27 February 2017 2017 Half Year Results Lendlease Group Further to Lendlease Group s earlier announcement today, attached are the following documents: ASX Announcement Lendlease Group Financial Results Presentation and Appendix ENDS FOR FURTHER INFORMATION, PLEASE CONTACT: Investors: Media: Justin McCarthy Natalie Campbell Tel: 02 9236 6464 Tel: 02 9236 6865 Mob: 0422 800 321 Mob: 0410 838 914 Lend Lease Corporation Limited ABN 32 000 226 228 and Lend Lease Responsible Entity Limited ABN 72 122 883 185 AFS Licence 308983 as responsible entity for Lend Lease Trust ABN 39 944 184 773 ARSN 128 052 595 Level 14, Tower Three, International Towers Sydney Telephone +61 2 9236 6111 Exchange Place, 300 Barangaroo Avenue Facsimile +61 2 9252 2192 Barangaroo NSW 2000 Australia lendlease.com
27 February 2017 Lendlease delivers double digit earnings growth, continued execution excellence 27 February 2017 For the half year ended 31 December 2016 1 : Profit after Tax of $394.8 million, up 12 per cent and earnings per stapled security of 67.8 cents, up 11 per cent Return on equity of 13.7 per cent 2, upper end of the 10 14 per cent target range Interim unfranked distribution of 33 cents per stapled security Capital solutions secured across four office developments Total residential presales of $5.7 billion Engineering activity accelerating, on track for larger earnings contribution Funds Under Management (FUM) of $24.7 billion, up 12 per cent Strong balance sheet with gearing of 5.1 per cent 3 and available liquidity of $3.3 billion Lendlease Group Chief Executive Officer and Managing Director, Steve McCann, said Lendlease produced a strong result for the half year ended 31 December 2016. We had success in converting our pipeline into delivery with the forward sale of three office buildings, in addition to the creation of a capital solution for the Circular Quay Tower. Commercial development, in particular the Australian office sector, was a highlight of the first half result. At Barangaroo South, Tower 1 reached practical completion with all three office towers now operational, said Mr McCann. Lendlease now has a total of 13 major commercial buildings across the globe in delivery with a combined estimated end value of around $7 billion. These projects in delivery provide future secured FUM of around $3 billion. 1 Comparative period the half year ended 31 December 2015 (the prior corresponding period). 2 Return on equity is calculated on an annualised basis, using the half year profit after tax divided by the arithmetic average of beginning and half year end securityholders equity. 3 Net debt to total tangible assets less cash. Lendlease Corporation Limited ABN 32 000 226 228 and Lendlease Responsible Entity Limited ABN 72 122 883 185 AFS Licence 308983 as responsible entity for Lendlease Trust ABN 39 944 184 773 ARSN 128 052 595 Level 14, Tower Three, International Towers Sydney Telephone +61 2 9236 6111 Exchange Place, 300 Barangaroo Avenue Facsimile +61 2 9252 2192 Barangaroo NSW 2000 Australia lendlease.com
27 February 2017 We also have an estimated $9 billion of additional commercial development end value remaining in our secured pipeline. Importantly, the conversion of that pipeline will underpin future earnings across all three segments of our integrated model, said Mr McCann. Total residential pre-sales of $5.7 billion also provides good future earnings visibility. The Construction margin improved by 70 bps to 2.7 per cent and in conjunction with higher revenue generated a strong lift in Construction EBITDA. The Investments segment, representing 40 per cent of operating EBITDA, continues to deliver solid recurring style earnings. The Group maintains an unwavering commitment to safety. The Group achieved a 17 percent decline in the lost time injury frequency rate on the prior corresponding period 4. Group Financials Group Chief Financial Officer, Tarun Gupta said the double digit EBITDA growth in all three operating segments was a highlight for the half year and underpinned EBIT growth of 26 per cent. Financial returns were strong in the period with Development ROIC 5 of 12.7 per cent and Investments ROIC 5 of 13.4 per cent, both above their respective target range. Mr Gupta said the Group continued to maintain a conservative financial setting which provides the flexibility to continue to explore new pipeline opportunities in line with our strategy. At 31 December 2016, Lendlease held a cash balance of $1.0 billion and undrawn debt facilities of $2.3 billion, providing substantial financial flexibility. Gearing ended the period at 5.1 per cent 6, and the interest coverage ratio was 10.8 times. Outlook Mr McCann said, We remain well placed for future success given earnings visibility and a targeted and disciplined approach to delivering on our strategy. We have made further progress in implementing our integrated business model in target gateway cities. 4 Comparative period the half year ended 31 December 2015 (the prior corresponding period). 5 Return on Invested Capital (annualised measure). 6 Net debt to total tangible assets less cash. Lendlease Corporation Limited ABN 32 000 226 228 and Lendlease Responsible Entity Limited ABN 72 122 883 185 AFS Licence 308983 as responsible entity for Lendlease Trust ABN 39 944 184 773 ARSN 128 052 595 Level 14, Tower Three, International Towers Sydney Telephone +61 2 9236 6111 Exchange Place, 300 Barangaroo Avenue Facsimile +61 2 9252 2192 Barangaroo NSW 2000 Australia lendlease.com
27 February 2017 The Development pipeline of $49.0 billion will help drive earnings over an extended time horizon. Construction backlog revenue stands at $20.5 billion with further work of approximately $7 billion in preferred bidder status. The Investments platform has FUM of $24.7 billion with approximately $3 billion 7 of additional secured FUM across the Group s urbanisation projects in delivery. We have had substantial origination success post balance date. We have been recommended as preferred bidder 8 on the estimated GBP2 billion mixed use urbanisation project in Haringey, London, in addition to securing a number of significant construction contracts, said Mr McCann. These wins will contribute strongly to our continuing growth momentum. Further information regarding Lendlease s results is set out in the Group s financial results presentation for the half year ended 31 December 2016 and is available on www.lendlease.com. ENDS FOR FURTHER INFORMATION, PLEASE CONTACT: Investors: Media: Justin McCarthy Natalie Campbell Tel: 02 9236 6464 Tel: 02 9236 6865 Mob: 0422 800 321 Mob: 0410 838 914 2017 Key Dates for Investors Interim distribution declared Securities quoted ex-dividend on the Australian Securities Exchange Interim distribution record date Interim distribution payable FY17 results released to market/final distribution declared Annual General Meeting 27 February 2 March 3 March 24 March 28 August 17 November 7 Represents secured future FUM increase from funds with development projects in delivery. 8 Remains subject to contractual close. Lendlease Corporation Limited ABN 32 000 226 228 and Lendlease Responsible Entity Limited ABN 72 122 883 185 AFS Licence 308983 as responsible entity for Lendlease Trust ABN 39 944 184 773 ARSN 128 052 595 Level 14, Tower Three, International Towers Sydney Telephone +61 2 9236 6111 Exchange Place, 300 Barangaroo Avenue Facsimile +61 2 9252 2192 Barangaroo NSW 2000 Australia lendlease.com
Lendlease 2017 Half Year Results 27 February 2017
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 growth and economic participation of Aboriginal and Torres Strait Islander Australians within our sector
3 Contents Topic Speaker Slide Group Performance and Results Highlights Steve McCann Group Chief Executive Officer and Managing Director 4 Financials Tarun Gupta Group Chief Financial Officer 9 Operational Update Steve McCann Group Chief Executive Officer and Managing Director 15 Outlook Steve McCann Group Chief Executive Officer and Managing Director 19
Section 1 Group Performance and Results Highlights Steve McCann Group Chief Executive Officer and Managing Director Image: Barangaroo South, Sydney
