Brad Soller
Group Chief Financial Officer
Financial Overview
Agenda
1.
2.
3.
4.
5.
6.
7.
Capital allocation
Future capital allocation
Sources of capital
Key debt metrics
Debt maturity profile
Pipeline
Key financial targets
Capital allocation
Region
TARGET
Risk Adjusted Capital 1
Europe
19%
Australia
>~60%
All other regions
No more than ~20% each
Amercias
14%
Asia
5%
Australia
62%
Services
5%
Segment
Development
~35 – 45%
Development
38%
Construction
~30 – 40%
Ownership
23%
Investment Management
~5 – 15%
Services
~<5%
Ownership
~10 – 20%
Investment
Management
1%
Project
Management
&
Construction
33%
1.Risk adjusted capital is an internal calculation used as a proxy for Lend Lease equity. The risk adjusted capital is based on a December 2010 pro forma balance sheet which includes the Lend Lease infrastructure business.
3
Future capital allocation
Investment pipeline of between A$1-1.5b over next 3 years1
Region
Sector
Australia
 Major development projects
 Lend Lease communities
 Co-investment in funds
 PPP equity positions
Americas
 Lend Lease DASCO healthcare pipeline
Asia
 Retail development
 Co-investment in funds
Europe
 Major projects such as Stratford International Quarter
and Elephant & Castle
1. Net cash outflows
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Sources of capital
Source of Capital
Expected position
Retained earnings
 Current dividend payout ratio of between 40% to 60% of net
operating profit after tax
 DRP to remain active
Portfolio Management
 Have sold circa A$2.3b of assets since 2006
 Number of mature assets to be sold down over next three years
Debt
 Capacity from increasing Group gearing
 Off balance sheet funding of major projects
Third party equity
 Significant access to third party capital through Lend Lease
managed funds
 Lend Lease to sell down equity in major projects pre
commencement
5
Key debt metrics
Dec 2010
June 2010
BBB- / Baa3
(Stable)
BBB- / Baa3
(Stable)
Net (cash) / debt1 (A$m)
29.5
(19.7)
Gearing excluding Valemus 2
0.4%
Net cash position
Pro forma gearing including Valemus
6.7%
Undrawn facilities (A$m)
571.5
688.6
4.8 years
5.5 years
6.4%
6.3%
Fixed / floating debt
63% / 37%
65% / 35%
Interest coverage 4
6.5x
6.7x
Credit Rating - S&P/Moody’s
Weighted average debt maturity 3
Weighted average cost of debt
1. Net (cash) / debt is borrowings including certain other financial liabilities, less cash
2 .Gearing is calculated as Gearing is calculated as net debt, divided by total tangible assets, less cash
3 .Weighted average maturity relates to drawn debt
4 .Calculated as operating EBITDA plus interest income divided by interest finance costs, including capitalised finance costs
6
Debt maturity profile
Debt Facilities Maturity Profile
- Post Proposed A$ Club Refinance
A$m
800
700
Bluewater
600
500
400
300
USPP
A$ Club
UK RCF
UK Bond
New A$
200
New A$
A$ Term
100
USPP
USPP
0
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY22
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Pipeline delivers certainty of future earnings
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016
Barangaroo
South
RNA
Elephant &
Castle
Stratford
International
Quarter
Australian
residential
Lend Lease
DASCO
Jurong
8
Key financial targets – tracking well
Metric
Target
31 Dec 2010
Return on Equity
 Greater than 15% per annum
Credit Rating
 Committed to investment grade
credit rating
Gearing2
 <20%
Interest Coverage Ratio
 >5x
6.5x
Annuity Income
 20% of EBITDA
23%
Dividend Payout Ratio
 40% to 60% of Operating Profit
after Tax
51%
13.4%1
BBB- / Baa3
(Stable)
6.7%3
1. Return on equity is calculated as the half year statutory profit after tax divided by the weighted average equity for period multiplied by two. This was done to approximate an annual return on equity
2. Gearing is calculated as net debt, divided by total tangible assets, less cash
3. Gearing including the proforma impact of the Valemus acquisition
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