lendlease group appendix 4d and 2020 half year

Lendlease Corporation Limited ABN 32 000 226 228 andLendlease Responsible Entity Limited ABN 72 122 883 185 AFS Licence 308983as responsible entity for Lendlease Trust ABN 39 944 184 773 ARSN 128 052 595

Level 14, Tower Three, International Towers Sydney Telephone +61 2 9236 6111Exchange Place, 300 Barangaroo Avenue Facsimile +61 2 9252 2192Barangaroo NSW 2000 Australia lendlease.com

Lendlease Group Appendix 4D and 2020 Half Year Consolidated FinancialReport

Lendlease Group today announced its results for the half year ended 31 December 2019. Attached is theAppendix 4D and Half Year Consolidated Financial Report.

ENDS

For further information, please contact:

Investors: Media:Justin McCarthy Stephen EllawayMob: +61 422 800 321 Mob: +61 417 851 287

Authorised for lodgement by the Lendlease Group Disclosure Committee

20 February 2020

1 / Directors’ Report / Lendlease Half Year Consolidated Financial Report December 2019

Lendlease Half Year

Consolidated Financial Report

December 2019

Paya Lebar Quarter, Singapore

2 / Lendlease Half Year Consolidated Financial Report December 2019

Table of Contents1. Directors 3

2. Dividends/Distributions 3

3. Events subsequent to Balance Date 3

4. Lead Auditor’s Independence Declaration 3

5. Rounding off 3

6. Performance & Outlook 4

Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 18

Financial Statements 19


Directors’ Report

Steam Mill Lane, Darling Square, Sydney


Directors’ ReportThe Directors present their Report together with the Half Year Consolidated Financial Report of the consolidated entity, being Lendlease Corporation Limited (the Company) including its controlled entities and Lendlease Trust (together referred to as the Consolidated Entity or the Group), for the six months ended 31 December 2019 and the Auditor’s Report thereon.

1. DirectorsThe name of each person who has been a Director of the Company at any time between 1 July 2019 and the date of this Report are:

M J Ullmer, AO Director since 2011 & Chairman since 2018

S B McCann Chief Executive Officer since 2008 & Managing Director since 2009

C B Carter, AM Director since 2012

P M Coffey Director since 2017

D P Craig Director since 2016

S B Dobbs Director since 2015

(retired 20 November 2019)

J S Hemstritch Director since 2011

E M Proust, AO Director since 2018

N M Wakefield Evans Director since 2013

2. Dividends/DistributionsAn unfranked interim distribution of $169 million (December 2018: $68 million unfranked) has been approved by the Directors. The interim distribution comprising of an unfranked dividend of 22.1 cents from the Company and a trust distribution of 7.9 cents per unit from Lendlease Trust will be paid on 17 March 2020 (December 2018: 12.0 cents per unit from Lendlease Trust paid on 20 March 2019).

3. Events subsequent to Balance DateThere were no material events subsequent to the end of the financial reporting period.

4. Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001The Lead Auditor’s Independence Declaration is set out at the end of this report and forms part of the Directors’ Report for the six months ended 31 December 2019.

5. Rounding offThe Group is of a kind referred to in the ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and, in accordance with that Instrument, amounts in the Half Year Consolidated Financial Report have been rounded off to the nearest million dollars, unless specifically stated otherwise. Comparative balances have been restated where required to reflect the change in rounding.

6. Performance & OutlookThe Performance & Outlook on pages 4 to 16 is based on the Half Year Consolidated Financial Statements for the six months ended 31 December 2019 and should be read in conjunction with those financial statements. All currency amounts are expressed in Australian dollars unless otherwise specified.


Performance and Outlook

6

Artist’s impression of Sydney Metro Victoria Cross Integrated Station Development



The Group recorded a Profit after Tax of $313 million for the period ended 31 December 2019. Earnings per security was 55.5 cents with a Return on Equity of 9.8 per cent. The distribution per security was 30.0 cents. The Group’s core business, excluding Engineering and Services, generated Earnings per Security of 54.6 cents and a Return on Equity of 9.6 per cent.

Core operating EBITDA was $628 million. The Construction and Investments segments delivered solid results in line with portfolio targets. The Development segment returns were below target, however earnings for the segment are anticipated to be skewed to the second half of the financial year.

The Development segment result was driven by the creation of a joint venture to deliver the Victoria Cross Over Station Development, Sydney. The retail precinct at Paya Lebar Quarter was completed and apartment settlements occurred in Boston, London, Melbourne and Singapore.

In the Construction segment, the business delivered a solid operating performance albeit earnings were lower than the prior corresponding period partially due to the revenue and earnings on integrated projects now being reported through the Development segment.

In Investments, strong fee income was driven by growth in funds under management and the performance fee for the successful completion of Paya Lebar Quarter in Singapore. Ownership earnings were down on the prior corresponding period due to lower revaluations.

The non core Engineering and Services segment recorded EBITDA of $23 million.

The Group has entered into an agreement to divest the Engineering business for $180 million with the transaction expected to complete in the second half of the financial year. The sale process for the Services business continues.

Group Services costs of $56 million, included within corporate costs1, were down 24 per cent on the prior corresponding period as a result of the adoption of AASB 16 Leases, resulting in the reclassification of $23 million operating lease expenses to finance costs and depreciation.

Net finance costs of $76 million were up on the prior corresponding period due to higher average net debt and the adoption of AASB 16 Leases.

Net debt ended the period at $2.3 billion, up from $1.4 billion at FY19 and in line with the prior corresponding period. The average cost of debt was 3.6 per cent with an average debt maturity of 3.9 years. The Group has no material debt expiries until FY22.

The cash result reflected ongoing investment in the development pipeline and higher investments and the impact from loss making projects in the Engineering business. During the period, invested capital in the Development segment rose by $0.5 billion to $5.3 billion and invested capital in the Investments segment rose $0.3 billion to $3.9 billion.

1. Comprises Group Services ($56m) and Group Treasury costs ($16m). 2. Includes finance revenue and revenue from discontinued operations. 3. Underlying Operating Cash Flow is derived by adjusting statutory cash flows to better reflect the operating cash generated by the Group from its operating model. 4. Comparative values are closing FY19 balances. 5. Lendlease’s approach to tax is outlined in the 2019 Tax Report (https://www.lendlease.com/au/investor-centre/distribution-and-tax/). Details on tax balances are included within the Consolidated Financial Statements. 6. Effective Tax Rate is non meaningful in HY19 due to the $500m pre-tax impact from losses expected to be incurred on underperforming Engineering projects. 7. Excludes Corporate.

Group highlights

HY19 HY20 Var.

Core BusinessDevelopment $m 261 272 4%Construction $m 111 101 (9%)Investments $m 273 255 (7%)Operating EBITDA $m 645 628 (3%)Corporate Costs $m (88) (72) 18%Group EBITDA $m 557 556 -Depreciation & Amortisation $m (50) (77) (54%)Net Finance Costs $m (53) (76) (43%)Profit before Tax $m 454 403 (11%)Profit after Tax $m 355 308 (13%)

Non CoreEBITDA $m (474) 23 >100%Profit/(Loss) after Tax $m (339) 5 >100%

Total GroupRevenue2 $m 7,771 7,408 (5%)EBITDA $m 83 579 >100%Profit after Tax $m 16 313 >100%Underlying Operating Cash Flow3 $m (164) 29 >100%Net Assets4 $m 6,357 6,511 2%Net Debt4 $m 1,425 2,294 61%Effective Tax Rate5,6 % n/a 23.5Earnings per Security cents 2.8 55.5 >100%Distribution per Security cents 12.0 30.0 >100%Weighted avg Securities no.(m) 571 564 (1%)

Core Business EBITDA MixKey Financials

Development Construction Investments

$628mCore Business

OperatingEBITDA⁷

41% 43%

16%

$308mHY20

Core Business Profit after Tax

HY19 $355m

9.6%HY20

Core Business Return on Equity

HY19 11.3%

54.6¢HY20

Core Business Earnings per Security

HY19 62.2¢


Portfolio Management Framework

Portfolio Management FrameworkThe Portfolio Management Framework is designed to maximise long-term securityholder value via: a diversified risk adjusted portfolio; leveraging the competitive advantage of the integrated model; optimising the business on a long-term basis; and providing financial strength to execute our strategy, maintaining an investment grade credit rating and the capacity to absorb and respond to market volatility.