5 Vision: to create the best places Strategic framework Business model Competitive advantage Pillars of value
HY17 Safety 6 1.62 (1.95 in HY16) Lost Time Injury Frequency Rate in the last 6 months 1.20 (1.64 in HY16) Critical Incident Frequency Rate in the last 6 months
7 Double digit earnings growth, continued execution excellence Securityholder returns 1 Profit after Tax of $394.8 million, up 12%, and earnings per stapled security of 67.8 cents, up 11% Interim distribution of 33 cents per security, representing a dividend payout ratio of 49% Return on equity of 13.7% 2, at the upper end of our 10% 14% target range Performance highlights 1 Capital solutions secured across 4 office developments Total residential presales of $5.7 billion Construction margin up 70 bps to 2.7% Engineering activity accelerating, on track for larger earnings contribution Investments segment continues to deliver solid recurring style earnings, representing 40% of operating EBITDA Growth in Funds Under Management (FUM) of 12% to $24.7 billion Gearing of 5.1% 3 and liquidity of $3.3 billion, including cash and cash equivalents of $1.0 billion Operating and Investing cash flow of $243.0 million, 62% of Profit after Tax 1. Comparative period the half year ended 31 December 2015 (the prior corresponding period) 2. Return on equity is calculated on an annualised basis using the half year profit after tax divided by the arithmetic average of beginning and half year end securityholders equity 3. Net debt to total tangible assets less cash
8 Commercial success highlights resilience of business model Commercial completion profile 1 ( 000s sqm) 26 47 26 37 31 28 34 44 26 38 55 2 7 15 Intl. House Sydney Office Darling Square Office Intl. Quarter Intl. Quarter London Office London Office No. 1 No. 2 Darling Square Hotel PLQ Office PLQ Office PLQ Office PLQ Retail Melb. Quarter No. 1 No. 2 No. 3 Office Victoria Harbour Office Brisbane Showgrounds Office Circular Quay Office H2 FY17 FY18 FY19 FY21 Competitive advantage generated by the integrated model critical to commercial development success Barangaroo South office T1 reached practical completion. All three towers now operational c.85,000 sqm of new commercial leasing 3 4 new buildings commenced delivery in HY17 representing an end value of c.$2.5 billion 2 13 major commercial buildings in delivery with total end value of c.$7 billion 4 or 414,000 sqm Buildings in delivery to provide additional secured FUM of c.$3 billion 5 Further $9.2 billion or 762,000 sqm of commercial development already secured in remaining development pipeline 1. Based on expected completion date of major commercial projects only, subject to change in delivery program. Not indicative of cash or profit recognition 2. Circular Quay Tower construction start remains subject to certain preconditions 3. Includes Agreements for Lease and Heads of Terms 4. Remaining end value to be delivered as at 31 December 2016 of $5.7 billion 5. Represents secured future FUM increase from funds with development projects in delivery
Section 2 Financials Tarun Gupta Group Chief Financial Officer Image: 432 Park Avenue, New York
10 Financial performance $ million HY16 HY17 Change Development 236.2 260.2 10% Construction 117.3 170.2 45% Investments 243.0 288.4 19% Strong Australian commercial result, investing in offshore regions Rebound in the Americas margin, Engineering activity increasing Both ownership and operating earnings growth Operating EBITDA 596.5 718.8 21% Corporate costs (84.5) (79.2) (6%) HY17 comprises Group Services costs of $69.1 million 1, down 4.0% Group EBITDA 512.0 639.6 25% Depreciation and amortisation (40.8) (47.8) 17% Higher amortisation on investment in systems EBIT 471.2 591.8 26% Net finance costs (45.7) (49.6) 9% Lower interest revenue in HY17 given discount unwind benefit in HY16 2 PBT 425.5 542.2 27% Income tax expense (71.9) (147.7) 105% Effective tax rate of 27.2%, up 10.3 percentage points External non-controlling interests 0.2 0.3 n/a NPAT 353.8 394.8 12% Weighted avg. securities 580.9 582.7 - EPS cents 60.9 67.8 11% 1. Remaining HY17 corporate costs represent Group Treasury of $10.1 million 2. Relates to the Military Housing Privatisation Initiative business
11 Cash flow movements ($b) 1 Denotes major movements Barangaroo Commercial +$0.8b, other Urbanisation +$0.4b, PLLACes +$0.2b, Communities +$0.3b Urbanisation ($1.4b), Communities ($0.3b), other operating payments ($0.2b) 1.8 (1.9) Equity contribution to LLOneITST 3 ($0.1b), Retirement properties ($0.1b) 0.6 (0.3) Net repayment of GBP Club Revolving Credit Facility ($0.2b) (0.2) 4 Circular Quay Tower +$0.3b, NZ 1.0 Retirement disposal 2 +$0.2b 1.0 FY16 closing cash Operating inflow Operating outflow Investing inflow Investing outflow Net financing and other adjustments HY17 closing cash 1. Represents an indicative analysis of operating cash inflows and outflows. Note, operating cash inflows and outflows relating to Construction have been included as a net position in the above chart 2. Late in FY16, the Group divested the New Zealand Retirement business, with proceeds subsequently received in HY17 3. Lendlease One International Towers Sydney Trust (Barangaroo South T1) 4. Includes the impact of fx movements on opening cash
12 Financial position $ million 31 Dec 15 30 Jun 16 31 Dec 16 Assets Cash and cash equivalents 570.0 1,008.4 1,020.8 Inventories 4,639.6 4,602.9 4,963.6 Equity accounted investments 1,275.2 1,152.6 744.0 Investment properties 1 6,312.7 5,940.7 6,439.5 Other assets (including financial) 6,286.4 5,888.3 5,738.6 Total assets 19,083.9 18,592.9 18,906.5 Key areas of capital employed Development inventories of $4.1 billion Investments of $3.3 billion including: Co-Investments of $1.5 billion Retirement Ownership of $1.7 billion Infrastructure of $0.1 billion Liabilities Borrowings and financing arrangements 2,592.5 2,031.3 1,844.9 Other liabilities (including financial) 1 11,117.2 10,946.9 11,114.4 Total liabilities 13,709.7 12,978.2 12,959.3 Net assets 5,374.2 5,614.7 5,947.2 Gearing 2 12.1% 6.5% 5.1% Funding and liquidity $1.0 billion of cash and $2.3 billion in undrawn debt facilities Interest coverage of 10.8 times Gearing of 5.1% 2 Prudent debt maturity profile, no material concentrations 1. Investment properties includes retirement properties of $6,236.6 million. Other liabilities includes retirement resident liabilities of $4,444.1 million 2. Net debt to total tangible assets less cash
13 Portfolio Management Framework EBITDA mix Invested capital By segment By region 9% 6% 40% 36% $718.8m 1 $6.0b 2 53% 47% 8% $6.4b 3 Target weighting Returns 24% Development Construction Investments Development Investments (35 45%) (20 30%) (30 40%) (40 60%) (40 60%) 77% Australia Asia Europe Americas (50 70%) (5 20%) (5 20%) (5 20%) Development ROIC 4 Investments ROIC 4 Construction EBITDA margin Target 9 12% 5 11.3% 12.7% Target 3 4% Target 8 11% 5 13.4% 12.2% 2.0% 2.7% HY16 HY17 HY16 HY17 HY16 HY17 1. Operating EBITDA 2. Invested capital for Development and Investments. Total Lendlease invested capital as at 31 December 2016 was $6.8 billion 3. Invested capital for Australia, Asia, Europe and the Americas. Total Lendlease invested capital as at 31 December 2016 was $6.8 billion ($0.4 billion, Corporate) 4. Return on Invested Capital (ROIC) definition: Operating Profit after Tax / Average Invested Capital (Annualised measure) 5. Through-cycle target based on rolling 3-5 year timeline
14 Portfolio Management Framework Return on equity (ROE) 1 13.5% 13.6% 18.2% 2 Target 10 14% 12.4% 13.0% 13.7% FY12 FY13 FY14 FY15 FY16 HY17 3 cents 80 70 60 50 40 30 20 10 0 Distributions 22 16 20 49 2 27 Target 40 60% 30 22 22 27 30 33 FY12 FY13 FY14 FY15 FY16 HY17 70% 60% 50% 40% 30% 20% 10% Gearing 4 Interim distribution (LHS) Payout ratio (RHS) Final distribution (LHS) 5.5% 5.4% 5.7% 10.5% 6.5% Target 10 15% 5.1% FY12 FY13 FY14 FY15 FY16 HY17 1. Full year ROE is calculated using the annual profit after tax divided by the arithmetic average of beginning, half and year end securityholders equity 2. FY14 includes Bluewater sale 3. Half year ROE is calculated on an annualised basis, using the half year profit after tax divided by the arithmetic average of beginning and half year end securityholders equity 4. Net debt to total tangible assets less cash
