Transcript Cover slide (option 1) - title split across two lines

Steve McCann
Group Chief Executive Officer & Managing Director
Strategy and Business Overview
Agenda
1.
2.
3.
4.
5.
6.
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9.
10.
Update on safety
External business environment
Key priorities for the Group
Pipeline of opportunities
Strategy update
Continued focus on key trends
Progress on strategy to date
Key strategic deliverables 2011
Operational update Asia
Operational update Europe
Good progress on safety
Total Lost Time Injuries per Region 1
800
600
400
200
0
FY03
FY04
FY05
FY06
AUSTRALIA
ASIA
FY07
FY08
AMERICAS
FY09
FY10
FY11
As at
May
EMEA
Total Fatalities per Region 1
10
9
8
7
6
5
4
3
2
1
0
FY03
FY04
FY05
AUSTRALIA
FY06
ASIA
FY07
FY08
AMERICAS
1. Excludes infrastructure business (Valemus)
FY09
FY10
EMEA
FY11
As at
May
Gold Coast University Hospital, Queensland
3
External environment favourable
Region
Australia
Asia
Americas
Europe
Outlook
Opportunity/ Impact for Lend Lease
 Favourable economic conditions present attractive opportunities across most
sectors, particularly infrastructure
 Short term impact from weak consumer sentiment
 Concerns of two speed economy and potential impact from interest rate rises
 Focus on delivery of secured pipeline of opportunities through existing
platform and integration of Valemus
 Strong fundamentals across most markets
 Focused on delivery of retail projects in Singapore
 Project management & construction – develop market leading positions in
pharmaceutical and life sciences
 Signs of recovery across key sectors
 Opportunity to leverage into market recovery and establish positions in new
sectors eg. healthcare development
 Early stages of recovery in residential and construction
 Focus on delivery of major projects and position project management &
construction business into market recovery
4
Key priorities for the Group
 Integrate Valemus infrastructure
business and deliver on earnings
accretion
 Integration of business on track
 Strong infrastructure backlog
driven by Abigroup
 Progress major projects
• Focus on portfolio management
• Position offshore businesses for
market recovery
Mangoola Coal Rail Bottom Loop, NSW
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Significant pipeline of opportunities
Dec 2010
Funds under management (A$b)
10.7
End development value of urban regeneration projects (A$b)
25.0
Construction backlog revenue (A$b) (including Valemus)
11.9
Retail assets under management (A$b)
9.4
Backlog of residential units
89,216
6
Strategy update
Our strategic direction
Our Strategic
Direction:
Leading
Be in the top 3
industry leaders within
our chosen market
segments and sectors
To be the Leading International Property and
Infrastructure Group
International
Sectors
Focus on 4 core
regions with defined
geographies
Property and
Infrastructure are our
core sectors. We will
participate in defined
sub-sectors where we
have core capabilities
Segments
 Development
 Construction
 Investment
Management
 Services
 Ownership
8
Our segment position
Development
Construction
 A leading
development
management,
design & delivery
capabilities
 Strong
capabilities in
project
management,
design and
construction and
new acquired
capability in
engineering and
construction
Target risk
adjusted capital
35-45%
Target risk
adjusted capital
30-40%
Investment
Management
 A leading
investment
management
platform
 Strong access to
capital
Target risk
adjusted capital
5-15%
Services
 Property, asset
and facilities
management
expertise
Target risk
adjusted capital
< 5%
Ownership
 Focused
predominately on
co-investments
 Use capital to
support fund
growth
Target risk
adjusted capital
10-20%
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Continued focus on key trends
Urban Regeneration
 Leading urban renewal projects in Australia, UK and Singapore
 Focus on delivery and execution
Ageing Population
 No. 1 senior living platform in Australia
 70 retirement villages and 32 aged care facilities
Infrastructure
 Australia - significant opportunities from both public and private
projects
 Valemus acquisition provides significant capability in the Australian
engineering and infrastructure market
Sustainability
 Continued focus on commercialising sustainability
Fund Growth Platform
 Continue to service our wholesale investor base
 Targeted opportunities which meet investor appetite
10
Our strategic pathway

RESTORE
 Right Structure
A Focused
Core Business
RESTORE
 Right structure
 Cost out
 Drive efficiency
 Capital management
Continue to focus on
business transformation
Capital management
LEAD
Outperformance
BUILD
Disciplined Expansion
 Reshape portfolio
 Growth platforms
 Operational excellence
 World class property and
