbank 20.8 20.0 18.4 than
Slide 17: Construction operational performance and outlook
Lendlease HY24 Financial Results 10 Construction Operational performance and outlook1 $8.3b backlog revenue – by sector and client Social Infrastructure Defence Operational changes Workplace Residential • Further simplification of the Construction portfolio with the Other Government Corporate announ
Slide 18: Financial Summary
Lendlease HY24 Financial Results 11 Financial Summary Simon Dixon Global Chief Financial Officer New York: Claremont Hall
Slide 19: Group financial performance
Lendlease HY24 Financial Results 12 Group financial performance1 $m HY23 FY23 HY24 % change Core • Prior corresponding period included a Military Housing Asset Management transaction; Investments 197 332 120 (39%) excluding this, underlying earnings increased by 1% • Benefit of payment received for
Slide 20: Segment financial performance
Lendlease HY24 Financial Results 13 Segment financial performance Investments ($m) HY23 FY23 HY24 % change Investments commentary Management revenue 147 275 136 (7%) • Lower Investments ROIC of 4.5%, as new platforms are built. Established platforms in Australia and Asia, generated ROICs of 6.2% and
Slide 21: Segment financial performance (cont.)
Lendlease HY24 Financial Results 14 Segment financial performance (cont.) Development ($m) HY23 FY23 HY24 % change Development commentary EBITDA 89 283 112 26% • Development activity subdued in the period; $7b of activity expected in 2H24 across - Urban 57 141 103 81% completions ($5b) and commencem
Slide 22: Net debt
Lendlease HY24 Financial Results 15 Net debt Net Debt1 ($b) 2H24 - key net cash inflows 3 Development Investments 0.3 3.7 (0.9) $1.5b of contracted and 0.6 0.3 (0.6) announced cash inflows 2.4 0.2 (0.1) expected in 2H24 FY23 Net Co-investments Capital recycling Barangaroo, Other net Interest, tax an
Slide 23: Capital
Lendlease HY24 Financial Results 16 Capital A focus on reweighting capital to Australia, funding Investments growth and capital efficiency Investments capital – by asset type1 Development capital – by development stage Group Capital – by region2 Residential Workplace Retail Data Centres & Industrial
Slide 24: Capital management & Treasury
Lendlease HY24 Financial Results 17 Capital Treasury overview Capital and liquidity management • Near-term pathway to deleverage to target 10-20% range FY23 HY24 management Net debt Proportion of fixed debt $m % 2,381 64 3,744 44 − Elevated gearing due to peak development capital demands, as major p
Slide 25: A strong focus on business productivity and costs
Lendlease HY24 Financial Results 18 A strong focus on business productivity and costs Further progress on cost efficiencies; annualised pre-tax savings target of $150m Cost savings FTE savings by region Americas Europe Australia Asia Corporate • Growth areas preserved, including investments platform
Slide 26: Outlook
Lendlease HY24 Financial Results 19 Outlook Tony Lombardo Global Chief Executive Officer London: Apartments for sale, Elephant Park Artist’s impression
Slide 27: Investments-led transition remains on-track
Lendlease HY24 Financial Results 20 Investments-led transition remains on-track Key strategic milestones achieved since FY21 Portfolio management Release capital Performance Costs Re-allocation of >$2.3b of capital Realising value from Removed >$170m capital focussed on recycling initiatives the dev
Slide 28: FY24 Outlook
Lendlease HY24 Financial Results 21 FY24 Outlook Group guidance and key drivers Core Operating Profit in 2H24 Revised expected FY24 ROE guidance of 7% reflects lower certainty of transaction timing and higher execution risks given the challenging capital markets backdrop • FY24 gearing forecast rema
Slide 29: Questions
Lendlease HY24 Financial Results 22 Questions
Slide 30: Half Year Results Appendix
Lendlease HY24 Financial Results 1 2024 Half Year Results Appendix Melbourne: Melbourne Quarter West Tower
Slide 31: Our operating segments
Lendlease HY24 Financial Results 2 Our operating segments We leverage our integrated Investments Development Construction business model of The segment comprises investment and The segment is predominantly focused on The segment provides project Investments, Development asset management platforms an
Slide 32: Segment Financial Metrics
