Lend Lease Investor Day 2011 25 May 2011

Home , 18 Months, Baulderstone, This Is the One, Tony Lombardo

LEND LEASE INVESTOR DAY 2011

25 MAY 2011

STEVE McCANN: Good morning everyone and thank you for attending today. Just want to take an opportunity firstly to introduce the key members of the Lend Lease senior management team who are here, and I hope I cover you all. We've got Scott Charlton, Brad Soller, Mark Menhinnitt, Bob McNamara from the US, David Hutton, Tarun Gupta, Tony Lombardo, William Hara I'm expecting at any minute, Jocelyn Harvey on the table at the back with Iwona Polski and Andrew Muller.

From the newly acquired infrastructure business, pleased to have here also Peter Brecht, Darrell Hendry, David Jurd, Ian Luck and David Marchant. We have other members of the Australian business in the audience as well. So hopefully you'll get the opportunity to talk to a number of the members of the senior management team as we go through the day.

In terms of what we're going to cover today, you will hear from a number of us. Before morning tea, Brad and I will take you through an update on strategy and on our capital position and an operational update on Asia and Europe. We'll then break for morning tea and then come back and hear an update from Scott Charlton on the progress of the integration of the Valemus business. Then we'll also hear from Peter's infrastructure senior management team, including some thoughts on their respective markets and a bit of a trading update on their businesses.

Bob McNamara will then take us through an update on the Americas before we break for lunch, then after lunch you'll hear from Mark Menhinnitt on the Australian business followed by David Hutton who'll give you an update on our major projects including Barangaroo. Then I will close the day with a few comments around about three o'clock.

So, just to keep the flow of the day moving, if we could keep questions until the end of each individual speaker's presentation and we'll take those questions then. So thanks for that. So, just moving through to the next slide.

Firstly, touching on an area which is the number one priority for Lend Lease and for the Board and senior management, and that's safety. Our safety vision is to operate incident and injury free wherever we have a presence. This means that every person who comes to work has the right to go home safely to their family and their loved ones at the end of their working day. This applies whether it's one of our projects, one of our shopping centers, one of our office buildings or any other asset site that we work at. It applies to all of our people, all of our employees and all of our contractors. Being incident and injury free is about the people, about the actions that we take constantly and about the business relationships we have, and it's not just about the numbers.

Over the past year we've spent a lot of time embedding our global minimum requirements in every region around the world, and this has been supported by some extensive training and reinforcement of the focus that's required on all of our sites and some very significant compliance oversight across all of our sites and assets. We do continue to invest in safety and we're confident we're on the right track. We have lagging LEND LEASE INVESTOR DAY 2011

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and leading indicators and they all show that we are making significant progress. We're determined to move closer to the goal of being incident and injury free.

We've made some great progress and as the slides show, we've had reduction in the amount of lost time injuries over a significant trend period now. I'm also very pleased to announce that to date we have had no fatalities in the financial year ended June 30, 2011, which is the first time since we've kept records.

I always hate to touch on that because it makes me feel nervous, but hopefully that will continue. But we do have to remain vigilant and we do continue to have accidents that could become serious injuries or fatalities, so we will be relentless in pursuing the incident and injury free outcome.

Just want to spend a little bit of time now on the external environment for the Group around the globe and reinforce some key messages. Those messages are that despite the uncertainty in global markets and regions, Lend Lease is in very good shape and we're extremely well placed to deliver growth for security holders.

In Australia, most of our sectors are presenting attractive opportunities, particularly in the infrastructure sector. Despite some short term impact from weak consumer sentiment, the outlook across our businesses here is positive. I do share concerns that are often spoken about these days, about a two speed economy and the impact that further interest rate rises are likely to have on the average household and also the continuing strength of the Australian dollar. However, on balance I think that our businesses are in a strong position and the economy is obviously also in a strong position overall.

In Asia there are very strong market fundamentals and they continue. In the Americas we do continue to see signs of a market recovery, and Bob will talk a little bit more about this in his presentation.

In the UK the recovery is at an earlier stage. But we are pretty well placed with our major urban regeneration projects and they have quite low holding costs and minimal capital requirements in the short term. So we're well positioned to develop these into recovery.

So across the business and across all of our regions, we've got a pretty strong outlook.

I just want to re-emphasize the key priorities for management over the next two years, and the criteria against which you as investors ought to judge our success in delivering these outcomes in that timeframe.

On Valemus, the integration of the business into the wider group and the extraction of synergies and the delivery of our target earnings accretion will be our key measurables. As Scott, Peter and the infrastructure team will talk to later in the day, the integration is on track and we do have a stronger overall backlog and growth opportunities than we initially anticipated in that business.

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In relation to our major projects, the next six to 12 months is crunch time for sourcing of tenants and for locking in capital for our major projects and we do remain on track for these projects to begin delivering returns in the second half of financial year 2012.

I just might take the opportunity to make some comments on Barangaroo which has obviously seen a lot of media commentary in recent times. I just want to emphasize Lend Lease has a binding project delivery agreement with the government for the development of Barangaroo South. The site has got an approved master plan, with approved project applications for basement works, and the first major commercial building.

The preparation of works are continuing on the site, and we are on program to commence construction of the basement from late June, and then major building works by Christmas, which will enable first occupancy from the end 2014. Detailed negotiations are underway as we flagged previously with major tenants and capital partners, and we continue to expect these negotiations to conclude over the coming months.

We welcome the recent comments from the Planning Minister, on the importance of Barangaroo, some very positive statements that were made in Parliament. Also the commitment to undertake a short, sharp review of the processes concerning Barangaroo. The reason we say this is it will create certainty for the project and it will enable the State Government to fully engage and understand the quality and merit of Lend Lease's proposed plans.

We're very confident of the quality of the project and also of the integrity of the processes we've undertaken at Barangaroo. We will continue to work cooperatively with the New South Wales Government. Our focus will remain to be on delivering a great outcome for Sydney and certainly the dialogue we've had with government confirms that that's their priority as well. So over the next two years we'll focus on portfolio management through divesting mature assets and redeploying that capital into our significant pipeline of opportunities including Barangaroo.

You will have seen yesterday that we announced the divestment of our 50% stake in King of Prussia which will deliver a material profit amount of circa A$100 million. It's a great outcome for the business. Obviously we've owned that asset for some time, but in particular in recent times there's been a significant amount of redesign and redevelopment proposals put through on that asset which has helped us to deliver the outcome we delivered. We took a deliberate decision to focus on the repositioning over the last couple of years. The team's driven a fantastic outcome beyond our expectations in terms of sale price. So very happy to be able to confirm that.

So with those clear priorities for the Group in mind just a reminder of the significant pipeline of opportunities that we have already secured. We did go into the GFC with a very strong balance sheet as you know, probably the strongest in the property sector, certainly in Australia and even against our international peers. That's put us in a position to acquire opportunities near the bottom of the cycle.

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We're now focused on developing those opportunities into what we expect to be a strong market and extracting the significant upside from the timing of those acquisitions and developments.

Our capital model continues to support our capacity to undertake a very significant pipeline of projects. Just a reminder, on the quality of those projects which is very timely. Very pleased to be able to announce that last week Baulderstone as part of the West Gate Freeway Alliance won the 2011 Australian Construction Achievement Award which is the industry's most celebrated award.

Also the ANZ Centre at Melbourne's Docklands won the development industry's most prestigious award for Development of the Year at the 2011 Property Council Rider Levett Bucknall Awards. It's our ability to deliver projects of this kind of quality profitably that we believe sets us apart from our position -- I should say competition.

So moving onto strategic direction. We've talked about this fairly consistently over the last two years and it hasn't changed. Our aim is to take Lend Lease to a position of leadership in property and infrastructure internationally. Just to quickly step through the key elements of that strategy. We will be in the top three positions within our chosen market sectors and segments. We're focused on four core regions and defined geographies within those regions.

We have consolidated our international footprint over time from over 30 countries down to 15. We will continue to focus on the sectors where the market is attractive and where we can establish competitive value proposition. We operate and invest in the property sub sectors where we have core capabilities. These include retail, office, residential, retirement apartments and industrial. In infrastructure we cover a very broad range of sectors and the team will discuss these in a bit more detail later. In terms of equity within the infrastructure sector, we will continue to target investment where there are availability based payment mechanisms.

Finally in relation to our segment position, we have strong capabilities across all of the segments in which we operate across the whole value chain. This is why I chose our target risk adjusted capital by segment. We're currently broadly in line with these targets, and Brad will talk a little bit more about this later. When we speak about risk adjusted capital, what we do is impute a reasonable gearing level into each of the businesses. That's based on their risk profile, their cash flow and their capital requirements. This approach produces a metric which then becomes a proxy for Lend Lease's equity utilised within each of those businesses.

I've previously talked about the five major trends that will impact and shape our business going forward. I think our strategy aligned to those trends has been well and truly laid out. Importantly we've achieved our target of market positions in Australia in urban regeneration, in senior living and in infrastructure. We do continue to be a leader in sustainability and our continuing focus on serving our wholesale investor client base puts us in a very strong position to fund a very significant development pipeline.

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This slide shows the strategic pathway which I've also talked consistently about over the last two years. The first stage of our strategy, which is restore is coming to completion, with the restructure and realignment of our businesses across our core regions.

We've now moved to a fully regionalized structure as you know, with all businesses in each of our major regions reporting into a regional CEO. This structure enables greater efficiencies and it instills a focus on delivery and execution of the key initiatives within each of those regions.

We're now moving into the next phase to ensure we deliver the best outcomes for key stakeholders, including employees, clients and investors. Within the build phase of the strategy, as I've already mentioned, we've also made some very significant achievements, including the acquisition of the Lend Lease infrastructure business.

We're now focusing on our portfolio and on extracting the maximum value from the unique combination of businesses we have across the Group. As part of the reshaping the portfolio initiative, we will be concentrating on making key decisions on the Group's capital, through better portfolio management and through a strong focus on driving efficiencies across the business.

Earlier I laid out these key priorities, the five key priorities listed on this page for management over the next 12 to 24 months.

Turning now to the operational update. As I mentioned, Bob McNamara our CEO of the Americas will take us through an update of his business after morning tea. Mark Menhinnitt who many of you have known in various roles within the Group, and is now our CEO for Australia will give us an update on the Australian business after lunch.

One of the significant strengths of Lend Lease is our diverse portfolio which you can see in the pie charts on this slide. Pie charts on the left show the June 2010 earnings on a pro forma basis, including the acquisition of Valemus. As you can see from the charts, the acquisition increases the Group's weighting to both Australia and the Project Management and Construction sector. This will reduce back over time as new development projects in Australia commence and our offshore business recovers. But as I've already indicated, we are already within the bounds of what we consider to be the right mix in terms of our risk adjusted equity.

As I said earlier, in Asia there are strong fundamentals across most of our markets. Rod Lever, who up until recently ran the Australian business, has taken over as CEO of the Asian business. Rod and his team will focus on delivery of Lend Lease's retail projects, including Jurong Gateway in Singapore and Setia Mall in Malaysia.

Our discussions with anchor retail tenants on Jurong are progressing well and we've announced that we've signed a Heads of Terms Agreement with the Singapore Ministry of National Development to tenant the

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entire commercial tower. Importantly it's the first time a government tenant will tenant a privately owned building in Singapore, which is a significant achievement for the team.

We will look to continue to develop our market leading positions in life sciences and in the pharmaceutical sectors within our Project Management and Construction business. There is continuing strong investor demand for quality regional assets. We took advantage of this in March to sell our 25% stake in the PoMo Mixed Use Centre.

We continue to look for opportunities to recycle our capital over time when appropriate.

In Europe we are seeing early stages of recovery in both the construction market and in the residential market. In the construction space we've seen some signs of activity levels improving, with new work secured up 41% in the first half of the year.

Market conditions do, obviously, remain tough over there however. But I am pleased to confirm we've appointed Michael Dyke as Executive Director of our Project Management and Construction business. Michael was formerly the director of UK Construction for National Grid, a very significant role in the industry, and before that spent time at both Wimpey and Balfour Beatty in a 25 year construction career. So a great addition to our senior management team.

The Athletes’ Village project remains on track and is nearing completion, and the infrastructure fund that we launched for the first half of the financial year has undrawn capacity which will then be used to acquire additional PPP assets that we create over time.

Finally, as we've said repeatedly we have three of the major urban regeneration projects in London, which we will look to develop as the residential markets begin to recover. As I said earlier, the holding costs in the interim are fairly minimal on those assets.

I will now hand over to Brad to take you through a financial review.

BRAD SOLLER: Thank you Steve and good morning everybody. We just heard Steve outline our key priorities and how the Group's focused strategy positions us well to deliver earnings growth. I will now take some time to expand on where we see opportunities to invest our capital and also how we'll fund our growth aspirations.

In summary, the Group's financial position remains sound with ample capacity to take advantage of the opportunities ahead. Let's start by looking at capital allocation.

At the last two Investor Days, we talked about our intention to re-weight our capital back to Australia. That objective has largely been met. That position of the Senior Living Business and the Infrastructure business

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together with our continued investment in our development pipeline, has increased our capital weighting to Australia, which is now in line with our target of 60%.

Europe at 19% includes our stake in Bluewater. Over time, this weighting is expected to decline as we intend to sell down this mature asset at some point. We will, however, continue to invest in our urban regeneration projects. The weighting to Americas will reduce following the sale of King of Prussia. But it is then expected to increase over the next three years as we invest in the pipeline of opportunities that came with the DASCO acquisition.

In terms of segments the recent acquisition of the infrastructure business brings the allocation to construction to within our target range. We are currently at the lower point of the range for our allocation for development. We'll see this increase over the next few years, as we continue to invest in the pipeline both here in Australia and offshore.

The other major change that will occur is a decreased weighting to asset ownership. As previously stated, we will, when market opportunities presents itself recycle capital from lower yielding mature assets and redeploy that capital into high yielding opportunities. The King of Prussia sale is an example of that strategy in action. So in summary, good progress has been made on capital allocation.

Let me now spend some time looking at where we will allocate our capital going forward. Over the next three years our business plan sees us investing a net amount of between $1 billion and $1.5 billion in our development pipeline. We have continued our disciplined approach to investing capital and we remain focused on the key growth sectors we identified. As I've already said, the majority of that investment will be here in Australia, as we continue to develop our major projects, replenish our communities backlog, co- invest in Lend Lease managed funds, and also take equity positions in infrastructure projects.

In America, the Lend Lease DASCO platform has a robust pipeline of opportunities in the healthcare space. In Asia we will look to capitalize on 313@somerset and the Jurong Gateway projects with a focus on retail and mixed use developments in partnership with our managed funds. In Europe there is minimal capital requirement in the short term. However, looking two to three years ahead, we expect to begin investing capital in our urban regeneration projects. So you can see, our planned investment is consistent with our strategy and will remain disciplined.

Let's now have a look at the Group's sources of capital. Lend Lease has access to a range of capital sources that give us both flexibility and capacity.

Firstly, retained earnings. In this regard the Group's current policy is to pay out between 40% and 60% of net operating profit after tax. Our distribution reinvestment plan is currently active and will be available to shareholders for the final dividend.

Since 2006, we have sold $2.3 billion of assets and we currently hold a number of mature assets that we will sell over the medium term. This is expected to raise significant capital for the Group.

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Increasing the Group's gearing towards our targeted level of 15% to 20% will also provide additional debt capacity. This excludes off balance sheet non-recourse debt, which we intend to use to fund those projects where our expected equity position is less than 50%.

A key source of capital once differentiates us from other developers, is our strong relationship with major wholesale equity investors. The quality of our pipeline and our track record of delivery, gives me confidence as to this source of funding. In summary, our diverse source of capital ensures we have ample capacity to fund our pipeline.

Moving to the Group's financial position. You should be familiar with the slide showing the Group's key liquidity metrics. As at December 31, our proforma gearing, which we define as net debt to total tangible assets less cash, post acquisition of the Infrastructure business was 7%. This is expected to be higher in June 2011 and as I have said before, we expect gearing to increase to around 15% over the next three years. There has been no change to our investment grade credit rating.

