Project Cash flow Reporting and Forecasting at Lend LeasePrepared by: Ken Salmon

16 August 2010

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Agenda

Introduction Who am I? Who is Lend Lease? What does our Oracle environment look like?

The business problem (Why project cash flow reporting/forecasting?) Our project cash flow solution

Process overview Spreadsheet demo

Alternative approaches to cash flow reporting/forecasting Questions

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Experience with Oracle applications

Worked with Oracle applications for 13 years

Started my Oracle applications journey as an accountant

Implemented and supported Oracle applications at sites throughout APAC

Lend Lease employee: 2 years

Current role: delivering business solutions to customers in Lend Lease’s communities business primarily through Oracle applications

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Lend LeaseA global fully integrated property group

Established in 1958 Headquartered in Sydney, Australia Listed on Australian Securities Exchange (ASX:LLC) Global, fully integrated property group

Development Management Investment Management Project Management & Construction Asset & Property Management

Operations in more than 30 countries Four key regions:

Asia Australia EMEA (Europe, Middle East and Africa) Americas

A$5.6 billionOperating revenue

A$8.4 billionFunds under management

A$9.3 billionRetail assets under management

Circa A$4.6 billionMarket capitalisation

10,000+Employees globally

Numbers as at 31 December 2009

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Some of our key projects

Shanghai Pavilion, Singapore Trump Tower, US

The new Royal Children’s Hospital, VIC

Barangaroo South, NSW MidCity, NSW

Darling Quarter, NSW Ropes Crossing, NSW

Brisbane Supreme Court and District Courts, QLD

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Oracle at Lend Lease

1997 - initial implementation 2005 – upgraded to 11i

Currently on version 11.5.10 CU2

Core financials and projects, iExpenses and property manager implemented

Moderate to high level of customisation

ERP systems vary across location and businesses

Hyperion Performance Management Reporting used for operational reporting from the eBusiness suite

Hyperion financial management used for financial reporting and consolidation across multiple ERP’s

In Australia we have two set’s of books, one for Bovis Lend Lease and another for Lend Lease’s communities business and corporate functions

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The customer

Australian communities business Apartment living (Vivas Lend Lease)

Victoria Harbour (Melbourne) Jacksons Landing (Sydney) St Patricks (Sydney)

Master planned residential subdivisions - (Delfin Lend Lease) Laurimar (Melbourne) Springfield lakes (Brisbane) Rouse Hill (Sydney) Mawson Lakes (Adelaide) Springbank Rise (ACT) Fairway Waters (Darwin) Alkimos (Perth)

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The business problem

Users wanted to analyse cash flow at a project and task level

Solution is designed for Lend Lease’s residential development business

Lend Lease is a ‘project’ organisation

Construction historically a ‘cash’ industry (revenue and costs ‘lumpy’ depending on stage of project)

GFC – imposed greater discipline around cash

Solution to enable management visibility on projects cash flow performance and future forecast cash needs

Focus on costs as opposed to revenue

Completed quarterly

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Cash flow solution overview

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Cash flow process

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1) Run extract process

Complex

Process extracts data from Oracle AP, AR, GL, PO and Projects modules

Point in time snapshot

Stores data in a number of views and temporary and permanent tables

Data outdated as soon as another transaction is processed

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2) Save cost report

Project level snapshot based on extract process (previous step)

Still accrual based

Baseline on which the cash flow reporting/forecasting process is based

Multiple versions can exist simultaneously based on different extract versions

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3) Download cost report version to spreadsheet

Based on saved cost report

Changes data from ‘accrual’ to ‘cash’ basis

Monthly periods on a two year rolling time frame

Months broken into ‘actual’ and ‘forecast’ periods

Populated by cost report, forecast populated by prior forecast

Spreadsheet does not download tasks where FFC = LTD certified

Track expenditures through the following stages: Uncommitted Committed Certified Cash FFC

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3) Download cost report version to spreadsheet (cont)

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3) Download cost report version to spreadsheet (cont)

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4) Update forecast data (spreadsheet demo)

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5) Upload forecast spreadsheet

Saves forecast data back to database

Baselines forecast as QPR or BP

Forms basis of hyperion cash flow reports

Populates forecast columns of next spreadsheet download

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Issues with the solution

Difficult to Support Complex Wide range of skills required for support

Limited understanding by users ie ‘Black Box’

Inflexible time frames

Only at project level – does not consolidate across projects

Despite this, the solution has been widely accepted, stable and welcomed by the business, because it has enabled more precise management of project cash flows.

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Other possible approaches

Alternative custom solution

Attach cash flow category to each GL natural account value via DFF

Natural Account Number Natural Account Desc Cash flow Desc (DFF)

410450 Wages and Salaries Payments to Employees

100010 Sales Receipts from Customers

410475 Telephone Exp Payments to Suppliers

200000 Misc Tools Payments to Suppliers

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Other possible approaches (cont)

Custom solution to track back from every payment/receipt to the related AR/ AP invoice distribution’s natural account

Result should tie back to bank account movement

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Other possible approaches (cont)

Standard Oracle Cash Management

Initial Cash position from bank reconciliation process

Based on user defined templates Columns = periods Rows = sources of cash

inflows and outflows

Forecast cash flows from all modules (includes projects)

Forecasting open interface available for external systems

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Conclusion

About Lend Lease

Business context

Business problem

Lend Lease’s communities business custom cash flow forecasting solution

Other possible cash flow solutions

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Conclusion

Questions?

“Cash is the oxygen of business, because unless cash is available to pay bills when needed, the business might be unable to operate or close its doors – even if profits are being made”

www.business.vic.gov.au

Cash flow forecasting and management is important because it:

Allows company’s to ensure liquidity

Minimise borrowing costs

Maximise income from short term investments

Manage financial risks

Project Cash flow Reporting and Forecasting at Lend LeasePrepared by: Ken Salmon

16 August 2010