Lendlease HY24 Financial Results 3 Operating EBITDA ($m) Operating Profit after Tax ($m) HY23 HY24 278 HY23 HY24 Segment 197 207 142 Financial 120 89 112 91 105 68 61 Metrics 51 54 47 30 24 1 Investments Development Construction Total Core1 Investments Development Construction Total Core Segment KPI
Slide 33: Reconciliation of Core Operating Profit
Lendlease HY24 Financial Results 4 $m HY23 HY24 Core operating profit after tax 105 61 Reconciliation Add/(less): Investment properties revaluations2 (9) (18) of Core Add/(less): Financial assets revaluations2 (3) (39) Add/(less): Equity accounted investments revaluations2 (27) (68) Operating Total
Slide 34: Investments HY24 Financial Performance
Lendlease HY24 Financial Results 5 % $m HY23 2H FY23 FY23 HY24 HY24/HY23 Investments Management revenue 147 128 275 136 (7%) FUM revenue 92 85 177 88 (4%) HY24 AUM revenue 55 43 98 48 (13%) Financial Operating expenses FUM expenses 90 55 81 40 171 95 81 55 (10%) - Performance AUM expenses 35 41 76 2
Slide 35: Development HY24 Financial Performance
Lendlease HY24 Financial Results 6 % $m HY23 2H FY23 FY23 HY24 HY24/HY23 Development Revenue 1,014 1,319 2,333 1,466 45% Urban 747 848 1,595 1,213 62% HY24 Communities 267 471 738 253 (5%) Financial EBITDA Urban 89 57 194 84 283 141 112 103 26% 81% Performance Communities 32 110 142 9 (72%) OPAT 54
Slide 36: Construction HY24 Financial Performance
Lendlease HY24 Financial Results 7 % $m HY23 2H FY23 FY23 HY24 HY24/HY23 Construction Revenue 3,723 3,480 7,203 3,045 (18%) Australia 1,908 1,799 3,707 1,879 (2%) HY24 Asia Europe 141 386 154 356 295 742 97 202 (31%) (48%) Financial Americas 1,288 1,171 2,459 867 (33%) EBITDA 68 22 90 51 (25%) Perfo
Slide 37: Group and Regional Financial Metrics
Lendlease HY24 Financial Results 8 HY24 HY23 Group Australia Asia Europe Americas Corporate Group Australia Asia Europe Americas Corporate Revenue ($m) 4,733 2,775 176 563 1,165 54 4,918 2,694 210 549 1,451 14 Group and EBITDA contribution 39% 32% (20%) 49% 65% 13% (3%) 25% Regional Core OPAT ($m) 6
Slide 38: Portfolio Management Framework (PMF)
Lendlease HY24 Financial Results 9 Portfolio Management Framework (PMF) Providing structure to manage business and capital decisions PMF through-the-cycle targets ▪ PMF maintained to support our transformation ambition Target HY23 HY24 − Target framework, including segment ROICs, reflect through-the
Slide 39: Health and Safety
Lendlease HY24 Financial Results 10 HY24 highlights • No corporate reportable fatalities across the organisation in HY24. Health and • Maintained a low frequency rate for Critical Incidents and Lost Time injuries following the record lows recorded in FY23. Safety • 3P’s Safety Strategy (Physical, Pr
Slide 40: Environmental, Social and Governance
Lendlease HY24 Financial Results 11 HY24 key achievements Environmental, Social and On track to achieve our Net Governance Zero Carbon by 2025 & $250m Social Value by 2025 targets 12 global Over 1700 New social value & Lendlease Scope 3 Commenced global rollout of employees partnership signed 14 reg
Slide 41: Investments Segment
Lendlease HY24 Financial Results 12 Invested capital Investments Segment $4.0b Management earnings Investment Portfolio earnings Funds under Assets under Investment Management Management portfolio1 $47.8b $33.7b $3.8b FUM AUM Returns and metrics Returns and metrics Funds management fees Property and
Slide 42: Funds & Assets Under Management
Lendlease HY24 Financial Results 13 FUM ($b) AUM ($b) Inception of FUM strategy: CAGR2 of 7.8% Funds & 48.3 47.8 44.4 Assets Under 39.6 29.3 28.5 30.0 32.8 33.7 Management1 36.0 FY20 FY21 FY22 FY23 HY24 FY20 FY21 FY22 FY23 HY24 HY24 FUM by region HY24 AUM by region Australia Asia Europe Americas Ame
Slide 43: Funds & Assets Under Management by product
Lendlease HY24 Financial Results 14 FUM ($b) AUM ($b) 48.3 0.9 (0.2) (1.1) Funds & (0.1) 47.8 1.5 (0.1) (0.2) (0.3) 33.7 32.8 Assets Under Management1 By Product 2 2 FY23 Additions Divest- Revaluations FX and HY24 FY23 Additions Divest- Revaluations FX and HY24 ments Other ments Other By product ($b
Slide 44: Co-investment and Fund Summary
Lendlease HY24 Financial Results 15 Co-investment and Fund Summary HY24 funds management platform Weighted Total No. of avg. cap assets1 Gearing Co-investment Region Sector assets Leased WALE rate $b % % $m # % Years % Australian Prime Property Fund Commercial 6.4 26.7 8.0 353 Aus Workplace 21 93.3
Slide 45: Development Segment