Let's now look at the maturity profile of our facilities. The key news item here is the progress we have made on the $570million Australian facility that matures in December. We have indeed made excellent progress in refinancing this facility and we currently have credit approval offers in excess of A$750million.

This comprises a three and a five year tranche, and the facility will initially be drawn down to A$570million, with the balance being a committed revolving facility. The new Australian club facility is based on the Group's standard terms and conditions and our standard banking covenants.

I now want to talk to the expected earnings flow from our major projects. We have often spoken about our pipeline of secured projects and how these projects will drive earnings for the Group from multiple sources across the value chain.

As Steve said, these projects were secured at a low point in the property cycle and also without us having to invest significant capital to secure these positions. The slide shows that the large projects are expected to start generating earnings from 2012, and that these earnings are expected to extend beyond a five year period.

The Group also generates significant annuity income from its investments in assets and co-investment in funds. From funds management fees from our investment management business and equity in returns from our infrastructure projects. These in total, amounted to 23% of earnings at the December half year.

In addition to our annuity earnings, we start each financial year with additional level of proportion of our earnings locked in. This relates to the backlog revenue embedded in our construction book and the residential pre-sales at the end of the financial year. In all, these three elements secure a significant proportion of our future earnings.

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To conclude, I want to look at the key financial metrics by which the Group measures itself. I have spoken to these metrics before and our targets remain unchanged. We aim to achieve a return of equity of greater than 15% per annum, and we were just under that target at the half year.

Our debt metrics remain strong and despite the proposed sale of mature assets will continue to target to have around 20% of our EBITDA from annuity income.

The key message I want to leave you with is, is despite continuing uncertainty and volatility in the global markets, we are tracking well against our financial targets. We are where we planned to be and the Group remains in a strong financial position with capacity to invest in new opportunities and fund our development requirements.

Thank you. We will now take whatever questions you guys might have.

QUESTION AND ANSWER

JOHN RICHMON – Merrill Lynch Thanks very much. John Richmond here from Merrill Lynch. I've just got three quick questions. Firstly, in relation to the sale of King of Prussia, are you guys looking to adjust your payout ratio down for this half accordingly down to the lower end of the 40% to 60% range?

STEVE McCANN: That's a Board decision actually so we will get to the discussion on payout ratio and dividend at the Board meeting leading up to that announcement. We will remain within the range of 40% to 60% but where we are within that range will depend on a number of factors.

JOHN RICHMOND – Merrill Lynch Thanks for that. And just on your gearing, currently it's around 7%. On that definition are you able to convert that into a look through number?

BRAD SOLLER: So in terms of the look through gearing, that actually had. At the December numbers, I've spoken about this before John. You can look at it in one of two ways. If you actually gross up the balance sheet our total gearing, if you include our development book, went up to around about 5%. If you look at it purely on how much equity we have invested and remove that equity from our tangible assets, that number was 3.4% of gearing.

We have total tangible assets of round about A$10 billion, so you can roughly work every A$100 million of balance sheet debt will increase our gearing by roughly 1% is the way I would look at it.

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JOHN RICHMOND – Merrill Lynch Okay great. Just lastly on Bluewater. Just wondering if you're seeing similar, or maybe not similar because King of Prussia was exceptional, but certainly valuation upside on the current market valuations there. Maybe if you can also just give us an update around the timing of some of the options on that asset and the expiry profile of those etc.

STEVE McCANN: In terms of where we are with the asset. I think firstly in the UK, with those high quality regional assets the market's been surprisingly very strong. So there's significant demand for those style of assets. I think the continuing material spread between what you can earn on those assets and the cost of debt in the UK is a partial driver of that.

There's also very limited opportunity in Europe for those kinds of assets. So strong demand in the sector, we're not in a hurry to sell Bluewater. There are a number of factors in that. Obviously with the King of Prussia sale as we announced, we have redeployment opportunities for that capital which means currency is effectively not that relevant to us.

With Bluewater it's obviously a very significant amount of capital and so the redeployment of that capital will be a key consideration at the time of sale. Obviously price will as well, we think there is more upside in the asset and it is performing well and there are rent reviews that occur in different segments in the UK in lumps. So it's better to wait until we see the full benefits of some of those rent reviews come through.

But we will continue to monitor it. We do get approaches on a fairly regular basis. There's certainly the liquidity in the market for the asset and it will be a matter of timing divestment to deliver the optimal outcome for us.

JOHN RICHMOND – Merrill Lynch Am I right in saying it's currently unencumbered from?

STEVE McCANN: It will be unencumbered from July 1 this year.

JOHN RICHMOND – Merrill Lynch Thank you.

UNIDENTIFIED AUDIENCE MEMBER Slide 23, the A$1.5 billion net investment outflow, that's now after the King of Prussia sale, is that right?

BRAD SOLLER: The A$1.5 billion, that's actually investing. The King of Prussia obviously is the proceeds coming in. So it's looking at our net investment going forward on major projects.

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UNIDENTIFIED AUDIENCE MEMBER Sure, and it is post that?

BRAD SOLLER: Yes.

UNIDENTIFIED AUDIENCE MEMBER Okay thank you.

PRESENTATION

SCOTT CHARLTON: So thanks everyone. It's always good to be running ahead of schedule particularly when you come to the construction part of the presentation. So we'll continue that theme both in the presentation and in the market. I'm Scott Charlton, I'm the Group Director of Operations for Lend Lease. I'd like to start with just a couple of opening comments about the infrastructure business. First of all with the acquisition what we're seeing is through the integration process is that everything is in line with our expectation. So we're very pleased with what's happening so far.

We're also on target for our accretion on our EPS and again I'm very pleased with that. I should also say that through the integration process, that there's been no new material project issues that we've identified to date. So just want to state that up front. I'll give a quick update on the integration process. I'll talk a bit about synergies and then the infrastructure team will go into a bit more detail about the trading update and also about some more color around their businesses.

So I might introduce the team again. I know Steve sort of introduced the names but - so we have Peter Brecht the Managing Director of Infrastructure, then David Jurd the Managing Director of Abigroup, Ian Luck the Managing Director of Baulderstone and David Marchant who's the Managing Director of Conneq. Conneq have recently joined and is already having a great impact on that business. I'd also ask if Darrell Hendry the CFO of Infrastructure Business, can you stand up Darrell. Don't raise your hand, stand up. If you get a chance to speak to Darrell as well, he obviously is a big part of that management team as well.

Before I do the update on the integration, I also just wanted to make a comment about the history and how this fits into Lend Lease. The history of Lend Lease is Lend Lease came out of Civil and Civic the construction business. Civil and Civic was a major player in Australia for the last half of the last century in building and infrastructure construction. So this business is in the absolute DNA of Lend Lease. So I might just talk about the acquisition as Steve said, one of the five key growth areas that Lend Lease had identified since 2009 was infrastructure and it's been something that the Group has been passionate about and chasing for a period of time and now we're delivering on that with the infrastructure acquisition.

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That business has a commanding market position. It now puts us as the second largest construction company in the Australian landscape. More importantly with the infrastructure businesses, they have presence in some of the key growth sectors that we're looking to take advantage of over the next five to 10 years. The work in hand is in line again with our expectations but there's probably bigger opportunities than we had thought looking forward particularly in that engineering space. An EPS accretion as I said, everything so far in the integration process has only confirmed the EPS accretion for next year and beyond.

Something that also gives us confidence, I look now at the market around our accretion and the growth outlook is the engineering and construction market is now playing out stronger in the opportunities than when we first started doing due diligence in the infrastructure business.

The engineering and construction market is now growing at twice the rate of GDP and with the LNG projects, major resource projects and now particularly some Government spending coming forward in Victoria and New South Wales, that market is growing particularly strong. We're seeing that in the backlog in the Abi Group. That is also helping to soften the blow of what we have seen in the building sector is some softening with the spending coming off from the Government Stimulus Packages but we expect that to increase going forward in 2013 and 2014 as private sector spending on the building sector is expected to increase.

So one of the issues that the guys will talk about, what are the challenges particularly in the engineering space, is how best to use our resources to tap that market because there are certain constraints around that market. We've got some key assets and how best to utilize them and get the best out of them and manage our risk profile. Which is part of what we're doing in the integration review process and how we tackle those markets. With this process, we're about two-thirds of the way through so unfortunately we're not I guess at the end yet, so we can't divulge all our thinking. We'll give a further update in August.

The key issue is that the process is going very well to date. I've been now around to all of the offices and I've been around to a lot of the major sites. The thing is I've been very pleased with what I've seen around the operations but particularly pleased about the caliber of the people and the management and how they've taken to the acquisition of Lend Lease. I guess we underestimated sort of the power of being owned by an Australian company. It seems that the Group is quite proud now to be in Australian ownership and they see it as quite positive aspects that Lend Lease brings to the Group and now the ability they have to do more work and grow their businesses.

It also has reinforced that we have bought a good business. It's well run, it's operating well. One of the things that we're doing through the integration process is we're operating at best in class. So it's not Lend Lease's way, it's not the infrastructure way but we're looking through all the operations of the different businesses and identifying the best processes, the best approach to risk, systems and safety and adopting a best in class approach. I think that will make the Group much more competitive going forward and certainly should deliver better outcomes.

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One of the issues which obviously the market is loving to speculate on at the moment is all the press around some of the major projects and major issues that the industry is dealing with. So some of the issues that we're looking at in the integration process as we attack some of these new markets and some of these growth markets, a level of specialization around certain sectors so that we can capture that growth sector. But also look at how we best manage our risk and not spread some of those specialized resources across a wide group of companies but actually more focused which should enable us to grow those markets but also mitigate the risk associated with that growth.

On the synergies, we've done the quick wins which are the easy wins which is the corporate sort of back off as corporate spend. Those will start coming through in financial of next year, financial year '12. The main point I want to make on the synergies was we had no synergies factored into the acquisition so these are all opportunities to the Group going forward. So we're moving off the corporate synergies now and we're moving on to the revenue synergies. We're identifying some the opportunities across our major developments, communities, business where we can use the infrastructure expertise to self execute a lot of that work that we were turning out to third parties. That does two things.

One, it should be able for us over the period to capture on a per annum basis hopefully A$100 million to A$200 million additional revenue per annum internally which keeps the margin internal through the Group. But the other thing it does is help us manage the risk as we keep that inside the Group with that expertise going forward.

Then over the next 18 to 24 months we would expect and are forecasting to deliver additional synergies on the cost side which just come from integrating some of the systems, back offices and then moving to procurement and the supply chain benefits. So just again for me, it's a very high level summary. I assume you want to really hear from the guys operating the businesses. But again the key message is that I wanted to leave, was that the acquisition is absolutely in line with our expectations again. We are on track to deliver the EPS accretion and we have had no new material project issues that have developed to date. So I'm going to ask Peter to give an overall trading update on the business and then at the end I'll facilitate a question and answer period. Hopefully we can get more than two questions. So Brad and Steve have done a fantastic job. If maybe we get one question, we do a better job. But we'll see. Peter.

PETER BRECHT: Thanks Scott. Just first of all I'd like to just reinforce one of Scott's messages there, the road shows we've been around on and just talking to all of the staff in the business, the positive attitude and no surprises, the process since December through to March and out through to now, the people in the business have looked, as Scott said, on it as very much a positive outcome. When you look at the history of Baulderstone with its 75 years and Abi with its 50 years and Conneq with more than 60 years in power to have those companies back in Australian ownership, is a real positive.

If we just have a look at the capabilities of our business, if you look at a lot of the major infrastructure work either recently or currently under construction, projects such as the Gateway Bridge upgrade which was A$1.5 billion, the North-south Bypass Tunnel which was a A$2 billion project, the M1 upgrade in Melbourne

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25 MAY 2011 which Steve mentioned has just won the Australian Construction Achievement Award on Thursday night. That was an A$600 million project. The Port Botany Expansion, A$700 million job and the Ipswich Motor Upgrade, an A$1.6 billion project. All these projects have Abigroup or Baulderstone as the sole deliverer or part of a team in those projects. So there's no doubt that Abigroup and Baulderstone are in the top tier of that large civil infrastructure delivery here in Australia.

On the building side of our businesses, both Abigroup and Baulderstone are top tier builders in the health, education, Defence and the commercial and mixed use residential areas. Baulderstone in particular is one of the largest builders in Australia. This is the one area where Baulderstone, Abigroup and the Lend Lease project management construction group do bid against each other. Conneq is a specialist in the water, gas, Telco, mining area around the asset management side of the business and one of the significant points of difference is their in-house engineering capability.

We've listed the market sectors there and as Scott has explained the forward forecasts there over the next 12 or 18 months are looking at something like a 12% growth in that engineering and construction and non- residential building space. If we move over, safety. Since joining the Lend Lease group, we have been very impressed with the approach that Lend Lease has to safety. Steve's already mentioned it in his earlier address. But from the time we've joined the Group, it's very clear from all the senior management down the importance that Lend Lease places on safety. It's also something t that our businesses have been focusing on for the last five or six years in particular. We have over the last three or four years, had 20% year on year improvement in our lost time injury frequency rates.

There's a large effort in the business going on around behavioral training and this empowers each person on our site to be responsible for their own safety and the safety of their workmates around them. One of the projects in particular has on the back of their safety vests, if you walk past it, you condone it. That sends a strong message to everyone on our site, that it's not just the responsibility of the safety professionals on the job but each and every one of us to look after each other.

As Steve's already mentioned, we have a focus on the lead and lag indicators. But in recent times there's been a much larger focus on the lead indicators and reviews of near misses which are very important in raising awareness and also looking at the lessons learnt.

Just moving on to the trading update. It's been a good start to the 2011, in our first four or five months here. We've picked up A$756 million worth of work in that period as well as this. We're one of three on the billion dollar Victorian Comprehensive Cancer Centre bid. That's a joint venture bid between Baulderstone and Project Management and Construction. We're short listed on three current large defense projects that are being bid.

In those particular bids, we're either one of four or two of four on those bid lists. We're also short listed on the package C and package E of the Regional Fast Train Projects. Abigroup is on both these short lists and Baulderstone is on one of the shortlists. Both these projects are circa A$1 billion. Baulderstone is also short listed one of two on the Abbott Point Redevelopment which could be pushing A$700 or A$800 million. This

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is ECI process where the two short listed consortiums are working through a bid process with the client. At the end of March the Group has A$5.3 billion worth of work secured and A$1.6 billion worth of pending. Our definition of pending is managing contracts or alliances where we've been named as the preferred by the client. Our only dealing with the client in finalizing either the total out turn cost on an alliance or the GMP on the managing contractors.

If we look at the next slide there it just lists some of the projects that we have secured in the first five months of the year and it also highlights the fact that since the end of March our level of pending has actually increased from A$1.6 billion closer to A$1.8 billion. If we just look at our risk management processes, within the Group businesses we've always had a very strong and disciplined approach to risk management. There are comprehensive limits of authority in place with approvals required at several levels before we can proceed. The probity arrangements that were in place before have been strengthened and developed and expanded further. I think one point worth mentioning is that from a risk perception, when we look at either the largest project we're doing or our share of the largest project at the moment that's sort of less than A$1 billion. Scott's already mentioned the fact that since the sale process we have not identified any new significant risks in any of our projects.

There's also been a very good exchange of process and best in class that Scott has referred to. There's been significant - particularly in the safety area where the - you know one thing, safety even within our group businesses and within the industry is a non-competitive issue. Whether it's at the ACA level, Australian Constructors Association or within our businesses, it's all about improving safety in our businesses.

The slides here, if we look at both the backlog by market and revenue by market, this highlights the strength of our engineering and construction and infrastructure businesses. If you then look at the backlog of contract type and revenue by contract type, this shows that we have about 40% of our work in the fixed price area. That means that the other 40 to 45 % of our work in that construction space is in the contract forms of delivery such as alliances, managing contracts and schedule of rates. That's balanced between fixed price work and the other forms of delivery is a good space to be.

That was all I had from an overview point of view. I'll just hand over to David to give you a little bit more detail around the Abigroup business.