The framework reflects the Engineering and Services businesses as non core and the reclassification of internal construction margin to Development, which took effect from the second half of FY19.

Returns for the core business were solid: Development returns below the target range reflect an expected skew to the second half; the Construction margin was within target range; and Investments was at the top of the target range. The dividend payout ratio was slightly above the mid-point of the target range.

The balance sheet remains resilient with gearing rising to the mid point of the target range following ongoing investment in the development pipeline and total liquidity of $3.1 billion1.

The segment invested capital mix continues to be weighted towards Development, reflecting the significant amount of development activity that is underway. Continued implementation of our international gateway cities strategy resulted in a reduction in the proportion of capital allocated to Australia.

Group outlookThe near term outlook for the core business is supported by the expected conversion of both commercial and residential development opportunities across our major urbanisation projects.

The Group is extremely well placed for long term growth and continues to implement its strategy of delivering urban precincts with a strong focus on environmental and social outcomes. The Group remains focused on delivering its urbanisation portfolio safely, sustainably and profitably. The portfolio of 21 major urbanisation projects across 9 gateway cities provides long term earnings visibility and a strong platform to deliver enhanced risk adjusted returns to securityholders.

Since FY14 the urbanisation pipeline has grown significantly from $25 billion to $98 billion, within a total development pipeline of $112 billion. The addition of two major urbanisation projects drove strong growth during the period. These projects, one in London and the other in the San Francisco Bay Area, have a combined development end value of approximately $36 billion.

The Construction segment provides built form design and delivery capability with expertise across a range of sectors and target markets. While the majority of backlog will continue to be derived from external clients, the business plays a critical role in the integrated model.

Funds under management rose by eight per cent on the prior corresponding period to $37 billion. The Group is well placed to double funds under management as the urbanisation pipeline is delivered. Along with the $4 billion of investments and $30 billion of assets under management, it provides a growing source of recurring income.

1. Includes $701m of cash and cash equivalents for the non core businesses which has been classified as Assets held for sale. 2. Comparative value is closing FY19 balance. 3. Review of capital structure underway to reflect change in business mix. 4. Return on Invested Capital (ROIC) is calculated using the annualised Profit after Tax divided by the arithmetic average of beginning and half year end invested capital. 5. Through-cycle target based on rolling three to five year timeline. 6. Remaining estimated development end value, subject to approval and contractual conditions.

Target HY19 HY20

Total Group MetricsReturn on Equity 10-14% 0.5% 9.8%

Dividend payout ratio 40-60% 431% 54%

Gearing2 10-20%3 9.9% 14.7%

Core Business EBITDA MixDevelopment 40-50% 40% 43%

Construction 10-20% 18% 16%

Investments 35-45% 42% 41%

Core Business Segment ReturnsDevelopment ROIC4 10-13%5 7.5% 7.3%

Construction EBITDA margin 2-3% 2.1% 2.3%

Investments ROIC4 8-11%5 13.6% 10.7%

Segment Invested Capital MixDevelopment 40-60% 60% 58%

Investments 40-60% 40% 42%

Regional Invested Capital MixAustralia 50-70% 53% 48%

Asia 5-20% 14% 16%

Europe 5-20% 19% 21%

Americas 5-20% 14% 15%

$112b

Development Pipeline6

HY19 74.5

HY20 112.5

$14b

Core Business Construction Backlog

HY19

HY20

14.8

14.2

$37b

Funds Under Management

HY19

HY20

34.1

36.9


Development performanceThe Development segment delivered EBITDA of $272 million, up four per cent on the prior corresponding period. Earnings are expected to be skewed to the second half of the financial year, driven by both commercial and residential activity across our major urbanisation projects. Invested capital rose to $5.3 billion as the Group invests in the development pipeline.

Two new major urbanisation projects with a combined estimated end value of $36 billion were added to the pipeline. In London, the Thamesmead Waterfront development is expected to create more than 11,500 homes with an end value of approximately $14.8 billion. In the San Francisco Bay Area, the Group secured a project to develop three mixed use communities in conjunction with Google. The predominantly residential led scheme, with an end value of approximately $21.5 billion, will deliver more than 15,000 new homes over a 10-15 year timeframe.

There were 1,146 apartment settlements and completions in the period. They comprise 862 apartments for sale settlements mainly from urbanisation projects in Boston, London, Melbourne and Singapore, and 284 apartments for rent completions at

Clippership Wharf in Boston.

The retail and residential components of Paya Lebar Quarter, Singapore’s newest lifestyle precinct, reached practical completion in the period. This milestone completes the 4-year development with approximately $4 billion of product delivered.

A development joint venture was formed to deliver the 58,000 sqm Victoria Cross Over Station Development in Sydney. The Australian Prime Property Fund Commercial acquired a 25 per cent interest in the project which is expected to have an estimated end value of $1.2 billion.

There were 836 land lot settlements across the Australian master planned communities portfolio. The market continues to be challenging with sales and settlements impacted by lower demand and tighter credit markets.

1. Securityholder equity plus net debt. 2. Commercial and apartment for rent completions are aligned with practical completion, apartment for sale settlements are recorded on cash receipt. 3. Includes 284 apartments for rent which completed in HY20.

Invested Capital¹ ($b)

HY19 HY20FY19

4.85.1 5.3

Return on Invested Capital

HY20FY19HY19

13%

10%TARGET

7.5%

11.6%

7.3%

Urbanisation Completions/Settlements²

HY19 HY20

908836

Communities Settlements (Lots)

908

Commercial (sqm ’000)

5 Buildings

3 Buildings

Apartments (units)

145

1,146³

12466

Key Financials ($m) EBITDA ($m)

HY19 HY20

FY16 FY18FY17 FY19 HY20

793

552500

236

264

260

292

443

230

261

532

272

673

1H 2HHY19 HY20

EBITDA

Australia 71 170

Asia 101 39

Europe 31 56

Americas 58 7

Total EBITDA 261 272

Total PAT 179 186

43%

of Operating EBITDA

908

Commercial (sqm ’000)

5 Buildings

3 Buildings

Apartments (units)

145

1,146³

12466


1. Remaining estimated development end value, subject to approval and contractual conditions. 2. Includes $0.3 billion of Infrastructure pipeline. 3. Major apartment buildings in delivery only. 4. Major commercial buildings in delivery only.

Development outlook The estimated end value of the development pipeline grew 51 per cent on the prior corresponding period to $112 billion. The pipeline comprises $98 billion of urbanisation projects and $15 billion of communities and other projects.The growth in the pipeline from the prior corresponding period was driven by three new major urbanisation projects. The Milan project was secured during the second half of FY19 with the London and San Francisco Bay Area projects secured in the current period. We have a globally diversified portfolio of 21 major urbanisation projects across 9 gateway cities. In total, the Group has an estimated $98 billion of secured urbanisation pipeline representing 56,815 apartment units and 2,402,000 sqm of commercial space. These projects are typically held in capital efficient structures, providing the Group with flexibility around delivery and timing, in line with market cycles.The scale of the development pipeline provides scope for a substantial increase in the rate of delivery and we expect this to result in an acceleration in the delivery of urbanisation product completed over time.

During the period, delivery commenced on residential apartment for sale buildings at two urbanisation projects in Sydney and Chicago. The first building at One Sydney Harbour, Barangaroo, comprising 317 apartments, has secured $1.4 billion in presales, representing approximately two thirds of the building. Presales of apartments in delivery rose by $0.5 billion to $2.2 billion. There are more than 1,700 apartments for rent in delivery with Cascade at Lakeshore East, a building comprising 503 units, commencing in the period. There are more than 2,200 apartments for rent in various stages of planning and approval, which are expected to commence in coming years. There are five major commercial buildings in delivery across 317,000 sqm with a total estimated end value of $5.4 billion. In addition, there are 24 major commercial buildings in the secured pipeline which the business is targeting to convert and commence delivery over coming periods.The Communities pipeline consists of 48,525 lots, providing more than a decade of supply based on the 3,000 to 4,000 targeted settlements per annum. This target will not be met in FY20 as a result of softer market conditions.