Lendlease HY24 Financial Results 16 Invested capital Development Segment $7.2b Development Phase Pipeline1 by product ($b) Work in Progress1 ($b) Capital by development stage2 Build to sell Workplace Build to sell Workplace WIP Master planned In Conversion Communities Build to rent Communities Build
Slide 46: Impacts on Development profit recognition from prior historical JV approach
Lendlease HY24 Financial Results 17 Impacts on Development profit recognition from prior historical JV approach FY24-25 profits understated; FY26 the expected first year of normalised urban development profit recognition FY22-FY25 period impacted by change in JV approach • Changes were announced in
Slide 47: Major Urban Project Summary
Lendlease HY24 Financial Results 18 Estimated Realised remaining Residential Commercial Project Delivery end value end value Completion backlog backlog Land payment ($b)2 sqm ‘0003 Major Urban Region Australia Project Victoria Cross4, Sydney secured commenced FY19 FY20 ($b) - 1.2 date FY25 units - 5
Slide 48: Urban Development Activity HY24 – Commencements and Completions
Lendlease HY24 Financial Results 19 Urban Development Activity HY24 – Commencements and Completions $3.2b of Urban Commencements and Completions in HY24 (excludes Communities) Commencements Presold / Presales Project end Net end City Project Sector Capital model Ownership Units Completion Pre let %
Slide 49: Indicative Completions profile – Work in Progress
Lendlease HY24 Financial Results 20 Indicative Completions profile1 – Work in Progress 2H24 Urban Completions pipeline of $5.2b, including 129k sqm of workplace and other development and 1,886 units Sqm (k) / Presold / Presales Project end Net end Profit City Project Sector Capital model Ownership C
Slide 50: Indicative Completions profile – Work in Progress (continued)
Lendlease HY24 Financial Results 21 Indicative Completions profile1 – Work in Progress (continued) Urban Completions pipeline of $14.6b from FY25 to FY28, including 275k sqm of workplace and other development and 3,280 units Sqm (k) / Presold / Presales Project end Net end Profit City Project Sector
Slide 51: Residential Apartment Settlements
Lendlease HY24 Financial Results 22 HY24 Settlements2 Ownership Completion Units $m $m (net)3 Residential Australia Apartment Melbourne Quarter – East Tower Total Australia 50% FY21 1 1 1 1 - - Settlements1 Europe Potato Wharf Block 3 100% FY22 19 12 12 Potato Wharf Block 4 100% FY22 2 1 1 Victora D
Slide 52: Targeted Commencements profile
Lendlease HY24 Financial Results 23 Targeted Commencements profile1 Seeking to balance commencements and completions over time to maintain WIP, subject to market conditions Delivery of pre-commencement pipeline ($b)2 ▪ 2H24 urban commencements of $1.6b anticipated 3 3 Build to rent Build to sell Wor
Slide 53: Australia Communities
Lendlease HY24 Financial Results 24 Sales & Settlements Sales Settlements HY23 HY24 HY23 HY24 Lots $m Lots $m Lots $m Lots $m Australia Queensland 476 149 516 170 437 114 415 132 Communities New South Wales Victoria 50 206 32 59 60 90 44 31 211 315 80 95 121 349 60 98 South Australia - - - - - - - -
Slide 54: Construction Segment
Lendlease HY24 Financial Results 25 Backlog1 $8.3b Construction Segment Preferred2 $11.8b Australia Asia Europe Americas 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 $0.2b $0.8b Backlog1 Backlog1 Backlog1 Backlog1 $4.
Slide 55: Construction Earnings / Backlog / New Work Secured
Lendlease HY24 Financial Results 26 EBITDA ($m) Backlog ($b)1 2.3% 3.0% 2.6% 1.8% 1.7% 11.3 10.6 10.5 Construction 8.7 8.3 Earnings / 101 104 84 Backlog / New 68 51 Work Secured HY20 HY21 HY22 HY23 HY24 FY20 FY21 FY22 FY23 HY24 HY24 New work secured by sector2 HY24 New work secured by client2 Social
Slide 56: Construction Backlog by Region
Lendlease HY24 Financial Results 27 Group ($b) Australia ($b) 12.0 2.6 (3.0) 0.7 (1.9) 5.7 Construction 10.0 8.7 - 8.3 - 4.5 Backlog by 8.0 6.0 Region1,2 4.0 Book to bill3: 0.8 Book to bill3: 0.4 2.0 0.0 FY23 New work Revenue FX and HY24 FY23 New work Revenue FX and HY24 secured Other secured Other
Slide 57: Defined Development terms
Lendlease HY24 Financial Results 28 Based on expected completion date of underlying buildings, subject to change in delivery program. Not indicative of cash Completion or profit recognition Funding model structured through a forward sale to a capital partner resulting in majority of profit recogniti
Slide 58: Important Notice
Lendlease HY24 Financial Results 29 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