infrastructure solutions
company
 Strong integrated offering
 Trusted investment manager
 Invest in people
 Divestment of non core
assets
 Valemus integration
 Talent management
Portfolio of successful
projects
Best in class execution
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Key strategic deliverables – 12 to 24 months
BUILD
 Reshape portfolio
 Growth platforms
Major Development
Projects
 Successful delivery and execution of secured
projects
Infrastructure
 Successful integration of the business
 Establish appropriate risk framework
 Extract synergies
Business
Transformation
 Drive business performance efficiency
 Deliver savings
Portfolio
Reallocation
 Realise capital of A$1–2b from completed assets
 Operational excellence
 Invest in people
UK and US market
recovery
 Position to outperform in recovering markets
 Realise intrinsic development value in UK projects
and focus on healthcare opportunities in the US
12
Operational update
Earnings split
Sector Earnings Split 1
June 2010 Proforma2
June 2010 Actual
Investment
Management
22%
Project
Management
& Construction
37%
Project
Management
& Construction
20%
Investment
Management
28%
Infrastructure
Development
11%
Infrastructure
Development
14%
Development
38%
Development
30%
Geographical Earnings Split 1
June 2010 Proforma2
June 2010 Actual
Americas
7%
Americas
6%
Europe
22%
Asia
6%
Europe
28%
Australia
66%
Australia
57%
Asia
8%
1. Based on Operating Profit after Tax from operating businesses
2. Based on Valemus CY09 Pro Forma Operating Profit after Tax and Lend Lease’s FY10 Operating Profit after Tax
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Asia business update
Opportunities
Outlook
 Additional mixed use development
sites coming to market in Singapore
 Global client strategy in pharma and
life sciences sectors
 Opportunities in China and Japan
 Focus on global capital relationships
 Signed government tenancy for
Jurong Gateway commercial and
progressing retail leasing
 Increasing competition for retail spend
in Singapore
 Strong investor demand for regional
assets
Dec
2010
Dec
2009
15.8
21.5
412.0
156.8
Dec
2010
June
2010
546.1
289.9
Funds under management
(A$b)
2.0
1.6
Retail assets under
management (A$b)
1.8
1.8
Key Metrics
Operating Profit after tax
(A$m)
Construction new work
secured (A$m)
Construction backlog revenue
(A$m)
Operating profit after tax for the six month period ended 31 Dec 2010
Project
Management
&
Construction
66%
Investment
Management
34%
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Europe business overview
Opportunities
 Focus on large projects (Greenwich
Peninsula, Elephant & Castle, Stratford
International Quarter)
 Rationalise CEMEA operations
 Appointment of new Head of project
management & construction - Michael Dyke
 Athletes’ Village project on track
 Infrastructure Fund has undrawn capacity
 Focus on capital recycling opportunities
Key Metrics
Profit after tax (million)
Dec
2010
94.6
Dec
2009
64.0
Construction new work secured (m)
764.5
540.0
Construction backlog revenue
(A$m)
Dec
2010
June
2010
1,381.7
1,473.9
Number of residential units
15,196
12,425
PPP equity invested(A$m)
78.3
147.3
Operating profit after tax for the six month period ended 31 Dec 2010
Project
Management
&
Construction
5%
Outlook
 Residential in early stages of recovery –
fits well with timing of major projects
 Construction market conditions remain
subdued but activity levels improving
Investment
Management
29%
Development
5%
Infrastructure
Development
61%
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Development - Communities
Operational
Update
 NSW/ ACT remain strong, Victoria is solid while
South Australia and South East Queensland are
subdued
 Flood impacting sentiment in Queensland
 Targeting zoning on current unzoned project
backlog in FY2012
Opportunities
 New projects secured – Alkimos, Toolern,
Werribee, Fernbrooke
 Zoning progressed – Calderwood, Yarrabilba
 Continue to target affordable projects and
replenish pipeline
 Maintain balanced portfolio
Outlook
 Long term fundamentals of residential market
remain solid, short term impacted by market
uncertainty and consumer sentiment
 Going into FY2012 – strong carry forward of
contracts / commence trading on a number of
new projects
Dec
2010
June
2010
Number of zoned
residential land lots
38,170
31,960
Number of unzoned
residential land lots
22,335
27,080
Total backlog lots
60,505
59,040
Key Metrics
Varsity Lakes, Gold Coast, QLD
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Overview of communities market
Consumer Sentiment Index
Monthly observations ending April 2011
130
Index (100=netural)
120
 Quality of enquiry at Lend Lease projects
improving, however conversion time has
increased on back of decline in sentiment