Urbanisation – Commercial Pipeline (sqm)

Urbanisation – Apartments Pipeline (Units)

Pipeline¹ by Region

$112b²3%

43%

27% 27%

Pipeline¹ by Product

13%

87%

$112b²

Urbanisation Communities

Australia Asia Europe Americas

Units for rent in delivery³ Units presold in delivery³ Units for rent secured Units for sale secured

In delivery⁴ Indicative launch H2 FY20 - FY24

Remaining secured

5 Buildings 24 Buildings

1,881 2,402,000317,000 557,000 1,528,000

1,881 56,8151,752 1,448 17,613 36,002

1-2k

Target for settlements per annum

2-3

Target for building

commencements per annum


Construction performance The Construction segment delivered EBITDA of $101 million, down nine per cent on the prior corresponding period. The 17 per cent decline in revenue was partly driven by activity on integrated projects being recognised in the Construction segment in the prior corresponding period.

Both revenue and earnings derived from the construction of buildings on integrated projects were reported in the Development segment from H2 FY19. This approach was adopted to more accurately reflect the returns the Group generates from its urbanisation projects through the integrated model. Comparisons with the prior corresponding period are therefore impacted by this change.

The business completed several significant projects during the period. In Australia, these included 60 Martin Place, ANU Union Court Redevelopment, Gosford Hospital Redevelopment and redevelopment of Rod Laver Arena. The Paya Lebar Quarter project was completed in Asia.

The operational performance of the Construction segment was solid with an EBITDA margin of 2.3 per cent, up from 2.1 per cent in the prior corresponding period.

New work secured of $3.1 billion was down from $4.3 billion in the prior corresponding period as a result of lower activity in the Americas, most notably the key New York market and some delays in projects being brought to market. In addition, Australia had a higher base of project wins in HY19.

The new work secured is well diversified by sector and client, although almost two thirds was derived from Australia during the period. Key new projects included the Victoria Cross Over Station Development, HMAS Watson Redevelopment, 140 Lonsdale Street, and the Curtin University School of Design and Built Environment.

Key Financials ($m)

New Work Secured by Region

$3.1b32%

3%3%

62%

Revenue by Region

$4.3b44%

10%3%

43%


EBITDA Margin

HY19 HY20

3%

2%

TARGET

2.1% 2.3%

EBITDA ($m)

New Work Secured by Sector3%

16%

13%

4%

6%

39%

19%

$3.1b

Commercial Defence Residential Social Infrastructure

Transport Other Hotel/ Entertainment


1. Includes Engineering and Services businesses.

FY16¹ FY18FY17 FY19 HY20

211271288

117

171

127

144

147

149

111

100

101

296

HY19 HY20

EBITDA

Australia 64 59

Asia 4 (4)

Europe 19 14

Americas 24 32


Total PAT 76 59

16%

of Operating EBITDA

1H 2H


Construction outlookThe outlook for the Construction segment remains solid, with backlog revenue of $14 billion. Approximately 80 per cent of major project backlog will generate future revenue and margin for the Construction segment, with margin on the remainder that is derived from integrated projects, being reported through the Development segment.

Australia has a strong pipeline of work, with $6.7 billion in backlog revenue. Key projects include Sydney Place, the Crown Sydney Hotel Resort, several Defence contracts, 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 $5.3 billion. The strong growth in the urbanisation pipeline to approximately $30 billion in the region provides substantial opportunities for future construction backlog.

Backlog revenue in Europe is $1.4 billion. Europe’s $49 billion development pipeline is expected to provide a significant amount of construction work in coming years.

In Asia, backlog revenue was broadly in line with the prior corresponding period as the business focuses on the delivery of The Exchange TRX in Kuala Lumpur and specialist sectors for external clients.

Beyond the current backlog, there is approximately $10 billion of work for which the Group is in a preferred position, across both external and integrated projects. The business is well placed to convert a significant proportion of this preferred work into backlog revenue over coming periods.

Backlog ($b)

Backlog Realisation

34%

38%28%

$14b

H2 FY20 FY21 Post FY21

Backlog roll forward ($b)

FY19 New worksecured

FX andOther

Revenuerealised

HY20

15.63.1 (4.3)

(0.2) 14.2

1. Includes all Construction projects with backlog greater than $100 million, which represents 77 per cent ($11.0 billion) of secured backlog.

Backlog by Region

37%

10%6%

47%$14b


Backlog by Client

40%

18%

42%

Major Project¹Backlog Revenue

Backlog by Sector

9%

9%

4%

29%

11%

18%20%

Major Project¹Backlog Revenue

Commercial Residential Defence Social Infrastructure

Transport Hotel/ Entertainment

Other


15.2 15.7 15.2 15.614.2

Lendlease Corporate Government


Investments performanceThe Investments segment delivered a strong result with EBITDA of $255 million generating a Return on Invested Capital of 10.7 per cent, the top end of the target range. The seven per cent decline in earnings relative to the prior corresponding period reflects the contribution from strong gains in underlying asset values in the prior period which delivered outperformance against target returns.

Ownership EBITDA was $135 million, down from $203 million in the prior corresponding period mainly due to lower asset value appreciation. To further support the growing development pipeline and diversify our capital strategy, the Group listed the Lendlease Global Commercial REIT in Singapore. The REIT was seeded with the Lendlease developed 313@somerset retail centre and three office properties at Milano Santa Giulia. Lendlease owns 24 per cent of the REIT.

The Retirement Living business made a lower contribution with a resilient performance from the established portfolio offset by a modest decline in prices and lower development activity reflecting softer market conditions.

EBITDA from Operating Earnings was $120 million, up substantially on the prior corresponding period. Growth in FUM supported higher base management fees, while the successful completion of Paya Lebar Quarter in Singapore generated a significant performance fee. Asset and property management fees from our US Military Housing operations and the Australian and Asian asset management businesses continue to support recurring earnings.

The investments platform ended the period with funds under management of $37 billion, up eight per cent on the prior corresponding period. Growth in funds under management was underpinned by the launch of the Lendlease Global Commercial REIT and doubling of residential funds under management to $1.4 billion. These contributions more than offset the decline in the FUM of APPF Retail as a result of falling assets values and divestments as the fund made progress in meeting redemptions under its liquidity window process.

1. Securityholder equity plus net debt. 2. Returns derived from co-investments, the Group’s Retirement investment, US Military Housing equity investment and other investments. 3. Earnings primarily derived from the investment management platform and the management of US Military Housing operations. 4. The Group’s assessment of market value of ownership interests.


3.73.3

3.0

4.03.4

Key Financials ($m)

Investments EBITDA by Activity ($m)

135

203

12070

Ownership interests² Operating earnings³

Investments⁴ ($b)

Invested Capital¹ ($b)

HY19 FY19 HY20

3.43.9

3.6

Return on Invested Capital

HY19 HY20FY19

13.6%

11%

8%

TARGET

10.8% 10.7%

EBITDA ($m)

HY19 HY20


489495458

243

215

288

207

383

286

273

216

255

669

HY19 HY20

EBITDA

Australia 199 118

Asia 33 109

Europe 10 5

Americas 31 23


Total PAT 226 199

41%

of Operating EBITDA

1H 2H


$4.0b24%

12%2%

62%

Investments outlookThe Investments segment continues to provide a solid base of recurring earnings to the Group. The integrated business model, with the development pipeline providing product and the Construction segment providing delivery capability, is expected to remain a key source of growth for the Investments segment.

Continued growth in FUM will support operating earnings in future periods. In addition to the current funds under management, there is approximately $3.1 billion of future secured FUM based on development projects currently in delivery.

A substantial uplift in the amount of institutional grade investment product will be created for capital partners and the Group’s Investments platform as the development pipeline is delivered.

We expect to create approximately $53 billion of institutional grade investment product from the current secured urbanisation pipeline. This comprises approximately $29 billion of commercial assets and approximately $24 billion of residential for rent assets or more than 19,000 apartment units. Demand from our capital partners for access to the end product across both commercial and residential asset classes remains strong.

The Group’s investments closed the period at $4 billion. This includes $1.9 billion of co-investments across our funds; $1.4 billion ownership interest in the Retirement Living business; and $0.7 billion in other investments including the Group’s equity interests in US Military Housing, US telecommunication assets and retail at Barangaroo.