DAVID JURD: Good morning. David Jurd's my name, I'm the Managing Director of Abigroup. I just will kick off my presentation. I wanted to talk about the market and Abigroup's position in the market. Next slide. Certainly my perspective on the market is that in the broader infrastructure market we are sailing into the next infrastructure boom. The previous drivers of the previous boom are still there, transport infrastructure, the resources boom and the drought that drove the last boom has been replaced in a very Australian way with the repair of floods particularly in Queensland. So those three things are driving the boom. Overlaid with that are the NBN Project and the LNG coal seam gas boom of its own that's driving us into the next infrastructure peak.

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Abigroup, we're talking about one of our core competencies there, roads. We are a leader in the road sector. We would lead in Queensland and New South Wales and be pretty close to leading in Victoria. It is a cultural thing. We sort of cut our teeth on road works and the self performance model and the direct ownership of plant and the self performance that goes with owning and operating plant. So that is one of our strengths in the road sector.

Some of the current major projects, you can see the numbers there. They are client numbers including client costs. If we talked about the cut of action that Abigroup would have out of those numbers, Ipswich is just less than A$1 billion for Abigroup in an alliance framework. Hunter Express Way is about half a billion dollars and Peninsula Link is the best part of A$700 million for Abigroup.

Opportunities still abound in the road space. There's a few opportunities listed there. We are in negotiations with Interlink about doing the work for them that they will be negotiating with the State Government in due course. M5 East duplication is certainly on the list of projects to come out in New South Wales.

Next slide, there's a quick update on the Peninsula Link project. We're hearing everybody's concerned for us at Peninsula Link. Our competitors are concerned, the market's concerned. We're not concerned. Our current forecast is we are on time and on budget. The project is scheduled for completion in December 2012, design's 95 % complete. That's key on projects these days and there's a couple of key indicators about our progress. One on cost, one on revenue. On the cost number we have hit our required peak monthly expenditure of A$25 million per month. We've hit that earlier than forecast. That always bodes well for a project. The graph is our revenue graph. Revenue needs to be independently certified and we are ahead as you can see at the Q1 2011 line. We're above our revenue forecast at tender time. That delta there on that line is A$50 million so we're A$50 million ahead on revenue to date. So we're quite happy with how Pen Link is traveling.

Next slide, if we wanted to focus on a particular growth sector for our business, one of them would be rail. There is a rail renaissance going on in Australia. It's about transport infrastructure in the urban areas and a little bit further down the track it will be about freight. The second driver in that market is the resources boom. Anything associated with the supply lines out of the resources sector, load out facilities, rail, ports, they are a big growth sector. We have been laying railway track with our own people and our own machines for the last three years. We haven't been shouting it. We've been working for private clients on small projects delivering rail track facilities, building our skills base with our business model which is self performance and machine ownership. I'm happy with where our skill base is at and we're about to leverage that into the big end of the rail market. You can see those opportunities that I'll just talk to in a minute.

We are just back from the States with three pieces of rail kit, significant pieces of kit, two regulators, one tamper that supplements our existing rail fleet. There's a couple of rail projects we're on at the moment. We're doing a job for Pacific National in Queensland and we're negotiating a like job in New South Wales. Jobs that are not there, we have picked up the last four consecutive rail contracts for the operator in Melbourne, MTN. we've won four contracts one after the other. More importantly we're making money on all

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25 MAY 2011 of them. They are small contracts, very small contracts, all A$10 million or less but very good credential projects.

If we just spoke about the regional rail projects in Victoria you can see the numbers there. So those numbers there are project numbers. So package B, we are in a joint venture. We're a 40 % share in that joint venture and the D and C project value will be A$500 million. That's on an alliance basis. Package C, short listing is done and that's now a two horse race. We are one of those horses again in a joint venture 40%, 40%, 20% Abigroup, John Holland and Coleman Rail. Package E, short listing is done. That's now a three horse race. We are in a 50% joint venture for that A$800 million D and C contract. Package C is an alliance, package E is D and C.

There's also Northwest Rail here in New South Wales. That's a massive project coming. Cross river rail in Brisbane, that's a bit further away, but again massive projects. Rail is undergoing a renaissance. They are two aspects of the business. The rail's a growth market. I like how the business is positioned particularly for growth. We have probably four start up businesses or less mature businesses that are well positioned for growth. Rail is one, West Australia is another where resource owners are looking to put their foot on construction capability to deliver their expansion projects. That's evident in the market. The mining business has room for growth and telecommunications off the back of the NBN, whatever that ultimately looks like.

Okay, thank you.

IAN LUCK: My name is Ian Luck, I am the Managing Director of Baulderstone. If we look at core competencies of our business, one of them is certainly building. We have mature building businesses in each of our principle areas of operation. We function as a relationship based contractor seeking repeat work from our major clients.

Of recent times we have had repeat work for Aspen, Crown, Stockland, Uniting Health and Defence. We take a strategic approach to the market sectors that we operate within where we have core competence and the capacity to deliver. If you look at those market sectors there is health research. Despite a significant amount of work in that area over the last few years, there is still a significant amount of opportunity including the VCCC project that Peter mentioned which is a PPP. Epworth Hospital, the Peter Doherty Research Centre, Modbury Hospital, Box Hill Hospital, Wollongong Private and Hervey Bay Hospital to name but a few.

In the education space we operate at the tertiary level with the universities. We deliver a range of projects including student accommodation, commercial developments and some research facilities. We have relationships with a number of universities but opportunities exist with QUT, Wollongong University, ANU, Canberra University, Melbourne University, University of Adelaide and Flinders.

In the corrections area, we have delivered a number of prison facilities and understand the complexity between the structure and the security systems. There are a number of opportunities before us. There's the

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NT Prison project, PPP which we have submitted and are awaiting an outcome on. There's Melbourne Remand Centre and Yongah Hill Immigration Detention Centre.

In the hospitality space we have delivered products within tight timeframes and in some cases, in a brown foods environment where we have had to keep a facility operational with the public utilization of the space while we are working within that space. There are opportunities that exist continuing with Crown, Burswood Casino in Western Australia and Jupiters in Queensland.

In the commercial space we are starting to see the emergence of some privately funded commercial developments which is pleasing to see. We hope that that expands to other states as well. But in the first instance we have the Aspen Development in Tower 8 in Adelaide and we are working with Colonial First State, 385 Bourke Street on getting that project up and away.

Defence is a subset of building for us. It is a huge opportunity for continued growth. We have a relationship with Defence Services Group. We understand the way they operate. We currently have A$700 million worth of Defence projects underway currently and there is a pipeline of work in the vicinity of A$1.3 million to A$1.4 billion worth of Defence projects annually coming through the market.

Could I have the next slide please? So there is certainly within the building market. But the real growth for our business is in the engineering space. That is on the back of the resources development. But particular expertise that comes off the resource market is marine work. According to BIS Shrapnel the marine facilities are the fastest growing in the infrastructure space. A claim is an average of 25% compounded growth from 2012 to 2015. The reports of the fundamental gateway for our resources export. They are the first link in the chain of resource developments and we are entering that space on the back of the successful delivery of the Port Botany Expansion here in Sydney. The bulk of the projects are up and down the eastern seaboard and of course in Western Australia. We bring to those opportunities a relationship we have delivered with Jan de Nul who were the dredging contractor on the Port Botany project. We have a strong relationship with them which we can bring to other clients on other port developments.

We have the capacity to self perform critical elements of these marine projects as we did on the Port Botany Expansion. The opportunities that are immediately before us in that area include Townsville Port, Abbot Point, Dampier and Lumsden Point, two on the East coast and two on the West coast.

So in summary, we certainly see growth opportunities in our building sector but real growth for our business on the engineering sector particularly in marine. Thank you.

DAVID MARCHANT: David Marchant, the Managing Director of Conneq. I'm the newest boy on the block having come from Australia's pre-eminent rail infrastructure owner to the Lend Lease family and Lend Lease Infrastructure Group. Can I just emphasize having been in the rail industry sector, that the emphasis on lost time injuries and on workplace safety I've found with Lend Lease Infrastructure Group has been far superior than I've seen in many other sectors and certainly their performance in that area and the governance of that area

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25 MAY 2011 both by Lend Lease Infrastructure and Lend Lease itself is outstanding from someone who's actually come from an infrastructure owner's perspective on a large mixed framework.

Now Conneq, the small sister of a large group of family of sisters in the infrastructure space. Conneq is obviously not in a civil construction, its electrical mechanical engineering business with a facilities management on the side of it. Effectively it's an engineering, mechanical and electrical framework that Conneq's core skills rest. On the first slide we're going to touch on power and infrastructure but I'm actually going to speak to just the power element of the first slide and infrastructure can come up in questions if you like.

On the market space in power, the Australian energy market operators last report only a matter of months ago, indicated that the energy power market was between A$65 billion and A$74 billion for new generation over the next decade, between A$7 billion and A$8 billion for new electricity transmission and the energy regulator indicated that acid replacement of around A$24 billion for transmission and an additional A$120 billion was needed in the next decade for distribution. So the total energy market is about A$240 billion over the next 20 years from the energy regulator's point of view or about A$12 billion per annum of investment in both new and renewing of assets.

The project growth in electricity market and generation is over 50% to keep up with capacity which is about 247 terawatt hours in 2007/8 to 366 terawatt by 2029/30. That's from ABARE's Australian energy projections outlook published in March. So within that context how does Conneq fit?

Conneq with its family of companies has designed and constructed 13 gas-fired power station plants since 1979. It's commissioned in the last two years, Uranquinty, Braemar 2 and Neerabup Power Station over the last three years. It's completing construction of a 550 megawatt power plant at Mortlake for Origin Energy and has new opportunities for both in gird connections and mine site power stations in the market for exploration at the moment. It has over 15 years experience in power network servicing and a current network operations in every Australian state excluding Western Australia.

It already, in the last two years, is installing hundreds of thousands of smart electrical meters in Victoria as a contractor for the electricity authorities. It's been supplying specialist generating and network electrical products to both the power industry through both Conneq manufactured and OEM partner arrangements into the power sector. It has a strong and very capable background in design and installation of power plants. On the infrastructure side it has an extensive background in the provision of facility management in water and waste water. In fact covers more than 40% of the water market in New Zealand as well as Yarra Valley in Victoria. Obviously we're rolling out the infrastructure structure, the only NBN contract with regard to construction in Tasmania at the moment, the only NBN contractor in Australia.

On the resources side which is the next slide, and I'm going to concentrate on resources rather than industrial and try and keep to my three minutes, that the industrial framework I'm hoping to get some questions about so at least I can add to David's six minutes. On the resources side, the mining industry is

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expected to grow as everybody would know by a record A$76 billion over the next 18 months. That material is sourced from the Commonwealth Budget released last week.

There's a pipeline of total resource investment in Australia of somewhere around A$380 billion over the next five to eight years, again from the Commonwealth Budget last week. In the gas part of that sector, over the next 20 years, gas consumption including LNG export is expected to increase between 4.7% and 8.7% per annum so the Australian energy market operator in its Statement of Opportunities release has outlined. It's expected to grow in Queensland market from the geological survey of Queensland report from 118 petajoules in 2009 to over 2503 petajoules by 2029. The share of gas and electricity generation is expected to increase from 19% in 2007/08 to 37% in 2029/2030 under ABS calculations. How does that relate to Conneq?

Well Conneq has an extensive background in both the electrical and mechanical design in resource framework in the gas area. We, with our partner at Baulderstone have actually completed the early design packages for the Australia Pacific LNG Project and we're looking forward to moving to the next stages. Conneq has more than 16 as an OEM service provider to BHP in Western Australia and Rio in the last few years. In our product areas, our Conneq iPower business provides high value electrical product, switching gear and the like for expansion in Western Australia and the Bowen Basin and the Hunter Valley on the East coast providing both switching, electrical installation and connection frameworks and gas connecting and fire cogeneration frameworks around those gas plants.

So the Conneq framework is electrical and mechanical framework with facilities management both in the water, road and in the outlying examples with regard to infrastructure, facilities management including the seven major coal power stations on the Eastern seaboard where Conneq manages the facility management of ash and coal transition in more than seven black coal power stations on the Eastern seaboard.

SCOTT CHARLTON: I guess it is hard to keep these guys to just a few minutes because they do have quite big businesses that they run and quite interesting businesses. So again, Telco, water, the other specialist business that we haven't really touched on, the high transmission power lines but we wanted to keep it to a limited time to enable questions. Hopefully we'll get more questions than the first panel but otherwise we can then break afterwards. So we'll open up the floor and I'll facilitate the questions. I saw Simon grab the mike before it was turned on. Go ahead Simon.

QUESTION AND ANSWER

SIMON THACKRAY - Nomura Thanks Scott. A couple of questions. I mean the opportunities look pretty broad and pretty abundant, but we're talking about A$76 billion in growth and infrastructure next year in the Commonwealth Budget and yet we here every contractor complaining about resource constraints and not enough people to do the amount of work.

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So I just want to get a feel for the sweet spot in terms of fixed priced contracts, you know is there a limit? We've seen some spectacular blow outs from one of your competitors over the last couple of months on big fixed price contracts so how are these risks going to be managed going forward? Are they going to be packaged differently et cetera? What are the growth constraints on the business? What's the role in the NBN that we can understand how that's going to play out, how you see that playing out?

I guess as a bit of a quirky one, capital constraint competitors in contract mining, what's going to happen with contract mining? Is that an opportunity for you guys? I mean presumably you get asked constantly but if somebody else is supplying the capital for the equipment, is that an area that you would go into given your relationships? Sorry, it's a lot of questions.

SCOTT CHARLTON: Okay, so there's sort of three questions. Let me give you a couple of overviews and then I'll throw to the guys. Just on a risk on resources, when we made the acquisition of Valemus, when we looked forward in the forecast, we had pretty flat growth for the next couple of years because at that time it looked like the markets were coming off. So there's an issue around how much obviously work that you can take on and how fast you can grow organically. So the issue from a Lend Lease point of view which we challenge these guys is how best to use our resources and get the best out of the business.

One of the things that we are seeing in the engineering sector and I've seen with these guys is clients actually coming to us saying we need help in delivery. So that's always a good sign when the clients come to you instead of you going to the clients. Still it's a competitive market.

On NBN, I'll get David to speak to that and on the capital constraints, you know the issue for Lend Lease is providing contract mining or providing mining services is a good business. The issue is the capital equation and how to do that smarter or better. You're seeing the competitors, our competitors out in the market saying they have issues with that capital equation, how it's playing out with the big clients. So happy to support the contract mining services business but we've challenged David and his team to see how we might be able to do it smarter. Happy to invest an amount of capital but I'm not sure that we're going to be investing A$3 billion over the next few years in mining equipment. But I might ask first if maybe Peter could talk about the risk contracts and the capacity in the type of contracts.

PETER BRECHT: Okay thanks Scott. Look from the risk side of things, D and C has been around for a long time. It's always been a large part of our mix and at that 40% we see that as a fairly good balance. In different times it has been higher but it's been something that we've been doing for the last 20 years and it's very much around the people in our businesses and the strength of those people in managing those D and C outcomes and understanding them. We have always had an approach from we're looking at bidding projects that if you can't put a team of your core people, existing people in the business with a proven track record and whatever, that perhaps make up 25% of a team, then we shouldn't be bidding the job in the first place.

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We've seen other companies that aren't as disciplined around that with a view that if they win the project, the people will come and we don't adhere to that idea. Like if you're doing an A$2 billion project, you're probably going to need circa 400 staff on that job. So if between ourselves and our joint venture partners we can put 25% to 30% of the key senior people into that team then you can build teams around it because we haven't got 400 people sitting in the office waiting for the next job. Back in 2007 when things were really hot, we saw a lot of pressure on the resources issue. There's no doubt it's tightening but I might actually particularly ask David to address that because they've been with a level of work he's securing of things like this, the ability to still find and attract good people, we're not having any issues with that. So perhaps if David just to touch on that.