110
100
 Affordability pressures continue to be driven by
interest rate rises and higher living costs
90
80
70
CSI
LR Average (101.4)
60
Apr-82 Mar-85 Feb-88 Jan-91 Nov-93 Oct-96 Sep-99 Aug-02 Jul-05 Jun-08
 Tightening bank lending criteria resulting in
lower Loan to Value Ratios
Source: Westpac-Melbourne Institute, RBA and Lend Lease Research
Stock Deficiency
300,000
250,000
Stock Deficiency
Supply
Demand
 Lend Lease product mix focused on affordable
end of the market
200,000
150,000
 Pricing and margins across Lend Lease
portfolio remain resilient
100,000
50,000
0
-50,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: BIS Shrapnel
 Long term fundamentals are positive with strong
underlying demand and ongoing stock shortfall
and supported by solid employment outlook
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Communities portfolio strategy update
 Capital model to match size and nature of
project – land management, joint ventures or
direct ownership
 New project acquisitions focused on replenishing
existing portfolio in affordable growth corridors
 Recent entry into WA market
Mawson Lakes, SA
 Focus on product innovation and builder
partnerships to deliver sales volume
 Strong reputation in place, creation and delivery
of key infrastructure to drive value and
competitive advantage
Lakeside Pakenham, VIC
Flexible business model and diverse geographic spread of projects
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Senior Living
Operational
Update
 FY2011 reflects first full year of 100%
ownership of Primelife
 Aged Care – has increased EBITDA per bed by
>35% since acquisition
Opportunities
 Recycle capital and introduce capital partners
 Increase development pipeline
 Standardise retirement contracts across the
portfolio for simplification and efficiency
benefits
Outlook
 Long term dynamics of senior living sector
remain positive – supported by an ageing
population, undersupply of stock and
government focus on senior housing
 Penetration in Australia remains low relative to
overseas markets
Dec
2010
June
2010
70
70
12,416
12,357
32
32
Number of aged care beds
2,372
2,370
Aged care occupancy (%)
94.4
94.5
Development pipeline –
number of retirement units
1,255
1,310
Key Metrics
Number of retirement
villages
Number of retirement units
Number of aged care
facilities
Woodlands Park, Berwick VIC
20
Investment Management
Operational
Update
 FUM growth of over 15% per annum over last 5
years – strong growth expected to continue
 Continued strong performance across key funds
 Integration of ING Retail Fund assets complete
Opportunities
 Internal development pipeline to support strong
growth outlook
 Focus on capital recycling opportunities across
the Group
 Diversify investor base and scale up retail
platform
 Grow separate mandates business
Outlook
 Investors seeking alignment with asset creators
and best in breed managers
 Lend Lease seen as attractive partner with
strong track record, governance framework and
end to end property skills
 Retail sales environment remains flat
Key Metrics
Dec
2010
Dec
2009
Operating profit after Tax (A$m)
17.2
11.9
Dec
2010
A$
June
2010
A$
7.6
7.1
0.3
0.3
15
15
Funds under management
(A$b)
Market value of investments
(A$b)
Retails assets under
management
MidCity Centre, Sydney, NSW
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Key priorities
 Grow construction backlog
 Focus on health pipeline and convert internal
opportunities
 Leverage multi-sites/ capital services platform
 Deliver key development projects
 Achieve key planning outcomes, secure
tenants and capital partners
 Replenish communities backlog in key
affordable markets
 Continue to drive operational excellence
across senior living platform
 Simplify operating model in preparation for
capital recycling
 Continue to grow funds under management
 Strong performance in existing funds is key
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Steve McCann
Group Chief Executive Officer & Managing Director
Closing Comments
Key priorities for the Group
 Integrate Valemus infrastructure
business and deliver on earnings
accretion
 Focus on execution and delivery
of major projects
 Ongoing portfolio management
• Position offshore businesses for
market recovery
Darling Quarter, Sydney, NSW
24
Positive outlook
Significant backlog, development pipeline and access to capital
 Continued deal momentum
 Capital invested is supported by third party equity
 Focus on capital recycling
 Emphasis on quality and consistency of execution
Strong long term outlook with positive EPS trend
 Expect accretion from Valemus deal
 Strong 1st half result positions the Group well for the full year
 Key projects expected to begin to deliver returns from 2nd half of financial year 2012
25