Diversification of investments across the Group supports improved risk adjusted returns. Lendlease has relationships with approximately 150 institutional investors and a strong track record of performance. Continuing to deliver attractive outcomes for our capital partners will be critical for the ongoing success of the Investments segment.

1. The Group’s assessment of market value. 2. The Group’s ownership interest. Total invested capital in the segment of $3.9 billion in HY20.

Funds Under Management¹ roll forward ($b)Funds Under Management¹ ($b)

35.22.6 (1.2)

Divest-ments

Additions Revalua-tions

FX andOther

FY19 HY20

0.1 0.2 36.9

Funds Under Management1 by Asset Class

39%

51%

$37b

4% 3%3% Retail

Office Industrial Residential Other

Funds Under Management¹ by Region

68%

25%

$37b

2%

5% Australia Asia Europe Americas

Investments1,2 by Region


$4.0b

5%

12%

47%

36%

Investments1,2 by Product

Co-investments Retirement US Military Housing

Other


23.626.1

30.135.2 36.9


Non core business performance The Non core segment comprises the Engineering and Services businesses in Australia. These businesses have been reported as a discontinued operation in HY20 based on the status of the sale process for each of the businesses.

The EBITDA for the period was $23 million, including $7 million of exit related costs. The substantial loss in the prior corresponding period included a $500 million pre tax provision relating predominantly to three underperforming projects. The Gateway Upgrade North project has completed while the remaining two projects, Kingsford Smith Drive and NorthConnex M1 / M2 Tunnel, are both more than 90 per cent complete and are due to conclude in calendar year 2020.

Engineering new work secured was $0.9 billion and included the bulk earthworks contract at Western Sydney International Airport and additional works on the Southern Program Alliance. The Engineering business closed the period with a backlog of $3.6 billion.

The Services business continues to deliver solid performance. New work secured of $1.1 billion included a multi year contract with Sydney Water and two telecommunication sector contracts with Optus. The business closed the period with a backlog of $2.2 billion and an attractive pipeline of future opportunities.

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

Revenue by Product New Work Secured by Product

Backlog by Sector

26%10%

2%

24%22%

16%

$5.8b

Rail Transport Services Other Services Road Telecommunica- tions

Other Engineering

$1.7b

28%

72%

$2.0b55%

45%

Backlog Realisation

$5.8b40%

27%

33%

Engineering Services

Engineering Services1

H2 FY20 FY21 Post FY21

HY19 HY20 Var.

EBITDA $m (474) 23 >100%

Profit/(Loss) after Tax $m (339) 5 >100%

New Work Secured $b 2.4 2.0 (17%)

Backlog $b 6.6 5.8 (12%)

Key Financials


1. Previously referred to as restructuring cost estimate.

Progress on separation of non core business During the period, the Group announced the sale of the Engineering business to Acciona Infrastructure Asia Pacific (Acciona) for a purchase price of $180 million.

The transaction is expected to complete in the first half of calendar year 2020 and is subject to conditions including client and third party consents and regulatory approvals including the Foreign Investment Review Board.

Under the terms of the sale agreement, Acciona will acquire the Engineering business excluding the NorthConnex and Kingsford Smith Drive projects, which will be completed by Lendlease. The Melbourne Metro Tunnel Project is also currently excluded with the project consortium working with Government on a confidential basis to resolve issues in relation to the scope and costs on the project. As a result, this project is currently being retained by Lendlease.

The final loss on the exit of the Engineering business will reflect a combination of exit related costs and proceeds from sale relative to the carrying value of the business on completion of the transaction. It is anticipated that this will be accounted for in FY20 following completion.

The sale process for the Services business continues.

The previously disclosed cost estimate to exit the Non core segment of $450 - $550 million pre tax remains appropriate with $22 million expensed to date. Exit related costs1 include: - Implementation and selling costs; - Indemnities included in any sale agreement; and - Potential costs to cover concluding projects retained by

the Group.

This cost estimate, together with existing provisions, is considered appropriate to cover concluding retained projects and to exit the Non core segment.


Financial position and cash flow movements

InventoriesInventories decreased by three per cent with rising core construction inventories more than offset by the decrease in non core construction inventories following their reclassification to assets held for sale.

Equity accounted investmentsEquity accounted investments increased by 11 per cent on the prior period. The listing of the Lendlease Global Commercial REIT was the largest contributor to the increase. The stabilisation of Paya Lebar Quarter and the creation of the development joint venture for Victoria Cross also contributed.

Other asset movementsThe seven per cent decline in other assets reflects the reclassification of assets to held for sale along with the reduction in the Group’s investment in Lendlease International Towers Sydney Trust. The rise in Investment Properties in the period reflects ongoing capital expenditure on telecommunications towers in the US and the transfer of stabilised assets from Development.

Total assets, total liabilities and net assetsTotal assets rose by five per cent reflecting the growth in Investment Properties, Equity Accounted Investments and the increase in core business inventories. The movement in net assets reflects profit and distributions over the period.

Financing cash flowNet cash inflow from financing activities was $425 million. Financing activity in the period was limited following the significant amount of financing completed during FY19 as the Group increased available liquidity and lengthened its debt maturity profile. The net inflow reflected greater utilisation of syndicated bank facilities during the period. The Group remains in a strong financial position with $3.1 billion1 of liquidity.

Interest and tax

paid

Underlyingoperating

cash�ow

Netnancingand other

adjustments

Underlyinginvesting cash �ow

FY19closing

cash

HY20closing

cash¹

1,2901,097

29 (125) (503) 406

FY19 $m

HY20 $m Var.

Cash and cash equivalents1 1,290 396 (69%)

Inventories 5,583 5,395 (3%)

Equity accounted investments 3,452 3,822 11%

Investment properties 501 598 19%

Disposal Group assets held for sale1 - 1,900 100%

Other assets (including financial) 6,352 5,910 (7%)

Total assets 17,178 18,021 5%

Borrowing and financing arrangements 2,715 3,391 25%

Disposal Group liabilities held for sale - 1,700 100%

Other liabilities (including financial) 8,106 6,419 (21%)

Total liabilities 10,821 11,510 6%

Net assets 6,357 6,511 2%

Financial Position

Cash movements ($m)

1. $701m of cash and cash equivalents for the non core businesses has been classified as Assets held for sale at HY20.

Operating and investing cash flow The Group measures underlying cash flows to better reflect the cash flows generated by its business model. This approach enables an assessment of cash conversion, measured as underlying operating cash flow relative to EBITDA. The measures are derived by adjusting statutory cash flows, with the largest adjustment relating to cash flow invested in development.Underlying operating cash flow was $29 million. The major operating cash inflows during the period included apartment and communities settlements across our development projects and the cash realisation of profit recognised in prior periods. There was a negative impact from payment of approximately $220 million of presold apartment revenue collected in previous periods through the PLLACes program. There are currently no outstanding PLLACes programs. Loss making Engineering projects that have been previously provided for in the income statement also reduced underlying cash flows. These impacts were the predominant drivers of a lower cash conversion ratio of five per cent in HY20 compared to 84 per cent cash to EBITDA conversion since FY16. Underlying investing cash outflow was $503 million. The major contributors included capital invested in establishing the new $1.5 billion Lendlease Global Commercial REIT with a 24.3 per cent interest, and additional equity commitments into the growing development pipeline.


Group funding and debt facilities

1. HY20 includes $701m of cash and cash equivalents for the non core businesses which has been classified as Assets held for sale. 2. FY19 EBITDA has been adjusted to exclude the $500m pre-tax impact from losses expected to be incurred on underperforming Engineering projects. 3. Values are shown at amortised cost. 4. Values are shown at gross facility value.

FY19 HY20 Var.

Net debt1 $m 1,425 2,294 61%

Borrowings to total equity plus borrowings % 29.9 34.2 14%

Net debt to total tangible assets, less cash1 % 9.9 14.7 48%

Interest cover2 times 8.8 7.4 (16%)

Average cost of debt % 4.0 3.6 (10%)

Average debt maturity years 4.8 3.9 (19%)

Average debt mix fixed: floating ratio 52:48 49:51

Undrawn facilities $m 2,631 2,009 (24%)

Net debt and gearing increased during the period, with gearing at the mid point of the target range. Interest cover was 7.4 times, with the weighted average debt maturity 3.9 years. Cash and cash equivalents of $1.1 billion includes the Group’s share of cash from joint operations of approximately $700 million, which is reported in the balance sheet as Assets held for sale. The Group’s liquidity position is $3.1 billion1.

