Lend Lease
Lend Lease
• Listed in 1958
• Market capitalisation A$10.5 billion
(US$6.5 billion)
• Two core businesses:
− Financial Services
− Real Estate
• Employees own 13.9% of the company
0
50
100
150
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450
A$M
1975
1976
1977
1978
1979
PAT
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
PAYOUT (excludes special dividend) 1992
1993
1994
1995
24 Years of Profit Growth
1996
1997
1998
1999
Cumulative Return
A$M
June 1989 - June 1999
7000
6000
5000
21.0% p.a. return
over last 10 years
4000
3000
2000
1000
0
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Lend Lease MSCI All Ords
Lend Lease Half Year Results
• After Tax Profit A$276M +34%
• Operating Profit components:
– Financial Services 40%
– Real Estate 65%
– Other (corporate costs, etc.) (5%)
• Geographic Profit Split Dec 99 June 021
– Australia 47% 53%
– Rest 53% 47%
1 LL estimate
Lend Lease Financial Strength
• Strong operating cashflows
• Return on equity
• Interest coverage ratio
• Undervalued balance sheet
Financial
Services
Financial Services
Australia
• Wealth Accumulation
– Funds under Management business (FUM)
– Funds under Administration business (FUA)
• Wealth Protection
– Life and Disability Insurance
Asia
• Life Insurance
– 55% CEF Lend Lease Life (Hong Kong)
– 80% Simas Lend Lease Life (Indonesia)
– JV to be announced shortly
Australian FUM/FUA Market
• Very attractive market
– Ageing population
– Government mandated savings programmes
– 10th largest world market in terms of retail FUM
• Advice will remain important
Strengths of MLC
• Significant market share in key retail market
• Distribution model
– multi-channel
– self-employed advisers
• Low cost structure
• Platforms
– FUM - MasterKey
– FUA - FlexiPlan
• Unique value proposition: best choice of non-
discretionary and discretionary “wrap” services
MLC Group
Half Year to December 99
Under Change Under Change
Management Administration
Retail Sales $1.9B +36% $0.7B +123%
Retail Net Cash
Flow $0.6B +56% $0.5B +186%
Retail FUM/FUA $17.9B +19% $3.0B +143%
Retail Distribution
Advant Private
Your MLCFP Godfrey Independent
Edge Garvan LLFP Client
Prosperity Pembroke Advisers
Services
Channels
Common Infrastructure
Research Training 360 OFFERING
Support Technology Compliance
Remuneration Marketing
Platforms
FlexiPlan MasterKey
Financial Services Status - Australia
MasterKey Initiatives
• Delivering
– Margin preservation
– Sales
– Improved retention
FUA/Distribution Initiatives
• Delivering
– Sales
– Market positioning
– Premium advice channel in Godfrey Pembroke
Life Insurance Taxation
• Will impact 2001 year
Life Insurance in Asia
• CEF Lend Lease Life (55% owned)
– New sales in calendar 1999 A$57.6M (+8%)
– Total net premiums in calendar 1999 A$150M (+20%)
– Authorised as Trustee for Mandatory Provident Fund
– Formal training/testing and licensing for agents commences
this year
• Simas Lend Lease Life (80% owned)
– Financial position sound
• Other Opportunities
– Joint venture to be announced shortly
Real Estate
Real Estate Businesses
• Real Estate Investments:
– Real Estate Equity and Debt Origination
– Real Estate Equity and Debt Funds Management
+
• Project Management and Construction
+
• Property Development
=
Unique Value Proposition: A global and
integrated Real Estate business
Global Real Estate Business
June 1999
US Europe Australia Asia
Real Estate
Investments
(recurring income
stream)
Property
Development
Lend Lease
Projects
Business in Place Business being developed Embryonic
Real Estate Acquisitions
Gap filled Total cost
A$M
Boston Financial Multi-family asset class in 280
US markets
Bovis Global project 751
management business
5 AMRESCO Commercial real estate 402
businesses debt
(in due diligence)
1,433
Real Estate as an Asset Class on
which to Build a Global Business
• Fragmented regional industry - no global leader
• Good discipline of public markets - especially US,
Australia
• Ageing populations meant more income and annuity focus
• Real estate can offer positive immediate yield over cash,
and growth potential
• Very small allocation to real estate as an asset class
• Opportunity to link capital users with suppliers of capital
Three Key Strategic
Initiatives in REI
Investment / Funds Management Capital Advisory
High net Defined
Institutional worth Contribution Retail
Current
geographies 1 Strengthen & stretch
- U.S
3
- Australia / Asia
Build
2
New
geographies Expand
- Europe
- Latin America
Current business
Evolution of REI
PAST PRESENT FUTURE
BUILD THE FUTURE
Develop BUSINESS:
PRIVATE PUBLIC
Real Estate Real Estate Platform •Retail
•New markets - Retirement
Equity/Debt Equity/Debt and Value
•Distribution Income
Proposition - DC Investment
•IT/Enterprise
Choice
•International
•Global
Dimensions of the Expanded US REI 1
FUM&A US$
FUM: Real Estate Equity 23.5B
Real Estate Debt 14.8B
Total 38.3B
FUA: Real Estate Loan Servicing 50.0B
Originations/Transactions - Calendar 99
• Real Estate Loan Origination Volume 14.7B
• Real Estate Equity Acquisitions and
Dispositions for clients 6.3B
• Other transactions for clients 4.3B
25.3B
1 Includes AMRESCO business, based on calendar 1999 figures
Project Management Business
• Capability to service global clients globally
• Achieves scale of operations in all key
regions
• Opportunity to increase profits
Project Management - Bovis
Lend Lease Forward Workload
A$B
December 99 June 99
LL Bovis Total LL
Projects Projects
Australia &
Pacific 1.0 0.1 1.1 1.7
North America 0.1 4.0 4.1 -
Asia 0.1 0.1 0.2 0.1
Europe 0.3 2.1 2.4 0.3
1.5 6.3 7.8 2.1
Property Development
• Niche strategy in selected markets
• Model is use of third party capital
• Leverage off skills and complementary
funds management business
Power of the Business Model:
Integration of the
Real Estate Businesses
• Broadening relationships with existing clients
• Realise synergies within the businesses - both costs
and revenue
• Simultaneously realise opportunities between the
Real Estate businesses, e.g. across client
relationships and across borders
June 2000 Anticipated Position
US Europe Australia Asia
Real Estate
• Significant RE • Started - UK • GPT • APIC
Investments equity manager £500M limited • APPF US $500M
• Significant RE partnership • Darling Park Trust
debt manager • US Office Trust
• Significant
commercial
mortgage loan
servicer
Property Embryonic Retail (UK, Retail, commercial Industrial
Europe) and and complex
Development Urban (Singapore)
residential
Regeneration
projects
Project Bovis Lend Lease
Management Global business in 38 countries with 5,300 employees
Business Fully in Place Business being developed Embryonic
E-commerce in Lend Lease
• E-commerce actively deployed to enhance
existing businesses:
– MasterKey and ThreeSixty in Financial Services
– Enterprise project in REI
– Shared Services, especially procurement
• E-commerce investments:
– 23% of IBM GSA
– coolsavings.com
Ingredients for Success
• Strong financial position
• Business markets attractive
• Competitive advantages of business models:
– Financial Services: cost structure, distribution,
platforms
– Real Estate: integrated global business
• Management
• Corporate governance
www.lendlease.com.au