DAVID MARCHANT: An anecdote around that would be we employ 3000 people. Of those, if I round the numbers, there's 2000 white collar workers, professionals. In the first three months of this calendar year we employed 200 salaried employees. So the first three months of this year we boosted our professional employment by 10 % in the first three months of the year which is a statistic that staggers me. So we are finding there are good people in the market. I think we did get in ahead of the market. Things are certainly going to tighten. Where's the peak? My perspective is that the peak is beyond the end of next year so the peak is still out there and it's going to get progressively worse. But right at the minute, not too bad.

SCOTT CHARLTON: I think some of it goes back to the disciplined approach and how fast we grow. Again looking at our turnover we're not forecasting any massive jumps in turnover but just to make sure we get the best margin and use these resources the best we can and watch the risk side of it as well. You can obviously grow too fast from a risk perspective. I might ask, David you made a comment about NBN, David Marchant. I should add as well Abi and Baulderstone, they all have a level of Telco expertise and all have been looking at NBN in some capacity or not. But I'll pass to Dave because he is the only one in Australia now with an NBN contract. No not you David, the other David.

DAVID MARCHANT: We did an NBN contract a week before last as you're aware, a small one in Tasmania which was the only one on the Australian continent that's been released so far. It's 12 cities but with a rollout process post to 12 cities. It didn't get caught up in the interesting exercise about contractual terms that's taking place in other frameworks. We'd already done a project for NBN in Tasmania pre this. So it was a rollout of a similar framework. The size and dimensions of that throughout Tasmania is more likely to be one that continues to roll through depending on performance on the first 75% of the 12 cities, of the 12 towns framework. But obviously the dimensions of that will change once their Telstra arrangements are concluded.

SCOTT CHARLTON: So I think the Groups are positioned but the jury's aren't. I think there were some comments from some other competitors about what the Government's trying to do in the market. We're happy to play a role and we'll just wait and see how it plays out. It's not if you look forward in our business plan, you know it would be a nice opportunity but it's not something that's going to make a big difference to the base plan. I don't

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25 MAY 2011 know, David Jurd do you want to make a comment about the mining business and the capital and how you see that.

DAVID JURD: I do see it as a bit of an opportunity. There is still - it's capacity constrained, the mining business as the resource owners race to market. So I think it is an opportunity. We've got a mining business with a lot of room for growth in it. The trick is how to employ the capital in the smartest way possible and I think clients will engage around that discussion about what's the smartest way to use capital around the big CapEx required for these projects. So I see it as a growth opportunity.

SCOTT CHARLTON: We'll get another question.

QUESTION AND ANSWER

GUY ROBINSON – Citigroup Guy Robinson from Citigroup. Just talk about maybe your capability in the LNG space. So you touched on briefly Conneq there doing some early stage design but are you guys sort of lining up for the bigger stuff there and also with some of the civil earthworks, do you have the capability to be a key player in that space?

SCOTT CHARLTON: The Group is involved in two of the alliances. So Baulderstone and Conneq in one and Abi's in another one of the projects. Since Ian hasn't spoken, I might let Ian speak about AP LNG and David you can speak about your central project as well.

IAN LUCK: Yes we are working in joint venture with Conneq on the AP LNG project and have been for some time in developing design and costing. We are at the stage now of looking at the first available opportunities that flow from that project and David and I are in fact meeting tomorrow to have a look at those opportunities. Primarily our role there is in the early phases of the project. We don't get involved in heavy earthmoving on those projects but certainly the infrastructure development and coupled with the capacity of Conneq, we believe we offer a good solution to a client.

SCOTT CHARLTON: David do you want to talk about the other project?

DAVID JURD: Yeah sure. It is a massive market. Everything in that space is a billion dollars, all the works packages be they at Gorgon or around Gladstone. Everything is big numbers. It's split into the upstream and

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25 MAY 2011 downstream works. We've currently got a downstream contract for Gladstone Port Authority where we are expanding the port facility for them there. On the upstream works, we are pricing work for Santos, a lot of work on the wells and the infrastructure and the water treatment facility.

So there's a real web, a network of infrastructure over a large geographical area to bring this stuff back to the plant for refinement. So we're pricing lots of work up there. It's a good opportunity and I think everybody's positioning and everybody's pricing. Shortly contracts are going to have to start be awarded.

SCOTT CHARLTON: I think if you look at that sort of LNG or that sort of oil and gas work, the civil site and the infrastructure site, I don't know Peter you probably have a view the Groups can play in 30% to 40%, maybe even up to 50% depending with Conneq of the spin. I mean the LNG train is stuff that we don't get involved in but there are other spins that you may be able to play in 30% to 40% of that?

PETER BRECHT: Definitely. Again David, Abigroup have been work on Gorgon and we're looking at other opportunities over there. But again I think the Queensland market actually suits the business strength better and gets back to one of the earlier comments about risk and where our resources are. Our Queensland businesses are two of the bigger businesses in the larger states and the location of these projects in Queensland and is easier to resource and easier to start. We've worked in those areas on previous projects as well and have a local presence. So we feel much more comfortable in targeting that work up in Queensland.

GUY ROBINSON – Citigroup Thanks. In terms of project risk, you've already touched on it and specifically Peninsula Link. In terms of your biggest projects by materiality, could you just give us a quick rundown in terms of where you are percentage of completion and maybe specifically if you have warranties against those specific projects?

SCOTT CHARLTON: I think the warranties or indemnity provision issue is an issue between the seller and the purchaser and these guys have got to deliver the best they can out of all the projects. So for the issue for warranties or indemnities or what we agreed with the seller, there was a difference of view on a certain level of projects we had so we came to an arrangement. We're very happy with those arrangements and we're comfortable with how that's going to work out, play out. But because of the commercial nature of the negotiations with the different clients and the seller, we don't disclose exactly what those are.

Again these guys are going to deliver the best outcome on every project they can and those issues of warranties and indemnities and provisions between us the seller. But I will just say we're very comfortable with our position and we had a very thorough due diligence process and I think we came out with a great outcome for Lend Lease. But on the materiality threshold for your major projects, I don't know if you want to run through a couple of the top ones Pete?

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PETER BRECHT: Yeah look if I were to look at the top four just off the top of my head, the Origin alliance, our share of that is just under A$1 billion but it's an alliance. So that delivery model gives us comfort there. The next one would be Pen Link that David's already talked about and given you an update on where Pen Link is and we've been down to the site in the last two months as well and it's really kicking into gear. It copped a fair bit of wet weather late last year and early this year but it's going quite well.

We then would go up to the Hunter Expressway which is an A$500 million D and C project. We're just through the design and approval stage and just starting to do site clearing and things like that. Then the fourth one would be the Adelaide desal plant. We're a 40% partner in that job so our turnover down there is about A$450 million or something like this. So they'd be the--

SCOTT CHARLTON: With Adelaide desal, you're about 70% complete?

PETER BRECHT: Yeah Adelaide desal is about 70% complete, yep.

SIMON GARING – Merrill Lynch Scott, it's Simon Garing of Merrill Lynch. Can we take a step sort of 40,000 feet a bit higher and in addition to the Valemus business, add the Lend Lease Bovis business. Can you talk about your forecast revenues? You made a comment I think a couple of times today about stable turnover and trying to marry that with staff levels and increasing staff or other drivers that we could see from 40,000 foot level, saying okay we're going to get some growth at the EBIT line?

SCOTT CHARLTON: Yeah well I guess there's a couple of issues. There's the building market, as I said the stimulus package for the building market is softening a bit. So we're still seeing growth in the business coming forward but we hadn't forecast to see big numbers. But we're seeing bigger growth particularly again in the Abigroup business coming forward. Now that engineering and construction business should generate better margins than the building business going forward. Then as Brad and Steve pointed out in their presentation, if you look at it coming in to 2012 and 2013, the self execution of our development pipeline in Barangaroo and RNA and some buildings coming out of Vic Harbour should then start ramping up around self execution capability. So when we look out there a couple of years we do see it then taking off. It was just that period of 2012 with the back of the stimulus coming off. So that's sort of a high level in Australia.

I think Bob will talk about the US and I think Steve already mentioned in the UK that we're now starting to win some backlog and we think that construction revenue has plateaued at the bottom and hopefully we should start picking up. Bob's business which we'll talk about in December, has made that churn now as well where he's now starting to win more work than he's running off. So it's just a bit of a cycle there for the building sector here in Australia. I think that's what - is that what you're after?

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SIMON GARING – Merrill Lynch So total revenue that you would be responsible for and total staff levels that you would be responsible for?

SCOTT CHARLTON: Well the infrastructure business is reporting in to me so that's going to be turning over just a round figure sort of A$5 billion and there's 7200 staff in the infrastructure business. But I'm holding Peter accountable for the results.

PETER BRECHT: No pressure.

ANDREW HODGE - RBS Scott just on, I guess the question's for Ian but it relates to the comment you made to the weakness in building. Does the Baulderstone business today still stand at about 60% of their business in non-res building and what's the capacity to grow that engineering construction side at the expense of (inaudible - background noise) weakness?

SCOTT CHARLTON: Yeah I made a couple of comments on that in the building so a lot of the Baulderstone building has been in the public sector space as well more than the PMC. So there hasn't been a huge overlap in the building sector when we did our due diligence but I'll let Ian speak about the mix between building and engineering.

IAN LUCK: Yes as I said in the building space, there is still a lot of opportunity before us to continue to grow the building business. It is still probably at about 60% of our business. We aim to certainly make it 50/50 so we intend to grow the engineering business, not at the expense of the building business but to grow it on top of that so that our business is about 50/50. That would be the aim.

ASHTON REID – Legg Mason Ashton Reid from Legg Mason. Made cognisant of your comments earlier about the indemnities, but how does that influence the approach to future work, those indemnities that you needed in past work?

SCOTT CHARLTON: I guess with every project where there's issues, you try and learn from your mistakes. You either have the wrong people or you have the wrong process. It usually ends up being the wrong people. I think if we look at some of the projects where we had a difference of view on indemnities and warranties and you were to put them through the Lend Lease risk system or you'd actually put them through the infrastructure risk system now, they wouldn't have gotten approved in that form that they were entered into to begin with.

So again we're just learning from the issues of the past and dealing with some of those issues going forward that we wouldn't take on a few of those contract types. We'd look at the people that would undertake those contracts.

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ASHTON REID – Legg Mason So it was more the form than the area or space of nature of work?

SCOTT CHARLTON: It was more the form of the contract, yeah.

JOHN FREEDMAN - UBS Good morning, John from UBS. Just two questions. Firstly you've always published a GPN backlog for the broader business. What's the current number for the new business?

SCOTT CHARLTON: I might let Brad come up and discuss that after the break because the answer John right now, I don't have that figure off the top of my head. But we are moving to, I guess more the industry standard. I'm sort of looking at the work in hand backlog type standard. Because the issue around some of the GPN is how it evolves over time and as well as the relationship between the revenue and the GPN. But I think Brad can give that number after the break. He'll have a quick chat about it John.

JOHN FREEDMAN - UBS Okay thank you. Can you give some insight into the burn off profile?

SCOTT CHARLTON: Yeah I'll let Peter make some comments but the infrastructure business has probably a faster burn off profile over a shorter time period because it connects service businesses, obviously a shorter time period and with the building businesses in both Baulderstone and Abi, obviously a shorter time period than the engineering. But I don't know Peter, it'd sort of be around one and a half for some years?

PETER BRECHT: Sorry?

SCOTT CHARLTON: One and a half years. You want to talk about the sort of burn off profile?

PETER BRECHT: Yeah the average project burn would be around that one and a half to two years. As the job bulks up a little bit it obviously heads toward the two year. What we really have noticed over the last two years but is the lead time for project procurement has increased. So from our early registration to going through the process and getting there has increased. So it does put the pressure back a little bit and I suppose over the last six or nine months we've seen with things like change of government in Victoria and the floods in Queensland, there has been a small hiatus in project outcomes. But we can really see over the next 12 or 15 months that that pipeline of tender opportunities is very solid.

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SCOTT CHARLTON: So our average tender should grow over the next few years as we move more into the engineering.

JOHN FREEDMAN - UBS Thank you.

PAUL JUNIPER - Macquarie Paul Juniper from Macquarie. Good morning Scott. I don't think you need to worry about that competition on the number of questions so far. But I was just wondering on the synergies if you could provide a little bit more detail. You mentioned that you'd identified a number of the quick wins in the corporate side of things but with the three separate corporate offices, it's just a little bit difficult conceptually to see what sort of synergy you have to extract and what sort of quantum they would be and over what timeframe we might look to realize them?

SCOTT CHARLTON: The quick wins just go into, I mean everything is important but the quick wins go, I mean the less than A$10 million, you know the few millions of dollars by just doing deals with Telstra, deals with Qantas, deals with the suppliers. But the bigger synergies will come out of the next 18 months to two years on the cost side. Because if we look at, all three of the companies are looking at investing in different systems, either in tendering and estimating safety and when we look across the globe at Lend Lease we have the systems in one form or another or we're looking in to invest.

So again, if we pick the best class systems, we pick the best class processes and we can look at some of the back offices and consolidate some of the non-competitive issues, we think we can take, over that time, hopefully we get a period we're taking more than tens of millions out of the cost side of the equation.

Just as important is on the revenue side is how do we use this skill base to deliver our major projects because we spend several hundred million dollars a year on infrastructure spend associated with our major development and our communities business. Which keeping that revenue in-house is a positive thing but also mitigating our risk by having the guys inside the tent and really understanding the cost equation. Already Baulderstone has provided some expertise on the marine structures around Barangaroo for instance and reviewing our plans and added a lot of value there. So there's those couple of things that will come out over the next 18 months.

So again hopefully we'll give a better update in August when we finalize this process because we've got about another month to run. But those are the things we're looking to bring out. Thanks Paul.

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PRESENTATION

BOB McNAMARA: Okay, why don't we reconvene if we can. My name is Bob McNamara, I'm here to present the Americas region to you. So I thought, looking around at the Group today, I thought maybe we would start with a little bit of a story. There's been kind of a breakthrough in talent identification for the engineering and construction field and it's a technology breakthrough, it's called the Hundred Brick Theory.

So you take 100 bricks and you put it in a room and you bring in two candidates at a time and you put them in the room and you walk in five minutes later and see what's going on. So if you walk in a room after five minutes and people are in there counting the bricks then clearly you've identified your accountants. If you go into the room five minutes later and they're recounting the bricks then clearly you've got your audit team. If you walk in a room and the bricks are assembled as a little stairway and they say to you look, this is just the beginning, this is a stairway that's going to go on to the top of this window and then on into eternal happiness, you've identified your sales people.

If you walk in the room and the bricks are assembled in little piles that are very neat but really disconnected, that's your engineering group. If you walk in the room and they're throwing the bricks at each other, now you have your operations guys. Lastly, if you walk in the room and people are talking very seriously, just a very determined conversation, but the truth is the bricks haven't moved an inch, you congratulate them and say, welcome to senior management.

So with that, what I thought I'd do is to kind of talk through where things are with the Americas region and maybe begin with what's most important to us which is on the safety side. So our safety record in the US from a loss time incident rate has improved about 16% this year and our recordable incident rate has also improved but in a much smaller percentage, about 2% or 3%. In both cases we're about three times better than the industry average but this is a milestone for us that is just something we're not going to be happy with.

So we're going to continue to drive that process. The goal for all the Americas region is to find and execute safe and profitable work. So safety remains a challenge for us, we're making progress but it's just a mile post along a very long journey for us. From an economic standpoint, just talk about general overview in the economics of the region, the GDP growth in the US is targeted for about high 2% range in 2012.

The Canadian GDP is scheduled to do a little bit better than that. If you look at the GDP forecast for Brazil, probably twice that number, if not, more. The same holds true for Argentina and also for Mexico. So you know, I think the general growth rates are beginning to bubble up a little bit better. If you look at the Americas and now just kind of focusing specifically on the US, in the construction industry, unemployment last year reached an all time high at just under 22%.