UKBondIssue

SyndicatedCash Advance

Facility

ClubRevolving

Credit Facility

Asia LoanFacility

US$ Reg.S notes

SingaporeBond

S$300m

AustralianMedium Term

Notes

303 303562

1,800

564 564343

755 725960

568 568318 318

Debt Facilities3 ($m)

Drawn Facility

0

1000

2000

225

546

900 900 960

566

FY20 FY21 FY22

755

571

FY23 FY24

319

FY27FY26FY25

80

FY29FY28

Debt Maturity Profile4 ($m)

Australian Medium Term Notes Syndicated Cash Advance Facility UK Bond Issue Club Revolving Credit Facility Asia Loan Facility US$ Reg. S notes Singapore Bond S$300m Undrawn


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, 20 February 2020

S B McCann Chief Executive Officer & Managing Director


KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Liability limited by a scheme approved under Professional Standards Legislation.

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 review for the half-year ended 31 December 2019 there have been:

i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and

ii. no contraventions of any applicable code of professional conduct in relation to the review.

KPMG

D M McLennan

Partner

Sydney

20 February 2020

Lead Auditor’s Independence Declaration

19 / Financial Statements / Lendlease Half Year Consolidated Financial Report December 2019

Lendlease Half Year Financial Statements December 2019


Artist’s impression of Sydney Metro Martin Place Integrated Station Development


Table of ContentsConsolidated Financial Statements Income Statement 21

Statement of Comprehensive Income 22

Statement of Financial Position 23

Statement of Changes in Equity 24

Statement of Cash Flows 25

Notes to the Consolidated Financial Statements 26

Notes IndexSection A: Performance 1. Segment Reporting 29

2. Dividends/Distributions 31

3. Earnings per Share/Stapled Security 31

4. Revenue from Contracts with Customers 32

5. Other Income 32

6. Other Expenses 33

7. Finance Revenue and Finance Costs 33

8. Share of Profit of Equity Accounted Investments 33

9. Taxation 34

10. Events Subsequent to Balance Date 34

Section B: Investment 11. Inventories 35

12. Equity Accounted Investments 35

13. Other Financial Assets 40

Section C: Liquidity and Working Capital 14. Borrowings and Financing Arrangements 41

15. Issued Capital 42

16. Loans and Receivables 42

17. Trade and Other Payables 43

18. Cash and Cash Equivalents 44

Section D: Other Notes 19. Fair Value Measurement 45

20. Contingent Liabilities 45

21. Discontinued Operations 46

Section E: Basis of Consolidation 22. Consolidated Entities 48

Directors’ Declaration 49

Lendlease Corporation Limited (the Company) is incorporated and domiciled in Australia. The consolidated financial report of the Company for the half year ended 31 December 2019 comprises the Company including its controlled entities and 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 infrastructure 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 20 February 2020.


Consolidated Financial Statements Income Statement – Half Year Ended 31 December 2019

Note

6 months December 2019

$m


$m

Revenue from contracts with customers 4 5,648 6,155

Other revenue 90 82

Cost of sales (5,142) (5,774)

Gross profit 596 463

Share of profit of equity accounted investments 8 65 192

Other income 5 276 206

Other expenses (458) (354)

Results from operating activities from continuing operations 479 507

Finance revenue 7 5 9

Finance costs 7 (81) (62)

Net finance costs (76) (53)

Profit before tax from continuing operations 403 454

Income tax expense 9 (95) (99)

Profit after tax from continuing operations 308 355

Profit /(loss) after tax from discontinued operations 21 5 (339)

Profit after tax 313 16

Profit/(loss) after tax attributable to:

Members of Lendlease Corporation Limited 281 (91)

Unitholders of Lendlease Trust 32 107

Profit after tax attributable to securityholders 313 16

External non controlling interests - -

Profit after tax 313 16

Basic/Diluted Earnings per Lendlease Group Stapled Security (EPSS) from Continuing Operations

Securities excluding treasury securities (cents) 21 55.0 62.6

Securities on issue (cents) 21 54.6 62.2

Basic/Diluted Earnings per Lendlease Group Stapled Security (EPSS)

Securities excluding treasury securities (cents) 3 55.9 2.8

Securities on issue (cents) 3 55.5 2.8

1. December 2018 balances have been restated for discontinued operations during the year. Refer to Note 21 ‘Discontinued Operations’ for further detail.

The accompanying notes form part of these consolidated financial statements.


1. Includes $21 million (December 2018: $53 million) relating to share of other comprehensive income on equity accounted investments. 2. December 2018 balances have been restated for discontinued operations during the year. Refer to Note 21 ‘Discontinued Operations’ for further detail.

Consolidated Financial Statements continuedStatement of Comprehensive Income – Half Year Ended 31 December 2019


$m


$m

Profit after Tax 313 16

Other Comprehensive Income/(Expense) after Tax

Items that may be reclassified subsequently to profit or loss:

Movements in hedging reserve 13 (3)

Movements in foreign currency translation reserve 18 84

Total items that may be reclassified subsequently to profit or loss1 31 81

Items that will not be reclassified to profit or loss:

Movements in non controlling interest acquisition reserve (1) (5)

Defined benefit plans remeasurements (16) (23)

Total items that will not be reclassified to profit or loss (17) (28)

Total comprehensive income after tax 327 69

Total comprehensive income after tax from continuing operations attributable to:

Members of Lendlease Corporation Limited 293 302

Unitholders of Lendlease Trust 29 106

Total comprehensive income after tax from discontinued operations attributable to:

Members of Lendlease Corporation Limited 5 (339)

Total comprehensive income after tax attributable to securityholders 327 69

External non controlling interests - -

Total comprehensive income after tax 327 69



Statement of Financial Position – As at 31 December 2019

NoteDecember 2019

$mJune 2019

$m

Current AssetsCash and cash equivalents 18 396 1,290

Loans and receivables 16 1,895 2,050

Inventories 11 1,837 2,238

Other financial assets 13 15 97

Current tax assets 21 11

Other assets 89 70

Disposal Group assets held for sale 21 1,900 -

Total current assets 6,153 5,756

Non Current AssetsLoans and receivables 16 531 688

Inventories 11 3,558 3,345

Equity accounted investments 12 3,822 3,452

Investment properties 598 501

Other financial assets 13 1,088 1,103

Deferred tax assets 124 101

Property, plant and equipment 653 548

Intangible assets 1,286 1,457

Defined benefit plan asset 128 140

Other assets 80 87

Total non current assets 11,868 11,422Total assets 18,021 17,178

Current LiabilitiesTrade and other payables 17 3,795 5,724

Provisions 257 332

Borrowings and financing arrangements 14a 225 225

Other financial liabilities 7 6

Disposal Group liabilities held for sale 21 1,700 -

Total current liabilities 5,984 6,287

Non Current LiabilitiesTrade and other payables 17 1,617 1,401

Provisions 48 45

Borrowings and financing arrangements 14a 3,166 2,490

Other financial liabilities - 1

Deferred tax liabilities 695 597

Total non current liabilities 5,526 4,534Total liabilities 11,510 10,821Net assets 6,511 6,357

EquityIssued capital 15 1,304 1,300

Treasury securities (67) (68)

Reserves 99 105

Retained earnings 3,985 3,815

Total equity attributable to members of Lendlease Corporation Limited 5,321 5,152Total equity attributable to unitholders of Lendlease Trust 1,167 1,182

Total equity attributable to securityholders 6,488 6,334External non controlling interests 23 23

Total equity 6,511 6,357


Consolidated Financial Statements continued


Consolidated Financial Statements continuedStatement of Changes in Equity – Half Year Ended 31 December 2019

