Lendlease Group Annual Report 2021

FY2021 Annual Report · Lendlease Group

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A sense of
place

Lendlease
Annual Report
2021

About this report
The Lendlease Annual Report 2021 has
been prepared with reference to the
International Integrated Reporting (IR)
Framework that encourages businesses to
consider what creates value for them and
how this value contributes to long term
sustainable returns for securityholders.

Materiality
A matter is considered material if senior
management and those charged with
governance believe it could significantly
impact the value created and delivered
in the short, medium and long term.
We identify and capture material matters
through the following processes:

• Project Control Group (PCG) sessions,
which include key internal stakeholders
and represent the governance structure
for overseeing the completion of the
Annual Report

• Capturing feedback through

engagement and research during
the financial year from key external
stakeholders including investors,
analysts, and other relevant groups

• Engagement with the Board
• Confirming that the strategy is

consistent and relevant with the
information collected above.

The outcomes of these processes are the
material issues noted on page 32 and 33,
and in the section Our Business on pages
12 to 19.

Directors’ Report and Operating and
Financial Review (OFR)

The required elements of the Directors’
Report, including the OFR, are featured
on pages 4 to 125 of this report and
include the sections A Year in Review,
Our Business, A Sense of Place,
Managing and Measuring Value, Risk and
Climate Related Resilience, Performance
and Outlook, and Governance.

The OFR is covered specifically on pages
4 to 69. All non financial metrics included
in the Directors’ Report on pages 4 to 55
have been verified through our internal
verification process. The Remuneration
Report on pages 84 to 121 and the
Financial Statements on pages 126 to 191
have been audited by KPMG.

Reporting suite
Our reporting suite provides information
about the organisation and its key
financial and operational achievements
including:

• The Annual Report

Features information about Lendlease,
our strategy, integrated financial and
operational performance, corporate
governance, Directors’ Report,
Remuneration Report and Financial
Statements

• Biannual Results Presentation
The current reporting period’s
financial results and detailed segment
information for projects including major
urbanisation projects, investments
and pipeline

• www.lendlease.com

Includes additional information on
sustainability reporting, corporate
governance, tax compliance and
historical financial information.

Front cover:
Sydney: Darling Square
on Gadigal Country and
Wangal Country

This page:
Sydney: Victoria Cross on
Cammeraygal Country

Artist's impression1

Lendlease Corporation Limited
ABN 32 000 226 228
Incorporated in NSW Australia

Lendlease Responsible Entity Limited
ABN 72 122 883 185 | AFS Licence 308983
as responsible entity for Lendlease Trust
ABN 39 944 184 773 | ARSN 128 052 595

1. Artist’s impression of Victoria Cross, Level 29 Terrace. Artist’s impression and views are indicative only as at June 2021 and subject to planning and other approvals. Prospective
lessees should make their own enquiries as to surrounding developments, both current and future, including any impacts they may have on view lines from Victoria Cross.

Lendlease Annual Report 2021

Acknowledgement of Country
We acknowledge the Traditional Custodians of the land and pay our respect to
them and their Elders past and present.

As a business that works across many locations, we have a responsibility to listen,
learn and walk alongside First Nations peoples so that our activities support their
ongoing connection to their lands, waters, cultures, languages and traditions.

We value their custodianship of 65,000 years.

Contents

Lendlease presents its sixth integrated Annual Report to
communicate how our business operates, our competitive
advantage, and our performance and outlook.

The future is now. As the world continues
to navigate its way through the impacts of
a global pandemic, the way we live, work,
shop and interact is changing.

designing, delivering and curating places
for generations to come. Suitably, the
theme of this year’s Annual Report is
‘a sense of place’.

Increasingly, governments and customers
are looking to Lendlease to help reshape
and innovate places which provide
experiences.

As we put our best foot forward to
help communities thrive, we do so by

At Lendlease, we have five focus areas
that contribute to creating long term value
for our securityholders and the broader
community. Icons are used throughout
the report linking our activities to this
value creation.

A Year in Review
Chairman's Report

Global Chief Executive Officer's Report

FY21 snapshot

Our Business
Purpose, value creation and global presence

Strategy

Operating segments

A Sense of Place
Cities are the future

Digitisation

Milan Innovation District

Melbourne Quarter

Risk and Climate Related Resilience

Performance and Outlook

Governance
Board of Directors’ information and profiles
Remuneration Report

Directors’ Report

Lead Auditor’s Independence Declaration

Financial Statements

Other Information
Corporate directory

Securityholder information

Glossary

126

200

Managing and Measuring Value

Health and Safety
Financial
Our Customers

Our People
Sustainability

A sense of place

Lendlease Annual Report 2021 A Year in Review 5

A Year in
Review

Boston:
Clippership Wharf

The uncertainties and impacts of
COVID-19 (COVID) left no person,
community or country untouched.

Our results tell a story of a Lendlease
impacted by the pandemic, and that of
an organisation that continued to make a
positive contribution to the lives of people
across our regions, and to the planet.

These past 12 months were marked by
challenges and opportunities to learn.
However, we never lost sight of the very
reason we exist – our purpose.

We remained committed to finding the
best ways to create value and make a
difference. We won new projects, secured
new partnerships and delivered work
across our pipeline.

We took on some bold missions for the
sake of the environment and got well
underway to achieving our sustainability
targets. We also continued to build our
digital capability as we work to be the
best in the industry.

We did this with an uncompromised
approach to the safety, health and
wellbeing of our people and all those who
interacted with our places.

A sense of place

Lendlease Annual Report 2021 A Year in Review 7

Chairman’s
Report

As an international real estate
group operating in targeted
gateway cities globally, the
COVID pandemic continued
to significantly impact
Lendlease during the past
year. And many of the cities in
which we operate were forced
into extended lockdowns or
reentered lockdowns.

These challenging conditions had
a negative impact across our core
businesses in all regions. We have given
specific examples in the Annual Report of
how each of Development, Construction
and Investments have been impacted. In
the context of this environment, it is a
testament to both the resilience of the
Lendlease business model and the hard
work and dedication of our people across
the globe that your company achieved
solid operational and financial results
across its Core business.

Health and Safety

The health and safety of our people, our
subcontractors and the communities
in which we operate continues to be
our number one priority. Tragically, two
subcontractor fatalities on our sites
occurred during the period. This provides
a strong reminder of why we have such
an unrelenting focus on this most critical
aspect of our business. Our sincerest
condolences are extended to the family
and colleagues of the two men who lost
their lives.

The Board oversaw the ongoing review
and subsequent refinement to our Global
Minimum Requirements (GMRs). Each
member of the Board, as well as our people
globally, undertook mandatory training
to understand how the updated GMRs
support the continual improvement of the
safety environment at our workplaces.

Financial Result

Lendlease reported a Statutory Profit after
Tax of $222 million. This included a loss
of $181 million for the Non core segment,
driven by additional provisioning relating
to claims on historical engineering
projects. This disappointing outcome
reinforces the decision to exit the
engineering sector so Lendlease can
focus on areas of competitive strength.

Core operating profit of $377 million was
up substantially from $206 million in FY20.
Full year distributions of 27 cents per
security reflects a pay out ratio of 49 per
cent, which is within the Board’s stated
target range of 40 to 60 per cent of core
operating earnings.

The Group entered FY21 in a strong
financial position with a healthy pipeline
of work, cash and cash equivalents
of $1.7 billion and gearing of 5.0 per
cent. The strength of our balance sheet
positions Lendlease strongly as we
continue to navigate the COVID impacted
operating environment.

Executive Leadership Transition

A key priority for the Board this year was
the selection of a new Chief Executive
Officer to succeed Steve McCann after
more than 12 years in the role. Following
an extensive internal and external search,

The Board’s focus has been to guide the organisation
through a very uncertain operating environment
and assist management to advance the Group’s long
term strategic objectives.

the Board appointed Tony Lombardo as
Global Chief Executive Officer, effective
1 June 2021. Tony has more than 25
years’ global experience working across
real estate development, investment
management, finance and mergers and
acquisitions. This experience, including
roles at Lendlease as CEO Asia and Group
CFO, make him eminently qualified to
lead Lendlease into the future.

Tony commenced his new role with the
mandate to pursue the Group’s strategy
of leveraging our competitive advantage
in the development and delivery of large-
scale, mixed-use urbanisation projects
and growing the Investments platform.

Steve retired from the Lendlease Board
on May 31, 2021 following a 16 year
career with the Group. I’d like to take
this opportunity to acknowledge his
contribution. We’re now recognised as
a global leader in transforming major
precincts and his unwavering commitment
to operating in a safe and sustainable way
has left a powerful legacy.

During the period, the Board had
oversight of other executive leadership
changes. This includes the appointment of
new members to our Global Leadership
Team, bringing fresh ideas and new
perspectives. The Board is confident
these appointments, along with a revised
organisational structure, set Lendlease up
for future success.

Board program

The Board program, in addition to its
regular cadence of meetings this year,
expanded to reflect the broader range
of both operational and strategic issues
which required oversight.

The Board continued to maintain its
regular cadence of meetings during the
year. While some engagement activities
were restricted by the pandemic, other
parts of the program were able to be
maintained through the adoption of
technology. This enabled the Board to
engage in virtual programs in all four
operating regions – including site tours,
project reviews, interactive employee
roundtables, leadership discussions and
engagement with external stakeholders.
The Board firmly believes these activities,
in addition to our formal meetings, further
enhance our understanding of our people,
our business and activities and operations
within each region.

During the year, we continued to focus
on our program of Board renewal –
in particular, identifying a new Non
Executive Director with deep skills in our
core operating segments.

Executive Reward Strategy

In response to investor feedback on our
FY20 Executive Reward Strategy (ERS),
our planned review of remuneration
arrangements was significantly expanded.
The focus was to continue to evolve our
ERS with the business so that it supports
the future success of Lendlease while also
meeting the expectations of our investors.

In FY21, the Board established a working
group to thoroughly assess and examine
views of securityholders and other
external stakeholders. The review also
considered market practice, internal
perspectives as well as the strategic
priorities of the Group. The revisions to our
ERS were implemented from 1 July 2021
and incorporated these considerations,
including increased transparency of Board
decision making.

The remuneration package for the new
CEO has been reduced by 33 per cent
for unhurdled remuneration and 21 per
cent for total maximum remuneration
opportunity compared to the former
CEO. Other key amendments include
rebalancing the remuneration mix with
a higher proportion of remuneration
subject to performance hurdles. Features
that reflect the long dated nature of the
business, that is delivering a significant
proportion of remuneration in equity
that vests over an extended period, have
been retained. Further detail on the
Board’s deliberations is provided in the
Remuneration Report.

Notwithstanding the solid operational
and financial results across our Core
business, the Board recognises the
need for accountability in FY21 for the
further provisions relating to the legacy
Engineering business and the potential
business review outcomes that have been
announced in relation to the Development
portfolio that will be considered in FY22.
Accordingly, there were appropriate
reductions in the FY21 bonus outcomes
for accountable Executives, including nil
short term award to the former Group
CEO. Further, on behalf of the Board, I will
be taking a 20 per cent reduction in my
Chairman’s fee for the current year.

Sustainability

This year Lendlease launched a global
campaign, ‘Mission Zero’ to raise
awareness about our ambition to reach
Net Zero Carbon by 2025 and Absolute
Zero Carbon by 2040. These targets set a
global benchmark for our sector and we
are making a conscious decision to be a
leader in driving industry transformation
to limit global warming.

From a social sustainability perspective, the
Group also made meaningful progress to
achieve our target of creating $250 million
of social value by 2025. We have ‘shared
value’ partnerships across all regions,
focused on creating measurable social value
by addressing the needs of communities.

The recent commencement of the Milan
Innovation District (MIND) project
exemplifies how the Group incorporates
environment and social sustainability
into key decision making. The project is
targeting to be a zero carbon precinct
including 100 per cent renewable energy
and 95 per cent onsite recycling. The
project is also designed to generate social
value for the community, exemplified
by training and job opportunities for
previously incarcerated individuals.

The Board also proudly endorsed the
Group’s Reconciliation Action Plan which
achieved ‘Elevate’ status, and the 2020
Modern Slavery Statement.

Looking to the Future

The COVID pandemic has had, and continues
to have, significant ramifications for the real
estate markets in which the Group operates.
As a result, we expect FY22 to be another
challenging year for all stakeholders.

We are steadfast in our strategy and
confident that as global cities recover,
the underlying strength of our business
will prevail.

I would like to thank my Board colleagues
and the entire Lendlease team for their
continued dedication in navigating the
challenges of a global pandemic. Throughout
much uncertainty, the team has achieved
significant milestones that position us to
create long term value for securityholders.

M J Ullmer, AO
Chairman

A sense of place

Lendlease Annual Report 2021 A Year in Review 9

Global Chief Executive
Officer's Report

Lendlease has navigated a challenging year
in the face of the COVID pandemic.

I’m honoured to present my
first report as Lendlease’s
Global CEO. Upon assuming
the role, my first task was
to listen: to our customers,
investors, and our people.
Those interactions reinforced
my conviction in the
fundamental strength and
culture of the Group. However,
there is more we need to do
to unlock our full potential.

My commitment is simple: to create
value for all those that interact with us
and make a positive contribution to
society through the places we create.
Our first step is to simplify the business
and adopt a more consistent approach
across the organisation to provide better
transparency. This will help us identify
the areas that create the most value, and
importantly, those that do not.

This is the key to creating wealth for our
securityholders, who have endured a
difficult period.

Health and safety

Getting our people home safely each day
remains our highest priority. Tragically,
two employees of subcontractors lost
their lives on Lendlease projects during
the financial year. A partial roof collapse at
Curtin University in Perth and an accident

during elevator fit out works at the Setia
City Mall in Malaysia resulted in a loss of
life. We extend our deepest condolences
to the loved ones of both men.

For more than 20 years we have
transparently reported safety data across
any operation where we have a presence
around the world, regardless of who has
statutory responsibility. Given the nature
of recent incidents, we are sharing our
learnings and advocating to industry to
bring about lasting changes and credible,
transparent reporting.

In 2008, we introduced Global Minimum
Requirements (GMRs) to define the
Lendlease way for managing health and
safety. The application of our GMRs
has been reflected in an improved
safety performance review across the
past decade. But there is no room for
complacency. This year, we released
the fourth edition of our GMRs which
incorporates updated work practices,
lessons learned over the last five years,
and a specific focus on the mental health
and wellbeing of our people.

Financial performance

Lendlease reported a Statutory Profit after
Tax of $222 million, including a loss of
$181 million for the Non core segment and
$26 million of property revaluations in the
Investments segment.

Core Operating Profit after Tax rose by
83 per cent to $377 million while Earnings
per Security rose by 60 per cent to
54.8 cents for a Core Operating Return on
Equity of 5.4 per cent. While an improved
performance compared with the prior
year, the Core business continued to be
adversely impacted by COVID.

The Development segment experienced
production delays, with ongoing impacts
on leasing and sales across some of our
active projects. The lockdowns in London
affected the performance of our recently
completed residential for rent buildings
at Elephant Park. Nonetheless, several
key initiatives were progressed including
an investment partner being secured for
the first two residential towers at One
Sydney Harbour. These initiatives drove
an improvement in Development ROIC
to 7.2 per cent, although returns remain
below target levels.

Construction activity was constrained
by delays in the commencement of
new projects, site shutdowns and
lower productivity. The impact of social
distancing protocols across our sites
was reflected in a 16 per cent decline in
revenue compared to a 9 per cent decline
in hours worked. Despite pandemic
impacts, we delivered a solid result with
the EBITDA margin rising to 2.7 per cent.

The Investments segment generated
a return on invested capital of 5.9 per
cent, just below the target of 6-9 per
cent. Management earnings were
resilient, although returns on the Group’s
investment portfolio were also impacted
by disruption across underlying assets.

While our financial performance was
below target levels, we achieved
substantial progress on our strategic
priorities; a number of new development
projects and investment partnerships
were secured and a number of strategic
divestments completed.

Strategy

The cornerstone of our strategy is to
create value through the best urban
precincts in key global gateway cities.
Our strong track record in delivering best
in class placemaking and sustainable
outcomes has helped us be the global

urbanisation partner of choice and
underpins our goal for ongoing strong
growth in the Investments platform.

Our gateway cities strategy is simple, the
most desirable cities will continue to be
the driving force of economic, social and
cultural life. We have unique insights into
the likely evolution of the urban landscape
given our global reach and capabilities.

Through the places we design, build and
manage, we aim to create destinations
where people want to be and address
urban challenges.

Creating value for future generations

A decade from now the world will be a
very different place, with the impacts of
climate change even more evident. That’s
why the actions we take now have that
future very much in mind. The cities in
which most of us now live – including our
homes, the places we work and where our
children go to school – contribute about
40 per cent of global greenhouse gas
emissions. This means our industry has a
unique opportunity to act.

To support our industry leading carbon
targets, Lendlease is phasing out diesel
and gas and increasing our use of
renewable energy. Our Australian Building
business has provided carbon neutral
construction for three consecutive years
and 100 per cent of our construction
projects in Chicago are powered using
renewable electricity.

We are collaborating with supply chain
partners, tenants and residents to achieve
absolute zero carbon by 2040.

Business review

Shortly after commencing my role,
I initiated a wide ranging business
review. While it is yet to complete, some
preliminary findings have been reached.
Importantly, the Group’s strategy and
strategic priorities have been confirmed.

The work to date has been directed
towards the organisation and
management structure and a review of
the development operations.

The revised organisational structure is
designed to derive the full benefit of
being a multinational company with a

more consistent operating model across
all regions. This will facilitate the Group
in achieving its strategic objectives and
realise significant cost savings.

The review of the development portfolio
reaffirmed its underlying strength,
supported by a capital efficient business
model. However, a small number of
projects have been identified where
a material change in strategy is under
consideration. We expect both the
Group’s development production and
return targets to be met by FY24.

Outlook

FY22 is a reset year for the Group as we
face the future with a more streamlined
organisation, focus on our core strengths
and address COVID impacts that have
temporarily challenged the key tenet
of our strategy. As a result, we expect
core operating returns for both the
Development and Investments segments,
along with returns for the Group to be
below target.

Despite this, I am incredibly optimistic
about the future of the organisation. We
are a great company with placemaking
and origination capabilities that are world
leading. Our success internationally
is testament to our strategy and the
depth of talent we have developed and
attracted. I believe we will create lasting
securityholder wealth while delivering on
our commitment of leadership in health,
safety and sustainability.

On a final note, my thanks to our Board,
employees, customers, investment
partners, securityholders and financiers
for supporting Lendlease throughout
the year.

Tony Lombardo

Global Chief Executive Officer

A sense of place

Lendlease Annual Report 2021 A Year in Review 11

FY21
snapshot

Sydney:
Waterman’s Cove,
Barangaroo South
on Gadigal Country

$14.5 billion

work in progress

$222 million

statutory
profit after tax

Strategic
divestments

including sale of
Engineering, Services1
and US Telecommunications
and Energy businesses

Strong

financial position
– gearing 5%

Mission Zero
campaign

raising awareness of our
carbon targets

10% increase

in funds
under management

$3.8 billion
production

including
Melbourne Quarter;
Elephant Park, London;
845 West Madison,
Chicago. Below medium
term target of more than
$8 billion per annum.

$377 million

core operating
profit after tax

$3.7 billion

development of luxury
apartments in joint ventures
at One Sydney Harbour

Artist’s impression

Record low

critical incident
frequency rate,
sadly two fatalities

$8.4 billion

additions to pipeline

1. Conditional sales agreement signed on 21 July 2021.

Artist’s impression

A sense of place

Lendlease Annual Report 2021 Our Business

Our
Business

Melbourne:
Melbourne Connect
on Wurundjeri Country

Who we are

Lendlease is a globally integrated real estate group
with core expertise in shaping cities and creating
strong and connected communities.

For more than 60 years, we have created
thriving places. Safety is always our first
consideration, boldness and innovation
characterise our approach and doing what
matters defines our intent.

We work with purpose to design, build
and curate places where people want
to be and care about. In partnership
with stakeholders we generate social,
environmental and economic value to
cities and communities.

We have a proud legacy of creating award
winning urban and lifestyle precincts
and living options for many stages of life.
We have also been entrusted to create
essential civic and social infrastructure:
hospitals, life sciences centres, and
universities that contribute to a more
liveable, resilient and sustainable future.

Headquartered in Sydney, our people
are located in four operating regions:
Australia, Europe, the Americas and Asia.

Guiding our behaviours and underpinning our
code of conduct are our core values:

Respect

Collaboration

Integrity

Excellence

Innovation

Trust

A sense of place

London:
Elephant Park

Lendlease Annual Report 2021 Our Business

Purpose, value creation
and global presence

Our purpose

Together we create
value through
places where
communities thrive

Our focus areas
We have five focus areas that
create long term value. They
underpin our ability to create
safe, resilient, economic and
sustainable outcomes. Our
success is measured by the
value we create in these five
focus areas and can be found
throughout this report.

Our purpose is focused on forming
vibrant and enduring communities
which contribute to a more liveable and
sustainable future.

We have a proud legacy of creating great
places in select global cities. Decades
of experience in transforming urban
precincts has generated lasting economic,
social and environmental benefits.

The positive actions we take are driven
from an understanding that every decision

we make has an impact and must be done
in collaboration. We embrace a holistic
approach, working in partnership with
communities, governments and investors
to help solve some of the challenges
confronting people, cities and the planet.

Our contribution is measured by the value
created through safer, more sustainable
and profitable outcomes.

Health and Safety
Everyone has the right to go home safely. We remain committed to the health
and safety of our people and all of those who interact with a Lendlease place.

Financial
A strong balance sheet and access to third party capital enables us to
fund the execution of our pipeline and deliver quality earnings for our
securityholders.

Our Customers
Our customers love the places we create when we partner effectively,
collaborate and innovate. Only through these actions can we respond to
a changing world.

Our People
Our people are the greatest contributors to our success and enable us
to fulfil our purpose. Together we create value through places where
communities thrive.

Sustainability
Sustainability is core to our planning and clear in our outcomes. We have a
proud history of emphasising environmental, social and economic impacts.

San Francisco •
•
Los Angeles

Chicago •

• Boston
•
New York

• London

• Milan

Rome •

Globally and locally
committed to creating
resilient cities

Beijing •

Shanghai •

• Tokyo

Kuala Lumpur •

• Singapore

Perth •

Melbourne •

• Brisbane
• Sydney

Lendlease’s urbanisation led
strategy focuses on targeted
major ‘gateway cities’ around
the world.

Our urbanisation led strategy focuses on
17 gateway cities around the world. These
cities often contain sites well suited for
regeneration, playing to the breadth of
our skills. They are the locations where
we believe we can deliver the most value.
Our teams of locally based professionals
combine their property expertise and

capability with the scale of our global
platform to provide a truly enterprise
wide experience for our customers and
stakeholders. Following the rapid growth
in our pipeline in recent years, we now
operate in 15 of these cities, of which 10
feature our major urbanisation projects.

Our major urbanisation pipeline1

Americas

Europe

Asia

Australia

• Lakeshore East, Chicago

• Euston Station, London

• The Exchange TRX,

• Victoria Cross, Sydney

• 30 Van Ness, San Francisco

• Silvertown Quays, London

Kuala Lumpur

• Southbank, Chicago

• Milano Santa Giulia

• 1 Java, New York

• Milan Innovation District

• San Francisco Bay Area
project, San Francisco

• Elephant Park, London

• High Road West, London

• Deptford Landings, London

• Smithfield Birmingham

• Thamesmead Waterfront,

London

• International Quarter

London

1. Projects with an estimated end development value of more than $1 billion.

• Barangaroo South, Sydney

• Melbourne Quarter

• Brisbane Showgrounds

• Sydney Place

• Waterbank, Perth

• Victoria Harbour,

Melbourne

A sense of place

San Francisco: Google,
San Francisco Bay Area

Artist's impression

Strategy

Employ our placemaking expertise and
integrated business model in global gateway
cities to deliver urbanisation projects and
investments that generate social, environmental
and economic value.

Placemaking is in our DNA. Place is
about people's connection to a physical
environment and the experiences that
trigger both an emotional attachment and
a sense of belonging. The unique places
we create are carefully designed and
curated to meet the needs and aspirations
of the people who live, learn, work and
play there.

The cornerstone of the Group’s strategy
is to create the best urban precincts in
key global gateway cities. Our point of
difference emanates from our proven
expertise in delivering major urbanisation
projects through placemaking and our
integrated business model, backed
by financial strength. This is our
competitive edge.

Purpose driven

Our strategy is underpinned by an ethos
that long term value creation is maximised
by achieving social, environmental
and economic outcomes. This involves
collaborating with customers, investment
partners, governments and the
communities within which we operate.

A key differentiator from other industry
players is our end to end capability across
all aspects of real estate: from concept
and planning to design and delivery
through to funding and investment
management.

A proven track record of more than two
decades of creating large scale mixed use
urban precincts has enabled the Group to
deepen its expertise and sophistication
to become in our view, the preeminent
urbanisation specialist.

1. Conditional sales agreement signed on 21 July 2021.

Disciplined origination,
accelerated development

The trust placed in us by our customers
and partners to evolve the next generation
of urban precincts is reflected in our
origination success in recent years across
targeted international gateway cities.
The urbanisation platform has grown
substantially to comprise a portfolio of 23
major projects across 10 gateway cities,
and our total development pipeline now
stands at more than $110 billion. The Group
is targeting more than $8 billion of annual
completions over the medium term – near
double the historical completion rate.

The growth in the development pipeline,
investment in capability to execute at
scale and the resilience of the cities in
which we have a presence, provides
us with confidence in achieving this
outcome. However, while the impacts
of the pandemic will prevent this in the
short term, we expect the target to be
reached by FY24.

Global mindset

An enterprise wide approach will be
critical to achieving safe, sustainable
and profitable outcomes as production
accelerates.

Our global operating model, supported
by products and platforms, provides
a framework for implementing best
practice consistently, while empowering
our teams to lead and innovate. We are
investing with the longer term in mind by
creating digital capabilities to support our
strategic objectives.

Our partnership approach has driven
significant growth in the Investments
platform. Future growth will be

underpinned by the more than $50 billion
of investment grade product that we
expect to create from the development
pipeline. In addition, we have the
appetite and global capability to
launch new products alongside our
investment partners.

Increased focus

The Group’s human and financial capital
is increasingly being directed towards
leveraging the Group’s capabilities
across urbanisation projects and
the Investments platform. Strategic
divestments have supported the Group
in redirecting these resources. We have
exited the Engineering, Services1 and
US Telecommunications businesses.
Capital allocation to the Retirement Living
and Communities businesses has also
been reduced.

Resilient and flexible

Our strategy has been designed to
be resilient to an evolving market
environment. The business model,
supported by land management structures
across most projects, has the agility to
ride out market cycles.

We understand cities will need to become
more affordable, inclusive and sustainable
with a greater focus on transport links,
security and workplace flexibility. Our
placemaking skills are already adapting
to these challenges and the associated
changes in consumer, corporate and
government behaviour.

Our refreshed strategy focuses on
expanding and upweighting our
businesses that have the greatest potential
to drive securityholder value.

Lendlease Annual Report 2021 Our Business

Our refreshed strategy focuses on
expanding and upweighting those parts of
the Group that have the greatest potential
to drive securityholder value.

Strategic priorities

Accelerate
development

Best practice
construction
delivery

Leverage
competitive
edge

Scale
investments

Leadership in
sustainability

London:
International Quarter
London Pavilion

Artist’s impression

A sense of place

Lendlease Annual Report 2021 Our Business

Operating
segments

Int e

t e d Business M

ents
tm

s
e
v
n

Thriving
communities

m
e
n
t

We pursue an integrated business model – where two
or more of our operating segments of Development,
Construction and Investments engage on the same
project – to create new mixed use precincts, communities
and important civic and social infrastructure.

As an international real estate Group with a presence in targeted gateway
cities, the pandemic had a pervasive impact on operations in FY21. For more
information refer to the Performance and Outlook section on pages 56 to 69.

Constru c t i o n
Proven Trac k R e c

o r d

Development
The Development segment is
predominantly focused on the creation
of mixed use precincts that comprise
apartments, workplaces and associated
leisure and entertainment amenities. The
Group also develops outer suburban
masterplanned communities and
retirement living villages.

Capability

We manage the entire development
process – from securing land, creating
masterplans and consulting with
communities and authorities through to
project management, sales and leasing.

Placemaking is core to our strategy and
competitive position. We create places
that resonate with communities and
contribute to the quality and liveability of
our cities by working in partnership with
governments, institutions, landowners,
investors and the community.

Platform

$114 billion development pipeline

231 major urbanisation projects located in
ten global gateway cities

171 masterplanned communities located in
Australia and the US

More than 59,000 residential apartments
and 57 commercial buildings to be
delivered

Construction
The Construction segment provides
project management, design and
construction services, predominantly in
the commercial, residential, mixed use,
defence and social infrastructure sectors.

Investments
The Investments segment comprises
a leading investment and asset
management platform and the Group’s
investments across the residential, office,
retail, industrial and retirement sectors.

Capability

Our capability is showcased in the places
and structures we create – workplaces for
some of the world’s largest organisations
and residential apartments, including
affordable housing options, hospitals,
and other buildings of civic and social
importance.

An investment in smart design and
advanced manufacturing has improved
our safety, sustainability and efficiency,
including the ability to simulate all aspects
of construction, from design to structural
integrity and system performance.

Our Construction segment typically
designs and delivers the built form for
our urbanisation projects and will be
integral for the successful delivery of our
$114 billion urbanisation pipeline.

Platform

$15 billion construction backlog revenue

Key sectors include commercial, defence,
social infrastructure and residential

For decades we have managed funds
and assets for some of the world’s largest
money managers including sovereign
wealth funds and large public and private
pension funds.

Our expertise spans unlisted and listed
property funds and mandates. We offer
a research led investment capability
supported by active asset management
and leadership in sustainability. Our
competitive edge lies in the opportunities
provided to our investment partners to
access the diverse, high quality product
created through our integrated model.

Our development pipeline will provide a
key source of growth for the Investments
segment. Growth will be supplemented
by pursuing other opportunities with our
investment partners.

Platform

$40 billion funds under management

c.150 institutional investment partners

45 per cent of our larger projects
delivered for government clients

$29 billion of commercial and residential
assets managed

c.44,000 backlog of communities lots

31 per cent delivered for corporate clients

Significant owner and operator of
75 retirement living villages

1. Total of 49 development projects, comprising a total of 32 urbanisation projects and 17 communities projects.

Chicago:
The Cooper,
Southbank

FY21 segment
highlights

Development

Construction

Investments

$8.4 billion

additions to pipeline including
new urbanisation projects secured
in New York, Los Angeles,
Birmingham, Boston, Greater
Tokyo and Singapore

$8.8 billion

new work secured

$5.1 billion

new investment
partnerships to drive
funds under management

$5.6 billion

commencements

Completed
projects
Crown Sydney Hotel, Melbourne
Quarter residential and
commercial, Elephant Park
residential for rent

New
partnerships
Aware Super: New York
and Los Angeles,
Ivanhoé Cambridge: Boston,
CPP Investments: Milan,
NPS: Melbourne

$14.5 billion

work in progress

100%

renewable energy
across all Australian
building projects

GRESB

#1 ranked office fund, seven
funds ranked in the top 20

A sense of place

Lendlease Annual Report 2021 A Sense of Place

A Sense
of Place

London:
Elephant Park

Creating
the future

We create places where people
want to be and be a part of.

The pandemic has raised questions about
the future role of our cities, workplaces
and homes, and the way we shop, live
and interact. People are more discerning
about the experiences they want, and we
recognise the best places are created
when we take a human centric and
holistic approach.

We take the time to explore and
understand our projects, their history and
what will generate continual attraction.
We immerse ourselves in our local
environments and communities to best
understand their cultures, needs and
wants. In doing so, we are better able
to design, deliver and curate projects
that contribute value to the communities
they serve.

Sustainable places are in demand by
investors and customers alike, reflected
in a growing desire for wellness and
connection. The line between one’s
personal and professional life is blurring.

We create places that provide safe
havens rich in culture, inclusivity and
innovation that support healthier lifestyles
and generate social, environmental and
economic benefits. MIND and Melbourne
Quarter are two such projects. They
cater for the varying facets of life’s needs
today and into the future with advanced
technology, a diverse range of services
and integrated experiences for work,
living and leisure.

A sense of place

Lendlease Annual Report 2021 A Sense of Place

Cities are the
future

Cities are destined to
remain the centrepiece of
modern society.
They have been the
lifeblood of innovation and
advancement for millennia.
The value to society of people
interacting in close proximity
has cemented the dominant
role that cities play in the
global economy.

The future is about
workplace innovation
rather than remote
working.

Resilient cities adapt

To be sustainable and liveable, cities
of the future need to provide solutions
for numerous challenges. These
include: workplace innovation, carbon
emissions, climate change adaption,
housing affordability, social inclusion and
income inequality. To achieve desired
outcomes governments, organisations
and communities will have to work
collaboratively.

The striking difference during the current
pandemic has been the ability for large
sections of the labour force to work
remotely. The attraction of talent will be
key to organisational success, and talent
will be attracted to the most liveable cities
and desirable workplaces.

The past year has reinforced the need,
desire and benefits of social interaction,
collaboration and knowledge sharing.
The yearning for experience and human
interaction is clearly evident across
communities and workplaces as cities
reopen and societies recover. In essence,
people want to connect with other people
and places.

The benefits of agglomeration are as
compelling today as they have ever been.
Think London and New York’s finance
sectors, Milan’s high end manufacturing
and fashion scene and Silicon Valley’s
technology smarts.

The extensive social infrastructure and
amenities that cities offer make them
people magnets. Population density
enables the best educational institutions
and healthcare facilities as well as cultural
attractions such as museums, galleries
and theatres. The strong desire for
social interaction and experience spurs
vibrancy across the retail, tourism and
hospitality sectors.

Periodic challenges are inevitable

Disease has been the great scourge of city
life with terrible death tolls from periodic
plagues, influenza and other diseases.

The enforced lockdowns and isolation
from the COVID pandemic has thrown
the primary purpose of cities – that
is, interaction and collaboration – into
some disarray. Their very nature is being
challenged. COVID is having significant
ramifications for the way societies live,
work and play. This has been reflected
across real estate with workplace
occupancy, retail vacancy and, in some
cases, population decline.

Despite these and other challenges,
including crime, civil unrest and pollution,
cities have rebounded with their growth
largely unabated.

As the powerhouse of the modern economy,
cities account for more than 80% of global GDP
but only 55% of the world's inhabitants.1

Additional insights into our approach to
creating Place include:

Innovation districts and rethinking
workplaces3

Waterfront regeneration4

Transit oriented development5

This is the future workplace we are
planning for, one that is sustainable, agile,
connected, inclusive and digitised.

A greater range of living options are
required to enhance dynamism across
gateway cities. Higher density, done
well, will play a key role in improved
liveability, addressing issues including
affordability, congestion, sustainability
and social isolation. We have the
capabilities to offer apartments for sale
and rent in amenity rich environments that
provide experiences as well as access to
employment opportunities.

Our Melbourne Quarter project, the
regentrification of a site which sat
dormant for decades, is an example of
placemaking in action. A new vibrant
inner city precinct with a diverse mix of
workspaces, living, hospitality, retail and
green public realms, is being created.
Further detail on this project is provided
on page 28 of this report.

Thriving communities across
gateway cities

Our gateway cities strategy is founded
on the premise that the most desirable
cities will continue to be the driving force
of economic, social and cultural life. We
select cities with the most favourable
prospects for long term outperformance.
Indicators we monitor to assess and
rank the performance of cities include
economics and demographics, business
climate and capital market metrics, real
estate fundamentals and policy and
planning frameworks.

Our global reach and capabilities,
combined with our partnering approach,
provide unique insights into the likely
evolution of the urban landscape. This
offers scope to lead reinvigoration,
renewal and reinvention. Placemaking that
meets the needs of the local community
is our contribution to solving urban
challenges.

Our role is to select the cities that
outperform and create environments
that resonate.

Through the places we design, build and
curate, we aim to create destinations
where people want to be. Improved
liveability, environmental sustainability,
inclusion, affordability, connectedness,
wellbeing and a sense of community
are important elements we incorporate
to create Place. Our approach is
underpinned by leading safety and climate
policies, and the adoption of technology.

Workplace flexibility will be critical to
provide a compelling proposition for both
employers and employees. We expect
requirements for space to be replaced by
demands for ‘Place’ where the workplace
is centred on collaboration and innovation,
and health and wellbeing.

‘What is the city
but the people.’2

1. https://www.worldbank.org/en/topic/
urbandevelopment/overview#1
2. William Shakespeare (Coriolanus, Act III Scene I).
3. https://lendlease.cc/innovationdistricts
4. https://lendlease.cc/waterfrontregeneration
5. https://lendlease.cc/transitorienteddevelopment

A sense of place

Lendlease Annual Report 2021 A Sense of Place

Targeting
improved
efficiency

Targeting
cost
reduction
in project costs

Accelerating speed to market
We constantly challenge the way we do
things in search of a more efficient and
consistent approach. The implementation
of digital platforms is expected to improve
the timeliness and quality of decision
making by providing best practice
methodologies, frameworks and tools for
the entire project lifestyle.

One Lendlease Interactive (OLi), launched
into our Construction portfolio this year,
helps manage more than 230 projects1
and future business opportunities valued
at c.$60 billion. This project management
platform provides greater consistency
across our operations and the ability to
digitise discrete processes, such as our
investment risk analysis. It enables data
to be utilised more comprehensively and
therefore enhances our decision making.
Our agile development approach to
OLi caters to new functionality added
almost weekly.

Additionally, our digital solutions, such as
digital twin technology, are set to:

• Simplify and accelerate the built

form process

• Reduce project costs
• Enable us to design hundreds of

scenarios to develop and and assemble
a building.

Designing healthier assets
for people and the planet
Buildings and construction are responsible
for 38 per cent of all carbon emissions in
the world, with the operational emissions
of buildings accounting for 28 per cent.2

We are investing to create smarter,
more highly connected buildings. Digital
technology is used to monitor elements
such as air quality, waste consumption
and energy efficiency. The resulting
data insights provide the ability to test
designs to improve building performance,
including the abundance of natural light
and reduced carbon footprints.

At Barangaroo, we are testing innovative
and renewable energy resources:

• Solar panels integrated with a green roof
to improve energy efficiency and output
• Using maggots to process food waste

into animal feed and fertiliser.

At Milan Innovation District, data is
being collected on the materials we
dismantle and demolish. This enables the
monitoring of recycling and the use of the
circular economy.

More broadly, the connectivity features
of our buildings, combined with customer
focused wellness programs, enable the
delivery of wellness outcomes to our
customers. This year, Lendlease became
the world’s first owner of commercial
buildings certified with a WELL portfolio
rating from the International WELL
Building Institute (IWBI). We achieved
this at scale across a portfolio of buildings
totalling 569,216 square meters (6.1 million
square feet) and benefiting nearly
60,000 people.

Keeping people safe
Data insights allow us to simulate the
response of building fabrics to changes in
external conditions and identify risks prior
to the commencement of construction.
Using digital platforms, we model the safe
positioning of cranes, and identify hidden
risks and opportunities to assemble and
operate buildings according to our high
safety standards.

1. Includes origination opportunities, projects in bid,
conversion and delivery. 2. 2020 Global Status Report
for Buildings and Construction.

Digitisation

Digitising for a more connected, safer and healthier world
The slow adoption of digitisation in the real estate sector has
been a factor in poor efficiency outcomes. During the past
50 years, real estate productivity has declined by 19 per cent
compared to average productivity across all other industries
rising by 153 per cent.

As digital solutions emerge, Lendlease
is forging new design and operational
standards, processes and partnerships to
simplify the interdependencies in the built
environment.

Together with some of the largest and
best in class organisations such as Google
Cloud, Stora Enso and JCI we aim to
transform the property value chain by
harnessing collective knowledge through
digital technology and data insights.

Our new Product Development Centre
in Singapore is part of a wider digital
ecosystem of innovation that includes
centres in Silicon Valley and Sydney.

The foundations for long term
transformation are being assembled.
We anticipate this will deliver products
to market faster, and more sustainably
and safely, thereby creating value for
customers and communities.

To deliver on our targeted production of more than
$8 billion per annum, Lendlease is sourcing and developing
new tech skills, capabilities and digital solutions.

A sense of place

Lendlease Annual Report 2021 A Sense of Place

Milan Innovation
District

Artist’s impression

The future of placemaking is now
Milan Innovation District (MIND) is a 100 hectare mixed use redevelopment,
aiming to become a world leading science, knowledge and technology hub
with an estimated development end value of $3.6 billion.

Housed on Milan’s famed Expo 2015 site,
the design, construction and delivery
brings together the entire breadth of
Lendlease’s end to end capabilities.
It embodies our view on the future of
urbanisation: more sustainable, connected
and smarter.

Targeting
zero carbon
precinct

32
Innovation partners

Working Together
MIND is a public private partnership (PPP),
based on a 99 year concession agreement
– a first and major milestone for both
Milan and Italy. Together with investment
partner Canada Pension Plan (CPP)
Investments, the scope of works spans
about half of the precinct’s area, including
offices, laboratories, build to rent living,
retail, feature amenities and services, as
well as a creative hub.

In addition to the PPP, five public and
private institutions are driving the broader
precinct’s development. They will deliver a
new science campus for more than 18,000
students, a hospital with more than 500
beds, research centres, and a network of
68 civil society organisations.

Advancing the future

Our partnerships on the MIND project are
helping us realise the vision of establishing
an innovation district.

In February 2021, to cocreate discoveries in
technology and life sciences, we launched
the Federated Innovation™ ecosystem.
Including Lendlease, it now comprises 32
partners, more than 100 companies and
greater than 100 projects in the pipeline.

Together with other organisations such as
universities, research centres and private
companies, Federated Innovation™ acts
as an innovation developer, accelerating
ideas into new products, processes and
services available to all partners.

Creating Value
Sustainable, innovative and modern
design will be major features of MIND, in
line with our global target to be a 1.5°C
aligned company.

The district will be a city based on
people and placemaking

Technology will be present everywhere,
but invisible. We are creating buildings
that facilitate data driven insights for
more intuitive, responsive and consistent
experiences without the glare of screens
and gadgets. And our design approach
uses Design for Manufacture and
Assembly (DfMA) methodologies to
design and deliver more safely, quickly
and efficiently.

Improving the planet and people’s
health is our goal

MIND aims to be a zero carbon precinct.
The project has already made progress to
deliver this commitment with the selection
of its energy partners who are leaders
in their field of competence. A private
smart grid, as well as a new generation
low temperature and high efficiency
district heating and cooling network, are
being developed for the site. Renewable
electricity will come from a variety of
sources, including on site production from
solar panels.

Project timeline

First
commercial
spaces
commenced

Galeazzi
Hospital
completed

First
residential,
commercial
buildings
and retail
commenced

Life sciences
research
centre
completed

University of
Milan science
campus
completed

Project
completion

FY32

Project
secured

FY19

Artist’s impression

Targeting digital
ecosystem of
autonomous buildings

“MIND represents an excellent opportunity for
CPP Investments to extend our relationship with an
experienced existing global partner.”

Andrea Orlandi, Managing Director, Head of Real Estate
Investments – Europe, CPP Investments

MIND will host
60,000 people
living and working,
with over 1,000
apartments for rent.

Establishing a thriving community
All buildings targeting minimum LEED Gold

Precinct to be powered by 100 per cent
renewable energy

Targeting 95 per cent of construction
waste recycled

Existing buildings refurbished where possible

Assessed and adapted for climate
change resilience

Training and jobs program established
in partnership with the Italian Ministry
of Justice to support inmates with
opportunities in the real estate sector

Codesigning spaces with local students

Urban Impact Fund created to foster
solutions for greener, healthier living

A sense of place

Lendlease Annual Report 2021 A Sense of Place

Melbourne
Quarter

Melbourne:
Melbourne Quarter on
Wurundjeri Country

Artist’s impression

FY13

Secured

FY26

Expected
completion

Melbourne Quarter. Something for everyone.
Designing customer driven solutions provides the opportunity
to secure the best projects, deliver on stakeholder needs and
ultimately create places where communities thrive.

Melbourne Quarter, once a transport and
industrial hub known as Batman’s Hill,
sat dormant for decades. In partnering
with Development Victoria a new, vibrant
inner city precinct, with a diverse mix of
workspaces, living, hospitality, retail and
green public realms, is being created.

Set to house approximately 3,000
residents and 15,000 workers, our vision

is to establish a connected place where
innovation and businesses thrive, visitors
are welcome and residents feel at home.

Designing and creating such an
experience requires a close understanding
of all stakeholder needs, responding
to them and working together to
generate value.

c.150,000sqm of commercial office space
across three towers, two residential towers
with c.1,500 apartments and 40 retail shops
once complete.

"Being a health company it’s a priority that we support our people in
achieving good health and wellbeing. This focus is central to our new
office and at the heart of all design elements. It will be a place for
concentration, collaboration and connection."

Kylie Bishop, Medibank Group Executive People and Culture

$3 billion

Total estimated development
end value of which
43% is complete

Working together
With our customers in mind – government,
investors, tenants, residents, retailers
and visitors – Melbourne Quarter is
transforming into one of the city’s largest
mixed use urban regeneration precincts.

Responding to the community

Designing and creating a place requires
a close understanding of the people who
will want to be there. Melbourne Quarter
reflects what our customer’s value:
culture, convenience and nature.

Drawing on our extensive placemaking
capability, we introduced laneways to link
the precinct to Southern Cross Station,
the city’s most connected transport hub;
preserved and integrated an 1890 heritage
listed wall; and have created green space
with a Wi-Fi enabled public sky park
suspended above Collins Street.

For greater inclusivity, we partnered
with Summer Housing on East Tower,
designing ten apartments for people with
high physical support needs. A major art
program was also introduced, generating
c.$13 million in social value.

Aligning with investment partners

Workplaces and residential buildings
within the precinct are being delivered
in partnership with investors attracted
to sustainable real estate with superior
amenities and connectivity. They include:
Mitsubishi Estate, Aware Super, National
Pension Service of Korea (NPS) and
Lendlease’s Australian Prime Property
Fund Commercial.

Understanding tenant priorities

Blue chip tenants from a range of
industries have been enticed by our
knowledge and expertise in placemaking.
Our offering of premium and A grade
office towers, superior transport
connectivity, retail and wellbeing
amenities has attracted customers such
as Arup, AMP, EnergyAustralia, and
Medibank across the three towers.

The precinct is set to deliver a diverse
range of services including an exclusive
commercial tenant experience platform
and a boutique wellness hub including
childcare and allied health services.
Coworking and flexible spaces cater to
the aspirations of customers wanting
to maximise the health, collaboration,
connectivity and creativity of their people.

Creating value
Melbourne Quarter’s centralised location
and amenities benefit workers wanting
easily accessible public transport and
diverse workspaces; residents seeking
local cafes and open space at their
doorstep; and blue chip tenants attracting
employees to a highly connected space.

Strong leasing on
completed towers
Tower 1: 99% leased
Tower 2: 97% leased

15,000
construction jobs

Establishing a thriving
community
Melbourne Quarter has sustainability and
connectivity at its core. It is delivering
smart solutions across the built form
and operations, positively impacting
the health, wellbeing and lifestyles of
residents and visitors. The precinct
features some of the highest sustainability
ratings achievable.

More than 50 per cent of space is green
and publicly accessible

Precinct wide flexible coworking
workspace

Walk Score rating of 100 per cent, 6 Star
Green Star Design & As Built ratings for
1MQ and 2MQ and a 5.5 Star NABERS
Energy Base Building rating for 1MQ

6 Star Green Star Communities award

A sense of place

Lendlease Annual Report 2021 Managing and Measuring Value

Managing and
Measuring
Value

Maroochydore,
Queensland:
Sunshine Plaza
Shopping Centre
managed by Lendlease
on Kabi Kabi Country

Australia’s largest
high ropes course

Our five focus areas
of value creation.

We measure our success by
the positive outcomes we
generate over the long term
through five focus areas.

These underpin our ability to create safe,
sustainable and economic outcomes for
our customers, partners, securityholders
and the community.

While we approach our focus areas with
an innovative mindset, our decisions are
supported by disciplined governance and
risk management.

Health and
Safety

Financial

Our
Customers

Our
People

Sustainability

A sense of place

Lendlease Annual Report 2021 Managing and Measuring Value

Our five focus areas
of value creation

Area of focus

Material issue

How we deliver value

Value created

How we measure value

Health
and Safety

Financial

Our
Customers

Our People

Operating safely across our operations
and projects. Maintaining the health and
wellbeing of our employees and those who
engage with our assets and sites

We are committed to the safety of our people
and those who interact with our assets and sites.
Through our Global Minimum Requirements
(GMRs) we operate to a consistent standard across
all operations. These GMRs extend to physical
safety and people’s mental health and wellbeing

Operating safely helps people feel valued
and cared for and fundamentally makes us
more consistent, reliable and efficient in
everything we do

Percentage of projects with no critical incidents: A critical incident is an
event that has the potential to cause death or permanent disability. This is
an indicator unique to Lendlease

Critical Incident Frequency Rate: A Lendlease indicator measuring the rate
of critical incidents

Lost Time Injury Frequency Rate: An indicator and industry standard
measuring a workplace injury which prevents a worker from returning to
duties the next day

Delivering securityholder returns. Maintaining
strong capital management to support
ongoing investment in our future pipeline

We deliver returns to our securityholders and
adopt a prudent approach to capital management
with a view to maintaining a strong balance sheet
throughout market cycles

Margins, fees and ownership returns across
Development, Construction and Investments.
Our Portfolio Management Framework sets target
guidelines for how we manage our portfolio

Core Operating Return on Equity: The annual Core Operating Profit after
Tax attributable to average securityholders’ equity throughout the year

Core Operating Earnings per Security: Core Operating Profit after Tax
attributable to Securityholders divided by the average number of securities
on issue during the year

Understanding our customers and responding
to changes in the market. Designing and
delivering innovative, customer driven
solutions to win the projects we want to win
and ultimately deliver the best places

Embedding a process of continuous improvement
based on customer insights and actions identified
through market research. This approach also
consistently measures customer satisfaction
and advocacy

Evolves our ability to improve the customer
experience, building our brand and reputation,
enabling us to win more work and grow our
business. Customer feedback also provides
greater insight into product development and
innovation opportunities

Customer satisfaction and advocacy tracked: Measured at the regional
and business unit level and reported regularly to our Global Leadership
Team and the Board. Action plans are developed to drive continuous
improvement in the customer experience, supporting the delivery and
growth of our development pipeline, construction backlog and funds under
management

Attracting, developing and retaining diverse
talent. Ensuring we have the right capability
across the organisation to deliver results for
all stakeholders

We attract, develop and retain diverse talent by
building a culture of collaboration and continuous
learning where successes are recognised and
people are rewarded. We invest in developing
leaders and capabilities to drive our success

Capable and motivated people committed to
the long term success of our business. Effective
succession planning and leadership transitions
support business continuity and can reduce
risks. Diversity of thought and experience can
support innovation, knowledge sharing and better
decision making

Retention of key talent: The organisation benefits from its investment in
leaders and key workforce capabilities

Succession strength: Demonstrates depth of capable talent ready to
progress into leadership roles

Leadership positions held by women: Demonstrates our broader
commitment to diversity and inclusion and our objective of increasing
female representation across our business

Sustainability

Designing, delivering and operating
buildings and precincts that respond to
the immediate challenge of reducing
carbon emissions while creating social
value. Meeting the increasing expectations
of key stakeholders for climate resilient
assets that support human health and value
natural capital

As a signatory to the United Nations Global Compact,
we are committed to the continuous improvement of
our operations. We integrate strategies to mitigate
the impact of climate change. For example, as a
developer Lendlease is committed to the creation
of independently rated green certified buildings and
precincts and climate resilient communities. We aim to
deliver inclusive, healthy and adaptable places that can
thrive through change

Recognised leadership in sustainability enhances
our brand and is a competitive differentiator. It
also provides more opportunities to partner with
governments, investors and the private sector
who are placing increasing importance around
Environmental Social Governance (ESG) matters

Measurement of, and reporting on our progress towards our sustainability
targets and the tangible examples of the ways in which we are addressing
our sustainability imperatives

Carbon Target: We are a 1.5ºC aligned company:

• Net Zero Carbon Scope 1 and 2 by 2025
• Absolute Zero Carbon by 2040

Social Target: Create $250 million of social value by 2025

A sense of place

Lendlease Annual Report 2021 Managing and Measuring Value

Health and
Safety

A sense of place –
a safe one

Our highest priority is
ensuring our employees,
subcontractors, and all those
who interact with our places
return home safely each day.

Key performance insights

Operations without a Critical Incident1

FY20

FY21

91%

94%

Critical Incident Frequency Rate2

FY20

FY21

0.70

0.66

Lost Time Injury Frequency Rate3

FY20

FY21

1.5

1.8

Safety metrics
Lendlease has achieved further
improvements against some of our key
safety metrics. Despite this, it is with
much sadness that we report two fatalities
on two of our operations in FY21.

In October 2020, a subcontractor working
on our Curtin University project in Western
Australia was involved in a partial roof
collapse and died from his injuries. In
November 2020, an elevator fit out

subcontractor was fatally injured within the
lift shaft on a Lendlease project in Malaysia.

As is our practice, following both
incidents an independent organisation
was appointed to conduct an investigation
to understand the factors involved and to
independently verify the application of our
Global Minimum Requirements (GMRs).

Our thoughts continue to be with the
families of these two workers and
everyone impacted by these tragic events.

Learning from incidents
Getting our people home safely each
day is our highest priority. Anything less
is unacceptable.

To learn from any serious incident and
work to prevent any repeats we address
the findings and recommendations from
any independent incident investigations
and work with internal and external
designers, engineering consultants
and supply chain partners to improve
design, to mitigate risk and apply
improved quality assurance processes.

The incident in Malaysia occurred when
a worker was accessing the external
side of an elevator car to install the
interior handrail. In response:

• Lendlease issued a global EH&S

alert across all operations to prohibit

the procurement of elevator cars
requiring external access for handrail
fit out

• Our third party provider now

prohibits designs that require external
access for lift car handrail fixation.
In addition, through our collaboration
they will now provide external
reporting of workplace fatalities in
their annual Sustainability Report

• Lendlease has added ‘elevator
installation/fit out’ to our list of
acute high risk activities in the 2021
GMRs that require independent third
party review of the proposed work
methodology.

We continue to share our learnings with
the broader elevator and construction
industry to drive improvements in design
and installation methods and processes.

Benchmarking industry reporting

d
n
a
s
n
o
s
r
e
p
f
o
e
g
n
a
r
g
n
i
s
a
e
r
c
n
I

s
c
i
t
s
i
t
a
t
s
n

d
e
d
u
c
n

s
o
i
r
a
n
e
c
s

Increasing range of safety reporting
data publicly available

Transparent reporting
Consistent performance data

Includes all business scenarios

Basic/standard reporting
Inclusion of industry metrics

Unclear which persons or
scenarios included

No safety reporting
70 ASX200 companies4

Included in Lendlease safety
reporting data, including fatalities

Employees

Consultants

Contractors

Subcontractors (incl. labour hire)

Visitors

Members of the public

All businesses in all operating
geographies

All operations regardless of
contractual or statutory health
and safety responsibilities

Yes

1. A Critical Incident is an event that caused or had the potential to cause death or permanent disability. This is an indicator unique to Lendlease. 2. The Critical Incident Frequency
Rate (CIFR) is calculated to provide a rate of instances per 1,000,000 hours worked. 3. The Lost Time Injury Frequency Rate (LTIFR) is calculated to provide a rate of instances per
1,000,000 hours worked. 4. Australian Council of Superannuation Investors (ACSI). Safety in Numbers: Safety Reporting by ASX200 Companies (September 2020).

Empowering our people with tools at their fingertips.
At Lendlease, when it comes to safety, we’re all in.

We have invested in the latest technology
to empower our people to make good
decisions around safety, in the moment,
to prevent incidents from happening.

gives all employees across Lendlease on
demand information on how to apply the
GMRs to workplace activities across the
project lifecycle.

Safety at Lendlease (S@L)

Enablon

A 2019 PwC Culture & Climate survey
identified the need to find new and
interesting ways to engage our people
around the GMRs. Utilising the latest
in artificial intelligence technology and
our existing communications platform of
Microsoft Teams, our new chat bot S@L

First launched in 2016, our Enablon Go
mobile app makes it easy for anyone
at Lendlease to take safety reporting
into their own hands and record safety
observations as and when they happen.

In FY21, we passed 1 million
observations via a mobile device.

Showing care through
continuous improvement
We believe that a place that cares is a safe
place to work and we’ve gone to great
lengths to embed a culture of care across
our organisation.

Our 2021 GMRs

Our GMRs are our high standard
framework for how we manage
environmental, health and safety risk
across our business. In FY21 we launched
the fourth edition, our 2021 GMRs, which
incorporate updated work practices,
lessons learned over the last five years
and have a greater focus on the health and
wellbeing of our people.

We show care through the application of
our GMRs from origination, so our people
know when they come to an operation
they are coming to work at a safe place.

EH&S Passport

To help employees understand how to
apply the 2021 GMRs, Lendlease launched
new online mandatory training called
EH&S Passport. The training reinforces
the role we all play in safety, emphasising
the everyday decisions we make and how
they impact the safety of others.

95 per cent of our global workforce
completed the EH&S Passport within
90 days of launch

Supporting our people
through COVID and beyond
Recognising the potential impacts of the
pandemic on our people, we invested in
the development of Mental Health First Aid
skills and actively embedded our program
into the organisation's culture. One of
the ways we did this was by emphasising
wellbeing in performance conversations.
This investment was particularly important
in construction, knowing workers in this
segment are six times more likely to have a
mental health illness.