The current number in the last reporting period is sitting at about just under 18%. So there's been a pretty good change in direction there. I think what's remarkable about that is if you go a little bit deeper into the

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detail, and it kind of talks to the unevenness of what's going on in the economy. If you look just in the construction sector itself, the building side of the construction sector in the last reporting period actually lost another 5000 jobs. However, the infrastructure and transportation sector has picked up about 12,500 jobs. So a big shift there.

I think to what's coming in the future is that in the engineering and architectural components in the last reporting period has been a 5000 job pick up in the engineering and architect areas. That augers pretty well for what's going on in the planning cycle and ultimately what will happen as far as reality in the construction business itself. So I feel that the economy is kind of on an uneven keel. There's parts of the economy doing quite well in the Americas and parts of the economy not really moving much at all.

A key area where we see good strength is in the urban areas. So the urban areas of Chicago, New York, LA, San Francisco, DC seem to be picking up actually quite well. A lot of that growth has been driven for a couple of reasons. One is there's been a lot of foreign direct investment. In the last six months there's been over $10.5 billion of deals that have been really sourced in by foreign capitals. So the major players coming into the US with these kinds of investments are Brazil's Safra is a big player. The China's Investment Bank came in and cut a couple of big deals and the Forest Lane people from Kuwait and cut a couple of big deals.

So those are the major players but it's actually a pretty broad spectrum of a large amount of foreign direct investment coming in. The focus of that investment has been urban so of that $10 billion over the last six months there's been about $1 billion in deals in DC, about $1 billion in Chicago, about $1 billion in San Francisco and about $3.4 billion in New York City. So these are trends that I think are happening in the economy that will order ultimately well for our positioning as the way we've positioned the business is really to focus on key urban centers and then have significant verticals in the health care space and the life sciences space.

So that's kind of where we are with the overall economy. From a retail standpoint I think you've all read the press announcements in the sale of KOP which we're very happy that that happened, and Steve indicated a good economic outcome for us. Next slide please. So in the Americas region, when you look overall at areas that we're focused on, we're focused on Canada, the US and all of Latin America.

Our business is well positioned in the markets that we're focused on, particularly, we're ranked number one in the nation in multi family. We've been a perennial leader in the top 10 in general building throughout the US. We've been a perennial leader in health care, always in the top 10 in health care areas. We're currently executing about 260 projects, not including our multi sites business which by itself has got almost 1000 sites.

From an infrastructure standpoint, we'll talk a little bit more about this when we get into the Actus area but our military base and market share in the military is number one. That business, although the front end of the family part of the business has flattened out now and it has a very, very long tail for family housing and it has other new pipelines that can come through that space, and we'll talk about those a little bit more

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when we get into the Actus side of the business and talk about the long tail of earnings there. King of Prussia, we spoke about.

Then another key vertical for us is in health care. We've been a major builder in the health care space, we've made an acquisition of a business called DASCO, now Lend Lease DASCO and we'll get into that in a little bit more detail. But the value proposition there is what goes on in the US economy is that in the revised legislation relative to how health care gets administered, the fundamentals or what goes on is that it's very difficult for a single or a two or three medical practitioner business to actually be effective and be able to bill and collect from the larger insurance companies. It just becomes a very tough process for them under the new laws and requirements.

So a lot of the doctors now want to become more affiliated with the larger hospital systems where they can gain a lot of scale, they can gain a lot of power with respect to billing out to the insurance companies. The health care systems, the hospital systems themselves are having a difficult time being able to pay a doctor what his expectations are. So the methodology now has come to where the hospital systems are bringing on doctors.

They come in, they participate, they become a staff doctor for the hospital system, but the hospital system is now investing in what are called medical office buildings or acute adjacent type facilities that have visitation capability, scanning, testing, rehab type capability, therapeutic type capability, where a doctor can be on staff, running the things that they do inside the acute care facility but have their own practice in these adjacent facilities on campus. That is the space that Lend Lease DASCO targets specifically and that's a trend that you know, when we get into the detail here, you'll see it's got pretty good strength from a pipeline standpoint. Next slide, please.

So the PM&C project management and construction business is, as I indicated, has been kind of a perennial leader in a couple of key areas. The book to bill ratio now in the PM&C business is well north of one. So we've been able to find and execute on work that I think is beginning to build our backlog back. It's been a long pull. This has been a declining backlog for quite some time and I think in this past fiscal year we've been able to turn it around.

A couple of key things to talk about there, if you look at again, on strategy if you look at what's going on in the bigger urban areas, Chicago had a major breakthrough with a large health care project in Chicago. We've had a major breakthrough with some investments that are going on in Chicago with respect to senior living which are rental type spaces. In New York City we have four major towers that are coming up, a 74- storey tower, a 54-storey tower, a 40-storey tower and a 35-storey tower. So it's good strength in that market.

You've read where we have saddled up with the New York City Department of Investigation. That's behind us. We still have an ongoing debate with the Eastern District in New York which is the federal level. But we've been cleared now by the City to now re-engage in that particular market. So significant to that is we now have an almost $200 million assignment out at JFK Airport for Delta which is you know, part of being

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25 MAY 2011 cleared by the City you get what's called your Vendex cleared and it allows you to get back into doing this type of work.

We've also signed a pretty significant contract with the Port Authority of New York and New Jersey which allows us now to be on call for them for assignments that can range from 5000 or 10,000 square feet to 100,000 or 200,000 square feet in the city to rehab space or reconfigure space for what the Port Authority needs to be done. So I think we've gotten through kind of the bad part, we're getting some traction and I feel the business there is really moving along pretty well.

The health care space has been a significant area for us. We now have 10 acute care hospitals that are either in preconstruction or construction and that's been a nice turn for us. A lot of repeat client work for New York Presbyterian, Long Island Jewish, Wake Forest was a big breakthrough for us down in the south east. HCA who's been a long term client for us has been a good breakthrough for us there to get back in and working for them. So the health care is revving up pretty well for us and I feel that that part of the market is going to continue rather strong. Next slide, please.

The other point before I leave PM&C that I wanted to make is that the business on the legacy Bovis side is probably going to finish the year, now come all the way back to pretty close break even. It might be slightly negative but with that build in book to bill, what's going on in its backlog, I think in our fiscal year 2012, the business is going to be able to start slowly, getting its earnings on the right track. So a heck of a turnaround there. A lot of hard work by some very good people.

On the infrastructure development which is our Lend Lease Actus business, the military family housing program which is known as MHPI has sunsetted. There'll be no more major new programs there. What goes on in that space though is that each of these units that have been left behind that actually have two and three and four years worth of development period left on them, they'll continue to churn out work. The operations and maintenance part of these units, also what they do is as the base housing allowance increases as a result of inflationary pressures, these businesses wind up with having enough NOY to basically fund continuous development.

That is a tail that's going to go on for decades. So there's a very strong tail of long term earnings that will come out of that business, and just a remarkable positioning by the team there. They've dominated that space and you know, they've got some nice winds. In addition to that kind of development, there's also areas like the lodging area which is a big business for us, both what's called PAL A and PAL B. This is basically privatization of lodging that goes on inside the military bases. These were significant awards and soul sourced awards, I might add. So just indicative of what's going on inside the team.

Canada. Canada, we've been down selected now on a number of different pursuits. We've chased three big projects there and come up short so far on all three. But we've been down selected now on at least three more and you know, we're going to continue to look at that market and aggressively find a way to be successful in winning safe and profitable work up there. The Canada market that we're looking at is a major

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privatization market. They've developed that skill in Canada at a rather rapid rate and we think it's a very strong opportunity for us going forward. Next slide, please.

You can see here the pictures of what we did and the type of work we do in the Lend Lease Actus business. The other part of this business that has been an area that I think is going to develop for us as well, it allows us a great opportunity because you know, we are the major player, we are the major landlord if you will, of military families. The ability to go in and look at green retrofits that change the energy equation in a lot of these basis is something that we have a skill set to do. I think mining opportunity out of that position going forward is a key focus of the team and I'm quite sure that they'll be very successful at it. Next slide, please.

Lend Lease DASCO. I gave you a kind of a little bit of framework around that. But I think there's some data on the health care side, in addition to what's going on specifically on the revised legislation in the US. The spend on health care inside the US was about 6% of GDP in 1990. In 2018 the spend will be about 20% of GDP. So these are big numbers. In Canada it went from 6%, it's going to go up to 12%. If you look at the change in health care spending, just the change in health care spending, that will take place over the next 10 years, these are PWC numbers. USA, Brazil, Canada, the increase will be over 50%. Interestingly enough, the one that's close to home here, Australia, will be very close to 50% increase in spend.

The China and India are three times that number. In China's case four times that number albeit coming from a pretty low base. So we think the spend in that market is significant and we think the positioning ourselves to be able to deliver these medical office buildings, acute adjacent facilities and even large scale acute facilities is the right market for us to be in.

In the win that we had with KOP and the ability to deploy capital into a market that allows us very early with these hospital system clients and with the Veterans Administration et cetera, to be able to give them early certainty to function, cost and schedule in that pipeline of work I think is going to be significant for us, and I think a very fertile field, not only in the US but also in Brazil. So you know, in the Brazilian market which, from a social infrastructure standpoint has just passed legislation now that allows them to go to a privatization model for social infrastructure, particularly hospitals.

So in the north, in Bahia is the first one that's been executed on that basis and that's now going through its process. It will complete in about a year. The legislation there is what's key for us and it's what has been very, very much influential in us looking now at Brazil. We see a significant spend in the PPP space around particularly health care and a couple of key clients in the Brazil space and we think that's going to be good for us.

In Mexico there are now 22 states in Mexico that have now approved PPP legislation for health care type of development. In the United States the amount of states now that have PPP legislation for both hard infrastructure and social infrastructure is six. You know, I think that that's going to change over time but I don't see the US really allowing that legislation to move very quickly. I think that will be a slower process in the US. If you'll just go back over the last two years, the spend in building up of health care facilities in the

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US, about 80% of that spend has in fact been private and my guess is that's the way it's going to stay going forward. That enables us under the DASCO model I think, to have a very, very good opportunity. Next slide, please.

There's a picture of just some of the medical office buildings that we've been able to do. If you look at the DASCO business, the DASCO business has transacted about $1.5 billion in these kinds of facilities. Their pipeline is extremely strong. The transaction was a good transaction for us. There's 10 existing projects in that pipeline and then it allows us good access into the larger health care systems with this model. But I bring in this early certainty to function cost and schedule in that market and delivering for those hospital systems given the amount of change that's going on in the healthcare space is a strong value proposition and we're getting a lot of traction on that. Next slide.

So the key priorities in the Americas is to basically look through the markets that we have and come back with finding out and executing on safe and profitable work. We think the capital recycling in that value proposition is something that's going to have some good strength for us. You know, we feel that overall the market itself has got some very bright spots for us but it's a very fragile recovery.

It is, I'm not going to paint the sky blue. There's some parts of the market, particularly in the single family residential that I think is down. I think it's going to be down for quite some time yet. So what we need to do is just continue to see the right opportunities, get ourselves into the right markets. The urban space I think is a good market for us, the resi space is good, the health care vertical I think is good, the life sciences market I think is good and the PPP markets are going to be good.

But ultimately every business kind of succeeds or fails based on the characters, the character and the quality of its people. So if you look at SC Johnson which is a Fortune 100 company. When they ran into trouble in Argentina on a major process facility they called the men and women of Lend Lease to come in and the men and women of Lend Lease fixed it, got the building up, got it running and did so safely without any lost time.

When you look at BBVA of Santander or you look at JPMorgan Chase on the full deployment of their new front end retail for banking throughout Mexico, it was the men and women of Lend Lease that executed on that. If you look at the Air Force's commitment relative to being good with respect to sustainability and energy efficiency, it was the men and women of Lend Lease that delivered the first zero energy home and have now put in place over, on their way to putting in place over 50 megawatts of renewable power on these bases which allows the bases not only to have a sustainable energy source, but also a protected energy source which is a key point.

If you look at the US Military's four corner strategy, it called on the men and women of Lend Lease for the development - for the new development of additional housing for service people deployment on the four corner strategy up in Wainwright Greely in Alaska and in Fort Drum in Upstate New York.

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If you look at their plan inside the US Military for a mandatory process for cross functional training and moving people around at the different training modules, that's what's driving the lodging program and of course, as I said to you before, they called on the men and women of Lend Lease to get that done for them in a source fashion. If you look at what's happened in with respect to skylines across the US, it's been Lend Lease. The new beautiful 70-storey towers sitting over on top of Chicago River, that's Lend Lease who did that.

If you look at the new towers that are budding out of the ground in New York City, it's the men and women of Lend Lease. If you look at the night of September 11, almost 10 years ago, it was the men and women of Lend Lease that were on that pile and it's the men and women of Lend Lease that are still there. They're going to deliver, this September, the largest urban landscaped pavilion in the US. It's two fountains. It's a billion dollar program, it's five levels of infrastructure underneath, including hanging trains and just the remarkable accomplishment into an iconic symbol that will be there for generations to come and it's the men and women of Lend Lease that have delivered it and delivered it safely and profitably.

So for the Americas region, when I look at our people, they're both capable and enabled. With a little bit of patience from all of you and from all of us, the growth will come. I think we have seeded the right opportunities but we have got the engines to make this happen so that's the story of the Americas. I think you for your time.

QUESTION AND ANSWER

BOB McNAMARA: Questions?

UNIDENTIFIED AUDIENCE MEMBER Hi Bob. Just with the DASCO acquisition I was wondering if you could put some numbers around the sorts of development margins that you get in the health care space as opposed to other sectors of the economy that Lend Lease has historically developed in the US, and also if there's been any change to the view as to what the pipeline is since the acquisition.

BOB McNAMARA: The way the Lend Lease DASCO model works, if you just walk along the entire value chain, it's a classic Lend Lease value chain. So we're basically creating to transact here. So we're going into the hospital systems, we're using our intellectual property to develop the right affinity between different doctor practices, offering that to the client, we're designing to that, we're building to that and then we're able to develop that piece of property, create the reality and then stabilize the asset and then ultimately transact it.

So when you look at that entire value chain the aggregate margins on that value chain are triple what we would get for just designing and building a building. That's been the history with Lend Lease DASCO and I think ultimately those are the models that I think are going to auger quite well for us. We're not on a volume

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strategy. We have no interest in running up volume so with these pockets where we can do high value delivery for our clients and get the margins on this is critical for us. But that value chain is, you're basically picking up a development, you're picking up a design and management fee and then you've got a transaction once the asset gets stabilized, all in a relatively short period of time. Our goal here is to keep cycle in that capital in a year, year and a half, tops.

JOHN RICHMOND – Merrill Lynch John Richmond from Merrill Lynch. Just following up on DASCO. To date the capital spend has been fairly limited. I'm wondering if you could kind of give us an outlook for what the potential capital investment into that business is and what the returns on that equity is and also maybe if you can just sort of illustrate a project example where above and beyond doing design development and construction, how the equity in the PPP would work?

BOB McNAMARA: Okay. So I think a good example of the business is a project that we have going for an investment grade health system right now. So the process is is that we will go in and make an offering, come back, get a stabilized commitment from the client, that's got to be north of 60% before we move forward, 60% of the space. The commitment for capital that we think ultimately in this business, we've got a range of between $150 million and $250 million is what we think we need to adequately fuel our pipeline.

You know, what happens in this business is that we apply our capital through the construction period finance area, the construction period risk until you get to a stabilized asset. Whether we do that all in our own money or we do it with some mixture of having outside sourced funds in that area, each job will be slightly different. Ultimately what happens is that you wind up with a stabilized asset, you've got a ground lease underneath you which is running 70 to 100 years and you've got an investment grade asset that's in a space that right now is quite attractive to a lot of outside investors so you basically get a chance to transact 18 months into the process.

JOHN RICHMOND – Merrill Lynch It's quite similar to some of the PPP work you've been doing in the UK by the sounds of it.

BOB McNAMARA: Sorry, I couldn't hear.

JOHN RICHMOND – Merrill Lynch A fairly similar model to what you've been doing in the UK PPP space.

