Macquarie Australia Conference May 2011 Important Notice This - - PowerPoint PPT Presentation

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macquarie australia conference may 2011 important notice
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Macquarie Australia Conference May 2011 Important Notice This - - PowerPoint PPT Presentation

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Macquarie Australia Conference May 2011 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,

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Macquarie Australia Conference May 2011

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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 presentation (any of which may change without notice). To the maximum extent permitted by law, Lend Lease Corporation Limited, its related entities and their respective directors, officers, employees and agents disclaim all liability and responsibility (including without limitation any liability arising from fault or negligence) for any direct or indirect loss or damage which may be suffered through use or reliance on anything contained in or omitted from this presentation. Each recipient should consult with, and rely solely upon, their own legal, tax, business and/or financial advisors in connection with any decision made in connection with the information contained in this presentation. Lend Lease Corporation Limited does not undertake any obligation to provide recipients with further information to update this presentation or to correct any inaccuracies. Prospective financial information has been based on current expectations about future events and is, however, subject to risks, uncertainties and assumptions that could cause actual results to differ materially from the expectations described in such prospective financial information.

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Development of master-planned urban communities, inner-city mixed-use developments, apartments, retail and the senior living sector Provides real estate investment management, retail property management and asset management services. Manages and invests in large public private partnership (PPP) projects Provides project management and construction services, as well as infrastructure and engineering services

Integrated business model

We find We buy We fund We design We build We manage

Sourcing the best property

  • pportunities

Structuring the right deal Providing the right investment solutions Creating innovative and sustainable property solutions Building and project managing using our global construction reach Continually enhancing the value of property

  • ver time

Infrastructure Development Development Investment Management Project Management and Construction

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Continued focus on key growth trends

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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

  • Number of new PPP projects impacted by slowdown in government

programs in the UK

  • Valemus acquisition gives the Group 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
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Progress since half year result

 1st half operating profit after tax of A$220.2m positions the Group well for the full year  Continued success in capital recycling and pipeline wins since first half result  Valemus integration on track  Progress on major projects  Positive long term outlook  Short term market conditions:

 Impact from stronger Australian dollar  Weaker consumer sentiment

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Barangaroo South, Sydney

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Positive performance across portfolio

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Dec 2010 A$m June 2010 A$m

Funds under management (A$b) 10.7 10.1 Investments (A$b) 1.8 2.0 Residential units - zoned 63,068 54,615 Residential units - unzoned 26,148 33,295 Construction backlog revenue (A$m) excluding Valemus backlog and internal development pipeline 6,556.1 7,152.7 Number of PPP projects 41 40

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Sector Earnings Split 1

June 2010 Actual

Geographical Earnings Split 1

Earnings split

June 2010 Actual

  • 1. Based on Operating Profit after Tax from operating businesses.
  • 2. Based on Valemus CY 2009 Pro Forma Operating Profit after Tax and Lend Lease’s FY 2010 Operating Profit after Tax.

June 2010 Proforma2 June 2010 Proforma2

Investment Management 22% Infrastructure Development 11% Development 30% Project Management & Construction 37% Australia 66% Asia 6% Europe 22% Americas 6% Investment Management 28% Infrastructure Development 14% Development 38% Project Management & Construction 20% Australia 57% Asia 8% Europe 28% Americas 7%

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Acquisition of Valemus in line with strategy

Strategic rationale

  • In line with strategy to capitalise on key growth trend of infrastructure
  • Ability to self perform internal Lend Lease infrastructure work where

previously there was limited capability Performance

  • Order book in excess of A$5.3b as at December 2010
  • Significant visibility on future pipeline (in excess A$1.85b of work

pending) Strong earnings accretion

  • The transaction is expected to provide ~15% EPS accretion on a full

year basis in the financial year ending 30 June 2012

  • Minimal contribution to FY2011 earnings

Balance sheet

  • Retained financial flexibility to fund its development pipeline
  • Rating agencies have confirmed investment grade credit rating with a

stable outlook Integration

  • Midway through a 90 day post acquisition integration process
  • New Managing Director of Conneq - David Marchant previously CEO of

Australian Rail and Track Corporation

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Australia business update

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Operating Profit after Tax Dec 2010 A$m Dec 2009 A$m Development 79.8 44.0 PM & C 43.5 61.2 Investment Management 17.2 11.9 Infrastructure Development (3.8) (0.9) Total 136.7 116.2 Gold Coast University Hospital, Queensland