800 employees trained as Mental Health
First Aiders across our global network

Gold Australia awarded top status as a
Skilled Workplace with Mental Health
First Aid (MHFA) Australia

Certified as Global Healthy Workplace
for the third time

Silver Asia received accolade in
workplace safety at 2020 Workplace
Safety and Health awards

Gold Europe topped the 2020/21
Workplace Wellbeing Index

Lendlease Hardship & Wellbeing Fund

Our Hardship & Wellbeing Fund was
created in 2020 to help employees
experiencing genuine hardship due to
the impacts of COVID or other reasons.
To date, around $4.5 million has been
distributed across our regions.

In some areas of Lendlease, the impacts
of the pandemic have been particularly
hard. In 2021, we utilised the Fund to
make a one-off payment to a number of
our frontline and customer facing workers
who went to great lengths to support our
customers during the pandemic.

The Fund addressed the immediate
financial need, but we want to set our
people up for success in the long term.
In FY21 we engaged with our partners to
deliver financial wellness education via
a series of webinars to equip our people
with the tools and knowledge to make
informed financial decisions.

A sense of place

Lendlease Annual Report 2021 Managing and Measuring Value

Financial

A sense of place –
profitable

Our approach to
financial performance
The Portfolio Management
Framework provides structure
and financial discipline across
the operating segments of
Development, Construction
and Investments.

In line with our refreshed strategy
announced in August 2020, the
framework is designed to maximise long
term securityholder value via: a diversified
risk adjusted portfolio; leveraging the
integrated model; and the financial
strength to execute the strategy, including
an investment grade credit rating.

Financial strategy
The Portfolio Management Framework
is the core of our financial strategy. This
framework sets target guidelines and is
designed to:

• Maximise long term securityholder
value through a diversified, risk
adjusted portfolio

• Leverage the competitive advantage of

our integrated model

• Optimise our business performance

relative to the outlook for our markets
on a long term basis

• Provide financial strength to execute
our strategy, maintain an investment
grade credit rating and sustain
capacity to both absorb and respond to
market volatility.

During FY21, the ongoing impact of
COVID has impacted the Group’s ability to
deliver on certain aspects of its Portfolio
Management Framework objectives. For
more detailed COVID financial impacts,
refer to page 59 of the Performance and
Outlook section.

Sydney:
Sydney Place on
Gadigal Country

Artist’s impression

Kuala Lumpur:
The Exchange, TRX

Artist’s impression

How we measure financial
performance
When measuring financial performance,
we focus on Return on Equity and
Earnings per Security to measure the
returns we achieve for securityholders.
The Portfolio Management Framework
outlines target returns at a segment level.
These returns are used to derive a Group
Core Operating Return on Equity target
within the 8 to 11 per cent range, and Core
Operating Earnings per Security is used to
make distributions within the 40 to 60 per
cent payout ratio target.

The Portfolio Management Framework
reflects the revised strategy and the
change in primary earnings metric from
statutory profit to operating profit. As
a result of this change, both the target
EBITDA mix and the target distribution
payout ratio are based on operating profit.
The Investments ROIC target has been
revised to 6 to 9 per cent to reflect the
adoption of the operating profit metric.
See Note 1 ‘Segment Reporting’ in the
Financial Statements for more details on
Operating profit.

Detailed financial
performance and outlook
For detailed information on our FY21
financial performance as measured
under the Portfolio Management
Framework, refer to the Performance
and Outlook section on pages 56 to
69 and the Financial Statements on
pages 126 to 191.

Green bonds
In June 2019 we announced our new
Sustainability Framework including
the Lendlease Sustainability Finance
Framework. This framework focuses
on efforts to support our ambitious
sustainability targets and is aligned to the
International Capital Markets Association
Green Bond Principles.

To help deliver on our sustainability target,
the Group raised a $500 million seven
year fixed rate green bond in October
2020 and a further $300 million ten year
fixed rate green bond in March 2021, to
become the largest non bank ASX listed
issuer of green bonds.

The proceeds of the bond issuance
will be focused on green buildings and
earmarked to eligible projects across
Lendlease’s global portfolio of 23 major
urbanisation projects. The delivery of
these buildings will drive a number of
initiatives, with benefits ranging from the
lowering of carbon emissions, reducing
the environmental impact of materials
and the delivery of health and wellbeing
benefits. These benefits will support the
Group’s two new sustainability targets
announced in the prior year and reflects
the Group’s commitment to:

Portfolio Management
Framework

1. Invested Capital Mix

Development

40-60% (<50%)1

Investments

40-60% (>50%)1

Australia

International regions2

40-60%

10-25%

2. Core Business EBITDA Mix3

Development

Construction

Investments

3. Target Returns

40-50%

10-20%

35-45%

Core Operating ROE

Development ROIC4

8-11%

10-13%

Construction EBITDA Margin 2-3%

Investments ROIC4

6-9%

4. Capital Structure

• Net Zero Carbon for Scope 1 and 2

Gearing5

10-20%

emissions by 2025, and Absolute Zero
Carbon by 2040

• Delivering $250 million of measured

social value by 2025.

Refer to the Sustainability section of
Managing and Measuring Values for
more details.

Investment grade credit rating

5. Distribution Policy3

Distribution payout ratio

40-60%

1. Reflects strategic direction. 2. Per region.
3. Core operating profit based measure.
4. Return on Invested Capital (ROIC) through
cycle target based on rolling three to five year
timelines. 5. Gearing definition: net debt to
total tangible assets less cash.

A sense of place

Lendlease Annual Report 2021 Managing and Measuring Value

Our Customers

A sense of place –
where customer experiences
and relationships matter

Our customers range from
individuals to the largest
government, investment and
corporate organisations.

We have the depth of expertise,
opportunity and understanding of our
customers to attract new partners and
customers and retain those who invest in
or visit our places again and again.

B2C: Business to Consumer

23%

of purchasers to date
in Residences Two of
One Sydney Harbour are
repeat Lendlease customers

Increase in
customer loyalty

More than 160 million residents and
visitors interact with Lendlease every
year. We conduct regular research to
understand what is important to them
to both improve their experience with
us and help shape our communities and
precincts.

Overall, our loyalty measure, Net Promoter
Score (NPS), increased slightly and
customer satisfaction, CSAT, was steady
this year. EODB (Ease of Doing Business),
a new measure introduced, achieved
a strong result. We interpret these as
positive outcomes given the challenging
global environment, including COVID
and political uncertainty in some regions.
Common themes around people, project/
asset quality, the delivery process, safety
and sustainability dominated feedback.

We value the impact of our actions at
every customer touchpoint. Regardless of

the project, region or stage of customer
engagement, we aim to provide best
practice solutions, in demand amenities
and a consistent, positive experience.

With a pipeline of more than 59,000
apartments in our global residential
portfolio1, repeat purchasers are an
indication of success. We recently
launched our second residential tower
at One Sydney Harbour with 23 per cent
of sales to date from existing Lendlease
customers. As part of this sales process,
we piloted an online reservations'
platform for customers to directly reserve
a selection of apartments.

In response to changing customer
expectations, we also extended our digital
solutions this year to execute a unique
interactive launch for TRX Residences
at The Exchange TRX in Kuala Lumpur,
offering virtual encounters and viewings.

1. Backlog of residential units across our urbanisation projects.

"High-quality assets that contain strong sustainability aspects
is what attracts us to companies such as Lendlease as we
seek to diversify our property portfolio globally."

Alek Misev, Portfolio Manager, Aware Super

B2B: Business to Business

2/3

of third party capital is held
by our top 10 investors across
the funds' platform

$3.1 billion

committed in
third party capital

Our B2B relationships span partnerships
with organisations, not for profits,
c.16,000 suppliers and a range of
institutional investors across funds,
mandates and managed assets.

We work with and for businesses across
all our operating segments. Within our
Investments platform our top 10 investors
account for two thirds of third party
capital. They consist of some of the world's
largest pension and sovereign wealth
funds such as Canada Pension Plan (CPP
Investments), Mitsubishi Estate, GIC,
APG, NPS, Aware Super and HostPlus.

In FY21, we introduced Ivanhoé
Cambridge to the platform by partnering
on a life sciences project in Boston.
Additional investments were also secured
with Aware Super, CPP Investments, NPS
and Mitsubishi Estate.

Expanding existing relationships with
established, large partners remains

a priority. Having already founded a
residential partnership with Aware Super
in the Americas, they recently became our
joint venture partner on an additional two
development projects in New York and
Los Angeles. They also acquired a 25 per
cent stake in our Australian Retirement
Living business.

Aware Super and Lendlease share a
philosophy that those entrusted with
creating and managing the built environment
have immense capacity, and an obligation,
for doing good. Leadership in responsible
property investment and creating value
for residents and investors was a founding
principle on inception of the partnership in
2018. This year, the US residential portfolio
in Chicago and Boston was verified net zero
carbon and the Retirement Living business
ranked first in the Global Real Estate
Sustainability Benchmark (GRESB).

B2G: Business to Government

B2G customer relationships connect with
all tiers of government to collectively
shape cities and places and support
economic growth.

complete the Javits Center expansion
that operated as a COVID field hospital
and the largest vaccination centre in the
United States.

Our diverse capabilities cover numerous
project types across a diverse range of
sectors including education, residential,
civil infrastructure and healthcare.

In Australia, we have been entrusted to
deliver crucial health infrastructure, with
state government healthcare projects
currently under construction or in planning.

During COVID, we have been applying
our award winning expertise in the
health sector to help manage health
and economic impacts. Working both
directly and indirectly with governments,
we are constructing or upgrading a
mix of hospitals, pharmaceutical labs,
vaccination hubs and life sciences
and research centres across our
operating regions.

In Asia, we are currently engaged
in conversations with Singapore
authorities to attract new investments
into the country’s life sciences sector
given our expertise in delivering major
pharmaceutical manufacturing facilities
to the region. In New York, we worked
closely with the local government to

Construction milestones were achieved
at the health, research and education
precinct at Randwick Campus that has
employed a workforce of more than
1,300. The business was awarded the
main works contract for Tweed Valley
Hospital and the second stage of work for
the Caboolture Hospital Redevelopment
Project in Queensland.

In addition, we are the preferred builder
for 120 new mental health beds across four
acute mental health facilities in Victoria.
To meet the government’s aspirations to
deliver these much needed facilities, an
expedited modular construction delivery
model was developed.

Sydney: Randwick campus on
Gadigal Country and Bidjigal Country

45% major construction
backlog, representing
$5.7 billion with
government

A sense of place

Lendlease Annual Report 2021 Managing and Measuring Value

Our People

A sense of place –
inclusive, diverse and
talented

Our people are the greatest contributors to our success and enable us to fulfil our
purpose. Together we create value through places where communities thrive.

FY21 was a challenging year as we adapted
to new ways of working. Supporting our
people during the pandemic has been our
priority. From enhanced communications
and technology enabling remote work to
providing additional funding for frontline
workers (see Hardship & Wellbeing Fund
on page 35), we are invested in the health
and wellbeing of our people.

10,825
Employees globally1

To deliver our refreshed business strategy
we need to attract, retain and invest in
our people to have the right capabilities
to succeed into the future. We aspire to
create a work environment that:

• Cares for its people, with safety and

wellbeing our priority

• Provides inspirational leadership with a

clear direction for the future

• Is team oriented, inclusive and diverse
• Fosters a culture aligned to purpose and
values that drives the way we operate
with each other and creates a sense of
belonging.

To support our aspirations our people
strategy has focused on engaging our
leaders and developing leadership
excellence. We are working to foster
an enterprise first mindset and sharing
knowledge globally.

Developing and deploying
key talent
As we accelerate the delivery of our
global pipeline of projects, we continue to
invest in the development of our people’s
capabilities.

This year we launched our Leadership
Excellence Program aimed at driving
leadership engagement and providing
our leaders with the right capabilities to
inspire and lead our people. We have
continued to invest in the development
of key talent through our Construction
Director and Project Director talent
programs, which shifted to virtual delivery.

In FY21, our pipeline of successors for key
leadership roles, along with the number of
women in our succession pool, increased.
For senior executive positions, we have
a target of three unique successors and
in our FY21 talent and succession review,
79 per cent of senior executive positions
met this target.

Retention of key talent has been challenging
in the current operating environment. In
FY21, we achieved a retention rate of 87
per cent, slightly below our target of 90 per
cent or higher. We see this as an ongoing
risk into 2022 as border restrictions
continue to impact the mobility of talent.

Succession strength2

FY20

FY21

75%

79%

Leadership positions
held by women3

FY20

FY21

26.9%

29.9%

1. As at 30 June 2021. 2. For all senior executive
positions, we have a target of three unique
successors. We define this as succession strength.
3. Leadership roles include a number of levels in the
Lendlease Career Job Framework, including executive
level roles.

Engagement scores compared to country benchmarks

Engagement score (May 2021)

Country benchmarks (median to top quartile)

Global benchmarks (median to top quartile)

Lendlease
Group

Australia

Americas

Italy

China

Japan

Malaysia

Singapore

100

Employee experience
Teams are at the heart of our listening
strategy and help us to understand the
environment and experiences we are
providing our employees. These insights
help us to be responsive and provide our
leaders with key actions to support our
employees to thrive.

In our most recent People Survey, we
achieved an employee engagement result
of 62 per cent. At the global level this
falls below the median and top quartile

benchmarks and is a concern for us,
however, we see substantial variance
between countries and their respective
benchmarks. In our four largest operating
markets, we are performing above the
country median, with the UK towards top
quartile scores.

Consistently our highest performing area
in the survey is Safety which is pleasing.
To improve our engagement result our
people have told us we need to provide
more visible career development and

pathways. This will form a key part of our
People Strategy next year.

Further demonstrating our strong culture
of care, our most recent results also
showed that employee perceptions of
their manager providing support through
COVID increased.

Supporting our managers and employees
through these challenging times remains
a key focus for us as we deliver on our
$114 billion pipeline.

Diversity and inclusion
Lendlease has a diverse global workforce
and we have made great progress in
improving our diversity areas of focus,
but we still have work to do. We are
committed to creating a workplace that
unites diverse minds, where respect,
equal treatment and equal opportunity
are the norm. Aligned with our Modern
Slavery Statement, this helps us to act
with integrity in our business relationships.

In FY21, to strengthen our culture of
inclusion, we focused on unwelcomed or
intrusive language and behaviours, many
of which are influenced outside of the
workplace. We understand the importance
of psychological safety and have further
invested in the ongoing support for
employee wellbeing. Our efforts not only
provide support for affected individuals,
but also educate for social change.

FY21 diversity and
inclusion actions
Anti-racism

Lendlease conducted a number of
listening sessions in the US and UK to
provide a safe space for our people to
share their stories, listen and learn. This
has led to a number of internal working
groups focused on equity at all Lendlease
touch points, internally and externally.

The Americas' business established a
Diversity, Equity and Inclusion (DEI) Advisory
Council with a diverse mix of employees
and two external DEI experts to help inform
DEI strategic priorities for the region.

In Australia, our Elevate RAP includes a
detailed action plan to support career
progression for our First Nations'
employees (see RAP on page 45).

Eradicating everyday sexism

We created an awareness video and toolkit
to bring attention to common language,
behaviours and social norms that perpetuate
gender stereotypes and assumptions.

Resources were designed to generate self
reflection and conversation.

We provided tips on how to identify and
address inappropriate behaviour and sent
a call to action to all employees.

Supporting flexible working

We prioritise connection to our workplaces
and our culture. We remain committed
to enabling flexible work options. We
established new ways of working through
virtual tools, events and communications
to share knowledge and connect people,
regardless of where they were working.

Our team in Japan were quick to establish
new work protocols to accommodate
remote working, while maintaining team
connections and a core focus on mental
health. Initiatives such as using chat bots
for enquiries and an online wellbeing
community hub influenced our global
standard, not only during periods of
lockdown, but how we conduct business
on an ongoing basis.

LGBTQ+ inclusion and recognition

Our actions add up. We continue to be
recognised for our efforts in LGBTQ+
inclusion.

In the Americas, Lendlease scored 100 in
the Corporate Equality Index for the fifth
consecutive year and achieved 'Best Place
to Work for LGBTQ Equality'.

In Australia, we partnered with the
University of New South Wales to
research barriers to LGBTQ+ inclusion on
construction sites and shared insights and
recommendations with the industry.

A sense of place

Lendlease Annual Report 2021 Managing and Measuring Value

Sustainability

A sense of place – one fit for the future

It has been a year since we launched our ambitious environmental and social
sustainability targets and we are pleased to report we have already made meaningful
progress. Our journey has given us greater conviction around the importance of our
mission and that collaboration is the only way to achieve industry transformation.

1.5°C aligned

Mission Zero

As a 1.5°C aligned company, we have
set ourselves ambitious science based
emissions reductions targets.

In May 2021, we launched ‘Mission Zero’,
a global campaign to raise awareness
about our mission to reach Net Zero
Carbon by 2025 and Absolute Zero
by 2040.

Our progress

We have made positive progress in FY21
to reduce our Scope 1 and 2 emissions.
The sale of our Engineering business and
the ongoing impact of COVID significantly
impacted our emissions (see page 55 for
our FY21 environmental performance).
While Scope 1 and 2 emissions are our
immediate focus, we have increased our
engagement and collaboration across the
real estate sector to also start addressing
Scope 3 emissions.

ISSI O N ZERO •

•

ARBON B

Z
E
R

O C

ISSI O N ZERO •

•

ERO BY 2

O
L
U

TE Z

By 2025, we'll reduce greenhouse gas
emissions as far as possible, with the
remainder offset in an approved carbon
offset scheme. Our Net Zero target
applies to Scope 1 and 2 emissions.

By 2040, no greenhouse gas emissions
from our business activities. No offsets.
Our Absolute Zero target applies to Scope
1, 2 and 3 emissions.1

31%

of our Scope 1 and 2
emissions offset in FY21

We are well on our way to
offsetting 100% of our residual
carbon emissions to achieve
Net Zero Carbon by 2025

32%

under our 1.5ºC aligned
trajectory for Scope 1 and 2
emissions in FY21

We are in a good position to
maintain our trajectory to achieve
Absolute Zero by 2040

1. Scope 1 emissions are from the fuels we burn, Scope 2 are from the power we consume and Scope 3 are from indirect activities.

The road to Absolute
Zero Carbon

Through this five step plan we are going to turn our commitments
into action. Here are some of the ways we are already
implementing change.

Step 1
Create a decarbonisation
investment strategy in 2021.

Established a Lendlease Decarbonisation
Investment Group (DIG) to identify
decarbonisation investment opportunities
and strategy

Launched online carbon education
tools and resources to help our people
understand our targets and what is
required to be a 1.5°C aligned business

Step 2
Phase out diesel and gas in
our operations.

Implemented successful renewable
diesel (HVO) pilots across a number of
UK projects

Launched an alternative fuels policy
across our UK business, liquid fossil
fuels no longer accepted on any new UK
construction projects and existing projects
have until January 2022 to comply

Saved 9.12 ktCO2-eq by using one tonne
electric excavators on Manchester Town
Hall restoration project – the equivalent of
around ten passengers flying from London
to New York

Trialling a 20 per cent biodiesel
blend (B20) at Caboolture Hospital
redevelopment and using a 5 per cent
biodiesel blend (B5) in cranes, generators,
boom lifts and excavators on several other
Australian projects

Lendlease are designing and delivering ‘all
electric’ buildings, including Sydney Metro
Victoria Cross – Over Station Development,
Sherwin Rise Retirement Living Villas and
Monash University's Woodside Building for
Technology and Design in Australia, MIND
in Italy, 30 Van Ness in San Francisco,
and our US residential community at
Fort Campbell

Step 3
Use 100 per cent renewable
electricity before 2030.

Continued to deploy energy efficiency
measures and upgrades to plant and
equipment

Lendlease Building Australia switched to
100 per cent renewable electricity from
January 2021

Lendlease’s Australian Prime Property
Fund (APPF) Industrial signed an
agreement to deliver a renewable energy
program for up to $20 million

Integrated 2MW of solar power systems
across the APPF Commercial portfolio

From FY22 our Australian corporate
workplaces will be powered by 100 per
cent renewable electricity

All Chicago construction projects
are utilising 100 per cent renewable
electricity, and Boston’s Clippership
Wharf development has been procuring
renewable electricity for owner controlled
spaces since November 2020

MIND will be powered only by renewable
energy sources (see page 26)

Step 4
Collaborate with supply chain
partners to set pathways to
achieve Absolute Zero Carbon
by 2040.

Became one of the first companies
globally to join SteelZero to drive market
demand for net zero carbon steel

Joined as a founding member of the
Materials and Embodied Carbon Leaders
Alliance (MECLA), a new industry led
coalition to decarbonise Australia’s
building and construction industry

Joined Race to Zero, one of the first
companies in the built environment sector
to do so

Step 5
Collaborate with our tenants
and residents to transition
to renewable electricity and
achieve Absolute Zero Carbon
by 2040.

In partnership with Aware Super, our
US residential portfolio of urbanisation
projects across Boston and Chicago has
been verified net zero carbon

At London’s Elephant Park, all residents
and tenants are now automatically signed
up to a green electricity tariff

Lendlease Funds Management’s Australian
office portfolio has been officially certified
carbon neutral

Alongside our two carbon
targets, we are also
focused on reducing waste
and water consumption,
and promoting biodiversity.

Waste

As part of our circular economy
ambitions, we are partnering with
WWF Singapore on a Waste in
Retail Research Initiative. Through
this initiative, we are undertaking
research into waste management
practices including waste generated
at malls. The knowledge we develop
will be shared with the retail property
management industry and key
stakeholders.

Water

Total village water consumption
across our Australian Retirement
Living portfolio decreased by 1.8 per
cent in CY2020 compared to CY2019,
a significant achievement given
residents were spending more time
at home during 2020 due to COVID.
In our 48 villages with real time water
monitoring, water consumption
decreased by 4.1 per cent over the
same period. These savings have
been realised by residents through
their village water bills. We are now
working to roll out real time water
loggers nationally.

Biodiversity

Valuing natural capital continues
to be a focus for us globally as
we apply nature based solutions
to create biodiversity and climate
resilient communities. The urban
ecosystem at Southbank, Chicago,
stands in lush contrast to the site's
past history, featuring migratory
birdhouses, beehives, a rooftop
farm, native grasses to restore the
waterways, and a river walk and
park for the community. In Malaysia,
The Exchange TRX will be delivering
a new city park in Kuala Lumpur
which will be home to more than
150,000 plantings from close to 150
native plants species, creating a new
ecological corridor for urban birds,
butterflies and bees.

A sense of place

Lendlease Annual Report 2021 Managing and Measuring Value

Social value

T E $
A
E
R
C

2 5 0m O

Shoreline Queensland:
Yarn on Quandamooka
Country and Danggan
Balun Country

C
I

L VA

•

LUE BY 2

$47.3 million

social value created to date
through the work of our
shared value partnerships –
18.9% achieved of our
$250 million goal by 2025

shared value
partnerships assessed

additional partnerships to
undergo assessment

Progress towards our
social value target

Step 1
Implement an industry
accepted methodology.

Partnered with the Australian Social Value
Bank (ASVB), Australia’s largest bank of
verifiable social outcomes, to determine
a simple yet robust methodology for
assessing social value creation across
shared value partnerships and social
programs within our business, projects
and assets

Piloting of this methodology will occur
through FY22

Step 2
Benchmark our existing
portfolio of partnerships.

Worked with Social Impax and Think
Impact to commence assessment of
Lendlease Foundation shared value
partnerships to evaluate social value
created, attributable to our social
value target

Financial proxies were used to determine
the social value we created across the
different countries where the programs
took place. This has allowed us to better
understand social value creation through a
cultural and country specific lens

Step 3
Establish new partnerships
and processes to expand our
social value creation.

Continued to look for new not for profit
and charity organisations, aligned to the
Lendlease Foundation Constitution and
Sustainability Framework, to partner with
in the creation of social value outcomes

Commenced a partnership in China
called ‘Future Smile’, which aims to
raise awareness and education for
senior citizens around diabetes and
Alzheimer's disease

Partnered with Billion Oyster Project
to restore oyster reefs, which help to
promote biodiversity, protect shorelines,
and clean waterways in New York Harbor

Step 4
Expand social evaluation efforts
to our projects and assets.

Worked with ASVB to establish relevant
social value financial proxies and an
assessment methodology suitable for us
on our projects and assets

Commenced the design and build of a
'Communities Module' in Footprint, our
sustainability database, to assist in the
collection of social value metrics across
the business

Elevate
Reconciliation
Action Plan
(RAP)

Our third Reconciliation Action
Plan (RAP) and second Elevate
RAP titled Country, Truth and
our Shared Story, launched in
October 2020.

This is our second Elevate RAP, and third
overall, which builds upon the learning
and feedback we have received over the
past 10 years from our RAP Expert Panel,
First Nations communities, employees,
RAP partners and businesses.

The RAP outlines our commitment to
Australia’s First Nations peoples by
acknowledging their unbroken connection
to country and creating respectful
relationships to provide opportunities for
equal social and economic outcomes.

Our leadership commitment is to lift
the industry standard of placemaking
by incorporating the self determination
principles and voices of First Nations
peoples in what we do.

Our RAP actions move us closer to
the vision of a reconciled nation. They
demonstrate how we align our operational
performance with our commitment to
human rights, specifically the rights of
Australia’s First Nations peoples.

FY21 Actions

Providing cultural engagement and
learning for all employees

5,153 Lendlease employees in Australia have
completed face to face or online cultural
awareness learning since FY12

Recognition of Country and the story of
place is implemented at the beginning of
our projects

Making First Nations businesses
foundational in our supply chain

155 Supply Nation businesses engaged
(registered and certified Indigenous
businesses)

$65.4 million spent in FY21 with registered
and certified Indigenous businesses

Our procurement goal aligns with the
national Raising the Bar initiative, which
sets annual targets to embed First Nations
owned businesses in our supply chain

Supporting First Nations voices
within Lendlease

1 per cent of Lendlease Australian employees
identify as First Nations Australians

8 First Nations Australian employees sit in
leadership roles

We’re focused on bringing First Nations
leadership into senior management roles

New York Harbor:
Oyster reef restoration

Image credit: John Suhar

A sense of place

Lendlease Annual Report 2021 Risk and Climate Related Resilience

Risk and
Climate Related
Resilience

Shanghai:
Ardor Gardens,
Qingpu District

Artist's impression

Our approach recognises the nature and level of
risk we are willing to accept to achieve our strategic
goals and key performance targets to create
securityholder value.

Governance in a rapidly
changing environment
Our Business Continuity Enterprise
Risk Framework has been exercised
beyond the defensive, to add value for
our employees, business partners and
customers. Our sites have been operating
under enhanced COVID measures so that
we can continue to deliver our projects
safely and in line with expectations.

The impact of COVID from an operational
perspective has been felt around the
world. Operational Enterprise Risks such
as Execution and Commercial have
experienced the greatest impact in the
reporting period.

As the Group continues to actively work
through understanding and addressing
the long term impacts of COVID from an
operational and strategic perspective, our
risk teams around the world remain active
participants in government and industry
forums to help reshape the future.

Our areas of focus for business
resilience are:

Health, Safety and Wellbeing: The health
and safety of our places and people is
our priority. The Board and Leadership
Teams continue to provide frequent
and transparent communications to the
business to keep our people well informed
and safe.

Operational Risk: Global COVID steering
committees are in effect and continue
to receive weekly updates and insights
relevant to our business. Lendlease is
prepared and has clear processes for
the management of interruption to our
operations and people.

Business Continuity and Crisis
Management: During the reporting period
Crisis Management Plans were activated
and followed in response to COVID
impacts. The business was technologically
prepared which empowered employees to
work remotely. Business continuity plans
are reviewed and updated periodically.

Supply Chain Resilience: We recognise
that sustainable supply chains strongly
align with our strategic priorities,
allowing us to minimise risk and maximise
opportunities for collective value
creation across economic, social and
environmental objectives. Supply chain
resilience is an important imperative
which is supported by our Enterprise Risk
Framework through the following relevant
Enterprise Risks and our Risk Appetite
Statement:

• Commercial Underperformance:
failure to execute given reliance on
supply chain to deliver

• Regulatory and Counterparty: supply
chain ethics fail to meet our standards

• Non-scalable Growth: the need for

strong global and regional supply chain
partnerships are required to support
in a global context or in dynamic
supply chains.

Our commitment to the UN Guiding
Principles on Business and Human Rights
has been memorialised in our Modern
Slavery Statement (FY20). Our phased
approach scopes potential modern slavery
risks that we may either cause, contribute
to, or to which our operations may be
directly linked. We will continue to evolve
and mature as envisaged in our statement.

Responding to climate
related impacts
The business also recognises the risks
and opportunities associated with
climate change.

Lendlease supports the recommendations
of the Task Force on Climate-related
Financial Disclosures (TCFD) and in
2018 committed to producing annual
disclosures that consider these
recommendations.

We have a phased approach to integrating
the recommendations of TCFD over
time, and this is our third annual TCFD
disclosure. Our disclosure continues to
evolve as we enhance our management of
climate related risks and as advancements
are made in the maturity of climate related
financial disclosures.

A sense of place

Lendlease Annual Report 2021 Risk and Climate Related Resilience

Our approach aims at providing best in class
governance, innovation and people to embed a
risk intelligent culture that delivers on strategy and
produces predictable and repeatable outcomes.

Risk

Risk Appetite Framework
Following the Risk Committee’s approval of the Risk Appetite
Framework and its subsequent implementation, the Board’s level
of oversight across the business has been enhanced.

As Risk Appetite continues to evolve,
the risk tolerances and accompanying
standards and frameworks are refined to
remain fit for purpose.

Of note in the period, the following
policies and standards were implemented
and will allow the Board to increase its
oversight of the business:

• Group Standards on Project

Environmental and Social Risk
Assessment

• Group Standard on Design Complexity
• Group Policy and Standard on Customer

Complaints and Feedback.

Continuous
Improvement
The Risk Appetite Framework is
reviewed annually by the Group
Chief Risk Officer and approved by
the Board Risk Committee.

Any changes outside of the annual
review cycle that encompass
the addition of new statements
and tolerances will be reviewed
and approved by the Board Risk
Committee on a quarterly basis.

The Board is responsible for ensuring the effectiveness of the
risk management framework. The risk management process
outlines the governance, risk appetite and accountability for the
risk management and operational resilience program.

Risk Appetite Framework deployment

Risk Governance and
Management
Our risk framework remains unchanged
from a governance perspective. This
continues to become infused into the
DNA of our business.

The framework is underpinned by a
‘Three Lines of Defence’ model. The
model codifies the defensive aspects of
risk and allows for the broader aspects of
value creation and organisational success.

Three lines of defence

Board and Committees

Group Leadership Team

Regional Leadership Teams

Risk Based
Governance Functions

Business
Integrity Group

Internal
Audit

External
Audit

First line of defence

Second line of defence

Third line of defence

Business Operations

Board defines
its appetite
and applies
governance

Board

Defines its appetite for the 12 Enterprise Risks through the Risk
Appetite Framework

Corporate risks
managed by
Group

Group

Business risks
managed at
regional level

Regions/Businesses

Enterprise risks:

Disruption • Cyber/Data • Regulatory • Culture • Business Continuity

Group Strategy, Investment in Digital, IT Policies, Management of
Compliance Obligations, Business Continuity Policy, Limits of Authority,
Code of Conduct, Formalised Investment Approval Processes

Enterprise risks:

Customer • Geopolitical • Environmental • Commercial Performance
Scalable Growth • Health, Safety and Wellbeing • Project Execution

Strategy Approval, Policies, Regional Investment Committees,
Limits of Authority, Formalised Investment Approval Processes

Operational
issues/risks
managed
at project/
investment level

Projects/Investments

Project Reviews, Limits of Authority, Localised Policies,
Project Approval Gates

Health, Safety
and Wellbeing

Disruption

Commercial

Execution

Geopolitical

Regulatory and
Counterparty

Corporate
Culture

A sense of place

Lendlease Annual Report 2021 Risk and Climate Related Resilience

Core operational and
market risks

Lendlease has 12 Enterprise Risks. These are stress tested globally
on a six month basis. Each one has a cascade of granular risks and
opportunities which are operational and market and allows for a
true portfolio lens to be placed over the risk profile.

Description

Mitigation

Value creation

Failure to provide an environment which promotes health, safety and wellbeing impacts
our ability to achieve our corporate and social responsibilities

Responsiveness to disruption, including digital disruption as well as other new methods
and materials emerging in the investment, development and construction sectors

Commercial performance fails to meet our corporate objectives

Failure to execute strategy or projects affects our ability to meet our corporate objectives

We are committed to the health, safety and wellbeing of our people. Through our Global Minimum
Requirements, which include both physical safety and health and wellbeing, we empower our people to
operate in a consistent standard across all our operations

With the increasing dependence on technology, our strategic intent aims to turn disruption into an
opportunity by creating a culture that fosters innovation and focuses on adopting leading edge technologies
to deliver innovative solutions and generate a competitive point of difference

Our capital deployment guidelines mitigate risk and improve performance. Quarterly business reviews assess
business operations against approved strategy to drive consistent, focused and risk assessed investment decisions

Our risk management approach and use of stage gates across our property and construction operations contribute
to the mitigation of execution risk. To inform our investment decisions, we use internal research to develop a ‘house
view’ of property cycles in every region and the strength of our gateway cities

Global and local events or shifts in government policy occur in the regions in which
we operate, adversely impacting our ability to achieve strategic objectives. Failure to
adequately understand governments’ mandates, expectations and performance standards

We are committed to growing our business in sectors that are supported by positive global trends. We are
sensitive to geopolitical shifts and concentration risk and coordinate our approach to government in all
regions to mitigate against sovereign risk

Non-compliance with regulatory and policy requirements by Lendlease or our clients/suppliers

Client, investor or supply chain ethics fail to meet our standards

Failure to adequately select, govern and drive value from counterparties

Failure to comply with government regulations impacts our ability to access government
opportunities

Failure to create and maintain culture which supports the Group's core behaviours,
principles and values to drive disciplined strategy execution

Cyber/Data Governance/
Asset Protection

Failure of cyber resilience and defence systems. Leakage, misappropriation or
unauthorised storage of data. Unauthorised control of systems and physical asset
infrastructure (i.e. lifts, security, air conditioning)

Customer

Loss of existing client (including government) relationships, or inability to tailor services
to future clients’ needs, impacting the Group's financial objectives

Non-scalable Growth

People: inability to attract, retain and upskill key talent necessary to deliver
strategic objectives

Process: lack of scalable processes to support predictable growth

Corporate and
Environmental
Sustainability

Business
Continuity

Failure to comply with regulatory, societal and investor expectations of corporate and
environmental sustainability such as climate change and social responsibility

Failure to properly plan for and/or appropriately respond to events which may disrupt
Lendlease’s business

To further improve our culture of compliance, we focus on aligning business priorities with the necessary
compliance and assurance measures. We are focused on maintaining an ethical and resilient supply chain to
ameliorate the risk of material substitution and modern slavery. We have an appetite for relationships with
parties who are aligned with our values

Our values drive our approach to business and delivery of long term value. We empower our people to make
business decisions that are aligned to our core values and behaviours, principles, and five areas of value
creation. Additionally, each Region has an appointed Voice of Risk who is part of the Regional Leadership
Team and has been appointed as an independent participant to challenge both the business and Risk function
on enterprise and operational risk

Physical and data security continue to be key focus areas globally. We invest in preventative technology and
education of employees to achieve a sustainable security culture

Bid leadership training of key employees reinforces understanding of customers’ requirements. Recurrent
client survey feedback informs our business strategy. A single platform assists in customer data security and
aligns customer service across all regions

To deliver the desired level of performance, we continue to invest in growing our core capabilities through
active talent management and targeted professional employee development to attract, retain and grow the
best people. Our processes are designed to be consistent, scalable and effective

We are committed to creating places where communities thrive and optimising our corporate and
environmental sustainability performance (including climate change and social responsibility) through
our Sustainability Framework and integrating sustainability considerations into our business strategies.
We continually increase engagement through training programs to promote sustainable behaviours in the
organisation globally. We have endorsed the TCFD recommendations on climate change and have begun
reporting Lendlease's resilience to the changes in both policies and the physical environment (as noted in the
Climate Related Strategic Resilience section)

To achieve organisational resilience, we are committed to operating in a way that supports our ability to
respond to threats and disasters without affecting our core business operations. We continue to invest in the
learning and development of our people to better prepare them in the event of disruption through training
programs and various threat scenario simulations to stress test the plan

A sense of place

Lendlease Annual Report 2021 Risk and Climate Related Resilience

Climate Related
Strategic Resilience

Sydney: Daramu House,
Barangaroo South on
Gadigal Country

Building strategic resilience
In FY19 we disclosed our three climate scenarios that we
would use to build business strategic resilience. The scenarios
were Polarisation (a >3ºC scenario), Paris Alignment (a 2–3ºC
scenario) and Transformation (a well below 2ºC scenario).

In FY20 the business identified risks and
opportunities that might arise over the
next 30 years for each of our climate
scenarios and identified which of the
risks and opportunities were likely to
appear in the next 10 years. These risks
and opportunities were then synthesised
into 10 Climate Related Impacts (CRI)
per scenario and disclosed in our FY20
annual report.

Our focus in FY21 has been to leverage
this work to further enhance the climate
related strategic resilience of our business.
To do this, over 100 senior leaders across
the global business participated in a series
of TCFD Business Impact workshops.

The workshops used the five CRIs that
were identified as most likely to appear
in the next 10 years from each scenario
as the basis of review. Participants were
asked to:

• Identify positive and negative

sensitivities to each CRI relative to
other sectors

• Identify what actions could be taken

to reduce sensitivity and either absorb,
adapt or transform to the CRIs

• Determine what the residual sensitivities
would be if those actions were taken.

Our strategic
resilience to climate
related impacts

The assessment of the five CRIs per
scenario most likely to appear in the
medium term has indicated a greater
resilience (higher residual positive
sensitivity) in our business strategy to our
Paris Aligned scenario, a world that sees
continued global commitment to the Paris
Agreement. Our recent commitment to
being a 1.5ºC aligned business has created
positive sensitivities to our Transformation

scenario. As with all real estate
companies, we have negative sensitivities
to the physical impact of climate change
in a more than 3ºC warmed world, our
Polarisation scenario. The integration
of climate risk assessments into our
investment decision making processes
has seen reduced residual sensitivities to
climate impacts.

Scenario

Climate Related Impact

Residual Sensitivity

Development Construction Investment

Polarisation scenario (>3ºC)
Our Polarisation Scenario sees a world where climate action is
delayed by the polarisation of climate action. This delay results in a
world where physical climate change risks are the greatest across
our three scenarios.

The integration of ‘Leadership in Sustainability’ as a strategic priority
and our Net and Absolute Zero Carbon targets sees high levels of
positive sensitivity in both leadership in decarbonisation and a shift
in consumer preference to secure and create resilient communities.

Impact of climate change on
assets and communities

Impact of climate change on
the way we work

Shift in consumer preference
toward secure and resilient
communities

Continued integration of physical climate risk assessments into our
investment and business processes is essential to reducing negative
sensitivities and building resilience to physical climate change risk.

Industry leadership in
decarbonisation valued

Paris Alignment scenario (2–3ºC)
Our Paris Alignment Scenario sees a market led transition to a lower
carbon future through global government commitments to the Paris
Agreement, resulting in higher regulation to climate action and
with lower physical impacts of climate change compared to our
Polarisation scenario.

There are many ‘difficult to decarbonise’ products and materials in
our supply chain, including cement, steel and aluminium. The cost
of decarbonisation in our supply chain creates negative sensitivities
for future development opportunities. Our commitment to Absolute
Zero Scope 3 emissions will drive action in our supply chain,
creating resilience in our strategy.

Our leadership in sustainability and carbon targets creates similar
positive sensitivities to decarbonisation as per our Polarisation scenario.

Transformation scenario (<2ºC)
Our Transformation Scenario sees a rapid decarbonisation pathway,
where global emissions peak in 2020 and are close to zero in 2040.

The speed of change that is needed to limit global warming to
1.5ºC is likely to create negative sensitivities in our supply chain
as suppliers try to keep pace with decarbonisation demands and
shifting preferences towards localisation.

Our leadership in sustainability and carbon targets create similar
positive sensitivities to decarbonisation, as per our Polarisation and
Paris Alignment scenarios.

Impact of climate change
on cities

Increase speed of change in
climate related impacts

Increase cost of carbon

Demand for decarbonisation
of supply chain

Increased scrutiny over
actions versus branding

Industry leadership in
decarbonisation valued

Increase speed of change in
climate related impacts

Local companies preferenced
over global ones

Shifting social licence to
operate expectations

Industry leadership in
decarbonisation valued

Shifting consumer preferences
towards lower impact living

Higher negative sensitivity

Higher positive sensitivity

A sense of place

Singapore: Paya Lebar Quarter Mall

Lendlease Annual Report 2021 Risk and Climate Related Resilience

Our disclosure
progress and next
steps

The below table provides a summary of
our TCFD disclosure. For further detail
related to this and previous disclosure,
please visit the Lendlease website
(www.lendlease.com).

Actions

FY19-20

FY21

FY22

Governance

Disclose the organisation’s
governance around
climate related risks and
opportunities

Strategy

Disclose the actual and
potential impacts of
climate related risks and
opportunities on the
organisation’s businesses,
strategy and financial
planning where such
information is material

Risk
Management

Disclose how the
organisation identifies,
assesses and manages
climate related risks

Metrics and
Targets

Disclose the metrics and
targets used to assess
and manage relevant
climate related risks and
opportunities where such
information is material

Strengthen Board and Management
oversight of climate related risks
through Board Sustainability Committee

Establish cross functional TCFD
Steering Committee chaired by Chief
Commercial Risk Officer

Identified climate related risks and
opportunities for each scenario

Impact of climate related risks and
opportunities on the entity

Assess the effect of climate related
risks and opportunities on decisions and
plans of the entity

Resilience of climate related risks and
opportunities (see page 53)

Climate related risk integrated into Risk
Committee

Climate related risk assessments
integrated into Investment Committee
decision making process

Integrated climate related risks into risk
management framework

Establish metrics for managing climate
related risks and opportunities

Continued disclosure of Scope 1 and 2
emissions

Establish Scope 3 emission reporting
boundaries and methodologies

Disclose Scope 3 emissions

Establish targets for managing climate
related risks and opportunities

Completed

Commenced

Ongoing action

Environmental performance

This financial year we have brought our environmental
performance data disclosure in line with our financial
reporting program by providing 12 months of data to 30 June
2021, which includes actual data for Q1-Q3 and estimated
Q4 data. As per previous years, we will update our full year
environmental performance data on the Lendlease website once
actual Q4 data has been gathered and the limited assurance
engagement completed.

Our environmental performance has seen both energy use and
emissions affected by the impact of COVID and the sale of the
Engineering business. We have also made significant progress
in reducing carbon emissions through business commitments to
renewable electricity and renewable diesel (see page 43).

In FY21, the business easily achieved the first year carbon target
for our 1.5°C alignment and made significant progress on our
2030 renewable electricity target.

Scope 1 and 2 carbon target performance
ktCO2-eq

FY21 energy use by business line (GWh)

Scope 1
Scope 2
Net emissions after offsets
1.5ºC aligned trajectory

352

370

234

263

118

107

222

150

116

103

FY19

FY20

FY21

FY22

Investments1

Construction

Engineering and Services

Lendlease tenancies

Total

210

198

% of electricity use from
renewable sources including grid
renewable electricity

FY19

FY20

FY21

307

170

368

854

319

123

406

856

177

123

362

31%

Total energy consumption in FY21 has reduced by 58 per cent
compared to FY20 due to the sale of Engineering, ongoing COVID
impacts and change in reporting boundaries in the US residential
portfolio to bring tenant energy emissions into Scope 3 rather
than Scope 2.

0.9

FY23

FY21 waste diverted and disposed (kTonnes)

Scope 2 emissions have been calculated using the market
based method. Gross Scope 2 emissions are calculated after the
purchase of renewable electricity certificates, power purchase
agreements and green power.

Scope 1 and 2 emissions by business line

% Waste diverted from landfill

Waste disposed

Waste diverted

FY19

FY20

682

705

51%

338

409

55%

FY21

185

76%

Investments
Construction
Engineering and Services
Lendlease tenancies

13%

21%

150

kt CO2-e

64%

In FY21, the reporting boundaries for waste disposed were changed
to exclude soils to landfill, in line with other market peer reporting
definitions. This change has been a significant contributor to the
increased waste diversion rate to 76 per cent. In addition, COVID
impacts and the sale of Engineering has seen total waste decrease
by approximately 67 per cent this financial year.

FY21 water consumption by business line
(MLitres)

Electricity used by the Investment Management business is the
largest contributor to our Scope 1 and 2 emissions. Our plans
to increase the purchase of renewable electricity to achieve
our target of 100 per cent renewable electricity by 2030 should
significantly reduce the Scope 2 carbon emissions associated
with this line of business.

Investments

Construction

Engineering and Services

Lendlease tenancies

FY19

4,935

600

610

FY20

4,950

476

711

FY21

4,527

504

Total

6,197

6,184

5,077

The sale of Engineering and COVID impacts has seen water
consumption drop by approximately 18 per cent this financial year.

1. Includes Development business line of 2GWh for FY19 and 1GWh for FY20.

A sense of place

Lendlease Annual Report 2021 Performance and Outlook

Performance
and Outlook

Chicago:
The Cooper,
Southbank

Group performance

As an international real estate group with a presence in targeted
gateway cities, the pandemic had a pervasive impact on
operations in FY21. Statutory Profit after Tax for the year ending
30 June 2021 was $222 million. This included a loss of $181 million
for the Non core segment, driven by additional provisioning
relating to claims on historical engineering projects.

The Performance and Outlook discloses profit after tax on both a
statutory and operating basis. The Core Operating profit metrics1
provide a clear view of the Group’s underlying operating result,
excluding the impacts of the Non core segment and property
revaluations in the Investments segment.

COVID impacts. However, the pandemic continues to impact the
business with ongoing challenging operating conditions affecting
each of the segments. Development was adversely impacted
by London lockdowns, investment income was suppressed and
construction revenue was lower.

The largest contributor to the Development segment was the
creation of separate investment partnerships to deliver the first
two residential towers at Barangaroo. While the return outcome
for the segment was below target, progress continues to be made
towards converting the development pipeline, as well as securing
additional urbanisation projects.

The Group recorded Core Operating Profit after Tax of
$377 million for the year ended 30 June 2021. Core Operating
Earnings per Security was 54.8 cents with a Return on Equity of
5.4 per cent, below the target range. Distributions per Security
totalled 27 cents, representing a payout ratio of 49 per cent of
Core Operating profit.

In the Construction segment, despite revenue being down
and a weak second half in the UK, performance across the
portfolio was solid, with overall returns at the upper end of the
target range. Activity continued to be impacted by delays in
the commencement of new projects and ongoing productivity
impacts across sites.

The Group made significant progress on its strategic priorities.
Investment partner initiatives worth $5.1 billion that will drive future
funds under management were progressed. Six new urbanisation
projects were secured with a total end value of $7.4 billion. The
sale of the Engineering business was completed and the US
Telecommunications and Energy businesses were divested. Post
balance date the sale of the Services business was announced with
completion expected prior to the end of the calendar year.

Core segment EBITDA of $918 million increased 27 per cent on
the prior year as performance recovered from the worst of the

The Investments segment recovered from the worst of the
COVID impacts, although returns remained below the target
range. Ownership returns across retirement were higher, while
asset management fees were impacted by lower activity across
the retail sector. Earnings in the prior year were boosted by a
substantial performance fee.

Corporate costs of $161 million comprised Group Services
costs of $128 million, which were stable, and treasury costs of
$33 million. Net finance costs of $137million were down 10 per
cent2 due to lower average net debt.

Key Financials3

Core Segment EBITDA Mix

Core Business
Development

Construction

Investments

Segment EBITDA
Corporate Costs

Operating EBITDA
Depreciation and Amortisation

Net Finance Costs

Operating Profit before Tax
Income tax expense

Operating Profit after Tax

Non Core
Operating EBITDA

Operating Profit/(Loss) after Tax

Total Group
Operating EBITDA

Operating Profit /(Loss) after Tax

Non Operating Items

Statutory Profit /(Loss) after Tax

Total Group
Core Operating EPS

Distribution per Security

Total Group Statutory EPS

Total Group Statutory ROE

$m FY20

FY21

Var.

322

101

300

723

(158)

565

(160)

(153)

252

(46)

206

(495)

(406)

(200)

(110)

(310)

cents

34.2

33.3

cents

(51.4)

% (4.7)

469

173

276

918

(161)

757

(148)

(137)

472

(95)

377

(139)

(181)

618

196

222

54.8

27.0

32.3

3.2

46%

71%

(8%)

27%

(2%)

34%

10%

87%

(107%)

83%

72%

55%

>100%

60%

(19%)

>100%

n/a

Development
Construction
Investments

30%

$918m
Core Segment
EBITDA4

51%

19%

Core Operating Profit after Tax

FY20

$206m

FY21

$377m

Core Operating Return on Equity

FY20

3.1%

FY21

5.4%

Core Operating Earnings per Security

FY20

34.2c

FY21

54.8c

Distribution Per Security

FY20

33.3c

FY21

27.0c5

1. Excludes property valuations movements in the Investments segment, impairment losses relating to intangibles and Non core items. 2. Comparative period the year ended
30 June 2020. 3. Operating earnings presented reflects statutory earnings adjusted for non operating items. 4. Excludes Corporate. 5. Final dividend component zero
franking. Interim dividend component of 11.2 cents per share 50 per cent franked.

A sense of place

Lendlease Annual Report 2021 Performance and Outlook

Group performance continued

Portfolio Management Framework
The Portfolio Management Framework is designed to maximise
long term securityholder value via a diversified risk adjusted
portfolio, leveraging the integrated model and the financial
strength to execute the strategy, including an investment grade
credit rating.

The framework was revised in August 2020 as part of the Group’s
strategy update. While the target EBITDA segment earnings mix
was maintained, it is now based on operating profit. This implies
an approximate ten percentage point higher target contribution
from Investments relative to that of recent years. The target
capital allocation to Investments moving to the upper end of
the range over time is expected to support a larger contribution
from Investments over the medium term. The target capital
allocation to each of the international regions was raised by five
percentage points.

The revised return targets are derived from hurdle rates that have
not been adjusted. The changes relate to the adoption of the
operating profit metric, combined with the target reweighting to
the Investments segment. This has led to a revised Investments
ROIC target of 6-9 per cent and a revised Group ROE target of
8-11 per cent. The distribution payout policy is 40-60 per cent of
Core Operating profit.

Returns for the Core business were challenged, reflecting difficult
operating conditions: Development returns were below the target
range; the Construction margin was in the upper half of the target
range; and Investments was below the target range.

The balance sheet remains in a strong position with gearing below
the target range and total liquidity of $4.9 billion.

Portfolio Management Framework

Target1

FY20

FY21

Total Group Metrics
Core Operating ROE

Distribution payout ratio2

Gearing

Core Business EBITDA Mix
Development

Construction

Investments

Core Business Segment Returns
Development ROIC3

Construction EBITDA margin

Investments ROIC3

Segment Invested Capital Mix
Development

Investments

Regional Invested Capital Mix
Australia

Asia

Europe

Americas

8-11%

40-60%

10-20%

40-50%

10-20%

35-45%

10-13%4

2-3%

6-9%4

40-60%

10-25%

3.1%

n/a

5.7%

45%

14%

41%

4.7%

1.3%

5.8%

56%

44%

42%

17%

22%

19%

5.4%

49%

5.0%

51%

19%

30%

7.2%

2.7%

5.9%

55%

45%

39%

19%

23%

19%

Group outlook
The enforced lockdowns and isolation from the COVID pandemic
have had significant ramifications for real estate markets across
the gateway cities in which the Group operates. While we are
confident these cities will rebound strongly over the medium
term, FY22 is expected to be a challenging year, particularly for
our Development segment. Core operating return targets for the
Development segment and the overall Group are expected to be
below target ranges for FY22.

The wide ranging business review that commenced in FY20, is
yet to complete, although preliminary findings have been reached.
The strategy and strategic priorities have been confirmed. The
Group Core Operating ROE target of 8-11 per cent is anticipated
to be met by FY24. Statutory profit in H1 FY22 is expected to
include a restructuring charge estimate of $130 to $170 million
and an impairment of $230 to $290 million in the Development
segment based on outcomes arising from the business review.

The Group’s end to end capability across real estate and a proven
track record is reflected in the $114 billion development pipeline,
which includes a portfolio of 23 major urbanisation projects
across ten gateway cities. The size and diversity of the pipeline is
expected to support the acceleration of production to more than
$8 billion per annum by FY24, approximately twelve months later
than previous expectations due to ongoing COVID impacts.

The Group expects to create more than $50 billion of investment
grade product from the development pipeline. This provides a
significant opportunity to more than double the current $40 billion
of funds under management and expand the Group’s $29 billion
of assets under management. The further strengthening of the
balance sheet following recent strategic divestments provides the
capacity for the Group to pursue new investment opportunities
alongside investment partners.

$114b

Development
Pipeline5

$15b

Core Business
Construction
Backlog

$40b

Funds Under
Management

$29b

Assets Under
Management

FY20

FY21

FY20

FY21

FY20

FY21

FY20

FY21

113.0

113.6

13.9

14.9

36.0

39.6

29.3

28.5

1. Targets represent PMF refresh following strategy update in August 2020. 2. Distribution payout ratio for FY21 has been calculated on Core Operating Earnings. 3. Return on
Invested Capital (ROIC) is calculated using the annual Profit after Tax divided by the arithmetic average of beginning, half and year end invested capital. 4. Through-cycle
target based on rolling three to five year timeline. 5. Total estimated project revenue of all development work secured (representing 100 per cent of project value).

COVID impacts across the Group

The Group has incorporated the impacts of the pandemic into its review process in the 30 June 2021 financial
statements where applicable. This process has highlighted the below impacts:

Development segment

Impacts

The Development segment has
experienced various COVID related
impacts on both historical and
projected future year performance.
The various impacts are expected
to persist into FY22, affecting both
activity and the profitability of the
Development segment.

Construction segment

COVID continued to impact on delivery
and revenue across the segment during
the year. These factors contributed to
revenue being down 16 per cent on the
prior year.

Investments segment

Performance across asset management
and investment income was impacted
due to COVID, although there was
some recovery from the worst of the
impacts that were experienced in the
second half of FY20.

1. Represents total rental assistance in FY21 across
Lendlease managed assets.

• Delays in converting opportunities across the Group’s urbanisation pipeline:

– Tenant demand and investment partner appetite in the office sector
– Weaker demand for new apartment product, especially from the investor segment of

the market, impacting new project launches

• Settlement delays have occurred in the apartments for sale product that has completed,

with some purchasers requiring more time to settle

• Extended lockdowns across the gateway cities in which the Group operates
• Identified projects that were substantially impacted, but unable to be quantified as

solely related to COVID, included:
– A $60 million provision recorded against the first two residential for rent buildings
at Elephant Park, London where rental demand was severely impacted. The overall
project remains profitable

– c.$40 million in negative pricing differential between Tower One and Tower Two at One
Sydney Harbour on capital solutions achieved, with Tower One pricing occurring during
the height of COVID uncertainty, reflected in pricing improvement on Tower Two
– An investment partner was not secured in FY21 on the next phase of International

Quarter London

• There were also some positive impacts for the Development segment:

– Demand and pricing for luxury apartments at Barangaroo was aided by the strength
of established house prices, in part a function of the significant decline in household
borrowing costs

– Government stimulus measures, including first home buyer schemes, have resulted in

stronger activity in the new detached housing market in Australia

– The Group took advantage of the weaker operating environment by securing

additional urbanisation projects on attractive terms.

• Impacts included:

– Social distancing protocols on productivity across our sites was reflected in a 16 per

cent decline in revenue compared to a 9 per cent decline in hours worked
– Projects being put on hold in some markets, with delays in the securing and

commencement of new projects

– Declining private sector activity, particularly in the US, impacting new work secured

• Cost management measures implemented following the onset of the pandemic

cushioned the impact on construction segment margins

• Conversely, public sector activity has increased, with an acceleration of projects being
brought to market. This supported strong new work secured outcomes in Australia and
a rebound in new work conversions in Europe compared to the prior year.

• The impact was pronounced in the retail sector:

– Retail asset management fees were lower than in the prior year
• The Group’s investment portfolio was impacted by similar factors:

– Coinvestment income was impacted with activity disrupted across underlying assets
– The trading performance of the Retirement Living business remained subdued, although
it recovered during the year reflecting the strength of the established housing market
– Extended stabilisation periods are being experienced on recently completed assets

• Identified projects and assets that were substantially impacted, but unable to be

quantified as solely related to COVID, included:
– Coinvestment yields impacted by c.$40 million1 in rental assistance provided to

tenants across the portfolio

– 845 West Madison, Apartment for rent building in Chicago lower than expected occupancy

• While income has been impacted, real estate valuations were resilient in the year with
coinvestments appreciating overall, highlighting the ongoing demand for high quality
assets by investors.

Government wage programs
In several countries, governments have established wage programs
with the aim of keeping people in employment through the
pandemic. The position of the Group in respect of these programs is:

• Australia – No participation in JobKeeper in the year
• UK – Coronavirus Job Retention Scheme – Employees of the
Group, who were furloughed during the year, received the
benefit of payments under this scheme

• Singapore – Job Support Scheme (JSS) – The JSS provides

cofunding for all active employers in Singapore. As an employer
in Singapore, the Group received funding under this scheme.

The amounts under these programs, totalling approximately
$10 million, were not material in the year. All benefits were received
in the first half of FY21.

A sense of place

Lendlease Annual Report 2021 Performance and Outlook

Development performance

Development outlook

The Development segment delivered EBITDA of $469 million, up
46 per cent.1 While the performance of the business improved from
the worst of the COVID impacts, the operating environment remained
challenging. Return on Invested Capital of 7.2 per cent was below
the bottom end of the target range of 10-13 per cent. Invested capital
decreased from $4.8 billion to $4.4 billion with a greater proportion
of development activity occurring with investment partners and some
delays in production activity.

