Lend Lease

Lend Lease Lend Lease • Listed in 1958 • Market capitalisation A$10.5 billion (US$6.5 billion) • Two core businesses: − Financial Services − Real Estate • Employees own 13.9% of the company 100 150 200 250 300 350 400 450 50 A$M 0 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 PAYOUT (excludes special dividend) PAT 24 Years of Profit Growth A$M 7000 6000 5000 Cumulative Return June 1989 - June 1999 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 – Real Estate – Other (corporate costs, etc.) 40% 65% (5%) 47% 53% 53% 47% • Geographic Profit Split – Australia – Rest 1 Dec 99 June 021 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 nondiscretionary and discretionary “wrap” services MLC Group Half Year to December 99 Under Change Under Change Management Administration Retail Sales Retail Net Cash Flow Retail FUM/FUA $1.9B +36% $0.7B +123% $0.6B $17.9B +56% +19% $0.5B $3.0B +186% +143% Retail Distribution Advant Edge Your Prosperity MLCFP Garvan LLFP Private Client Services Godfrey Pembroke Independent Advisers Channels Common Infrastructure Research Training Technology Compliance Remuneration Marketing 360 OFFERING Support 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$150M (+20%) Authorised as Trustee for Mandatory Provident Fund Formal training/testing and licensing for agents commences this year • Simas Lend Lease Life (80% owned) – Financial position sound • Other Opportunities – Joint venture to be announced shortly Real Estate Real Estate Businesses • Real Estate Investments: – Real Estate Equity and Debt Origination – Real Estate Equity and Debt Funds Management + • Project Management and Construction + • Property Development = Unique Value Proposition: A global and integrated Real Estate business Global Real Estate Business June 1999 US Real Estate Investments (recurring income stream) Property Development Lend Lease Projects Business in Place Business being developed Embryonic Europe Australia Asia Real Estate Acquisitions Gap filled Total cost A$M 280 Boston Financial Multi-family asset class in US markets Global project management business Commercial real estate debt Bovis 751 5 AMRESCO businesses (in due diligence) 402 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 High net Defined Institutional worth Contribution Retail Current geographies - U.S - Australia / Asia 2 1 Capital Advisory Strengthen & stretch 3 Build New geographies - Europe - Latin America Expand Current business Evolution of REI PAST PRIVATE PUBLIC Real Estate Equity/Debt Real Estate Equity/Debt PRESENT BUILD BUSINESS: •New markets •Distribution •IT/Enterprise •International FUTURE THE FUTURE •Retail - Retirement Income - DC Investment Choice •Global Develop Platform and Value Proposition Dimensions of the Expanded US REI FUM&A FUM: Real Estate Equity Real Estate Debt Total FUA: Real Estate Loan Servicing Originations/Transactions - Calendar 99 • Real Estate Loan Origination Volume • Real Estate Equity Acquisitions and Dispositions for clients • Other transactions for clients 1 1 US$ 23.5B 14.8B 38.3B 50.0B 14.7B 6.3B 4.3B 25.3B 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 LL Projects Australia & Pacific North America Asia Europe 1.0 0.1 0.1 0.3 1.5 Bovis Total June 99 LL Projects 1.7 0.1 0.3 2.1 0.1 4.0 0.1 2.1 6.3 1.1 4.1 0.2 2.4 7.8 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 Real Estate Investments Europe Australia Asia • Significant RE • Started - UK • • equity manager Significant RE debt manager Significant commercial mortgage loan servicer £500M limited partnership • GPT • APIC US $500M • APPF • Darling Park Trust • US Office Trust Property Development Embryonic Retail (UK, Europe) and Urban Regeneration projects Retail, commercial and complex residential Industrial (Singapore) Project Management Bovis Lend Lease Global business in 38 countries with 5,300 employees Business being developed Embryonic Business Fully in Place 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