Section 3 Operational Update Steve McCann Group Chief Executive Officer and Managing Director Artist impression: Paya Lebar Quarter, Singapore
16 Development 36% Performance highlights 1 ROIC of 12.7% 2 above our target range Forward sale of 3 office buildings Capital solution secured for Circular Quay Tower Barangaroo South T1 reached practical completion. All three towers now operational Barangaroo South T1 > 70% let 3 and International House 100% let 3 Commercial development in delivery with combined end value of c.$7 billion Residential settlements of 2,037 units: Communities 1,338 units Apartments 628 units 4. Default rate < 1.0% Residential presales of $5.7 billion c.950 apartment units in delivery in the US Commercial building completion profile 5 ($b) By estimated total end value International House Sydney 1.7 3.0 0.1 1.8 3.3 1.5-1.7 H2 FY17 FY18 FY19 FY20 FY21 Residential presales 7 ($b) 5.4 0.7 0.7 International Quarter London and Darling Square Office and Hotel Paya Lebar Quarter Office and Retail, Brisbane Showgrounds, Melbourne Quarter and Victoria Harbour Aus Communities Aus Apartments Europe Apartments 5.9 8 5.7 (0.7) 0.6 (0.1) 1.3 1.2 3.9 3.7 HY16 FY16 Settlements Sales Other HY17 of operating EBITDA Circular Quay Tower 6 0.8 1. Comparative period the half year ended 31 December 2015 (the prior corresponding period) 2. Half year returns have been annualised 3. Including agreed Heads of Terms 4. Profit recognised on practical completion 5. Based on expected completion date of underlying buildings, subject to change in delivery program. Not indicative of cash or profit recognition 6. Circular Quay Tower construction start remains subject to certain preconditions 7. Excludes retirement and Americas development. Includes 100% of revenue from joint venture projects 8. Includes fx impact
17 Construction 24% of operating Performance highlights 1 Global EBITDA margin up 70 bps to 2.7%, continuing an upward trend towards the Group s target range of 3 4% Earnings for Australia broadly in line with the prior corresponding period, with increased Engineering activity offset by softer Building margins Execution excellence with the completion of 4 major Building projects in excess of c.$4 billion Increased Engineering activity driven by North Connex M1/M2 Tunnel, Gateway Upgrade North and Caulfield to Dandenong Level Crossing Removal Americas margin boosted by successful project close outs Asia and Europe impacted by challenging market conditions, however continue to be supported by internal pipeline Backlog revenue of $20.5 billion diversified across multiple sectors and clients New work secured of $6.3 billion with an increased contribution from Asia and the Americas c.$7 billion of further work in preferred bidder status EBITDA ($m) 105 18.6 97 2 HY16 0 (1) (3) 4 6.3 (6.3) 20.7 (0.2) 20.5 HY16 FY16 New work secured HY17 Revenue realised 15 70 Other 117 EBITDA Australia Asia Europe Americas Total EBITDA Margin (%) Backlog ($b) 170 HY16 3.6% 0.1% (0.4%) 0.7% 2.0% HY17 3.0% (0.5%) 0.6% 3.2% 2.7% 3 HY17 1. Comparative period the half year ended 31 December 2015 (the prior corresponding period) 2. Values have been rounded down to the nearest million 3. Includes fx
18 Investments 40% of operating Performance highlights 1 ROIC of 13.4% 2, above our target range, driven by improved performance in Australia and Asia Australian result supported by a strong Retirement result with an average 8.6% uplift in unit pricing on resales. We continue to explore the introduction of capital partners over the medium term Higher investment income, including co-investment in Lendlease International Towers Sydney Trust Restoration of profitability in Asia driven by solid investment income contribution Strong uplift in operating earnings driven by higher FUM and military housing fee income FUM of $24.7 billion, up 12% on the prior corresponding period with c.$3 billion 3 of additional secured FUM across the Group s urbanisation projects New equity raised of $0.8 billion mainly attributable to the Circular Quay Tower development Investments EBITDA by activity ($m) 22.0 201 Ownership interest FUM ($b) 23.6 HY16 226 HY17 42 1.0 (0.1) 0.5 62 Operating earnings (0.3) EBITDA 24.7 HY16 FY16 Acquired Divested Net revals Other HY17 4 1. Comparative period the half year ended 31 December 2015 (the prior corresponding period) 2. Half year returns have been annualised 3. Represents secured future FUM increase from funds with development projects in delivery 4. Includes fx
Section 4 Outlook Steve McCann Group Chief Executive Officer and Managing Director Artist impression: International Quarter London
20 Outlook We are well placed for future success given: Earnings visibility from the growing pipeline across our business segments Competitive advantage via integrated capabilities across the property and infrastructure value chain Resilient business model with diversity across segments, sectors and geographies Financial strength low gearing, high levels of liquidity and access to third party capital Significant origination success post balance sheet date: Recommended preferred bidder on Haringey urbanisation project, London c.gbp2.0 billion development end value 1 Progress made on entry into US telco infrastructure A number of significant construction contracts including Javits Convention Centre in New York 1 Focussed on execution excellence through: Strong risk management framework to manage individual projects, property cycles and sovereign risk Unwavering commitment to health, safety and sustainability Disciplined approach to origination 1. Remains subject to contractual close
FY12 FY13 FY14 FY15 FY16 HY17 FY12 FY13 FY14 FY15 FY16 HY17 FY12 FY13 FY14 FY15 FY16 HY17 21 Earnings visibility from strong pipeline across all segments Development pipeline of $49.0 billion Construction backlog revenue of $20.5 billion FUM of $24.7 billion 60 Development pipeline ($b) 22 Construction backlog revenue ($b) 25 Funds under management ($b) 50 20 20 40 30 18 15 20 16 10 10 14 5 0 12 0
Section 5 Q&A Steve McCann Group Chief Executive Officer and Managing Director Tarun Gupta Group Chief Financial Officer Dan Labbad Chief Executive Officer, International Operations Image: Fulton Street Transit, New York
Appendices Artist impression: The Darling Exchange, Sydney
2 Group
3 Our business model Our business model is how we generate earnings. The model is integrated when more than one segment is engaged on a single project DEVELOPMENT The Development segment is involved in the development of communities, inner city mixed use developments, apartments, retirement, retail, commercial assets and social and economic infrastructure Core Financial Returns: Development margins Development management fees received from external co-investors Origination fees for infrastructure PPPs CONSTRUCTION The Construction segment provides a project management, design, and construction service, predominantly in the infrastructure, defence, mixed use, commercial and residential sectors Core Financial Returns: Project management and construction management fees Construction margin INVESTMENTS The Investments segment includes a leading wholesale investment management platform and also includes the Group s ownership interests in property and infrastructure co-investments, Retirement and US Military Housing Core Financial Returns: Fund, asset and property management fees Investment yields and capital growth on coinvestments, and returns from the Group s Retirement portfolio and US Military Housing business