Progress continues to be made on converting the development
pipeline. This included creating new investment partnerships, the
launch of residential product, achieving planning milestones and
securing additional urbanisation projects.

Two residential towers at One Sydney Harbour, Barangaroo,
contributed $325 million to EBITDA. The forward sale of Melbourne
Quarter Tower and a new joint venture partnership at Milan Innovation
District were other key contributors to the result. The largest
contributors to apartments for sale settlements were Melbourne
Quarter and Clippership Wharf, Boston. While settlements across the
Australian Communities portfolio were up 17 per cent to 2,228 lots,
they were well below both target levels and broader performance
across the industry.

Delivery commenced on residential product at Residences Two, One
Sydney Harbour, TRX in Kuala Lumpur, Ardor Gardens in Shanghai, and
100 Claremont Avenue in New York. Apartments for sale were launched
on the next stages at Southbank in Chicago and Elephant Park in London.

Production of $3.8 billion included the completion of both commercial
and residential buildings at Melbourne Quarter and residential for
rent at Elephant Park in London and 845 West Madison in Chicago.
Work in progress,2 the lead indicator for future production, ended
the period at $14.5 billion. This includes $6.9 billion of commercial
buildings in Melbourne, Milan, Sydney and Kuala Lumpur; $5.9 billion
of apartments for sale in Sydney, Kuala Lumpur, London, Chicago and
New York; and $1.3 billion of apartments for rent in London, Chicago
and Shanghai.

Six urbanisation projects were added to the pipeline. In the UK, the
c.$3.5 billion Smithfield project will provide more than 3,000 new
homes. In Boston, 60 Guest Street should become a state of the
art life sciences building with an estimated end value of $0.8 billion.
In New York, 1 Java Street is planned to transform a city block into
apartments for rent with an estimated end value of $1.0 billion. The
Group also secured its first urbanisation project in Los Angeles at
La Cienega Boulevard with an estimated end value of $0.8 billion,
which is planned to include apartments for rent and office space.

The estimated end value of the development pipeline was steady
on the prior year at $114 billion. While origination activity was
strong with new projects of $8 billion secured, it was offset by
completions and foreign exchange rate movements. The pipeline
comprises $101 billion of urbanisation projects, including 23 major
urbanisation projects across ten gateway cities, and $13 billion of
communities projects.

The size of the development pipeline, as well as its diversity by
gateway city and product type, provides scope for a material
acceleration in development activity. Our target is to produce greater
than $8 billion of product per annum. While this will not be achievable
in the near term, we expect the target to be reached by FY24.

COVID has had a widespread impact on many of the gateway
cities in which we operate. The enforced lockdowns and isolation
caused by the pandemic have had significant ramifications for real
estate markets across these cities.

Gateway cities across our platform have been selected based
on their resilience and prospects for long term outperformance.
While we expect these cities to rebound strongly over time, near
term challenges are likely to persist. This will have implications

for both activity and profitability of the Development segment
over the next two years. In addition, profit recognition on projects
we commence with investment partners is expected to be more
closely aligned with the achievement of key delivery milestones
and project cash flow outcomes in future periods. This will result
in a transition phase in the short term.

Notwithstanding the impact of the pandemic, there is $14.5 billion of
work in progress, and the Group expects to commence more than
$16 billion of work in FY22-FY23. Important planning milestones have
progressed across numerous urbanisation projects that have been
secured in recent years. We expect many of these to move into the
delivery phase over the next two financial years, although weighted
towards FY23. These include the San Francisco Bay Area project,
High Road West in London and La Cienega Boulevarde in Los Angeles.

The Australian Communities business has not been positioned to
take full advantage of the favourable market environment over the
last year. We expect sales to accelerate in FY22, boosted by the
commencement of new projects. However, with the typical lag
between sales and subsequent settlements, volumes are expected
to remain below the annual settlement target of 3,000-4,000 lots.

Key Financials and Operational metrics

EBITDA ($m)

Pipeline¹ ($b)

Pipeline¹ roll forward ($b)

Operating EBITDA ($m)

Operating Profit after Tax ($m)

Invested Capital3 ($b)

Production4 ($b)

Work in Progress2 ($b)

Pipeline ($b)

FY20

322

233

4.8

5.0

12.3

113.0

FY21

469

342

4.4

3.8

14.5

113.6

793

673

552

469

322

113.0

113.6

113.0

8.4

(3.8)

(4.0)

113.6

71.1

76.1

49.3

FY17

FY18

FY19

FY20

FY21

FY17

FY18

FY19

FY20

FY21

FY20

New work
secured

Production

FX and
other

FY21

Invested Capital3 ($b)

Return on Invested Capital

Work in Progress2 roll forward ($b)

Work in Progress by Product2 ($b)

4.3

4.8

4.4

3.0

9.6%
5 year average

FY17

FY18

FY19

FY20

FY21

5.6

(3.8)

0.4

14.5

12.3

FY20

Commence-
ments

Prod-
uction

FX and
Other

FY21

Apartments for sale
Apartments for rent
Commercial
Communities

$14.5b

40%

48%

Production4 ($b)

Production4 by product ($b)

Pipeline1 by product ($b)

Indicative commencements ($b)3

4.6

4.0

5.6

5.0

3.8

Apartments for sale
Apartments for rent
Commercial
Communities

19%

18%

$3.8b

29%

34%

FY17

FY18

FY19

FY20

FY21

Apartments for sale
Apartments for rent
Commercial
Communities

12%

36%

$114b

30%

22%

Apartments for sale
Commercial

Communities

Apartments for rent

Jan-21 to Jun-23
>$20b

$3.6b 2H 2021
commencements

29%

17%

33%

10%

11%

1. Comparative period the year ended 30 June 2020. 2. Represents the end value of buildings in delivery. 3. Securityholder equity plus gross debt less cash on balance sheet.
4. Project end value on product completed during a financial period (representing 100 per cent of project value).

1. Total estimated project revenue of all development work secured (representing 100 per cent of project value). 2. End value of Development Pipeline in delivery as at period
end (representing 100 per cent of project value). 3. Subject to changes in delivery program.

7.2%TARGET 10-13%4.7%FY20FY2162

A sense of place

Lendlease Annual Report 2021 Performance and Outlook

Construction performance

The Construction segment delivered a good result,
notwithstanding significant COVID disruptions. EBITDA of
$173 million was up from $101 million in the prior year.

Revenue of $6.4 billion was down 16 per cent,1 with activity
still impacted by delays in the commencement of new projects
and ongoing productivity impacts across sites. Revenue from
Australia and the Americas, which accounts for more than 80
per cent of total Construction revenue, declined by 11 per cent1
and 29 per cent1 respectively.

The EBITDA margin rose to 2.7 per cent, the upper end of
the target range of 2-3 per cent. Overall performance across
the portfolio was solid, despite a weaker outcome in Europe.
Margins were aided by contributions from projects that
reached completion. In addition, disciplined cost management
implemented in response to the pandemic had a positive impact
on earnings.

Completions included the Crown Sydney Hotel, two residential
for rent buildings at Elephant Park, a major defence contract

and commercial and residential towers at Melbourne Quarter.
New work secured of $8.8 billion was up from $7.5 billion with
the Australian and European businesses benefitting from public
sector activity.

In Australia, new work secured of $4.3 billion was underpinned
by several projects in the defence sector, the Caboolture and
Tweed Valley Hospitals and Cairns Convention Centre. This was
supplemented by private sector projects including the office
tower at 555 Collins Street, Melbourne. The European business
secured $1.5 billion of new work. This was predominantly from
government clients and includes projects for the London Borough
of Camden, the Ministry of Justice and Manchester City Council.

New work secured of $2.5 billion in the Americas was well below
historical averages, reflecting subdued activity in the key markets
along with some delays in projects being brought to market.

Extensive sector expertise and geographic diversity has
been critical for the business to navigate through a difficult
operating environment.

Construction outlook

The outlook for the Construction segment remains subject to
the potential ongoing disruption risk from COVID. Backlog
revenue remains solid and increased modestly to $14.9 billion,
with $11.3 billion relating to external clients which will generate
future revenue and margin. The remaining backlog relates
to integrated projects, with the margin reported through the
Development segment.

The backlog remains diversified by both client type and
geography. However, public sector projects have become more
important for the business in the near term and now account for
more than half of the external backlog. This has also resulted in a
shift in the sector mix with the social infrastructure and defence
sectors becoming more prominent as a proportion of the backlog.

The Group’s development target of greater than $8 billion of
production per annum represents a material uplift in the amount
of development activity and this is expected to benefit the
Construction business.

Australia has a strong workbook, with $8.6 billion in backlog
revenue. Key projects include Residences One and Two at

One Sydney Harbour, Sydney Place, Melbourne Quarter
Tower, several defence contracts and the Sydney Metro Martin
Place and Sydney Metro Victoria Cross Integrated Station
Developments.

The established Construction business in the Americas has
good market share in its target cities and sectors with backlog
revenue of $3.9 billion. Subdued recent new work secured
volume has resulted in a decline in backlog. The strong growth
in the urbanisation pipeline to $27.8 billion in the region provides
substantial opportunities for future construction backlog.

Backlog revenue in Europe is $1.7 billion. Recent project wins
provide near term certainty of activity while Europe’s $51.8 billion
development pipeline is expected to provide a significant amount
of construction work in future years.

In Asia, backlog revenue is modest relative to other regions as the
business focuses on the delivery of The Exchange TRX in Kuala
Lumpur and specialist sectors for external clients.

Key Financials and Operational metrics

EBITDA ($m)

Backlog by Sector

Backlog by Client

Revenue ($m)

Operating EBITDA ($m)

Operating Profit after Tax ($m)

New Work Secured ($b)

Backlog ($b)

271

296

FY20

7,627

101

7.5

13.9

FY21

6,398

173

100

8.8

14.9

211

173

101

FY17

FY18

FY19

FY20

FY21

Commercial
Defence
Residential
Social
Infrastructure
Other

18%

Major
Project¹
Backlog
Revenue

32%

25%

Lendlease
Corporate
Government

4.8

24%

45%

Major
Project¹
Backlog
Revenue

31%

New Work Secured by Sector

EBITDA Margin

Commercial
Social
Infrastructure
Residential
Defence
Other

13%

15%

33%

$8.8b

30%

2.4%
5 year average

Backlog roll forward2 ($b)

External

Internal

Backlog3 ($b)

External

Internal

8.8

(7.2)

(0.6)

14.9

New work
secured

Run-off

FX and
Other

11.3

FY21

13.9

10.6

FY20

15.7

15.2

15.6

13.9

14.9

FY17

FY18

FY19

FY20

FY21

1. Comparative period the year ended 30 June 2020.

1. Includes all Construction projects with backlog greater than $100 million, which represents 85 per cent ($12.7 billion) of secured backlog. 2. Internal revenue not included in
the Construction segment financial performance. 3. FY17 - FY19 internal and external backlog presentation derived based on Construction projects with backlog greater than
$100 million.

FY20FY21TARGET 2-3%1.3%2.7%64

A sense of place

Lendlease Annual Report 2021 Performance and Outlook

Investments performance

Investments outlook

The Investments segment delivered EBITDA of $276 million, down
8 per cent on the prior year as performance continued to be
impacted by COVID. The segment generated a Return on Invested
Capital of 5.9 per cent, just below the target of 6-9 per cent.

Management EBITDA, derived from funds and asset management
activities across the Group’s Investments platform, was
$165 million, down from $198 million.1

Ownership EBITDA was $111 million, up from $102 million,
reflecting a recovery in underlying investment income, which
more than offset lower asset sale profits during the year. The
challenging retail environment also resulted in lower returns
across the Group’s retail investments. Ownership earnings
exclude the impact of property revaluations across the
investment portfolio.

Funds management revenue of $145 million was down from
$212 million due primarily to the significant performance fee
generated from the completion of Paya Lebar Quarter in the
prior year.

Asset management revenue of $139 million was up from
$105 million. $1.3 billion of redevelopment activity was secured
across the US residential portfolio underpinning the overall
increase in asset management fees. Performance was impacted
by lower retail asset management fees, with COVID impacting
activity across the sector. Residential asset management fees
now represent the largest component of the asset management
revenue base.

The trading performance of the Retirement Living business, while
still subdued, recovered during the year, reflecting the strength
of the established housing market. There was a modest rise in
resales coupled with strong price growth and an uplift in the sale
of new units.

The Group’s investments closed the year at $3.5 billion, down from
$4.0 billion, reflecting the sale of the US Telecommunications
Infrastructure business and the divestment of a 25 per cent
interest in the Retirement Living business. The Investment
portfolio is well diversified, with the predominant exposure across
the retirement, office, retail and residential sectors.

Funds under management, assets under management and the
investment portfolio are the key operating metrics that drive
performance.

Assets under management declined slightly to $28.5 billion, reflecting
the foreign exchange translation impact on the US residential
portfolio and modest valuation declines across retail assets.

Funds under management commenced the new financial year
at $39.6 billion, up ten per cent.1 The growth was underpinned
by a new $2 billion multisector investment mandate secured
in Australia, additional residential for rent product in both the
US and Europe, and acquisitions across the Australian Funds
Management platform. This more than offset the negative
foreign exchange translation impact due to the appreciation
of the Australian dollar. In addition to the current funds under
management, there is approximately $2.7 billion of future secured
FUM based on development projects currently in delivery via
managed funds or mandates.

The Group’s urbanisation development pipeline is expected
to continue to provide a key source of future growth for the
Investments platform. The existing urbanisation development
pipeline includes more than $50 billion of institutional investment
grade product across commercial and residential for rent assets.

The Group’s investments of $3.5 billion includes $0.9 billion in
each of retirement, retail and office assets, respectively, and
$0.7 billion in residential, with the remainder in industrial. The
Group made further progress in realigning its exposure to
the retirement sector with an investment partner acquiring
25 per cent of the Retirement Living business. This reduced the
Group’s interest to 50 per cent. The Group continues to assess
redeployment opportunities within the Investments segment.

The Group’s strategy is to significantly grow its investment
portfolio over time, delivering the Group a solid base of recurring
earnings. Growth is expected to include retaining a larger
proportion of completed assets from the development pipeline
and investing alongside investment partners through the launch
of new products. Key initiatives progressed during the year
include securing the first data centre development in Japan under
the Lendlease Data Centre Partners, and the establishment of a
new life sciences investment partnership in the US.

Key Financials and Operational metrics

EBITDA ($m)

Funds Under Management2 ($b)

Assets Under Management 2,3 ($b)

433

369

278

300

276

30.1

26.1

35.2

36.0

39.6

28.7

29.3

28.5

12.2

12.7

FY20

FY21

Funds Under Management fees ($m)

Assets Under Management fees ($m)

Management EBITDA2 ($m)

Ownership EBITDA3 ($m)

Operating EBITDA ($m)

Operating Profit after Tax ($m)

Invested Capital4 ($b)

212

105

198

102

300

214

3.7

145

139

165

111

276

213

3.6

FY17

FY18

FY19

FY20

FY21

FY17

FY18

FY19

FY20

FY21

FY17

FY18

FY19

FY20

FY21

Investments5 ($b)

Return on Invested Capital

Funds Under Management2 by Sector ($b)

Assets Under Management2 by Sector ($b)

3.3

3.4

3.7

4.0

3.5

6.9%
5 year average

FY17

FY18

FY19

FY20

FY21

Office
Retail
Residential
Industrial
Other

4% 3%

$40b

55%

32%

Residential
Retail
Office

11%

$29b

48%

41%

Investments EBITDA by Activity ($m)

Investments5,6 by Sector ($b)

Funds Under Management2 roll forward ($b)

Assets Under Management2 roll forward ($b)

FY20

FY21

198

165

102

111

Management EBITDA

Ownership EBITDA

Retail
Retirement
Office
Residential
Industrial
Other

3% 1%

19%

26%

$3.5b

25%

26%

4.8

(0.4)

0.2

(1.0)

39.6

36.0

29.3

0.6

(0.2)

(0.6)

28.5

FY20

Additions

Divest-
ments

Revalua-
tions

FX and
Other

FY21

FY20

Additions

Divest-
ments

Revalua-
tions

FX and
Other

FY21

1. Comparative period the year ended 30 June 2020. 2. Earnings primarily derived from the Investment management platform and the management of US residential housing
operations. 3. Returns excluding non-cash backed property related revaluation movements of Investment Property, Other Financial Assets, and Equity Accounted
Investments in the Investments segment. 4. Securityholder equity plus gross debt less cash on balance sheet. 5. The Group’s assessment of market value of ownership
interests. 6. Represents the Group's ownership interest. Total invested capital in the segment of $3.6 billion in FY21.

1. Comparative period the year ended 30 June 2020. 2. The Group's assessment of market value. 3. Assets Under Management excludes US residential housing for FY17
and FY18.

5.9%TARGET 6-9%5.8%FY20FY2166

A sense of place

Lendlease Annual Report 2021 Performance and Outlook

Non core segment

The Group completed the sale of the Engineering business to
Acciona Infrastructure Asia Pacific in September 2020. The
Group has received $150 million of the agreed purchase price
of $197 million. The final deferred payment, which was due on
30 June 2021, has not been received. The Group has commenced
legal proceedings against Acciona in relation to remaining
amounts owing. There was no impact on the Income Statement
from the sale, that is, there was no gain or loss on sale. A working
capital cash balance of $411 million transferred to the buyer
upon settlement.

Under the terms of the sale agreement, the Group retained three
projects and exposure to other historical projects. The Group
recorded $168 million after tax in additional provisioning relating
to claims on historical projects completed prior to the sale of
the Engineering business. These claims are subject to dispute
proceedings and are expected to take time to resolve.

The Melbourne Metro Project, the remaining project in delivery, is
scheduled to complete in 2025. During the year, the Cross Yarra
Partnership and the D&C Subcontractor joint venture between
Lendlease, John Holland and Bouygues Construction resolved
identified issues with the Victorian Government in relation to
the scope and costs on the project. The project progressed well
during the year and did not require any additional provision.

Post balance date, an agreement was entered into with Service
Stream for the sale of the Services business for a purchase price
of $310 million. The transaction is expected to complete prior to
the end of calendar year 2021.

The loss of $181 million after tax for the Non core segment
includes the additional provision to cover claims on historical
projects, the performance of the Engineering business prior to
sale completion, the retained Melbourne Metro project and the
Services business.

Key Financials and Operational metrics

Revenue ($b)

Operating EBITDA ($m)

Operating Loss after Tax ($m)

Services

New Work Secured1 ($b)

Backlog ($b)

FY20

FY21

Var.

2,884

1,444

(50%)

(495)

(406)

(139)

(181)

1.4

2.0

1.5

2.7

n/a

35%

Financial position and
cash flow movements

Financial Position

Cash and cash equivalents

Inventories

Equity accounted investments

Investment properties

Disposal Group assets held for sale1

Other assets (including financial)

Total assets

Borrowing and financing arrangements

Disposal Group liabilities held for sale1

Other liabilities (including financial)

Total liabilities

Net assets

Inventories

Inventories decreased by 28 per cent following several
development initiatives with investment partners, the settlement
of residential apartments and declining construction inventories.
The formation of new investment partnerships and subsequent
reclassification of both Residences One and Two at One Sydney
Harbour to Equity Accounted Investments were the largest
contributors to the decline.

Equity accounted investments

Equity accounted investments increased by two per cent.
The residential towers at Barangaroo, together with equity
contributions for the newly secured urbanisation projects in
New York and Los Angeles, were the main sources of growth.
These were almost offset by a reduction in investments relating
to the divestment of a 25 per cent interest in the Retirement
Living business.

FY20
$m

1,111

5,369

3,671

658

841

6,098

17,748

2,395

670

7,751

10,816

6,932

FY21
$m

1,662

3,873

3,758

467

7,240

17,000

2,357

7,692

10,049

6,951

Var.

50%

(28%)

(29%)

(100%)

19%

(4%)

(2%)

(100%)

(1%)

(7%)

Other asset movements

The 29 per cent decline in Investment properties reflects the sale
of the US Telecommunications business, more than offsetting
growth in other investments. The sale of the Engineering business
resulted in Disposal Group assets held for sale declining to zero.

Total assets, total liabilities and net assets

Total assets decreased four per cent and total liabilities declined
by seven per cent, with the sale of the Engineering business being
a key contributor in each case.

1. Only the next five years of revenue secured on new contracts has been included.

1. Net assets of $171 million have been disposed of upon completion of the sale of the Engineering business.

A sense of place

Lendlease Annual Report 2021 Performance and Outlook

Financial position and
cash flow movements

Cash movements ($m)

1,562

(469)

(227)

948

(152)

1,662

Financing cash flow
Net cash outflow from financing activities was $146 million
with the repayment of borrowings and distribution payments
exceeding the proceeds from borrowings. The Group continued
to diversify its sources of financing with the issue of two green
bond offers, a first for the Group, including a $500 million
green bond representing the largest issued by an Australian
non financial corporate. The Group remains in a strong financial
position with $4.9 billion of liquidity.

FY20
closing
cash

Underlying
operating
cash
flow

Interest
and tax
paid

Underlying
investing
cash flow

Net
financing
and other
adjustments

FY21
closing
cash

Operating and investing cash flow
The Group measures underlying cash flow to enable an
assessment of cash conversion. The measures are derived by
adjusting statutory cash flows, with the largest adjustment relating
to the impact on cash flows from investments in development.
Underlying operating cash outflow was $469 million. The
establishment of separate development joint ventures to deliver
two residential towers at One Sydney Harbour resulted in an
approximate $900 million decrease in the underlying operating
cash flow and an equivalent increase in underlying investing
cash flow. Net underlying operating cash inflow was solid
across a range of other development projects. There was also an
approximate $200 million operating cash outflow from the Non
core segment. The cash conversion ratio to operating EBITDA
over the five years to FY21 was 73 per cent.

Underlying investing cash inflow was $948 million. Proceeds
from strategic divestments in the year, combined with the
One Sydney Harbour cash inflows, more than offset additional
capital commitments across the Development and Investments
segments. The largest sources of inflow were from the further
25 per cent sale of the Retirement Living business and several
strategic divestments, although the proceeds from the sale of
the Engineering business were more than offset by the working
capital cash balance transfer.

Group funding and debt facilities

Net debt1

Borrowings to total equity plus borrowings

Net debt to total tangible assets less cash1

Interest cover2

Average cost of debt

Average debt maturity

Average debt mix fixed: floating

Undrawn facilities

times

years

ratio

FY20

833

25.7

5.7

2.8

3.4

4.2

56:44

4,226

FY21

695

25.3

5.0

6.4

3.6

4.9

87:13

3,268

Var.

(17%)

(2%)

(12%)

129%

17%

(23%)

Net debt and gearing declined with gearing holding below the bottom end of the target range. The Group is in a strong liquidity position
with $1.7 billion of cash and cash equivalents and $3.2 billion in available undrawn debt. Interest cover has improved in conjunction with
a recovery in EBITDA and lower interest expense.

Debt Facilities3 ($m)

1,800

Drawn

Facility

555

741

300

–

235

180

113

531

478 478

296 296

UK Bond
Issue

Syndicated
cash
advance
facility

Syndi-
cated
loan
facility

Club
Revolving
Credit
Facility

Asia Loan
Facility

CNY
bank
facility

US$ Reg.
S notes

S$ Reg.
S notes

Green
Bond
A$500
million

A$
medium
term
notes

298 298

Green
Bond
A$300
million

Debt Maturity Profile4 ($m)

UK Bond Issue
Syndicated cash advance facility
Syndicated loan facility
Club Revolving Credit Facility
Asia Loan Facility
CNY bank facility

US$ Reg. S notes
S$ Reg. S notes
Green Bond A$500 million
A$ medium term notes
Green Bond A$300 million
Undrawn

300

900

556

741

714

900

235

180

533

500

297

300

FY22

FY23

FY24

FY25

FY26

FY27

FY28

FY29

FY30

FY31

1. $451 million of cash and cash equivalents was classified as Disposal Group assets held for sale at FY20. A working capital cash balance of $411 million transferred on the
completion of the sale of the Engineering business. 2. EBITDA has been adjusted to exclude one-off items related to the Engineering business. 3. Values are shown at
amortised cost. 4. Values are shown at gross facility value.

A sense of place

Lendlease Annual Report 2021 Governance

Governance

As noted in the Chairman’s
Report, the events of the last year
have left a profound impact on
the business.

The Board’s focus has been to navigate
through this time of uncertainty with scale
and pace, and to drive forward on the
Group’s strategic priorities. This continued
throughout the year as evidenced by
the high number of meetings conducted
by the Board during FY21. It has been
essential for the Board to remain highly
engaged and support our people in
addition to fulfilling its core responsibilities
to oversee governance, culture, financial
controls and risk management.

Sydney:
Board visit to One
Sydney Harbour,
Barangaroo South on
Gadigal Country

A sense of place

Lendlease Annual Report 2021 Governance

Board of Directors’
information and profiles

The Lendlease Board is
committed to exceptional
corporate governance policies
and practices which are
fundamental to the long term
success and prosperity of
the Group.

In FY21, the Board continued its
longstanding practice of reviewing its
corporate governance and reporting
practices. The Corporate Governance
Statement is available on the Lendlease
website (www.lendlease.com/au/
company/governance). For detailed
information on the skills, experience
and qualifications of each of the
Directors, refer to pages 72 to 77 of the
Annual Report.

The Corporate Governance Framework
is regularly assessed and amended
to remain current. The Board’s five
permanent committees continue to assist,
advise and make recommendations
to the Board on matters falling within
their areas of responsibility, as set out
in the Committee Charters. The Board
delegates authority for all other functions
and matters necessary for the day to day
management of the Group to the Global
Chief Executive Officer, who delegates
to senior management as required. Limits
of Authority, which are reviewed at least
annually, are in place. These outline
the matters specifically reserved for
determination by the Board and those
matters delegated to Board Committees
or Group Executive Management.

Michael J Ullmer, AO
Chairman
(Independent Non Executive Director)

Term of Office

Mr Ullmer joined the Board in December 2011 and was appointed
Chairman in November 2018.

Skills, Experience and Qualifications

Mr Ullmer brings to the Board extensive strategic, financial
and management experience accumulated over his career in
international banking, finance and professional services. He
was the Deputy Group Chief Executive Officer of the National
Australia Bank (NAB) from 2007 until he retired from the Bank in
August 2011. He joined NAB in 2004 as Finance Director and held
a number of key positions including Chairman of the subsidiaries
Great Western Bank (US) and JB Were. Prior to NAB, Mr Ullmer
was at Commonwealth Bank of Australia, initially as Group Chief
Financial Officer and then Group Executive with responsibility for
Institutional and Business Banking. Before that, he was a Partner
at accounting firms KPMG (1982 to 1992) and Coopers & Lybrand
(1992 to 1997).

Mr Ullmer has a degree in mathematics from the University of
Sussex. He is a Fellow of the Institute of Chartered Accountants,
a Senior Fellow of the Financial Services Institute of Australia, and
a Fellow of the Australian Institute of Company Directors.

Listed Company Directorships
(held within the last three years)

Non Executive Director of Woolworths Limited
(appointed January 2012)

Other Current Appointments

Nil

Board Committee Memberships

Member of the Audit Committee

Member of the Nomination Committee

Member of the People & Culture Committee

Member of the Risk Committee

Member of the Sustainability Committee

Philip M Coffey
(Independent Non Executive Director)

David P Craig
(Independent Non Executive Director)

Term of Office

Mr Coffey joined the Board in January 2017.

Mr Craig joined the Board in March 2016.

Skills, Experience and Qualifications

Mr Coffey served as the Deputy Chief Executive Officer (CEO) of
Westpac Banking Corporation from April 2014 until his retirement
in May 2017. As the Deputy CEO, Mr Coffey had the responsibility
of overseeing and supporting relationships with key stakeholders
of Westpac including industry groups, regulators, customers and
government. He was also responsible for the Group’s Mergers &
Acquisitions function. Prior to this role, Mr Coffey held a number
of executive positions at Westpac including Chief Financial
Officer and Group Executive, Westpac Institutional Bank. He has
successfully led operations based in Australia, New Zealand, the
United States, the United Kingdom and Asia and has extensive
experience in financial markets, funds management, balance
sheet management and risk management. He began his career
at the Reserve Bank of Australia and has also held executive
positions at Citibank.

Mr Coffey holds a Bachelor of Economics (Hons) from the
University of Adelaide and has completed the Executive Program
at Stanford University Business School. He is a graduate member
of the Australian Institute of Company Directors and Senior
Fellow of the Financial Services Institute of Australasia.

Mr Craig is a business leader with a successful international
career spanning over 39 years in finance, accounting, audit,
risk management, strategy and mergers and acquisitions in the
banking, property and professional services industries. He was
the Chief Financial Officer (CFO) of Commonwealth Bank of
Australia from 2006 through the GFC, until he retired in June
2017. At Commonwealth Bank, he was responsible for leading the
finance, treasury, property, security, audit and investor relations
teams.

Mr Craig’s previous leadership roles have included CFO for
Australand Property Group, Global CFO for PwC Consulting and
a Partner at PwC (17 years).

As well as his role as CFO of Australand Property Group
(now Frasers), Mr Craig was responsible for Property for the
last 22 years of his executive career, including overseeing three
significant property transformations at CBA.

Mr Craig holds a Bachelor of Economics from the University of
Sydney. He is a Fellow of the Institute of Chartered Accountants,
ANZ and a Fellow of the Australian Institute of Company
Directors.

Listed Company Directorships
(held within the last three years)

Non Executive Director of Macquarie Group Limited
(appointed August 2018)

Other Current Appointments

Listed Company Directorships
(held within the last three years)

Nil

Other Current Appointments

Director of the Clean Energy Finance Corporation Board

President of the Financial Executives Institute of Australia

Board Committee Memberships

Chairman of the Risk Committee

Member of the Audit Committee

Member of the Nomination Committee

Member of the People and Culture Committee

Deputy Chairman of the Victor Chang Cardiac Research Institute

Director of the Sydney Theatre Company

Board Committee Memberships

Chairman of the Audit Committee

Member of the Nomination Committee

Member of the People and Culture Committee

Member of the Risk Committee

A sense of place

Lendlease Annual Report 2021 Governance

Board of Directors’
profiles

Jane S Hemstritch
(Independent Non Executive Director)

Elizabeth M Proust, AO
(Independent Non Executive Director)

Nicola M Wakefield Evans
(Independent Non Executive Director)

Robert Welanetz
(Independent Non Executive Director)

Term of Office

Ms Hemstritch joined the Board in September 2011.

Ms Proust joined the Board in February 2018.

Ms Wakefield Evans joined the Board in September 2013.

Mr Welanetz joined the Board in March 2020.

Skills, Experience and Qualifications

Ms Hemstritch has extensive senior executive experience in
information technology, communications, change management
and accounting. She also has broad experience across the
financial services, telecommunications, government, energy and
manufacturing sectors and in business expansion in Asia. During
a 25 year career with Accenture and Andersen Consulting, Ms
Hemstritch worked with clients across Australia, Asia and the US.

Ms Hemstritch was Managing Director Asia Pacific for Accenture
from 2004 until her retirement in 2007. She was a member of
Accenture’s global Executive Leadership Team and oversaw the
management of Accenture’s business in the Asia Pacific region,
which spanned 12 countries and included 30,000 personnel.

Ms Hemstritch has a Bachelor of Science in Biochemistry and
Physiology from the University of London and is a Fellow of the
Institutes of Chartered Accountants in Australia and in England
and Wales. She is a Member of Chief Executive Women.

Listed Company Directorships
(held within the last three years)

Non Executive Director of Telstra Corporation Limited
(appointed August 2016, retired January 2019)

Other Current Appointments

Ms Proust is one of Australia’s leading business figures and has
had a diverse career holding leadership roles in the public and
private sectors for over 30 years. Ms Proust spent eight years
at ANZ Group including four years as Managing Director of
Esanda, Managing Director of Metrobanking and Group General
Manager, Human Resources, Corporate Affairs and Management
Services. Before joining ANZ, Ms Proust was Secretary (CEO)
of the Department of Premier and Cabinet (Victoria) and Chief
Executive of the City of Melbourne.

Ms Proust has extensive board experience in listed and private
companies, subsidiaries and joint ventures, as well as government
and not for profits. She was made an Officer of the Order of
Australia in 2010 for distinguished service to public administration
and to business, through leadership roles in government and
private enterprise, as a mentor to women, and to the community
through contributions to arts, charitable and educational bodies.
She is a Fellow of the Australian Institute of Company Directors
and a member of Chief Executive Women.

Ms Proust holds a Bachelor of Arts (Hons) from La Trobe
University and a Bachelor of Laws from the University of
Melbourne.

Listed Company Directorships
(held within the last three years)

President of the Board of The Walter and Eliza Hall Institute
of Medical Research

Nil

Board Committee Memberships

Member of the Audit Committee

Chairman of the Nomination Committee

Other Current Appointments

Chairman of Cuscal Limited

Chairman of SuperFriend

Member of the People and Culture Committee

Board Committee Memberships

Member of the Risk Committee

Chairman of the People and Culture Committee

Member of the Nomination Committee

Member of the Risk Committee

Member of the Sustainability Committee

Ms Wakefield Evans is an experienced business leader and Non
Executive Director with broad ranging commercial, business
management, strategy and legal experience gained over a 30 year
international career. Ms Wakefield Evans held several key management
positions at King & Wood Mallesons (KWM), including Managing
Partner International in Hong Kong, where she was responsible for the
overall governance and strategic positioning of the business in the
Asia region. In addition to holding a number of senior management
and leadership roles, Ms Wakefield Evans has had a diverse career
as one of Australasia’s leading corporate finance lawyers.

Ms Wakefield Evans has extensive experience in the financial services,
resources and energy and infrastructure sectors. She has extensive
international experience working in Australia, New York and Hong
Kong. Ms Wakefield Evans was included in the Australian Financial
Review and Westpac Group’s inaugural list of ‘Australia’s 100 Women
of Influence’. She is a member of Chief Executive Women.

Ms Wakefield Evans holds a Bachelor of Jurisprudence and a
Bachelor of Laws from the University of New South Wales and is a
qualified lawyer in Australia, Hong Kong and the United Kingdom.

Listed Company Directorships
(held within the last three years)

Non Executive Director of Macquarie Group Limited
(appointed February 2014)
Non Executive Director of Viva Energy Group Limited
(appointed August 2021)

Other Current Appointments

Chair of 30% Club, Australia
Director of the Clean Energy Finance Corporation
Director of UNSW Foundation Limited
Director of Australian Institute of Company Directors
Director of MetLife Australia
Director of Goodes O’Loughlin (GO) Foundation Limited
Member of the Takeovers Panel

Board Committee Memberships

Chairman of the Sustainability Committee
Member of the Nomination Committee
Member of the Audit Committee
Member of the Risk Committee

Mr Welanetz is based in the US and has significant executive,
advisory, strategic and operational experience in the property and
construction sectors gained over an international career spanning
over 40 years.

In his most recent role, Mr Welanetz served as Chief Executive
Officer in the property division of Majid Al Futtaim (MAF), based
in Dubai, where he had overall responsibility for managing MAF’s
property portfolio and development pipeline. Mr Welanetz retired
from that position in 2018. Prior to joining MAF, Mr Welanetz
spent over seven years in a global role in Blackstone’s Real Estate
Group advising and identifying acquisition opportunities in retail
real estate and providing strategic guidance for Blackstone’s
portfolio of retail assets and retail operating companies.

Mr Welanetz also served as Chief Executive Officer of Shanghai
Kinghill Ltd, based in China, with responsibility for the operations
and delivery of retail and development projects in mainland China.
Prior to this, Mr Welanetz was President and Chief Executive
Officer, Retail, at Jones Lang LaSalle Inc Americas.

Mr Welanetz holds a Bachelor of Science degree from Colorado
State University. He is a former Chairman of the International
Council of Shopping Centres and served on the board of the
Galileo Property Trust, an Australian shopping centre investor.

Listed Company Directorships
(held within the last three years)

Nil

Board Committee Memberships

Member of the Nomination Committee

Member of the Risk Committee

Member of the People & Culture Committee

Member of the Sustainability Committee

A sense of place

Lendlease Annual Report 2021 Governance

General Counsel and
Company Secretary
qualifications and
experience

Karen Pedersen
Ms Pedersen was appointed Group
General Counsel in January 2013. Prior
to this she was General Counsel and
Company Secretary for other large
property and construction companies.
Ms Pedersen has a Masters of Law from
the University of Technology, Sydney and a
Bachelor of Commerce/Bachelor of Laws
from the University of New South Wales.

Wendy Lee
Ms Lee joined Lendlease in September
2009 and was appointed Company
Secretary in January 2010. Prior to her
appointment, Ms Lee was a Company
Secretary for several subsidiaries of a large
financial institution listed on the Australian
Securities Exchange. She has over 15
years of company secretarial experience.
Ms Lee has a Bachelor of Arts and a
Bachelor of Laws from the University of
Sydney, a Graduate Diploma in Applied
Corporate Governance, and is a Fellow of
the Governance Institute Australia.

Global Chief Executive Officer

Tony Lombardo
Tony Lombardo was appointed Global Chief Executive Officer of
the Group, effective 1 June 2021.

Tony Lombardo has more than 25 years’ experience working across
real estate development, investment management, finance, mergers
and acquisitions (M&A) and strategy in Australia and internationally.

Tony joined Lendlease in 2007 as Group Head of Strategy and M&A
where he led a number of initiatives including refocusing the Group's
overall business strategy. In 2011, he was appointed Group Chief
Financial Officer and played a key role in enhancing the flexibility
of the Group’s capital structure via a stapled structure as well as
significantly broadening its funding and banking relationships. He
also implemented a range of people focused initiatives including
creation of the Young Indigenous Pathways program, which provides
mentoring opportunities for young Indigenous students.

In 2016, Tony was appointed Chief Executive Officer Asia based in
Singapore. As part of resetting Lendlease Asia’s growth strategy,
Tony spearheaded a number of major initiatives to drive future
growth. Recent successes include the completion of Singapore’s
S$3.7 billion Paya Lebar Quarter mixed use development,
establishment of a US$1 billion data centres joint venture with a
large institutional investor and the successful listing of S$1 billion
global LREIT on the Singapore Exchange.

Prior to joining Lendlease, Tony spent almost 10 years at GE with
responsibilities across a number of functional disciplines including
strategy, M&A and finance for both GE Capital and GE Corporate.
Tony commenced his career at KPMG where he worked for more
than four years.

Tony holds a degree in Accounting and Finance from RMIT
University and is a member of the Institute of Chartered
Accountants in Australia.

Previous Board Members
during the reporting period

Stephen B McCann
(Retired 31 May 2021)

Mr McCann, the former Group Chief Executive Officer and
Managing Director joined the Board in March 2009 and retired
in May 2021.

Colin B Carter, AM
(Retired 20 November 2020)

Mr Carter joined the Board in April 2012 and retired in
November 2020.

Baroness Margaret A Ford, OBE
(Retired 18 August 2020)

Baroness Ford joined the Board in March 2020 and retired in
August 2020. Lendlease previously announced on 17 August 2020
that the disruption caused by COVID was the major contributor
driving Baroness Ford's decision to retire. Baroness Ford continues
to assist the Lendlease Board in respect of the Group's European
operations as an independent advisor. Baroness Ford has flagged
a willingness to rejoin the Board once COVID related restrictions
have significantly subsided, if this remains appropriate.

Board skills
and experience

Industry experience
The Board views ‘industry experience’
as skills or experience gained in
one or more of the core Lendlease
operating segments of Development,
Construction and/or Investments.

5 of 7
Board members
have experience in
one or more of the
core segments

100%
Have Directors’
experience in
governance and
financial acumen

Directors’ average tenure
The Board considers it has an appropriate
mix of new, mid and longer tenured
Directors. At June 2021, the average term
of the Board is 6 years.

Gender diversity
The target of 30 per cent female Board
members aims to improve gender
diversity and focus its attention on
achieving this objective. This target has
been exceeded.

1-3
years

3-6
years

6-9
years

9+
years

40%
Current female
Directors as at
June 2020

43%
Current female
Directors as at
June 2021

The Directors have a mix of local and
international experience and expertise, as well
as specialised skills to assist with decision
making to effectively govern and direct the
organisation for the benefit of securityholders.

The table below sets out the skills and experience considered by
the Board to be important for its Directors to have collectively.
These skill areas are reviewed regularly to assess their alignment
with and support of the Group’s strategic direction. The
skills matrix assists the Board with succession planning and
professional development initiatives for Directors. In determining
the skills matrix, each Director undertakes a self assessment of
their skills and expertise.

Skills/Experience

Comments

Total

Governance

Industry
Experience

International
Operations

Health
and Safety

Sustainability

Strategy

A commitment to and experience in setting exceptional corporate governance policies,
practices and standards.

Possessing industry knowledge, exposure and experience gained in one or more of the core
Lendlease operating segments of Development, Construction and Investments. This includes
acting in advisory roles for these industries.

Exposure to international regions either through experience gained directly in the region or through
the management of regional clients and other stakeholder relationships.

Experience in programs implementing safety, mental health and physical wellbeing on site and
within the business. Monitoring the proactive management of workplace health and safety practices.

The ability to identify economically, socially and environmentally sustainable developments.
Ability to set and monitor sustainability aspirations.

Developing, setting and executing strategic direction. Experience in driving growth and executing
against a clear strategy.

Risk
Management

Experience in anticipating and evaluating risks that could impact business. Recognising and managing
these risks by developing sound risk governance policies and frameworks.

Legal

People and
Culture

Executive
Leadership

Financial
Acumen

Technology

Experience in identifying and resolving legal and regulatory issues and having the ability to assist the
Board on these matters.

Experience in building workforce capability, setting a remuneration framework which attracts and
retains a high calibre of executives, promoting workplace culture, diversity and inclusion.

Skills gained while performing at a senior executive level for a considerable length of time including
delivering superior results, dealing with complex business models, projects, and issues and change
management.

Understanding of the financial drivers of a business. Experience in financial reporting and corporate
financial management.

Strong technology background including online communications, IT workplace knowledge, security
and data analysis skills.

A sense of place

Lendlease Annual Report 2021 Governance

Engagement

Board regional program FY21

As an international company and having regard for the material
scale of individual projects, the Board program is formulated to
reflect the geographic spread of Lendlease's businesses.

The Board program typically comprises
formal meetings and additional business
briefings, presentations from internal
and external sources, project site visits,
employee events and meetings with key
stakeholders and customers.

The Lendlease Board views these
program activities, in addition to the
formal, scheduled Board and Committee
meetings, as an important part of
receiving a greater understanding of our
people, our business and the activities and
operations within each region.

The Chair works with the Company
Secretary to forward plan the program for
the year. Depending on the time of year
and depth of project review required, the
program runs for three to five days.

In FY21, the Board maintained its regular
cadence of meetings. While some
engagement activities with our people and
customers were temporarily placed on
hold in response to COVID, other parts of
the program were able to be maintained
through the use of virtual technology.

Program for the reporting period between 1 July 2020 and 30 June 2021.
Board program activities undertaken during the reporting period are listed below.

Asia (virtual program)

Virtual site tour and safety overview of the
TRX project in Kuala Lumpur, Malaysia
(August 2020)

Deep dive and virtual site tour of the
Ardor Gardens Retirement Living Project
in Shanghai, China (September 2020)

Virtual engagement with Lendlease China
Senior Leadership Team who provided
insights into district governments and an
overview of Lendlease China operations
(September 2020)

Received a briefing from an external
speaker on the geopolitical landscape in
Asia including sovereign risk and trade
issues (September 2020)

Discussion with the Asia Regional
Leadership Team (September 2020)

Europe (virtual program)

Received briefings from an external
speaker on insights into the UK market
including governance focus areas, impact
of COVID on real estate, investments and
construction, and the impact of Brexit
(November 2020 and May 2021)

Deep dive and virtual site tour of the
Milan Innovation District (MIND) project.
(June 2021)

Interactive individual and group
discussions between the Board and
Europe Regional Leadership Team
members. These sessions provided
guidance, motivation and support in
career development (June 2021)

Australia (virtual and on site program)

Engagement with regional business
leaders to provide updates and overview
of key regional business issues (individual
Directors, quarterly intervals throughout
the reporting period)

Virtual site visit and interaction with the
project team for the integrated Sydney
Place project (March 2021)

Viewing and site walk of One Sydney
Harbour residential precinct and overview
of project. Engagement and Q&A session
with project team and Board members
(March 2021)

Site walk around Barangaroo foreshore
public realm, delivered in FY21
(March 2021)

Virtual site visit and project deep dive of
the Sydney Martin Place Metro project.
(September 2020). This was followed
by a project deep dive, on site visit and
project team Q&A session with the Board
(May 2021)

Site tour of apartments and common areas
in the 11 Gibbons Street, Redfern project –
a mixed use social and affordable housing
development delivered by Lendlease for
St George Community Housing (SGCH).
Client engagement with CEO and Senior
Leadership Team of SGCH (May 2021)

Americas (virtual program)

Received a briefing from an external
speaker on insights into US policy
proposals addressing areas of particular
relevance to Lendlease including housing,
sustainability, supply chain, healthcare
and the COVID response (October 2020)

Virtual site viewing of the Javits
Convention Centre in New York
(May 2021)

Sydney:
Board visit to
One Sydney Harbour

Stakeholder engagement
The Board members, led by the Chairman,
maintain an active and extensive
engagement program to represent the
interests of Lendlease at various industry
functions and bodies. The Chairman acts
as a spokesperson for Lendlease and
regularly meets with customers, investors,
governments and media.

The Board encourages two way
communications with our investor

community and in June 2021 released on
the ASX a presentation detailing the scope
of the Board's activities in FY21.

Our Annual General Meeting (AGM)
provides our securityholders with a
valuable opportunity to communicate
with the Board. In 2020, Lendlease held
a virtual AGM and our securityholders
were able to join the meeting online,
ask questions and vote on all resolutions
in 'real time'.

Meeting with
Lendlease people
Our Board members believe that it is
important to meet with local Lendlease
management and employees in all our
regions to assess the culture of Lendlease
at work. They encourage employees to
ask questions at 'town hall’ style events,
providing an opportunity for open and
honest debate on organisational culture.
Due to the restrictions put in place
because of the pandemic, in FY21 these
sessions occurred on a smaller scale,
often in virtual formats.

Board Project Assessments

One of the key responsibilities of the Lendlease Board is to oversee the strategy
so the Group can pursue its integrated business model in targeted gateway cities
around the world. In FY21, the Board used technology to attend site visits and
attend deep dive reviews of various projects.

The MIND development project is
presented as a case study of the activities
that the Board undertakes in reviewing
and assessing strategic opportunities.

Site visits allow the Board to see and
experience firsthand the challenges
and opportunities associated with a
project’s delivery.

Milan Innovation District, Italy

Commencing in April 2017, the Board
was introduced to the opportunity to
design, construct and deliver the Milan
Innovation District (MIND), a 100 hectare
mixed use redevelopment with an end
value of $3.6 billion. The project is a truly
integrated project bringing together
Lendlease’s end to end capabilities and
embodying our strategic view on the
future of urbanisation.

The Board received a deep dive
presentation from the Project Team
ahead of the formal request for approval

to move forward with the MIND
project. The deep dive covered several
aspects of the development including
the alignment to strategy. Factors
considered included urbanisation and
digital aspects, understanding of risk
limits, capital partners, the development’s
viability, commercial assessment, risk
factors, geopolitical matters, the safety,
sustainability and environment strategy,
and the planning and scheme masterplan
process. These issues continued to be
discussed in project updates at various
times and while not exhaustive, were
indicative of the issues considered during
boardroom discussions.

The Board’s most recent visit to the MIND
site was through the use of technology in
June 2021 when an aerial flythrough of
the project was provided and the Board
met virtually with several members of the
project team.

Milan:
Milan Innovation
District (MIND)

Artist’s impression

A sense of place

Lendlease Annual Report 2021 Governance

Supporting
value
creation

The Board recognises that
the five focus areas of
value creation, supported
by disciplined governance
and risk management,
contribute to performance
and drive the long term
value of our business.

During the year, in addition to the
responsibilities and tasks set out in
the Charter documents, the Board
and Board Committees deliberated
on the following specific matters and
undertook a number of activities to
support value creation. While these do
not represent the full scope of Board
activities, they highlight some of the
areas of focus by the Board.

Health and Safety
Material Issue:

Financial
Material Issue:

Our Customers
Material Issue:

Our People
Material Issue:

Sustainability
Material Issue:

Operating safely across our operations
and projects. Maintaining the health and
wellbeing of our employees and those
who engage with our assets and sites.

The Board and Risk and Sustainability
Committees undertook the following
activities as part of their continued
review of the Lendlease Health and
Safety Framework and the unwavering
commitment to the safety of our people
and those who interact with Lendlease
assets and sites.

Activities and actions:

• Formed a Board subcommittee to
receive and discuss the measures
and actions taken in response to two
fatalities on two of our operations,
at Curtin University and at Setia City
Mall, Malaysia

• In conjunction with the Risk Committee,
received reports on the formation of
the Design Risk Appetite Policy and
endorsed the appointment of a Group
Chief Engineer to strengthen the
approach to safety and quality issues
across the Group from a technical
perspective

• Received reports on the revised

approach to the global safety standards
to be applied in the updated Global
Minimum Requirements (GMRs),
released in March 2021

• Every Board member undertook the

EH&S Passport training in May 2021 to
understand the application of the 2021
GMRs and the role that our people
play in safety

• Received status updates on the

completion of the mandatory online
EH&S Passport training by our people.
95 per cent of our global workforce
completed the EH&S Passport within
90 days of launch

• In tandem with the People & Culture
Committee, led the work on the
approach to setting the guiding
principles to manage remuneration
adjustments following safety incidents

• Continued to address the health and
safety culture through on site and
virtual site visits and received reports
from management on the ways that
safety issues were being managed on
these projects

• Received reports on the promotion of
our health and safety expectations of
our business partners

• Received reports from business leaders

on the ways that they had shared
lessons learned from Level 3 critical
incident reports.

Delivering securityholder returns.
Maintaining strong capital management to
enable investment in our future pipeline.

The Board and Audit and Risk Committees
undertook the following activities to help
fulfil the Board’s oversight responsibilities
in delivering returns to securityholders
and by adopting a prudent approach
to capital management with a view
to maintaining a strong balance sheet
throughout market cycles.

Activities and actions:

• Continued to consider project

approvals in the context of the Portfolio
Management Framework, with the
object to maximising long term
securityholder value

• Formalised the audit tender policy so
that at least once every ten years, an
external audit tender is conducted,
and if this has not been conducted
within the ten year period, provide an
explanation to securityholders in the
Annual report as to the reasons for not
conducting a tender

• Continued to receive reports on how
the risk appetite framework is gaining
traction in the business, both at a
project approval and enterprise level
to drive more informed and consistent
decision making

• Received reports and monitored

engagement with credit rating agencies
on the Group’s rating outlook. Moody’s
credit rating improved from Negative
to Stable following completion of
Engineering sale

• Endorsed the Lendlease $500 million

Green Bond which successfully
launched in October 2020 and a further
$300 million Green Bond in March
2021 to become the largest green bond
issued by an Australian non financial
corporate. The proceeds of the bond
will be focused on green buildings
and earmarked to eligible projects in
Lendlease’s global portfolio, consisting
of 23 major urbanisation projects
• Oversaw the exit of the Engineering

business and the operating framework
for the delivery of remaining Engineering
projects and the exit strategy for the
Services business

• Finalised the Core business

‘Go Forward’ strategy through the
strategy refresh process and the
communications of this to market.
Sponsored through Board involvement
five implementation workstreams to
support the ‘Go Forward’ strategy.

Understanding our customers and
responding to changes in the market.
Designing and delivering innovative,
customer driven solutions to win the
projects we want to win and ultimately
deliver the best places.

The Board and its committees undertook
the following activities as part of its
support of the Group’s customer focused
approach and to embed a process of
continuous improvement based on
customer insights and actions.

Activities and actions:

• Endorsed the Group Customer

Complaint Handling & Feedback Policy
setting a minimum standard across the
Group. Continued to receive reports
on customer engagement, types of
complaints and resolution timeframes
for every region

• Received reports on the progress of
the Digital Strategy and the product
development achievements of
digital initiatives

• Received a report on the application and
Lendlease preparation for the Australian
Government Payment Times Reporting
Scheme for small business suppliers

• Received external reports on the

measuring of Board effectiveness as
viewed by external investors. Continued
the engagement program of major
Board stakeholders through FY21

Attracting, developing and retaining
diverse talent. Ensuring we have the right
capability across the organisation to
deliver results for all stakeholders.

The Board, People and Culture Committee
and Nomination Committee undertook
the following activities to help attract,
develop and retain diverse talent and to
monitor the investment in developing
leaders and capabilities.

Activities and actions:

• A key focus of the Board has been

the CEO succession process, which
came to a successful conclusion with
Tony Lombardo formally taking over
the role on 1 June 2021. This has been
a disciplined process supported by an
external advisor who assisted the Board
in development of the leadership cohort

• Reset CEO remuneration downwards
and in line with market expectations.
Oversaw the alignment of the structure
of executive remuneration at Lendlease
with the new CEO’s package
• Endorsed changes to the Global

Leadership Team with new external
hires announced: Simon Dixon as Chief
Financial Officer and Deborah Yates as
Chief People Officer. Endorsed the new
organisation structure at Lendlease

• Continued the program of board

refreshment by actively reviewing Board
composition against the skills matrix

• Received a deep dive report from the

• Continued to review and discuss

Americas CEO to brief the Board on key
customer relationships relevant to the
US residential portfolio.

the Group’s talent management and
strategic resourcing strategy and
endorsed actions to provide greater
transparency on the talent process.
Engaged with regional senior leaders
through virtual meetups to continue
engagement with the Board to gain
greater visibility of the emerging pool of
potential internal successors to the GLT
• Approved a one-off payment to frontline

and customer facing staff from the
Hardship and Wellbeing Fund (seeded
in part by the voluntary fee reduction
agreed by Non Executive Directors
and Lendlease senior executives) in
recognition of the challenges presented
by the COVID pandemic.

Designing, delivering and operating
buildings and precincts that respond to the
immediate challenge of reducing carbon
emissions, while creating social value.
Meeting the increasing expectations
of key stakeholders for climate resilient
assets that support human health and
value natural capital.

The Board and Sustainability Committee
engaged in the following activities to help
deliver inclusive, healthy and adaptable
places that can thrive through change.

Activities and actions:

• Approved a commitment to reconciliation
by endorsing the Group’s Reconciliation
Action Plan which achieved ‘Elevate’
status in November 2020. Requested
that management implement a quarterly
reporting program to report on the progress
of initiatives outlined in the Elevate RAP
• Engaged with management, attended

workshops and endorsed the Group’s two
new sustainability targets to reflect the
Group’s commitment to:
- Net Zero Carbon for Scope 1 and 2

emissions by 2025, and Absolute Zero
Carbon by 2040

- Delivering $250 million of measured

social value by 2025

• Requesting that management implement
quarterly progress reporting against both
the carbon and social value targets

• Received regular reports on ethical supply
chains within the Group to ameliorate the
risk of material substitution and modern
slavery. Endorsed the 2020 Modern
Slavery Statement following regular
presentations from management
• Continued to receive reports on the
Group’s approach to social housing
• Conducted a deep dive review of the

ESG reporting frameworks and indices
to understand in further detail various
reporting and rating schemes

• Received reports on the assessment against

project approvals against the Group’s
Environmental and Social Risk Assessment
framework since launching in 2020

• Requested and received a report on the

review of the Group’s approach to climate
against ACSI’s new climate policy
• Continued to receive reports at every
meeting on the progress against the
Task Force on Climate-related Financial
Disclosures risk assessment and reporting
framework

• Received a case study on sustainability

leadership in action focusing on the 1 Java,
New York project and the risk assessment
of different river flood impacts across the
time horizons of now, 2050 and 2100

• Received regular reporting on the Lendlease
FutureSteps initiative to address affordable
and housing issues. Conducted a site visit
of a partnership project with St George
Community Housing in Redfern, Sydney.

A sense of place

Lendlease Annual Report 2021 Governance

Board of Directors’ information

Interests in Capital
The interests of each of the Directors in the stapled securities of the Group at 16 August 2021 is set out below.
The current Non Executive Directors acquired Lendlease securities using their own funds.

Securities Held
Directly 2021

Securities Held
Beneficially/
Indirectly 2021

Total
2021

Securities Held
Directly 2020

Current Directors

M J Ullmer

P M Coffey

D P Craig

J S Hemstritch

E M Proust1

N M Wakefield Evans

R F Welanetz

Former Directors

S B McCann2

C B Carter3

M A Ford4

7,000

375,000

125,000

21,216

73,061

33,061

68,061

34,379

46,874

18,601

4,065

21,216

73,061

33,061

68,061

34,379

7,000

421,874

18,601

4,065

Securities Held
Beneficially/
Indirectly 2020

Total
2020

110,000

21,216

63,061

23,061

53,061

21,216

63,061

23,061

53,061

34,020

7,000

547,200

291,527

838,727

18,061

4,065

18,061

4,065

1. E M Proust also holds through her super fund $500,000 face value of Lendlease Green Bonds. 2. S B McCann ceased to be an Executive Director on 31 May 2021.
The balance of securities held at the end of the financial year shown here represents the balance held at that date. 3. C B Carter ceased to be a Non Executive Director on
20 November 2020. The balance of securities held at the end of the financial year shown here represents the balance held at that date. 4. M A Ford ceased to be a Non
Executive Director on 18 August 2020. The balance of securities held at the end of the financial year shown here represents the balance held at that date.