Issued Capital

$m

Treasury Securities¹

$mReserves²

$m

Retained Earnings

$m

Members of Lendlease

Corporation Limited

$m

Unitholders of Lendlease

Trust $m

External Non

Controlling Interests

$m

Total Equity

$m

Balance as at 1 July 2018 1,297 (44) 61 3,855 5,169 1,244 1 6,414

Total Comprehensive Income

(Loss)/profit for the period - - - (91) (91) 107 - 16

Other Comprehensive Income (Net of tax) - - 76 (23) 53 - - 53

Total Comprehensive Income - - 76 (114) (38) 107 - 69

Transactions with Owners of the Company

On market buyback of securities - - - (140) (140) (34) - (174)

Dividends and distributions - - - (174) (174) - - (174)

Treasury securities acquired - (50) - - (50) - - (50)

Treasury securities vested - 33 - - 33 - - 33

Fair value movement on allocation and vesting of securities - - (10) - (10) - - (10)

Asset disposals and transfers - - (1) - (1) - - (1)

Other movements - - (1) - (1) - - (1)

Total other movements through reserves - (17) (12) (314) (343) (34) - (377)

Balance as at 31 December 2018 1,297 (61) 125 3,427 4,788 1,317 1 6,106

Balance as at 30 June 2019 1,300 (68) 105 3,815 5,152 1,182 23 6,357

Impact of change in accounting policy3 - - - (42) (42) - - (42)

Balance as at 1 July 2019 1,300 (68) 105 3,773 5,110 1,182 23 6,315

Total Comprehensive Income

Profit for the period - - - 281 281 32 - 313

Other Comprehensive Income (Net of tax) - - 33 (16) 17 (3) - 14

Total Comprehensive Income - - 33 265 298 29 - 327

Transactions with Owners of the Company

Distribution reinvestment plan (DRP) 4 - - - 4 1 - 5

Dividends and distributions - - - (53) (53) (45) - (98)

Treasury securities acquired - (51) - - (51) - - (51)

Treasury securities vested - 52 - - 52 - - 52

Fair value movement on allocation and vesting of securities - - (16) - (16) - - (16)

Asset disposals and transfers - - (23) - (23) - - (23)

Total other movements through reserves 4 1 (39) (53) (87) (44) - (131)

Balance as at 31 December 2019 1,304 (67) 99 3,985 5,321 1,167 23 6,511

1. Opening balance for number of treasury securities 1 July 2019 was 4 million (1 July 2018: 4 million) and closing balance at 31 December 2019 was 4 million (31 December 2018: 4 million). 2. Balance and movement in reserves are presented on a combined basis for the half year ended 31 December 2019 and 31 December 2018. 3. December 2019 Statement of Changes in Equity have been adjusted to reflect the impact of the first time adoption of AASB 16 Leases (refer to New and Revised Accounting Standards Adopted 1 July 2019) by recording $(42) million to opening retained earnings.



Statement of Cash Flows – Half Year Ended 31 December 2019

Note


$m

6 months December 2018²

$m

Cash Flows from Operating Activities

Cash receipts in the course of operations 7,321 8,071

Cash payments in the course of operations (7,664) (8,862)

Interest received 4 6

Interest paid in relation to other corporations (95) (85)

Interest in relation to lease liabilities1 (13) -

Dividends/distributions received 110 63

Income tax paid in respect of operations (21) (17)

Net cash used in operating activities (358) (824)

Cash Flows from Investing Activities

Redemption of investments 304 228

Acquisition of investments (499) (201)

Acquisition of/capital expenditure on investment properties (37) (18)

Net loan drawdowns from associates and joint ventures (33) (20)

Disposal of consolidated entities (net of cash disposed and transaction costs) 94 232

Disposal of property, plant and equipment 13 7

Acquisition of property, plant and equipment (51) (47)

Acquisition of intangible assets (32) (24)

Net cash (used in)/provided by investing activities (241) 157

Cash Flows from Financing Activities

Proceeds from borrowings 2,060 3,031

Repayment of borrowings (1,445) (2,090)

Dividends/distributions paid (163) (190)

Payments for on market buyback of stapled securities - (174)

Payments for on market buyback of stapled securities - Distribution Reinvestment Plan - (11)

Repayment of lease liabilities1 (27) -

Net cash provided by financing activities 425 566

Other Cash Flow Items

Effect of foreign exchange rate movements on cash and cash equivalents (19) 12

Net decrease in cash and cash equivalents (193) (89)

Cash and cash equivalents at beginning of financial period 18 1,290 1,177

Cash and cash equivalents at end of financial period3 18 1,097 1,088

1. December 2018 comparatives are $nil as Interest in relation to lease liabilities and Repayment of lease liabilities were not recognised under AASB 117 Leases. 2. Balances include cash flows relating to both continuing and discontinued operations. Net cash flows relating to discontinued operations have been disclosed in Note 21 ‘Discontinued Operations’. 3. $701 million of cash and cash equivalents has been classified as Assets held for sale at 31 December 2019. Refer to Note 18 'Cash and Cash Equivalents' for further detail.


Consolidated Financial Statements continued


Notes to the Consolidated Financial StatementsBasis of PreparationThe consolidated financial report is a general purpose financial report, which:• Has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001;• Complies with the recognition and measurement requirements of the International Financial Reporting Standards (IFRSs) adopted by the

International Accounting Standards Board (IASB);• Should be read in conjunction with the 30 June 2019 annual consolidated financial report and any public announcements by the Group

during the half year in accordance with continuous disclosure obligations arising under the Corporations Act 2001. The half year financial report does not contain all the information required for a full financial report;

• Is presented in Australian dollars, with all values rounded off to the nearest million dollars unless otherwise indicated, in accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) instrument 2016/191;

• The comparative financial information in the Income Statement, Statement of Comprehensive Income and related Notes have been restated for discontinued operations during the year. The comparative information in the Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and related Notes have not been restated. Refer to Note 21 ‘Discontinued Operations’ for further details;

• Segment disclosures in Note 1 ‘Segment Reporting’ have been restated in line with a reassessment of the Group’s strategy in February 2019;• Certain other comparative balances have been reclassified following the adoption of AASB 16 Leases; and• 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 financial statements for the basis of valuation of assets and liabilities measured at fair value.

The preparation of an interim financial report that complies with AASB 134 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 accounting policies have been consistently applied by the Group and are consistent with those applied in the 30 June 2019 annual

consolidated financial report other than as stated below.

Impact of New and Revised Accounting Standards

New and Revised Accounting Standards Adopted 1 July 2019From 1 July 2019 the Group adopted Interpretation 23 Uncertainty over Income Tax Treatments. Interpretation 23 did not have a material impact on the Group.From 1 July 2019 the Group adopted AASB 16 Leases and consequential amendments. AASB 16 provides a new model for accounting for leases. AASB 16 is based on the principle that all leases the Group enters as a lessee will be recognised on balance sheet, with a right-of-use asset and lease liability recognised, with depreciation recognised on the right-of-use asset and interest expense on the lease liability. Lease expense (depreciation expense and interest expense) will effectively be front-loaded to the start of the lease period, even when cash lease payments are constant throughout the period of the lease.

The Group utilised the modified retrospective cumulative approach to transition to AASB 16, therefore comparatives have not been restated. Comparatives continue to be accounted for in accordance with the Group’s previous accounting policies outlined in the 30 June 2019 annual consolidated financial report.

Payments associated with short term leases and leases of low value assets are recognised on a straight-line basis as an expense in the Income Statement. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.

The Group presents right-of-use assets that do not meet the definition of investment property in Property, plant and equipment, the same line item as it presents underlying assets of the same nature that it owns. Right-of-use assets that meet the definition of investment property are presented within investment property.

Based on analysis performed, as a lessor, there was no material impact to the Group on adoption. As a lessee, on adoption, the Group has:• Recorded a right-of-use asset of $437 million, lease liabilities of $(514) million, derecognition of existing lease balances under AASB 117

Leases of $18 million and a net deferred tax asset of $17 million in the Statement of Financial Position for its material operating lease commitments. The sum of these adjustments is $(42) million;

• The net difference of $(42) million was recorded as an adjustment to equity to reflect the cumulative impact on initial adoption of the standard; and

• The net impact to the Income Statement for the period is a $1 million increase in expenses.

