Lendlease Group (LLC) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Lendlease market update. [Operator Instructions] I must advise you that this call is being recorded today, Wednesday, 10th of February 2021. I'll now hand the call over to Mr. Michael Ullmer, Chairman of Lendlease. Please go ahead.

Good morning, everyone, and thank you for joining our call announcing Lendlease's CEO succession. As was just introduced, my name is Michael Ullmer, and I'm the Chairman of Lendlease Group. I'm joining you today from the lands of the Boon Wurrung and Wurundjeri people who are the traditional custodians of this place in Melbourne, and I extend my respect to their elders, past, present and emerging. I also acknowledge and pay my respects to any other first nations people who are participating in this call. Joining me on the call is Steve McCann, Group Chief Executive Officer and Managing Director of Lendlease. And I really appreciate your time during such a busy period with reporting season having recently commenced, but we felt it's important to provide you with the opportunity to hear from both Steve and me at this very important juncture in Lendlease's history. I will provide some opening remarks following the ASX announcement that we lodged this morning. I will then hand over to Steve before opening up for some questions. So today, we announced that Steve McCann will retire as Group Chief Executive Officer and Managing Director of Lendlease on the 31st of May 2021. I'm delighted to announce that Tony Lombardo has been appointed as Steve's successor, following an extensive international search and will commence in the role effective 1 June 2021. Steve has just the sixth CEO of Lendlease over the group's more than 60-year history, has had a stellar 16-year career with the group, including more than 12 years as group CEO and Managing Director. Steve has played an instrumental role in spearheading Lendlease's transformation, focusing on our integrated business model in targeted gateway cities. Under Steve's leadership, the group's global development pipeline has grown to more than $110 billion, including 22 major urbanization projects across 10 of the world's most iconic cities. Lendlease is now recognized as a global leader in transforming major precincts into places people truly want to be. Steve's passion, intellect and leadership as well his unwavering commitment toward operating in a safe and sustainable way have left a powerful legacy. The onset of COVID-19 delayed Steve's planned retirement as he led the group's response to the pandemic, and I'd like to thank Steve for his commitment to Lendlease during this challenging period. Tony will commence in his new role at a pivotal time for the group. The revised strategy is very focused on our core capabilities in real estate. While we have been impacted as others have been by the pandemic over the last 12 months, we have an unrivaled development pipeline and strong investment partner relationships, which provides the basis for significant ongoing growth. Tony's demonstrated leadership skills are ideally suited to guide the organization into the next phase where execution will be paramount. I'll now hand over to Steve to say a few words. Are you on mute, Steve?

Operator, can you hear me? Hello? Michael, can you hear me now?

Yes. You're all good, Steve.

Okay. Apologies for that. I'll start again in case no one could hear it. So thanks very much, Michael. I'm sitting here at Barangaroo in Sydney. So I'd like to acknowledge we're on the land of the Gadigal people and extend my respects to their elders, past, present and emerging. It's been a tremendous privilege to lead Lendlease for more than 12 years now. And I'd like to thank everyone of our people around the world for their dedication in delivering our projects safely and sustainably on behalf of our customers, our investment partners and also the communities where we operate. And I'd like to also thank our security holders for their support over those years. I am very pleased that the Board selected Tony as my successor. Tony's appointment reinforces the outstanding bench strength we've built here at Lendlease in senior management. And I've worked very closely with Tony for almost 13 years now, and I'm confident in the future of Lendlease in Tony's hands. Over the last decade, we have transformed the group into a fully integrated international real estate organization. And as Michael mentioned, with the portfolio of 22 major urbanization projects and an investments platform at position for significant growth. So I think we're in great shape for the future. I'll leave Lendlease in May 2021 knowing that the group is in very good hands, as I've said, with Tony at the helm, and I'll work hard with Tony during the transition period to set the organization up for success. So thank you, and I'll now hand back to Michael.

Thanks, Steve. We'll now take any questions.

[Operator Instructions] Your first question comes from Sholto Maconochie from Jefferies.

Just a quick question. Obviously, Tony has been in the business for a while and knows it well and the strategies being set last year. Is it -- was there any reason to go internal over external? Just can you talk us through that? Or is it because the strategy has largely been said, you didn't want an external party come in and revising it? Could you give us a bit of color on that, please?

Sure. From a Board's perspective, we've been running a very disciplined process of leadership development, which is the precursor to any succession process for an over 18 months to 2 years, and that's involved all of our senior leadership team within Lendlease and very much focusing on the core capabilities and skills we were looking for in the next leader of Lendlease, understanding individual strengths and weaknesses and identifying development plans to then help bring those people capabilities along. And we also look to the assignments that we've given them. And as you can see that so many of our top leadership team have had different assignments in multijurisdictions, which again, gives the Board a great line of sight into people's capabilities and particularly their capability to grow. And of course, COVID has been an amazing pressure test to which the organization, led by Steve, but also supported incredibly well by his leadership team has responded, quite frankly, and magnificently. But again, that illustrates people's skills in stress situations. But as you'd expect, with an international, globally orientated company like ourselves, we also, as a Board, looked externally and used that same yardstick of the skills and capabilities we were looking for in the next CEO to look at what talent could be available globally. And we were looking particularly with people with deep real estate expertise as, obviously, all our internal candidates clearly have that. So we looked externally. And one of the interesting things that came through that was the number of external candidates who actually started their careers who have spent some time with their careers in Lendlease, so they were well-known quantities. And at the end of the day, after a very rigorous process, where we did have a range of external experts supporting us, we came to the view that the internal bench was very strong. And therefore, in the final phase of the process, we were looking to assess which of our strong internal candidates we should take through to this CEO position. And that's how Tony came through. In terms then of your question around strategy, clearly, all of our internal candidates have been intimately involved with Steve and the Board over the last 2 years really as we've been evolving that strategy. And so there would always be areas where a new CEO will look at things. But I would very much expect our core strategy to be what is the cornerstone of our work going forward because it is actually compelling and leverages so strongly off our competitive advantages.