Directors’ Meetings
Board meetings

The Board meets as often as necessary
to fulfil its role. Directors are required to
allocate sufficient time to the Group to
perform their responsibilities effectively,
including adequate time to prepare for
Board meetings. During the financial year
ended 30 June 2021, 13 Board meetings
were held. Typically, four face to face
meetings would be held in Australia
and one each in the UK, Asia and the
Americas to align with the Group’s
regional operations. In addition, three
shorter meetings are scheduled to provide
updates to the Board between the longer
face to face meeting programs. Due to
the mandatory travel and group meeting
restrictions put in place in response
to the COVID pandemic, from March
2020 onwards, the Board transitioned
to enable virtual attendance at all Board
and Committee meetings. Matters were
also dealt with as required by circular
resolution. From time to time special
subcommittees were formed to give
the Board better guidance and provide
oversight concerning specific matters.
During the reporting period, 10 Board
subcommittee meetings were also
constituted to deal with specific matters.

Overview of Board Committees

The Board recognises the essential role
of Committees in guiding the Company
on specific issues. There are five standing
Board Committees to assist, advise and
make recommendations to the Board
on matters falling within their areas of
responsibility. Each Committee consists of

independent, Non Executive Directors. The
Chair of each Committee is not a Chair of
other Committees, or Chair of the Board.
Each Committee is governed by a formal
Charter setting out its objectives, roles and
responsibilities, composition, structure,
membership requirements and operation.
Directors who are not members of the
Committees have a standing invitation to
attend meetings of the Committees. During
the reporting period and in conjunction
with the review of the Board and its
Committees, a review of the accompanying
Charters and Workplans for each of the
Committees was undertaken.

The five permanent Committees of
the Board are:

Audit Committee

The Audit Committee assists the Board
with its oversight responsibilities in
relation to accounting policies and
practices, tax matters, treasury reporting,
monitoring of internal financial controls,
internal and external audit functions and
financial reporting of the Group.

People and Culture Committee

The People and Culture Committee
assists the Board with its oversight
responsibilities in relation to establishing
people management, diversity and
inclusion, talent and remuneration/
compensation policies for the Group.

Risk Committee

The Risk Committee assists the Board with
its oversight responsibilities in relation
to risk management and internal control
systems, risk policies and practices and
compliance. The Risk Committee also

has another important role: to review,
and if approved, recommend to the
Board for approval major transactions as
referred to the Committee by the Global
Investment Committee. Given the review
of major transactions moving to the Risk
Committee, all members of the Board are
members of the Risk Committee.

Sustainability Committee

The Sustainability Committee assists
the Board to monitor the decisions and
actions of management in achieving
Lendlease’s aspiration to be a sustainable
organisation. Sustainability is viewed as
encompassing how Lendlease conducts
business through the pursuit of workplace
safety, a commitment to corporate social
responsibility, environmentally sustainable
solutions and employee diversity,
development and opportunity. Lendlease
is strategically and culturally committed
to achieving commercial success in ways
that honour ethical values and respect
people, communities and the natural
environment.

Nomination Committee

The Nomination Committee advises
and supports the Board to fulfil its
responsibilities to securityholders,
certify that the Board is comprised of
individuals who bring a mix of expertise,
skills, experience and perspectives, and
contribute to the discharge of diligent
oversight and effective corporate
governance of the Group. The Nomination
Committee also oversees activities for
Director development and oversees the
reviews of Board, Committee and Director
performance.

Attendance at Meetings of Directors 1 July 2020 to 30 June 2021
The number of Board and Board Committee meetings held, and the number of meetings attended by each
Director during the 2021 financial year, are set out in the tables below.

(MH) Number of meetings held. (MA) Number of meetings attended.

Membership

M J Ullmer

P M Coffey

D P Craig

J S Hemstritch

E M Proust

N M Wakefield Evans

R F Welanetz

Former Members

S B McCann2

C B Carter3

M A Ford4

Membership

M J Ullmer

P M Coffey

D P Craig

J S Hemstritch

E M Proust

N M Wakefield Evans

R F Welanetz

Former Members

S B McCann2

C B Carter3

M A Ford4

Board
(Chairman M J Ullmer)

Board
Subcommittee7

Strategy
Workstream Meetings8

Nomination Committee
(Chairman J S Hemstritch)

MH1

125

116

People &
Culture Committee
(Chairman E M Proust)

Risk Management
Committee
(Chairman P M Coffey)

Sustainability Committee
(Chairman
N M Wakefield Evans)

Audit
Committee
(Chairman D P Craig)

1. Reflects the number of meetings held during the time the Director held office during the year. Five out of the 13 meetings were Board teleconferences constituted to
address specific issues. 2. S B McCann, the former Group CEO and MD retired from the Board on 31 May 2021. The number of meetings attended reflects the number of
meetings until S B McCann's retirement. S B McCann is not a member of the Audit, Risk, People & Culture and Sustainability Committees but as Group CEO and MD, he has a
standing invitation to the Committee meetings. 3. C B Carter retired from the Board on 20 November 2020. The number of meetings attended reflects the number of
meetings until C B Carter's retirement. 4. M A Ford retired from the Board on 18 August 2020. The number of meetings attended reflects the number of meetings until M A
Ford's retirement. 5. D P Craig was unable to attend one of the five Board teleconferences as they were called at short notice to address specific issues. 6. J S Hemstitch was
unable to attend two of the five unscheduled Board teleconferences as they were called at short notice to address specific issues. 7. Subcommittee meetings were convened
during the reporting period to address specific issues or strategy items. Only the Subcommittee members attended the relevant meeting. 8. Strategy Workstream meetings
were convened during the reporting period to provide oversight of the Group's strategic initiatives. Only the Strategy Workstream members attended the relevant meeting.
The Board Chairman and Group CEO and MD had standing invitations to all the Strategy Workstream meetings.

Lendlease Annual Report 2021 Governance

Remuneration Report

Message from the Board
The challenging operating conditions
associated with COVID continued to have a
negative impact across our global gateway
cities (see the Performance and Outlook
section on page 59 for further information).

Notwithstanding these challenges,
there were notable achievements that
supported the delivery of our Core
operating profit result of $377 million
after tax and continued progress on our
strategic priorities. Management brought
capital partners into a number of major
urbanisation projects, built upon our
Development pipeline, and launched
new Investment products. Construction
activity continued in all jurisdictions, albeit
with reduced productivity due to social
distancing requirements and the impact of
lockdowns. The Group’s balance sheet and
liquidity remain strong.

Our priority to protect the health
and safety of our people, customers,
subcontractors and other stakeholders
remains a fundamental guiding principle,
particularly in the current environment.

Given this context, framing appropriate
remuneration outcomes for our people in
FY21 has been particularly challenging.

Responding to your feedback

At the November 2020 Annual General
Meeting we received a first strike, with 47
per cent of securityholders voting against
the FY20 Remuneration Report. Feedback
from proxy advisors and securityholders
highlighted a number of concerns, including
the quantum of CEO remuneration,
elements of our Executive reward structure,
and a view that the FY20 Deferred Equity
Awards were not aligned with overall
performance and the environment.

Although this outcome was disappointing,
the Board has carefully considered
stakeholder feedback and has taken the
following actions to address key concerns:

• Increased the transparency of Board

decision making for determining Short
Term Award (STA) outcomes, as well
as formalising our guiding principles
and process for remuneration decisions
arising from safety incidents

• Lowered the quantum of remuneration

for the new Global CEO

• Made changes to our Executive Reward

Strategy from 1 July 2021:
– Removed the Restricted Securities

Award (RSA)

– Implemented STA deferral
– Rebalanced the remuneration mix
– Simplified the communication
of Long Term Awards (LTAs) at
maximum opportunity to align with
market practice.

Leadership transition and adjusted
CEO remuneration

Stephen McCann retired from the Board
on 31 May 2021. This followed a 16 year
career with the Group, including more
than 12 years as Group Chief Executive
Officer and Managing Director. After a
comprehensive search process, the Board
was pleased to announce the appointment
of Anthony Lombardo to the Global CEO
role from 1 June 2021.

The transition to a new CEO provided
the Board with an opportunity to reset
remuneration quantum. The Global
CEO’s Total Maximum Remuneration is
21 per cent lower than his predecessor.
Remuneration without performance
conditions (‘unhurdled’ remuneration)
is 33 per cent lower, reflecting a lower
fixed remuneration and the removal of
the RSA. The mix of pay at maximum
remains weighted toward equity based
remuneration and the LTA continues to be
delivered over a period of up to six years.

Following Stephen’s retirement, unvested
equity awards were left on foot and
remain subject to the original terms.
Unvested equity awards that are subject to
performance hurdles are currently unlikely
to meet the required performance hurdles
when they are tested. However, accounting
standards require that all remaining
expense for these awards be brought
forward into FY21, resulting in a statutory
remuneration disclosure that does not
reflect what was earned during the period.

FY21 reward outcomes reflect our
performance and environment

FY21 STA outcomes

In determining FY21 STA outcomes for
Executives, the Board has considered
performance of both financial and non
financial indicators against the Group
scorecard. The Board also considered the
two subcontractor fatalities reported in FY21.

After careful deliberation, and consideration
of the following factors, the Board
determined that the former Group CEO
would not receive an STA payment for FY21:

• Performance against the Group scorecard
• The additional provisions for legacy

Engineering projects

• His positive contribution and support

provided in the transition to the new CEO

• The preliminary findings of the

business review announced to the
market on 16 August 2021 relating to
Development projects.

With respect to the newly appointed
Global CEO, notwithstanding that his
performance as CEO Asia for the first
part of the year was ahead of the Group
scorecard performance, the Board
considered it more appropriate to apply
the overall Group outcome, being 30 per
cent of maximum opportunity.

Other Executive STA outcomes ranged
between 17 per cent and 40 per cent of their
maximum opportunity, reflecting individual
performance and in-year accountability
relating to the overall Group result.

For more information refer to pages
100 to 103.
LTAs1 where performance has been
assessed at the end of FY21

For LTAs subject to performance hurdles
at the end of FY21, testing did not meet
the required thresholds set by the Board
and consequently there was nil vesting.

Chairman's FY22 fee reduction

Notwithstanding the solid operational
and financial results across our Core
business, the Board recognised the need
for accountability in FY21 for the further
provisions relating to the legacy Engineering
business and the business review preliminary
findings that have been announced in
relation to the Development portfolio.
Accordingly, in addition to the appropriate
Executive accountability, on behalf of the
Board, the Chairman will be taking a 20 per
cent reduction in base fees for FY22.

Looking ahead

We are currently in a period of leadership
transition. Following the appointment of
our Global CEO and a comprehensive
review of the business, we have reset
our organisational structure, effective
from 1 July 2021. Our aim is to drive and
support consistent operations across
regions, realise efficiencies, and place a
greater focus on our competitive edge. At
the same time, the operating environment
remains challenging for our people as the
impacts of COVID persist.

Through proactive and extensive
engagement with stakeholders we will
continue to listen to feedback about our
remuneration structure and decision
making. For FY22 the Board and Global CEO
will review the STA scorecard structure, as
this represents our first opportunity to make
changes following the first strike against the
FY20 Remuneration Report.

We look forward to informing you of our
progress as part of our ongoing engagement.

Michael Ullmer, AO

Chairman

Elizabeth Proust, AO

Chairman,
People & Culture Committee

FY21 Remuneration
Snapshot

FY21 reward outcomes reflect our performance and environment

Nil STA

awarded to
former Group CEO

20%

reduction in Chairman's
fees for FY22

30%

of Maximum STA
awarded to new
Global CEO
(KMP STA outcomes ranged
from 17% to 40% of
Maximum STA opportunity)

Nil LTA
awards vested1
Long Term performance
targets (relative TSR and ROE)
failed to meet challenging
thresholds

The Board conducted an extensive program of work to listen to securityholder feedback
and to test the effectiveness of our Executive Reward Strategy

FY22 Executive
Reward
Strategy amended
to balance stakeholder views
and continue to support
strategic priorities

76%

of new Global CEO
Total Maximum
Remuneration is
performance based

LTA continues to reflect the
long dated nature
of our business

Total Maximum
Remuneration opportunity
reduced

50%

of future STAs to be
deferred into equity

Removed the RSA
increasing the
proportion of performance
based reward

Anthony Lombardo and Stephen McCann effected a successful transition of leadership

33%

reduction
in unhurdled
remuneration

21%

reduction
in maximum
remuneration
opportunity

(for the new Global CEO compared
to former Group CEO)

All outstanding equity awards
remain subject to original
performance conditions
Termination arrangements for former
Group CEO in line with contract

Key appointments to the Global
Leadership Team

1. 2018 LTI (tranche 2) and 2019 LTA (excludes the RSA previously referred to as the LTA Minimum).

Lendlease Annual Report 2021 Governance

Contents

KMPs covered by this report

Remuneration Framework Review

2020 Strike
Executive Reward Strategy Review
Key changes to the Executive Reward Strategy for FY22

FY21 Executive Reward Strategy

Our Remuneration Framework
Alignment between Remuneration Outcomes and Securityholder Experience
Total Remuneration Realised
Fixed Remuneration
Restricted Securities Award (RSA)
Short Term Award (STA)
Long Term Award (LTA)

Executive Service Agreements

Non Executive Director Fee Policy

Remuneration Governance and Risk Management

Other Statutory Disclosures

FY21 Executive Statutory Remuneration
Reconciliation of Realised and Statutory Remuneration for the Former Group CEO
FY21 Non Executive Director Statutory Remuneration
FY21 Executive Equity Holdings
Executive Equity Based Remuneration - Deferred Securities
Executive Equity Based Remuneration - Long Term Awards
FY21 Non Executive Director Equity Holdings

88
89
90

92
94
96
97
98
99
104

108

110

111

114

114
115
116
117
118
119
121

CAGR

Compound Annual Growth Rate

Critical Incident Frequency Rate

Customer Satisfaction

Funds Under Management

Abbreviations

LTA

LTI

ROE

RSA

Long Term Award

Long Term Incentive

Return on Equity

Restricted Securities Award

Financial year ending 30 June 2021

RTSR

Relative Total Shareholder Return

Financial year ending 30 June 2022

Global Leadership Team

SBP

STA

Security Based Payment

Short Term Award

Global Minimum Requirements

TCFD

Task Force on Climate Related Financial Disclosures

Key Management Personnel

TPV

Total Package Value

CIFR

CSAT

FUM

FY21

FY22

GLT

GMR

KMP

KMPs covered by this report

Name

Position

Term as KMP

People & Culture
Committee

Current KMP

P
M
K
e
v
i
t
u
c
e
x
E
n
o
N

P
M
K
e
v
i
t
u
c
e
x
E

Michael Ullmer

Independent Non Executive Chairman

Philip Coffey

David Craig

Jane Hemstritch

Elizabeth Proust

Independent Non Executive Director

Nicola Wakefield Evans

Independent Non Executive Director

Robert Welanetz

Independent Non Executive Director

Anthony Lombardo

Global CEO

Johannes Dekker

Group Head of Construction

Justin Gabbani

Denis Hickey

Frank Krile

Neil Martin

Kylie Rampa

CEO, Asia

CEO, Americas

Acting Group Chief Financial Officer

CEO, Europe

CEO, Property Australia

David Andrew Wilson

Group Chief Commercial and Risk Officer

Full Year

Full Year1

Full Year

Part Year2

Full Year3

Part Year4

Full Year

Full Year5

Full Year6

Chair

Note: The term 'Executives' used throughout this Remuneration Report refers to the Executive KMP listed above, unless stated
otherwise.

Name

Colin Carter

Margaret Ford

Stephen McCann

Tarun Gupta

Former KMP

Position

Date ceased to be KMP

Independent Non Executive Director

20 November 2020

Independent Non Executive Director

18 August 2020

Group CEO and Managing Director

31 May 2021

Group Chief Financial Officer

29 November 2020

Changes following the end of FY21
• Frank Krile, who has been Acting Group Chief Financial Officer since 30 November 2020, has been appointed as

Group Chief Risk Officer, effective 1 July 2021. Frank will also continue to hold the position of Acting Group Chief Financial Officer
until 30 September 2021

• Simon Dixon (external) has been appointed as the Group Chief Financial Officer, effective from 1 October 2021
• Anthony Lombardo announced a new Lendlease organisational structure effective from 1 July 2021 to drive and support consistent
operations across our regions and to place a greater focus on our competitive edge. Further details of the leadership and structure
changes will be set out in the FY22 Remuneration Report.

1. CEO, Asia from 1 July 2020 to 31 May 2021 and appointed Global CEO from 1 June 2021. 2. Appointed 1 June 2021. 3. Appointed to Global Chief Operating Officer from
1 July 2021, supplementing his role as CEO, Americas. 4. Appointed 30 November 2020. 5. Appointed to Group Head of Investments role from 1 July 2021. 6. Ceased as a
KMP on 30 June 2021 and retired on 2 July 2021.

Lendlease Annual Report 2021 Governance

Remuneration Framework Review

As highlighted in our FY20 Remuneration Report, a strategic
review of our Executive Reward Strategy was scheduled for 2021.
The Board expanded the scope of the review in light of the 2020
strike against the Remuneration Report. The focus has been for
our approach to continue to evolve with the business and support
the future success of Lendlease.

Our review has considered securityholder views, as well as future
strategic priorities, internal perspectives, and current/emerging
market practice. This review culminated in the Board determining
an amended approach, which has been adopted from 1 July 2021.

2020 Strike
At the 2020 Annual General Meeting, Lendlease securityholders
signalled concerns with our current remuneration practices and
decision making, delivering a first strike against the Remuneration
Report. While disappointing, the feedback was considered
carefully by the Board as we undertook a first principles review
of our Executive Reward Strategy. Over the course of FY21,
the Board has established a thorough process to gather and
examine views:

Established
a Board led
working group

Reflected on
the feedback
received from
securityholders
as part of pre-
AGM engagement

Reviewed proxy
advisor reports
from FY18-FY20

Conducted an
online survey to
seek feedback
from our Top 100
securityholders

Developed a
Remuneration
Fact Base

Met with
investors

While our consultations highlighted a variety of views about how executive remuneration should work at Lendlease, consistent themes
could be seen:

Concern

Board response

Quantum

Remuneration was considered to be
too high, especially at the CEO level

Remuneration structure

Our Executive Reward Strategy was
adopted in 2018 – a remuneration
framework designed to reflect the
nature of our business.

While some securityholders appreciated
this approach, others remained
uncomfortable with certain features.

The transition to a new CEO provided the ideal opportunity to
adjust remuneration quantum.

The remuneration package for the new CEO has been reduced
by 33 per cent for unhurdled remuneration and 21 per cent for Total
Maximum Remuneration opportunity opportunity compared to the
former CEO.

We have made adjustments to our Executive Reward Strategy from
1 July 2021 to address key concerns. This has included:

• Removing the Restricted Securities Award (RSA)
• Implementing STA deferral
• Rebalancing the remuneration mix
• Communicating and granting LTA at maximum opportunity.

We have retained features that reflect the long dated
nature of the business, such as:

• LTA vesting over years 3 to 6
• Delivering a significant proportion of remuneration in equity.

Refer

Refer to
page 91

Refer to
page 90

FY20 deferred awards were not
considered to be reflective of
performance

Securityholders felt that the FY20
Deferred Equity Award was not
aligned with overall performance and
environment.

The Board reviewed its approach to remuneration decision making and
refined the process to include more detailed disclosures in relation to
STA outcomes.

In addition, we have formalised our guiding principles and process for
decision making in relation to remuneration adjustments arising from
safety incidents, to improve the transparency of the Board’s approach.

Refer to
pages
100 to 103
and 112

We have also refreshed our remuneration report to streamline and simplify our remuneration disclosures, so that the purpose, operation
and outcomes of the Executive Reward Strategy are clear.

Executive Reward Strategy Review

The Board undertook a holistic review of
the Executive Reward Strategy to confirm
that the framework continued to reflect
the Purpose and Strategy of the Group.

Our strategy is urbanisation led,
leveraging our integrated model to create
the best urban precincts in key gateway
cities internationally. See the Strategy
section on page 16 for further information.

Our Purpose:
Together we create value through places where
communities thrive

Our Strategy:
Employ our placemaking expertise and integrated business
model in global gateway cities to deliver urbanisation projects
and investments that generate social, environmental and
economic value

Remuneration Principles

Remuneration at Lendlease should be…

Aligned with securityholder interests

Transparent and easy to communicate

Aligned with team behaviours and enterprise leadership

Market competitive to retain highly capable executives

Balanced with a significant portion of remuneration at risk, which is only earned for
outstanding performance

Longer dated and aligned to our earnings profile, reflecting the importance of
urbanisation projects

Risk management focused with clear practices that minimise potential conflicts of
interest and enable effective and aligned decision making

Our review confirmed that the underlying
remuneration principles align to the
Lendlease Purpose; and continue to support
the achievement of our strategic priorities.

Lendlease Annual Report 2021 Governance

Key changes to our Executive Reward Strategy for FY22

The FY21 review culminated in the design of an amended Executive Reward Strategy for implementation in FY22. The amended
structure was reflected in the appointment of Anthony Lombardo as our new Global CEO. The Board are pleased to note that the
proposed changes have received positive feedback in our engagement with various stakeholders over the course of the year.

FY22 Maximum Remuneration Mix
Maximum remuneration mix for the Global CEO and Executives is as follows:

Performance Based

Change

Rationale

Removal of RSA

Implementation
of STA deferral

• Increases proportion of remuneration subject to performance

• Maintains focus on building Executive securityholdings and alignment with

securityholder experience

Grant LTA at maximum

• Reduces complexity and increases transparency in disclosures
• Aligned with market practice so easily comparable

Recalibrate
LTA vesting schedule

Reset remuneration mix
(increase STA, reduce LTA)

• Straight line vesting between threshold and maximum increases simplicity

• Accounts for removal of RSA, and implementation of STA deferral
• Acknowledges securityholder concerns around LTA maximum quantum
• Increases proportion of remuneration subject to performance
• Maintains long dated nature of Executive Reward Strategy, relative to market peers

The following diagram illustrates the structure of the FY22 Executive Reward Strategy:

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Fixed
Remuneration

STA

LTA

End of deferral / performance period

Base salary + Superannuation
(where applicable)

50 per cent Cash. 50 per cent
Deferred Rights. Distribution
equivalents paid on vested awards
only (in cash or via equity top up)

Performance Rights. Distribution
equivalents paid on vested awards
only (in cash or via equity top up)

Fixed Remuneration

Maximum STA

Maximum LTA

24%

33%

Cash
16.5%

Deferred
16.5%

Relative TSR
14.3%

43%

ROE
14.3%

FUM
14.3%

76 per cent of Total Maximum Remuneration is performance based
59 per cent of Total Maximum Remuneration is delivered in equity

Appointment of new Global CEO
In FY21, Anthony Lombardo was appointed as our new Global CEO, effective 1 June 2021.

As announced to the market in February, the Board took this opportunity to rebase the Global CEO remuneration package to reflect
both the current market and securityholder expectations, which applies from 1 June 2021:

Total Maximum Remuneration (A$’000)

9,500

5,050

1,800

500

2,200

21%
reduction

33%
reduction

7,500

3,200

1,250

1,800

Former Group CEO

Global CEO

LTA
STA (deferred)
STA (cash)
RSA
Fixed Remuneration

The Global CEO’s Total Maximum Remuneration is 21 per cent lower than his predecessor. Unhurdled remuneration is 33 per cent
lower reflecting a reduced fixed remuneration and removal of the RSA. The cash/equity split remains weighted toward equity based
remuneration.

For FY21, Anthony remained on the FY21 Executive Reward Strategy (per his CEO, Asia role), but Fixed Remuneration, STA opportunity
and LTA were increased pro rata for the one month served as Global CEO.

Further detail will be provided on the new Executive Reward Strategy within the FY21
Notice of Meeting and the FY22 Remuneration Report

Lendlease Annual Report 2021 Governance

FY21 Executive Reward Strategy

Our Remuneration Framework

Fixed Remuneration

RSA

STA

LTA

To attract and
retain highly capable
Executives

To retain Executives
and link reward to
long term value
creation

To focus short term
decision making
on priority areas in
the current financial
year

To reward
Executives
for delivering
sustained long term
securityholder value

Quantum is
benchmarked against
relevant comparator
companies to
test market
competitiveness

Annual grant of
equity that is variable
in value as the
security price moves

Annual opportunity
to receive a cash
incentive to focus
performance on
priority areas over
the current financial
year

Annual grant of
‘at risk’ equity to
reward for delivering
the Lendlease
Strategy, in
alignment with long
term securityholder
returns

n/a

Ongoing alignment
with Lendlease
securityholders
as the award value
is linked to security
price movements
over three to six
years

Current financial
year performance,
based on measures
aligned to
Lendlease’s focus
areas of value
creation:

• Financial
(50%)

• Non Financial

(50%)

Forward looking,
three year
performance:

• Relative TSR

(1/3)

• Return on Equity

(1/3)

• Growth in

Funds Under
Management (1/3)

Award value linked
to security price
movements over
three to six years

The People & Culture Committee and the Board review our remuneration principles and remuneration
framework as well as determine the STA and LTA outcomes for Executive KMP, which remain subject
to malus consideration. The Board retains the discretion to reduce or forfeit any unvested awards if it
considers that vesting of such awards will result in the participant receiving a benefit that would be
unwarranted or inappropriate. Additionally, the Global CEO LTA is submitted for securityholder approval
at the AGM.

e
s
o
p
r
u
P

h
c
a
o
r
p
p
A

e
c
n
a
m
r
o
f
r
e
P
o
t
k
n
L

e
c
n
a
n
r
e
v
o
G

The following diagram illustrates the structure of the FY21 Executive Reward Strategy:
The following diagram illustrates the structure of the FY21 Executive Reward Strategy:

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Fixed
Remuneration

RSA

STA

LTA

End of deferral / performance period

Base salary + Superannuation
(where applicable).

Deferred Rights. Distribution
equivalent amounts are paid as
cash during the deferral period

100 per cent Cash

Performance Rights. Distribution
equivalents paid on vested awards
only (in cash or via equity top up)

FY21 Maximum Remuneration Mix
Maximum remuneration mix for the former Group CEO was as follows:

Performance Based

Fixed Remuneration

RSA

Maximum STA

Maximum LTA

23%

19%

Relative TSR
17.7%

53%

ROE
17.7%

FUM
17.7%

Maximum remuneration mix for Executives1 was as follows:

Performance Based

Fixed Remuneration

RSA

Maximum STA

Maximum LTA

23%

10%

15%

Relative TSR
17.3%

52%

ROE
17.3%

FUM
17.3%

1. Excludes Executives that were appointed during FY21 (Justin Gabbani and Frank Krile) as they were not eligible for an RSA.

Lendlease Annual Report 2021 Governance

Alignment between remuneration outcomes and securityholder experience

Five year performance summary

LTI / LTA outcomes and securityholder experience

Profit after Tax (PAT) Attributable to
Securityholders ($m)1

Total Dividends / Distributions ($m)

Earnings per Stapled Security (EPSS) (cents)
(excluding treasury securities)

Annual Total Securityholder Return (%)

Return on Equity (ROE) (%)2

Closing Security Price as at 30 June ($)3

FY17

758.6

384.9

135.2

12.9

16.65

FY18

792.8

399.6

137.0

12.7

19.74

FY19

467

237

(33)

7.4

13.00

FY20

(310)

191

(51.8)

(2)

(4.7)

12.37

FY21

377

186

32.5

(6)

5.4

11.50

STA outcomes and securityholder experience

The following chart sets out aggregate Executive STA outcomes, relative to Annual TSR, Profit After Tax and Total Distributions,
over time.

67%

)

m
$
(

s
e
m
o
c
t
u
o
A
T
S
e
v
i
t
u
c
e
x
E
e
t
a
g
e
r
g
g
A

23%

30%

Total
Distributions
($m)

400400

350

300

250

200

150

100

Annual
TSR

80%80%

70%

60%

50%

40%

30%

20%

10%

-10%

-20%

-30%

PAT
($m)1

800800

700

600

500

400

300

200

100

-100

-200

-300

FY174

FY184

FY19

FY205

FY21

-40%

-400

Aggregate Executive STA outcomes ($m)

Group CEO STA outcome as % Maximum STA opportunity

Annual TSR (%)

PAT ($m)1

Global CEO STA outcome as % Maximum STA opportunity

Total Dividends / Distributions ($m)

STA outcomes reflect short term performance, demonstrating the alignment between
STA outcomes and the securityholder experience

The following chart shows LTI / LTA outcomes for the former CEO relative to 3 year TSR and 3 year average ROE over time:

• Over the period from Sep-05 to Sep-18, 41 per cent of the aggregate value of LTI / LTA awards vested (outcomes range from 0 per

cent to 99 per cent)

• 4 of the 14 LTI / LTA awards were worth more than the grant value due to security price growth (Sep-10, Sep-11, Sep-12 and Sep-13)
• 5 of the 14 LTI / LTA awards were worth nothing when they were tested (Sep-05, Sep-06, Sep-07, Sep-17 and Sep-18).

)

m
$
(

e
u

l
a
v
A
T
L

T
L

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

-0.5

Sep
05

Sep
06

Sep
07

Sep
08

Sep
09

Sep
10

Sep
11

Sep
12

Sep
13

Sep
14

Sep
15

Sep
16

Sep
17

Sep
18

LTI / LTA Grant Date

3 Year
TSR

3 Year
Average
ROE

150%

16%

128%

14%

106%

12%

83%

10%

61%

39%

17%

-6%

-28%

-50%

-2%

Grant Value1

Vest Value (excludes security price growth/decline)

Security price growth /decline

3 Year TSR

3 Year Average ROE

Nil vesting

• Historically, LTI / LTA outcomes have been aligned with the securityholder experience

• LTI / LTA outcomes reward steady and sustainable securityholder returns

1. FY17 to FY20 reflects Statutory Profit after Tax and FY21 reflects Core Operating Profit after Tax. FY21 Statutory Profit after Tax was $222 million. 2. FY17 to FY20, reflects
Statutory ROE which is calculated as the annual Statutory Profit after Tax attributable to securityholders divided by the arithmetic average of beginning half year and year end
securityholders' equity. FY21 reflects Core Operating ROE which is calculated as annual Core Operating Profit after Tax attributable to securityholders divided by the
arithmetic average of beginning half year and year end securityholders' equity. Core Operating ROE replaces Statutory ROE as an LTA hurdle as it better reflects the impact
management have in creating value for securityholders. FY21 Statutory ROE was 3.2 per cent. 3. FY18 reflects 29 June 2018 closing security price and FY19 reflects 28 June
2019 closing security price. 4. 50 per cent paid as cash and 50 per cent deferred as securities. The deferred portion is released in two equal tranches after one and two years.
5. 100 per cent deferred as securities that is released in two equal tranches after one and two years.

1. The LTI / LTA grant value is the number of securities granted multiplied by the 1 September opening security price for the LTI / LTA grant year.

Lendlease Annual Report 2021 Governance

Total Remuneration Realised

Fixed Remuneration

The table below presents the remuneration paid to, or vested for, Executives in respect of FY21.

This section presents our approach to setting Fixed Remuneration.

FY21 Total Remuneration Realised

Design

How Fixed Remuneration Works

A$’0001

Current Executives

Anthony Lombardo2

Johannes Dekker

Justin Gabbani3

Denis Hickey

Frank Krile4

Neil Martin

Kylie Rampa

David Andrew Wilson

Former Executives

Stephen McCann5

Tarun Gupta6

Definitions

Fixed Remuneration

Previous years’ RSA

Unhurdled

Hurdled

P
Previous
years’
RSA

Previous
years’
deferred
securities
vested

FY21
STA
awarded

P Previous
years’
LTI / LTA
awards

P
Security
price
growth /
declineS

Fixed
Remuneration

Termination
Payments

Total
Remuneration
Realised

Awards
forfeited
or lapsed

1,086

1,160

1,417

555

1,249

1,160

1,205

1,943

1,060

500

100

1,074

244

150

368

188

164

125

175

n/a

(206)

(241)

(206)

(208)

(322)

1,624

1,669

(3,664)

(3,300)

(34)

2,079

(3,612)

743

1,413

1,577

(439)

(655)

(3,685)

2,632

(3,275)

(206)

1,900

4,137

1,060

(8,352)

(3,720)

Includes the TPV / Base Salary plus superannuation (where applicable) received during FY21 and reflects the 20
per cent Fixed Remuneration reduction that applied from 1 July 2020 to 31 August 2020.

Includes the RSA (previously referred to as the LTA Minimum) that was granted in September 2018 and reached
the end of the deferral period on 30 June 2021. The value reflects the number of securities multiplied by the grant
price. 25 per cent of this award value will be released in September 2021 and the remaining 75 per cent will be
released in three equal tranches in September 2022, 2023 and 2024, subject to malus provisions.

Previous years’ deferred
securities vested

Includes deferred securities that are not subject to hurdles such as sign on awards and the Distinguished
Executive Award. The value reflects the number of securities that vested in FY21 multiplied by the grant price.

FY21 STA awarded

Reflects the STA awarded in relation to FY21 performance. For Justin Gabbani and Frank Krile, 50 per cent of
the FY21 STA is paid as cash in September 2021 and 50 per cent is deferred as Rights that will be released in two
equal tranches after one and two years. For all other Executives, FY21 STA outcomes will be paid as 100 per cent
cash in September 2021.

Quantum

• No remuneration increases were applied in FY21, except in the case where the Executive

moved to a larger role within the Group

• Neil Martin’s Base Salary increased from £550,000 to £670,0001 effective from 1 September

2020, as part of the transition to the remuneration for the CEO, Europe role.

Benchmarking Approach

• Quantum and remuneration mix are benchmarked to test that total remuneration remains

market competitive

• Annual review except in instance of role changes
• Considers the relative size, scale and complexity of roles to enable a fair comparison
• A target fixed and total remuneration position is established with reference to the market

median and 75th percentile

• Aim to provide total remuneration towards the 75th percentile if outstanding performance is

achieved.

Primary Sources of Data

• The People & Culture Committee typically uses a number of sources for benchmarking

Global CEO and Executive remuneration including:

– Publicly available data for similar roles in companies of a similar size, such as:

–Revenue Group: ASX listed companies with revenue of between 50 and 200 per cent of

Lendlease’s revenue

–Market Capitalisation Group: ASX listed companies that are ranked between 26 and 75

by market capitalisation (excluding companies domiciled outside Australia)

– Publicly available data for comparable roles at:

–Property organisations in Australia such as Charter Hall Group, Dexus, Goodman Group,

GPT Group, Mirvac Group, Scentre Group, Stockland and Vicinity Centres

–Companies where we compete for talent, such as Macquarie Group Limited and AMP

Limited

– Published remuneration surveys, remuneration trends and other data sourced from

external providers.

Supplementary Peer
Group

• To supplement the above information, we also consider the following three companies as
comparators for Lendlease: Brambles Limited, British Land Company PLC and CapitaLand
Limited. These companies were identified as part of a review that was undertaken
during FY21 to determine which companies align with Lendlease based on quantitative
comparisons against key metrics such as profit, market capitalisation and scale of operations
as well as a qualitative overlay that considered the scope of business lines, employee base
and operating environment.

Previous years’ LTI /LTA
awards

Includes the 2018 LTI (tranche 2) and 2019 LTA that reached the end of the performance period on 30 June 2021,
vesting in September 2021. The value reflects the number of securities scheduled to vest multiplied by the
grant price.

The Fixed Remuneration for Executive KMPs was temporarily reduced by 20 per cent
from 1 May 2020 to 31 August 2020 as part of the Group’s response to COVID.

Security price growth /
decline

Includes the value of security price growth / decline between grant and 30 June 2021 for previous years' deferred
securities and between grant and 30 June 2021 for previous LTI / LTA awards. Also includes the value of the
distribution equivalent amounts paid as cash on the RSA.

Awards forfeited
or lapsed

The value reflects the maximum number of securities that were forfeited / lapsed in respect of FY21 multiplied by
the grant price plus the value of the forfeited portion of the maximum FY21 STA.

1. Remuneration is reported in AUD based on the 12 month average historic foreign exchange rates for FY21 (rounded to two decimal places): SGD 1.00 (applied to Anthony
Lombardo and Justin Gabbani), USD 0.75 (applied to Denis Hickey) and GBP 0.55 (applied to Neil Martin). 2. Fixed Remuneration and FY21 STA cash awarded for Anthony
Lombardo reflects time in the CEO, Asia role from 1 July 2020 to 31 May 2021 and time in the Global CEO role from 1 June 2021 to 30 June 2021. 3. Fixed Remuneration and
FY21 STA cash awarded for Justin Gabbani reflects time as a KMP (1 June 2021 to 30 June 2021). 4. Fixed Remuneration and FY21 STA cash awarded for Frank Krile reflects
time as a KMP (30 November 2020 to 30 June 2021). 5. Fixed Remuneration and FY21 STA cash awarded for Stephen McCann reflects time as a KMP (1 July 2020 to 31 May
2021). 6. Tarun Gupta resigned effective 29 November 2020. All unvested equity awards were forfeited upon resignation. Additionally, Tarun was not eligible for an STA award
in FY21.

No Fixed Remuneration increases are proposed for FY22.

1. Fixed Remuneration for Neil Martin, converted to AUD based on the 12 month average historic foreign exchange rates for FY21 (GBP 0.55), has increased from
$1,000,000 to $1,218,182 effective from 1 September 2020.

Lendlease Annual Report 2021 Governance

Global CEO - Market Comparison

When setting the remuneration for the new Global CEO, the Board considered current market data in line with Lendlease’s established
remuneration benchmarking approach (as outlined on page 97). This analysis demonstrated that the proposed remuneration quantum
was aligned to our target market position, except for the positioning of Fixed Remuneration against the Revenue comparator group,
which was below the median. The graph below summarises the market positioning of the new Global CEO’s Fixed Remuneration and
Maximum Total Remuneration against the Revenue and Market Capitalisation comparator groups.

Short Term Award (STA)

This section presents the key features of the STA plan.

Fixed Remuneration

Maximum Total Remuneration

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Target range

■ Revenue group - Lendlease percentile rank
● Market Capitalisation group - Lendlease percentile rank

From FY22, 50 per cent of awarded STA will be deferred as Rights to receive
Lendlease securities. The deferred portion will be released in two equal tranches after
one and two years.

To offset the removal of the RSA, and the introduction of deferral, Maximum STA
opportunity has been increased (excluding the Global CEO).

Design

How the STA Works

Remuneration was set toward the top of the target range for the Select Real Estate companies comparator group for both Fixed
Remuneration and Maximum Total Remuneration.

The Board felt that the new Global CEO’s remuneration quantum was appropriate when considering the size and complexity of the
Group’s operations relative to the companies within the comparator groups. Additionally, the reduction in quantum compared to the
prior incumbent was consistent with market practice when considering recent new CEO appointments.

Eligibility

Quantum

Restricted Securities Award (RSA)

This section presents a summary of the key features of the RSA plan.

Design

How the RSA Works

Funding

Eligibility

Quantum

• Group CEO, Global CEO and Executives

• The RSA quantum is equivalent to:

– Global CEO: 45% of Fixed Remuneration (including 11 months’ opportunity relating to

the CEO, Asia role, and one month relating to the Global CEO role, pro rata)

– Former Group CEO: 23% of Fixed Remuneration
– Executives: 34% - 42% of Fixed Remuneration

Delivery

• Rights to acquire securities, subject to continued tenure
• Award may be settled in cash at the Board’s discretion

Determining the
number of Rights

Deferral Period

Distributions

• Face value: volume weighted average price (VWAP) of stapled securities traded on the ASX
over the 20 trading days prior to the release of the full year results preceding the grant date

• Released in four equal tranches at the end of Y3, Y4, Y5 and Y6

• Distribution equivalent amounts are paid as cash during the deferral period

Going forward, the RSA has been removed from the Executive Reward Strategy for FY22.

Executives who were appointed during FY21 (Justin Gabbani and Frank Krile) were not
eligible for an RSA.

• Group CEO, Global CEO and Executives

• For FY21, target STA opportunity was as follows:

– Global CEO: 49% of Fixed Remuneration (including 11 months’ opportunity relating to the

CEO, Asia role, and one month relating to the Global CEO role, pro rata)

– Former Group CEO: 55% of Fixed Remuneration1
– Executives: 40% - 75% of Fixed Remuneration

• The minimum possible STA outcome is zero
• The maximum STA outcome is limited to 150% of target opportunity2

• The Board determines the pool of funds to be made available to reward Executives, with

reference to Group financial and non financial performance

• The Board examines safety performance and the overall health of the business (including a
broader set of metrics around origination, sustainability and how we have managed risk)

• Global CEO and Executive scorecards, including:

– 50% Financial Performance (earnings, profit, margin, cash flow, and return measures)
– 50% Non Financial Performance (safety, sustainability, risk, people, customer and

strategic measures)

Refer to pages 100 and 101 for a summary of the FY21 Group/Global CEO scorecard

• Lendlease is committed to the safety and wellbeing of all of its employees. While the

assessment is not structured formulaically or as a ‘gateway’ measure, poor health and safety
outcomes may lead to a reduction in STA outcomes for the year

• The People & Culture Committee considers feedback from multiple sources to consider ‘how’

performance outcomes are achieved:

– Group Chief Financial Officer
– Group Chief Risk Officer
– The Audit Committee
– The Risk Committee
– The Sustainability Committee

Key Performance
Indicators

Delivery3

• Cash
• Paid in September following the assessment of performance

1. The FY21 STA target opportunity for Stephen McCann reflects time in KMP role (1 July 2020 to 31 May 2021). 2. The FY21 maximum STA is 139 per cent of STA target
opportunity for the Global CEO for the period from 1 June 21 to 30 June 21. 3. For Justin Gabbani and Frank Krile, 50 per cent of the FY21 STA is paid as cash in September
2021 and 50 per cent is deferred as Rights that will be released in two equal tranches after one and two years.

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FY21 CEO STA scorecard

Areas of focus

Reason chosen

Overall Assessment

Performance assessed against FY21 targets

Lendlease Annual Report 2021 Governance

101

A breadth of financial measures (including Profit
After Tax, EBITDA, cash flow from operating and
investing and overheads), in combination with
the forward looking assessment of the financial
health of the business, focuses the CEO on the
delivery of financial results in the short term while
taking decisions with an emphasis on the long term
interests of securityholders.

Financial

BELOW

ABOVE

A summary of the result against each financial measure is below:

Operating Profit
after Tax

EBITDA

Operating and
Investing Cash Flow

Behind
Target

Above
Target

Overheads

On Target

The Group recorded Core Operating Profit after Tax of $377 million for the year ended 30 June 2021.

Core operating EBITDA in FY21 was $757 million. While the performance of the business improved from
the COVID impacts in FY20, the operating environment remained challenging.

Actual cash flow was $252 million, which was ahead of target, primarily related to the execution of the
sale of a further 25% of the Groups investment in the Retirement Living operations.

Continued focus on the cost base saw overheads lower than targeted, but reduction in NPAT resulted in
Overhead / Gross Profit Margin ratio not being met.

Target

Result

Health & Safety

We are committed to the health and safety of our
people. The Critical Incident Frequency Rate (CIFR)
helps us assess how effective we are at eliminating
life threatening incidents.

BELOW

ABOVE

GMR implementation guides developed and in place as determined by the GLT approved rollout plan

Maintain CIFR at or below set target

< 0.9

n/a

Strategic Initiatives

Effective delivery of strategic initiatives drives
longer term securityholder returns.

BELOW

ABOVE

Complete exit of Engineering business, establish operating framework to oversee delivery of remaining Engineering projects
and review exit strategy for Services business.

Finalise the Core business ‘Go Forward’ strategy through the strategy refresh process and the revised Portfolio Management
Framework post exit of the Engineering business and communicate this to the market.

Progress the implementation of the Group Digital Strategy to take us to a leadership position in digital over the medium term.

Commence implementation of the Group strategic shifts through the establishment and oversight of appropriate GLT
sponsored workstreams and Board engagement.

Launch revised Lendlease Purpose and Carbon targets to internal and external stakeholders.

Effective and proactive risk management is key to
delivering on securityholder expectations.

Actively support the role of the nominated Voice of Risk members to provide robust challenge on Regional Leadership Teams.

Maintain appropriate scenario planning around key risks associated with the external environment, including COVID.

Managing Risk

Aligns remuneration with appropriate risk taking.

BELOW

ABOVE

Champion the new Risk Appetite Framework within the business.

Our Customers

BELOW

ABOVE

Satisfied customers drive long term value.

Improve on FY20 enterprise wide CSAT
score

Improve on FY20 enterprise wide Net
Promoter Score

Target

Result

> 7.6

+17

7.6

+18

Further embed customer centricity into the culture and
operating model using business processes such as Quarterly
Business Reviews and the knowledge framework, and
actively support strategies to build stronger relationships with
key customers from government, business and investors.

0.67

Met

Partial

Met

Partial

Our People

Having the right people in leadership roles is critical
to long term success.

The CEO sponsors key people initiatives.

The CEO actively promotes diversity and inclusion to
grow capability.

BELOW

ABOVE

Support the succession planning process through GLT development with a focus on developing readiness
of one or more Group CEO succession candidates

Maintain or improve People Leadership survey score

Increase proportion of women in leadership

Target

>=61%

26.9%

Result

54%

29.9%

n/a

Met

Sustainability

Capital investors, policy makers, customers and
communities are seeking partners who can deliver
efficient, healthy, resilient, culturally and socially
inclusive outcomes that deliver long term value.

BELOW

ABOVE

1. Performance measures do not have individual weightings. The Board undertakes a holistic assessment of financial and non financial performance to determine the
FY21 CEO scorecard performance.

Demonstrate leadership in sustainability by actively supporting, and requiring senior business leaders to drive and support
actions aligned to the achievement of our key Sustainability Social and Environmental targets

Embed TCFD scenarios in business strategic planning and require Climate impact analysis for all new investment opportunities
through Regional Investment Committee and Global Investment Committee papers

Require all business leaders to have a base level of knowledge about carbon emissions in our business and the implications of
our carbon targets, to enable informed decision making and project review

Met

102

Lendlease Annual Report 2021 Governance

103

Impact of safety incidents on FY21 STA outcomes
We are deeply saddened to report that two fatalities occurred in FY21.

We go beyond regulatory reporting requirements and report all fatalities on our sites as we do not consider the lives of subcontractors
and community members as any different to our employees.

In line with the guiding principles for determining remuneration adjustments arising from safety incidents set out on page 112, the key
factors considered by the Board when determining whether a remuneration adjustment should be made for the fatalities that occurred
during FY21 are:

Curtin University, Perth,
Western Australia

• Safety leadership and safety performance metrics have been of a consistently high standard for the

duration of the project and in the business unit over the past four years.

• The Board was satisfied based on material from internal and external sources made available at the time
that Lendlease had met the standards set out in its GMRs which are generally set at an equivalent or
higher standard than those of local regulators.

Setia City Mall Phase 2
project in Malaysia

• Safety leadership and safety performance metrics have been of a consistently high standard for the

duration of the project and in the business unit over the past four years.

• The findings from the external investigation conducted by the Malaysian authorities confirmed that

Lendlease is not a party of interest.

Based on an assessment of the above factors and material available at the time, the Board has determined that no adjustment would be
made to FY21 STA outcomes as a result of the fatalities, noting that if new information emerges from external investigations, the Board
can reduce future STA outcomes or apply a malus adjustment.

Board's Initial Assessment of FY21 CEO STA scorecard performance

The following table sets outs the Board's holistic assessment of financial and non
financial performance against the CEO STA scorecard for FY21:

% of CEO STA
Target | Maximum

Financial
Performance (50%)

Non Financial
Performance (50%)

FY21 CEO STA
Scorecard
Performance

'Initial Assessment'

• On balance, the Board determined that financial targets were not met.

• The Board considered the position relative to target for each of the

focus areas.

• The People & Culture Committee sought inputs from the Acting Group
Chief Financial Officer / Group Chief Risk Officer and each of the Risk,
Audit and Sustainability Committees.

• In the context of non financial performance the Board determined that
the overall score should be 45% of target opportunity which represents
30% of maximum opportunity.

• Overall, the Board has determined that 45% of target performance against
the CEO STA scorecard was achieved in FY21, which represents 30% of
CEO Maximum STA.

• Differences in Business Unit financial and non financial performance are

reflected in individual KMP FY21 STA outcomes.

0% | 0%

45% | 30%

Business review and impact on FY21 STA outcomes
The Board considered all of the material made available at the time of determining FY21 STA outcomes, including any identified risks, to
establish if there should be any impact on FY21 STA outcomes, unvested equity awards, or both. This included the preliminary findings
of the business review advised to the market on 16 August 2021. Following their review, the Board determined it appropriate that any
adjustments be made to FY21 STA outcomes only to reflect accountability and impact on the overall group result.

FY21 STA outcomes for the former Group CEO and Global CEO

The Board's initial assessment of FY21 CEO STA scorecard performance has been adjusted as
follows:

Stephen McCann - Former Group CEO

Anthony Lombardo - Global CEO

Period as Group CEO

• 1 July 2020 to 31 May 2021

Period as Global CEO

• 1 June 2021 to 30 June 2021

FY21 CEO STA
Scorecard Performance
'Initial Assessment'

30% of Maximum STA

$495,617

FY21 CEO STA
Scorecard Performance
'Initial Assessment'

30% of Maximum STA

$62,500

Other Considerations

Adjustment

Adjusted FY21 Former
Group CEO STA

• Additional provisioning in the Non
Core business relating to legacy
Engineering projects ↓

• The business review identified
a number of projects where a
material change to the development
strategies may be required ↓

• Supported successful CEO

leadership transition ↑

• On balance, the Board determined
that the FY21 STA outcome for
Stephen McCann should be reduced
to nil

Adjustment

• n/a

FY21 Global CEO STA

30% of Maximum STA

$62,500

CEO Asia role

• From 1 July 2020 to 31 May 2021

Other Considerations

• Notwithstanding that Anthony's

performance as CEO Asia for the first
part of the year was ahead of the Group
scorecard performance, the Board
considered it more appropriate to apply
the overall Group outcome, being
30 per cent of maximum opportunity

Adjustment

• n/a

0% of Maximum STA

FY21 CEO Asia STA

30% of Maximum STA

$181,500

Total FY21 STA

30% of Maximum STA

$244,000

FY21 Short Term Performance Outcomes

The following table outlines the FY21 STA opportunity and outcomes for each Executive.

FY21 STA outcomes

Target STA
Opportunity

Maximum STA
Opportunity

STA
Awarded $2

STA Awarded
as % of
Maximum STA

STA Forfeited
as % of
Maximum STA

553

500

613

418

545

500

1,101

n/a

813

750

920

627

818

750

1,652

n/a

244

150

368

188

164

125

175

n/a

30%

20%

37%

40%

30%

20%

17%

23%

70%

80%

63%

60%

70%

80%

83%

77%

100%

A$’0001

Current Executives

Anthony Lombardo3

Johannes Dekker

Justin Gabbani4

Denis Hickey

Frank Krile5

Neil Martin

Kylie Rampa

David Andrew Wilson

Former Executives

Stephen McCann6

Tarun Gupta7

1. Remuneration is reported in AUD based on the 12 month average historic foreign exchange rates for FY21 (rounded to two decimal places): SGD 1.00 (applied to Anthony
Lombardo and Justin Gabbani), USD 0.75 (applied to Denis Hickey) and GBP 0.55 (applied to Neil Martin). 2. For Justin Gabbani and Frank Krile, 50 per cent of the FY21 STA
is paid as cash in September 2021 and 50 per cent is deferred as Rights that will be released in two equal tranches after one and two years. For all other Executives, FY21 STA
outcomes will be paid as 100 per cent cash in September 2021. 3. The FY21 STA for Anthony Lombardo has been prorated to reflect time in the CEO, Asia role from 1 July
2020 to 31 May 2021 and time in the Global CEO role from 1 June 2021 to 30 June 2021. 4. The FY21 STA for Justin Gabbani reflects time as a KMP (1 June 2021 to 30 June
2021). 5. The FY21 STA for Frank Krile reflects time as a KMP (30 November 2020 to 30 June 2021). 6. The FY21 STA for Stephen McCann reflects time as a KMP (1 July 2020
to 31 May 2021). 7. Tarun Gupta was not eligible for an FY21 STA following his resignation effective 29 November 2020.

104

Lendlease Annual Report 2021 Governance

105

Long Term Award (LTA)

LTA Design

How the LTA Works

This section presents the key features of the 2021 LTA (granted in September 2020).

LTA Design

How the LTA Works

Eligibility

Quantum

• Group CEO, Global CEO and Executives1

• The maximum face value of the 2021 LTA award granted in September 2020 is as follows:

– Global CEO: 250% of Fixed Remuneration (including 11 months’ opportunity relating to the

CEO, Asia role, and one month relating to the Global CEO role, pro rata)

– Former Group CEO: 230% of Fixed Remuneration
– Executives: 191% - 225% of Fixed Remuneration

Delivery

• Rights to acquire securities, subject to specific performance conditions and continued tenure
• The number of performance rights is adjusted up or down at vesting based on performance over

the assessment period

• The award may be settled in cash or other means at the Board’s discretion

Determining
the Number of
Performance Rights

• Face value: VWAP of stapled securities traded on the ASX over the 20 trading days prior to the

release of the full year results preceding the grant date

Performance Period

• Three years

Deferral

• Released in four equal tranches at the end of Y3, Y4, Y5 and Y6
• The timeframe reflects a balance between reward that motivates Executives while reflecting the

‘long tail’ of profitability and risk associated with ‘today’s decisions’

From FY22, LTA awards will be granted at maximum opportunity (rather than target).
Accordingly, the vesting schedules will be recalibrated to reflect this change and a
straight line vesting approach will be adopted for added simplicity.

Maximum LTA quantum has been reduced in line with broader changes to the
Executive remuneration mix.

1. Executives that were appointed during FY21 (Justin Gabbani and Frank Krile) were not eligible for a 2021 LTA.

Performance
Hurdles

• The Board believes that these measures provide a suitable link to long term securityholder value creation.
• While the Board appreciates that there are, at times, differing views held by stakeholders, we believe that

these measures provide the appropriate balance between market and non market measures.

Market Measure

Non Market Measures

Relative Total Securityholder
Return (RTSR) - 1/3

Average Operating Return on
Equity (ROE) - 1/3

CAGR % in FUM - 1/3

• TSR incentivises Executives to
deliver returns that outperform
what a securityholder could
achieve in the market and
promotes management to
maintain a strong focus on
securityholder outcomes

• TSR is measured by the growth

in security price and any
dividends/distributions paid
during the performance period

• TSR is measured against
companies that comprise
the Standard & Poor’s (S&P)/
Australian Securities Exchange
(ASX) 100 index

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• CAGR % in FUM recognises the
importance of growth in FUM
to achieving our key strategic
objective of increasing our
Investments platform globally
which will be achieved through
our internal development
pipeline, creating new products,
using value add strategies
and through external market
acquisitions

• CAGR % in FUM is calculated as
the compounded annual growth
rate of Lendlease’s funds under
management over the three year
performance period

• Operating ROE reflects the
capital intensive nature of
Lendlease’s activities and is an
important long term measure
of how well the management
team generates acceptable
earnings from capital invested
and rewards decisions in
respect of developing,
managing, acquiring and
disposing of assets

• Operating ROE replaces

Statutory ROE as it
better reflects the impact
management have in creating
value for securityholders

• Operating ROE is calculated
as the Group’s Operating
Profit After Tax divided by
the arithmetic average of
beginning, half and year end
securityholders’ equity
• Performance is based on

the average Operating ROE
results over the three year
performance period

• Target is reviewed annually

and is set with reference to the
Group’s operating plan

and is set with reference to the
Group’s Portfolio Management
Framework

• Operating ROE target aims to
drive outperformance without
incentivising excessive risk
taking

• The Board believes that the
vesting range provides a
realistic goal at the lower end
and a stretch at the upper end
• The Board is conscious of the
impact that debt can have on
the Operating ROE result and
has governance protocols in
place to monitor this

How the LTA Works

FY21 Long Term Performance Outcomes
The table below presents the performance and vesting outcomes for awards that vested, or were tested, in FY21.

Lendlease Annual Report 2021 Governance

107

106

LTA Design

Vesting
Schedule
(as % of
Maximum LTA)1

RTSR Percentile
Ranking

% of
Maximum LTA

Average
Operating ROE

% of
Maximum LTA

CAGR %
in FUM

% of
Maximum LTA

Below 50th

Below 8%

Below threshold
set by the Board

At the 50th

11%

Between 8% and
target set by the
Board

Straight line
vesting between
8% and 41%

Between
threshold and
target set by the
Board

Straight line
vesting between
8% and 41%

At or above the
50th and below
the 75th

Straight line
vesting between
11% and 100%

At target set by
the Board

41%

At target set by
the Board

41%

75th or greater

100%

Between target
set by the Board
and 11%

Straight line
vesting between
41% and 100%

Between target
and maximum
set by the Board

Straight line
vesting between
41% and 100%

At or above 11%

100%

At or above
maximum set by
the Board

100%

Retesting

• No retesting.
• If the performance hurdle is not met at the time of testing, the awards are forfeited.

Distributions

• Distributions are not paid, unless and until vesting conditions are met.