On adoption, the Group has measured lease liabilities at the present value of the remaining lease payments, discounted using the Group’s incremental borrowing rate as of 30 June 2019. The incremental borrowing rate applied to the lease liabilities on 1 July 2019 was 4.8%.

In applying AASB 16 for the first time, the Group has applied the following practical expedients permitted by the standard for leases:• The ability to not reassess whether a contract is, or contains, a lease at the date of initial application (prior to 1 July 2019);• The application of a single discount rate to a portfolio of leases;• The use of hindsight in determining the lease term; and• The decision to exclude a lease for which the lease term ends within 12 months of initial application.

New disclosures have been included where required. Changes to disclosures include reclassification of prior period balances to better align the presentation of comparative information to the new disclosure requirements.


Notes to the Consolidated Financial Statements continuedBasis of Preparation continued

Impact of New and Revised Accounting Standards continued

Changes to accounting policies from 1 July 2019The Group’s accounting policies have been revised to reflect the guidance of the new leasing standard with effect from 1 July 2019. Refer below for further details:

RecognitionAs a lessee, the Group assesses whether a contract is or contains a lease at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Group assesses whether: • The contract involved the use of an identified asset;• The Group has the right to obtain substantially all of the economic benefits from the use of the asset throughout the period of use; and• The Group has the right to direct the use of the asset. The Group has this right when it has the decision-making rights that are most relevant

to changing how and for what purpose the asset is used.

For the leases of land and buildings in which it is a lessee, the Group has elected not to separate non-lease components and account for the lease and non-lease component as a single lease component.

The Group’s primary leasing activities are for office space in the regions and cities in which it operates. There are no material future cash outflows to which the Group is potentially exposed that are not reflected in the measurement of lease liabilities, and there are no material restrictions or covenants imposed by the Group’s leases.

MeasurementThe Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises:• The initial amount of the lease liability;• Any lease payments made at or before the commencement date less any lease incentives received;• Initial direct costs; and• Restoration cost.

Right-of-Use AssetsRight-of-use assets which meet the definition of property, plant and equipment form part of the property, plant and equipment balance and are measured at cost less accumulated depreciation in accordance with AASB 116 Property, Plant and Equipment.

Right-of-use assets which meet the definition of investment property form part of the investment property balance and are measured at fair value in accordance with AASB 140 Investment Property.

Lease LiabilitiesLease liabilities are initially measured at the present value of the lease payments discounted using the interest rate implicit in the lease. If that rate cannot be determined, the Group’s incremental borrowing rate is used. Generally, the Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of lease liability comprise the following:• Fixed payments offset by any lease incentives;• Variable lease payments, for lease liabilities which are tied to a floating index;• Amounts expected to be payable under a residual value guarantee;• The exercise price of purchase options (if it is reasonably certain that the option will be exercised); and• Payments of penalties for terminating leases, if the lease term reflects the lease terminating early.

Lease liabilities are subsequently measured by:• Increasing the carrying amount to reflect interest on the lease liability; • Reducing the carrying amount to reflect the lease payments made; and • Remeasuring the carrying amount upon the occurrence of certain events (such as a change in the lease term or lease payments).

When a lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset and is recorded in the profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.


Notes to the Consolidated Financial Statements continuedBasis of Preparation continued

Impact of New and Revised Accounting Standards continued

Changes to accounting policies from 1 July 2019 continued

Depreciation and AmortisationRight-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.

PresentationItems relating to leases are presented as follows:• Right-of-use assets are recognised in the Statement of Financial Position within the same line item as that within which the corresponding

underlying assets would be presented if they were owned by the Group, within either Property, plant and equipment or Investment property;

• Lease liabilities are recognised within Trade and other payables in the Statement of Financial Position and split between current and non-current liabilities;

• Depreciation charge for right-of-uses assets is recognised within Other expenses; and• Interest expense on lease liabilities is recognised within Finance costs.

Relevant information on the Group’s leasing has been included in the following notes: Note 6 'Other Expenses', Note 7 'Finance Revenue and Finance Costs' and Note 17 'Trade and Other Payables'.

Short-term leases and leases of low-value assetsThe Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

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.


Notes to the Consolidated Financial Statements continuedSection A: Performance

Earnings before interest, tax, depreciation and amortisation (EBITDA) and Profit after tax (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 EBITDA and 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 & Outlook section of the Directors’ Report.

1. Segment Reporting

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 returns profile and allocation of resources for each segment, and internal reports that are reviewed and used by the Group Chief Executive Officer and Managing Director (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.

Segment performance is based on EBITDA and PAT. EBITDA and 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:

DevelopmentOperates 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 internal projects is recognised in this segment.

ConstructionOperates across all four geographic regions. Its products and services include the provision of project management, design and construction services, predominantly in the defence, mixed use, commercial and residential sectors.

InvestmentsServices include owning and/or managing investments across all four geographic regions. The investments segment includes a leading investment management platform and also includes the Group’s ownership interests in property and infrastructure Co-Investments, Retirement Living and US Military Housing.

Non coreNon core includes the provision of project management, design and construction services in the Australian infrastructure sector. These products and services represent the Engineering and Services business. The Chief Operating Decision Maker receives separate information about this business, given the Group announced in February 2019 that the Engineering and Services business is no longer a required part of the Group’s strategy. The discontinued operations referenced throughout the financial statements are equal to the result of this segment. Refer to Note 21 ‘Discontinued Operations’ for further detail.


Notes to the Consolidated Financial Statements continued

1. Segment revenue as disclosed in the Performance and Outlook, is comprised of Revenue from contracts with customers, Other revenue and Finance revenue. 2. December 2018 comparatives have been restated to separately present the results of the Engineering and Services business as a non core operating business.

No revenue from transactions with a single external customer amounts to 10 per cent or more of the Group’s revenue.

Section A: Performance continued

1. Segment Reporting continuedFinancial information regarding the performance of each reportable segment and a reconciliation of these reportable segments to the financial statements is included below.

EBITDA¹ PROFIT BEFORE TAX PROFIT AFTER TAX GROUP TOTAL ASSETS

6 months December

2019 $m

6 months December

2018 $m

6 months December

2019 $m

6 months December

2018 $m

6 months December

2019 $m

6 months December

2018 $m

December 2019

$m

June2019

$m

CoreDevelopment 272 261 260 258 186 180 7,202 7,101

Construction2 101 111 83 105 59 75 3,756 3,710

Investments 255 273 246 270 199 226 4,370 4,028

Total core segments 628 645 589 633 444 481 15,328 14,839

Non core2 23 (474) 6 (485) 5 (339) 1,900 2,089

Total segments 651 171 595 148 449 142 17,228 16,928

Reconciling ItemsCorporate activities (72) (88) (186) (179) (136) (126) 793 250

Total 579 83 409 (31) 313 16 18,021 17,178

Interest, tax, depreciation and amortisation1 (266) (67)

Statutory result (Profit after tax) 313 16

The operating segments generate revenue in the following regions.

REVENUE¹

December 2019Development

$m

Construction

$mInvestments

$m

Total Core Segments

$mNon Core

$m

Total Segments

$m

Corporate Activities

$m

Statutory Result

$m

Australia 530 1,863 92 2,485 1,665 4,150 22 4,172

Asia 7 122 95 224 - 224 - 224

Europe 492 414 11 917 - 917 - 917

Americas 132 1,927 36 2,095 - 2,095 - 2,095

Total 1,161 4,326 234 5,721 1,665 7,386 22 7,408

December 20182

Australia 595 2,149 104 2,848 1,525 4,373 21 4,394

Asia 9 200 29 238 - 238 - 238

Europe 223 487 6 716 - 716 - 716

Americas 43 2,355 25 2,423 - 2,423 - 2,423

Total 870 5,191 164 6,225 1,525 7,750 21 7,771

1. EBITDA represents earnings before interest of $(76) million (December 2018: $(53) million), tax of $(96) million (December 2018: $47 million), depreciation and amortisation of $(94) million (December 2018: $(61) million). 2. December 2018 comparatives have been restated to separately present the results of the Engineering and Services business as a non core operating business.