4 Income Statement Income Statement ($m) Dec-15 Dec-16 Revenue 7,340.0 7,945.3 Cost of sales (6,522.7) (7,077.3) Gross profit 817.3 868.0 Other income 85.1 139.0 Other expenses (552.6) (458.9) Results from operating activities 349.8 548.1 Finance revenue 14.8 5.5 Finance costs (60.5) (55.1) Net finance costs (45.7) (49.6) Share of profit of equity accounted investments 121.4 43.7 Profit before Tax 425.5 542.2 Income tax expense (71.9) (147.7) Profit after Tax 353.6 394.5 Profit after Tax attributable to: Members of Lendlease Corporation Limited 257.7 338.6 Unitholders of Lendlease Trust 96.1 56.2 Profit after Tax attributable to securityholders 353.8 394.8 External non controlling interests (0.2) (0.3) Profit after Tax 353.6 394.5 Basic/Diluted EPS per Lendlease Group Stapled Security (cents) 60.9 67.8
5 Statement of Financial Position Statement of Financial Position ($m) Dec-15 Jun-16 Dec-16 Current Assets Cash and cash equivalents 570.0 1,008.4 1,020.8 Loans and receivables 3,110.9 2,785.0 2,057.4 Inventories 2,016.4 1,923.0 2,488.2 Current tax assets 18.4 21.6 - Other financial assets 43.4 50.7 65.0 Other assets 74.2 69.2 94.0 Total current assets 5,833.3 5,857.9 5,725.4 Non Current Assets Loans and receivables 296.0 285.4 259.4 Inventories 2,623.2 2,679.9 2,475.4 Equity accounted investments 1,275.2 1,152.6 744.0 Investment properties 6,312.7 5,940.7 6,439.5 Other financial assets 632.3 628.8 1,230.4 Deferred tax assets 207.7 109.5 116.2 Property, plant and equipment 360.9 432.3 413.1 Intangible assets 1,470.9 1,446.8 1,433.7 Defined benefit plan asset 8.3 7.5 6.5 Other assets 63.4 51.5 62.9 Total non current assets 13,250.6 12,735.0 13,181.1 Total assets 19,083.9 18,592.9 18,906.5 Statement of Financial Position ($m) Dec-15 Jun-16 Dec-16 Current Liabilities Trade and other payables 4,642.3 4,328.8 4,353.5 Resident liabilities 4,291.3 4,119.5 4,444.1 Provisions 321.0 292.4 321.8 Borrowings and financing arrangements 220.4-297.8 Current tax liabilities - - 38.5 Other financial liabilities 30.1 83.6 23.5 Total current liabilities 9,505.1 8,824.3 9,479.2 Non Current Liabilities Trade and other payables 1,590.1 1,909.4 1,702.9 Provisions 43.2 70.6 49.2 Borrowings and financing arrangements 2,372.1 2,031.3 1,547.1 Defined benefit plan liability 65.9 3.4 9.7 Other financial liabilities 21.1 9.7 1.7 Deferred tax liabilities 112.2 129.5 169.5 Total non current liabilities 4,204.6 4,153.9 3,480.1 Total liabilities 13,709.7 12,978.2 12,959.3 Net assets 5,374.2 5,614.7 5,947.2 Equity Issued capital 1,264.4 1,276.3 1,283.9 Treasury shares (95.4) (99.5) (43.7) Reserves 113.9 98.0 65.9 1. Lendlease Trust Retained earnings 3,071.1 3,289.6 3,552.3 Total equity attributable to equity holders of Lendlease Corporation Limited 4,354.0 4,564.4 4,858.4 Total equity attributable to unitholders of LLT 1 1,018.8 1,048.6 1,087.4 Total equity attributable to securityholders 5,372.8 5,613.0 5,945.8 External non controlling interests 1.4 1.7 1.4 Total equity 5,374.2 5,614.7 5,947.2
6 Statement of Cash Flows Statement of Cash Flows ($m) Dec-15 Dec-16 Cash Flows from Operating Activities Cash receipts in the course of operations 8,079.0 8,561.0 Cash payments in the course of operations (7,826.5) (8,515.1) Interest received 5.9 4.8 Interest paid (87.5) (77.2) Dividends/distributions received 28.0 33.5 Income tax received/(paid) in respect of operations 1.8 (77.4) Net cash provided by/(used in) operating activities 200.7 (70.4) Cash Flows from Investing Activities Sale/redemption of investments 75.4 67.4 Acquisition of investments (323.9) (155.7) Acquisition of/capital expenditure on investment properties (7.1) (58.9) Net loans to associates and joint ventures (51.5) 6.0 Disposal of consolidated entities (net of cash disposed and transaction costs) - 521.0 Disposal of property, plant and equipment 10.3 3.6 Acquisition of property, plant and equipment (47.2) (66.4) Net acquisition / disposal of intangible assets (25.5) (3.6) Net cash provided by/(used in) investing activities (369.5) 313.4 Cash Flows from Financing Activities Proceeds from borrowings 1,978.5 1,624.3 Repayment of borrowings (1,847.4) (1,802.7) Dividends/distributions paid (139.9) (157.7) Proceeds from the sale of treasury securities - 106.5 Other financing activities (4.8) (9.9) Net cash used in financing activities (13.6) (239.5) Other Cash Flow Items Effect of foreign exchange rate movements on cash and cash equivalents 2.3 8.9 Net increase/(decrease) in cash and cash equivalents (180.1) 12.4 Cash and cash equivalents at beginning of financial year 750.1 1,008.4 Cash and cash equivalents at end of financial year 570.0 1,020.8
7 Securityholder returns Return on equity (ROE) 1 18.2% 2 Distributions cents 80 70% 13.5% 13.6% 13.0% 12.4% 13.7% FY12 FY13 FY14 FY15 FY16 HY17 3 70 60 50 40 30 20 10 0 49 2 60% 50% 30 27 40% 20 22 30% 27 30 33 22 22 16 20% 10% FY12 FY13 FY14 FY15 FY16 HY17 Interim distribution (LHS) Final distribution (LHS) Payout ratio (RHS) 1. Full year ROE is calculated using the annual profit after tax divided by the arithmetic average of beginning, half and year end securityholders equity 2. FY14 includes Bluewater sale 3. Half year ROE is calculated on an annualised basis, using the half year profit after tax divided by the arithmetic average of beginning and half year end securityholders equity
8 Segment financial metrics Operating Profit after Tax ($m) EBITDA ($m) HY16 HY17 HY16 HY17 183 182 203 215 260 236 243 288 170 77 107 117 Development Investments Construction ROIC 1,2 (Development and Investments), EBITDA margin (Construction) 12.7% ROIC 12.2% HY16 13.4% HY17 EBITDA margin 2.0% 2.7% Development Investments Construction Invested Capital 3 (Development and Investments) ($b) HY16 HY17 3.5 3.2 3.2 2.8 11.3% Development Investments Construction Development Investments 1. Return on Invested Capital (ROIC) definition: Operating Profit after Tax / Average Invested Capital (Annualised measure) 2. ROIC has been calculated on an annualised basis 3. Total Lendlease Invested Capital at 31 December 2016 was $6.8 billion. Development, Investments and Construction Invested Capital totalled $6.4 billion, with remaining Invested Capital representing Corporate ($0.4 billion)
9 Segment and region financial metrics By segment Revenue ($m) EBITDA ($m) Profit After Tax ($m) Invested Capital ($b) HY16 HY17 HY16 HY17 HY16 HY17 HY16 FY16 HY17 Development 1,115 1,331 236 260 183 182 3.2 2.9 2.8 Investments 272 305 243 288 203 215 3.5 3.2 3.2 Construction 5,961 6,306 117 170 78 107 Corporate 7 9 (84) (78) 1 (110) (109) Group 7,355 7,951 512 640 354 395 By region Revenue ($m) EBITDA ($m) Profit After Tax ($m) Invested Capital ($b) HY16 HY17 HY16 HY17 HY16 HY17 HY16 FY16 HY17 Australia 4,140 4,796 518 1 632 386 451 5.4 4.8 4.9 Asia 167 297 (32) 8 (28) 5 0.5 0.5 0.5 Europe 774 660 81 11 73 6 0.9 0.8 0.6 Americas 2,267 2,189 29 67 33 42 0.2 0.4 0.4 Corporate 7 9 (84) (78) 1 (110) (109) Group 7,355 7,951 512 640 354 395 1. Rounded down to the nearest million
Operating EBITDA 10 Recurring income 100% 90% 80% 70% 60% 69% 58% 63% 60% Targeting 60% - 70% of earnings from residential, commercial, infrastructure and retail development activities and from construction / services margin 50% 40% 30% 20% 10% 31% 42% 37% 40% Targeting 30% - 40% of earnings from the Investments segment delivering recurring income 0% FY14 FY15 FY16 HY17 Investments income Other Group earnings
11 Revenue and EBITDA by segment and geography ($m) Revenue EBITDA HY16 HY17 HY16 HY17 Development Australia 1,024.9 1,277.9 191.8 290.1 Asia 7.2 7.2 (13.3) (7.2) Europe 70.0 44.9 65.3 6.3 Americas 13.0 0.8 (7.6) (29.0) Total Development 1,115.1 1,330.8 236.2 260.2 Construction Australia 2,914.4 3,271.7 105.4 97.9 Asia 138.6 265.3 0.2 (1.4) Europe 689.6 612.2 (2.8) 3.9 Americas 2,218.7 2,156.7 14.5 69.8 Total Construction 5,961.3 6,305.9 117.3 170.2 Investments Australia 200.7 246.3 221.3 244.2 Asia 21.1 23.5 (18.5) 16.9 Europe 14.0 3.2 18.6 1.2 Americas 35.3 31.8 21.6 26.1 Total Investments 271.1 304.8 243.0 288.4 Total Operating Australia 4,140.0 4,795.9 518.5 632.2 Asia 166.9 296.0 (31.6) 8.3 Europe 773.6 660.3 81.1 11.4 Americas 2,267.0 2,189.3 28.5 66.9 Group Total Operating 7,347.5 7,941.5 596.5 718.8 EBITDA by segment ($m) 800 HY16 HY17 700 600 500 400 300 200 100 - Development Construction Investments Total EBITDA by geography ($m) 800 HY16 HY17 700 600 500 400 300 200 100 - (100) Australia Asia Europe Americas Total