The LTA vesting schedule has been shown as a percentage of Maximum LTA as we
transition to communicating and granting LTA awards at maximum from FY22 in line
with securityholder and proxy advisor feedback

FY21 LTI / LTA outcomes

LTI / LTA

Award1

Performance
Period

Performance
Hurdle

Performance
Outcome

Vesting
Outcome

Overall
Vesting Outcome
(% Maximum

LTI/LTA)

% of
Maximum
LTI/LTA
forfeited

2017 LTI

(Tranche 2)

1 July 2016 to
30 June 2020

(4 years)

2018 LTI

(Tranche 1)

1 July 2017 to
30 June 2020

(3 years)

2018 LTI

(Tranche 2)

1 July 2017 to
30 June 2021

(4 years)

2019 LTA2

2020 LTA

1 July 2018 to
30 June 2021

(3 years)

1 July 2019 to
30 June 2022

(3 years)

2021 LTA

1 July 2020 to
30 June 2023

(3 years)

RTSR

Ranked at the 46th percentile of
the comparator group

ROE

7.1% average ROE performance

RTSR

Ranked at the 29th percentile of
the comparator group

ROE

5.1% average ROE performance

RTSR

Ranked at the 16th percentile of
the comparator group

ROE

4.7% average ROE performance

RTSR

Ranked at the 12th percentile of
the comparator group

ROE

2.0% average ROE performance

100%

RTSR

ROE

RTSR

ROE

FUM

Performance period on going

The 2017 and 2018 LTI awards (tested to 30 June 2020) are shown for transition purposes, in line with previous disclosures that focused
on awards that vested during the financial year. In future Remuneration Reports, we plan to focus discussion of performance on plans
that include performance up to and including the current financial year.

1. The vesting schedule (as a per cent of Maximum LTA) for the former Group CEO (disclosed in the 2020 Notice of Meeting) varies as follows: RTSR - 27 per cent of
Maximum LTA vests at the 50th percentile with straight line vesting to the 75th percentile; Operating ROE and CAGR per cent in FUM - 13 per cent of Maximum LTA vests at
threshold with straight line vesting to 63 per cent vesting at target and straight line vesting from target to maximum.

1. Refer Note 35 of the Notes to Consolidated Financial Statements for details of LTI / LTA Awards granted in prior financial years. 2. 2019 LTA excludes the RSA previously
referred to as the LTA Minimum. The vesting outcome for the 2019 RSA is included in the Total Realised Remuneration table on page 96.

108

Lendlease Annual Report 2021 Governance

109

Former Group CEO
As announced to the market on 10 February 2021, Stephen McCann retired from the Board on 31 May 2021, following a 16 year career
with the Group, including more than 12 years as Group Chief Executive Officer and Managing Director.

Contractual payment in lieu of notice was provided in line with his employment agreement. Stephen was entitled to receive a payment
in lieu of the balance of his notice period ($1,900,385).

After careful deliberation the Board assessed Stephen McCann’s performance for FY21 and determined that he would not receive an
STA payment.

In line with the relevant Plan rules, all unvested equity awards were left on foot (including FY20 Deferred Equity Award, 2018 LTI,
2019/2020/2021 LTAs, 2021 RSA1). Each of these awards remains subject to the original terms and performance conditions, and will be
tested at the relevant testing date.

Former Executives
Tarun Gupta

Tarun Gupta resigned effective from 29 November 2020. All unvested equity awards were forfeited upon resignation. Additionally,
Tarun was not entitled to an STA award in FY21. In light of Tarun’s move to Stockland Group, he was placed on gardening leave until
31 May 2021.

David Andrew Wilson

David Andrew Wilson announced his retirement during FY21, effective 2 July 2021. David Andrew remained a KMP for the full financial
year. In line with the relevant Plan rules, all unvested equity awards will remain on foot, subject to the original performance conditions,
and will be tested at the relevant testing date. With regard to the final tranche of the Distinguished Equity Award, the Board elected to
exercise its discretion to retain the full award on foot (not pro rata).

Executive Service Agreements

An overview of key terms of employment for current Executives is provided below:

Contract Term

Contract type

Notice period by
Lendlease

Notice period by
executive

Global CEO

Group Head of Construction

Other Executives

Permanent

12 months

Permanent

12 months1

6 months

Permanent

6 months

All Executives have termination benefits that are within the limit allowed by the Corporations Act 2001
without securityholder approval. Specifically, in the case where the Executive is not employed for the full
period of notice, a payment in lieu of notice may be made.

Termination payment

Treatment of unvested awards depends on the reason for termination:

– Terminated for cause: Awards lapse
– Terminated for poor performance: Board discretion
– Resignation (engaged in activities that are competitive with the Group): Awards lapse
– ‘Good leavers’: Awards remain on foot subject to the original vesting conditions.

New Executive Appointments in FY21
Frank Krile

Frank Krile was appointed as the Acting Chief Financial Officer from 30 November 2020. While acting in the Chief Financial Officer role,
Frank received an additional cash allowance. Frank was also awarded a 2021 LTI³ award that vests after three years subject to performance
hurdles. No changes were made to Frank’s STA opportunity for the period that he was acting in the Chief Financial Officer role.

Justin Gabbani

Justin Gabbani was appointed as the Chief Executive Officer, Asia from 1 June 2021. Justin’s Maximum Total Remuneration was set in
line with the FY22 Executive Remuneration Strategy approach and is as follows:

A$’0004 A

Fixed Remuneration

Maximum STA5

Maximum LTA

Maximum Total Remuneration

800

1,120

1,440

3,360

The Maximum STA and Maximum LTA do not apply until FY22. For FY21, no changes were made to Justin's STA opportunity to reflect
his appointment to the Chief Executive Officer, Asia role.

1. Johannes Dekker’s contract allows for 12 months’ notice by Lendlease for the first four years of employment and reverts to 6 months’ notice by Lendlease thereafter.
2. Denis Hickey’s notice payment is based on base salary and other minimum benefits as required by applicable United States legislation. Neil Martin’s notice payment is
based on base salary in line with UK practice. 3. The 2021 LTI is a non KMP award and has the same performance hurdles and performance period as the 2021 LTA however
100 per cent of the award vests and is released after the three year performance period. Refer to Note 35 of the Notes to Consolidated Financial Statements for further
details. 4. Remuneration is reported in AUD based on the 12 month average historic foreign exchange rates for FY21 (SGD 1.00). 5. 50 per cent of STA is deferred.

1. Following Stephen McCann's retirement, the 2021 RSA award was prorated for time served with 40,229 securities remaining on foot and 3,603 securities forfeited.

110

Lendlease Annual Report 2021 Governance

111

Non Executive
Director Fee Policy

Non Executive Directors’ fees
The maximum aggregate remuneration payable to Non Executive Directors is $3.5 million per year, as approved at the 2015 Annual
General Meeting.

Board and committee fees
Non Executive Directors receive a Board fee and fees for chairing or participating on Board committees:

A$’000

Chair Fee

Member Fee

Board

6401

160

Nominations
Committee

People & Culture
Committee

Risk Committee

Audit
Committee

Sustainability

Committee

Nil

Board and committee fees are paid as cash. Superannuation contributions are paid in addition to the Board and committee fees outlined
above in accordance with superannuation legislation and are capped at the Maximum Superannuation Contribution Base.

Non Executive Directors are not entitled to retirement benefits other than superannuation.

There were no increases to Non Executive Director fees during FY21.

Recognising the recent performance of the Group, in particular the further provisions relating to the legacy engineering business and the
potential business review outcomes relating to the development portfolio, on behalf of the Board, the Chairman volunteered to take a 20
per cent reduction in base fees for FY22 to reflect the accountability in his position as Board Chair.

Travel Fees
Board meetings are scheduled in Australia and in each of the regions where Lendlease operates. As an international company, the Board
program is formulated to reflect the geographic spread of the Lendlease businesses. Generally, the program runs over three to five days
and includes a number of activities outside the formal meeting. These include business briefings, presentations from external sources,
project site visits, client meetings, and networking events with employees and key stakeholders. Where deeper project reviews are
required, the program may take up to five days.

The program is an important element of the Board’s activities to enable the Non Executive Directors to obtain the required deep
understanding of operations across the Group.

Where significant additional time has been spent travelling to fulfil the requirements of the program, fees are paid to compensate Non
Executive Directors for the extra time commitment:

Travel less than 4 hours

Travel between 4 and 10 hours

Travel over 10 hours

Fee (Each Way)

Nil

2,800

6,0 6,000

Although the number of hours worked has increased, Non Executive Director fees are
lower in 2021 compared to 2020 predominantly as a result of Non Executive Directors
electing to take a temporary base fee reduction of 20 per cent from 1 June 2021 to
31 August 20212 and no travel fees being paid due to the global travel restrictions in
place as a result of COVID.

1. The Chairman does not receive extra fees for participating on committees. 2. Refer to page 107 of the Lendlease Annual Report 2020 for information about temporary Non
Executive Director fee reductions.

Remuneration Governance
and Risk Management

Robust governance is a critical part of Lendlease’s approach to executive remuneration. The diagram
below illustrates the roles various stakeholders play in making remuneration decisions at Lendlease:

Board

The Board has overall responsibility for Executive and Non Executive Director remuneration at Lendlease

The Board assesses the performance of and determines the remuneration outcomes for the Global CEO

Audit Committee

Assists in setting and assessing
financial targets for remuneration
purposes

Assesses and advises of any
audit matters which may impact
remuneration outcomes

The Chair of the Audit Committee
is a member of the People &
Culture Committee

Risk Committee

Advises of risk issues and/or
conduct matters to assist in
determining an appropriate Risk
adjustment for STA outcomes

The Chair of the Risk Committee
is a member of the People &
Culture Committee

Sustainability
Committee

Assists in setting and assessing
Safety/Sustainability related Key
Performance Indicators

People & Culture Committee

Assists in establishing appropriate policies for people management and
remuneration across the Group

Reviews and recommends the goals, performance and remuneration of
other Executives

Undertakes a holistic assessment of annual performance when determining
STA outcomes, including input from other Committees and Management

Regularly considers matters outside of remuneration – including organisational
culture, talent development and succession, and feedback from employees through
Our People Survey

Independent Remuneration
Advisor

The Board and People & Culture
Committee engage external
consultants to provide advice or
information. Their input is used
to guide Board and Committee
decisions

In July 2020, the Board engaged
EY as the Board appointed
independent remuneration advisor

During the year, advisors did
not provide a remuneration
recommendation as defined in
Section 9B of the Corporations
Act 2001

The Board is satisfied that any advice
provided by EY was made free
from undue influence from any of
the KMP given the structure of the
engagement

Management

The Global CEO recommends Fixed
Remuneration and STA outcomes for
his direct reports (for approval by the
People & Culture Committee)

The Group Chief Financial Officer
and Group Chief Risk Officer present
on the ‘Health of the Business’ when
the Committee is considering STA
outcomes

Recommends potential approaches
for developing and implementing
the Executive Reward Strategy and
structure

Provides information relevant to
remuneration decisions and, if
appropriate liaises with advisors to
provide factual information relating
to company processes, practices and
other business issues; and provide
management’s perspectives

112

Lendlease Annual Report 2021 Governance

113

Risk management and governance processes apply across remuneration timelines,
aligned with our business cycle. We have short term, long term and ongoing mechanisms:

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Short term

• Significant portion of annual opportunity

at risk and subject to performance

• Holistic assessment of annual performance
• Input from Risk committee

Long term

• Long dated performance periods (up to 3 years)
• Significant portion of remuneration delivered in equity
• Remuneration deferral (up to 6 years)

• Board discretion
• Malus
• Guiding principles

Ongoing

(remuneration adjustments
arising from safety incidents)

• Change of control
• Mandatory securityholding
• Securities trading policy
• Hedging
• Independent advisor governance protocols

See below for
details of ongoing
Risk Management
and Governance
Mechanisms

Ongoing Risk Management and Governance Mechanisms

Overall Board
Discretion

• The Board makes, reviews and approves decisions concerning executive remuneration throughout
the year. The Board, uses its discretion to influence individual outcomes or to steer management
towards appropriate outcomes.

Malus

Guiding principles
for determining
remuneration
adjustments
arising from safety
incidents

• The Board retains an overarching discretion to reduce or forfeit any unvested awards (during the

deferral period beyond the performance testing period) if it considers that vesting of such awards
would result in the participant receiving a benefit that was unwarranted or inappropriate.

• To inform robust decision making in relation to remuneration adjustments arising from safety

incidents, the Board formalised a set of guiding principles and relevant factors during the year. The
key guiding principles are as follows:

– Our objective is to learn from incidents and to reinforce an open dialogue and safety culture.

Our people must have confidence that sharing safety related information supports this objective
and helps to identify how we will adapt in the future.

– As the facts and circumstances surrounding each incident are unique, decision making is not

prescriptive or formulaic and requires the application of judgement.

– To facilitate a consistent approach to decision making, rather than the application of a

consistent outcome, the following set of relevant factors are used by the Board to evaluate the
application of any remuneration adjustments to be made arising from safety incidents:

Safety Leadership

Safety Performance

Findings

How is safety leadership demonstrated in the relevant business
/ project?

How has the relevant business / project performed against
safety performance indicators?

In the event of a fatality, what was Lendlease's role based on
internal investigations?

Availability of new information

As events unfold over time, has new and pertinent information
emerged from external investigations?

Change of
Control

• The early vesting of any unvested awards may be permitted by the Board in other limited

circumstances such as a change in control of Lendlease. In these circumstances the Board will
determine the timing and proportion of any unvested awards that vest.

Mandatory
Securityholding

• The Global CEO and Executives are required to accumulate and maintain a significant personal
investment in Lendlease securities. This policy encourages Executives to consider long term
securityholder value when making decisions.

What is the Mandatory Securityholding requirement?

Mandatory Securityholding Requirementn

Global CEO

Executives (Australia)

150% of TPV

100% of TPV

Executives (International)

100% of Base Salary

What is counted towards the Mandatory Securityholding requirement?

Included n

Excludedn

Personally held securities

Unvested Deferred STI

On foot RSA

Unvested LTI / LTA

• Until the Mandatory Securityholding requirement is reached, 50 per cent of any vested equity
awards (Deferred STI, RSA, LTI or LTA) will be subject to a disposal restriction (for Executives
based in Australia).

• Executives based outside of Australia are required to achieve the Mandatory Securityholding

requirement within six years of their appointment to a KMP role.

• Progress toward the minimum requirement is outlined in the Executive Equity Holdings table on

page 117.

Securities Trading
Policy

• The Lendlease Securities Trading Policy applies to all employees of the Lendlease Group. In

accordance with the policy, Directors and Executives may only deal in Lendlease securities during
designated periods.

Hedging

• Directors and Executives must not enter into transactions or arrangements that operate to limit

the economic risk of unvested entitlements to Lendlease securities. No Director or Executive may
enter into a margin loan arrangement in respect of unvested Lendlease securities.

• Deferred STI, RSA, LTI and LTA awards are subject to the Securities Trading Policy, which prohibits
Executives from entering into any type of ‘protection arrangements’ (including hedging, derivatives
and warrants) in respect of those awards before vesting.

Independent
Advisor Governance
Protocols

• Strict governance protocols are observed to so that advisors’ advice to the Committee is made

free from undue influence by KMP:

– Advisors are engaged by, and report directly to, the Chair of the People & Culture Committee
– The agreement for the provision of any remuneration consulting services is executed by the

Chair of the People & Culture Committee on behalf of the Board

– Any reports delivered by advisors were provided directly to the Chair of the People & Culture

Committee; and

– Advisors are permitted, where approved by the People & Culture Committee Chair, to speak
to management to understand company processes, practices and other business issues and
obtain management’s perspectives.

114

Lendlease Annual Report 2021 Governance

115

Other Statutory
Disclosures

FY21 Executive Statutory Remuneration

A$000s¹

Short Term Benefits

Post
Employment
Benefits

Security Based
Payments7

Name

Year

Cash
salary2

STA
Cash3

Non
Monetary
Benefits4

Superannu-

ation5

Other
Long
Term
Benefits6

Sub-
total

LTI/
LTA

Deferred
STI

Termination
Benefits

Total

244

150

Current Executives

Anthony Lombardo8

2021

1,294

Johannes Dekker

Justin Gabbani9

Denis Hickey

2020

2021

2020

2021

1,129

1,170

1,180

1,434

368

2020

1,634

Frank Krile10

2021

542

Neil Martin11

2021

1,283

2020

2021

2020

2021

849

1,154

1,164

1,199

2020

1,209

Kylie Rampa

David Andrew
Wilson15

Former Executives

Stephen McCann12,15

2021

1,941

2020

2,130

164

125

175

Tarun Gupta13

2021

1,040

n/a

Daniel Labbad14

2020

1,164

454

Total

2021

11,124

1,330

2020

10,913

362

280

279

260

197

190

355

1,119

1,165

117

1,934

1,409

334

692

1,628

1,662

1,488

1,700

1,999

359

1,824

673

1,472

857

1,347

1,249

715

532

303

376

750

1,467

3,890

1,259

995

2,057

5,733

2,192

1,815

1,158

(1,476)

1,203

809

735

865

116

114

101

190

104

223

317

438

159

175

420

219

157

121

2,384

2,215

3,391

3,262

113

2,548

2,643

970

2,321

1,598

1,817

2,158

5,532

2,330

1,900

10,110

4,226

(318)

2,095

1,795

126 13,816

11,493

1,659

1,900

28,868

113 12,290

8,570

1,462

22,322

Reconciliation of Realised and Statutory Remuneration for the Former Group CEO

The following table shows the difference between the former Group CEO's Total Realised Remuneration and Total Statutory Remuneration.

A$000s

Common
Elements

Realised
Remuneration

Fixed Remuneration

FY21 STA

RSA distribution equivalent

Termination payment

Previous years RSA

Security price growth / decline

Annual leave and long service leave accruals

Accounting
Expense

Other

SBP - LTI / LTA

SBP - Deferred STI

The full accounting expense over
the remaining life of retained
unvested awards is required to be
brought to account in the year of
departure. Of the total accounting
expense of $5.733m relating
to unvested LTI/LTA awards
retained by Stephen McCann,
$1.226m is for awards that have
no further performance hurdles,
but are still subject to time based
deferrals. $5.826m (2020 LTA
+ 2021 LTA) relates to unvested
LTA awards that are currently
forecast as unlikely to meet the
required performance hurdles,
and accordingly this amount
is expected to be reversed to
reserves in future periods.

Plan

2017 LTI-4 year

2018 LTI-3 year

2018 LTI-4 year

2019 LTA

2019 RSA (LTA Minimum)

2020 LTA

2020 RSA (LTA Minimum)

2021 LTA

2021 RSA

SBP - LTI/LTA

Total Realised
Remuneration
(page 96)

Total Statutory
Remuneration
(page 114)

4,137

1,943

1,900

500

(223)

n/a

10,110

1,943

1,900

n/a

5,733

420

See
breakdown
in table
below

Accelerated
Accounting
Expense for FY21

Vesting Schedule

FY21

FY22

FY23

FY24

FY25

FY26

n/a - 0% vesting

(592)

(583)

(277)

133

140

1,837

627

3,989

459

5,733

End of deferral / performance period

Unhurdled

Hurdled

1. 2021 remuneration is reported in AUD based on the 12 month average historic foreign exchange rates for FY21 (rounded to two decimal places): SGD 1.00 (applied to
Anthony Lombardo and Justin Gabbani), USD 0.75 (applied to Denis Hickey) and GBP 0.55 (applied to Neil Martin). 2020 remuneration is reported in AUD based on the 12
month average historic foreign exchange rates for FY20 (rounded to two decimal places): SGD 0.93 (applied to Anthony Lombardo and Justin Gabbani), USD 0.67 (applied to
Denis Hickey) and GBP 0.53 (applied to Neil Martin and Daniel Labbad). All Executives are paid in local currency. 2. Cash Salary includes the payment of cash allowances such
as motor vehicle allowance and the value of distribution equivalent amounts paid as cash on the RSA. For Anthony Lombardo, this also includes tax equalisation payments. For
Neil Martin and Daniel Labbad, this also includes cash allowances paid in lieu of pension contributions. Cash salary also reflects the 20 per cent Fixed Remuneration reduction
that applied from 1 July 2020 to 31 August 2020 as part of the Group’s response to COVID. 3. STA Cash refers to the portion of the FY21 STA which is payable as cash in
September 2021. For Justin Gabbani and Frank Krile, this reflects 50 per cent of the FY21 STA as 50 percent is deferred as Rights that will be released in two equal tranches
after one and two years. For all other Executives, this reflects 100 per cent of the FY21 STA. 4. Non monetary benefits may include items such as car parking, relocation and
expatriate benefits (such as house rental, health insurance, shipping of goods and tax return preparation), motor vehicle costs, travel benefits and annual leave.
5. Superannuation includes the value of insurance premiums funded by Lendlease for Australian Executives who are members of the Lendlease default superannuation fund.
6. Other Long Term Benefits represents the accrual of long term leave entitlements (e.g. long service leave). 7. Security based payments reflect the accounting expense on a
fair value basis. For all Executives other than Neil Martin, security based payments are issued as indeterminate rights and performance rights. For Neil Martin, Deferred STI
(including his Executive Deferred Award) is issued as securities. LTI/LTA includes the accounting expense for the RSA.8. Remuneration for Anthony Lombardo has been
prorated to reflect time in the CEO, Asia role from 1 July 2020 to 31 May 2021 and time in the Global CEO role from 1 June 2021 to 30 June 2021. 9. Justin Gabbani was
appointed to the CEO, Asia role on 1 June 2021 and remuneration reflects time as a KMP. 10. Frank Krile was appointed to the Acting Group Financial Officer role from
30November 2020 and remuneration reflects time as a KMP. 11. Neil Martin was appointed to the Chief Executive Officer, Europe role on 10 September 2019 and his 2020
comparative remuneration reflects time as a KMP. 12. Stephen McCann retired from the Group CEO role on 31 May 2021 and remuneration reflects time as a KMP. 13. Tarun
Gupta resigned effective 29 November 2020 and remuneration reflects time as a KMP. All unvested equity awards were forfeited upon resignation. Additionally, Tarun was
not eligible for an STA award in FY21. 14. Daniel Labbad ceased as a KMP on 9 September 2019 and remuneration reflects time as a KMP. 15. As a ‘Good Leaver’, unvested LTI,
LTA and Deferred STI awards remain on foot and subject to the original vesting conditions. The security based payment accounting expense for the current period therefore
includes up to three years of each unvested award expense that has been accelerated and disclosed in total for FY21, including those amounts which would otherwise have
been included in future year disclosures.

The SBP accounting expense for Stephen McCann and David Andrew Wilson has
been accelerated as a result of their retirement. This means that up to three years of
the accounting expense for each unvested award, that would have ordinarily been
included in future year disclosures, has been reflected in the FY21 SBP value.

All unvested equity awards that remain on foot following retirement are still subject
to the original performance conditions and will be tested at the relevant testing date.
Depending on performance, these awards may have nil value.

To the extent these awards do not vest when tested, the accounting expense that has
been previously booked will be reversed.

Refer to page 96 for the Total Remuneration Realised by Executives in FY21.

116

Lendlease Annual Report 2021 Governance

117

FY21 Non Executive Director Statutory Remuneration

FY21 Executive Equity Holdings

Name

Year

Base Fees¹

S Short Term Benefits

Committee
Chair Fees

Committee
Membership
Fees

Post Employment
Benefits

Travel
Fees² Superannuation³

Total

Non Executive Directors

Michael Ullmer

Philip Coffey

David Craig

Jane Hemstritch

Elizabeth Proust⁴

2021

2020

2021

2020

2021

2020

2021

2020

2021

2020

Nicola Wakefield Evans

2021

Robert Welanetz⁵

2020

2021

2020

Former Non Executive Directors

Colin Carter⁶

Steve Dobbs⁷

Margaret Ford⁸

Total

2021

2020

2021

2020

2021

2020

619

629

155

157

155

157

155

157

160

157

160

155

157

5 51

5515 1,6411

5515 1,7431

228

366

396

178

161

170

641

668

297

316

261

280

270

273

260

275

266

283

249

115

292

146

2,396

2,715

Number of
securities
required under
the mandatory
securityholding
at period end¹

Securities
held at
beginning
of financial
year

Securities
received
during the
financial
year

Other net
changes to
securities

Securities
held at end
of financial
year

Total securities/
performance
rights that may
count towards
the mandatory
securityholding
requirement

RSA

Name

Year

Current Executives

Anthony Lombardo

2021

84,000

60,654

12,263

(72,917)

102,608

897,44 102,608

Johannes Dekker

Justin Gabbani

Denis Hickey

Frank Krile

Neil Martin

Kylie Rampa

2020

2021

2020

2021

2020

2021

2020

2021

2020

David Andrew Wilson 2021

Former Executives

Stephen McCann4

Tarun Gupta5

Daniel Labbad6

Total

2020

2021

2020

2021

2020

2021

2020

84,000

110,654

29,906

(79,906)

60,654

58,776

897,44 119,430

90,000

27,117

7,036

14,225

12,892

34,153

102,608

897,44 136,761

27,117

58,776

897,44 85,893

n/a

436

13,926

(14,362)

n/a

28,635

6,155

(8,801)

25,989

102,608

897,44 0

128,597

61,443

24,192

(57,000)

28,635

58,776

897,44 87,411

60,000

n/a

400,859

19,993

420,852

n/a

897,44 420,852

102,000

75,000

90,000

94,000

47,061

12,514

18,391

17,078

(12,514)

(18,391)

(64,139)

61,925

35,216

(50,080)

72,710

88,801

49,364

23,346

47,061

161,511

72,710

65,536

21,704

897 65,536

21,704

102,608

897,44 102,608

58,776

897,44 105,837

102,608

897,44 264,119

58,776

897,41131,4861

248,000

838,727

23,887

(440,740)

421,874

102,552

n/a

248,000

750,018

88,709

90,000

190,324

16,868

90,000

116,411

73,913

67,001

20,642

838,727

58,720

897,44 897,447

207,192

(58,776)

n/a

190,324

58,776

897,44 249,100

87,643

24,048

111,691

1,666,523

218,521

(613,473)

1,271,571

622,352

1,221,081

1,231,041

327,207

(205,377)

1,352,871

457,128

1,809,999

1. For the period from 1 July 2020 until 31 August 2020, Non Executive Directors were able to elect to temporarily reduce their base fees up to 20 per cent. 2. No travel fees
were payable during the 2021 financial year as a result of the global travel restrictions in place in response to COVID. 3. Directors have superannuation contributions paid on
their behalf in accordance with superannuation legislation. 4. Elizabeth Proust requested and was issued a Superannuation Guarantee shortfall exemption certificate for the
last quarter of the 2021 financial year. This means that for the period from 1 April 2021 to 30 June 2021 that Lendlease was exempt from making superannuation contributions
on behalf of Elizabeth Proust. A cash payment was made in lieu of the superannuation contributions that would have ordinarily been payable. 5. Robert Welanetz was
appointed as a Non Executive Director on 1 March 2020. 6. Colin Carter ceased to be a Non Executive Director on 20 November 2020. 7. Steve Dobbs ceased to be a Non
Executive Director on 20 November 2019. 8. Baroness Margaret Ford was appointed as a Non Executive Director on 1 March 2020 and ceased to be a Non Executive Director
on 18 August 2020.

1. Mandatory securityholding requirements are reviewed in August each year. As part of the Group’s response to COVID, Denis Hickey requested a temporary release from
the applicable mandatory securityholding requirement and the reduced mandatory securityholding requirement (50 per cent of the original mandatory securityholding
requirement) has been reflected for 2020. 2. For Executives, securities received relate to security entitlements under employee benefit vehicles. 3. Under the RSA (LTA
Minimum), performance rights will vest over a period of up to six years. This number of performance rights counts towards mandatory securityholding requirements. 4.
Stephen McCann ceased as a KMP on 31 May 2021. The end balance of securities for 2021 represents the balance held at that date. 5. Tarun Gupta ceased as a KMP on 29
November 2020. The end balance of securities for 2021 represents the balance held at that date. 6. Daniel Labbad ceased as a KMP on 9 September 2019. The end balance of
securities for 2020 represents the balance held at that date.

118

Lendlease Annual Report 2021 Governance

119

Executive Equity Based Remuneration - Deferred Securities

Executive Equity Based Remuneration - Long Term Awards

Name

Plan

Current Executives

Performance
Year

Grant date

Vesting date

Number
granted

Anthony
Lombardo

Deferred STI

2018

Sept 2018

Sept 2020

Deferred Equity Award

2020

Sept 2020 Sept 2021-2022

Total

Johannes
Dekker2

Deferred STI

Sign-On Award

2018

Sept 2018

Sept 2020

May 2018

Sept 2020

Deferred Equity Award

2020

Sept 2020 Sept 2021-2022

Total

Justin
Gabbani3

Deferred STI

2018

Sept 2018

Sept 2020

EDA

2019

Sept 2019

Sept 2020, Sept
2022

Deferred Equity Award

2020

Sept 2020 Sept 2021-2022

Total

Deferred STI

2018

Sept 2018

Sept 2020

Deferred Equity Award

2020

Sept 2020 Sept 2021-2022

Total

Deferred STI

2018

Sept 2018

Sept 2020

EDA

2019

Sept 2019

Sept 2020, Sept
2022

Fair value per
security1

Total fair
value at grant
date1

Expense for
the year ended
30 June 2021

116,118

7,143

227,926

154,824

382,750

25,015

100,000

19.79

12.16

19.79

17.57

12.16

125,022

93,766

250,037

100,909

Plan

Name

(for the year ended)

Grant date

Vesting date

Current Executives

Anthony
Lombardo

June 2017 LTI (50%)

Sept 2016

Sept 2020

June 2018 LTI (50%)

Sept 2017

Sept 2020

June 2018 LTI (50%)

Sept 2017

Sept 2021

June 2019 LTA

Nov 2018

Sept 2021-2024

June 2020 LTA

Sept 2019

Sept 2022-2025

June 2021 LTA

Sept 2020

Sept 2023-2026

June 2021 LTA Prorata CEO Sept 2020

Sept 2023-2026

Number
granted6

26,618

24,034

76,936

111,120

96,432

5,124

19.79

101,307

June 2021 RSA

Sept 2020

Sept 2023-2026

43,832

Fair value per
security7

11.44

13.07

13.23

11.49

17,614

16.86

296,972

11,187

Total

12.16

196,060

594,339

208,868

19.79

12.16

12,086

23,273

252,720

189,540

461,588

189,540

Johannes
Dekker8

June 2019 LTA

Nov 2018

Sept 2021-2024

June 2020 LTA

Sept 2019

Sept 2022-2025

Retention Award

Jan 2019

Jan 2022

June 2021 LTA

Sept 2020

Sept 2023-2026

June 2021 RSA

Sept 2020

Sept 2023-2026

19.79

200,002

Total

22.08

2,453,528

Total fair value
at grant date7
$

Expense for the
year ended 30
June 2021

304,510

(128,688)

314,124

317,970

883,996

1,245,900

66,204

500,124

(139,558)

(72,842)

17,516

298,985

246,584

13,102

98,960

6,086,356

334,059

883,996

17,516

2,453,528

298,985

3,000,000

1,000,000

1,245,900

500,124

246,584

98,960

8,083,548

1,662,045

12.92

11.41

11.49

22.08

11.94

12.92

11.41

12.16

144,728

258,841

286,285

289,790

883,996

11.44

13.07

13.23

11.49

22.08

2,453,528

12.92

11.41

1,245,900

500,124

5,918,464

10.15

266,955

22.08

12.92

11.41

266,955

1,533,412

1,245,900

500,124

3,279,436

8,922

(109,391)

(127,190)

(66,385)

17,516

298,985

246,584

98,960

359,079

74,154

186,859

246,584

98,960

532,403

408,130

76,936

111,120

251,168

96,432

43,832

579,488

11,902

22,626

21,904

76,936

111,120

96,432

43,832

394,754

26,301

69,448

96,432

43,832

209,712

Justin
Gabbani3

Retention Award

Sept 2020

Sept 2021-2022

Total

June 2017 LTI (50%)

Sept 2016

Sept 2020

June 2018 LTI (50%)

Sept 2017

Sept 2020

June 2018 LTI (50%)

Sept 2017

Sept 2021

Denis Hickey

June 2019 LTA

Nov 2018

Sept 2021-2024

June 2021 RSA

Sept 2020

Sept 2023-2026

Total

June 2021 LTI

Sept 2020

Sept 2023

Frank Krile4

Total

Neil Martin

June 2020 LTA

Sept 2019

Sept 2022-2025

June 2021 LTA

Sept 2020

Sept 2023-2026

June 2021 RSA

Sept 2020

Sept 2023-2026

Total

1. The fair value at grant date is the value of the Deferred STI award (as advised to the executive). 2. Johannes Dekker received a sign on award reflecting remuneration
foregone on resignation from his previous employer. The award is split into three tranches and has vested, or will vest, during the first, second and third years of his
employment. 3. Justin Gabbani was appointed to the CEO, Asia role on 1 June 2021 and the expense for the year ended 30 June 2021 reflects time in KMP role. 4. Frank Krile
was appointed to the Acting Group Financial Officer role from 30 November 2020 and the expense for the year ended 30 June 2021 reflects time in KMP role. 5. The Deferred
Equity Awards was forfeited upon resignation. 6. For LTA awards, the number granted reflects target opportunity. For LTI and other long term awards, the number granted
reflects maximum opportunity (158 per cent of target for the former Group CEO and 245 per cent of target for other Executives). From FY22, LTA awards will be granted at
maximum opportunity (rather than target) in line with stakeholder feedback. 7. The fair value at grant date represents an actuarial valuation of the award, including the RSA
(LTA Minimum), using assumptions underlying the Black-Scholes methodology to produce a Monte-Carlo simulation model in accordance with Australian Accounting
Standards rounded to two decimal places. 8. Johannes Dekker received a retention award relating to the strategic review of the Engineering and Services businesses.

Denis
Hickey

Frank
Krile4

Neil
Martin

Kylie
Rampa

David
Andrew
Wilson

19,774

16.86

333,390

89,170

Deferred Equity Award

2020

Sept 2020 Sept 2021-2022

25,074

12.16

305,000

133,490

Total

Deferred STI

2018

Sept 2018

Sept 2020

EDA

2019

Sept 2019

Sept 2020, Sept
2022

54,954

11,605

838,392

222,660

19.79

229,668

22,658

16.86

382,014

175,090

Total

Deferred STI

Deferred Equity Award

Total

2018

2020

Sept 2018

Sept 2020

Sept 2020 Sept 2021-2022

Deferred STI

2018

Sept 2018

Sept 2020

Deferred Equity Award

2020

Sept 2020 Sept 2021-2022

Total

Former Executives

Stephen
McCann

Tarun
Gupta

Deferred STI

2018

Sept 2018

Sept 2020

Deferred Equity Award

2020

Sept 2020 Sept 2021-2022

Total

Deferred STI

Deferred Equity Award5

Total

2018

2020

Sept 2018

Sept 2020

Sept 2020 Sept 2021-2022

19.79

12.16

19.79

12.16

19.50

12.16

19.79

12.16

317,418

125,022

442,440

152,762

175,016

93,766

175,016

327,778

175,016

437,510

420,022

857,532

313,520

175,016

488,536

420,022

Deferred Equity Award

2020

Sept 2020 Sept 2021-2022

15,540

12.16

189,028

141,771

June 2020 LTA

Sept 2019

Sept 2022-2025

800,710

316,861

June 2021 LTA

Sept 2020

Sept 2023-2026

11,517

12,728

24,245

1,264

5,690

10,278

17,232

5,119

16,118

38,851

10,554

20,776

31,330

10,106

49,803

16,039

10,278

26,317

7,719

14,388

22,107

22,434

34,530

56,964

15,842

14,388

30,230

120

Lendlease Annual Report 2021 Governance

121

Executive Equity Based Remuneration - Long Term Awards cont.

FY21 Non Executive Director Equity Holdings

Plan

Name

(for the year ended) Grant date

Vesting date

Current Executives cont.

Kylie Rampa June 2017 LTI (50%)

Sept 2016

June 2018 LTI (50%)

Sept 2017

June 2018 LTI (50%)

Sept 2017

Sept 2020

Sept 2021

June 2019 LTA

Nov 2018

Sept 2021-2024

June 2020 LTA

Sept 2019

Sept 2022-2025

June 2021 LTA

Sept 2020

Sept 2023-2026

June 2021 RSA

Sept 2020

Sept 2023-2026

Total

David
Andrew
Wilson3

DE Award4

May 2016 May 2021, May 2023

June 2017 LTI (50%)

Sept 2016

Sept 2020

June 2019 LTA

Nov 2018

Sept 2021-2024

June 2020 LTA

Sept 2019

Sept 2022-2025

June 2021 LTA

Sept 2020

Sept 2023-2026

June 2021 RSA

Sept 2020

Sept 2023-2026

Total

Former Executives

Stephen
McCann5

June 2017 LTI (50%)

Sept 2016

June 2018 LTI (50%)

Sept 2017

June 2018 LTI (50%)

Sept 2017

Sept 2020

Sept 2021

June 2019 LTA

Nov 2018

Sept 2021-2024

June 2020 LTA

Sept 2019

Sept 2022-2025

June 2021 LTA

Sept 2020

Sept 2023-2026

June 2021 RSA6

Sept 2020

Sept 2023-2026

Total

June 2017 LTI (50%)

Sept 2016

June 2018 LTI (50%)

Sept 2017

June 2018 LTI (50%)

Sept 2017

Sept 2020

Sept 2021

Tarun Gupta7

June 2019 LTA

Nov 2018

Sept 2021-2024

June 2020 LTA

Sept 2019

Sept 2022-2025

June 2021 LTA

Sept 2020

Sept 2023-2026

June 2021 RSA

Sept 2020

Sept 2023-2026

Number
granted1

Fair value per
security2 $

Total fair value
at grant date2
$

Expense for
the year ended
30 June 2021

19,165

21,904

76,936

111,120

96,432

43,832

391,293

160,000

15,971

76,936

111,120

96,432

43,832

504,291

122,440

100,388

177,904

256,960

280,524

43,832

1,082,436

33,272

31,638

76,936

111,120

96,432

43,832

11.44

13.07

13.23

11.49

22.08

12.92

11.41

13.42

11.44

11.49

22.08

12.92

11.41

11.44

13.07

13.23

9.94

22.55

14.22

11.41

11.44

13.07

13.23

11.49

22.08

12.92

11.41

219,248

286,285

289,790

883,996

2,453,528

1,245,900

500,124

5,878,871

2,147,200

182,708

883,996

2,453,528

(92,657)

(127,190)

(66,385)

17,516

298,985

246,584

98,960

375,813

675,026

(77,212)

230,238

1,316,311

1,245,900

500,124

500,012

7,413,456

3,890,275

1,400,714

1,312,071

(591,965)

(582,918)

1,328,133

(276,590)

1,768,364

272,558

5,794,448

2,463,967

3,989,052

500,124

458,912

16,092,906

5,733,016

380,632

(160,868)

413,509

418,571

(183,712)

(296,378)

883,996

(349,915)

2,453,528

(485,594)

1,245,900

500,124

Total

424,868

6,296,260

(1,476,467)

1. For LTA awards, the number granted reflects target opportunity. For LTI and other long term awards, the number granted reflects maximum opportunity. From FY22, LTA
awards will be granted at maximum opportunity (rather than target) in line with stakeholder feedback. 2. The fair value at grant date represents an actuarial valuation of the
award, including the RSA (LTA Minimum), using assumptions underlying the Black-Scholes methodology to produce a Monte-Carlo simulation model in accordance with
Australian Accounting Standards rounded to two decimal places. 3. David Andrew Wilson ceased as a KMP on 30 June 2021. The expense for the year ended 30 June 2021
reflects the full entitlement to unvested LTI and LTA which would otherwise have been included in future year disclosures and may not vest. These unvested awards remain on
foot and subject to the original vesting conditions. 4. David Andrew Wilson was granted a Distinguished Executive (DE) Award in May 2016 that vests in two equal tranches
over five and seven years. Refer to Note 35 of the Notes to Consolidated Financial Statements. 5. Stephen McCann ceased as a KMP on 31 May 2021. The expense for the year
ended 30 June 2021 reflects the full entitlement to unvested LTI and LTA which would otherwise have been included in future year disclosures and may not vest. These
unvested awards remain on foot and subject to the original vesting conditions. 6. Following Stephen McCann's retirement, the 2021 RSA award was prorated for time served
with 40,229 securities remaining on foot and 3,603 securities forfeited. 7. Tarun Gupta resigned effective from 29 November 2020. All unvested equity awards were forfeited
upon resignation.

Name

Year

Securities held at beginning
of financial year

Other net changes to
securities

Securities held at end of
financial year

Non Executive Directors

Michael Ullmer

Philip Coffey

David Craig

Jane Hemstritch

Elizabeth Proust1

Nicola Wakefield Evans

Robert Welanetz2

Former Non Executive Directors

Colin Carter3

Steve Dobbs4

Margaret Ford5

Total

2021

2020

2021

2020

2021

2020

2021

2020

2021

2020

2021

2020

2021

2020

2021

2020

2021

2020

20216

2020

110,000

100,000

21,216

9,810

63,061

50,000

23,061

20,000

53,061

25,000

34,020

30,248

7,000

18,061

15,000

12,000

4,065

333,545

262,058

15,000

10,000

11,406

10,000

13,061

10,000

3,061

15,000

28,061

359

3,772

7,000

3,061

4,065

50,359

83,487

125,000

110,000

21,216

73,061

63,061

33,061

23,061

68,061

53,061

34,379

34,020

7,000

18,061

12,000

4,065

383,904

345,545

Purchase of Lendlease securities by Non Executive Directors
The current Non Executive Directors acquired Lendlease securities using their own funds.

Loans to KMP
No loans were made to KMP or their related parties during the current year or prior year.

Other transactions with KMP
From time to time, Directors and Executives of Lendlease or its consolidated entities, or parties related to them, may purchase goods
from the Consolidated Entity. These purchases are on terms and conditions no more favourable that those entered into by unrelated
customers.

1. Elizabeth Proust also acquired $500,000 of green bonds. 2. As Robert Welanetz was appointed as a Non Executive Director on 1 March 2020 a nil opening balance has been
shown for the 2020 comparative. 3. Colin Carter ceased to be a Non Executive Director on 20 November 2020. The end balance of securities for 2021 represents the balance
held at that date. 4. Steve Dobbs ceased to be a Non Executive Director on 20 November 2019. The end balance of securities for 2020 represents the balance held at that
date. 5. Baroness Margaret Ford was appointed as a Non Executive Director on 1 March 2020 and ceased to be a Non Executive Director on 18 August 2020. The end balance
of securities for 2021 represents the balance held at that date. 6. The 2021 opening balance excludes the securities held by Steve Dobbs (12,000) given that he ceased to be a
Non Executive Director in the 2020 financial year.

122

Lendlease Annual Report 2021 Governance

123

Directors’ Report

The Directors’ Report for the financial year ended 30 June 2021 has been prepared in accordance with the requirements of the
Corporations Act 2001. The information below forms part of this Directors’ Report:

• Principal activities on page 13
• Operating and Financial Review on pages 4 to 69 incorporating the Performance and Outlook on pages 56 to 69
• Biographical information for the Directors and Company Secretary on pages 72 to 76
• Officers who were previously partners of the audit firm on page 72
• Directors’ interests in capital on page 82
• Board and committee meetings and attendance on pages 82 to 83
• Remuneration Report on pages 84 to 121
• Lead Auditor’s Independence Declaration on page 124.

a. Dividends/Distributions
The 2020 final distribution of $22 million (3.3 cents per security, unfranked) referred to in the Directors’ Report dated
17 August 2020 was paid on 15 September 2020. Details of dividends/distributions in respect of the current year are as follows:

Interim dividends/distributions of 15.0 cents per security paid on 17 March 20211

Final dividends/distributions of 12.0 cents per security (unfranked) declared by Directors to be payable on 15 September 20212

Total dividends/distributions

103

186

1. Comprised of a dividend component franked to 50 per cent of 11.2 cents per share paid by the Company and an unfranked trust distribution of 3.8 cents per unit paid by
Lendlease Trust. 2. Comprised of an unfranked dividend of 7.9 cents per share to be paid by the Company and an unfranked trust distribution of 4.1 cents per unit to be paid by
Lendlease Trust.

b. Significant Changes in State of Affairs
There have been no significant changes in the Group’s state of affairs.

c. Events Subsequent to Balance Date
On 21 July 2021, the Group entered into an agreement with Service Stream for the sale of the Services business for a purchase price of
$310 million. The transaction, which is expected to complete prior to the end of calendar year 2021, is subject to conditions including
client and third party consents. Given the agreement was signed post balance date and at 30 June 2021 there was uncertainty as to
whether a transaction would be completed, the Services business did not meet the accounting criteria to be held for sale, therefore it
has not been included in discontinued operations or assets and liabilities classified as held for sale at 30 June 2021. The sale, and any
resulting gain/loss after transaction costs and completion adjustments, is expected to be recorded in the subsequent financial year. The
sale price is above the net assets of the Services business at 30 June 2021. Any gain/loss will be subject to the completion accounts
process, final transaction costs and any required provisions for indemnifications.

On 16 August 2021, the Group announced the preliminary results of the business review undertaken following the appointment of the
new Global CEO. While the review is still ongoing at the date of this report, the Group expects to record an estimated restructuring
provision in FY22 of pre-tax $130 million to $170 million for the restructuring costs associated with the revised organisational structure
and related matters. As part of this exercise, the Group has also identified a small number of projects where a material change in
development strategy is under consideration. A range of alternative strategic options are being considered to reduce future capital
outlay and/or expedite the release of existing capital on these projects to enable redeployment elsewhere. The expected change in
forecast strategy for these projects is expected to result in an estimated development properties impairment of approximately pre-tax
$230 million to $290 million in FY22.

There were no other material events subsequent to the end of the financial reporting period.

d. Security Options
No security options were issued during the year by the Company or any of its controlled entities, and there are no such options on issue.

e. Indemnification and Insurance of Directors and Officers
Rule 12 of the Company’s Constitution provides for indemnification in favour of each of the Directors named on pages 72 to 76 of this
report and the officers of the Company or of wholly owned subsidiaries or related entities of the Company (Officers) to the extent
permitted by the Corporations Act 2001. Rule 12 does not indemnify a Director, Company Secretary or Officer for any liability involving a
lack of good faith.

In conformity with Rule 12 of the Company’s Constitution, the Company has entered into Deeds of Indemnity, Insurance and Access
with each of the Directors named on pages 72 to 76 of this report and for officers of the Company and Directors of related entities of the
Company. The indemnities operate to the full extent permitted by law and are not subject to a monetary limit. The Company is not aware
of any liability having arisen, and no claims have been made during or since the financial year under the Deeds of Indemnity, Insurance
and Access.

For unrelated entities in which the Group has an interest, Deeds of Indemnity may be entered into between Lendlease Corporation
Limited and the Director or Officer. Since the date of the last report, the Company has not entered into any separate Deeds of Indemnity
with a Director or Officer of an unrelated entity.

No indemnity has been granted to an auditor of the Company in their capacity as auditor of the Company.

In accordance with the Corporations Act 2001, Rule 12 of the Constitution also permits the Company to purchase and maintain insurance
or pay or agree to pay a premium for insurance for Officers against any liability incurred as an Officer of the Company or of a related
body corporate. This may include a liability for reasonable costs and expenses incurred in defending proceedings, whether civil or
criminal, regardless of their outcome. Due to confidentiality obligations and undertakings of the policy, no further details in respect of
the premium or policy can be disclosed.

f. Environmental Regulation
The Group is subject to various state and federal environmental regulations in Australia.

The Directors are not aware of any material non compliance with environmental regulations pertaining to the operations or activities
during the period covered by this report. In addition, the Lendlease Group is registered and publicly reports the annual performance
of its Australian operations under the requirements of the National Greenhouse and Energy Reporting (NGER) Act 2007 and Energy
Efficiency Opportunities (EEO) Act 2006.

All Lendlease businesses continue to operate an integrated Environment, Health and Safety Management System, ensuring that non
compliance risks and opportunities for environmental improvements are identified, managed and reported accordingly.

g. Non Audit Services
During the year, KPMG, the Company’s auditor, performed certain other services in addition to its statutory duties.

The Board has considered the other services provided during the year by the auditor and, in accordance with written advice provided by
resolution of the Audit Committee, is satisfied that the provision of those services during the year by the auditor is compatible with, and
did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reason:

• All other services were subject to the corporate governance procedures adopted by the Group and the Audit Committee is satisfied

that those services do not impact the integrity and objectivity of the auditor.

The other services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or
decision making capacity for the Group, acting as an advocate for the Group or jointly sharing risks and rewards.

A copy of the Lead Auditor's Independence Declaration, as required under Section 307C of the Corporations Act 2001, is included at the
end of the Directors’ Report.

Details of the amounts paid to the auditor of the Company, KPMG, and its related practices for audit and other services provided during
the year are set out below:

Audit and Other Assurance Services

Audit services

Other assurance services

Total audit and other assurance services

Non audit services

Total audit, non audit and other assurance services

Consolidated

June 2021
$000s

June 2020
$000s

7,019

822

7,841

438

8,279

7,233

524

7,757

557

8,314

h. Rounding Off
Lendlease Corporation Limited is a company of the kind referred to in the ASIC Corporations (Rounding in Financial/Directors' Reports)
Instrument 2016/191 dated 24 March 2016 and, in accordance with that Instrument, amounts in the Consolidated Financial Statements
and this report have been rounded off to the nearest million dollars unless specifically stated to be otherwise.

This report is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Directors.

M J Ullmer, AO

Chairman

Sydney, 16 August 2021

A P Lombardo

Global Chief Executive Officer

Sydney, 16 August 2021

124

Lendlease Annual Report 2021 Governance

125

Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001

To the Directors of Lendlease Corporation Limited

I declare that, to the best of my knowledge and belief, in relation to the audit of Lendlease Corporation
Limited for the financial year ended 30 June 2021 there have been:

ii.

no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and

no contraventions of any applicable code of professional conduct in relation to the audit.

KPMG

D M McLennan

Partner

Sydney

16 August 2021

KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by
a scheme approved under Professional Standards Legislation.

This page is intentionally left blank.

126

Lendlease Annual Report 2021 Financial Statements

127

Financial
Statements

Our financial statements reflect the
performance of the Group for the
financial year ended 30 June 2021.

The financial statements are presented
in the following sections: Consolidated
Financial Statements, Performance,
Investments, Liquidity and Working
Capital, Risk Management, Basis of
Consolidation and Other Notes.

Malaysia:
Setia City Mall

128

Financial Statements

Table of Contents

Consolidated Financial Statements

Income Statement

Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to Consolidated Financial Statements

Notes Index

Section A: Performance

1. Segment Reporting

2. Dividends/Distributions

3. Earnings Per Share/Stapled Security

4. Revenue from Contracts with Customers

5. Share of Profit of Equity Accounted Investments

6. Other Income

7. Other Expenses

8. Finance Revenue and Finance Costs

9. Taxation

10. Events Subsequent to Balance Date

Section B: Investment

11.

Inventories

12. Equity Accounted Investments

13. Other Financial Assets

Section C: Liquidity and Working Capital

14. Cash and Cash Equivalents

15. Notes to Statement of Cash Flows

16. Borrowings and Financing Arrangements

17.

Issued Capital

18. Capital Management

19. Liquidity Risk Exposure

20. Commitments

129

130

131

132

134

135

136

140

141

143

144

146

147

150

151

152

157

158

159

161

162

163

21. Loans and Receivables

22. Trade and Other Payables

23. Provisions

Section D: Risk Management

24. Financial Risk Management

25. Hedging

26. Fair Value Measurement

27. Contingent Liabilities

Section E: Basis of Consolidation

28. Consolidated Entities

29. Employee Benefit Vehicles

30. Parent Entity Disclosures

31. Related Party Information

Section F: Other Notes

32. Intangible Assets

33. Discontinued Operations

34. Defined Benefit Plans

35. Employee Benefits

36. Impact of New and Revised Accounting Standards

37. Other Significant Accounting Policies

Directors’ Declaration

164

165

167

168

170

171

172

173

174

175

176

178

180

182

185

190

191

Lendlease Annual Report 2021 Financial Statements

129

Consolidated Financial Statements

Income Statement
Year Ended 30 June 2021

Revenue from contracts with customers

Other revenue

Cost of sales

Gross profit

Share of profit of equity accounted investments

Other income

Other expenses

Results from operating activities from continuing operations

Finance revenue

Finance costs

Net finance costs

Profit/(Loss) before tax from continuing operations

Income tax (expense)/benefit from continuing operations

Profit/(Loss) after tax from continuing operations

Profit after tax from discontinued operations

Profit/(Loss) after tax

Profit/(Loss) after tax attributable to:

Members of Lendlease Corporation Limited

Unitholders of Lendlease Trust

Profit/(Loss) after tax attributable to securityholders

External non controlling interests

Profit/(Loss) after tax

Basic/Diluted Earnings per Lendlease Group Stapled Security (EPSS) from Continuing Operations

Shares excluding treasury shares

Shares on issue

Basic/Diluted Earnings per Lendlease Group Stapled Security (EPSS)

Securities excluding treasury securities

Securities on issue

(cents)

Note

June 2021
$m

June 2020
$m

9,771

121

11,671

163

(9,132)

(11,361)

760

100

488

(916)

432

(146)

(137)

295

(75)

220

222

128

222

32.2

32.0

32.5

32.3

473

(13)

352

(1,195)

(383)

(165)

(153)

(536)

194

(342)

(310)

(342)

(310)

(57.1)

(56.7)

(51.8)

(51.4)

Lendlease Corporation Limited (the Company) is incorporated and domiciled in Australia. The consolidated financial report of the
Company for the financial year ended 30 June 2021 comprises the Company and its controlled entities including Lendlease Trust
(LLT) (together referred to as the consolidated entity or the Group). The Group is a for profit entity and is an international property and
investments group. Further information about the Group’s primary activities is included in Note 1 ‘Segment Reporting’.

Shares in the Company and units in LLT are traded as one security under the name of Lendlease Group on the Australian Securities
Exchange (ASX). The Company is deemed to control LLT for accounting purposes and therefore LLT is consolidated into the Group’s
financial report. The issued units of LLT, however, are not owned by the Company and are therefore presented separately in the
consolidated entity Statement of Financial Position within equity, notwithstanding that the unitholders of LLT are also the shareholders
of the Company.

The consolidated financial report was authorised for issue by the Directors on 16 August 2021.

The accompanying notes form part of these consolidated financial statements.

130

Lendlease Annual Report 2021 Financial Statements

131

Consolidated Financial Statements continued

Statement of Comprehensive Income
Year Ended 30 June 2021

Statement of Financial Position
As at 30 June 2021

Profit/(Loss) after tax

Other Comprehensive Income/(Expense) after tax

Items that may be reclassified subsequently to profit or loss:

Movements in hedging reserve

Movements in foreign currency translation reserve

Total items that may be reclassified subsequently to profit or loss1

Items that will not be reclassified to profit or loss:

Movements in non controlling interest acquisition reserve

Movements in defined benefit plans remeasurements

Total items that will not be reclassified to profit or loss

Total comprehensive income/(expense) after tax

Total comprehensive income/(expense) after tax from continued operations attributable to:

Members of Lendlease Corporation Limited

Unitholders of Lendlease Trust

Total comprehensive income after tax from discontinued operations attributable to:

Members of Lendlease Corporation Limited

Total comprehensive income/(expense) after tax attributable to securityholders

External non controlling interests

Total comprehensive income/(expense) after tax

Note

June 2021
$m

June 2020
$m

222

(310)

(108)

(93)

146

148

(2)

146

(19)

(5)

(24)

(1)

(322)

(381)

(322)

Includes Other comprehensive loss of $70 million (June 2020: $39 million) relating to share of other comprehensive income of equity accounted investments.

Current Assets

Cash and cash equivalents

Loans and receivables

Inventories

Other financial assets

Current tax assets

Other assets

Disposal Group assets held for sale

Total current assets

Non Current Assets

Loans and receivables

Inventories

Equity accounted investments

Investment properties

Other financial assets

Deferred tax assets

Property, plant and equipment

Intangible assets

Defined benefit plan asset

Other assets

Total non current assets

Total assets

Current Liabilities

Trade and other payables

Provisions

Borrowings and financing arrangements

Other financial liabilities

Disposal Group liabilities held for sale

Total current liabilities

Non Current Liabilities

Trade and other payables

Provisions

Borrowings and financing arrangements

Other financial liabilities

Deferred tax liabilities

Total non current liabilities

Total liabilities

Net assets

Equity

Issued capital

Treasury securities

Reserves

Retained earnings

Total equity attributable to members of Lendlease Corporation Limited
Total equity attributable to unitholders of Lendlease Trust

Total equity attributable to securityholders
External non controlling interests

Total equity

Note

June 2021
$m

June 2020
$m

16a

1,662

1,741

1,469

1, 1 1 1

1,667

2,256

841

4,950

5,977

1,871

2,404

3,758

467

1,080

115

594

1,456

243

12,050

17,000

744

3,113

3,671

658

1,076

141

693

1,457

156

11,771

17,748

4,839

4,496

575

555

343

134

670

5,983

5,653

1,760

1,802

401

4,066

10,049

6,951

1,888

(79)

3,327

5,139
1,788

6,927
24

6,951

2,405

2,261

434

5,163

10,816

6,932

1,889

(68)

3,265

5,151
1,756

6,907
25

6,932

The accompanying notes form part of these consolidated financial statements.