BOB McNAMARA: Yes. It's kind of a classic Lend Lease model. Understanding the value proposition that the customer needs, creating that reality. You k now, you go through an architectural and engineering solution process and then you create that reality. You're basically de-risking it for third party investors because you bring it across the

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construction period risk. You've got to stabilized at the end because you had a 60% commit before you got started and then you transact.

JOHN RICHMOND – Merrill Lynch Just also on --

STEVE McCANN: Sorry, I just wanted to clarify something because your questions seem to be going down a path of PPP. This is not a PPP model, this is a development model. So the PPP business in the UK is government backed availability based payment mechanisms gearing 85% to 90%. This is a development model. The underpinning income stream comes from the health care provider, typically a private operator, and we'll get it significant pre lease commitment from that operator before we start developing. But I just think when you're talking about the return profile, the PPP is simply a delivery model, it's just the way you fund those projects in the UK. I just wanted to make sure there wasn't confusion on that.

JOHN RICHMOND – Merrill Lynch That's helpful, thanks. Just if I can also, on the construction side in the US, you talk about an improved outlook and recovering revenues over a long period of time. When we sort of look at previous peaks, off the top of my head, I think you recently peaked in the US around $6 billion in annual revenues there and the number now is obviously far below that. Where would sort of the medium term expectation for a recovery be? Would it be back to peak levels at any time in the next five or 10 years? You know, you won't be investing staff numbers and capital that heavily to get back to that peak.

BOB McNAMARA: I guess I'd answer that in two ways. One, we're not on a volume strategy so I don't think we're ever going to try and auger our way back to huge revenue numbers. I think the revenue numbers come. But what's key for us is to be in a value proposition where the margin that we're being able to deliver is number one, significant and number two, we can keep it. So you know, I feel that the business will begin to grow again and in 2012 I think it will start ramping its way back up. I think it will hit its earnings potential from these markets that we're in now about three years out. You've got some lumpiness which comes as a result of this transaction model but I think roughly in the next two and a half, three years, you're going to see a model that's pretty robust there.

PRESENTATION

MARK MENHINNITT: Good afternoon. My name is Mark Menhinnitt, Chief Executive for the Australian business. Pleased to be here. I think we will have plenty of time up our sleeves at the back end; plenty of time to get home and watch Queensland give New South Wales another lesson in rugby league, so I don't think there's any need to panic about that.

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Hopefully at the break and at lunch you will get to meet some of the Australian leadership team that's here. We've got Frank Krile and Tony Brennan at the front desk here. Paul Walsh I see in the back, who heads up the retirement living, aged care business. David Rolls I think is on his way here, and I think Murray Coleman as well. We got here a little bit early so hopefully they will be here around lunch time if you've got any specific questions you'd like to - right on cue. There we are.

I'm in the very fortunate position that I have worked with just about everyone in the leadership team here in Australia, so over the 23 years I have had in the organization, we've worked together at various times over those 23 years. So very fortunate coming in and knowing the team.

It's a great team; know what they're doing and a team that's firmly got their hands on the wheel.

So the agenda for today - I'm going to give a brief overview of how we see the market and our position therein, and then do a quick view of each of the businesses in a little bit more detail. David Hutton will come up after me and we'll talk through some of the major projects we have in the portfolio - you know, Barangaroo, RNA, and so on.

Before I kick I will just touch on safety as well. I think in the Australian business more broadly - and Steve mentioned it before - it's not just in the construction side, it's all the assets that we own and manage from retirement living, aged care, retail, commercial and so forth. Safety is a very big focus for the organization. It all starts with the leadership.

In terms of progress, I think we've done well in terms of lag indicators over the last five years. I think Steve had some of those shown there. I suppose it's fair to say in the last couple of years we've shifted the focus on the lag indicators are an ultimate scorecard, but the focus in the business is one on incidents. It doesn't matter what the outcome of an incident is, if an incident occurs then that's an unacceptable occurrence. So our focus is very much on driving the prevalence of incidents out of the business, irrespective of what the ultimate outcome was.

I think as we start to measure incident performance, again I think we can now, we'll be able to take another quantum leap forward in terms of some of those lag indicators. But we're reasonably happy with the trajectory, but as always with safety the job is never done. So the leadership team is extremely focused on that, from myself, all the way through the organization.

So in terms of the overview of the business environment - as Steve mentioned earlier we're cautiously optimistic about the Australian economic environment. I was at a small gathering yesterday with the Reserve Bank Governor and his usual way, he doesn't give away too much on what is going on, but he did highlight some things which have, you know, if you follow what's happening in that space, some insights.

If you look at where the national income in Australia is going, it's certainly very strong, and I think the investment in the resource sector sort of indicates that - 2% of GDP has been the historic investment in the resource sector. It is now at 6% of GDP and we're not finished yet. His projection is that that will get to 8%.

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So a lot of the things that are coming out in terms of the infrastructure - in the resource sector and flow on into infrastructure is certainly there.

However that causes other issues within our business. A lot of people sit there and say well that's all interesting but how does that - I'm not seeing it - and Steve mentioned the two-speed economy. So what we see is increase in household saving. I think a comment he made yesterday about sort of flat GDP growth coming out of sort of the consumer drive - and I think for our business we see that and it's incumbent on us to adapt to that sort of shift that we're seeing in economic growth in Australia. We'll talk more about that as we go through each of the businesses.

So I think for each of our sectors the outlook is reasonably positive, but there's always those factors we need to be cognizant of, you know, pressure on inflation, housing affordability gets a lot of airtime and we certainly see that as an issue. Cost of living generally - cost of energy, insurance, all those types of things are heading up. I think not the issue of the carbon price, but what the uncertainty is around the carbon price I think is more of the issue is the uncertainty than what it actually means.

So they are factors we always consider as we manage our portfolio going forward. That said, employment is still very strong and that's employment in terms of the level of unemployment in Australia, but also the level of participation is quite high.

So all those things in the mix - the level of national income, the level of employment and employment participation being quite strong makes us optimistic despite some short-term inflections.

We see the construction sector growing quite strongly as was mentioned before in the - I think we've had a bit of a dip in the general building space, but that will come through and we'll talk about that a bit more later.

The residential market I mentioned is impacted somewhat by the short-term issues, you know the bias towards interest rates increases, that would be obviously a negative in that market - and we'll talk a little bit about that later in terms of where we are with consumer sentiment.

But I think in terms of our business, we're very well placed with the capital model that we approach and the good level of sales that we see going into next year, in terms of carryover.

The apartment and senior living markets are still quite active and I think our position in those markets are quite strong. So we will cover that.

I think the retail environment is obviously a little bit softer. There's been a lot of press on retail spend, but I think as an asset class retail is still a very attractive asset class and in terms of our pipeline of developments, redevelopments, repositioning, you know we're starting to see some more throughput there.

Included with just the sheer weight of capital inflow into superannuation and the like there's obviously a lot of opportunities for the investment management team to deploy that capital within Australia.

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So overall, you know, cautiously optimistic about the Australian market, but obviously making sure that our settings and strategies reflect some of those challenges.

Lend Lease in Australia - just talk briefly about each of the businesses and then I'll get into a bit more detail.

In the project management construction business we're a leading player in the general building market and we have quite dominant positions in commercial building, healthcare and various government sectors. As I think Scott mentioned before, some of the stimulus spending is coming off and so you're seeing that government spend in those areas around stimulus coming off. But that said, you know, we have a very large internal pipeline of opportunities and still seeing very strong future pipeline in areas like healthcare and higher education.

Infrastructure development was mentioned earlier - that is still quite strong. In the PPP sector there's a pipeline starting to come through. That was a bit slow 12, 18 months ago, but that's starting to pick up.

In our development business, which comprises residential, land, apartments, and the large mixed use urban regeneration projects, the pipeline that we have is quite strong and our market positions in those spaces provide us good visibility into the future.

In senior living - you know, the largest player in that space - we've got a good platform. There's a lot of work going into that business to drive operational performance, efficiency, simplification and we're seeing some good outcomes there. So we'll talk a bit more about that later.

I think our iron business is - for a number of years now been the leading wholesale platform in Australia and it's a good contributor to earnings in and of itself to the Lend Lease Australia business. But clearly the strategic value in sourcing secure competitive third-party capital to fund out pipeline, both property and infrastructure, is very valuable.

So we've talked to each of the businesses - so in the project management and construction business our profit - and you see some of the numbers there - our profit for the full year will be weighted more to the second half. So in terms of where we are headed, we see more coming through in the second half. So it will be a better result than what you have seen at the first half.

I have mentioned before some of the stimulus spending has come off, which has been you know quite a driver of value for that business of recent times - is coming off, so we will see our backlog position coming into the end of the fiscal year this year come off a little bit, but offsetting that obviously is the strong pipeline that we are seeing in healthcare, in higher education, and the like. So we have - although the backlog is coming off our visibility into what the opportunities are, the realism of those opportunities and our position on those, we're quite positive.

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I think I mentioned healthcare. We see in that pipeline in the order of you know A$4 billion to A$5 billion in healthcare projects that will come to market in the next 18 months or so, be that in a managing contractor format or a PPP format, so there's a significant spend coming through in healthcare.

I mentioned our internal development pipeline as well, and David will talk through what those major projects are. But outside of that we have opportunities that will come through in the retail area as well. Hopefully we will get Craigieburn onto the launch pad before the end of this which will be a major Greenfield retail project in Melbourne.

So overall, coming off towards the end of this calendar year in terms of backlog, but we see that, if you like the lower point moving to more strength going forward in FY12.

In terms of infrastructure development, this year we have seen the successful completion of the South Australian schools project - a small project but a very profitable one for us. We have a 50% equity position in that and obviously the value of that equity position we see growing now that the project is complete, de- risked and into operations.

As Peter mentioned before, in partnership with Baulderstone we are bidding the billion dollar plus Victorian comprehensive cancer in Melbourne. A bit went in at the end of last year and we are going through negotiations and discussions with the government, but that will not happen before the end of this fiscal year. It will go into the next fiscal year. So that's obviously a major project for the broader group Baulderstone and the Lend Lease infrastructure development side and the project management construction business.

Outside of that we are active on five other projects in the PPP space - not of that scale, but quite active on those, and hopefully we will have some positive news in the near future.

So the outlook for the infrastructure development PPP business is relatively strong. As I mentioned before healthcare is a big part of that. Sunshine Coast Hospital, circa A$2 billion; Bendigo Hospital has been announced in the recent Victorian budget; Sydney convention center is something obviously within the Sydney market that the government is keen to get moving. So we see quite a good pipeline of opportunities coming through there.

Our model in that business is very similar to our development business and to what Bob was talking about before - having an origination capability, using our balance sheet to see the equity, take a co-investment, source competitive third-party capital to join with us, and then obviously deliver the design and construction outcome as well. So it is the whole cycle within the infrastructure space is what we have the capability to do.

Clearly we see the move in New South Wales to create an infrastructure New South Wales organization is a very positive movement.

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So if we look at the mixed use business - I mentioned before David is going to get up and talk about some of the major projects, so I will focus more on where we are with our apartments business. The apartments business, if I go back four years ago when I was in the development business, we have always had a goal or an agenda to get that business to circa 700, 800 apartment deliveries per annum. That sort of ballpark scale business would give us a leading position in the Australian market, give us a platform that allows us to grow our IP, be competitive and be successful and profitable.

So it's good to see four or five years later we are getting to that position with you know significant backlog of opportunities in the apartment space in Sydney, Brisbane and Melbourne. So good diversity in terms of geography as well, and now a pipeline of around 10,000 apartments and we see the underlying fundamentals for apartments as being quite strong. I think our model as well in terms of getting the project to launch, bringing in capital partners, gives us a point of difference.

I think for the apartments business, as we stand at the moment, it's at a point of inflection in terms of product to market, our sales this year will be somewhat subdued, more around the launch of products and product and getting through some of the planning approvals we have needed to achieve in Victoria. So we think settlements will be down a little bit in FY12, however we see we will have very good carryover into FY12 - expect that to be quite strong.

We are targeting a number of new project launches in FY12 which we see as underpinning our future. We will have circa 700 apartments across five projects move onto the launch pad in the apartments business through FY12. So I suppose in terms of getting to that scale, getting to the number of sales and settlements up around that 700 to 800, we feel very confident within the next couple of years that's where we will be. In terms of growing the pipeline of geographical expansion and diversity we're looking at some of the opportunities in the Perth market as well.

In terms of the communities business - and I will spend a little bit more time on this business - the conditions I think, as you would have read in the paper and around the place, very State by State. New South Wales and ACT have been quite strong, as has Victoria been quite solid, but sentiment in South Australia and south-east Queensland in particular has been quite soft, obviously as the result of floods and just various other uncertainties in the south-east Queensland market.

So there is a - the market does get impacted by uncertainty and sort of softer consumer sentiment and I'll talk a bit more about that in a slide or two after this.

The inquiry level is still quite strong however. The fundamental underlying demand is still there. It's much more an issue around affordability and in terms of banks and valuation metrics that are being used now, so very much the demand is there but a lot of focus on affordability.

We see our settlements this year to be - up to the end of this financial year - to be down slightly on last year, not as a result so much of the sales position or the sales position we expect will be off a little bit; more around timing of being able to bring settlements to close - so due to titling issues or delays as a result of

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25 MAY 2011 weather earlier this year. So we don't see that the reduced settlements are really a function of our ability to sell into the market, it's more around being able to close on those contracts; settle on those contracts.

So we continue to focus on getting the proportion of zoned land in our backlog up and targeting by the end of this calendar year to have the vast bulk of the backlog that we have moving from unzoned into zoned which will be a very positive and good achievement.

In terms of replenishing backlog, we are looking at obviously targeting the corridors where we feel we are under-represented; where we have some projects that are coming into wind-up mode, so we're targeting those corridors. I think in terms of what we are targeting it's looking to create a balanced portfolio, so across geography, the timing of that as we bring backlog into the business, the timing of the backlog realization to make sure it's in balance, price point - so that obviously at the moment targeting a lot more in the affordable corridors, but in all corridors making sure that we have got affordable product, and then the balance of land ownership versus land management.

So all of those things are factored into getting a balanced portfolio as we bring new backlog into the business.

We see going into FY12 - I mentioned sales or settlements being a little bit down slightly on last year, but we see going into FY12 our carry forward being significantly stronger as a result of delays in being able to achieve those settlements. So we see that being quite strong into next year.

So I have spent a little bit of time talking about some of the key drivers. There are a couple of charts here - I mentioned before that the communities business has over 60,000 lots of which 38,000 were zoned at December. Since December we have achieved rezoning on Calderwood; we have added Werribee in the western corridor of Melbourne to the project with zoning. So that goes in as zoned. As I mentioned before, by the end of calendar year 2011 our target is to have the balance of that portfolio into the zoned category.

I mentioned the key geographies that we are in in terms of Sydney, Canberra, Melbourne, Adelaide, south- east Queensland, and obviously the move into Perth of recent times with Alkimos.

The chart on the top left hand corner is the sort of consumer sentiment, so sort of Westpac, Melbourne Institute chart that we look at. It's sort of the balance of optimism versus pessimism and you can see that that - it does vacillate a little over the last number of years outside the GFC, generally fluctuating on the more optimistic side. We have seen that come down, but that said it hasn't declined substantially. So the level of inquiry that we have in the business is still there, but it is taking longer to convert that inquiry into sales.

As I mentioned before, affordability is the key issue in that. We track across each of the corridors that we are in what's on the market at what price point and where the inquiry is and where the demand is and just looking at the match of that, and clearly the demand is there but it is definitely for more the affordable product.

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Across the portfolio we have seen our margins and pricing remain quite resilient and even though that consumer sentiment has come down we're still seeing good margin performance in the business.

On the bottom left hand chart that is stock deficiencies. That looks at, in an aggregate sense, what's the aggregate over-supply or under-supply of stock in the market. It has obviously through that chart you can see been quite high for some time and it is forecasted to continue when you look at what's coming to market and the underlying aggregate demand. We still see that we'll be in a deficiency position in the Australian market.