12 Revenue and EBITDA by segment and geography, local currency Europe EBITDA, local currency (m) Local currency Revenue EBITDA HY16 HY17 HY16 HY17 Europe, GBPm 45 35 HY16 HY17 Development 32.9 26.5 30.7 3.7 Construction 324.1 361.2 (1.3) 2.3 Investments 6.6 1.9 8.7 0.7 25 15 Total operating 363.6 389.6 38.1 6.7 5 Americas (5) Development Construction Investments Total Local currency Revenue EBITDA HY16 HY17 HY16 HY17 55 HY16 HY17 Americas, USDm Development 9.4 0.6 (5.5) (21.8) Construction 1,597.5 1,617.5 10.4 52.4 35 15 Investments 25.4 23.9 15.6 19.6 Total operating 1,632.2 1,642.0 20.5 50.2 Asia Local currency Revenue EBITDA HY16 HY17 HY16 HY17 Asia, SGDm Development 7.3 7.5 (13.4) (7.5) Construction 140.0 275.9 0.2 (1.5) Investments 21.3 24.4 (18.7) 17.6 Total operating 168.6 307.8 (31.9) 8.6 (5) (25) 50 30 10 (10) (30) (50) Development Construction Investments Total HY16 HY17 Development Construction Investments Total
13 Exchange rates Income Statement Local Foreign HY16 1 FY16 2 HY17 3 AUD USD 0.72 0.73 0.75 AUD GBP 0.47 0.50 0.59 AUD SGD 1.01 1.01 1.04 Statement of Financial Position Local Foreign HY16 4 FY16 5 HY17 6 AUD USD 0.73 0.75 0.72 AUD GBP 0.49 0.56 0.58 AUD SGD 1.03 1.00 1.04 1. Average foreign exchange rate for the half year 2016 2. Average foreign exchange rate for the full year 2016 3. Average foreign exchange rate for the half year 2017 4. At spot foreign exchange rate 31 December 2015 5. At spot foreign exchange rate 30 June 2016 6. At spot foreign exchange rate 31 December 2016
14 Regional EBITDA to PAT reconciliation HY17 EBITDA to PAT Reconciliation Region EBITDA Net Interest D&A 1 PBT Tax Non Cont. Int. 2 PAT Australia Development 290.1 0.6 (0.6) 290.1 (86.7) - 203.4 Construction 97.9 0.4 (12.8) 85.5 (22.6) - 62.9 Investments 244.2 - (3.7) 240.5 (55.8) - 184.7 Total Australia 632.2 1.0 (17.1) 616.1 (165.1) - 451.0 Asia Development (7.2) (0.1) (0.4) (7.7) 1.0 0.3 (6.4) Construction (1.4) - (0.5) (1.9) 0.3 - (1.6) Investments 16.9 - - 16.9 (3.4) - 13.5 Total Asia 8.3 (0.1) (0.9) 7.3 (2.1) 0.3 5.5 Europe Development 6.3 - (1.4) 4.9 (3.1) - 1.8 Construction 3.9 (0.4) (0.5) 3.0 0.6-3.6 Investments 1.2 - - 1.2 (0.8) - 0.4 Total Europe 11.4 (0.4) (1.9) 9.1 (3.3) - 5.8 Americas Development (29.0) - (0.1) (29.1) 11.8 - (17.3) Construction 69.8 - (2.3) 67.5 (25.2) - 42.3 Investments 26.1 0.6-26.7 (9.9) - 16.8 Total Americas 66.9 0.6 (2.4) 65.1 (23.3) - 41.8 Corporate Group Services (69.1) (0.1) (25.5) (94.7) 25.8 - (68.9) Group Treasury (10.1) (50.6) - (60.7) 20.3 - (40.4) Total Corporate (79.2) (50.7) (25.5) (155.4) 46.1 - (109.3) Total 639.6 (49.6) (47.8) 542.2 (147.7) 0.3 394.8 1. Depreciation and Amortisation 2. Non Controlling Interests
15 Debt metrics Dec-15 Jun-16 Dec-16 Net debt $ million 2,063 1,052 844 Borrowings to total equity plus borrowings % 32.5 26.6 23.7 Net debt to total tangible assets, less cash % 12.1 6.5 5.1 Interest coverage 1 times 7.7 8.0 10.8 Average cost of debt including margins % 4.8 4.6 4.8 Average debt duration years 3.8 5.3 4.9 Debt mix fixed : floating ratio 54 : 46 91 : 9 100 : 0 Undrawn debt facilities $ million 1,424 2,173 2,313 1. EBITDA plus interest income, divided by interest finance costs, including capitalised finance costs
16 Debt facilities and maturity profile Debt facilities ($m) 1 1,500 Drawn Facility 690 513 513 550 0 0 550 35 35 263 263 476 476 Syndicated Multi- Option Facility UK Bond Issue Club Revolving Credit Facility US $ Reg. S Notes US Private Placement Singapore Bond Australian Medium Term Notes Debt maturity profile ($m) 2 225 250 0 900 600 690 264 35 517 556 FY17 FY18 FY19 FY20 FY21 FY22 FY26 Syndicated Multi-Option Facility UK Bond Issue Club Revolving Credit Facility Australian Medium Term Notes US Private Placement Singapore Bond US $ Reg. S Notes Undrawn 1. Values are shown at amortised cost 2. Values are shown at gross facility value
17 Key dates for investors Date HY17 results released to market / interim distribution declared 27 February 2017 Securities quoted ex-dividend on the Australian Securities Exchange 2 March 2017 Interim distribution record date 3 March 2017 Interim distribution payable 24 March 2017 FY17 results released to market / final distribution declared 28 August 2017 Annual General Meeting 17 November 2017
18 Development
19 Development HY17 Overview Involved in the development of communities, inner city mixed use developments, apartments, retirement, retail, commercial assets and social and economic infrastructure Financial returns are generated via Development margins, Development management fees from external co-investors and origination fees for the facilitation of infrastructure PPP transactions Drivers Forward sale of 839 Collins St, Victoria Harbour: - 38,000 sqm office - End development value $400-450 million, est completion FY19 Forward sale of One Melbourne Quarter: - 26,000 sqm office - End development value $200-250 million, est completion FY19 - LLC indirect ownership via holding in APPF Commercial Capital solution secured for Circular Quay Tower 1 subject to preconditions: - c.55,000 sqm office - End development value $1.5-1.7 billion, est completion FY21 - LLC 20% co-investment Barangaroo South T1 T3 profit release on converting to operational phase 3,500 sqm of additional leasing at Barangaroo South T1 (AFL) 2 Residential settlements of 2,037 units, down 8.6%: - Communities settlements of 1,338 units, down 8.7% - Retirement settlements of 71, down from 100 - Apartment settlements of 628 units, down 5.1% Performance HY16 HY17 % Operating EBITDA 40 36 ROIC (%) 11.3 12.7 Invested Capital ($b) 3.2 2.8 Outlook Residential presales of 8,864 units, $5.7 billion: - Record Communities presales of 3,351 units, $844 million - Apartment presales of 5,513 units, $4,829 million Barangaroo South leasing HoTs 3 on 23,800 sqm at T1 that will take occupancy to c.75% and 6,700 sqm at International House, 100% of building PLQ 42,000 sqft retail leasing secured. Retail and 3 office towers due FY19 Forward sale of 5 King St, Brisbane: 15,000 sqm office, end development value $100-150 million, est completion FY19 US residential development execution underway c.950 apartments in delivery, 736 of which are residential for rent Future pipeline secured post balance sheet date: - Haringey urbanisation project, London GBP2.0 billion estimated end value 4 - Entry into US telco development Total pipeline $49.0 billion, including c.$35 billion in urbanisation, of which c.$25 billion remains yet to be put into delivery 1. $66.2 million gain on sale, $16.7 million revaluation gain on retained equity 2. Agreement for Lease 3. Heads of Terms 4. Remains subject to contractual close
20 Development earnings / pipeline EBITDA by geography ($m) Development pipeline by geography ($b) HY16 HY17 HY16 HY17 49.0 46.6 191.8 290.1 65.3 6.3 260.2 236.2 30.9 26.0 5.7 5.7 11.5 8.7 3.4 3.7 (13.3) (7.2) (7.6)(29.0) Australia Asia Europe Americas Total Australia Asia Europe Americas Total Urbanisation pipeline by geography HY17 ($b) Historical development pipeline ($b) Urbanisation Pipeline Communities Pipeline 8.7 3.7 $35.0b 16.9 Australia Asia Europe Americas 37.2 37.4 37.7 15.9 14.3 12.7 44.9 12.1 48.8 49.0 11.5 14.0 5.7 21.3 23.1 25.0 32.8 37.3 35.0 FY12 FY13 FY14 FY15 FY16 HY17
21 Residential development Communities and Retirement (settlements by state) 1 HY16 HY17 Units $m Units $m Communities QLD 583 96 589 114 NSW 2 430 157 202 68 VIC 305 53 407 83 SA 81 13 75 10 WA 67 16 65 17 Retirement Australia 100 45 71 34 Total 1,566 380 1,409 326 Communities and Retirement (sales by state) HY16 HY17 Units $m Units $m Communities QLD 718 141 820 166 NSW 2 536 201 249 96 VIC 580 114 744 159 SA 157 20 38 6 WA 69 16 44 12 Retirement Australia 100 45 71 34 Total 2,160 537 1,966 473 HY17 Apartment settlements 3 Units $m Australia Victoria Harbour 888 Collins 440 284 Other 12 14 Total 452 298 Europe IQL 4 Glasshouse Gardens 114 84 E&C 5 South Gardens 6 61 23 Other 1 1 Total 176 108 Total settlements 628 406 1. Retirement metrics reflect sales / settlements in the development business and not resales in investment portfolio 2. NSW includes the Australian Capital Territory 3. As at 24 February 2017, 86% total apartment settlements across Australia and Europe were cash settled. Profit recognised on practical completion 4. International Quarter London 5. Elephant & Castle 6. Affordable apartments