132

Lendlease Annual Report 2021 Financial Statements

133

Consolidated Financial Statements continued

Statement of Changes in Equity
Year Ended 30 June 2021

Balance as at 30 June 2019

Impact of change in accounting policy1

Balance as at 1 July 2019

Total Comprehensive Income
Profit for the period
Other comprehensive income (net of tax)

Total comprehensive income

Other Comprehensive Income (Net of Tax)
Effect of foreign exchange movements
Effective cash flow hedges
Defined benefit plans remeasurements

Other comprehensive income (net of tax)

Transactions with Owners of the Company
Capital contributed by non controlling interests
Distribution Reinvestment Plan (DRP)
Share issue via institutional placement (net of transaction costs)2
Share issue via Security Purchase Plan (net of transaction costs)3
Dividends and distributions
Treasury securities acquired
Treasury securities vested
Fair value movement on allocation and vesting of securities

Transfer as a result of asset disposal4
Other movements

Total other movements through reserves

Balance as at 30 June 2020

Balance as at 1 July 2020

Total Comprehensive Income
Profit for the period
Other comprehensive income (net of tax)

Total comprehensive income

Other Comprehensive Income (Net of Tax)
Net investment hedge
Effect of foreign exchange movements
Effective cash flow hedges
Defined benefit plans remeasurements

Other comprehensive income (net of tax)

Transfer as a result of asset disposal4
Other movements

Total other movements through reserves

Balance as at 30 June 2021

Issued
Capital
$m

1,300

Treasury
Securities5
$m

(68)

-
-

-
-
-

-
9
454
126
-
-
-
-

-
-

589

1,889

-
-

-
-
-
-

-
3
(3)
(1)
-
-
-
-

-
-

(1)

1,888

-
-

-
-
-

-
-
-
-
-
(52)
52
-

-
-

(68)

-
-

-
-
-
-

-
-
-
-
-
(50)
39
-

-
-

(11)

(79)

RESERVES

Hedging
Reserve
$m

Foreign
Currency Translation
Reserve
$m

Non Controlling
Interest
Acquisition
Reserve
$m

Other
Reserve
$m

Equity
Compensation
Reserve
$m

Retained
Earnings
$m

Members of
Lendlease
Corporation
Limited
$m

Unitholders
of Lendlease
Trust
$m

External
Non
Controlling
Interests
$m

(84)

-
(19)

(19)

-
(19)
-

(19)

-
-
-
-
-
-
-
-

7
-

(96)

-
15

-
-
15
-

-
-
-
-
-
-
-
-

2
-

(79)

-
-

-
-
-

-
-
-
-
-
-
-
-

(30)
-

(30)

-
(96)

(96)

12
(108)
-
-

(96)

-
-
-
-
-
-
-
-

(5)
-

(5)

(63)

(97)

-
(1)

(1)

(1)
-
-

(1)

-
-
-
-
-
-
-
-

-
-

106

-
-

-
-
-

-
-
-
-
-
-
-
-

-
-

(98)

106

-
6

-
6
-
-

-
-
-
-
-
-
-
-

-
-

-
-
-
-

-
-
-
-
-
-
-
-

-
-

(92)

106

112

-
-

-
-
-

-
-
-
-
-
-
-
3

-
-

115

-
-

-
-
-
-

-
-
-
-
-
-
-
16

-
-

131

3,815

(42)

3,773

(342)
13

(329)

-
-
13

-
-
-
-
(178)
-
-
-

-
(1)

(179)

3,265

128
11

139

-
-
-
11

-
-
-
-
(77)
-
-
-

-
-

(77)

3,327

5,152

(42)

5,110

(342)
(7)

(349)

(1)
(19)
13

(7)

-
9
454
126
(178)
(52)
52
3

(23)
(1)

390

5,151

128
(64)

12
(102)
15
11

(64)

-
3
(3)
(1)
(77)
(50)
39
16

(3)
-

(76)

5,139

1,182

32
(5)

(5)
-
-

(5)

-
2
479
134
(67)
-
-
-

-
(1)

547

1,756

94
(10)

-
(10)
-
-

(10)

-
1
-
-
(54)
-
-
-

-
1

(52)

1,788

-
-

-
-
-

2
-
-
-
-
-
-
-

-
-

-
(2)

(2)

-
(2)
-
-

(2)

1
-
-
-
-
-
-
-

-
-

Total
Equity
$m

6,357

(42)

6,315

(310)
(12)

(322)

(6)
(19)
13

(12)

2
11
933
260
(245)
(52)
52
3

(23)
(2)

939

6,932

222
(76)

146

12
(114)
15
11

(76)

1
4
(3)
(1)
(131)
(50)
39
16

(3)
1

(127)

6,951

1. June 2020 Statement of Changes in Equity has been adjusted to reflect the impact of the first time adoption of AASB 16 Leases by recording $(42) million to opening retained earnings.
2. On 4 May 2020 the Group issued 97 million new stapled securities via an institutional placement at an issue price of $9.80.
3. On 4 June 2020 the Group issued 27 million new stapled securities via a Security Purchase Plan at an issue price of $9.80.
4. These movements in reserves were transferred to profit and loss in the year.
5. Opening balance for number of treasury securities 1 July 2020 was 4 million (1 July 2019: 4 million) and closing balance at 30 June 2021 was 6 million.

The accompanying notes form part of these consolidated financial statements.

134

Lendlease Annual Report 2021 Financial Statements

135

Consolidated Financial Statements continued

Notes to Consolidated Financial Statements

Statement of Cash Flows
Year Ended 30 June 2021

Cash Flows from Operating Activities

Cash receipts in the course of operations

Cash payments in the course of operations

Interest received

Interest paid in relation to other corporations

Interest in relation to lease liabilities

Dividends/distributions received

Income tax paid in respect of operations

Net cash provided by operating activities

Cash Flows from Investing Activities

Sale/redemption of investments

Acquisition of investments

Acquisition of/capital expenditure on investment properties

Net loan drawdowns from associates and joint ventures

Disposal/acquisition of consolidated entities (net of cash disposed/acquired and
transaction costs)

Disposal of property, plant and equipment

Acquisition of property, plant and equipment

Acquisition of intangible assets

Net cash used in investing activities

Cash Flows from Financing Activities

Net proceeds from share issue

Proceeds from borrowings

Repayment of borrowings

Dividends/distributions paid

Increase in capital of non controlling interests

Repayment of lease liabilities

Net cash (used in)/provided by financing activities

Other Cash Flow Items

Effect of foreign exchange rate movements on cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of financial year

Cash and cash equivalents at end of financial year

Note

June 20211
$m

June 20201
$m

9,531

(8,916)

13,488

(13,313)

(128)

(20)

(85)

468

573

(301)

(110)

(13)

(266)

(53)

(68)

(216)

3,503

(3,470)

(121)

(60)

(146)

(6)

100

1,562

1,662

(164)

(25)

146

(11)

137

448

(709)

(57)

(9)

136

(112)

(77)

(369)

1,193

4,658

(4,970)

(327)

(61)

495

272

1,290

1,562

1. Balances include cash flows relating to both continuing and discontinued operations. Net cash flows relating to discontinued operations have been disclosed in Note 33

‘Discontinued Operations’.

The accompanying notes form part of these consolidated financial statements.

Basis of Preparation
The consolidated financial report is a general purpose financial report which:

• Has been prepared in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards

Board, and the Corporations Act 2001

• Complies with International Financial Reporting Standards (IFRSs) adopted by the International Accounting Standards Board
• Is presented in Australian dollars ($). At June 2021, all values have been rounded off to the nearest million dollars unless otherwise

indicated, in accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191

• Is prepared under the historical cost basis except for the following assets and liabilities, which are stated at their fair value: derivative
financial instruments, fair value through profit or loss investments, investment properties, and liabilities for cash settled share based
compensation plans. Recognised assets and liabilities that are hedged are stated at fair value in respect of the risk that is hedged.
Refer to the specific accounting policies within the Notes to the Consolidated Financial Statements for the basis of valuation of assets
and liabilities measured at fair value.

Significant accounting policies have been:

• Included in the relevant notes to which the policies relate, while other significant accounting policies are discussed in Note 37 ‘Other

Significant Accounting Policies’

• Consistently applied to all financial years presented in the consolidated financial statements and by all entities in the Group, except as

explained in Note 36 ‘Impact of New and Revised Accounting Standards’.

The preparation of a financial report that complies with AASBs requires management to make judgements, estimates and assumptions.

• This can affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual

results may differ from these estimates

• Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively
• The significant accounting policies highlight information about accounting judgements in applying accounting policies that have the
most significant effects on reported amounts and further information about estimated uncertainties that have a significant risk of
resulting in material adjustments within the next financial year

• These significant accounting estimates and judgements have been considered in the context of the ongoing COVID outbreak and the

impact of the current economic conditions.

The Group presents assets and liabilities in the Statement of Financial Position as current or non current.

• Current assets include assets held primarily for trading purposes, cash and cash equivalents, and assets expected to be realised in,

or intended for sale or use in, the course of the Group’s operating cycle or within the next 12 months. All other assets are classified as
non current

• Current liabilities include liabilities held primarily for trading purposes, liabilities expected to be settled in the course of the Group’s
operating cycle and those liabilities due within one year from the reporting date. All other liabilities are classified as non current.

At 30 June 2021, the Group is in a net current deficit (current liabilities exceeds current assets) but does not anticipate a significant
liquidity risk in the next 12 months. This is due to the Group’s strong financial profile, which includes significant committed undrawn
facilities and low gearing ratios.

The financial statements are prepared on a going concern basis. In preparing the financial statements, including assessing the going
concern basis of accounting, the Group has considered the ongoing COVID pandemic.

The Group has:

• $3,268 million in undrawn facilities. See Note 16 ‘Borrowings and Financing Arrangements’
• $1,662 million in cash and cash equivalents. See Note 14 ‘Cash and Cash Equivalents’
• Net positive cash inflow from operating activities in FY21. See Statement of Cash Flows.

Following this assessment, the Group is well placed to manage its financing and future commitments over the next 12 months from the
date of the financial statements.

136

Lendlease Annual Report 2021 Financial Statements

137

Notes to Consolidated Financial Statements continued

Section A: Performance

In addition to the statutory result, Operating Earnings before Interest, Tax, Depreciation and Amortisation (Operating EBITDA)
and Operating Profit after Tax (Operating PAT) are the key measures used to assess the Group’s performance. This section of the
Financial Report focuses on disclosure that enhances a user’s understanding of Operating EBITDA and Operating PAT. Segment
Reporting below provides a breakdown of profit and revenue by the operational activity. The key line items of the Income
Statement, along with their components, provide detail behind the reported balances. Group performance will also impact the
earnings per stapled security and dividend payout, therefore disclosure on these items has been included in this section. Further
information and analysis on performance and allocation of resources can be found in the Performance and Outlook section of the
Directors’ Report.

1. Segment Reporting

Accounting Policies

The Group’s segments are Development, Construction, Investments and Non core. The Group has identified these operating
segments based on the distinct products and services provided by each segment, the distinct target return profile and allocation
of resources for each segment, and internal reports that are reviewed and used by the Global Chief Executive Officer (the Chief
Operating Decision Maker) in assessing performance, determining the allocation of resources, setting operational targets, and
managing the Group.

The Group has arranged the segments around business activity rather than geography due to the Group’s business model being
broadly consistent in all regions.

On 31 August 2020, the Group announced a strategy update and that Management would report Operating EBITDA and Operating
PAT as its primary earnings metrics going forward, in addition to the statutory result. Operating PAT is defined as Statutory profit
adjusted for non-cash backed property related revaluation increases or decreases of Investment property, Other financial assets
and Equity accounted investments that are classified in the Investments segment, and other non-cash adjustments or non-recurring
items such as impairment losses relating to goodwill and other intangibles. Operating EBITDA is before Interest, Tax, Depreciation
and Amortisation.

The Chief Operating Decision Maker receives information and assesses segment performance under these metrics. Operating
EBITDA and Operating PAT are used to measure performance as management believes that such information is the most relevant in
evaluating the results of certain reportable segments relative to other entities that operate within these industries. The Group does
not consider corporate activities to be an operating segment.

The operating segments are as follows:

Development

Operates in all four geographic regions. Its products and services include the development of inner city mixed use developments,
apartments, communities, retirement, retail, commercial assets and social and economic infrastructure. Construction margin earned on
development projects is recognised in this segment.

Construction

Operates across all four geographic regions. Its products and services include the provision of project management, design and
construction services, predominantly in the commercial, residential, mixed use, defence and social infrastructure sectors.

Investments

Operates across all four geographic regions. Services include owning and/or managing investments across all four geographic regions.
The segment includes an investment management platform and the Group’s ownership interests in residential, office, retail, industrial,
retirement and infrastructure investment assets.

Non core

Non core includes the provision of project management, design and construction services in the Australian infrastructure sector. These
products and services represent the retained Engineering projects and Services business. The discontinued operations referenced
throughout the financial statements are included in this segment. Discontinued operations represent the Engineering business sold,
excluding the projects retained by the Group. Refer to Note 33 ‘Discontinued Operations’ for further detail.

Financial information regarding the performance of each reportable segment and a reconciliation of these reportable segments to the
financial statements are included below:

Year Ended June 2021

Note Development Construction Investments

Total Core
Segments

Non
Core3

Total
Segments

Corporate
Activities

Total
Group

SEGMENTS

Operating EBITDA

Reconciling Items

Net interest revenue/(expense)

Depreciation and amortisation
Operating profit/(loss) before tax1

Operating income tax (expense)/benefit

Operating profit/(loss) after tax

Investments segment revaluations (pre-tax):

Investment properties revaluations

Financial assets revaluations

Equity accounted investments
revaluations
Total adjustments1

Income tax expense on adjustments

469

(14)

457

(115)

342

173

(4)

(35)

134

(34)

100

Statutory profit/(loss) after tax

342

100

276

918

(139)

779

(161)

618

(1)

(9)

266

(53)

213

(1)

(25)

239

(3)

(58)

(59)

857

(197)

(202)

655

(181)

(1)

(25)

(2)

(117)

660

(186)

474

(1)

(25)

(134)

(90)

(385)

107

(278)

(136)

(207)

275

(79)

196

(1)

(25)

681

(181)

500

(278)

222

Note Development Construction Investments

Total Core
Segments

Non
Core

Total
Segments

Corporate
Activities

Total
Group

SEGMENTS

Year Ended June 20202

Operating EBITDA

Reconciling Items

Net interest revenue/(expense)

Depreciation and amortisation
Operating profit/(loss) before tax1

Operating income tax (expense)/benefit

Operating profit/(loss) after tax

Investments segment revaluations (pre-tax):

Investment properties revaluations

Financial assets revaluations

Equity accounted investments
revaluations

Impairment losses relating to
intangibles

Total adjustments1

Income tax expense on adjustments

Statutory profit/(loss) after tax

12c

322

(23)

300

(67)

233

101

(6)

(28)

(25)

300

723 (495)

228

(158)

(6)

(17)

277

(63)

214

(26)

(16)

(11)

(68)

(84)

644 (574)

(155)

168

489 (406)

(26)

(16)

(105)

(13)

(160)

104

(13)

(160)

379 (406)

(6)

(152)

(26)

(16)

(105)

(13)

(160)

(27)

(142)

(148)

(92)

(244)

(392)

(322)

109

122

(283)

(200)

(26)

(16)

(105)

(13)

(160)

(283)

(310)

1. Operating profit before tax of $275 million (June 2020: $(322) million) plus Investments segment revaluations (pre-tax) of $19 million (June 2020: $(160) million) reconciles
to Profit before tax from continuing operations of $295 million (June 2020: $(536) million) as disclosed in the Income Statement and Profit before tax for discontinued
operations of $(1) million (June 2020: $54 million) as disclosed in Note 33 ‘Discontinued Operations’.

2. June 2020 Balances have been re-presented to align the presentation to Operating EBITDA and Operating PAT as primary earnings metrics.
3. Includes provisions related to claims on historical Non core segment projects completed prior to the sale of the Engineering business.

The following table provides a reconciliation of Core operating profit after tax to Statutory profit after tax:

Core operating profit after tax

Non core operating profit after tax

Total adjustments (pre-tax)

Income tax expense on adjustments

Statutory profit/(loss) after tax

June 2021

Corporate
Activities
$m

(278)

Segments
$m

655

(181)

500

Total Group
$m

Segments
$m

377

(181)

222

489

(406)

(160)

(27)

June 2020

Corporate
Activities
$m

(283)

Total Group
$m

206

(406)

(160)

(310)

138

Lendlease Annual Report 2021 Financial Statements

139

Notes to Consolidated Financial Statements continued

Section A: Performance continued
1. Segment Reporting continued

The following tables set out other financial information by reportable segment:

Segment
Revenue1
$m

Finance
Revenue
$m

Finance
Expense
$m

Share of
Results EAI2
$m

Income Tax
$m

Material Non
Cash Items3
$m

Non Current
Segment
Assets4
$m

Group
Total
Assets
$m

June 2021

Core

Development

Construction

Investments

Total core segments

Non core

Total segments

Corporate activities

Total

1,965

6,398

348

8,711

1,444

10,155

10,185

(2)

(4)

(2)

(8)

(138)

(146)

(115)

(34)

(46)

(195)

(179)

107

(72)

100

June 2020

(12)

(6)

(23)

5,416

1,509

2,737

6,975

3,627

3,954

9,662

14,556

273

948

9,935

15,504

677

1,496

10,612

17,000

Segment
Revenue1
$m

Finance
Revenue
$m

Finance
Expense
$m

Share of
Results EAI2
$m

Income Tax
$m

Material Non
Cash Items3
$m

Non Current
Segment
Assets4
$m

Group
Total
Assets
$m

Core

Development

Construction

Investments

Total core segments

Non core

Total segments

Corporate activities

Total

2,344

7,627

390

10,361

2,884

13,245

13,289

(5)

(6)

(7)

(18)

(1)

(19)

(147)

(166)

(100)

(16)

(13)

(67)

(25)

(13)

(105)

168

109

172

(36)

(17)

(63)

(116)

(107)

(37)

(144)

5,150

1,310

7,281

3,565

3,032

4,236

9,492

15,082

279

1,828

9,771

16,910

627

838

10,398

17,748

1. Comprised of Revenue from contracts with customers from continuing operations of $9,771 million (June 2020: $11,671 million), other revenue from continuing operations of

$121 million (June 2020: $163 million), finance revenue from continuing operations of $9 million (June 2020: $12 million), revenue from contracts with customers from
discontinued operations of $283 million (June 2020: $1,437 million) and finance revenue from discontinued operations of $1 million (June 2020: $6 million).

2. Equity Accounted Investments.
3. Material Non Cash Items relates to impairments and provisions raised or written back, unrealised foreign exchange movements and fair value gains or losses.
4. Excludes deferred tax assets, financial instruments and defined benefit plan assets.

Australia

Asia

Europe

Americas

Total segment

Corporate activities

Total

NON CURRENT ASSETS1

June 2021
$m

June 2020
$m

5,007

1,388

1,471

2,069

9,935

677

10,612

4,882

1,361

1,382

2,146

9,771

627

10,398

1. Excludes deferred tax assets, financial instruments and defined benefit plan assets and is based on the geographical location of assets.

The operating segments generate revenue in the following regions:

Development
$m

Construction
$m

Investments
$m

REVENUE1

Total Core
Segments
$m

1,239

2,868

511

204

1,965

262

861

2,407

6,398

164

348

4,271

350

1,386

2,704

8,711

Non Core
$m

1,444

Total
Segments
$m

Corporate
Activities
$m

Statutory
Result
$m

5,715

350

1,386

2,704

5,745

350

1,386

2,704

1,444

10,155

10,185

Development
$m

Construction
$m

Investments
$m

REVENUE1

Total Core
Segments
$m

1,198

969

164

2,344

3,217

255

782

3,373

7,627

172

134

390

4,587

402

1,767

3,605

10,361

Non Core
$m

2,884

Total
Segments
$m

Corporate
Activities
$m

Statutory
Result
$m

7,471

402

1,767

3,605

13,245

7,515

402

1,767

3,605

13,289

June 2021

Australia

Asia

Europe

Americas

Total

June 2020

Australia

Asia

Europe

Americas

Total

1. Comprised of Revenue from contracts with customers from continuing operations of $9,771 million (June 2020: $11,671 million), other revenue from continuing operations of

No revenue from transactions with a single external customer amounts to 10 per cent or more of the Group’s revenue.

140

Lendlease Annual Report 2021 Financial Statements

141

Notes to Consolidated Financial Statements continued

COMPANY/TRUST

Cents
Per Share/Unit

June 2021
$m

June 2020
$m

Accounting Policies

Provision of Construction and Development services

4. Revenue from Contracts with Customers

Section A: Performance continued
2. Dividends/Distributions1

Parent Company Interim Dividend
December 2020 – paid 17 March 2021
December 2019 – paid 17 March 2020

Lendlease Trust Interim Distribution

December 2020 – paid 17 March 2021

December 2019 – paid 17 March 2020

Parent Company Final Dividend

June 2021 – declared subsequent to reporting date2
June 20203

Lendlease Trust Final Distribution

June 2021 – provided for and payable 15 September 2021
June 2020 – paid 15 September 2020
Total

11.2
22.1

3.8

7.9

7.9
-

4.1
3.3

77
-

55
-

28
-
186

-
124

-
-

-
22
191

1. The June 2021 final dividend/distribution was not franked. The December 2020 interim dividend was 50 per cent franked, with the balance sourced from the conduit foreign

income account. The December 2020 interim distribution and the June 2020 interim/final dividends/distributions were not franked.

2. No provision for this dividend has been recognised in the Statement of Financial Position at 30 June 2021, as it was declared after the end of the reporting period.
3. No final dividend was declared for the Company for 30 June 2020.

Dividend Franking

The amount of franking credits available for use in subsequent reporting periods as at 30 June 2021 is $7 million, based on a 30 per cent
tax rate (30 June 2020: $17 million). This is calculated after adjusting for franking credits which are expected to arise from the payment
of income tax provided in the financial statements and tax losses utilised in the current financial year.

3. Earnings Per Share/Stapled Security (EPS/EPSS)

Accounting Policies

The Group presents basic and diluted EPS/EPSS in the Income Statement. This is a key performance measure for the Group. Refer
to further details in the Finance Area of Focus section of the Annual Report.

Basic EPS/EPSS is determined by dividing Profit/(loss) after tax attributable to members of the Company and Group (excluding
any costs of servicing equity other than ordinary shares/securities) by the weighted average number of ordinary shares/securities
outstanding during the financial year, adjusted for bonus elements in ordinary shares/securities issued during the financial year.

Diluted EPS/EPSS is determined by adjusting the Profit/(loss) after tax attributable to members of the Company and Group, and
the weighted average number of ordinary shares/securities outstanding for the effects of all dilutive potential ordinary shares/
securities. The Group currently does not have any dilutive potential ordinary shares/securities. Dilution occurs when treasury shares
and employee share options are included in outstanding shares.

The issued units of Lendlease Trust (LLT) are presented separately within equity, and therefore the profit attributable to LLT is
excluded from the calculation of basic and diluted earnings per Company share presented in the Income Statement.

JUNE 2021

JUNE 2020

Shares/
Securities
Excluding
Treasury
Securities

Shares/
Securities
on Issue

Shares/
Securities
Excluding
Treasury
Securities

Shares/
Securities
on Issue

Basic/Diluted Earnings Per Share (EPS)1

Profit/(loss) attributable to members of Lendlease Corporation Limited
(Company)
Weighted average number of ordinary shares
Basic/Diluted EPS

Basic/Diluted Earnings Per Stapled Security (EPSS)1

$m
m
cents

128
683
18.7

128
688
18.6

(342)
599
(57.1)

Profit/(loss) attributable to securityholders of Lendlease Group
Weighted average number of stapled securities
Basic/Diluted EPSS
1. Balances include both continuing and discontinued operations. Earnings per share/stapled security for continuing and discontinued operations have been separately

(310)
599
(51.8)

$m
m
cents

222
688
32.3

222
683
32.5

disclosed in Note 33 ‘Discontinued Operations’.

(342)
603
(56.7)

(310)
603
(51.4)

Construction services include project management, design and construction services predominantly in the defence, mixed use,
commercial and residential sectors. Development services include development fees earned on development of inner city mixed
use developments, retirement, retail, commercial assets and social and economic infrastructure.

Contracts with customers to provide Construction or Development services can include either one performance obligation or
multiple performance obligations within each contract. The Group assesses each of its contracts individually and where there are
separate performance obligations identified, the transaction price is allocated based on the relative standalone selling prices of the
services provided. Typically, the Construction or Development services in contracts are not considered distinct as the services are
highly interrelated and an integrated bundle of services and therefore are accounted for as a single performance obligation.

The transaction price for each contract may include variable consideration in the form of contract variations or modifications, and
contract claims (collectively, ‘Modifications’). Variable consideration may also include performance or other incentive fees. The
transaction price is the amount of consideration to which the Group expects to be entitled to receive in exchange for transferring
promised goods or services to a customer per the contract.

Variable consideration is only included in the transaction price for a contract to the extent it is highly probable that a significant
reversal of that revenue will not occur, which is an area of accounting judgement. Factors considered in assessing whether the
estimated revenue associated with Modifications should be recognised include the following:

i. Status of negotiations with customers
ii. The contract or other evidence provides a legal basis for the Modifications
iii. Additional costs incurred were caused by circumstances that were unforeseen at the contract date and for which entitlement

contractually exists

iv. Modification related costs are identifiable, measurable, and considered reasonable in view of the work performed
v. Evidence supporting the Modification is objective and verifiable, which may include independent third-party advice
vi. Commercial and market factors specific to the Modifications
vii. Historical experience in resolving Modifications.

This assessment is reviewed each reporting period or when facts and circumstances change during the reporting period.

Revenue is recognised over time, typically based on an input method using an estimate of costs incurred to date as a percentage
of total estimated costs. These contracts are typically executed on the customer’s land so they control the assets as they are being
built or the customer benefits from the service as the work is performed. Differences between amounts recognised as revenue and
amounts billed to customers are recognised as contract assets or liabilities in the Statement of Financial Position.

The measurement of revenue is an area of accounting judgement. Management uses judgement to estimate:

i. Progress in satisfying the performance obligations within the contract, which includes estimating contract costs expected to be

incurred to satisfy performance obligations

ii. The probability of the amount to be recognised as variable consideration for approved variations and claims where the final

price has not been agreed with the customer.

Revenue is invoiced based on the terms of each individual contract, which may include a periodic billing schedule or achievement
of specific milestones. Invoices are issued under commercial payment terms which are typically 30 days from when an invoice
is issued.

A provision for loss making contracts is recorded for the difference between the expected costs of fulfilling a contract and the
expected remaining economic benefits to be received where the forecast remaining costs exceed the forecast remaining benefits.

Provision of Investment services

Investment services include funds management, asset management, leasing and origination services.

Each contract with a customer to provide Investment services is typically one performance obligation with revenue recognised over
time as services are rendered. Typically, our performance obligation is to manage a client’s capital and/or property for a specified
period of time and is delivered as a series of daily performance obligations over time.

The transaction price for each contract may include variable consideration in the form of performance fees. Variable consideration
is only included in the transaction price for a contract to the extent it is highly probable that a significant reversal of that revenue
will not occur. The Group assesses probability of receiving variable consideration using a combination of commercial and market
factors, and historical experience.

Revenue is invoiced either monthly or quarterly based on the terms of each individual contract. Invoices are issued under
commercial payment terms which are typically 30 days from when an invoice is issued.

142

Lendlease Annual Report 2021 Financial Statements

143

Notes to Consolidated Financial Statements continued

Section A: Performance continued
4. Revenue from Contracts with Customers continued

5. Share of Profit of Equity Accounted Investments

Accounting Policies continued

Sale of Development Properties

The Group develops and sells residential land lots and built form products, including residential apartments, commercial and retail
buildings. Sales of residential land lots and apartments typically are recognised at a point in time, with each contract treated as a
single performance obligation to transfer control of an asset to a customer. Residential land lots and apartments are recognised on
settlement with the customer.

The sale of retail, commercial and mixed use assets may include land, construction, development management and investment
service components. Where there are multiple components within one contract, the transaction price is allocated based on the
standalone selling prices of each component, typically using the residual approach, and revenue is recognised based on the policies
noted above. Sales of commercial and retail buildings are recognised when the customer obtains control of the asset based on the
specific terms and conditions of the sales contract.

The Group discounts deferred proceeds to reflect the time value of money where the period between the transfer of control of
a development property and receipt of payment from the customer exceeds one year. Deferred proceeds from customers are
recognised in trade and other receivables where the right to receive payment is unconditional. Deposits received in advance from
customers are recognised as a contract liability until the performance obligation has been met.

The measurement of revenue from the sale of development properties is an area of accounting judgement as it requires
management to exercise judgement in valuing the individual components of a development property sale, given the due
consideration to cost inputs, market conditions and commercial factors. The recognition and determination of when control passes
requires management judgement and is considered an area of accounting judgement.

Proceeds from the sale of residential land lots and apartments are received upon settlement, which typically occurs between
6-12 weeks following practical completion on the asset. Proceeds from the sale of retail, commercial and mixed use assets are
received in accordance with the specific terms of each contract.

The Group may enter a PLLACes (Presold Lendlease Apartment Cash Flows) transaction for certain residential apartment buildings
from time to time. This involves the Group receiving an upfront cash inflow from third party investors (investors) in exchange
for selling the investors the rights to the cash proceeds that are due from customers once the apartments are completed. When
customers settle their apartments the Group does not receive any cash proceeds nor does it pay any amounts to the investors as
the customers pay the investors directly. On entry into a PLLACes transaction the cash inflow is disclosed as an operating cash
inflow in the Statement of Cash Flows which typically occurs over a year in advance of the revenue recognition from the sale
of the apartments. At the same time, an Other payables – PLLACes is also recognised within Trade and Other Payables and is
derecognised as revenue once settlement of the apartments occurs.

Revenue from the provision of services

Core Construction services

Non core Construction services

Construction services

Development services

Investment services

Total revenue from the provision of services

Revenue from the sale of development properties

Total revenue from contracts with customers1

1. Further information on revenue by geography and by segments is included in Note 1 ‘Segment Reporting’.

June 2021
$m

June 2020
$m

6,398

1,161

7,559

496

282

8,337

1,434

9,771

7,626

1,441

9,067

1,083

310

10,460

1,211

11,671

Accounting Policies

Investments in associates and joint ventures are accounted for using the equity method. The share of profit recognised under
the equity method is the Group’s share of the investment’s profit or loss based on ownership interest held. Associates (including
partnerships) are entities in which the Group, as a result of its voting rights, has significant influence, but not control or joint control,
over the financial and operating policies. A joint venture is a joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the arrangement.

For associates, this is from the date that significant influence commences until the date that significant influence ceases, and for
joint ventures, this is from the date joint control commences until the date joint control ceases.

Associates1,2

Share of profit

Joint Ventures1,2

Share of profit

Total share of profit of equity accounted investments

Note

12a

12b

June 2021
$m

June 2020
$m

100

(14)

(13)

1. Reflects the contribution to the Group’s profit, and is after tax paid by the Equity Accounted Investment vehicles themselves, where relevant. However, for various Equity

Accounted Investments, the share of tax is paid by the Group and is included in the Group’s current tax expense.

2. Share of profit from Associates and Joint Ventures includes $(2) million (June 2020: $(31) million) and $(23) million (June 2020: $(74) million), respectively, in revaluation gains

and losses recognised in the Investments segment adjustment in Note 1 ‘Segment Reporting’.

6. Other Income

Accounting Policies

Net gains or losses on sale/transfer of investments, including consolidated entities and Equity Accounted Investments are
recognised when an unconditional contract is in place.

Net gains or losses on fair value remeasurements are recognised in accordance with the policies stated in Note 13 ‘Other Financial Assets’.

Net gain on sale/transfer of investments

Consolidated entities1, 2

Other financial assets at fair value

Equity accounted investments

Other assets and liabilities

Total net gain on sale/transfer of investments

Net gain on fair value measurement

Investment properties3

Fair value through profit or loss assets4

Total net gain on fair value measurement

Other5

Total other income

June 2021
$m

June 2020
$m

375

388

488

183

223

105

352

During the period, the Group disposed of a 25 per cent interest in each of One Sydney Harbour R1 Trust and One Sydney Harbour R2 Trust, recording a net gain on sale
of $19 million and $27 million, respectively. Refer to Note 28 ‘Consolidated Entities’ for further detail. The remaining 75 per cent interests retained by the Group provided
revaluation gains of $128 million and $151 million, respectively, based on the transaction prices. The amounts have been recorded in the Development segment.
During the period, the Group disposed of a 50 per cent interest in Lendlease Renaissance I Fund, recording a net gain on sale of $23 million. Refer to Note 28 ‘Consolidated
Entities’ for further detail. The remaining 50 per cent interest retained by the Group provided a revaluation gain of $28 million based on the transaction price. The amounts
have been recorded in the Development segment.
Net gain on fair value measurements for Investment properties includes $1 million loss (June 2020: $26 million loss) recognised in the Investments segment adjustments in
Note 1 ‘Segment Reporting’.
Net gain on fair value measurements for Fair value through profit or loss assets includes $45 million gain (June 2020: $16 million loss disclosed in Other expenses) recognised
in the Investments segment adjustments in Note 1 ‘Segment Reporting’.
During the period, the Group disposed of its 50 per cent stake in International Quarter London - North and purchased the remaining 50 per cent stake in International Quarter
London - South. The transaction resulted in a net gain of $31 million. The amounts have been recorded in the Development segment.

144

Lendlease Annual Report 2021 Financial Statements

145

Notes to Consolidated Financial Statements continued

Section A: Performance continued
7. Other Expenses

Accounting Policies

Other expenses in general are recognised as incurred.

Employee Benefit Expenses

Employee benefits are expensed as the related service by the employee is provided and includes both equity and cash based
payment transactions. Employee benefits recognised in the Income Statement are net of recoveries.

For cash bonuses, the Group recognises an accrued liability for the amount expected to be paid. This is based on a formula that
takes into consideration the profit attributable to the Group’s securityholders after certain adjustments. Refer to Note 35a ‘Short
Term Incentives’ for further detail.

Share Based Compensation

The Group operates equity settled share based compensation plans that are linked to Lendlease’s security price. The fair value of
the equity received in exchange for the grant is recognised as an expense and a corresponding increase in equity, in the Equity
Compensation Reserve. The total amount to be expensed over the vesting period is determined by reference to the fair value of the
securities granted.

The fair value is primarily determined using a Monte-Carlo simulation model. Refer to Note 35j ‘Amounts Recognised in the
Financial Statements’ for further detail. Management considers the fair value assigned to be an area of estimation uncertainty as it
requires judgements on Lendlease’s security price and whether vesting conditions will be satisfied.

At each balance sheet date, the Group revises its estimates of the entitlement due. It recognises the impact of revision of original
estimates on non market conditions, if any, in the Income Statement, and a corresponding adjustment to equity over the remaining
vesting period. Changes in entitlement for equity settled share based compensation plans are not recognised if they fail to vest due
to market conditions not being met.

Superannuation Accumulation Plan Expense

All employees in the Australia region are entitled to benefits on retirement, disability or death from the Group’s superannuation
accumulation plan. The majority of these employees are party to a defined contribution plan and receive fixed contributions from
the Group. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised
as an employee benefit expense when they are due. The Group also operates a defined benefit superannuation plan, membership
of which is now closed. Refer to Note 34 ‘Defined Benefit Plans’ for further detail.

Impairment

The carrying amounts of the Group’s assets, subject to impairment tests, are reviewed at each balance sheet date to determine whether
there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. The calculation of this
recoverable amount is dependent on the type of asset. The material assets’ accounting policies will contain further information on these
calculations.

An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are
recognised in the Income Statement.

Reversals of Impairment

Impairment losses on assets can be reversed (other than goodwill) when there is a subsequent increase in the recoverable amount.
The increase could be due to a specific event, the indication that impairment may no longer exist or there is a change in estimates
used to determine the recoverable amount.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would
have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Lease Expense

Short term lease and low value lease payments, including outgoings, are recognised in the Income Statement on a straight line basis
over the term of the lease.

Depreciation and Amortisation

Depreciation on owned assets is charged to the Income Statement on a straight line basis over the estimated useful lives of items
of property, plant and equipment. Amortisation is provided on leasehold improvements over the remaining term of the lease. Most
plant is depreciated over a period not exceeding 20 years, furniture and fittings over three to 15 years, motor vehicles over four to
eight years and computer equipment over three years.

Right-of-use assets are depreciated using the straight line method from the commencement date to the earlier of the end of the
useful life of the right-of-use asset or the end of the lease term.

Profit before income tax includes the following other expense items:

Employee benefit expenses1

Superannuation accumulation plan expense

Net defined benefit plans expense

Expenses include impairments raised/(reversals) relating to:

Loans and receivables

Property inventories

Equity accounted investments

Other assets

Net loss on remeasurement of fair value through profit or loss assets

Lease expense (including outgoings)

Depreciation on right-of-use assets

Depreciation on owned assets

Amortisation

Net foreign exchange loss/(gain)

1. Total expense before recoveries through projects.

Auditors’ Remuneration

Amounts received or due and receivable by the auditors of Lendlease Group and its consolidated
entities for:

Audit services

Other assurance services

Total audit and other assurance services

Non audit services1

Total audit, other assurance and non audit services

June 2021
$m

June 2020
$m

2,102

(13)

2,373

(2)

June 2021
$000s

June 2020
$000s

7,019

822

7,841

438

8,279

7,233

524

7,757

557

8,314

1. Non audit services include amounts charged for work relating to financial, regulatory and asset due diligence of the Group and its consolidated entities.

146

Lendlease Annual Report 2021 Financial Statements

147

Notes to Consolidated Financial Statements continued

Section A: Performance continued
8. Finance Revenue and Finance Costs

Accounting Policies

Finance revenue is recognised as it is earned using the effective interest method, which applies the interest rate that discounts
estimated future cash receipts over the expected life of the financial instrument. The discount is then recognised as finance revenue
over the remaining life of the financial instrument.

Finance costs include interest, amortisation of discounts or premiums relating to borrowings and amortisation of costs incurred in
connection with the arrangement of new borrowings facilities. Costs incurred in connection with the arrangement of borrowings
are capitalised and amortised over the life of the borrowings. Finance costs are expensed immediately as incurred unless they relate
to acquisition and development of qualifying assets. Qualifying assets are assets that take more than six months to prepare for their
intended use or sale. Finance costs related to qualifying assets are capitalised.

Finance Revenue

Other corporations

Other finance revenue

Total interest finance revenue

Interest discounting

Total finance revenue

Finance Costs

Interest expense in relation to other corporations

Interest expense in relation to lease liabilities

Less: Capitalised interest finance costs1

Total interest finance costs

Non interest finance costs

Total finance costs

Net finance costs

June 2021
$m

June 2020
$m

127

(18)

129

146

(137)

159

(33)

151

165

(153)

1. The weighted average interest rate used to determine the amount of interest finance costs eligible for capitalisation was 3.6 per cent (30 June 2020: 3.5 per cent), which is the

effective interest rate.

9. Taxation

Accounting Policies

Income tax on the profit or loss for the financial year comprises current and deferred tax. Income tax is recognised in the Income
Statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Under
current Australian income tax law, LLT is not liable for income tax, including capital gains tax, to the extent that unitholders are
attributed the taxable income of LLT.

Current tax is the expected tax payable on the taxable income for the financial year, using applicable tax rates (and tax laws) at the
balance sheet date in each jurisdiction, and any adjustment to tax payable in respect of previous financial years.

Deferred tax is the expected tax payable in future periods as a result of past transactions or events and is calculated by comparing
the accounting balance sheet to the tax balance sheet. Temporary differences are provided for any differences in the carrying
amounts of assets and liabilities between the accounting and tax balance sheets. The following temporary differences are not
provided for:

• The initial recognition of taxable goodwill
• The initial recognition of assets or liabilities that affect neither accounting nor taxable profit
• Differences relating to investments in subsidiaries to the extent that they are not likely to reverse in the foreseeable future.

Measurement of deferred tax is based on the expected manner of realisation or settlement of the carrying amount of assets and
liabilities, using applicable tax rates (and tax laws) at the balance sheet date.

Recognition of deferred tax assets is only to the extent it is probable that future taxable profits will be available so as the related tax
asset will be realised. Deferred tax assets may include the following:

• Deductible temporary differences
• Unused tax losses
• Unused tax credits.

Management considers the estimation of future taxable profits to be an area of estimation uncertainty as a change in any of the
assumptions used in budgeting and forecasting would have an impact on the future profitability of the Group. The Group prepares
financial budgets and forecasts, covering a five year period, which are reviewed on a regular basis. These forecasts and budgets
form the basis of future profitability to support the carrying value of the deferred tax assets. The performance of the Group is
influenced by a variety of general economic and business conditions, which are outside the control of the Group, including the level
of inflation, interest rates, exchange rates, commodity prices, ability to access funding, oversupply and demand conditions and
government fiscal, monetary and regulatory policies.

Presentation of deferred tax assets and liabilities can be offset if there is a legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity or on different tax entities,
but are intended to be settled on a net basis or to be realised simultaneously.

Tax Consolidation

The Company is the head entity of the Australian Tax Consolidated Group comprising all the Australian wholly owned subsidiaries,
excluding LLT. As a consequence, all members of the Australian Tax Consolidation Group are taxed as a single entity.

148

Lendlease Annual Report 2021 Financial Statements

149

Notes to Consolidated Financial Statements continued

June 2021
$m

June 2020
$m

Recognised Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities are attributable to the following:

c. Deferred Tax Assets and Liabilities

June 2021

June 2020

Assets
$m

Liabilities
$m

Assets
$m

Liabilities
$m

Section A: Performance continued
9. Taxation continued

a. Income Tax Expense

Recognised in the Income Statement

Current Tax Expense
Current year

Adjustments for prior years

Current year tax losses derecognised/(recognised)

Total current tax expense/(benefit)

Deferred Tax Expense

Origination and reversal of temporary differences

Temporary differences recognised/recovered

Recognition of prior year net tax losses
Change in tax rate1

Total deferred tax (benefit)
Income Tax Expense

Total income tax expense/(benefit) from continuing operations
Total income tax (benefit)/expense from discontinued operations2

Total income tax expense/(benefit)3

Reconciliation of Effective Tax Rate

Profit/(loss) before tax

Income tax using the domestic corporation tax rate 30%
Adjustments for prior year
Non assessable and exempt income4
Non allowable expenses5

Net write off tax losses through income tax expense
Temporary differences recognised through income tax expense6

Utilisation of capital losses on disposal of assets
Effect of tax rates in foreign jurisdictions7

Other

Income tax expense/(benefit)

Deferred Tax Recognised Directly in Equity
Relating to:

Hedging reserve

Impact of adoption of new accounting standard

Defined benefit plans remeasurements

Foreign currency translation reserve

Non controlling interest acquisition reserve

Total deferred tax expense recognised directly in equity

b. Tax Effect Relating to Other Comprehensive Income

Movements in hedging reserve

Movements in foreign currency translation reserve

Movements in non controlling interest acquisition reserve

Movements in defined benefit plans remeasurements

Total other comprehensive income net of tax

June 2021
Tax
(Expense)/
Benefit
$m

(2)

(41)

(37)

Before
Tax
$m

(114)

(39)

June 2020

Tax
(Expense)/
Benefit
$m

Before
Tax
$m

(19)

(15)

(1)

(21)

(1)

Net
of Tax
$m

(19)

(5)

(1)

(12)

Net
of Tax
$m

(108)

(76)

1. Legislation was passed in the current period to increase the UK corporation tax rate rate from 19 per cent to 25 per cent.
2. Refer to Note 33 ‘Discontinued Operations’ for further detail.
3. Represents income tax expense from continuing operations of $75 million and income tax benefit from discontinued operations of $3 million.
4.
5.
6.

Includes Lendlease Trust Group profit.
Includes accounting expenses for which a tax deduction is not allowed permanently.
Includes temporary differences not recognised in the current year that are written off to income tax expense in the current period and temporary differences that arose in a
previous year but were not recognised until the current period.

7. The Group operates in a number of foreign jurisdictions for trading purposes which have significantly lower tax rates than Australia such as the United Kingdom and Singapore

and higher tax rates such as the United States of America (blended federal, state and local rate) and Japan. This also includes the effect of changes in tax rates.

132

(4)

168

(65)

(7)

(31)

(96)

(3)

294

88
(4)

(40)

(13)

(26)

(6)

(58)

(2)

(62)

(77)

(5)

(18)

(10)

(110)

(194)

(172)

(482)

(145)
(5)

(30)

(5)

(34)

(172)

(5)

(10)

(2)

(16)

Loans and receivables

Inventories

Other financial assets

Other assets

Equity accounted investments

Investment properties

Property, plant and equipment

Intangible assets

Net defined benefit plans

Trade and other payables

Provisions

Borrowings and financing arrangements

Other financial and non financial liabilities

Unused revenue tax losses recognised

Unused capital tax losses recognised

Items with a tax base but no carrying value

Total deferred tax assets/(liabilities)

Deferred tax set off

Net deferred tax assets/(liabilities)

June 2021

Movement in temporary differences during the financial year:

Loans and receivables

Inventories

Other financial assets

Other assets

Equity accounted investments

Investment properties

Property, plant and equipment

Intangible assets

Net defined benefit plans

Trade and other payables

Provisions

Borrowings and financing arrangements

Other financial and non financial liabilities

Unused revenue tax losses recognised

Unused capital tax losses recognised

Items with a tax base but no carrying value

Total net deferred tax assets/(liabilities)

112

180

117

805

(690)

115

(91)

(371)

(49)

(4)

(417)

(17)

(12)

(19)

(67)

(10)

(8)

(26)

(1,091)

690

(401)

104

190

135

157

833

(692)

141

(53)

(451)

(54)

(13)

(403)

(57)

(18)

(21)

(34)

(2)

(20)

(1,126)

692

(434)

1 July
2020
$m

Recognised
in Income
$m

Recognised
in Equity
$m

Other/
Foreign
Exchange
$m

30 June
2021
$m

(51)

(389)

(49)

(399)

(57)

(21)

(13)

190

135

157

(293)

(35)

(16)

(2)

(33)

(14)

(4)

(41)

(6)

(3)

(44)

(4)

(7)

(18)

(60)

(5)

(45)

(90)

(282)

(40)

108

(405)

(17)

(18)

(51)

170

117

(286)

150

Lendlease Annual Report 2021 Financial Statements

151

Notes to Consolidated Financial Statements continued

Section A: Performance continued
9. Taxation continued

Section B: Investment

1 July
2019
$m

Recognised
in Income
$m

Recognised
in Equity
$m

Other/Foreign
Exchange
$m

30 June
2020
$m

Investment in the Development pipeline, joint ventures in property projects, the retirement sector, and more passive assets, such
as property funds, drive the current and future performance of the Group. This section includes disclosures for property such as
Inventories and indirect property assets such as Equity Accounted Investments and Other Financial Assets contained within the
Statement of Financial Position.

June 2020

Movement in temporary differences during the financial year:

Loans and receivables

Inventories

Other financial assets

Other assets

Equity accounted investments

Investment properties

Property, plant and equipment

Intangible assets

Net defined benefit plans

Trade and other payables

Provisions

Borrowings and financing arrangements

Other financial liabilities

Unused revenue tax losses recognised

Items with a tax base but no carrying value

Total net deferred tax assets/(liabilities)

(64)

(357)

(59)

(3)

(391)

(8)

(34)

(23)

(6)

192

117

(496)

(29)

(16)

(30)

(5)

(13)

110

Unrecognised Deferred Tax Assets

Deferred tax assets have not been recognised in respect of the following items:

Unused revenue tax losses

Unused capital tax losses

Net deductible temporary differences

Total unrecognised deferred tax assets

(1)

(3)

(2)

(19)

(1)

(9)

(15)

(1)

(51)

(389)

(49)

(399)

(57)

(21)

(13)

190

135

157

(293)

June 2021
$m

June 2020
$m

132

258

153

Of the unrecognised deferred tax assets of $258 million, only $30 million expires by 2037. The remainder of the unrecognised deferred tax
assets have no expiry date.

10. Events Subsequent to Balance Date

On 21 July 2021, the Group entered into an agreement with Service Stream for the sale of the Services business for a purchase price of
$310 million. The transaction, which is expected to complete prior to the end of calendar year 2021, is subject to conditions including
client and third party consents. Given the agreement was signed post balance date and at 30 June 2021 there was uncertainty as to
whether a transaction would be completed, the Services business did not meet the accounting criteria to be held for sale, therefore it
has not been included in discontinued operations or assets and liabilities classified as held for sale at 30 June 2021. The sale, and any
resulting gain/loss after transaction costs and completion adjustments, is expected to be recorded in the subsequent financial year. The
sale price is above the net assets of the Services business at 30 June 2021. Any gain/loss will be subject to the completion accounts
process, final transaction costs and any required provisions for indemnifications.

On 16 August 2021, the Group announced the preliminary results of the business review undertaken following the appointment of the new
Global CEO. While the review is still ongoing at the date of this report, the Group expects to record an estimated restructuring provision
in FY22 of pre-tax $130 million to $170 million for the restructuring costs associated with the revised organisational structure and related
matters. As part of this exercise, the Group has also identified a small number of projects where a material change in development strategy
is under consideration. A range of alternative strategic options are being considered to reduce future capital outlay and/or expedite the
release of existing capital on these projects to enable redeployment elsewhere. The expected change in forecast strategy for these projects
is expected to result in an estimated development properties impairment of approximately pre-tax $230 million to $290 million in FY22.

There were no other material events subsequent to the end of the financial reporting period.

11. Inventories

Accounting Policies

Development Properties

Property acquired for development and sale in the ordinary course of business is carried at the lower of cost and Net Realisable
Value (NRV).

The cost of development properties includes expenditure incurred in acquiring the property, preparing it for sale and borrowing
costs incurred.

The NRV is the estimated selling price, less the estimated costs of completion and selling expenses. Management considers the
estimation of both selling prices and costs of completion to be an area of estimation uncertainty, as these estimations take into
consideration market conditions affecting each property and the underlying strategy for selling the property.

The recoverable amount of each property is assessed at each balance date and accounting judgement is required to assess whether
a provision is raised where cost (including costs to complete) exceeds NRV.

Inventories are expensed as cost of sales in the Income Statement. Management uses accounting judgement in determining the
following:

• The apportionment of cost of sales through sales revenue
• The amount of cost of sales, which includes costs incurred to date and final forecast costs
• The nature of the expenditure, which may include acquisition costs, development costs, borrowing costs and those costs incurred

in preparing the property for sale.

Construction Contract Assets

The gross amount of Construction and Development work in progress consists of costs attributable to work performed, including
recoverable pre contract and project bidding costs and emerging profit after providing for any foreseeable losses. In applying the
accounting policies on providing for these losses, accounting judgement is required.

Construction contract assets are presented as part of inventories for all contracts in which revenue recognised (costs incurred plus
recognised profits) exceed progress billings. If progress billings and/or recognised contract losses exceed revenue recognised, then
the difference is presented in Trade and other payables as a Construction contract liability.

Current

Development properties

Construction contract assets

Other

Total current

Non Current

Development properties

Total non current

Total inventories

Note

21a

June 2021
$m

June 2020
$m

894

565

1,469

2,404

3,873

1,337

912

2,256

3,113

5,369

152

Lendlease Annual Report 2021 Financial Statements

153

Notes to Consolidated Financial Statements continued

Section B: Investment continued
12. Equity Accounted Investments

Accounting Policies

Equity Accounted Investments (Associates and Joint Ventures)

As outlined in Note 5 ‘Share of Profit of Equity Accounted Investments’, investments in Associates and Joint Ventures are equity
accounted. The share of investment recognised under the equity method is the Group’s share of the investment’s net assets based
on ownership interest held.

Investments in associates and joint ventures are carried at the lower of the equity accounted carrying amount and the recoverable
amount. When the Group’s share of losses exceeds the carrying amount of the equity accounted investment (including assets that
form part of the net investment in the associate or joint venture entity), the carrying amount is reduced to nil and recognition of
further losses is discontinued except to the extent that the Group has obligations in respect of the associate or joint venture.

Dividends from associates and joint ventures represent a return on the Group’s investment and, as such, are applied as a reduction
to the carrying value of the investment. Unrealised gains arising from transactions with equity accounted investments are eliminated
against the investment in the associate or joint venture to the extent of the Group’s interest in the associate or joint venture.
Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Other movements in associates’ and joint ventures’ reserves are recognised directly in the Group’s consolidated reserves.

Service Concession Arrangements (SCAs)

The Group equity accounts its investment in project companies with SCAs through Public Private Partnerships (PPPs). These
arrangements provide facilities management and maintenance services with terms generally of 25 to 30 years. They also
incorporate contractual obligations to make available the individual assets for their prescribed use and, where necessary, overhaul
or replace major items of plant and equipment related to the assets with payment obtained through periodic draw downs from the
relevant government authorities.

Joint Operations

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and
obligations for the liabilities relating to the arrangement.

Investments in joint operations are accounted for by recognising amounts on a line by line basis in accordance with the
accounting standards applicable to the particular assets, liabilities, revenues and expenses in relation to the Group’s interest in the
joint operation.

Associates

Investment in associates

Less: Impairment

Total associates

Joint Ventures

Investment in joint ventures

Less: Impairment

Total joint ventures

Total equity accounted investments

Note

June 2021
$m

June 2020
$m

12a

12b

444

(3)

441

3,356

(39)

3,317

3,758

518

(5)

513

3,198

(40)

3,158

3,671

a. Associates

Australia

Investments

INTEREST

SHARE OF PROFIT

NET BOOK VALUE

June 2021
%

June 2020
%

June 2021
$m

June 2020
$m

June 2021
$m

June 2020
$m

Lendlease Communities Fund 1

Lendlease Sub Regional Retail Fund1

20.8

10.0

20.8

10.0

Other

Total Australia

Asia

Investments

Lendlease Global Commercial REIT

Lendlease Asian Retail Investment Fund 1

Lendlease Asian Retail Investment Fund 2

Lendlease Asian Retail Investment Fund 31

25.9

48.7

39.4

15.1

25.3

48.7

39.4

20.1

Total Asia

Americas

Investments

Other

Total Americas

Total Group

Less: Impairment

Total associates

(1)

(8)

(10)

(14)

(9)

(14)

249

123

408

444

(3)

441

261

180

480

518

(5)

513

Although the Group has less than 20 per cent ownership interest in Lendlease Sub Regional Retail Fund and Lendlease Asian Retail Investment Fund 3, it holds at least 20 per
cent of the voting rights over the fund and has significant influence over the investment. As a result, the Group applies equity accounting for its ownership interest.

b. Joint Ventures

Australia

Development

Circular Quay Tower

Melbourne Quarter R1

One Sydney Harbour R1 Trust

One Sydney Harbour R2 Trust

Victoria Cross

Other

Investments

INTEREST

SHARE OF PROFIT

NET BOOK VALUE

June 2021
%

June 2020
%

June 2021
$m

June 2020
$m

June 2021
$m

June 2020
$m

20.0

50.0

75.0

20.0

50.0

75.0

(1)

(29)

(7)

(11)

150

111

146

132

952

1,580

117

123

1,367

1,697

Lendlease Retirement Living Trust1

50.0

75.0

Other

Total Australia

1. During the period, the Group disposed of a further 25 per cent interest in Lendlease Retirement Living Trust. The Group sold the units at the 31 December 2020 book value of

$458 million.

154

Lendlease Annual Report 2021 Financial Statements

155

Notes to Consolidated Financial Statements continued

Section B: Investment continued
12. Equity Accounted Investments continued

INTEREST

SHARE OF PROFIT

NET BOOK VALUE

June 2021
%

June 2020
%

June 2021
$m

June 2020
$m

June 2021
$m

June 2020
$m

b. Joint Ventures continued

Asia

Development

Certis and Lendlease Property Trust

The Exchange TRX

Investments

CDR JV Ltd (313@somerset)

Paya Lebar Quarter

Total Asia

Europe

Development

LRIP LP

LRIP 2 LP

MSG South

Milano Innovation District

Stratford City Business District Limited (International
Quarter London)1

Victoria Drive Wandsworth

Other

Investments

Other

Total Europe

Americas

Development

277 Fifth Avenue

Lendlease Towers LLC

Americas Residential Partnership2

211 North Harbor Drive Venture

445 East Waterside

SB Polk Street

1 Java Holdings

La Cienega

60 Guest Street

Other

Construction

49.0

60.0

25.0

30.0

20.0

50.0

40.0

42.5

50.1

20.2

50.0

25.0

60.0

25.0

30.0

20.0

50.0

40.0

42.5

50.1

Lendlease Turner Joint Venture

50.0

Investments

845 Madison3

Americas Residential Partnership2

Clippership Wharf Multifamily Holdings

720 S Wells Holdings

Total Americas

Total Group

Less: Impairment

Total joint ventures

Total associates

Total equity accounted investments

37.5

50.1

37.5

50.1

(1)

(16)

(17)

(3)

(4)

(3)

(11)

(1)

(5)

(10)

(8)

(5)

(3)

(15)

(26)

100

(14)

(13)

388

358

773

177

409

354

379

736

125

300

594

3,356

(39)

3,317

441

3,758

465

3,198

(40)

3,158

513

3,671

1. At 30 June 2020, the Group had a 50 per cent stake in International Quarter London - North and International Quarter London - South. During the period, the Group
disposed of its 50 per cent stake in International Quarter London - North and purchased the remaining 50 per cent stake in International Quarter London - South.
The interest above relates to the current operating assets of the International Quarter London joint venture. Refer to Note 6 ‘Other Income’ for further detail.

2. June 2020 comparatives have been reclassified to separately present the individual joint ventures within Americas Residential Partnership.
3. During the period, 845 Madison was transferred from the Development segment to the Investments segment subsequent to project completion.

c. Material Associates and Joint Ventures Summarised Financial Information
The table below provides summarised financial information for those associates and joint ventures that are material to the Group.
Material associates and joint ventures have been determined by comparing individual investment net book value with the total equity
accounted investment carrying value and share of profit, along with consideration of relevant qualitative factors. The information
disclosed reflects the amounts presented in the financial statements of the relevant joint ventures and associates and, where indicated,
the Group’s share of those amounts. They have been amended to reflect adjustments made by the Group when using the equity method,
including fair value adjustments and differences in accounting policies. The nature and principal activities of the material associates and
joint ventures is investment in property assets.