In terms of where we are at with the portfolio and the strategy - the majority of the communities portfolio is in the land management model, so that's where we don't pay for the land upfront, we enter into land management arrangements and pay for the land as drawn down over time. So the majority of our backlog is based on that model. So we have a lower level of capital invested as a result of that, and particularly important on long duration projects.

So we see that model attractive for those types of projects and it's a way to manage our exposure across the residential cycles, particularly on those long data projects.

Our focus on new acquisitions to build our backlog is in the corridors that we identify as attractive corridors. To date in FY11 we have added about 10,000 lots to backlog through these various projects we have secured, but in securing those projects we look at the underwriting criteria by which we look to bring that backlog in. So in terms of sales rates, start-up periods, escalation, real growth in pricing versus cost, it's fair to say our underwriting criteria is somewhat more conservative given that outlook. So it's good to see we are bringing backlog in but bringing it in on a more conservative set of assumptions.

I mentioned before about Western Australia, so we are looking to get Alkimos up and trading in the next calendar year which will see us commence and start to grow our position in Western Australia.

Lot of focus on bringing our, improving our builder partnerships, particularly when you're working in the more affordable space, so consumers buying more home and land packages, so doing that in partnership with builders and building a lot more of those relationships to drive volume through the business.

I think ultimately how we see ourselves differentiating from our competitors is really around what the brand of Lend Lease is and that's around creating place, creating a brand for the particular residential development and then driving value through that. That's something that historically we have done well.

So I turn now to the senior living business. It's been about 18 months since Lend Lease acquired 100% of Primelife and so that will be seen in the result for this year. I think it has been well documented the underlying drivers of demand, the ageing population and so forth, so I think that's well documented and so consequently having the position we have we see as a very strong position.

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Senior living will be a significant contributor to the Australian result this year and we are the largest in this space. I mentioned before the focus of Paul and his team in that business has been about driving operational performance. It was an aggregation of a lot of different businesses, a lot of different assets. So the focus of the team has been to drive the operational efficiency, get simplification, consistency across a lot of the contracts that we have with the various residents, and to drive up per bed performance from an EBITDA point of view in the aged care business, and a lot of very, very good work has been done in that business in the last 12 months to really drive that and put in place the necessary systems and processes and to drive performance out of that business.

We also remain focused on delivering and replenishing the development pipeline that we have in the senior living sector. We have targeted double the number of annual settlements over the short-term. Currently we are about 250 settlements or thereabouts over about 13 projects, so we want to drive more development opportunities through that business.

The overall strategy is to get the business onto a good operational footing and performing well and over time, the medium-term, to bring in capital partners to allow us to recycle some of the capital out of that business. As I said, the timeframe for that is over the medium-term.

So investment management - in terms of performance and growth, the investment management platform has delivered growth in funds under management of about 15% over the last five years and we see that growth continuing as we need sources of capital for our development pipeline, but as we also partner with our investors to secure existing assets - the ING portfolio being a good example.

In the past 12 months we have focused a lot on getting the ING assets integrated from an operational point of view and that has been complete, so all of the retail assets that were acquired with that portfolio, along with our partners, have now been integrated and operating under the Lend Lease model.

In terms of the growth - as I mentioned before the sheer weight of capital flowing in to that sector provides opportunities for us to grow and clearly our point of difference in that space - understanding as a property organization what drives property performance, having best in class, investment governance systems, that give our investors confidence that their investments will be managed well.

I think we also see a larger proportion of investment under management coming through the separate mandates, investment relationships with a number of the larger investors who want to invest directly rather than through funds, but doing that through a mandate that we have with them.

I will talk a little bit about retail as well here. We see the retail - there's a lot written about the retail sales environment being relatively flat which just means you have got to drive how you manage those assets, the act of management and positioning of retail assets, the service offer that's available, and so we continue to do that. I think in terms of retail over a long period of time continues to evolve - so in terms of what the offer is to the consumer - and we will continue to drive that evolution.

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As Steve and Brad mentioned before, at the right opportunity we will always look to recycle our capital out of some of those assets that are more mature into high yielding development opportunities.

So to close out, in terms of the key priorities for the Australian business - in our construction business we will continue to focus on opportunities in the sectors where we see the spend being - health, higher education - and obviously supporting the broader Lend Lease organization in delivering the significant internal development pipeline.

As David will talk to in a moment - achieving some of the key planning outcomes, not just on our large projects, but on a number of our projects in the development pipeline, in the communities pipeline and the apartments pipeline as well.

Senior living - the focus being all about getting the foundations of the business right and achieving operational excellence, driving the returns through better operational performance and continuing to grow our funds under management in to the future and delivering the broader Lend Lease Group the secure competitive cost to capital that we need to drive our development pipeline.

So with that I will conclude and happy to take any questions. If there is a question I can't quite answer immediately I may draw on some of the expertise in the leadership team here, but hopefully I can cover it for you.

Thank you.

QUESTION AND ANSWER

SIMON GARING – Merrill Lynch Simon Garing from Merrill Lynch. On the senior living business you spoke a lot about driving operational excellence. Could you give us a snapshot as to where the returns on the equity that you have got invested in that business today?

BRAD SOLLER: Brad can you just repeat the question.

SIMON GARING – Merrill Lynch Senior living Brad, it's one of your biggest investments, what's the return that you're getting out of it and try and differentiate between a cash return versus picking up accruals on future DMF.

BRAD SOLLER: Yes, so in terms of the overall returns there's a mix of returns that we actually get. In relation to the new developments that we actually do on villages we would expect to get a margin in line with what we actually do, what we achieve on other types of developments. You then actually have a long tail of annuity type earnings in relation to the DMF on the existing villages.

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In relation to those returns they - our return on that would be round about the 10%, 11% mark I guess. In terms of the cash returns we get, that lags it because of the delay in terms of when that cash flows. So you only get paid at the very end of the duration that the resident stays in the village. So at the moment our cash returns are much lower than that, given the maturity profile of some of those villages.

MARK MENHINNITT: I think to add to that, Brad mentioned the maturity profile, obviously as a number of these assets mature that will pick up over time and obviously the focus on getting the development, you know organic development growth in that business, the development returns we get just by developing the assets themselves are consistent with what we achieve in the other parts of the business, but then obviously that builds that long-term value as well.

SIMON GARING – Merrill Lynch With respect, the development of only 250 ILUs is not significant in the scheme of the overall investment you've got in the existing portfolio, so I'm just trying to work out when will the cash returns of the existing investments hit a reasonable level? Brad mentioned a number lower than 10%, but can we get a better feel as to where that is off the existing asset base?

MARK MENHINNITT: The timeframe.

BRAD SOLLER: In terms of the time it will actually take to get the actual cash returns back up to the book profit we are actually recognizing, that will probably take a while. It's not going to happen in the next three years of our business plan and will probably be beyond that. But we will continue to actually gradually move in that direction as the portfolios become more mature.

SIMON GARING – Merrill Lynch Do you think you will have that portfolio sold down to your capital partners - sorry, do you think you will have part of the sell down done in the next three years?

BRAD SOLLER: In terms of the timing of that - our intention is to actually recycle the capital as it is to recycle other assets that we hold on our balance sheet. In terms of the timing, it depends on the market opportunities as who's out there at any point in time. We will look to sell down that capital - our stake in those villages at some point, yes.

MARK MENHINNITT: It's about the optimum time to do it. There's good opportunities to get the business performing from an operational point of view much better and so you want to make sure that you maximize value before obviously transacting. There has been some level of interest in it, but you know, it's like anything you've got

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to make sure we extract the maximum value before it. But as Brad mentioned it will be over the medium- term not the short-term.

SIMON GARING – Merrill Lynch Sorry, one more question. Sorry Mark just on - there's been some commentary on Centro and your interest in Centro. Are you able to comment what that interest is compared to the update that we got in February?

MARK MENHINNITT: Yes, Steve will cover that.

STEVE McCANN: Yes, I will take that one because I just had a journalist ask me that question as well in an interview this morning, so just to be clear there was an article in The Australian I think it was a week or so ago. Not sure where that comes from. I presume it's from one of the advisors to one of the people involved in the process, because you know quite annoyingly for the last three years our name gets associated with that transaction whenever they're trying to get some price tension.

So what I can say is we put an offer in for that business in February 2008 and we approached them in December 2007. Things evolved over time and our consortium of investors changed but our interest never did, and still hasn't, but they announced in the middle of March they have sold the US business and they're recapitalizing Australian business. We are unaware of any other process and I struggle to see how we can be involved in a process we are unaware of.

So that's our official position and you'll probably read it in The Fin Review tomorrow - unless we get misquoted again.

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PRESENTATION

DAVID HUTTON: Okay. What I wanted to do just prior to lunch was give an overview of half a dozen of the major development projects. For those of you I haven't met, my name's David Hutton. I've been with the Group for over 20 years. My role is to overview our major projects. Now we have the regional structure in place that Steve referred to this morning. What the Group head of discipline, so in my case, development but likewise in investment management, project management, and construction and PPP, what we seek to do is ensure we apply best practice, we apply a portfolio approach to our larger projects and what we really look to do is ensure there's the right governance and discipline processes around where we put capital and how we run our major projects.

What I won't do today is go into a whole lot of detail. I'll try and give you a flavor of those larger projects and then happy to take any questions. Just in terms of the six projects I'll run through, I think it's indicative of our portfolio approach that three of those are now in Australia -Brisbane, Sydney, Melbourne. Our Jurong Gateway project in Singapore and then two large projects in the UK.

What we've worked very hard to do in the development portfolio is ensure we're not betting the Company on any one project so obviously a project like Barangaroo which I'll talk to in a moment, is a large project but it's one project in a much larger portfolio. So our focus is to ensure we've got the right capital model. Our focus is to ensure we're not absolutely dependent on any one market cycle or any one market project.

So our approach to capital, our approach to discipline, our approach to having the right portfolio is been where our focus has been. We've sought to buy well over the last two years in terms of converting some of these opportunities and now obviously our focus is on execution as we come into the recovery cycle.

In respect of Barangaroo, Steve made some comments this morning. We went unconditional in June 2010 so circa 12 months ago after what was quite a long and thorough bidding process. We've made good progress since then in terms of planning with our concept plans so the Lend Lease preferred design was approved prior to Christmas. We have approval for the basement, we have approval for the first commercial tower. But we've been spending a lot of time now on detailed design, getting the project to a stage where we're confident in costs, we're confident in staging and we're able to engage in detail with tenants and investors.

It's been reported previously but we're well advanced now with eight organisations in terms of pre-let. We're speaking for around two thirds of the commercial space. Our focus at Barangaroo initially is on commercial. We intend to get the first tower underway by Christmas this year followed shortly by the second tower and then we'll start to focus on the residential. The reason for that is the commercial towers have a circa three year build time and what we're not looking to do is to have any of the residential occupied until the first office tower is completed. So residential sales will follow approximately 12 months after starting the first commercial tower.

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I think you'd be aware with the statistics on Barangaroo, around 490,000 square meters of gross floor space, which in net lettable equates to around 288,000 of commercial, around 30,000 retail and just under 800 apartments. In terms of staging the project, obviously no one wants to live in a construction zone for a long period of time. What we intend to do for Barangaroo is start on the southern side of the project and move north. In fact, it's on the next slide. Have the first two towers underway, which is adjacent to the Macquarie Building and the KPMG Building and then start to move north.

So again, ensuring the occupants of Barangaroo have an unimpeded connection back to the city and to their neighbors and that they're not interfacing with construction as we work our way to the north of the site through the project. In terms of the commercial towers themselves, we believe they'll be the best buildings in Sydney. A lot of the stock in Sydney now is 10 to 20 years old. In fact, quite a lot of the commercial buildings were built in the late '80s and '90s cycles. Sustainability in those buildings is now clearly out of date. There's very limited opportunity to get sizable floor plates.

So the Barangaroo floor plates are around 2300 square meters, they'll be six star buildings, they'll have better technology, they'll have higher floor to ceilings, they'll all have raised floors. So there's very, very significant advantages in terms of organisations and efficiencies and with some minor tweaking we can increase the density up to one person per eight square meters.

So in terms of cost per person for an organization moving into Barangaroo, significantly lower than other stock in the city. That's really lead the response we've seen to Barangaroo, once people start to understand those benefits they really see the attraction of coming to Barangaroo. In terms of planning, I mentioned before the concept plan is approved. As I said, now we've worked through the contracts with Government, we're well on our way through the planning process now. Our focus is on pre-lets and capital and we're looking to bring those together to enable us to start the first building prior to Christmas.

You will see basement works get underway in the next four or six weeks. Then as I said, starting the first major building by year end. As our approach to commercial office we don't spec huge amounts of space. The towers at Barangaroo would be looking to have pre-let at around 65% before we start a tower and then obviously use the balance of the three year construction period to complete the leasing. Likewise, we'll be looking to have capital in place prior to starting the construction of the tower.

So a disciplined approach to third party capital and a disciplined approach to pre-lets. We have quite a lot of flexibility with our agreement with Government in terms of staging so obviously if we don't get the level of pre-lets we'll delay the start but in terms of the response we've had at the moment, we don't anticipate any change to our forecast program. So happy to take any questions on Barangaroo at the end. But what I'd like to do is flick through a number of the other major projects.

Moving on to the RNA Showgrounds up in Brisbane. This project, to some extent has been a quiet achiever. It's the largest property project in Queensland. It's A$2.5 billion in value, 340,000 square meters, so a large project by any measure. The RNA for those of you who are familiar with Brisbane or Queensland, it's a very long institution. The RNA Showgrounds was actually opened in 1875. I think Don

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Bradman played his first test match there. It was the first plane that flew over Brisbane took off there. So it's got a long, long history. It's on the doorstep of the CBD, 1.5 kilometers from the center of Brisbane.

It's obviously adjacent to the valley which has seen a lot of commercial and residential development in recent years. It's on the airport side of the city as well. So a lot of benefits. Our main focus is residential. So over 2000 apartments but we also have the opportunity for 140,000 of commercial space. It's a long term project. It also will see the renewal of all the RNA facilities. It will support the ongoing success of the Ekka Show, so it's still the largest attraction in Queensland every year. So this project, by developing the 5.5 hectares of private land, rather than paying land payments, we will be improving the public realm and rebuilding the facilities for the RNA.

So Bovis Lend Lease or our project management construction business rather, will be undertaking that work and they've already started on the first facility being the industrial pavilion which is a A$60 million design and build for the RNA and we'll be launching our first apartments at the RNA early in the new year. So after getting our ULDA planning consent which we have now, we're now lodging individual project applications.

Moving south down to Melbourne, Vic Harbour. Our project down there, we've been underway now for 10 years. So a long time in one hand, it's a very large project, an envoy of around A$4.5 billion. In terms of where we are today, we have progressed 70% of the commercial space on that project so we still have 30% of the potential office to go, and we're just over 30% of our way through the residential. So still, nearly 2000 apartments to go.

We're currently developing two residential buildings there. We have also signed a major pre-let to Oricon so we'll be starting their building for a new commercial building. We're also pre-selling strata units in another building. So our focus very much now is accelerating our momentum on these projects. Vic Harbour started slow. You'll recall we did the National Australia Bank in the early 2000, we were focused on one building. Our focus very much now is having a diversity of product on these large projects and undertaking three to four buildings in parallel.

So that's our focus. Again, on the basis of having a disciplined capital model and putting various sorts of products to the market at any one time. Over the last 12 months, the team has also renegotiated our development agreement with VicUrban and modified our master plan. So what we did, reflected on the last eight or nine years, lessons learnt. We went back to the Government when the economy was obviously at a low point and we looked at what we could do to improve the project to put more momentum and to create some additional benefits to the Government and the City of Melbourne so the team did that and again, I think it's something we've learnt that when you put a long term contract in place, you don't just leave it there. You continually look at how you can improve it.

Moving up to Singapore, following our completion of 313 on Orchard Road, the team bid and won the Jurong Gateway project in June of last year. So again, we've spent the last nine or 10 months setting that project up and we're now into construction. Our focus has been on pre-lets. The Jurong project is a project

LEND LEASE INVESTOR DAY 2011

25 MAY 2011 that is 25% Lend Lease Direct and 27% our ARIF Fund. So again, we have the same capital model in place we had at 313.