22 Apartment and Communities presales 1 Apartments presales By units $m 5,392 1,797 5,914 1,635 144 83 (452) (176) Australia 5,513 1,542 Europe 4,732 1,667 5,247 1,373 105 94 (211) (298) (108) 4,829 1,148 3,595 4,279 3,971 3,065 3,874 3,681 HY16 FY16 Sales Settlements HY17 HY16 FY16 Sales Impact of fxsettlements HY17 Communities presales By units $m 1,895 (1,338) 439 (292) 2,732 2,794 3,351 655 697 844 HY16 FY16 Sales Settlements HY17 HY16 FY16 Sales Settlements HY17 1. Excludes retirement and Americas development and includes 100% of revenue from joint venture projects
23 Apartment presales by location and customer Presales in delivery (by value, as at 31 December 2016) 1 Run-off profile by location 2 By customer 44% 30% H2 FY17 FY18 FY19 23% Other offshore 31% 4% 10% 5% 14% 11% 6% 7% 20% 3% 10% 21% China 56% Local 0% 0% Sydney Brisbane Melbourne London 1. Apartment projects in delivery reflecting total presales of $4.3 billion, including 100% of revenue from joint venture projects 2. Based on expected completion date of underlying buildings, subject to change in delivery program
24 Development pipeline provides long term earnings visibility 1 Record secured pipeline of $49.0b controlled by invested capital of $2.8b Apartments 20 major apartment buildings presold and in delivery, estimated completion FY17 FY19 Estimated annual turnover 5 4,570 units presold 2 19,405 units remaining 23,975 units ~1,000-2,000 settlements $4.3 billion presold 2 $15.8 billion remaining $20.1 billion Commercial 13 major buildings in delivery, estimated completion FY17 FY21 414,000 sqm in delivery 762,000 sqm remaining 1,176,000 sqm ~2-3 buildings commenced $5.7 billion in delivery 3 $9.2 billion remaining $14.9 billion Communities and Retirement 3,351 lots presold 54,511 lots remaining 4 57,862 lots 3 ~3,500-4,500 settlements $0.8 billion presold $13.2 billion remaining $14.0 billion 1. All data as at 31 December 2016 2. Represents presales balance on buildings in delivery only 3. Total end value of c.$7.0 billion, with c.$1.3 billion delivered to date 4. Includes built-form units to be sold with land lots 5. Subject to market conditions $49.0 billion Total pipeline end value
25 Major project summary Project Project secured Delivery commenced Expected completion date 1 Residential units backlog Commercial sqm backlog 000s Total remaining end value $b 2 Barangaroo South, Sydney 2009 2012 2023 775 80 3.7 Darling Square, Sydney 2013 2013 2019 1,507 70 1.9 Victoria Harbour, Melbourne 2001 2004 2025 2,500 46 2.1 Melbourne Quarter, Melbourne 2013 2016 2022 1,683 129 1.1 Brisbane Showgrounds, Brisbane 2009 2011 2029 2,579 85 1.6 Waterbank, Perth 2013 - - 1,225 17 1.1 Tun Razak Exchange, Kuala Lumpur 2014 - - 2,400 246 2.7 Paya Lebar Quarter, Singapore 2015 2016 2019 429 137 3.0 Elephant and Castle, London 2010 2012 2025 2,410 18 3.5 International Quarter, London 2010 2014 2026 210 273 3.4 The Wharves, Deptford, London 2014 2016 2022 1,130 7 1.1 Riverline, Chicago 2014 2016 2025 3,750 1 2.0 Other Urbanisation Projects 3 3,377 67 7.8 Total Urbanisation 23,975 1,176 35.0 1. Based on expected completion date of underlying buildings, subject to change in delivery program 2. Reflects the remaining estimated total project end development value. Values for any project can vary and are subject to change 3. Includes Toorak Park, Clippership and Circular Quay Tower
26 Apartment projects in delivery settlement profile 3 Project Building Total Units Presold (%) Presales 1 ($m) Australia Wirth House, St Leon and Darling One 539 100% ~585 Darling Square Darling North, Harbour Place and Trinity House 577 100% ~810 Darling Rise, Barker House and Arena 391 100% ~490 889 Collins 536 98% ~360 Victoria Harbour 883 Collins 528 96% ~350 Collins Wharf 1 321 83% ~245 Brisbane Showgrounds North Yard and South Yard 401 98% ~210 Toorak Park Park, East, North and Terrace Homes 468 87% ~390 Total Australia 3,761 ~3,440 Europe Elephant and Castle South Gardens 299 85% ~220 West Grove (Buildings 1 and 2) 593 76% ~420 International Quarter London 4 Glasshouse Gardens (Buildings 1 and 2) 219 100% ~175 Wandsworth Victoria Drive 110 34% ~40 Total Europe 1,221 ~855 Sub-total 4,982 ~4,295 Americas 5th Avenue 5 281 5th Avenue 130 - - Clippership Buildings 1 and 2 284 6 - - Building 3 80 - - Riverline 7 Building D 452 6 - - Total Americas 946 - Total 5,928 ~4,295 = Indicates expected timing of building completion and profit recognition Delivery 2 H2 FY17 FY18 FY19 1. Closing presales balance as at 31 December 2016 2. Based on expected completion date of underlying buildings, subject to change in delivery program 3. Excludes settlements recognised in HY17 4. Lendlease ownership interest 50% 5. Lendlease ownership interest 40% 6. Residential rental product 7. Lendlease ownership interest 60%
27 Major commercial development pipeline Commercial building completion profile 1 Project Capital model sqm ('000) Building H2 FY17 2 FY18 FY19 FY20 FY21 International Quarter London Fund through 3 73 Office (2 buildings) Paya Lebar Quarter Joint venture 93 Office (3 buildings) 44 Retail Darling Square Fund through 3 37 Hotel 26 Office Barangaroo South Fund through 3 7 International House Sydney Melbourne Quarter Fund through 3 26 One Melbourne Quarter Victoria Harbour Fund through 3 38 Office Circular Quay Tower 4 Fund through 3 55 Office Brisbane Showgrounds Fund through 3 15 Office Total 414 = Indicates expected building completion date subject to change in delivery program Indicative conversion timing of secured commercial pipeline to FY21 (sqm 000) 5 Project # Buildings Sector sqm ('000) H2 FY17 FY18 FY19 FY20 FY21 Melbourne Quarter 2 Office 97 Brisbane Showgrounds 2 Office 35 International Quarter London 6 Office 196 Tun Razak Exchange 6 1 Retail 204 Total 11 532 1. Not indicative of cash or profit recognition. Based on expected completion date of underlying buildings, subject to change in delivery program 2. Excludes buildings completed in HY17 3. A funding model structured through a forward sale to a capital partner resulting in staged payments prior to building completion Targeting 2-3 building commencements p.a. 4. Circular Quay Tower construction start remains subject to certain preconditions 5. Indicative project execution timing, subject to tenant pre-commitment, planning and other conditions 6. Subject to unconditional contract close
28 Communities and Retirement projects Communities Residential Commercial Include Horizon in this. Estimated Backlog Backlog Backlog Project Location Ownership Interest Completion Built-Form Date 1 Land Units 2 sqm / 000s Units 2 3 Bingara Gorge NSW Land management 2025 1,170-38 Calderwood Valley NSW Land management 2035 4,565-56 St Marys Jordan Springs NSW Owned 2023 1,075 20 491 The New Rouse Hill NSW Land management 2018 25 430 - Fernbrooke Ridge QLD Land management 2018 195 - - Elliot Springs (formerly Rocky Springs) QLD Land management 2058 10,675-1,037 Springfield Lakes QLD Land Management 2026 4,340 315 47 Yarrabilba QLD Staged acquisition 2043 13,255 1,190 2,097 Blakes Crossing SA Staged acquisition 2019 525-9 Atherstone VIC Land management 2033 3,950-80 Aurora VIC Owned 2025 2,700-189 Harpley VIC Land management 2024 3,190-313 Mayfield VIC Owned 2017 25 - - Alkimos WA Land management 2024 1,500 15 55 The Assembly at Coolbellup WA Land management 2017 15 - - Horizon Uptown Americas Owned 2033 3,860-371 Sub-total 51,065 1,970 4,783 Retirement - 4,827 - Total 51,065 6,797 4,783 1. Estimated completion date represents the expected financial year in which the last unit will be settled as at 31 December 2016, subject to change 2. Represents estimated backlog and includes the total number of units in Group owned, joint venture and managed projects. The actual number of units for any particular project can vary as planning approvals are obtained 3. Represents the net developable land in relation to master-planned urban communities. The actual land area for any particular project can vary as planning approvals are obtained