Income Statement1

Revenue and other income

Cost of sales

Other expenses

Unrealised fair value gains/(losses)

Finance costs

Income tax expense

Profit/(loss) for the period

Other comprehensive income/(expense)

Total comprehensive income/(expense)

Group’s ownership interest

Group’s total share of:

Profit/(loss) for the period

Other adjustments

Total profit/(loss) for the period

Other comprehensive income/(expense)

Total comprehensive income/(expense)

LENDLEASE GLOBAL
COMMERCIAL REIT2

LENDLEASE
RETIREMENT LIVING
TRUST3

PAYA LEBAR QUARTER

June 2021
$m

June 2020
$m

June 2021
$m

June 2020
$m

June 2021
$m

June 2020
$m

8181

(22)

(20)

(31)

(10)

(2)

(16)

(27)

(22)

(4)

(9)

188188

(24)

(60)

(13)

(23)

126

(26)

(60)

(62)

(18)

(39)

(1)

(40)

119

(44)

(52)

(2)

25.9%

25.3%

50.0%

75.0%

30.0%

(1)

(10)

(6)

(2)

(8)

(10)

(5)

(15)

(29)

(30)

(16)

(9)

(25)

219

(168)

(160)

(190)

(54)

(1)

(354)

30.0%

(106)

(10)

(19)

(29)

1. The underlying investments in the material associate and joint ventures are office, retail and retirement living investment properties measured at fair value. At 30 June 2021,

valuations were undertaken on the underlying assets. The carrying value of the investments are considered recoverable as it correlates with the net assets of the associate and
joint ventures, which have been valued at 30 June 2021.

2. Prior period balances have been reclassified to reflect updated management information.
3. During the period, the Group disposed of a further 25 per cent interest in Lendlease Retirement Living Trust. The Group sold the units at the 31 December 2020 book value of

$458 million.

The table below provides summarised financial information for those associates and joint ventures that are individually immaterial to the Group:

Income Statement

Aggregate amounts of the Group’s share of:
Profit/(loss) from continuing operations

Other comprehensive income/(expense)

Aggregate amounts of Group’s share of total comprehensive income/
(expense) of individually immaterial equity accounted investments

ASSOCIATES

JOINT VENTURES

June 2021
$m

June 2020
$m

June 2021
$m

June 2020
$m

(10)

(6)

(4)

(1)

(5)

(46)

(14)

156

Lendlease Annual Report 2021 Financial Statements

157

Notes to Consolidated Financial Statements continued

Section B: Investment continued
12. Equity Accounted Investments continued

c. Material Associates and Joint Ventures Summarised Financial Information continued

13. Other Financial Assets

Accounting Policies

LENDLEASE GLOBAL
COMMERCIAL REIT

LENDLEASE
RETIREMENT LIVING
TRUST1,2

PAYA LEBAR QUARTER3

Financial Assets at fair value through profit or loss on initial recognition are measured at fair value (generally transaction price)
and subsequently stated at fair value. Transaction costs are recorded as expenses when they are incurred. Any gain or loss arising
from a change in fair value is recognised in the Income Statement.

Financial Assets at amortised cost are presented within Note 21 ‘Loans and Receivables’.

Statement of Financial Position

June 2021
$m

June 2020
$m

June 2021
$m

June 2020
$m

June 2021
$m

June 2020
$m

Current assets

Cash and cash equivalents

Other current assets

Total current assets

Non current assets

Investment properties

Other non current assets

Total non current assets

Current liabilities

Resident liabilities

Financial liabilities (excluding trade payables)

Other current liabilities

Total current liabilities

Non current liabilities

Financial liabilities (excluding trade payables)

Other non current liabilities

Total non current liabilities

Net assets

Reconciliation to Carrying Amounts

Opening net assets 1 July

Total comprehensive income/(loss) for the period

Acquisition/contributions

Distributions

Foreign currency translation for the period

Closing net assets

% ownership

Group’s share of net assets

Other adjustments

Carrying amount at end of period

245

254

1,409

1,461

536

547

101

1,506

1,522

552

565

7,441

7,443

120

107

202

7,232

2,960

7,233

2,964

4,835

4,700

4,891

4,767

742

781

1,144

1,037

1,882

1,805

1,037

197

(47)

(50)

1,144

25.9%

296

(47)

249

1,077

(16)

(32)

1,037

25.3%

262

(1)

261

1,805

1,845

(40)

1,882

50.0%

941

(2)

939

1,805

75.0%

1,354

1,733

1,819

1,292

1,297

(65)

1,292

30.0%

388

(30)

358

149

100

249

3,128

1,864

121

1,985

1,297

1,591

(354)

(9)

1,297

30.0%

389

(10)

379

Current Measured at Fair Value

Fair Value Through Profit or Loss – Designated at Initial Recognition
Derivatives
Total current

Non Current Measured at Fair Value

Fair Value Through Profit or Loss – Designated at Initial Recognition

Lendlease International Towers Sydney Trust

Lendlease One International Towers Sydney Trust

Australian Prime Property Fund – Industrial

Australian Prime Property Fund – Commercial

Australian Prime Property Fund – Retail

Lendlease Public Infrastructure Investment Company

Military Housing Projects Initiative

Parkway Parade Partnership Limited

Other investments

Derivatives

Total non current

Total other financial assets

1. Refer to Note 26 ‘Fair Value Measurement’ for details on basis of determining fair value and the valuation technique.

a. Fair Value Reconciliation
The reconciliation of the carrying amount for Level 3 financial assets is set out as follows:

Carrying amount at beginning of financial year

Disposals

Net gains/(losses) recognised in Income Statement

Other movements

Carrying amount at end of financial year

Fair Value
Level1

June 2021
$m

June 2020
$m

Level 2

Level 3

Level 2

7
7

165

120

386

201

16
16

153

101

372

211

1,080

1,087

1,076

1,092

June 2021
$m

June 2020
$m

1,068

(39)

(20)

1,070

1,180

(51)

(16)

(45)

1,068

1. The carrying amount at the end of the period differs to Note 12b ‘Joint Ventures’ due to an impairment of $13 million.
2. During the period, the Group disposed of a further 25 per cent interest in Lendlease Retirement Living Trust. The Group sold the units at the 31 December 2020 book value of

$458 million.

3. Prior period balances have been reclassified to reflect updated management information.

Material joint ventures had $141 million (June 2020: $32 million) in capital expenditure commitments.

The table below provides summarised financial information for those associates and joint ventures that are individually immaterial to the Group:

ASSOCIATES

JOINT VENTURES

Statement of Financial Position

June 2021
$m

June 2020
$m

June 2021
$m

June 2020
$m

Aggregate carrying value of individually immaterial equity
accounted investments

195

257

2,046

1,452

The potential effect of using reasonably possible alternative assumptions for valuation inputs would not have a material impact on the Group.

158

Lendlease Annual Report 2021 Financial Statements

159

Notes to Consolidated Financial Statements continued

Section C: Liquidity and Working Capital

15. Notes to Statement of Cash Flows

The ability of the Group to fund the continued investment in the development pipeline, invest in new opportunities and meet
current commitments is dependent on available cash, undrawn debt facilities and access to third party capital. This section contains
disclosures on the financial assets, financial liabilities, cash flows and equity that are required to finance the Group’s activities,
including existing commitments and the liquidity risk exposure associated with financial liabilities. The section also contains
disclosures for the Group’s trading assets, excluding inventories, and the trading liabilities incurred as a result of trading activities
used to generate the Group’s performance.

14. Cash and Cash Equivalents

Accounting Policies

Cash and cash equivalents include cash on hand, deposits held at call with banks, bank overdrafts and other short term highly liquid
investments that are readily convertible to known amounts of cash within three months and which are subject to an insignificant risk
of changes in value.

Bank overdrafts (if applicable) are shown as a current liability on the Statement of Financial Position and are shown as a reduction to
the cash balance in the Statement of Cash Flows.

Note

June 2021
$m

June 2020
$m

Continuing

Cash

Short term investments1

Total cash and cash equivalents for continuing operations

Disposal Group Assets Held for Sale

Cash

Short term investments

Total cash and cash equivalents classified as Disposal Group assets held for sale

Total cash and cash equivalents

1,303

359

1,662

937

174

1,111

142

309

451

1,562

1. Short term investments earned variable rates of interest which averaged 0.5 per cent per annum during the year (30 June 2020: 1.5 per cent).

Reconciliation of Profit after Tax to Net Cash Provided by Operating Activities

Profit/(Loss) after tax (including external non controlling interests)

Amortisation and depreciation

Net gain on sale of investments, plant and equipment

Impairment of equity accounted investments

(Reversal)/impairment of inventories

Impairment of loans and receivables

Impairment of intangible assets

Impairment of property, plant and equipment

Net unrealised foreign exchange (gain)/loss and currency hedging costs

Net fair value (gain)/loss on investments

Share of (profit)/loss of equity accounted investments

Dividends/distributions from equity accounted investments

Fair value gain on investment properties

Other

Net cash provided by operating activities before changes in assets and liabilities

Changes in Assets and Liabilities Adjusted for Effects of Purchase and
Disposal of Consolidated Entities and Operations During the Financial Year

(Increase)/decrease in receivables

Decrease in inventories

(Increase)/decrease in other assets

Increase in net defined benefit plans

(Decrease)/increase in payables

Decrease/(increase) in operating derivatives assets/liabilities

Increase in deferred tax items

Decrease/(increase) in current tax

Increase in other provisions

Net cash provided by operating activities1

1. Balances include cash flows relating to both continuing and discontinued operations.

16. Borrowings and Financing Arrangements

June 2021
$m

June 2020
$m

222

207

(388)

(13)

(38)

(61)

(100)

155

(3)

(41)

(49)

(1,021)

1,457

(26)

(80)

(119)

(5)

251

468

(310)

244

(225)

102

(24)

(83)

(166)

282

(20)

102

(9)

(176)

(13)

137

Accounting Policies

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost using the effective interest rate method. Under the amortised cost method the difference between the amount
initially recognised and the redemption value is recorded in the Income Statement over the period of the borrowing on an effective
interest basis. Borrowings are referred to in this section using their redemption value when describing the terms and conditions.

a. Borrowings – Measured at Amortised Cost

Current

Commercial notes

Total current

Non Current

Commercial notes

Bank credit facilities

Total non current

Total borrowings

June 2021
$m

June 2020
$m

555

1,682

120

1,802

2,357

134

1,500

761

2,261

2,395

160

Lendlease Annual Report 2021 Financial Statements

161

Notes to Consolidated Financial Statements continued

Section C: Liquidity and Working Capital continued
16. Borrowings and Financing Arrangements continued

b. Finance Facilities

The Group has access to the following lines of credit:

Commercial Notes

Facility available

Amount of facility used

Amount of facility unused

Bank Credit Facilities

Facility available

Amount of facility used

Amount of facility unused

Bank Overdrafts

June 2021
$m

June 2020
$m

2,237

(2,237)

3,264

(120)

3,144

2,036

(1,634)

402

4,461

(761)

3,700

Facility available and amount unused

124

Commercial notes include:
• £300 million COVID Corporate Financing Facility (CCFF) from the Bank of England was drawn to $134 million as at June 2020. The CCFF was

closed for new issuance in March 2021 and was repaid in May 2021

• £300 million of guaranteed unsecured notes issued in October 2006 in the UK bond market with a 6.125 per cent per annum coupon maturing in

October 2021 and was classified as current for June 2021

• US$400 million of guaranteed unsecured senior notes issued in May 2016 in the US Reg. S market with a 4.5 per cent per annum coupon maturing in

May 2026

• S$300 million of guaranteed unsecured senior notes issued in April 2017 in the Singapore bond market with a 3.9 per cent coupon maturing in

April 2027

• $500 million of guaranteed unsecured Green senior notes issued in October 2020 in the Australian bond market with a 3.4 per cent coupon

maturing October 2027

• $80 million of unsecured senior medium term notes issued as an A$ private placement in December 2018 with a 5.4 per cent per annum coupon

maturing in December 2028

• $300 million of guaranteed unsecured Green senior notes issued in March 2021 in the Australian bond market with a 3.7 per cent coupon maturing

March 2031.

Bank credit facilities include:
• $1,800 million syndicated cash advance facility with Tranche A $900 million maturing December 2021 and Tranche B $900 million maturing

September 2022. As at 30 June 2021, tranches A and B were undrawn

• $800 million syndicated loan facility with Tranche A $400 million and Tranche B $400 million. Tranche A was repaid and cancelled during the
period. $100 million of Tranche B was cancelled during the period with the remaining $300 million maturing in May 2022 and undrawn as at
30 June 2021

• £400 million club bank facility maturing in March 2023 undrawn as at 30 June 2021
• $960 million A$ syndicated loan facility, maturing in March 2024. During the period, the $725 million Tranche A was repaid and cancelled. As at

30 June 2021, the $235 million Tranche B was undrawn

• CNY871 million bank facility maturing in January 2025 drawn to $113 million as at 30 June 2021.

The bank overdraft facilities may be drawn at any time and are repayable on demand.

The Group has not defaulted on any obligations in relation to its borrowings and financing arrangements.

June 2021
Within one year
Between one and five years
More than five years

Total
June 2020
Within one year
Between one and five years
More than five years

Total

INTEREST EXPOSURE
Fixed
$m

Floating
$m

Total
$m

A$
$m

US$
$m

CURRENCY
£
$m

CNY
$m

S$
$m

Total
$m

555
644
1,151

2,350

134
564
965

1,663

-
-
7

-
725
7

732

555
644
1,158

2,357

134
1,289
972

2,395

-
-
855

855

-
725
79

804

-
531
-

531

-
-
575

575

555
-
7

562

134
535
7

676

-
113
-

113

-
29
-

-
-
296

296

-
-
311

311

555
644
1,158

2,357

134
1,289
972

2,395

Note

16a

June 2021

June 2020

2,395
33
(49)
(22)

2,357

2,715
(312)
(8)
-

2,395

c. Movement in Borrowings and Financing Arrangements
Balance at beginning of financial year
Net proceeds from/(repayments of) borrowings
Effect of foreign exchange rate movements
Other movements

Balance at end of financial year

17. Issued Capital

Accounting Policies

Issued Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a
deduction from equity.

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is
recognised as a change in equity. Repurchased shares are classified as treasury shares and are recognised as a deduction from equity.

Issued capital at beginning of financial year, net
of prior period share buyback

Distribution reinvestment plan (DRP)

Share issue via institutional placement (net of
transaction costs)1,3
Share issue via Security Purchase Plan (net of
transaction costs)2,3

LENDLEASE CORPORATION LIMITED

LENDLEASE TRUST

June 2021
No. of
Shares (m)

June 2020
No. of
Shares (m)

June 2021

June 2020

No. of
Units (m)

688

1,889

564

1,300

688

1,536

564

(3)

(1)

454

126

921

479

134

Issued capital at end of financial year

689

1,888

688

1,889

689

1,537

688

1,536

1. On 4 May 2020, the Group issued 97 million new stapled securities via an institutional placement at an issue price of $9.80.
2. On 4 June 2020, the Group issued 27 million new stapled securities via a Security Purchase Plan at an issue price of $9.80.
3. During the prior period the Group raised $1,193 million in equity after costs which was allocated 48.4 per cent to the Company and 51.6 per cent to Lendlease Trust.

a. Issuance of Securities
As at 30 June 2021, the Group had 689 million stapled securities on issue, equivalent to the number of Lendlease Corporation shares and
Lendlease Trust (LLT) units on issue as at that date. The issued units of LLT are not owned by the Company and are therefore presented
separately in the Consolidated Statement of Financial Position within equity.

b. Security Accumulation Plans
The Group’s Distribution Reinvestment Plan (DRP) was reactivated in February 2011. The last date for receipt of an election notice for
participation in the DRP is 24 August 2021. The issue price is the arithmetic average of the daily volume weighted average price of Lendlease
Group stapled securities traded (on the Australian Securities Exchange) for the period of five consecutive business days immediately following
the record date, commencing on 24 August 2021, for determining entitlements to distribution. If that price is less than 50 cents, the issue price
will be 50 cents. Stapled securities issued under the DRP rank equally with all other stapled securities on issue.

c. Terms and Conditions
Issued capital for Lendlease Corporation Limited comprises ordinary shares fully paid. A stapled security represents one share in the Company
stapled to one unit in LLT. Stapled securityholders have the right to receive declared dividends from the Company and distributions from
LLT and are entitled to one vote per stapled security at securityholders’ meetings. Ordinary stapled securityholders rank after all creditors in
repayment of capital.

The Group does not have authorised capital or par value in respect of its issued stapled securities.

162

Lendlease Annual Report 2021 Financial Statements

163

Notes to Consolidated Financial Statements continued

Section C: Liquidity and Working Capital continued
18. Capital Management

The Group assesses capital management as part of its broader strategic plan. The Group focuses on interrelated financial parameters,
including Return on Equity, earnings growth and borrowing capacity. The Group also monitors its gearing ratio, leverage ratio, interest
coverage ratio and weighted average cost of debt and maturity profile. These are all taken into account when the Group makes
decisions on how to invest its capital and evaluate its existing investments.

The Group’s capital includes total equity, borrowings and other interest bearing liabilities. When investing capital, the Group’s objective
is to deliver strong total securityholder returns and to maintain an investment grade credit rating by maintaining an appropriate financial
profile. The Moody’s/Fitch long term credit ratings at 30 June 2021 are Baa3/BBB- respectively (June 2020: Baa3/BBB-).

The capital structure of the Group can be changed by equity issuance, paying distributions to securityholders, the Distribution
Reinvestment Plan and changing the level of debt. For further information on how the Group allocates and manages capital, refer
to details of the Portfolio Management Framework in the Financial Area of Focus and Performance and Outlook sections of this
Annual Report.

19. Liquidity Risk Exposure

Further information on liquidity risk is disclosed in Note 24 ‘Financial Risk Management’. As disclosed in Note 27 ‘Contingent Liabilities’,
in certain circumstances, the Company guarantees the performance of particular Group entities in respect of their obligations including
bonding and bank guarantees. Issued bank guarantees have cash collateralisation requirements if the bank guarantee facility is not
renewed by the provider.

At 30 June 2021, the Group does not anticipate a significant liquidity risk in relation to the following financial liabilities. This is due to the
Group’s strong financial profile, as supported by the significant committed undrawn facilities and low gearing ratio. Refer to Note 14 ‘Cash
and Cash Equivalents’ and Note 16 ‘Borrowings and Financing Arrangements’.

The Group has provided collateral of $nil (June 2020: $nil) against letter of credit facilities.

The following are the contractual cash flow maturities of financial liabilities including estimated interest payments:

Carrying
Amount
$m

Contractual
Cash Flows
$m

Less Than
One Year
$m

One to Two
Years
$m

Two to Five
Years
$m

More Than
Five Years
$m

Note

June 2021

Non Derivative Financial Liabilities

Trade and other payables1

Lease liabilities

Borrowings and financing arrangements

Total

Derivative Financial Liabilities

(Outflow)

Inflow

Total

June 2020

Non Derivative Financial Liabilities

Trade and other payables1,2

Lease liabilities

Borrowings and financing arrangements

Other financial liabilities

Total

Derivative Financial Liabilities

(Outflow)

Inflow

Total

16a

5,156

474

2,357

7,987

4,688

544

2,395

7,627

5,172

526

2,719

8,417

(1,127)

1,164

5,166

650

2,667

8,509

(399)

404

3,793

690

4,563

(990)

1,001

3,941

119

215

770

115

961

(23)

(1)

782

123

588

580

206

668

1,454

(61)

234

848

4,301

1,493

1,179

(397)

404

(1)

125

1,285

1,439

(53)

346

174

1,016

1,536

(1)

Trade and other payables are presented excluding lease liabilities. The carrying amount of trade and other payables excludes $902 million of current and $67 million of non
current amounts (June 2020: $884 million of current and $785 million of non current) in relation to items where there is no future cash outflow or liquidity risk.

2. Balance includes Disposal Group liabilities held for sale.

Other contractually committed cash flows the Group is exposed to are detailed in Note 20 ‘Commitments’.

20. Commitments

a. Capital Expenditure

At balance date, capital expenditure commitments agreed or contracted but not provided for in
the financial statements are as follows:

Due within one year

Due between one and five years

Due later than five years

Total

Balance includes Disposal Group capital expenditure commitments.

b. Investments

At balance date, capital commitments existing in respect of interests in equity accounted
investments and other investments contracted but not provided for in the financial statements are
as follows:

Due within one year

Due between one and five years

Due later than five years

Total

c. Investment Properties

At balance date, capital commitments existing in respect of the purchase, construction or
development of investment properties, contracted but not provided for in the financial
statements, are as follows:

Due within one year

Due between one and five years

Due later than five years

Total

June 2021
$m

June 20201
$m

June 2021
$m

June 2020
$m

794

2,027

2,893

386

1,234

1,635

June 2021
$m

June 2020
$m

227

232

164

Lendlease Annual Report 2021 Financial Statements

165

Notes to Consolidated Financial Statements continued

Section C: Liquidity and Working Capital continued
21. Loans and Receivables

Accounting Policies

Loans and receivables, which include trade and other receivables, are non derivative financial assets with fixed or determinable
payments that are not equity securities. They arise when the Group provides money, goods or services directly to a debtor with
no intention of trading the receivable. Contract debtors represent receivables where the right to receive payment from customers
remains conditional. Other receivables include receivables related to investment management, property development and
miscellaneous items.

Loans and receivables are carried at amortised cost using the effective interest method, which applies the interest rate that
discounts estimated future cash receipts over the term of the loans and receivables. Cash flows relating to short term trade and
other receivables are not discounted if the effect of discounting is immaterial. The discount, if material, is then recognised as
revenue over the remaining term.

The Group assesses provision for impairment of loans and receivables based on expected loss, and books a provision if material.
The Group considers reasonable and supportable information that is relevant and available. This includes both quantitative and
qualitative information and analysis, based on the Group’s historical impairment experience, credit assessment of customers and
any relevant forward looking information. The amount of the provision is recognised in the Income Statement.

Retentions receivable on construction contracts represent deposits held by the Group until the satisfaction of conditions specified
in the contract are met.

Current

Trade receivables

Less: Impairment

Related parties

Retentions

Contract debtors

Accrued income

Other receivables

Total current

Non Current

Related parties

Less: Impairment

Retentions

Other receivables

Total non current

Total loans and receivables

Note

June 2021
$m

June 2020
$m

21a

602

(12)

590

185

279

247

362

1,741

570

(4)

566

1,235

1,871

3,612

762

(16)

746

351

263

213

1,667

176

(2)

174

218

352

744

2,411

As at the reporting date, $478 million of the trade debtors were current (30 June 2020: $501 million) and $124 million were past due (30 June
2020: $261 million). Of the past due amount, $112 million was not impaired (30 June 2020: $245 million). ‘Past due’ is defined under accounting
standards to mean any amount outstanding for one or more days after the contractual due date. Of the total trade debtors, 6.5 per cent
(30 June 2020: 23.1 per cent) are aged greater than 90 days. Other than trade debtors, no other loans and receivables are considered past due
at 30 June 2021 (30 June 2020: $nil).

Provision for Impairment

Carrying amount at beginning of financial year

Bad and doubtful debts impairment loss net of provisions written back

Utilised bad and doubtful debts impairment provision

Other movements (including foreign exchange rate movements)

Carrying amount at end of financial year

June 2021
$m

June 2020
$m

(1)

(2)

Total impairment as a percentage of total loans and receivables

0.4%

0.7%

Current

Trade and accrued creditors

Construction contract liabilities

Related parties

Retentions

Deferred land payments

Unearned income

Lease liabilities

Other

Total current

The credit quality of all loans and receivables, including those neither past due nor impaired, is assessed and monitored on an ongoing
basis. As the majority of the Group’s customers are government entities for the Construction business and are institutional investors
in the Development and Investment businesses, no additional risk has been identified. Impairment as noted above was immaterial at
30 June 2021. The impairment provision relates to specific loans and receivables that have been identified as being impaired, including
related party loans where the Group’s interest in a development was via an equity accounted investment.

a. Contract Assets
Current

Contract debtors1

Construction contract assets2

Accrued income

Total contract assets1

Note

June 2021
$m

June 2020
$m

247

565

890

263

912

1,237

Movements in contract assets during the period relate primarily to the transfer of balances into Trade receivables as the right to receive payment from customers becomes
unconditional.

2. Movements in contract assets during the period relate primarily to billings raised on construction contracts with customers in excess of revenue recognised.

22. Trade and Other Payables

Accounting Policies

Trade Creditors

Liabilities are recognised for amounts to be paid in the future for goods or services received, whether or not billed to the Group.
Trade and other payables are settled in the normal course of business. Trade and other payables are carried at amortised cost using
the effective interest method, which applies the interest rate that discounts estimated future cash outflows over the term of the
trade and other payables. Cash flows relating to short term trade and other payables are not discounted if the effect of discounting
is immaterial. The discount, if material, is then recognised as an expense over the remaining term.

Construction Contract Liabilities

Construction contracts where the total progress billings issued to clients (together with foreseeable losses, if applicable) on a
project exceed the revenue recognised (costs incurred to date plus recognised profit) on the contract are recognised as a liability.

Retentions

Retentions are amounts payable for the purpose of security and for the provision of defects in accordance with contract terms.
Release of retention amounts are in accordance with contractual terms.

Unearned Income

Primarily relates to unearned income and deposits received in advance on presold apartments. These amounts will be recognised
as income in line with the ‘Sale of development properties’ accounting policy in Note 4 ‘Revenue from Contracts with Customers’.

Lease Liabilities

Lease liabilities are measured at the present value of the lease payments discounted using the interest rate implicit in the lease.
The Group uses its incremental borrowing rate as the discount rate.

Note

22a

June 2021
$m

June 2020
$m

2,243

1,379

263

386

278

196

2,281

1,460

476

132

4,839

4,496

166

Lendlease Annual Report 2021 Financial Statements

167

Notes to Consolidated Financial Statements continued

Section C: Liquidity and Working Capital continued
22. Trade and Other Payables continued

Non current

Trade and accrued creditors

Retentions

Deferred land payments

Unearned income

Lease liabilities

Other payables - PLLACes1

Other

Total non current

Total trade and other payables

Note

June 2021
$m

June 2020
$m

22a

366

407

869

1,760

6,599

190

614

177

473

608

339

2,405

6,901

PLLACes transactions involve selling the presold apartment cash flows for a specific development project to a third party for cash consideration. Refer to Note 4 ‘Revenue
from Contracts with Customers’ for further details. This amount was deconsolidated in FY21 as part of the sale of One Sydney Harbour R1 Trust. See Note 6 ‘Other Income’
for further detail.

As at 30 June 2021, the Group recognised right-of-use assets of $325 million within Property, Plant and Equipment and $nil within Investment
Properties.

23. Provisions

Accounting Policies

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable
that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the
reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the
cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect
of the time value of money is material).

Management considers this is an area of estimation uncertainty as these calculations involve a number of key assumptions including
the expected future cash outflow and the timing of the outflow to determine the provision.

Employee Benefits

Includes amounts for employee annual leave and long service leave entitlements.

Construction Projects

Includes amounts for claims and litigation related to legacy construction projects. The timing of any expected outflows of economic
benefits is dependent on the progression of negotiations and litigation with claimants, which are ongoing at period end.

Development Projects

Includes amounts for costs to close out development projects, including defects and residual guarantees. The timing of any
expected outflows of economic benefits is dependent on market factors, such as lease up rates in specific markets, and
negotiations with customers.

June 2021
$m

June 2020
$m

Other

Includes amounts related to various litigation and commercial matters.

a. Contract Liabilities
Current
Unearned income1

Construction contract liabilities2

Total current

Non Current
Unearned income1

Total non current

Total contract liabilities

1,379

1,406

1,473

1,460

1,500

177

1,677

1. Movements in Unearned income relates primarily to residential presales settled during the period and deposits received for development properties.
2. Movements in Construction contract liabilities relate primarily to billings raised during the period in excess of revenue recognised on construction contracts with customers.

This balance also contains provisions previously incurred on retained Engineering projects that are in progress.

During the year, the Group recognised $466 million in revenue from contracts that held a contract liability balance at the beginning of
the financial year. The total transaction price relating to the Group’s Unearned income on the Group’s development contracts at June
2021 is $556 million relating primarily to various UK and Australian projects. The difference between the Unearned income amount
noted in the table above and this amount primarily relates to the remaining development value of apartments versus the deposit amount
received. Revenue from these contracts is expected to be realised as control over each asset is transferred to the customer.

The total transaction price allocated to unsatisfied performance obligations on the Group’s construction contracts as at June 2021 is
$14.9 billion for the core business (June 2020: $13.9 billion) and $3.9 billion for the Non core business (June 2020: $5.1 billion), which
is the construction backlog reported in the Performance and Outlook section of the Directors’ report. This includes new work secured
during the period. Of the total construction backlog, 44 per cent is expected to be realised within the next 12 months to June 2022 (June
2020: 47 per cent to June 2021), 31 per cent to June 2023 (June 2020: 25 per cent to June 2022) and the remaining 25 per cent realised
post June 2023 (June 2020: 28 per cent post June 2022).

Balance as at 1 July 2020

Provisions made during the year

Provisions used during the year

Provisions reversed during the year

Balance as at 30 June 2021

Current Provisions

Non Current Provisions

Total Provisions

Employee
Benefits
$m

Construction
Projects1
$m

Development
Projects
$m

Other
$m

181

120

(105)

(2)

194

167

194

223

(31)

(4)

266

260

266

(12)

(16)

143

(10)

Total
$m

405405

430

(148)

(32)

655

575

655

1. The Group has recorded $168 million of provisions related to claims on historical Non core segment projects completed prior to the sale of the Engineering business.

168

Lendlease Annual Report 2021 Financial Statements

169

Notes to Consolidated Financial Statements continued

Section D: Risk Management

The Group’s activities expose it to a variety of financial risks. The Group’s overall financial risk management strategy focuses on
the unpredictability of financial markets and seeks to minimise adverse effects on the Group’s performance. Treasury policies have
been approved by the Board for managing this risk. This section contains disclosures of financial risks the Group is exposed to and
how the Group manages these risks. The impact of contingent liabilities is also considered in this section.

24. Financial Risk Management

The Group operates across numerous jurisdictions and markets. The Lendlease Asset and Liability Committee oversees the management
of the Group’s treasury risks, within the parameters of a Board approved Treasury Policy, and maintains a Group wide framework for
financial risk management and reviews issues of material risk exposure within the scope of the Treasury Policy. A summary of key risks
identified, exposures and management of exposures is detailed in the table below:

Risks Identified

Definition

Exposures

Management of Exposures

Foreign Currency

The risk in local currency terms
that the value of a financial
commitment or a recognised
asset or liability will fluctuate due
to changes in foreign currency
exchange rates

• Foreign currency earnings
• Net investments in
foreign operations

• Transactions settled in

foreign currency

• Further information on

exposures is detailed in Note
24a ‘Foreign Currency
Risk Exposure’

• Physical financial instruments, including
natural hedges from matching foreign
assets and liabilities

• Derivative financial instruments, mainly

foreign exchange contracts

• Contracting out
• Speculative trading is not permitted

Credit

The risk that a counterparty
will not be able to meet its
obligations in respect of a
financial instrument,
resulting in a financial loss to
the Group

Liquidity

The risk of having insufficient
funds to settle financial liabilities
as and when they fall due

Interest Rate

The risk that the value of a
financial instrument or cash flow
associated with the instrument
will fluctuate due to changes in
market interest rates

Equity Price

The risk that the fair value of
either a traded or non traded
equity investment, derivative
equity instrument, or a portfolio
of such financial instruments,
increases or decreases in the
future

• Recoverability of loans and

• Policies in place so that customers and

receivables

suppliers are appropriately credit assessed

• Recoverability of other

financial assets and cash
deposits

• Further information on

exposures is detailed in Note
24b ‘Credit Risk Exposure’

• Treasury Policy sets out credit limits for
each counterparty based on minimum
investment grade ratings

• Insufficient levels of

• Maintaining sufficient levels of cash

committed credit facilities

• Settlement of financial

liabilities

and committed credit facilities to meet
financial commitments and working
capital requirements

• Further information on

• Managing to funding portfolio benchmarks

exposures is detailed in Note
19 ‘Liquidity Risk Exposure’

as outlined in the Treasury Policy
• Timely review and renewal of credit

facilities

• Financial assets, mainly cash

at bank

• Financial liabilities, mainly
borrowings and financing
arrangements

• Further information on

exposures is detailed in
Note 24c ‘Interest Rate
Risk Exposure’

• Physical financial instruments
• Derivative financial instruments,

mainly interest rate swaps

• Managing to hedging limits in respect
of recourse funding as outlined in the
Treasury Policy

• Speculative trading is not permitted

• All traded and/or non

traded financial instruments
measured at fair value

• Material investments within the portfolio
are managed on an individual basis. The
Group’s portfolio is monitored closely as
part of capital recycling initiatives

a. Foreign Currency Risk Exposure

The net asset exposure by currency is detailed below.

A$m

US$m

£m

S$m

€m

CNYm

MYRm Other m2

June 2021
Net asset/(liability) exposure (local currency)

June 20201
Net asset/(liability) exposure (local currency)

3,248

3,390

743

717

572

596

607

593

307

190

653

1,204

599

1,044

1. Balance includes Disposal Group assets and liabilities held for sale.
2. Other currency is translated and disclosed in AUD.

Sensitivity Analysis
The sensitivity analysis of the Group’s Australian dollar denominated Income Statement and Statement of Financial Position to foreign
currency movements is based on a 10 per cent fluctuation (June 2020: 10 per cent fluctuation) on the average rates during the financial
year and the spot rate at balance date, respectively. This analysis assumes that all other variables, in particular interest rates, remain
constant, and excludes the effects of the foreign exchange contracts.

A 10 per cent movement in the average foreign exchange rates would have impacted the Group’s Profit after tax as follows:

USD

GBP

SGD

EUR

CNY

MYR

10% WEAKENING LEADS TO
INCREASE/(DECREASE) IN PROFIT
AFTER TAX

10% STRENGTHENING LEADS TO
INCREASE/(DECREASE) IN PROFIT
AFTER TAX

June 2021
$m

June 2020
$m

June 2021
$m

June 2020
$m

(1)

(6)

(2)

(3)

(9)

(5)

(4)

(3)

(1)

(2)

(15)

A 10 per cent movement in the foreign exchange spot rates at balance date would have impacted the Group’s net assets as follows:

USD

GBP

SGD

EUR

CNY

MYR

10% WEAKENING LEADS TO
INCREASE/(DECREASE) IN NET
ASSETS

10% STRENGTHENING LEADS TO
INCREASE/(DECREASE) IN NET
ASSETS

June 2021
$m

June 2020
$m

June 2021
$m

June 2020
$m

102

107

385

117

127

401

(96)

(91)

(54)

(42)

(12)

(35)

(330)

(96)

(104)

(59)

(28)

(11)

(33)

(331)

170

Lendlease Annual Report 2021 Financial Statements

171

Notes to Consolidated Financial Statements continued

Section D: Risk Management continued
24. Financial Risk Management continued

b. Credit Risk Exposure

•

•
•

The maximum exposure to credit risk at balance date on financial instruments recognised in the Statement of Financial Position (excluding
investments of the Group) equals the carrying amount, net of any impairment
The Group is not exposed to any significant concentrations of credit risk on either a geographic or industry specific basis
Credit risk on financial instruments is managed under a Board approved credit policy that determines acceptable counterparties. Derivative
counterparties and cash deposits are limited to recognised financial intermediaries with a minimum investment grade credit rating as
determined by a recognised rating agency

• Refer to Note 21 ‘Loans and Receivables’ for information relating to impairment on loans and receivables
•

In certain circumstances, the Group will hold either financial or non financial assets as collateral to further mitigate the potential credit risk
on selected transactions. During the current and prior year, the Group did not hold financial or non financial assets as collateral. At any point
in time, the Group will hold other collateral such as bank guarantees and performance bonds to mitigate potential credit risk as a result of
default by a counterparty or otherwise.

c. Interest Rate Risk Exposure

The Group’s exposure to interest rate risk on its financial assets and liabilities is set out as follows:

Fixed Rate

Financial assets

Financial liabilities

Variable Rate

Financial assets

Financial liabilities

CARRYING AMOUNT

June 2021
$m

June 20201
$m

147

(2,657)

(2,510)

1,612

(1,136)

476

173

(2,103)

(1,930)

1,241

(736)

505

Balance includes Disposal Group financial assets and liabilities held for sale.

Sensitivity Analysis

At 30 June 2021, it is estimated that an increase of one percentage point in interest rates would have decreased the Group’s equity and Profit
after tax by $3 million (June 2020: $6 million decrease in the Group’s equity and Profit after tax). A one percentage point decrease in interest
rates would have increased the Group’s equity and Profit after tax by $3 million (June 2020: $6 million increase in the Group’s equity and Profit
after tax). The increase or decrease in interest income/(expense) is proportional to the increase or decrease in interest rates. Interest rate
derivatives have been included in this calculation.

25. Hedging

Accounting Policies

The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from
operating, financing and investing activities. Derivative financial instruments are recognised initially at fair value on the date a
derivative contract is entered into and subsequently remeasured at fair value. Hedge accounting recognises the offsetting effects
on profit or loss of changes in the fair value of the derivative financial instruments and the hedged item. The accounting for hedges
that meet the criteria for hedge accounting are classified as either fair value hedges, cash flow hedges or investment hedges.

The Group has minimal hedges designated at fair value. The Group primarily uses forward foreign exchange contracts as cash flow
hedges for highly probable sale, purchase and dividend transactions. The Group also uses forward foreign exchange contracts to hedge
cross border intercompany loans and transactions which mainly net off in the Income Statement. Interest rate swaps and interest rate
options are used to manage the Group’s exposure to interest rates arising from borrowings. These are primarily treated as cash flow
hedges and are mainly on borrowings within equity accounted investments.

The Group has foreign exchange derivative contracts primarily held in GBP, USD, EUR, SGD and CNY at reporting date to hedge specific
foreign currency exposures. The total gross payable exposure is $1,405 million (June 2020: payable $936 million).

There are 62 foreign currency contracts that will mature in more than one year (June 2020: 56 foreign currency contracts).

26. Fair Value Measurement

Accounting Policies

The accounting policies for financial instruments held at fair value are included in Note 13 ‘Other Financial Assets’ and Note
25 ‘Hedging’.

Management considers the valuation of assets at fair value including financial instruments to be an area of estimation uncertainty.
While this represents the best estimation of fair value at the reporting date, the fair values may differ if there is volatility in market
prices or foreign exchange rates in future periods.

All financial instruments recognised in the Statement of Financial Position, including those instruments carried at amortised cost, are
recognised at amounts that represent a reasonable approximation of fair value, with the exception of the following borrowings:

Liabilities

Current

Commercial notes

Non Current

Commercial notes

JUNE 2021

JUNE 2020

Carrying
Amount
$m

Fair Value
$m

Carrying
Amount
$m

Fair Value
$m

555

565

134

133

1,682

1,838

1,500

1,676

Note

16a

The fair value of commercial notes has been calculated by discounting the expected future cash flows by the appropriate government bond
rates and credit margin applicable to the relevant term of the commercial note.

a. Basis of Determining Fair Value

The determination of fair values of financial assets and liabilities that are measured at fair value are summarised as follows:

•

The fair value of unlisted equity investments, including investments in property funds, is determined based on an assessment of the
underlying net assets, which may include periodic independent and Directors’ valuations, future maintainable earnings and any special
circumstances pertaining to the particular investment. Fair value of unlisted equity investments has also taken the ongoing COVID
pandemic into consideration to determine fair value at 30 June 2021. This included valuations of underlying investment properties at
balance date

The fair values of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with
generally accepted valuation techniques; these include the use of recent arm’s length transactions, reference to other assets that are
substantially the same, and discounted cash flow analysis

The fair value of derivative instruments comprises forward foreign exchange contracts, which are valued using forward rates at balance
date, and interest rate swap contracts, which are measured at the present value of future cash flows estimated and discounted based on
applicable yield curves derived from quoted interest rates and include consideration of counterparty risk adjustments.

b. Fair Value Measurements

The different levels for valuation method have been defined as follows:

•

Level 1: The fair value is determined using the unadjusted quoted price for an identical asset or liability in an active market for identical
assets or liabilities

Level 2: The fair value is calculated using predominantly observable market data other than unadjusted quoted prices for an identical asset
or liability

• Level 3: The fair value is calculated using inputs that are not based on observable market data.

During the period, there were no material transfers between Level 1, Level 2 and Level 3 fair value hierarchies.

172

Lendlease Annual Report 2021 Financial Statements

173

Notes to Consolidated Financial Statements continued

Section D: Risk Management continued
27. Contingent Liabilities

Section E: Basis of Consolidation

The Group has the following contingent liabilities, being liabilities in respect of which there is the potential for a cash outflow in excess
of any provision where the likelihood of payment is not considered probable or cannot be measured reliably at this time:

• There are a number of legal claims and exposures that arise from the normal course of the Group’s business. Such claims and

exposures largely arise in respect of claims for defects, claims for breach of performance obligations or breach of warranty or claims
under indemnities. In some claims:

– There is uncertainty as to whether a legal obligation exists;
– There is uncertainty as to whether a future cash outflow will arise in respect to these items; and/or
– It is not possible to quantify the potential exposure with sufficient reliability.

This particularly applies in larger more complex projects, in claims involving a number of parties or in claims made a number of years
after completion of a project.

Where it is probable there will be liabilities from such claims and the potential exposure can be quantified with sufficient reliability, a
provision has been made for anticipated losses arising from such claims.

• In certain circumstances, the Company guarantees the performance of particular Group entities in respect of their obligations. This
includes bonding and bank guarantee facilities used primarily by the Construction business as well as performance guarantees for
certain of the Company’s subsidiaries.

• Securities Class Action

On 18 April 2019, Lendlease Corporation and Lendlease Responsible Entity (Lendlease Group) were served with a shareholder class
action proceeding filed in the Supreme Court of New South Wales on 18 April 2019 by David William Pallas and Julie Ann Pallas as
trustees for the Pallas Family Superannuation Fund, represented by Maurice Blackburn. On 7 August 2019, Lendlease Corporation
and Lendlease Responsible Entity (Lendlease Group) were served with a shareholder class action proceeding filed in the Supreme
Court of New South Wales on 6 August 2019 by Martin John Fletcher, represented by Phi Finney McDonald. On 21 November 2019
the Supreme Court ordered consolidation of the two class actions into a single proceeding. The consolidated proceeding alleges that
Lendlease was in breach of its continuous disclosure obligations under the Corporations Act 2001 and made representations about
its Engineering and Services business that were misleading or deceptive or likely to mislead or deceive. It is currently not possible
to determine the ultimate impact of these claims, if any, on Lendlease Group. Lendlease Group denies the allegations and intends to
vigorously defend this proceeding.

This section provides information on how the Group structure affects the financial position and performance of the Group as a
whole. The disclosures detail the types of entities and transactions included in the consolidation and those excluded.

28. Consolidated Entities

Accounting Policies

The Group consolidation comprises all subsidiaries controlled by the Company. Control exists when the Company:

• Has the power to direct the relevant activities such as key operating, financial and investing decisions
• Has exposure or rights to variable returns from its involvement with the investee such as dividends, loans and fees
• Has the ability to use its power over the investee to affect the amount of returns.

In assessing control, potential voting rights that are presently exercisable or convertible are taken into account. Management uses
accounting judgement in determining whether the Group controls an entity by applying the above control criteria and reviewing the
substance of its relationship with the entity.

The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until
the date that control ceases. The financial statements of subsidiaries are prepared for the same reporting period as the parent company,
using consistent accounting policies with adjustments made to bring into line any dissimilar accounting policies that may exist.

External non controlling interests are allocated their share of total comprehensive income and are presented within equity in the
consolidated Statement of Financial Position, separately from the equity of securityholders.

The material consolidated entities of the Group listed below were wholly owned during the current and prior year. Refer to the following
section for details on the disposal of entities.

PARENT ENTITY

EUROPE

Lendlease Corporation Limited

Lendlease Construction (Europe) Limited

AUSTRALIA

Capella Capital Lendlease Pty Limited

Capella Capital Partnership

Lendlease Building Pty Limited

Lendlease Construction Holdings (Europe) Limited

Lendlease Europe Finance plc

Lendlease Europe Limited

Lendlease Residential (CG) Limited

Lendlease Building Contractors Pty Limited

Lendlease (Elephant & Castle) Limited

Lendlease Communities (Australia) Limited

ASIA

Lendlease Development Pty Limited

Lendlease Japan Inc.

Lendlease Finance Limited

Lendlease Singapore Pte. Limited

Lendlease Infrastructure Investments Pty Limited

AMERICAS

Lendlease International Pty Limited

Lendlease (US) Capital, Inc.

Lendlease Real Estate Investments Limited

Lendlease (US) Construction, Inc.

Lendlease Responsible Entity Limited

Lendlease (US) Construction LMB, Inc.

Lendlease Services Pty Limited

Lendlease (US) Public Partnerships, LLC

Lendlease Trust1

Lendlease (US) Public Partnerships Holdings LLC

Lendlease Development, Inc.

Lendlease Trust is a consolidated entity of the Group as the parent entity is deemed to control it. The parent entity has no ownership interest in Lendlease Trust.

During the current and prior year, there were no acquisitions of material consolidated entities.

174

Lendlease Annual Report 2021 Financial Statements

175

30. Parent Entity Disclosures

The following summarises the financial information of the Group’s parent entity, Lendlease Corporation Limited (the Company), as at
and for the year ended 30 June 2021.

Results

(Loss)/Profit after tax

Other comprehensive income after tax

Total comprehensive income after tax

Financial Position

Current assets

Non current assets

Total assets

Current liabilities

Non current liabilities

Total liabilities

Net assets

Issued capital

Treasury securities

Reserves

Retained earnings

Total equity

COMPANY

June 2021
$m

June 2020
$m

(273)

(272)

1,452

2,938

4,390

843

3,547

1,888

(79)

198

1,540

3,547

613

(1)

612

1,613

2,858

4,471

577

579

3,892

1,889

(68)

182

1,889

3,892

In respect of the contingent liabilities of the Group disclosed in Note 27 ‘Contingent Liabilities’, the Company participates in the provision of
guarantees to Group entities.

Notes to Consolidated Financial Statements continued

Section E: Basis of Consolidation continued
28. Consolidated Entities continued

During the current and prior year, the following disposals of material consolidated entities occurred.

Ownership
Interest Disposed
%

Consideration

Date
Disposed

Received/Receivable
$m

June 2021

One Sydney Harbour R1 Trust

Lendlease Construction Australia Holdings Pty Limited1

Lendlease (US) Telecom Holdings LLC

Lendlease Renaissance I

One Sydney Harbour R2 Trust

June 2020

25.0

100.0

50.0

25.0

1 July 2020

9 September 2020

15 October 2020

29 June 2021

Victoria Cross Commercial Head Trust

25.0

21 December 2019

Includes the sale of Lendlease Engineering Pty Limited.

29. Employee Benefit Vehicles

197

390 390

The Company sponsors a number of employee benefit vehicles, including employee security plans and employee security ownership vehicles.
These vehicles, while not legally controlled, are currently required to be consolidated for accounting purposes.

a. Employee Security Plans

As at 30 June 2021, employees own approximately 0.9 per cent (June 2020: 1.0 per cent) of the issued capital of the Group through various
active Lendlease employee security plans and ownership vehicles, details of which are outlined below:

•

Australia: Employee Share Acquisition Plan (ESAP): ESAP was established in December 1988 for the purpose of employees acquiring
securities in the Group and is funded by Lendlease subscriptions, and employee salary sacrifice contributions
Americas: US Rabbi Trust (Rabbi Trust) was established in 2004 and updated in 2005 for the acceptance of employee profit share
contributions used to acquire Group securities for US based employees. This part of the plan is not currently accepting new contributions
Employee Share Acquisition Plan (STI) (ESAP STI): ESAP STI was established in July 2014 for the purpose of acquiring and allocating
securities granted as the deferred component of Short Term Incentive (STI) awards, which are funded by Lendlease subscriptions.
Securities are currently allocated to employees across Australia, Singapore, Malaysia, the United Kingdom and the United States.

Eligibility
The eligibility rules for each plan are determined by reference to the regulatory, legal and tax rules of each country in which the Group
operates.

Distributions and/or Voting Rights

Generally, employees in the various operating security plans are entitled to distributions and voting rights for allocated securities. The plans
reflect this intention subject to regulatory, legal and tax constraints. The trustee may exercise these rights in accordance with any fiduciary or
governance rules pertaining to the deed or trust laws in the legal and tax jurisdiction within which the trust operates.

b. Employee Security Ownership Vehicles

In addition to the plans discussed above, Lendlease has an employee security ownership vehicle, Lendlease Retirement Benefit Fund (RBF):

•

RBF was established in 1984 with shareholder approval for the benefit of employees. RBF holds Lendlease securities. The Lendlease
securities in RBF are not available for allocation to employees other than in the event of a change of control of the Group and, in accordance
with RBF’s trust deed, the capital of the trust is not available to the Group. The RBF trustee has discretion as to the distribution of the
RBF funds. In 1992, a deed poll was executed which allows for the distribution of the income of RBF to the Company to fund employee
benefit activities through the Lendlease Foundation. As a result of changes to the constitution and governance structure of the RBF trustee
on 22 June 2017, Lendlease currently does not have control of RBF and therefore RBF is currently not required to be consolidated for
accounting purposes

•

The RBF arrangement is subject to periodic review to assess its ongoing role and operation.

176

Lendlease Annual Report 2021 Financial Statements

177

Notes to Consolidated Financial Statements continued

Section E: Basis of Consolidation continued
31. Related Party Information

a. Consolidated Entities

Intragroup balances and transactions, and any unrealised gains or losses arising from intragroup transactions, are eliminated in preparing
the consolidated financial statements. Investments in subsidiaries are carried at their cost of acquisition less impairments in the Company’s
financial statements.

Lendlease Corporation Limited provides financing and treasury services, which includes working capital facilities and long term financing
to certain subsidiaries. Interest is earned or incurred only on long term loans provided to or drawn with subsidiaries based on project specific
risks and returns. Outstanding balances arising from working capital facilities and long term financing are typically unsecured and repayable on
demand.

In addition, guarantees are provided to particular Group entities in respect of their obligations. These include bonding and bank guarantee
facilities used primarily by the Construction business as well as performance guarantees for certain Development business commercial built
form developments. Guarantee fees are charged under normal terms and conditions.

The following represents the transactions that occurred during the financial year and the balances outstanding at year end between Lendlease
Corporation Limited and its consolidated entities:

Transactions

Guarantee fees

Dividend income

Interest income

Interest expense

Outstanding Balances (Net of Provisions Raised)

Receivables

Payables

COMPANY

June 2021
$000s

June 2020
$000s

27,557

105,261

18,666

62,435

30,998

478,893

6,932

103,546

432,805

739,327

1,251,166

505,634

Transactions that occurred during the financial year between entities in the Lendlease Group included:
• Provision of project management, design services, construction management services to development projects
• Provision of development management services
• Provision of investment management services
• Provision of payroll, transaction and management services
• Receipt and payment of superannuation contributions
• Reimbursement of expenses made on behalf of subsidiaries
• Loan advances and repayments between subsidiaries
• Premium payments and receipts for the Group’s insurance policies
• Dividends received or due and receivable from subsidiaries.

b. Associates and Joint Ventures

Interests held in associates and joint ventures by the Group are set out in Note 12 ‘Equity Accounted Investments’.

Transactions between the Group and its associates and joint ventures principally relate to:

•

Development: development management services, infrastructure bid and advisory services and the sale and purchase of development
properties with Lendlease managed funds

• Construction: provision of project management, building and construction services
•

Investments: provision of property and infrastructure investment management, property management and asset management services.

There were $nil non interest bearing loans provided to joint ventures at 30 June 2021 (June 2020: $nil).

Except as noted above, transactions and outstanding balances are typically on normal terms and conditions.

Revenue earned by the Group during the year as a result of transactions with its associates and joint ventures is as follows:

Revenue

Associates

Joint ventures

Total

June 2021
$000s

June 2020
$000s

41,841

1,259,392

1,301,233

42,343

1,297,079

1,339,422

Other transactions and outstanding balances with associates, joint ventures and other related parties have been disclosed in Note 4 ‘Revenue
from Contracts with Customers’, Note 6 ‘Other Income’, Note 7 ‘Other Expenses’, Note 8 ‘Finance Revenue and Finance Costs’, Note 12 ‘Equity
Accounted Investments’, Note 13 ‘Other Financial Assets’, Note 21 ‘Loans and Receivables’ and Note 22 ‘Trade and Other Payables’. Transactions
with joint operations are included in the consolidated Income Statement and Statement of Financial Position.

c. Key Management Personnel

The key management personnel compensation is as follows:

Short term employee benefits1

Post employment benefits

Security based payments

Other long term benefits

Total

June 2021
$000s

June 2020
$000s

17,708

278

13,152

126

31,264

14,623

269

10,032

113

25,037

1. Short term employee benefits for the year ended 30 June 2021 includes termination benefits of $1,900,385.

Information regarding Directors’ and senior executives’ remuneration is provided in the Remuneration Report within the Directors’ Report.

178

Lendlease Annual Report 2021 Financial Statements

179

Notes to Consolidated Financial Statements continued

Section F: Other Notes
32. Intangible Assets

Accounting Policies

Goodwill represents the excess of the purchase price over the fair value of the Group’s share of the net identifiable assets and
contingent liabilities of the acquired business at the date of acquisition. Goodwill on acquisition of subsidiaries is included in
intangible assets as goodwill. Goodwill on acquisition of associates is included in the carrying value of investments in associates.

Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Goodwill is not amortised.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

For the purposes of impairment testing, goodwill is allocated to cash generating units (CGUs) (or groups of CGUs) that are expected
to benefit from the business combination in which the goodwill arose. CGUs are an identifiable group of assets that generate cash
associated with the goodwill. Management considers this is an area of estimation uncertainty as these calculations involve an
estimation of the recoverable amount of the CGU to which the goodwill is allocated. The Construction CGUs use the value in use
basis, which requires the Group to estimate the future cash flows expected to arise from the CGUs and a suitable discount rate in
order to calculate the recoverable amounts.

Management agreements and other intangible assets acquired by the Group are stated at cost less accumulated amortisation
and impairment losses (see Note 7 ‘Other Expenses’). Amortisation is charged to the Income Statement on a straight line basis over
the estimated useful lives of the intangible assets, ranging from three to 20 years.

Goodwill

Management agreements

Other intangibles

Total intangible assets

a. Goodwill

Construction

Development

Total goodwill

Reconciliations

Reconciliations of the carrying amounts for each category of goodwill are as follows:

Construction

Carrying amount at beginning of financial year

Transferred to Disposal Group

Effect of foreign exchange rate/other movements

Carrying amount at end of financial year

Development

Carrying amount at beginning of financial year

Effect of foreign exchange rate movements

Carrying amount at end of financial year

Note

32a

32b

June 2021
$m

June 2020
$m

1,200

223

1,456

1,170

1,200

1,181

(11)

1,170

(2)

1,213

208

1,457

1,181

1,213

1,200

(19)

1,181

b. Goodwill Allocation

Goodwill relating to the Construction business is allocated to CGUs identified as set out below.

Construction

Australia Core

Australia Non core

Europe

Americas

Asia

Total construction goodwill

June 2021
$m

June 2020
$m

573

151

251

187

1,170

573

151

246

203

1,181

c. Impairment Tests and Key Assumptions Used – Construction

The recoverable amount of the Construction CGUs is determined based on value in use (VIU) calculations. For the Construction CGUs, the
assumptions used for determining the recoverable amount of each CGU are based on past experience and expectations for the future, utilising
both internal and external sources of data and relevant industry trends.

No impairment arose as a result of the review of goodwill for the Construction CGUs for the year ended 30 June 2021. Based on information
available and market conditions at 30 June 2021, a reasonably foreseeable change in the assumptions made in this assessment would not result
in impairment of Construction goodwill. The foreseeable change in the assumptions took the ongoing COVID pandemic into consideration.

The following describes the key assumptions on which management has based its cash flow projections when determining VIU relating to the
Construction CGUs:

Cash Flows

The VIU calculations use pre tax cash flow projections based on actual operating results, and financial forecasts covering a five year period
which have been approved by management. These forecasts are based on management estimates to determine income, expenses, capital
expenditure and cash flows for each CGU.

Growth Rate

The terminal value growth rate used to extrapolate the cash flows beyond the five year period is 3.0 per cent (June 2020: 3.0 per cent). The
growth rate reflects the forecast long term average growth rate for each CGU and the countries in which they operate.

Discount Rate

The discount rates applied to the cash flow projections vary between 8.9 per cent and 12.4 per cent (June 2020: between 9.4 per cent and
13.1 per cent). The Group’s weighted average cost of capital is used as a starting point for determining the discount rate, with appropriate
adjustments for the risk profile relating to the relevant CGUs and the countries in which they operate. The discount rates used are pre tax.

180

Lendlease Annual Report 2021 Financial Statements

181

Notes to Consolidated Financial Statements continued

Section F: Other Notes continued
33. Discontinued Operations

Accounting Policies

Discontinued operations relate to a component of the Group including its corresponding assets and liabilities that have been classified as
held for sale and represent a separate major line of business or geographical area of operation. The group of assets and their corresponding
liabilities (together referred to as a Disposal Group), may only be classified as held for sale once the following criteria are met:

Basic/Diluted Earnings Per Share (EPS) from Continuing Operations

Profit/(Loss) from continuing operations attributable to members of Lendlease
Corporation Limited (Company)

June 2021

June 2020

Shares/
Securities
Excluding
Treasury
Securities

Shares/
Securities
on Issue

Shares/
Securities
Excluding
Treasury
Securities

Shares/
Securities
on Issue

• The carrying amount will be recovered principally through a sale transaction rather than through continuing use
• The sale must be highly probable.

A Disposal Group is measured at the lower of its carrying amount and fair value less costs to sell. Where fair value is lower than the carrying
amount, the difference is recognised as an impairment loss within the Income Statement.

The results of discontinued operations are presented separately in the Income Statement and Statement of Comprehensive Income.