Development

  • Long term fundamentals of residential market

remain solid, short term impacted by market uncertainty and consumer sentiment

  • NSW/ ACT remain strong, Victoria is solid but

SA and South East Queensland subdued

  • Senior living – reflects 100% ownership
  • Focus on rezoning and replenishing backlog
  • Major projects progressing well

Project Management & Construction

  • Lower profit in first half versus prior period
  • A number of major projects were < 50%

complete

  • Backlog revenue of A$3.2b

Investment Management

  • Profit up due to income from ING retail assets
  • FUM increased by 7% to A$7.6b

Infrastructure Development

  • Small loss due to costs of bidding on projects
  • 1 of 3 shortlisted on Victoria Comprehensive

Cancer Centre in Melbourne

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Barangaroo South, Sydney

  • Extension of the Sydney CBD
  • Estimated $A6b end value
  • Development period 10 to 15 years
  • Stage 1 - 7.5 hectare site area
  • Up to 490,000 sqm total GFA
  • Commercial, Residential and Retail

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Asia business update

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Operating Profit after Tax Dec 2010 A$m Dec 2009 A$m Development (0.2) 0.5 PM & C 10.7 12.5 Investment Management 5.3 8.5 Total 15.8 21.5 Nokia Beijing Campus, China

Development

  • Finalised purchase of Jurong Gateway mixed-

use site with Asian Retail Investment Fund Project Management & Construction

  • New work secured up 163% as at December

2010 - including major project in Taiwan

  • Profitability ratio maintained at 56% at

December 2010 Investment Management

  • FUM increased to A$2b due to Asian Retail

Fund being fully invested

  • Lower profit in first half as previous period

included final distribution from APIC I

  • Interest in PoMo Shopping Centre sold in

March 2011

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Europe business update

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Operating Profit after Tax Dec 2010 A$m Dec 2009 A$m Development 4.8 24.5 PM & C 4.4 2.1 Investment Management 27.1 14.2 Infrastructure Development 58.3 23.2 Total 94.6 64.0 Greenwich Peninsula, UK

Development

  • Approvals for major projects on track
  • Pier Walk building sold

Project Management & Construction

  • New work secured up 42% - includes Regents

Place and Scottish National Arena projects

  • Market conditions remain tough but activity

levels showing signs of improvement Investment Management

  • Launch of £220 million Infrastructure Fund
  • Extension of Retail Partnership for 7 years
  • Sale of Group’s interest in Overgate shopping

centre Infrastructure Development

  • Reached financial close in March 2011 on

£70m Wandsworth Schools program redevelopment

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Americas business update

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Operating Profit after Tax Dec 2010 A$m Dec 2009 A$m Development (0.5) 0.1 PM & C (3.2) (19.9) Investment Management 12.4 11.6 Infrastructure Development 20.2 27.2 Total 28.9 19.0 Privatization of Army Lodgings program

Development

  • Completed acquisition of healthcare

developer Dasco

Project Management & Construction

  • Settlement reached with NY City DOI –

restores standing to win NYC agency work

  • Business made small loss after tax in first half
  • Increase in activity levels – healthcare
  • pportunities
  • Backlog Revenue up 24%

Investment Management

  • Valuation of King of Prussia firmer

Infrastructure Development

  • Secured US$350m second phase (Group B)
  • f Privatization of Army Lodgings program
  • Reached financial close on US$377m

Wainwright Greely project in Alaska

  • Includes costs incurred in bidding for
  • pportunities in Canada
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Capacity to fund pipeline

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  • 1. Net (cash) / debt is borrowings including certain other financial liabilities, less cash

2 .Gearing is calculated as Gearing is calculated as net debt, divided by total tangible assets, less cash net debt, divided by total tangible assets, less cash 3 .Weighted average maturity relates to drawn debt 4 .Calculated as operating EBITDA plus interest income divided by interest finance costs, including capitalised finance costs

Dec 2010 June 2010 Dec 2009

Credit Rating - S&P/Moody’s BBB- / Baa3 (Stable) BBB- / Baa3 (Stable) BBB- / Baa3 (Stable) Net (cash) / debt1 (A$m) 29.5 (19.7) 749.9 Gearing excluding Valemus 2 0.4% Net cash position 9.2% Pro forma gearing including Valemus 6.7% Undrawn facilities (A$m) 571.5 688.6 536.8 Weighted average debt maturity 3 4.8 years 5.5 years 6 years Weighted average cost of debt 6.4% 6.3% 5.2% Fixed / floating debt 63% / 37% 65% / 35% 60% / 40% Interest coverage 4 6.5x 6.7x 10.2x

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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

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Macquarie Australia Conference May 2011