29 Development deal structuring tailored to local market Communities / Retirement Apartments (Australia, Europe) Urbanisation Commercial Forward Sale JV Structure / LP-GP 1 Project examples Jordan Springs, Sydney Yarrabilba, Brisbane Darling Square, Sydney Elephant & Castle, London Barangaroo (ITS), Sydney Phase 1 International Quarter, London Paya Lebar Quarter, Singapore Phase 1 Riverline, Chicago Land ownership Land funding 2 Land management Staged payments Land management Staged payments Land management Staged payments Land ownership via JV (including project financing) Production 100% on-balance funding 2 sheet Largely 100% on-balance sheet Capital partner progress or staged payments Funded via JV (including project financing) P&L returns Development profit on settlement Construction margin on infrastructure delivery Development profit on practical completion Construction margin on practical completion 3 Development profit typically upfront at time of sale Development management fees, Construction margin 4 and Investment Management fees 4 during delivery Development profit tied to equity interests Development management fees, Construction margin 4 and Investment Management fees 4 (including performance fees) during delivery Cash returns (Development only) On settlement On settlement Over life of project during delivery Linked to cash equity returns or sell down of investment typically post practical completion 1. Limited Partnership / General Partnership 2. Reflects typical funding models used across segment examples 3. Based on apartment projects delivered 100% on-balance sheet 4. Only where Construction and / or Investments segments are engaged to play a role in the project
30 Construction
31 Construction HY17 Overview Provides a project management, design, and construction service, predominantly in the infrastructure, defence, mixed-use, commercial and residential sectors Financial returns are generated via project management and construction management fees, in addition to construction margin Drivers Australia - Earnings broadly in line with prior corresponding period due to increased Engineering activity offset by softer Building margins - Execution excellence with the completion of 4 major Building projects in excess of c.$4 billion - Engineering contributors included NorthConnex M1/M2 Tunnel, Gateway Upgrade North and Caulfield to Dandenong Level Crossing Removal Asia - Breakeven result as construction works ramp up on Paya Lebar Quarter, Singapore Europe - Internal pipeline continues to support the business - Region has avoided bidding in highly competitive markets in recent years Americas - Successful close out on a number of projects positively impacted overall result Performance HY16 HY17 % Operating EBITDA 20 24 EBITDA margin (%) 2.0 2.7 New Work Secured ($b) 6.1 6.3 Backlog Revenue ($b) 18.6 20.5 Outlook Trajectory towards target margin of 3 4% Diversity by region, client and sector c.$7 billion of further work in preferred bidder status Australia - New work secured of $2.8 billion including Sunshine Plaza Redevelopment and Western Sydney Stadium - Pursuing a number of large transport projects including Western Distributor and Melbourne Metro Asia - Backlog revenue higher from internal pipeline Europe - Recent project wins to assist in achieving scale to restore margins in future periods with $1.5 billion in preferred bidder status Americas - HY17 lift in margin expected to normalise - New work secured of $2.5 billion, $4.2 billion in preferred bidder status - Post balance sheet date awarded c.us$1.5 billion expansion of the Jacob K. Javits Convention Center (50% JV in New York)
32 Construction earnings EBITDA ($m) EBITDA margins (%) 105.4 97.9 HY16 HY17 69.8 117.3 170.2 4% 3% 2% 3.6% 3.0% HY16 HY17 3.2% 2.0% 2.7% 14.5 0.2 (1.4) (2.8) 3.9 Australia Asia Europe Americas Total EBITDA Europe (GBPm) 1% 0.6% 0.7% 0.1% 0% (1%) (0.5%) (0.4%) Australia Asia Europe Americas Total EBITDA Americas (USDm) 2.3 52.4 10.4 (1.3) HY16 HY17 HY16 HY17
33 Construction backlog Backlog revenue ($b) Backlog revenue by region ($b) 1 Aus Services Asia Europe Aus Engineering 3.3 1.5 0.9 1.1 15.1 16.2 16.2 17.3 20.7 20.5 $20.5b 6.9 Americas FY12 FY13 FY14 FY15 FY16 HY17 Aus Building 6.8 Backlog revenue by client 1,2 Backlog revenue by sector 1,2 Corporate 18% Lendlease Commercial Other 14% 9% 19% Transport 44% 38% Government Defence Hotel / Entertainment 1. As at 31 December 2016 2. Includes all Construction projects greater than $100 million, which represents 78% ($16.0 billion) of secured backlog 16% 10% 32% Residential
34 Construction new work secured / backlog New work secured revenue ($m) Australia Asia Europe Americas Total Dec-15 Dec-16 Dec-15 Dec-16 Dec-15 Dec-16 Dec-15 Dec-16 Dec-15 Dec-16 New work secured revenue 1 Building 2,052.4 2,331.1 48.0 598.1 623.7 411.7 1,654.0 2,547.7 4,378.1 5,888.6 Engineering 1,145.5 335.1 14.8 22.0 1,160.3 357.1 Services 517.1 99.9 517.1 99.9 Total new work secured revenue 3,715.0 2,766.1 62.8 620.1 623.7 411.7 1,654.0 2,547.7 6,055.5 6,345.6 Backlog revenue ($m) Australia Asia Europe Americas Total Dec-15 Dec-16 Dec-15 Dec-16 Dec-15 Dec-16 Dec-15 Dec-16 Dec-15 Dec-16 Backlog revenue 2 Building 6,393.2 6,843.8 319.2 884.2 1,588.2 1,076.8 5,799.2 6,924.3 14,099.8 15,729.1 Engineering 2,935.8 3,273.5 19.1 4.4 2,954.9 3,277.9 Services 1,517.8 1,523.7 1,517.8 1,523.7 Total backlog revenue 10,846.8 11,641.0 338.3 888.6 1,588.2 1,076.8 5,799.2 6,924.3 18,572.5 20,530.7 Backlog realisation (%) Year ending June 2017 30 31 60 38 41 63 30 31 31 31 Year ending June 2018 38 42 36 55 51 26 40 42 40 43 Post June 2018 32 27 4 7 8 11 30 27 29 26 Total 100 100 100 100 100 100 100 100 100 100 1. New work secured revenue is the total revenue to be earned from projects secured during the year 2. Current period backlog revenue is the total revenue to be earned from projects in future financial periods, based on projects secured as at 31 December 2016. Although backlog revenue is realised over several periods, the average foreign exchange rate for the current period has been applied to the closing backlog revenue balance in its entirety, as the average rates for later years cannot be predicted
35 Construction backlog revenue by region Group ($m) Australia ($m) 6,346 (6,306) 2,766 (3,272) 257 (179) Book to bill 1 : 1:01 Book to bill 1 : 0:85 18,573 20,670 20,531 10,847 11,890 11,641 HY16 FY16 New work secured Revenue realised Other HY17 HY16 FY16 New work secured Revenue realised Other HY17 Europe ($m) Americas ($m) 2,548 (2,157) 412 (612) (182) (228) Book to bill 1 : 1:18 1,588 1,505 Book to bill 1 : 0:67 1,077 5,799 6,715 6,924 HY16 FY16 New work secured Revenue realised Other HY17 HY16 FY16 New work secured Revenue realised Other HY17 1. Ratio calculated as new work secured over revenue realised
36 Australian market outlook Engineering 1 National major road construction (major project commencements, real terms, $b) 2 7 6 5 4 3 2 1 0 Forecast 5.7 6.2 5.9 5.5 5.6 5.2 4.1 4.2 4.6 4.6 4.3 3.9 3.3 2.7 2.6 1.6 1.6 1.4 1.3 0.0 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 National major railways construction (major project commencements, real terms, $b) 2 10 9 8 7 6 5 4 3 2 1 0 Forecast 9.1 5.2 5.6 5.3 3.1 2.5 2.8 2.2 1.7 2.0 2.3 2.3 1.2 1.4 0.6 0.8 0.0 0.0 0.0 0.0 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 1. Source: Estimates based on Lendlease Group Research, ABS 2. Major project = toll road or public project > $500 million (construction activity, not total value)
37 Investments