On 25 February 2019, the Group announced that its Engineering and Services businesses are no longer a required part of the Group’s strategy.
Management at that time committed to a plan to exit from Non core operations of Engineering and Services. On 19 December 2019, the Group
entered into an agreement with Acciona to sell its Engineering business and on 9 September 2020 the Group completed the sale. The agreed
purchase price for the sale of the Engineering business was $160 million which was adjusted by $37 million at completion, resulting in total
estimated proceeds of $197 million. $150 million has been received by 30 June 2021. Acciona has not made the final deferred payment which
was due on 30 June 2021 claiming various amounts should be set off against that payment. This is disputed by Lendlease and legal proceedings
have been commenced seeking recovery of payments due by Acciona. The discontinued operations represent the Engineering business sold,
excluding the projects retained by the Group.

At 30 June 2021, the Services business does not meet the criteria to be held for sale and does not meet the definition of a discontinued
operation. Refer to Note 10 ‘Events Subsequent to Balance Date’ for further details.

The Group has recorded provisions related to claims on historical Non core segment projects completed prior to the sale of the Engineering
business. Refer to the construction projects category in Note 23 ‘Provisions’ for where the amounts have been recorded.

The major classes of assets and liabilities of the Engineering business sold as at 9 September 2020 are as follows:

Assets/(Liabilities) Sold

Cash and cash equivalents

Loans and receivables

Inventories

Other assets

Total assets sold

Trade and other payables

Other liabilities

Total liabilities sold

Net assets and liabilities sold

Net proceeds from sale of the Engineering business

Transaction and other costs

Gain/(loss) on sale of the Engineering business

The results of the discontinued operations, representing the Engineering business sold, are as follows:

Results from Discontinued Operations

Revenue from contracts with customers

Cost of sales

Gross profit

Other income

Finance revenue

Impairment on Disposal Group held for sale1

Other expenses

(Loss)/Profit before tax for discontinued operations

Income tax benefit/(expense)

Total profit after tax for discontinued operations as presented in the Income Statement

1. Relates to the impairment of goodwill as a result of the measurement of the Disposal Group at fair value less costs to sell.

9 September 2020
$m

411

187

215

847

610

660

187

(197)

12 months
June 2020
$m

1,437

(1,263)

174

(19)

(109)

(22)

1 July - 9 September
2020
$m

283

(272)

(13)

(1)

Weighted average number of ordinary shares

Basic/Diluted EPS from continuing operations

Basic/Diluted Earnings Per Share (EPS) from Discontinued Operations

Profit from discontinued operations attributable to members of Lendlease
Corporation Limited (Company)

Weighted average number of ordinary shares

Basic/Diluted EPS from discontinued operations

Basic/Diluted Earnings Per Stapled Security (EPSS) from Continuing Operations

Profit/(Loss) from continuing operations attributable to securityholders of
Lendlease Group

Weighted average number of stapled securities

Basic/Diluted EPSS from continuing operations

Basic/Diluted Earnings Per Stapled Security (EPSS) from Discontinued
Operations

Profit from discontinued operations attributable to securityholders of Lendlease
Group

Weighted average number of stapled securities

Basic/Diluted EPSS from discontinued operations

cents

126

683

18.4

683

0.3

220

683

32.2

683

0.3

126

688

18.3

688

0.3

220

688

32.0

688

0.3

The net cash flows for discontinued operations, representing the Engineering business sold, are as follows:

Cash Flows from Discontinued Operations

Net cash (outflow)/inflow from operating activities

Net cash outflow from investing activities

Net cash outflow from financing activities

Net (decrease)/increase in cash and cash equivalents

1 July - 9 September
2020
$m

(39)

(1)

(40)

(374)

599

(374)

603

(62.4)

(62.0)

599

5.3

(342)

599

(57.1)

599

5.3

603

5.3

(342)

603

(56.7)

603

5.3

12 months

June 2020
$m

156

(59)

The major classes of assets and liabilities held for sale are as follows:

Disposal Group Assets/(Liabilities) Held for Sale

June 20211
$m

June 2020
$m

Cash and cash equivalents

Loans and receivables

Inventories

Other assets

Total Disposal Group assets held for sale

Trade and other payables

Other liabilities

Total Disposal Group liabilities held for sale

Disposal Group net assets held for sale

451

135

223

841

629

670

171

1. The Group had no assets or liabilities recorded as held for sale at 30 June 2021 as the sale of the Engineering business completed on 9 September 2020. Refer to

‘Assets/(Liabilities) Sold’ table above for further details.

182

Lendlease Annual Report 2021 Financial Statements

183

Notes to Consolidated Financial Statements continued

Section F: Other Notes continued
34. Defined Benefit Plans

Accounting Policies

Group companies operate pension plans. The plans are generally funded through payments to insurance companies or trustee
administered funds as determined by periodic actuarial calculations.

A defined benefit plan is a pension plan that defines the amount of pension benefit an employee will receive on retirement, usually
dependent on one or more factors such as age, years of service and compensation.

The asset or liability recognised in the Statement of Financial Position in respect of defined benefit plans is the present value of the
defined benefit obligation i.e. ‘the pension liability’ at the balance sheet date less the fair value of plan assets. The present value of
the pension liability is determined by discounting the estimated future cash outflows using interest rates of high quality corporate or
government bonds, that:

• Are denominated in the currency in which the benefits will be paid
• Have terms to maturity approximating the terms of the related pension liability.

The defined benefit obligation is calculated at least annually by independent actuaries using the projected unit credit method, which in
simplistic terms proportions the benefit based on service. Management considers the valuation of defined benefit plans undertaken by
the actuaries to be an area of estimation uncertainty as a number of key assumptions must be adopted to determine the valuation.

Actuarial losses/(gains) will arise where there is a difference between previous estimates and actual experience, or a change to
assumptions in relation to demographic and financial trends. These actuarial losses/(gains) are recognised in the period they occur,
directly in other comprehensive income as remeasurements. They are included in retained earnings in the Statement of Changes in
Equity and in the Statement of Financial Position.

Past service costs are recognised immediately in the Income Statement.

Lendlease Superannuation Plan

Lendlease UK Pension Scheme

Total net defined benefit plan asset

a. Lendlease UK Pension Scheme

Note

34a

June 2021
$m

June 2020
$m

243

(1)

157

156

Lendlease Construction Holdings (Europe) Limited (UK Construction) sponsors a funded defined benefit pension scheme (the Scheme) for
qualifying UK employees. The Scheme is administered by a separate board of Trustees which is legally separate from UK Construction. The
Scheme’s Trustees are composed of representatives of both the employer and employees. The Trustees are required by law to act in the
interest of all relevant beneficiaries and are responsible for the investment policy with regard to the assets plus the day to day administration of
the benefits.

The Scheme is a funded defined benefit scheme, with the final salary section providing retirement benefits based on final salary and the index
linked section providing retirement benefits based on career average salary. A separate section, the Personal Investment Section, provides
retirement benefits on a defined contribution basis. The UK Construction’s contributions to members’ Personal Investment Fund accounts are
not included in these disclosures.

The final salary section closed to future accruals on 31 August 2008 and the index linked section closed to future accruals on 31 January
2012. There were no Scheme amendments affecting defined benefits payable, curtailments or settlements during the year. UK Construction
pays four per cent of members’ basic salaries to cover the Scheme’s expected administration costs and costs of benefits payable on death in
service. The Scheme expects to pay $5 million in contributions to its defined benefit plan in FY22. Following the triennial valuation for 31 March
2020, deficit repair contributions are not required to be paid as the scheme is in an actuarial surplus.

The defined benefit plan is exposed to actuarial risk and market (investment) risk. The following information provides additional detail on risk:

i. Statement of Financial Position Amounts

The amounts recognised in the Statement of Financial Position are determined as follows:

Defined benefit obligations

Fair value of plan assets

Net defined benefit plan asset

June 2021
$m

June 2020
$m

(1,272)

1,515

243

(1,324)

1,481

157

ii. Reconciliation of Defined Benefit Obligations

Defined benefit obligations at beginning of financial year

Included in Income Statement

Interest cost

Remeasurements Included in Other Comprehensive Income

Actuarial loss/(gain) arising from:

Financial assumptions

Experience adjustments

Demographic assumptions

Other

Benefits paid

Effect of foreign exchange rate movements

Defined benefit obligations at end of financial year

iii. Reconciliation of the Fair Value of Plan Assets

Fair value of plan assets at beginning of financial year

Included in Income Statement

Interest income

Administration costs

Remeasurements Included in Other Comprehensive Income

Actual return on plan assets excluding interest income

Other

Contributions by Group companies

Benefits paid

Effect of foreign exchange rate movements

Fair value of plan assets at end of financial year

iv. Expense Recognised in the Income Statement

Net interest cost

Administration costs

Net defined benefit plan (income)/expense

v. Fair Value of Plan Assets

Plan assets comprise:

Global Equities

Investment funds

Infrastructure

Government index linked bonds

Other assets

Fair value of plan assets at the end of the financial year

June 2021
$m

June 2020
$m

1,324

1,208

(45)

(19)

(21)

(33)

1,272

135

(9)

(41)

(28)

1,324

1,481

1,347

(2)

(44)

(33)

1,515

(3)

(1)

431

956

1,515

(2)

173

(41)

(33)

1,481

(3)

(1)

437

384

115

491

1,481

The investment funds target an absolute level of return. The plan assets can be categorised as Level 1, where the fair value is determined
using an unadjusted quoted price for an identical asset, or Level 2, where the fair value is derived either directly or indirectly from observable
inputs, or Level 3, where inputs are unobservable (i.e. for which market data is unavailable). At year end, approximately $1,428 million (June
2020: $1,408 million) and $87 million (June 2020: $73 million) of total plan assets were categorised as Level 2 and Level 3, respectively. UK
Construction and Trustees have agreed to a long term strategy for reducing investment risk as and when appropriate. This includes an asset–
liability matching policy which aims to reduce the volatility of the funding level of the pension plan by investing in assets that perform in line with
the liabilities of the plan so as to protect against inflation being higher than expected. The current targeted benchmark allocation is 67.5 per cent
growth assets and 32.5 per cent matching assets (June 2020: 75.0 per cent growth assets and 25.0 per cent matching assets).

184

Lendlease Annual Report 2021 Financial Statements

185

Notes to Consolidated Financial Statements continued

Section F: Other Notes continued
34. Defined Benefit Plans continued

vi. Principal Actuarial Assumptions

Discount rate (%)

RPI inflation (%)

Average pension increase in payments (%)

Future mortality (years):

Male

Female

June 2021

June 2020

2.0

3.5

2.7

25.3

26.3

1.5

3.0

2.5

24.9

26.4

The liabilities are calculated using a discount rate set with reference to corporate bond yield. If assets underperform this yield, this will create
a deficit.

A decrease in corporate bond yield will increase the value placed on the Scheme’s liabilities, although this will be partially offset by an increase
in the value of the Scheme’s corporate bond holdings. The majority of the Scheme’s benefit obligations are linked to inflation and higher
inflation will lead to higher liabilities, although in most cases this will be capped to protect against extreme inflation. The majority of the assets
are either unaffected by or loosely correlated with inflation, meaning that an increase in inflation will also increase the deficit. The majority
of the Scheme’s obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the
liabilities. The mortality assumptions are based on standard mortality tables which allow for expected future mortality improvements. The
assumption is that a member aged 63 will live for a further 25.3 years (June 2020: 24.9 years) if they are male and 26.3 years if they are female
(June 2020: 26.4 years).

At 30 June 2021, the weighted average duration of the defined benefit obligation was 18 years (June 2020: 19 years).

vii. Sensitivity Analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would
have affected the defined benefit obligations by the amounts shown below:

0.1%
Increase in
Discount Rate
$m

0.1%
Decrease in
Discount Rate
$m

0.1%
Increase RPI
Inflation and
Pension Payment
$m

0.1%
Decrease
RPI Inflation
and Pension
Payment
$m

1 Year
Increase in
Future Mortality
$m

1 Year
Decrease in
Future Mortality
$m

June 2021
Defined benefit asset/(obligations)

June 2020
Defined benefit asset/(obligations)

(23)

(26)

(19)

(13)

(37)

(64)

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that
the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Non pensioner benefits are linked to RPI in the period up to retirement. Once in payment, pension increases are linked to RPI but with a zero
per cent floor and different caps applying to different periods of pensionable service. The inflation sensitivity reflects a change in RPI inflation
and the associated increases in payment.

35. Employee Benefits

Detailed information regarding the Group’s Executive Reward strategy is provided in the Remuneration Report within the Directors’ Report.
The key incentive plans are as follows:

• Short Term Incentive (STI)
• Short Term Award (STA)
• Long Term Incentive (LTI)
• Long Term Award (LTA)
• Restricted Securities Award (RSA)
• Distinguished Executives Award (DE Award)
• Executive Deferred Award (ED Award)
• Deferred Equity Award (DEA)
• Pro Rata CEO Grant.

a. Short Term Incentive (STI)

The STI plan is an annual incentive plan whereby a number of employees receive benefits which are dependent upon the achievement of both
Lendlease financial and non financial targets, and individual goals. The total value of the potential benefit varies by individual and is tested
against relevant market levels for each role.

•

The STI plan typically comprises a cash component, which is paid in September following year end. For more senior employees, where the
potential benefit is typically higher, the plan also includes a deferred component

Deferral periods are generally for one or two years. The deferred component is normally awarded as Lendlease securities and in some
instances as cash. Securities are held in Lendlease employee security plan trusts on behalf of employees for the deferral period (refer to
Note 29a ‘Employee Security Plans’). For employees to receive the deferred component in full, they must generally be employed by the
Group at the time of vesting.

b. Short Term Award (STA)

The STA plan is an annual incentive plan which replaced the STI for a limited number of senior executives from 2019. It is designed to focus
senior executives on priority areas for delivery in the current financial year, including key Group and regional financial targets, safety and other
non financial targets aligned to the Group’s areas of focus.

Whilst performance is assessed against a set of Group metrics when determining awards, the Board will assess the overall performance and
contribution of individual senior executives, with a particular focus on safety.

The total value of the potential benefit varies by individual and is set with reference to both internal peers and external market levels. The STA
plan is intended to be awarded as cash in September following year end.

c. Long Term Incentive (LTI)

The LTI plan is designed to:

•

Motivate executives to achieve the Group’s long term strategic goals and provide reward where the Group delivers better value to
securityholders than its peers

Align the interests of executives and securityholders, given that the reward received is linked to the Group’s security price and average
Return on Equity performance.

Arrangements for LTI Awards

LTI Design

How the LTI Works

Performance
Securities

• An annual grant of ‘performance securities’ is made to a limited number of executives
• The Board intends that the awards be settled in Lendlease securities, although the award may be settled in cash or

other means at the Board’s discretion

• On vesting, each performance security entitles executives to one Lendlease stapled security, or at the Board’s

discretion, cash or other instruments of equivalent value

• In the event of a change in control of the Group, the Board has the discretion to determine whether the vesting of

some or all performance securities should be accelerated.

Performance
Period (applicable
to FY17 and FY18
Grants)

• 50 per cent of the performance securities are assessed over a three year period. If the performance hurdle is not

fully achieved at this time, those performance securities that have not vested will lapse
• The remaining 50 per cent of the performance securities are assessed after four years
• If the performance hurdle is not met, the awards are forfeited
• There is no retesting on any portion of the LTI grant.

186

Lendlease Annual Report 2021 Financial Statements

187

Notes to Consolidated Financial Statements continued

Section F: Other Notes continued
35. Employee Benefits continued

Performance
Period (applicable
to FY19, FY20 and
FY21 Grants)

• 100 per cent of the performance securities are assessed over a three year period. If the performance hurdle is not

fully achieved at this time, those performance securities that have not vested will lapse

• If the performance hurdle is not met, the awards are forfeited
• There is no retesting on any portion of the LTI grant.

Termination of
Employment

• If the executive resigns or is terminated for cause, the unvested LTI is forfeited
• If the executive is terminated and if the Board considers vesting would provide a benefit that was unwarranted or

inappropriate, the Board can adjust unvested LTI prior to the vesting date

• For ‘good leavers’, the LTI grant may remain on foot, subject to the original terms
• In exceptional circumstances (such as death or total and permanent disability), the Board may exercise discretion

and settle the award at the time of termination of employment.

Performance
Hurdles

Financial Years 2017 to 2020

• 50 per cent subject to Lendlease’s Total Securityholder Return (TSR) compared to the companies in the S&P/ASX

100 Index. The S&P/ASX 100 companies are determined at the start of the performance period

• 50 per cent subject to Average Return on Equity (ROE) hurdle.

Financial Year 2021

Vesting Schedule
- CAGR % FUM
(FY21 only)

Below CAGR for threshold vesting

No vesting

Between CAGR for threshold vesting and CAGR for
target vesting

Pro rata vesting on a straight line basis between 20 per cent
and 50 per cent vesting

At CAGR for target vesting

50 per cent vesting

Between CAGR for target vesting and CAGR for
maximum vesting

Pro rata vesting on a straight line basis between 50 per cent
and 100 per cent vesting

At CAGR for maximum vesting

100 per cent vesting

d. Long Term Award (LTA)

The LTA plan replaced the LTI for a limited number of executives from 2019. It was designed to motivate and reward key executives to deliver
on the Group’s long term strategy and to allow them to share in the value created for securityholders. Specifically, the objectives are to:

• Create rewards that are aligned to earnings

• Align the interests of securityholders and our most senior executives

• Promote team behaviours and an enterprise leadership mindset

• Retain the senior executive team.

The intended outcome is that reward and strategy are better aligned.

• One third subject to Lendlease’s Total Securityholder Return (TSR) compared to the companies in the S&P/ASX

100 index. The S&P/ASX 100 companies are determined at the start of the performance period

• One third subject to Average Operating Return on Equity (Operating ROE) hurdle
• One third subject to compound annual growth rate (CAGR) % in funds under management.

Arrangements for LTA Awards

LTA Design

How the LTA Works

Vesting Schedule
- Relative TSR
(FY17 to FY21)

Measure

Percentage of performance securities that vest as a
proportion of maximum opportunity

Below the 50th percentile

No vesting

At the 50th percentile

50 per cent vesting

At or above the 51st percentile but below the 75th
percentile

Pro rata vesting on a straight line basis between 52 per cent
and 98 per cent

Vesting Schedule
- Average ROE
(FY17 only)

Vesting Schedule
- Average ROE
(FY18 to FY20)

Vesting Schedule
- Average
Operating ROE
(FY21 only)

At or above the 75th percentile

100 per cent vesting

Less than 11 per cent

No vesting

At 11 per cent

25 per cent vesting

Greater than 11 per cent but below 15 per cent

Pro rata vesting on a straight line basis between 25 per cent
and 100 per cent vesting

At or above 15 per cent

100 per cent vesting

10 per cent or less

No vesting

Above 10 per cent but below 14 per cent

Pro rata vesting on a straight line basis between 0 per cent and
100 per cent vesting

At or above 14 per cent

100 per cent vesting

Less than 8 per cent

No vesting

Between 8 per cent and target Operating ROE set
by the Board

Pro rata vesting on a straight line basis between 20 per cent
and 50 per cent vesting

At target Operating ROE set by the Board

50 per cent vesting

Between target Operating ROE set by the Board
and 11 per cent

Pro rata vesting on a straight line basis between 50 per cent
and 100 per cent vesting

At or above 11 per cent

100 per cent vesting

Performance
Rights

• An annual grant of ‘performance rights’ is made to a limited number of executives on the Global Leadership Team
• The Board intends that the awards be settled in Lendlease securities, although some or all of the award may be

settled in cash at the Board’s discretion

• Performance rights are rights to receive a variable number of Lendlease securities or at the discretion of the Board,

cash with an equivalent value, upon vesting

• Outcomes against performance hurdles will determine how many Lendlease securities will be received following

vesting between nil and a maximum number

• In the event of a change in control of the Group, the Board has the discretion to determine whether the vesting of

some or all performance rights should be accelerated.

Performance
Period (applicable
to FY19, FY20 and
FY21 Grants)

• 100 per cent of the performance rights are assessed over a three year period and the number of Lendlease

securities that may be delivered on vesting is determined. The first tranche will vest immediately thereafter, and
the second, third and fourth tranches will be deferred and will vest progressively four, five and six years after the
grant date

• If the performance hurdle is not met, the awards are forfeited
• There is no retesting of the LTA grant.

Termination of
Employment

• If the executive resigns and becomes engaged in activities that are competitive with the Group or is terminated for

cause, the unvested LTA is forfeited

• If the executive is terminated and if the Board considers vesting would provide a benefit that was unwarranted or

inappropriate, the Board has the discretion to lapse some or all performance rights prior to the vesting date

• For ‘good leavers’, the LTA grant may remain on foot, subject to the original terms.

Performance
Hurdles

Financial Years 2019 and 2020

• 50 per cent subject to Lendlease’s Total Securityholder Return (TSR) compared to the companies in the S&P/ASX

100 Index. The S&P/ASX 100 companies are determined at the start of the performance period

• 50 per cent subject to Return on Equity (ROE) hurdle.

Financial Year 2021

• One third subject to Lendlease’s Total Securityholder Return (TSR) compared to the companies in the S&P/ASX 100

Index. The S&P/ASX 100 companies are determined at the start of the performance period

• One third subject to Average Operating Return on Equity (Operating ROE) hurdle
• One third subject to compound annual growth rate (CAGR) % in funds under management.

188

Lendlease Annual Report 2021 Financial Statements

189

Notes to Consolidated Financial Statements continued

Section F: Other Notes continued
35. Employee Benefits continued

Vesting Schedule
- Relative TSR
(FY19, FY20 and
FY21)

Measure

Percentage of performance securities that vest as a
proportion of maximum opportunity

Group CEO (Steve McCann)

Senior Executive

Vesting Schedule
- Average ROE
(FY19 and FY20)

Vesting Schedule
- Average
Operating ROE
(FY21 only)

Vesting Schedule
- CAGR % FUM
(FY21 only)

Below the 50th percentile

No Vesting

At the 50th percentile

27 per cent vesting

11 per cent vesting

At or above the 50th percentile and
below the 75th percentile

Pro rata vesting on a straight line basis
between 27 per cent and 100 per cent

Pro rata vesting on a straight line basis
between 11 per cent and 100 per cent

At or above the 75th percentile

100 per cent vesting

Less than 10 per cent

No Vesting

Between 10 per cent and target
ROE set by the Board

Pro rata on a straight line basis
between 0 per cent and 63 per
cent

Pro rata on a straight line basis
between 0 per cent and 41 per cent

At target ROE set by the Board

63 per cent vesting

41 per cent vesting

Between target set by the Board
and 14 per cent

Pro rata on a straight line basis
between 63 per cent and 100 per
cent

Pro rata on a straight line basis
between 41 per cent and 100 per cent

At or above 14 per cent

100 per cent vesting

Less than 8 per cent

No Vesting

Between 8 per cent and target
Operating ROE set by the Board

Pro rata on a straight line basis
between 13 per cent and 63 per
cent

Pro rata on a straight line basis
between 8 per cent and 41 per cent

At target Operating ROE set by the
Board

63 per cent vesting

41 per cent vesting

Between target set by the Board
and 11 per cent

Pro rata on a straight line basis
between 63 per cent and 100 per
cent

Pro rata on a straight line basis
between 41 per cent and 100 per cent

At or above 11 per cent

100 per cent vesting

Below CAGR for threshold vesting

No Vesting

Between CAGR for threshold vesting
and CAGR for target vesting

Pro rata on a straight line basis
between 13 per cent and 63 per cent

Pro rata on a straight line basis
between 8 per cent and 41 per cent

At CAGR for target vesting

63 per cent vesting

41 per cent vesting

Between CAGR for target vesting and
CAGR for maximum vesting

Pro rata on a straight line basis
between 63 per cent and 100 per
cent

Pro rata on a straight line basis
between 41 per cent and 100 per
cent

e. Restricted Securities Award (RSA)

The Restricted Securities Award (RSA), previously referred to as the LTA Minimum, is similar to fixed remuneration as it is not subject to
performance conditions. It is designed to motivate and reward a limited number of key executives to deliver on the Group’s long term strategy
and to allow them to have a sense of ownership and share in the value created for securityholders. The RSA (and previously referred to LTA
Minimum) is not continuing from FY22 under the revised Executive Reward Strategy. Specifically, the objectives are to:

• Align the interests of securityholders and our most senior executives

• Support long term value creation

• Better align reward to risk management (recognising that the RSA may be forfeited in certain circumstances).

Arrangements for RSA Awards

RSA Design

How the RSA Works

Performance
Rights

• An annual grant of ‘performance rights’ is made to a limited number of executives on the Global Leadership Team
• However, following feedback from proxy-holders and other stakeholders, the RSA will no longer be offered

from FY22

• The Board intends that the awards be settled in Lendlease securities, although some or all of the award may be

settled in cash at the Board’s discretion

• Performance rights are rights to receive one Lendlease stapled security, or at the Board’s discretion, cash or other

instruments of equivalent value

• In the event of a change in control of the Group, the Board has the discretion to determine whether the vesting of

some or all performance rights should be accelerated.

Vesting Period

• The first tranche (i.e. 25%) will vest after three years and the second, third and fourth tranches will vest

progressively four, five and six years after the grant date.

Termination of
Employment

• If the executive resigns and becomes engaged in activities that are competitive with the Group or is terminated for

cause, the unvested RSA is forfeited

• If the executive is terminated and if the Board considers vesting would provide a benefit that was unwarranted or

inappropriate, the Board has the discretion to lapse some or all performance rights prior to the vesting date

• For ‘good leavers’, the RSA grant may remain on foot, subject to the original terms.

f. Distinguished Executives Award (DE Award)

The Distinguished Executives Award (DE Award) is a program established to recognise and reward Lendlease technical mastery and significant
contribution to the business. DE Awards are generally deferred over five and seven years. The deferred component is awarded as Lendlease
securities and held in Lendlease employee security plan trusts on behalf of the employees. For employees to receive the deferred component,
they must generally be employed by the Group at the time of vesting. DE Awards are valued based on the average price of on market
purchases made in respect of these awards at the time of grant.

g. Executive Deferred Award (ED Award)

The Executive Deferred Award (ED Award) is an award that was made to a limited number of executives and senior managers in recognition of
their role in supporting the Lendlease transformation program.

The ED Award comprises a one off grant of Lendlease deferred securities which vest in three equal tranches, with the final vesting three years
after grant. Securities are held in Lendlease employee plan trusts for the deferral period. Refer to Note 29a ‘Employee Security Plans’ for
further details. For employees to receive the deferred components in full, they must generally be employed by the Group at the time of vesting.

h. Deferred Equity Award (DEA)

The DEA is delivered to Senior Executives as a grant of rights with vesting over two years. The Board determined that an equity award was
more appropriate than paying cash as a result of COVID. The key objectives of this award are to:

• Recognise the achievement of non financial performance outcomes that support long term value creation
• Consider the balance between motivating, recognising and rewarding executives with securityholder interests
• Provide the Board with additional review points prior to vesting
• Provide a retention element given that executives will be required to wait up to two years for the award to vest.

At CAGR for maximum vesting

100 per cent vesting

i. Pro Rata CEO Grant

The pro rata CEO Grant is designed to recognise the period served as Global CEO (one month) in FY21 for Anthony Lombardo.

Arrangements for the Pro Rata CEO Grant

Pro Rata CEO Grant

How the Pro Rata CEO Grant Works

Performance Rights

• A one-off grant of ‘performance rights’ to reflect time served as Global CEO in FY21 reduced to reflect the

length of the period and value already granted for FY21

• All other terms, including the performance period, performance hurdles, termination rules remain as per the

FY21 LTA Grant referred to above.

190

Lendlease Annual Report 2021 Financial Statements

191

Notes to Consolidated Financial Statements continued

Directors’ Declaration

Section F: Other Notes continued
35. Employee Benefits continued

j. Amounts Recognised in the Financial Statements

LTI and LTA awards are valued using Monte-Carlo simulation methodology where the security price can be projected based on the
assumptions underlying the Black-Scholes formula. Retention awards are valued by discounting the security price by the expected
dividends assumed to be paid from the valuation date until the vesting date (if applicable). The model inputs include the Lendlease Group
security price, a risk free interest rate, expected volatility and dividend yield. During the financial year ended 30 June 2021, a $55 million
expense was recognised in the Income Statement in relation to equity settled security based payment awards (June 2020: $55 million).

36. Impact of New and Revised Accounting Standards

New Accounting Standards and Interpretations Not Yet Adopted

Accounting Standard

Requirement

Impact on Financial Statements

AASB 2014-10
Amendments to Australian
Accounting Standards – Sale or
Contribution of Assets between
an Investor and its Associate or
Joint Venture and consequential
amendments.

AASB 2014-10 amends AASB 10 and AASB 128 to
clarify the requirements for recording the sale or
contribution of assets between an investor and its
associate or joint venture.

The amendment becomes mandatory for the
June 2023 financial year and will be applied
prospectively.

Based on preliminary analysis performed, the
amendments are not expected to have a material
impact on the Group.

37. Other Significant Accounting Policies

a. Foreign Currency Translation

Functional and Presentation Currency

In the opinion of the Directors of Lendlease Corporation Limited (the Company):

1. The financial statements and notes and the remuneration disclosures contained in the Remuneration Report in the Directors’ Report

are in accordance with the Corporations Act 2001, including:

a. Giving a true and fair view of the financial position of the Consolidated Entity as at 30 June 2021 and of its performance for the

financial year ended on that date; and

b. Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations

Regulations 2001.

2. The financial statements and notes also comply with International Financial Reporting Standards as disclosed in the Basis of Preparation.

3. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

4. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Global Chief Executive

Officer and Group Chief Financial Officer for the financial year ended 30 June 2021.

Signed in accordance with a resolution of the Directors:

M J Ullmer, AO
Chairman

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (the functional currency). The consolidated financial report is presented in Australian dollars, which is
the Company’s functional and presentation currency.

A P Lombardo
Global Chief Executive Officer

Transactions and Balances

Foreign currency transactions are translated into Australian dollars using the exchange rate on the date of the transactions. Assets and
liabilities denominated in foreign currencies are translated to Australian dollars at balance date.

Sydney, 16 August 2021

Foreign exchange gains or losses are recognised in the Income Statement for monetary assets and liabilities such as receivables and
payables, except for qualifying cash flow hedges and qualifying net investment hedges in foreign operations, which are recognised in other
comprehensive income. Refer to Note 25 ‘Hedging’ for further detail.

Translation differences on non monetary items, such as equities held at fair value through profit or loss, are reported as part of the fair value
gain or loss.

Group Entities

The results and Statement of Financial Position of all Group entities that are not presented in Australian dollars (none of which has the currency
of a hyperinflationary economy) are translated as follows:

•

Revenue and expenses are translated at average exchange rates (unless this average is not a reasonable approximation of the transaction
rate, in which case revenue and expenses are translated at the date of the transactions)

• Assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at balance date

• All resulting exchange differences are recognised in other comprehensive income, in the foreign currency translation reserve.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate.

b. Goods and Services Tax

Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is
not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as
part of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the Australian
Taxation Office (ATO) is included as a current asset or liability in the Statement of Financial Position. Cash flows are included in the Statement
of Cash Flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from,
or payable to, the ATO are classified as operating cash flows.

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Lendlease Annual Report 2021 Financial Statements

193

Independent Auditor’s Report

To the members of Lendlease Corporation Limited

Report on the audit of the Financial Report

Opinion

We have audited the Financial Report of
Lendlease Corporation Limited as the
deemed parent presenting the stapled
security arrangement of Lendlease Group
(the Financial Report).

In our opinion, the accompanying Financial
Report is in accordance with the
Corporations Act 2001, including:

• giving a true and fair view of Lendlease
Group’s financial position as at 30 June
2021 and of its financial performance for
the year ended on that date; and

• complying with Australian Accounting

Standards and the Corporations
Regulations 2001.

The Financial Report of Lendlease Group comprises:

• Consolidated statement of financial position as at 30

June 2021;

• Consolidated income statement, Consolidated

statement of comprehensive income, Consolidated
statement of changes in equity, and Consolidated
statement of cash flows for the year then ended;

• Notes including a summary of significant accounting

policies; and

• Directors' Declaration.

The Lendlease Group consists of Lendlease Corporation
Limited and the entities it controlled at the year-end or
from time to time during the financial year and Lendlease
Trust.

Shares in Lendlease Corporation Limited and units in
Lendlease Trust are jointly traded as a Stapled Security
on the Australian Securities Exchange under the name of
Lendlease Group.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.

We are independent of Lendlease Group and Lendlease Corporation Limited in accordance with the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled
our other ethical responsibilities in accordance with the Code.

Key Audit Matters

The Key Audit Matters we identified for
Lendlease Group are:

• Construction Revenue Recognition;

• Sale of Development Properties;

• Recoverability of Development Property

Inventory; and

• Asset Valuation.

Key Audit Matters are those matters that, in our
professional judgement, were of most significance in our
audit of the Financial Report of the current period.

These matters were addressed in the context of our
audit of the Financial Report as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.

Construction Revenue Recognition (A$7,559m)

Refer to Note 4 ‘Revenue from Contracts with Customers’ to the Financial Report

The key audit matter

How the matter was addressed in our audit

The Group performs various building,
engineering and services construction
contract works (projects) for a wide range of
customers. The Group contracts in a variety
of ways. Each project has a different risk
profile based on its individual contractual
and delivery characteristics.

The COVID-19 pandemic continues to
create ongoing challenging operating
conditions impacting productivity, expected
timing of completion and expected costs to
complete. Other impacts include projects
being put on hold in some markets, with
delays in securing and commencement of
new projects.

•

Construction revenue recognition is a key
audit matter as judgement is required to
assess the timing of recognition determined
by the Group. Revenue on construction
contracts is earned over time, typically using
costs incurred as a proportion of total
forecast costs as the measure of progress.

Estimating total forecast costs to complete
during project life is complex and requires
judgement. Typical cost estimates include
labour, subcontractors, equipment,
materials, and project overheads. Changes
to these cost estimates could give rise to
variances in the amount of revenue
recognised.

Our procedures included:
• Evaluating and testing management’s review and

approval of revenue and cost forecasting;

• Selecting a sample of contracts for testing using:
- Data Analytic routines based on a number of

quantitative and qualitative factors, related to size
and risk of projects; and
the Group’s project reporting tool.

-
For the sample selected, we:
- conducted visits to a selection of project sites and
used up-to-date site photographs, where site
visits were not possible, to evidence physical
progress;
inquired with key project personnel to assess the
project schedule, forecast costs, risks and
opportunities, with involvement from KPMG
engineering specialists where appropriate;
read relevant contract terms and conditions to
evaluate the inclusion of individual characteristics
and project risks in the Group’s estimates;
tested a sample of incurred costs to supplier
invoices or other underlying documentation;
tested forecast costs for labour, subcontractors,
equipment, materials, and project overheads by
comparing to actual incurred spend and
committed future contracts, with specific
consideration of the impacts of COVID-19;
tested the variations and claims (including COVID-
19 related impacts) recognised within revenue
against the criteria for recognition in the
accounting standards via inspection and
assessment of:

194

Lendlease Annual Report 2021 Financial Statements

195

The revenue on construction contracts may
also include variations and claims, which fall
under either the variable consideration or
contract modification requirements of AASB
15. These are recognised on a contract-by-
contract basis when evidence supports that
it is highly probable that a significant
reversal in the amount of revenue
recognised will not occur.

The assessment of revenue on construction
contracts resulting from variations and
claims was a focus of our audit due to the
audit effort in assessing this across bespoke
projects and contracting arrangements.

o correspondence between the Group and the

customer;

o the Group’s legal basis for the variations and
claims, including, where necessary, external
legal opinions; and

o the Group’s analysis of the amounts they

consider meet the recognition requirement of
highly probable, using our knowledge of the
Group’s historical experience in resolving
variations and claims, and considering the
commercial factors specific to each variation
or claim and quality of information
underpinning the amounts recognised.

Sale of development Properties (A$1,434m)

Refer to Note 4 ‘Revenue from Contracts with Customers’ to the Financial Report

The key audit matter

How the matter was addressed in our audit

The Group develops for sale both built form
products (for example residential
apartments, and commercial and retail
buildings) and residential land communities.
It is the Group’s policy for development
revenue to be recognised when control
transfers to the purchaser, based on an
assessment of the contractual terms of
sale.

This was a key audit matter due to the
volume of transactions that occur across
multiple jurisdictions. In addition, the
assessment of cost of sales includes
judgement as cost allocation for site
infrastructure costs is typically based on the
proportion of revenue for each unit, lot or
building as compared to total forecast
project revenue.

COVID-19 continues to result in some
delays in residential settlements and
cancellations, these do not impact the
Group’s revenue recognition policy for
residential apartments and residential land
communities as revenue is recognised on
settlement.

Our procedures included:
• Evaluating and testing management’s review and

approval of development revenue and cost
forecasting;

• Selecting a sample of settlements, across multiple

jurisdictions, during the year. For the sample selected
we:
- compared revenue recognised to contractual

terms of sale and cash settlements;

- assessed the Group’s determination of when
control transfers by a detailed analysis of the
contractual terms of sale against the criteria in the
accounting standards;

- assessed the Group’s cost allocation

methodology against the requirements of the
accounting standards;
tested the application of the cost allocation
methodology by comparing allocated costs to
revenue recognised in the year relative to the
total project revenue; and

- assessed total project revenue by comparing
expected sales prices to published industry
forecasts and comparable sales prices achieved in
the year, being alert to the impacts of current
challenging market conditions.

Recoverability of Development Property Inventory (A$3,298m)

Refer to Note 11 ‘Inventories’ to the Financial Report

The key audit matter

How the matter was addressed in our audit

Our procedures included:

• Selecting a sample of projects for testing using:
- Data Analytic routines based on a number of

quantitative and qualitative factors, related to size,
duration and risk of projects; and
the Group’s project reporting tool.

• For the sample selected, we:

- compared expected sales prices to published

industry forecasts and comparable sales prices
achieved in the year, being alert to the impacts of
current challenging market conditions;
tested a sample of forecast construction and
infrastructure costs to underlying supplier
contracts, historical experience of similar costs,
and our industry expectation of cost contingency
levels and cost escalation assumptions; and
- assessed expected sales prices, the volumes of
sales expected each period and holding costs in
light of current challenging market conditions,
using our industry knowledge.

• Assessing disclosures included in the financial report

highlighting the key factors in determining
recoverability of development property inventory,
using our understanding obtained from our testing
and against the requirements of the accounting
standards. This included considerations of the
impacts of COVID-19.

It is the Group’s policy to capitalise
development costs into inventory over the
life of its projects. Development costs
include the purchase of land, site
infrastructure costs, construction costs for
built form products and borrowing costs.

It is the Group’s policy to carry inventory at
the lower of cost and net realisable value.
The recoverability therefore of these
capitalised development costs is a
significant judgement made by the Group,
and their assessment is based on forecasts
of:

• sales prices; and
• construction and infrastructure costs to

complete the development.

Where a development is forecast to be loss
making and the inventory is no longer
considered to be recoverable, the Group
considers it to be impaired and it is their
policy for an expense to be recognised.

This was a key audit matter for us due to
many developments being long term which
increases the level of forecasting
judgement and audit complexity in
assessing estimated sales prices and future
costs to complete the development. We
considered the heightened risk in
estimating future sales prices, the timing of
sales, and future costs as a result of the
continued impact of COVID-19 to these
assumptions.

196

Lendlease Annual Report 2021 Financial Statements

197

Asset Valuation

Refer to Note 12 ‘Equity accounted investments’ (A$3,758m), Note 13 ‘Other Financial Assets’
(A$1,087m) and Note 26 ‘Fair Value Measurement’ to the financial report

The key audit matter

How the matter was addressed in our audit

Our procedures included:

• Selecting a sample of valuations performed by the

Group, based on the significance of the asset to the
Group’s financial position and performance;

• Assessing the scope, competence and objectivity of
external valuation experts engaged by the Group for
assets valued by external valuation experts;

• Assessing the impact of market uncertainty caveats
included in valuations performed by the Group’s
external valuation experts on the extent of our
testing of key assumptions;

• Evaluating and testing management’s review and

approval of internal valuations based on the Group’s
policies for internally valued assets;

• Assessing the valuation methodology for consistency
with accounting standards and industry practice for
the asset’s class;

• Comparing, with market data published by

commercial real estate agents, previous external
valuations, our knowledge of the industry, and/or our
knowledge of the asset and its historical
performance, key assumptions such as:

- discount rates
- changes in village residents
- units/home current market prices
- pricing growth rates
- capitalisation of earnings rates
- future rental income
- leasing incentives

• Assessing disclosures included in the financial report

highlighting the estimates and judgements in
determining fair values of the Group’s equity
accounted investments and other financial assets.
We used our understanding obtained from our
testing, including considerations of the impacts of
COVID-19, against the requirements of the
accounting standards.

The Group is required to assess the value of
equity accounted investments and other
financial assets at each reporting date. The
fair value of the properties held by various
investment entities directly impacts the
Group’s interests in these assets.

Valuations of assets are generally
performed by the Group using internal
valuation methodologies (discounted cash
flow or capitalised income approach) or
through the use of external valuation
experts. External valuations are obtained on
a routine basis by the Group each year, with
the remaining investments being valued
internally.

Other financial assets are predominantly
investments in entities which in turn own
commercial and retail property. Accordingly,
the Group’s valuation assumptions are
predominantly the capitalisation of earnings
rates, discount rates, future rental income,
and leasing incentives.

Equity accounted investments include the
Group’s interest in the retirement living
business. The key assumptions used by the
Group in determining the value of
retirement villages are discount rates,
changes in village residents, current
units/homes market prices and pricing
growth rates.

Whilst COVID-19 continues to have
significant impact on real estate valuations
across the Group’s investments, the market
has remained resilient highlighting the
ongoing demand for high quality assets by
investors.

The assessment of the valuations of these
assets is a key audit matter as they:

• are inherently judgemental, amplified by
the impact of COVID-19. There were
fewer market transactions as a result,

which are ordinarily strong sources of
evidence regarding fair value;
• contain certain forward looking

assumptions, with higher estimation
uncertainty as the business is
recovering from COVID-19, which are
inherently challenging to audit; and
lead to additional audit effort, often due
to the high number of differing
assumptions and models, across varying
asset classes.

•

Other Information

Other Information is financial and non-financial information in Lendlease Group’s annual reporting which
is provided in addition to the Financial Report and the Auditor’s Report. The Directors of Lendlease
Corporation Limited are responsible for the Other Information.

Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.

In connection with our audit of the Financial Report, our responsibility is to read the Other Information.
In doing so, we consider whether the Other Information is materially inconsistent with the Financial
Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date
of this Auditor’s Report we have nothing to report.

Responsibilities of the Directors for the Financial Report

The Directors of Lendlease Corporation Limited are responsible for:

• preparing the Financial Report that gives a true and fair view in accordance with Australian

Accounting Standards and the Corporations Act 2001;

•

implementing necessary internal control to enable the preparation of a Financial Report that gives a
true and fair view and is free from material misstatement, whether due to fraud or error; and

• assessing Lendlease Group’s ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless they either intend
to liquidate the Lendlease Group or to cease operations, or have no realistic alternative but to do so.

198

Lendlease Annual Report 2021 Financial Statements

199

Auditor’s responsibilities for the audit of the Financial Report

Our objective is:

•

to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and

to issue an Auditor’s Report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it
exists.

Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the Financial Report.

A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.

Report on the Remuneration Report

This page is intentionally left blank.

Opinion

Directors’ responsibilities

In our opinion, the Remuneration Report of
Lendlease Corporation Limited for the year
ended 30 June 2021 complies with Section
300A of the Corporations Act 2001.

The Directors of Lendlease Corporation Limited are
responsible for the preparation and presentation of the
Remuneration Report in accordance with Section 300A
of the Corporations Act 2001.

Our responsibilities

We have audited the Remuneration Report included in
pages 84 to 121 of the Directors’ report for the year
ended 30 June 2021.

Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.

KPMG

D M McLennan

Partner

Sydney

16 August 2021

200

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Lendlease Annual Report 2021 Other Information

201

Other
Information

Milan:
Milano Santa Giulia

Artist’s impression

Corporate
directory

Annual General Meeting 2021 (AGM)

The Annual General Meeting (AGM) of shareholders of Lendlease
Corporation Limited and the general meeting of unitholders
of Lendlease Trust (together, Lendlease Group) will be held at
10am on Friday 12 November 2021. Due to the ongoing risks of
the COVID pandemic and in light of the restrictions currently in
place by state governments, the Board has decided that a virtual
meeting will be held. Securityholders will not be able to physically
attend the AGM. We will provide securityholders with full details
of participation in the Notice of Meetings. Lendlease advises that
the date of close of Director nominations for election at the AGM
is Friday 24 September 2021.

2021 Financial Calendar

Mon 16 Aug

Full Year Results Announced

Fri 20 Aug

Security Price Ex Distribution

Mon 23 Aug

Final Distribution Record Date

Wed 15 Sep

Final Distribution Payable

Fri 12 Nov

Annual General Meeting

2022 Financial Calendar

Mon 21 Feb

Half Year Results Announced

Fri 25 Feb

Security Price Ex Dividend

Mon 28 Feb

Interim Distribution Record Date

Wed 16 Mar

Interim Distribution Payable

Please note that the timing of events can be subject to change.
A current calendar is available online at www.lendlease.com

Entity Details

Lendlease Corporation Limited
ABN 32 000 226 228
Incorporated in NSW Australia

Lendlease Responsible Entity Limited
ABN 72 122 883 185
AFS Licence 308983 as responsible
entity for Lendlease Trust
ABN 39 944 184 773
ARSN 128 052 595

Registered Office

Level 14, Tower Three
International Towers Sydney
Exchange Place
300 Barangaroo Avenue
Barangaroo NSW 2000

Contact

T: +61 2 9236 6111
F: +61 2 9252 2192
www.lendlease.com

Share Registry Information

Computershare Investor Services Pty Limited
ABN 48 078 279 277
GPO Box 242, Melbourne Victoria 3000 Australia

T: 1800 230 300 (within Australia)
T: +61 3 9946 4460 (outside Australia)

www.computershare.com.au

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Lendlease Annual Report 2021 Other Information

203

Securityholder
information

Dispute resolution

There is a dispute resolution mechanism
that covers complaints by securityholders.
For more information, please contact
Lendlease Investor Relations at
+61 2 9236 6111 or email us
(investorrelations@lendlease.com).

Distribution and Share Accumulation
Plan issue price history

For historical distribution and
Share Accumulation Plan Issue Price
information, please see the below
link to our website
(www.lendlease.com/au/investor-centre/
distribution-and-tax).

Securities exchange listing and code

Lendlease Group is listed on the Australian
Securities Exchange and trades under the
code LLC.

In the United States, Lendlease securities
are traded on the ‘over the counter’
market in the form of sponsored American
Depositary Receipts (ADRs) under the
symbol LLESY. Each ADR represents one
ordinary security. Information about ADRs
is available from the depositary, The Bank
of New York Mellon (www.adrbny.com).

Voting rights

Each stapled security in Lendlease Group
and each ADR entitles the holder to one
vote. Rights to Lendlease Group securities
granted under Lendlease Group’s
employee equity incentive plans do not
carry voting rights.

Share Accumulation Plan

The Share Accumulation Plan is
designed to be a convenient way
for securityholders with a registered
address in Australia or New Zealand
to build their securityholdings without
incurring transaction costs. The laws of
other countries make it difficult for us
to offer securities in this way. Lendlease
securityholders are able to reinvest their
distributions to acquire more Lendlease
securities through the Distribution
Reinvestment Plan (DRP) or the Share
Election Plan (SEP). Securityholders may
also make contributions of between
$500 and $2,500 to acquire new
Lendlease securities under the Share
Purchase Plan (SPP). Together the
DRP, SEP and SPP constitute the Share
Accumulation Plan.

The rules of each of these plans are
set out in the Share Accumulation Plan
Information Sheet. Copies are available
on the Lendlease website. Please note
that the Share Election Plan and the Share
Purchase Plan are currently suspended.

Key sources of information
for securityholders

We report the following to
securityholders each year:

• Annual Report
• Half Year Financial Report
• March and September
distribution statements.

Electronic communications

Securityholders have the option of
receiving the following communications
and all other Company related information
electronically:

• Annual Report
• Distribution statements
• Notice of Annual General Meetings.

Lendlease makes the Annual Report
available in an online version. A hard copy
of the Annual Report will only be sent to
those securityholders who elect to receive
it in that form. In addition, securityholders
may elect to receive notification when the
Annual Report is available online.

Securityholders who wish to register their
email address should go to the website of
the Lendlease share registry
www.investorcentre.com/ecomms

For registry contact details, see page 201.

Privacy legislation

Under Chapter 2C of the Corporations
Act 2001, a securityholder’s information
(including their name, address and details
of securities held) is required to be
included in Lendlease’s public register.
This information must continue to be
included in Lendlease’s public register
for seven years after a person ceases
to be a securityholder. These statutory
obligations are not altered by the Privacy
Amendment (Private Sector) Act 2000.
Information is collected to administer
the securityholder’s holding and if some
or all of the information is not collected,
then it may not be possible to administer
the holding. Lendlease’s privacy policy is
available on its website.

Security information at a glance at 1 August 2021
(comparative 1 August 2020)

Number of securityholders

Units issued

Percentage owned by 20 largest securityholders

Interim dividend/distribution

Total dividend/distribution

Dividend payout ratio

Spread of securityholdings as at 1 August 2021
(comparative 1 August 2020)

1 to 1,000 securities

1,001 to 5,000

5,001 to 10,000

10,001 to 100,000

100,001 securities and over

Total number of securityholders

2021

70,202

688,585,551

74.89%

2020

66,696

688,267,587

75.89%

15.0 cents per security

30.0 cents per security

27.0 cents per security

33.3 cents per security

49%1

NA2

2021

37,814

25,683

4,318

2,235

70,148

2020

35,448

24,515

4,414

2,231

66,696

Securityholders with less than a marketable parcel

Securities purchased on market

3,158
(representing 50,236 securities)

3,396
(representing 60,497 securities)

The following securities were purchased on market during the financial year for the purpose of funding employee incentive awards
through Lendlease securities.

Stapled Securities

3,471,620

$12.66

Number of Securities Purchased

Average Price Paid Per Security

1. Dividend payout ratio for FY21 has been calculated on Core Operating Earnings. 2. Dividend payout ratio is nonmeaningful in FY20 due to the Group statutory loss.

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Lendlease Annual Report 2021 Other Information

205

Securityholder
information continued

Rank

Name

Units

% of Units

HSBC Custody Nominees (Australia) Limited

J P Morgan Nominees Australia Pty Limited

Citicorp Nominees Pty Limited

National Nominees Limited

BNP Paribas Nominees Pty Ltd

BNP Paribas Noms Pty Ltd

LL Employee Holdings Custodian Pty Limited

Argo Investments Limited

BNP Paribas Nominees Pty Ltd SIX SIS Ltd

HSBC Custody Nominees (Australia) Limited

Netwealth Investments Limited

BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd

HSBC Custody Nominees (Australia) Limited-GSCO ECA

Custodial Services Limited

Citicorp Nominees Pty Limited

BNP Paribas Nominees Pty Ltd ACF Clearstream

Avanteos Investments Limited

Sandhurst Trustees Ltd

LL Employee Holdings Custodian Pty Limited

Total Top 20 holders of fully paid ordinary shares

Total Remaining Holders Balance

225,463,978

109,668,562

63,644,331

33,782,908

15,288,088

14,692,697

14,075,522

5,971,381

4,980,092

4,550,035

3,910,944

3,632,648

3,189,236

2,838,789

2,625,928

1,996,186

1,827,040

1,366,981

1,186,020

981,946

515,673,312

172,912,239

32.74

15.93

9.24

4.91

2.22

2.13

2.04

0.87

0.72

0.66

0.57

0.53

0.46

0.41

0.38

0.29

0.27

0.20

0.17

0.14

74.89

25.11

Substantial securityholders as shown in the Company’s Register at 1 August 2021

Name

State Street Corporation

BlackRock Group

The Vanguard Group

Date of Last Notice Received

23/06/2021

08/01/2020

29/4/2019

No. of Units

34,998,869

34,049,935

33,903,122

% of Issued Capital1

5.08

6.03

6.01

1. As at the date of last notice received.

Glossary

Co-investment: The total market value
of Lendlease equity invested across
Lendlease managed funds as at period
end. Represents the Group’s assessment
of the market value.

Construction backlog realisation: The
proportion of Construction backlog
revenue which is expected to be earned
across future years.

Construction backlog revenue: Current
year Construction backlog revenue is the
total revenue to be earned across future
periods.

Critical incident: An event that had
the potential to have caused death or
permanent disability.

Development pipeline: Estimated
remaining end value of all of the Group’s
secured development projects based
on values as at period end; includes 100
per cent of joint venture projects and
therefore will not necessarily correlate
with the Group’s Profit after Tax.

Distribution payout ratio: Distribution
divided by Profit after Tax.

Distribution per security: Amount of
interim and final distribution per stapled
security from the Company/Trust.

Earnings per security: Profit after Tax
divided by the weighted average number
of securities on issue during the year
(including treasury securities) unless
otherwise stated.

EBITDA: Earnings Before Interest, Tax,
Depreciation and Amortisation.

Effective tax rate: Income tax expense as
a percentage of Profit before Tax.

Face value of a security: The value of a
Lendlease security at the applicable time.

Funds under management (FUM): The
total market value of investments across
Lendlease managed funds.

Gearing: Net debt to total tangible assets
less cash.

Global Minimum Requirements
(GMRs): GMRs are Lendlease’s minimum
environment, health and safety standards
designed to control the risks across our
operations.

Good leaver: A senior executive who is
leaving Lendlease for a reason such as
retirement, redundancy, or resignation
where the senior executive is not joining a
competitor, and who may remain eligible
for part or all of an incentive opportunity.

Green Star rating: Green Star is a national
voluntary environmental rating system
used by the Green Building Council of
Australia to evaluate the environmental
design and achievements of buildings.

Investments: Includes equity invested
in Lendlease managed funds and direct
investment in property and property
related assets. Represents the Group’s
assessment of market value.

Investments performance: The
performance of our Investments
business which includes our funds under
management, assets under management,
co-invested equity in Lendlease managed
funds and direct investment in property
and property related assets.

Key Management Personnel (KMP):
Those executives who have the authority
and responsibility for planning, directing
and controlling the activities of the Group
directly or indirectly (as per Accounting
Standard AASB 124 Related Party
Disclosures).

KPIs: Key Performance Indicators.

Long Term Incentive (LTI)/Long Term
Award (LTA): An incentive scheme which
provides Lendlease equity (or cash, in
some circumstances) to participating
executives that may vest, in whole or part,
if specified performance measures are
met over a three or four year period.

Lost Time Injury Frequency Rate (LTIFR):
An indicator and industry standard
measuring a workplace injury which
prevents a worker from returning to duties
the next day. LTIFR refers to the number
of lost time injuries within a year, relative
to the total number of hours worked in the
financial year.

Market capitalisation: The number
of securities on issue multiplied by the
security price at year end.

Net debt: Borrowings, including certain
other financial liabilities, less cash.

New work secured revenue: Estimated
revenue to be earned from construction
contracts secured during the period.
New work is secured and forms part of
Construction backlog revenue when
formal contracts are signed.

People and Culture Committee: The
Board subcommittee that helps the
Board fulfil its responsibilities in people
management and reward policies. It is
made up entirely of independent Non
Executive Directors.

Profit after Tax (PAT): Profit after
Tax attributable to securityholders,
determined in accordance with Australian
Accounting Standards.

Public Private Partnerships (PPP):
A joint procurement arrangement for
infrastructure development contracts
between the public and private sectors.

Residential for rent: Residential
apartments, typically in the form of an
entire building, that are made available
for rent as separate dwellings. Lendlease
and its investment partners maintain
ownership of these apartments.

Return on Equity (ROE): ROE is
calculated using annual Statutory Profit
after Tax attributable to securityholders
divided by the arithmetic average
of beginning, half year and year end
securityholders’ equity.

Securityholders: An individual or entity
that owns Lendlease securities.

Senior executive: Employees who hold
a position at executive level according
to the Lendlease Career Job Framework.
This generally includes Regional Business
Unit Heads, Regional Function Heads and
in some cases, direct reports to Group
Function Heads.

Settlements (units): Apartments – cash
settled in the period on completed units in
Australia, Europe and Americas, and units
which have reached practical completion
in Asia; Communities and Retirement –
units settled in the period on completed
land lots or units; Commercial – buildings
that have achieved practical completion
during the period.

Short Term Incentive (STI)/Short Term
Award (STA): Incentives awarded with
direct reference to financial and non
financial performance over a one year
period. Measures are designed to focus
individuals on priority areas for the current
financial year.

Total Package Value (TPV): Salary
plus the value of salary package items
such as motor vehicles and parking and
compulsory superannuation contributions
paid on behalf of an employee.

Total Shareholder Return/Total
Securityholder Return (TSR): The
movement in a company’s share/security
price, dividend yield and any return of
capital over a specific period. It is often
expressed as a percentage.

Urbanisation pipeline: Estimated
remaining end value of all of the Group’s
secured development projects (excluding
Communities projects and Retirement
projects) based on values as at period
end; includes 100 per cent of joint venture
projects and therefore will not necessarily
correlate with the Group’s Profit after Tax.

Weighted average number of securities:
The time weighted number of securities
outstanding during the period.

206

A sense of place

Birmingham:
Smithfield Birmingham

Artist’s impression

Reducing our footprint – page by page

This report is printed on locally sourced,
carbon neutral recycled paper and
contains waste paper from Lendlease
assets around Australia.

Level 14, Tower Three
International Towers Sydney
Exchange Place
300 Barangaroo Avenue
Barangaroo NSW 2000

www.lendlease.com

@lendlease

@lendleasegroup

@lendlease

London: Elephant Springs at
Elephant Park, a globally recognised
garden to soothe the soul

Image credit: Charles Emerson