Lend Lease will undertake the development management, the retail leasing, the design and construction and then obviously the ongoing fund management. Jurong is a major new town center focus for the Singapore Government. It's to the west of Orchard Road. A similar distance, but to the west that Tampines is to the east for those of you who are familiar with Singapore.

Ultimately the Government wants to have 500,000 square meters of commercial space in this new town center and they're currently releasing land for 1000 new homes, a hotel and a 700 bed hospital and a further 200 bed community hospital. The site has terrific infrastructure, it's already on a major MRT line and bus interchange. The trade area has around 1.1 million people existing today.

In terms of pre-lets, the total retail space of this development is 53,000 square meters. We've already secured NTUC Hypermarket for a 7000 meter Hypermarket. We've secured the Robinsons Department Store out at Orchard Road to open a store at Jurong. We've signed the cinema deal and we've signed a number of our mini major tenants. So we're well underway now on pre-lets, we've got the major anchor stores in place and then you'd also be aware, we've secured the Ministry of National Development to take all of the commercial space. So there's a 26,000 meter office tower above the retail and the Government will be moving in and signing a 20 year lease for that space which is a terrific win.

What they really saw in working with Lend Lease was the opportunity to create the most sustainable office tower in Singapore and for the Government to lead by committing to that, committing to the regeneration renewal of Jurong, they saw significant benefits in that. So terrific win for the project and to have all the commercial space pre-let from the outset.

So jumping over to the UK, I just want a few comments in respect of Elephant and Castle. For those familiar with London, Elephant and Castle is obviously on the south of the river. It's about 1.5 kilometers from Westminster or if you go due north, effectively into the city centre itself. So very, very close. Postcode of SE1 for those familiar with London. Obviously it sits on the Overland Line and the Metro or the Tube system. So very well connected but it's been a neglected part of London for a long time.

The old Heygate Estate sat on this land. It's 26 acres in total. So a huge piece of land. Where we are now, we've signed the regeneration agreement and we're working through planning with Southwark Borough. They're actually underwriting the majority of our costs through this phase and then there's a viability test before us going live on the first buildings. So again, it's a focus of minimum capital in, securing a large opportunity, around 2500 apartments that will be developed over the next decade on an encumbered piece of land working with the authority who are also the planning authority.

So we're well underway on planning. We're working through the design of various buildings. Obviously, we now have a huge amount of expertise following the Olympic Village where we're close now to completing 2800 apartments out there. So the team that have delivered those will move onto this project and apply

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much of our learnings over the last few years in terms of delivering large residential projects efficiently in London.

If I move out to Stratford, I won't talk about the village itself, which is nearing completion, but what I wanted to touch on was the international quarter. This is a joint venture arrangement we have in place with London Continental Railway who are the land owner. There's an opportunity post Games for 400,000 square meters of commercial space. I think the important thing for Stratford is it's connectivity. Again, those with long memories in London will recall the Canary Wharf suffered for probably a decade because of lack of transport.

Stratford is now a seven minute train ride in to London St Pancras on the high speed train. It's got two tube lines. It's connected to the DLR as well. It's probably the most connected site in London itself and then obviously, if you want to travel east it goes down to the coast which opens up a huge commuter belt down to Ebbsfleet and Dover and then it's two hours to Paris. The train service is 50 minute to Heathrow and with the new cross rail that will be reduced to I think about 38 minutes to Heathrow from Stratford as well.

In terms of rentals and why is this a viable place for commercial, if you really look at the London market very simplistically the West End, the City, Canary Wharf. West End rents are around Â£80 a foot. The City Canary Wharf is around GBP55 to GBP60. We believe it will be possible to put rents into Stratford at around GBP35 a foot. So effectively closer to London than Canary Wharfs, significantly lower rents, the opportunity for smart campus buildings, large floor plates, environmentally sustainability. Again, the things that the old stock in London can't offer and in fact many of the buildings at Canary Wharf can no longer offer.

So we believe there'll be significant advantages for organisations to come to Stratford and in fact it's our view the development here will accelerate past Kings Cross and past the success of precincts like Paddington scene in recent years. So a large opportunity for us. Building off the success of the Games. Again, low capital. London Continental Railway stay in as our joint venture partner. They put the land in, we undertake the development management, our PM&C business has first rights to construct all the buildings. So that early planning is now underway and we will launch that to the market over the next 12 months.

So a very quick whistle stop through those projects. I just guess, in conclusion, if you put the end value of those together, it's around A$18 billion, obviously over 10 plus years. But I think the important thing is we're applying a discipline, we're creating significant fly wheel earnings for the whole business from construction, design, development, leasing and funds management. We're applying very capital and capital efficient models and risk management and a governance structure over the top of those. We're involved in all of these with relatively minimal land and holding costs. We've got flexibility on timing to ride the market recovery and we're really focused on ensuring we have a balanced portfolio both across geographies and across sectors and across various market cycles. So I'm happy to take any questions.

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QUESTION AND ANSWER

SIMON THACKRAY - Nomura Thanks David. Simon Thackray from Nomura. Just one on Barangaroo actually. You're saying construction of Commercial Tower One starts at Christmas? I guess subject to, subject to. But you need 65% pre-let so I'm presuming your advanced discussions post approval stage or post a short sharp review stage, we're going to see a raft of announcements on pre-let, is that the intention?

DAVID HUTTON: Yeah, so the intention, when we bid for Barangaroo, we had three heads of terms in place already at that point and that was always on the basis of proving up our assumptions and ensuring when we went into the bid process we were confident on those. Those three organisations have continued to advance and are still with us. We're now discussing detailed lease documentation. We've now developed the design of the buildings up to where we have detailed specifications which is obviously as required to sign agreements for lease.

It was required we obviously had our basement approval which we got just prior to Christmas. I mentioned we also now have our first tower approval, we got in March. So following that we can now move into finalizing AFLs and finalizing capital. So as I said earlier, we're on track to bring those together by Christmas, we'll be starting the basement prior to that but our target remains to start the first tower by calendar year end.

JOHN RICHMOND – Merrill Lynch Thanks David. John. Just continuing with Barangaroo. How confident that the review is solely concerned with looking at the process and won't result in any change to the master plan concept in terms of building envelope space albeit maybe changes to headland or something like that?

DAVID HUTTON: Obviously one can never predict an outcome of any sort of review but if you saw the Planning Minister's speech in Parliament, he talked about a short sharp review focused on process. Obviously we've spent a lot of time going through the planning process today. We're very confident in the work we've done. It's all gone through, it's all been publically exhibited. It's all gone through a detailed and thorough process. So what's important for a project like Barangaroo is that it has the State Government's full support.

Obviously we had that with the previous Government in terms of the Premier and the Planning Minister were very supportive of Barangaroo, they understood the economic benefits it provided to New South Wales. We're now working in engaging closely with the new Government. They've made, as I said, the Planning Minister's speech in Parliament, he outlines the benefits Barangaroo provides the economy. It's obviously difficult for a new Premier to fall in love with the ex-Premier's favorite project overnight so it's

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important as I said, the new Government take ownership of the project and we feel we're now going through that process.

So we have a series of briefings, they're coming up to speed, with the benefits it provides to the state. So at this stage we will work with them through the process, we welcome the process in terms of them getting to a stage where they're absolutely confident and we and the Government together can sort of put the certainty that we all want into the market. But I think, what's important for Barangaroo is we have a signed development agreement that's already in place. We have contractual rights for Barangaroo and we already have a concept master plan for Barangaroo.

So the practical reality of that and the outcome of any review is it needs to take those into account. So the project is well advanced and as I said before, we're confident of the program we've currently got.

JOHN RICHMOND – Merrill Lynch Okay, and just from your comments about the one to eight workspace ratio, are you indicating by that that part of the competitive positioning relates to the ability to I guess, fit more people into a smaller area and hence the rents might be positioned differently to the CBD?

DAVID HUTTON: Yeah, it's interesting when you talk to organizations now, and some are further advanced than others in terms of whether they want to go to activity based working. One particular organization we were speaking to recently wants to go to eight to one and wants to work at 120% efficiency. So like the airlines you overbook because not all of us are in the office every day so who's using your desk today. So organisations are moving to that. They're moving to it for a number of reasons. Obviously cost is one of those but you need to design buildings that can cater for that.

So it's not just a matter of recreating a t-shirt factory and jamming everyone closer together. You've got to have a quality environment. So Barangaroo buildings will have all fresh air, Barangaroo buildings have got the taller ceiling to floor height I mentioned before that creates more space. Barangaroo buildings have got better natural light. So there's a whole of aspects to still create the right sort of environments. But one of the benefits of coming to Barangaroo is that the cost per person can be reduced and clearly that's a competitive advantage it has over older buildings.

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SIMON GARING – Merrill Lynch David, Simon Garing. You gave us some comps that demonstrated that you could get the office component at Stratford underway. Where are you with Elephant and Castle and Greenwich in terms of comps and ability to launch as soon as you get approvals? In other words, are the economics there today or do you need house prices to lift?

DAVID HUTTON: What we're doing at Elephant and Castle, we've got about another 12 months to go but if you look at the pricing at Elephant and Castle again, it's a deal, we signed the regeneration agreement with the Borough 12 months ago. Obviously the London economy including the housing market has been relatively soft. The interesting thing in London residential now the supply has turned right down so at the lower levels of affordability there is still demand. Rents are increasing in London so you're seeing investors move into that market.

You're also seeing London residential really being used as a safe haven for capital. So it's interesting, the Government's starting to look at interest in the village now because obviously they are the owner of the apartments at the village and they've had strong investor demand in respect of some of those units. So we have priced Elephant and Castle on the basis of the lower end of the market and that's the basis of our land agreement with the Borough. So we're confident we can enter into the market and start developing the current price levels.

What we are very focused on is the diversity of product, so we won't be coming in sort of launching buildings that have 200 or 300 units of the same product. We'll be developing terrace houses, medium rise and higher rise concurrently. So if it gets to the stage where we can sell 50 to 75 of each of those per year, so we're looking to sell up to say 250 a year but of mixed product, that's what we would target. So it is about ensuring you have that diversity across price points.

SIMON Garing – Merrill Lynch Second question. Are you looking to bid on any other major urban regen projects around the markets you operate in or is this it for the time being?

DAVID HUTTON: The focus for the Group now is on execution, converting, putting the capital in place and getting these projects underway and creating earnings from them. That said, we will continue to look if there's good opportunities. Some of these projects obviously always relate to relationships that emerge over periods of time. So Elephant and Castle, the team have been working on for a number of years. The Stratford opportunity obviously came out of the first Stratford opportunity.

The RNA, I first walked around the RNA site with Jonathan Tunney, the CEO of RNA in 2004. So we've been working on that for a long time. So we have a number of potential opportunities, but the focus now, it's

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not about winning more and more projects. It's about converting them and turning them to earnings. Okay, thank you.

PRESENTATION

STEVE McCANN: So we continue to run materially ahead of schedule, which is a good thing. I think what we'll do then is take the opportunity to wrap things up now and then there will be lunch provided, so you can help yourselves to lunch. So thank you to all the speakers and thanks for the questions we have had. I might just wrap up firstly by re-emphasizing the key priorities for the Group, which I've already touched on.

So in the infrastructure business our focus will clearly be on the integration of that business into the wider Group and identifying and extracting the synergies that we believe will come over time on both the cost and potentially the revenue side of the business. We will also obviously be focused on delivering on the earnings' accretion that we have flagged. In relation to our major projects the next six to 12 months is crunch time really for finalizing tenants and capital partners. We do remain on track for those large projects to begin delivering returns for the second half of FY12.

I just might make an additional comment to what David has already said on Barangaroo and as he rightly pointed out you can never be certain of the outcome of a review process. But what I would say is that the government in power today is not a government that we sense would allow politics to get in the way of what's best for Sydney. All of the feedback we've had. I will just read for those who haven't actually had the opportunity to see it, this is the speech from the Planning Minister, made in Parliament on Wednesday 11 May.

I am quoting this directly.

Let me make this very clear-Barangaroo is vitally important for this State. Its potential is to deliver private sector investment worth A$6 billion. When it opens it will ensure New South Wales is competing in the world financial market. We intend that Barangaroo will be the place where the world wants to come to do business. The O'Farrell Government anticipates that the stand-out companies of Australia, indeed the world, will take their place in the magnificent new financial-business sector that will be Barangaroo.

Lend Lease is a company of world-class reputation, one of the nation's business leaders. It is a leader in sustainability and innovation, and its contribution to the urban fabric of this State is valued by the New South Wales Government.

New South Wales, Sydney and the world can be assured Barangaroo will have a great outcome. It will be an incredible adornment to our great, international city of Sydney. This Government is absolutely determined to make sure it happens.

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So that doesn't sound like a government to me that's going to allow politics to get in the way of that development and we will obviously be working hard to, as David said, make sure that they understand the benefits, understand the attractions of the existing design and facilitate our ability to continue moving forward. We have a binding contractual arrangement and we have a clock that's ticking, so we need to keep it moving.

Back to the key priorities for the Group. Over the next two years, apart from what I've mentioned, we'll also be focusing on portfolio management which will continue to include the divesting of mature assets and redeploying that capital into our significant pipeline of opportunities. So it's all about execution from here on those opportunities. Finally we are, as we've said, very well positioned to leverage our offshore businesses into the anticipated market recoveries in the US and the UK in particular.

In summary our financial strength, our focus on capital recycling and our access to third party capital gives Lend Lease the financial flexibility to fund our development pipeline and other opportunities as they emerge. We have continued to deliver on our strategy of investing in key growth opportunities that we identified some time ago through our development pipeline. The acquisition of Valemus will provide earnings' accretion in financial year 2012.

The strength of our first half result positions the Group very well for the full year. We are positive about our operating outlook and we remain focused on optimizing security holder returns. We will continue to drive our focus on operational excellence and continue to align our cost base. We do have significant opportunities. We have very clear plans as to where we will allocate our capital going forward and we're well on the way to delivering our target 15% return on equity.

As I said earlier, we are in very good shape. We are very well placed to deliver growth of our investors.

So thank you for coming today and if there are any further questions before we wrap up, please raise them and I'll direct them as appropriate.

STEVEN FAHEY – Balanced Equity Steve, an unexpected question from me.

STEVE McCANN: Very unexpected.

STEVEN FAHEY – Balanced Equity Just with regards to your dividend payout policy, is there any, will you consider moving to a policy of only paying out to the level that you can fully frank rather than having a 40% to 60% range?

STEVE McCANN: I, so I think I need to answer that question in this way. I understand the logic of paying only franked dividends from a tax leakage and pure financial approach. I understand that logic very well. The challenge,

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I guess, is that if you are a company like we are which has a combination of domestic and offshore earnings, albeit our domestic earnings are increasing and you also have businesses such as our retirement business, senior living business which have significant tax shelters. Then the ability to deliver fully franked earnings and distribute those earnings means that you end up with a fairly low dividend payout ratio if you focus on 100% franked dividends only.

The challenge for us, I guess, is that we have got a range of different shareholders on our register, across institutions and across retail who have varying drivers and the dividend level does seem to have a more direct correlation to our performance in the market than the franking level of those dividends. I am not for a minute saying that is the way it should be but that is the way that it is. So we are always listening to that feedback.

In the short term our intention is to maintain our payout ratio between 40% to 60%, but as we said earlier, that is a Board decision. I think if the institutional market as a whole pushed more strongly towards fully franked dividends we would have to listen to that feedback and we do take into account the feedback we get.

STEVEN FAHEY – Balanced Equity Can I request that we move to a resolution on the dividend, whether people want it unfranked, so actually put it to shareholders through a vote?

STEVE McCANN: As I said, I don't think that the technical arguments that you put forward on dividend can be faulted. But I do think that the franking is not the only thing that comes into account in determining the appropriate level of dividend for our shareholders. But very happy to engage further on that issue with you, Stephen. If you wanted to have a resolution put to the meeting, then we can sit down with myself and our Chairman and talk further about that with you as well.

ENDS