38 Investments HY17 Overview Owns and / or manages investments including a leading wholesale investment management platform and also the Group s ownership interests in property and infrastructure co-investments, Retirement and US Military Housing Financial returns include fund and property management fees, yield and capital growth on investment positions, and returns from the Group s Retirement portfolio and US Military Housing business Drivers FUM of $24.7 billion, up 12.3% on the prior corresponding period New equity raised of $0.8 billion - Mainly attributable to equity commitments relating to the Circular Quay Tower development in Sydney Investments managed on behalf of the Group increased to $3.3 billion Retirement Ownership and Management: - 453 unit resales at higher average price (+8.6%) - 30 bps decrease in discount rate to 13.0% Higher investment income from co-investment in Lendlease International Towers Sydney Trust Higher investment management fees due to FUM growth Restoration of profitability in Asia driven by stronger investment income and asset devaluations in the prior corresponding period Higher asset management fees from the America s military housing units under management Performance HY16 HY17 % Operating EBITDA 41 40 ROIC (%) 12.2 13.4 Invested Capital ($b) 3.5 3.2 Revaluations ($m) 30.0 35.7 Revaluations / Operating EBITDA (%) 5.0 5.0 Outlook ROIC leverage from FUM and assets under management FUM supported by $1.5 billion co-investment Growing FUM and asset management income - c.$3 billion 1 of additional secured FUM across the Group s urbanisation projects in delivery c.$600 million direct exposure to premium grade office at Barangaroo South - Higher investment income from co-investment in Lendlease One International Towers Sydney Trust following practical completion of Barangaroo South T1 736 US residential for rent apartments in delivery provide a source of investment income and potential investment product for capital partners Explore introduction of capital partners to Retirement over the medium term Well positioned to deliver future recurring earnings through: - ~150 institutional investors - $1.5 billion co-invested in funds - $1.7 billion of capital across 71 retirement villages - 53,105 military housing units under management 1. Represents secured future FUM increase from funds with development projects in delivery
39 Investments earnings / ownership EBITDA by region ($m) EBITDA by activity ($m) 244 221 HY16 HY17 243 288 201 226 HY16 HY17-17 19 22 1 26 42 62 (19) Australia Asia Europe Americas Total Ownership interests Investments by product ($b) 3 Investments by region ($b) 3 1 2 Operating earnings 3.2 3.0 3.3 1% 4% 4% 53% 50% 51% 3.2 3.0 3.3 4% 4% 3% 3% 2% 2% 16% 11% 10% 46% 46% 45% 77% 83% 85% HY16 FY16 HY17 Co-Investments Retirement ownership Infrastructure HY16 FY16 HY17 Australia Asia Europe Americas 1. Earnings derived from co-investments, the Retirement business and equity returns from US Military Housing 2. Earnings derived from the investment management platform and the management of the US Military Housing business 3. Represents the Group s assessment of market value
40 Funds Under Management (FUM) Growth in FUM ($b) CAGR of 15.0% 21.3 23.6 24.7-12.3 15.0 16.3 FY12 FY13 FY14 FY15 FY16 HY17 FUM by asset class 1 FUM by region ($b) 1 Industrial 4% Europe 1.4 Asia 5.4 Commercial 42% 52% Retail $24.7b Australia 17.9 Other 2% 1. As at 31 December 2016
41 FUM by region Group ($b) Australia ($b) 1.0 (0.1) 0.5 (0.3) 1.0 (0.1) 0.5-22.0 23.6 24.7 15 16.5 17.9 HY16 FY16 Acquired Divested Net Impact of fx revaluations HY17 HY16 FY16 Acquired Divested Net Impact of fx revaluations HY17 Europe ($b) Asia ($b) - - - (0.2) - - - (0.1) 1.7 1.5 1.4 5.3 5.6 5.4 HY16 FY16 Acquired Divested Net Impact of fx revaluations HY17 HY16 FY16 Acquired Divested Net Impact of fx revaluations HY17
42 Major fund summary Funds Management Platform 1 APPFR 2 APPFC 3 APPFI 4 LLITST 5 LLOITST 6 ARIF 7 1 (Somerset) ARIF 7 3 (Jem) PPPL 8 LLRP 9 Total assets ($ billion) 5.1 10 3.0 10 0.9 3.3 1.8 0.8 1.4 1.2 1.4 Gearing (%) 11.7 10 7.7 10 12.9 18.7 11.6 66.0 47.0 40.0 2.3 LLC co-investment (%) 1.0 7.8 10.7 15.0 12.5 10.1 20.1 6.1 4.3 LLC co-investment ($ million) 45 208 79 392 196 27 150 39 62 Region AUS AUS AUS AUS AUS Asia Asia Asia Europe Asset class Retail Office Industrial Office Office Retail Retail and Commercial Retail and Commercial Retail Number of assets 12 18 30 4 11 1 1 1 1 2 Occupancy (%) 98.4 85.8 12 93.6 79.5 12 74.7 12 93.2 99.1 96.0 95.9 Weighted average cap rate (%) 5.6 5.8 7.4 5.3 5.5 5.0 5.0 5.7 4.2 1. The above highlights only selected major funds and does not comprise Lendlease s complete Funds Management Platform 2. Australian Prime Property Fund Retail 3. Australian Prime Property Fund Commercial 4. Australian Prime Property Fund Industrial 5. Lendlease International Towers Sydney Trust (Barangaroo South T2 and T3) 6. Lendlease One International Towers Sydney Trust (Barangaroo South T1) 7. Asian Retail Investment Fund 8. Parkway Parade Partnership Limited 9. Lendlease Retail LP 10. Assets and gearing calculated on a look through basis 11. Includes car park asset 12. Includes Heads of Terms
43 Retirement summary Value drivers Investments Valuation drivers HY16 FY16 HY17 Long term growth rate 3.7% 3.7% 3.6% Discount rate 13.3% 13.3% 13.0% Average length of stay ILUs (years) 11 11 11 Number of established units 14,295 13,384 1 12,433 Units resold 541 1,038 453 1,672 1,488 1 1,654 Villages / units Location Number of villages Units QLD 12 2,913 NSW 17 3,181 VIC 26 4,057 SA 4 500 WA 10 1,623 ACT 2 159 Total 71 12,433 Units by state HY16 FY16 HY17 4,057 3,181 2,913 1,623 500 159 VIC NSW QLD WA SA ACT 1. In FY16, the Group divested its NZ Retirement business, consisting of 996 units and 5 sites
44 Lendlease overview
45 Vision: to create the best places Strategic framework Business model Competitive advantage Pillars of value
46 Globally diverse pipeline Our globally diverse pipeline provides long term earnings visibility 1 $49.0b $20.5b $24.7b $3.3b Development pipeline Americas $3.7b Development pipeline $6.9b Construction backlog revenue $0.1b Investments Construction backlog revenue Europe FUM $8.7b Development pipeline $1.1b Construction backlog revenue $1.4b FUM $0.1b Investments Asia Investments $5.7b Development pipeline $0.9b Construction backlog revenue $5.4b FUM $0.3b Investments Australia $30.9b Development pipeline $11.6b Construction backlog revenue $17.9b FUM $2.8b Investments 1. All data as at 31 December 2016
47 Global trends influencing our strategy Urbanisation By 2014, 54% of the world s population were estimated to live in urban areas; this will reach 60% by 2030 1 Lendlease leadership $35.0b 2 Urbanisation pipeline 12 major urbanisation projects 3 across 8 Gateway cities Infrastructure Funds growth Sustainability Ageing population Worldwide infrastructure spending will grow from US$4 trillion per year in 2012 to more than US$9 trillion by 2025 4 Global assets under management are forecast to rise from US$64 trillion in 2012 to US$102 trillion by 2020 6 Cities occupy 2% of the world s land mass, but are responsible for up to 70% of harmful greenhouse gases 8 Internationally, people aged 60+ will grow the most in number between 2015 and 2050 10 A leading tier 1 Engineering business in Australia $4b+ PPPs secured in last 5 years 5 Lendlease accounted for ~10% of new equity raised globally for core wholesale mandates since 2009 7 Recognised by GRESB as an international leader 9 Development pipeline targeting 98% green certification A market leader in retirement living sector in Australia Actively seeking to transfer skills offshore Technology Global investment in real estate technology start-ups has grown from $0.2b in 2012 to $1.7b in 2015 11 1. World Urbanization Prospects: The 2014 Revision, United Nations 2. As at 31 December 2016 3. Urbanisation development projects with end value >$1b 4. Capital project and infrastructure spending outlook to 2025, PwC 2015 5. Cumulative data from FY12 FY16 6. Asset Management 2020: A Brave New World, PwC 2014 A pioneer of new delivery technologies e.g. Cross Laminated Timber, pre-fab and modular; a leader in new safety initiatives 7. Preqin Ltd; represents period 2009 to 2015 8. UN-HABITAT s Global Report on Human Settlements 2011 9. Global Real Estate Sustainability Benchmark (GRESB) 2016 survey; 5 funds achieved no.1 ranking in respective global or regional category 10. World Population Prospects: The 2015 Revision, United Nations 11. CB Insights: Real Estate Tech Start-ups Funding Overview 2016