COMPANY/TRUST

Cents Per Share/Unit


$m


$m

Parent Company Interim Dividend

December 2019 – declared subsequent to reporting date2 22.1 124 -

December 20183 - - -

Lendlease Trust Interim Distribution

December 2019 – provided for and payable 17 March 2020 7.9 45 -

December 2018 – paid 20 March 2019 12.0 - 68

169 68

COMPANY/TRUST

Cents Per Share/Unit

6 months June 2019

$m

6 months June 2018

$m

Parent Company Final Dividend

June 2019 – paid 16 September 2019 9.5 53 -

June 2018 – paid 21 September 2018 30.3 - 174

Lendlease Trust Final Distribution

June 2019 – paid 16 September 2019 20.5 116 -

June 2018 – paid 21 September 2018 4.7 - 27

169 201

December 2019 December 2018

Shares/Securities excluding Treasury

Securities

Shares/ Securities

on Issue

Shares/Securities excluding Treasury

Securities

Shares/ Securities

on Issue

Basic/Diluted Earnings Per Share (EPS)

Profit/(loss) attributable to members of Lendlease Corporation Limited used in calculating basic/diluted EPS $m 281 281 (91) (91)

Weighted average number of ordinary shares m 560 564 567 571

Basic/Diluted EPS cents 50.2 49.8 (16.0) (15.9)

Basic/Diluted Earnings Per Stapled Security (EPSS)

Profit attributable to securityholders of Lendlease Group $m 313 313 16 16

Weighted average number of stapled securities m 560 564 567 571

Basic/Diluted EPSS cents 55.9 55.5 2.8 2.8

1. Final and/or Interim dividends/distribution were not franked in the current and prior period.2. No provision for this distribution has been recognised in the Statement of Financial Position at December 2019, as it was declared after the end of the half year.3. No dividend was declared for the Company for the December 2018 half year.

1. Balances include both continuing and discontinued operations. Earnings per share/stapled security for continuing and discontinued operations have been separately disclosed in Note 21 ‘Discontinued Operations’.

2. Dividends/Distributions1

3. Earnings Per Share/Stapled Security (EPS/EPSS)1




1. During the period, the Group disposed of a 25 per cent interest in Victoria Cross Commercial Head Trust. The Group recorded a gain on sale of $31 million. Refer to Note 22 'Consolidated Entities' for further detail. The remaining 75 per cent interest retained by the Group provided a revaluation gain of $92 million based on the transaction price.2. December 2018 balances have been restated for discontinued operations during the year. Refer to Note 21 ‘Discontinued Operations’ for further detail.


4. Revenue from Contracts with Customers 6 months December 2019

$m


$m3

Revenue from the Provision of Services

Construction services1 4,325 5,189

Development services 531 245

Investments services 193 126

Total revenue from the provision of services 5,049 5,560

Revenue from the sale of development properties 599 595

Total revenue from contracts with customers2 5,648 6,155

5. Other Income 6 months December 2019

$m


$m

Net Gain on Sale/Transfer of Investments

Consolidated entities1 159 73

Other financial assets at fair value 2 13

Equity accounted investments 35 -

Total net gain on sale/transfer of investments 196 86

Net Gain on Fair Value Measurement

Investment properties 24 36

Fair value through profit or loss assets 17 70

Total net gain on fair value measurement 41 106

Other 39 14

Total other income 276 206

1. December 2018 balances have been restated to align the presentation of comparative information to the change in segments disclosed in Note 1 ‘Segment Reporting’. 2. Further information on revenue by geography and by segments is included in Note 1 ‘Segment Reporting’. Segment revenue as disclosed in the Performance and Outlook, is comprised of Revenue from contracts with customers, Other revenue and Finance revenue.3. December 2018 balances have been restated for discontinued operations during the year. Refer to Note 21 ‘Discontinued Operations’ for further detail.



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. December 2018 balances have been restated for discontinued operations during the year. Refer to Note 21 ‘Discontinued Operations’ for further detail.

6. Other Expenses 6 months December 2019

$m

6 months December 2018³

$m

Profit before income tax includes the following other expense items:

Net defined benefit plan expense 1 -

Expenses include impairments raised/(reversals) relating to:

Property inventories 8 (1)

Equity accounted investments 2 (4)

Net loss on sale of property, plant and equipment 2 -

Operating lease expense (including outgoings) 14 45

Depreciation on right-of-use assets1 30 -

Depreciation on owned assets2 21 22

Amortisation2 26 28

Net foreign exchange loss - 1

7. Finance Revenue and Finance Costs 6 months December 2019

$m


$m

Finance Revenue

Other corporations 3 6

Other finance revenue 1 -

Total interest finance revenue 4 6

Interest discounting 1 3

Total finance revenue 5 9

Finance Costs

Interest expense in relation to other corporations1 79 72

Interest expense in relation to lease liabilities2 13 -

Less: Capitalised interest finance costs (16) (15)

Total interest finance costs 76 57

Non interest finance costs 5 5

Total finance costs 81 62

Net finance costs (76) (53)

8. Share of Profit of Equity Accounted InvestmentsNote


$m


$m

Associates1

Share of profit 12a 6 12

Joint Ventures1

Share of profit 12b 59 180

Total share of profit of equity accounted investments 65 192

1. December 2018 comparatives are $nil as depreciation of right-of-use assets was not recognised under AASB 117 Leases.2. December 2018 comparatives have been reclassified to separately present depreciation and amortisation due to the adoption of AASB 16 Leases. 3. December 2018 balances have been restated for discontinued operations during the year. Refer to Note 21 ‘Discontinued Operations’ for further detail.

1. As a result of the adoption of AASB 16 Leases, the description has changed from Other corporations to Interest expense in relation to other corporations. 2. December 2018 comparatives are $nil as Interest expense in relation to lease liabilities were not recognised under AASB 117 Leases.



Notes to the Consolidated Financial Statements continuedSection A: Performance continued

9. Taxation

Income Tax Expense 6 months December 2019

$m


$m

Recognised in the Income Statement

Current Tax Expense

Current period (4) (70)

Adjustments for prior years - (1)

Benefit of tax losses recognised - (2)

Total current tax expense/(benefit) (4) (73)

Deferred Tax Expense

Origination and reversal of temporary differences 109 35

Temporary differences recovered (5) (2)

Net tax losses recognised (4) (7)

Total deferred tax expense 100 26

Total income tax expense/(benefit)1 96 (47)

Reconciliation of Effective Tax Rate

Profit/(loss) before tax 409 (31)

Income tax using the domestic corporation tax rate of 30 per cent 123 (9)

Adjustments for prior year tax claim - (1)

Non assessable and exempt income2 (21) (35)

Non allowable expenses3 3 2

Net write-off/(recognition) of tax losses through income tax expense 2 (1)

Temporary differences recognised through income tax expense4 (5) -

Utilisation of capital losses on disposal of assets - (3)

Effect of tax rates in foreign jurisdictions5 (10) (3)

Other 4 3

Income tax expense/(benefit)1 96 (47)

10. Events Subsequent to Balance DateThere were no material events subsequent to the end of the financial reporting period.

1. Represents income tax expense from continuing and discontinued operations. Refer to Note 21 ‘Discontinued Operations’ for the portion relating to the discontinued operations. 2. Includes LLT Group profit. 3. Includes accounting expenses for which a tax deduction is not allowed permanently. 4. Includes temporary differences recognised in a previous period but are subsequently 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. 5. 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. Also includes the effect of change in tax rates.


Notes to the Consolidated Financial Statements continuedSection B: Investment

Investment in the Development pipeline, joint ventures in property projects, the retirement sector, and more passive assets, such as property funds, drives 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.

11. InventoriesNote

December 2019 $m

June 2019

$m

Current

Development properties 797 1,031

Construction contract assets 16a 1,039 1,180

Other 1 27

Total current 1,837 2,238

Non Current

Development properties 3,558 3,345

Total non current 3,558 3,345

Total inventories 5,395 5,583

12. Equity Accounted InvestmentsNote

December 2019 $m

June 2019

$m

Associates

Investment in associates 12a 543 277

Less: Impairment (3) (7)

Total associates 540 270

Joint Ventures

Investment in joint ventures 12b 3,301 3,195


Total joint ventures 3,282 3,182

Total equity accounted investments 3,822 3,452


Notes to the Consolidated Financial Statements continuedSection B: Investment continued

12. Equity Accounted Investments continuedINTEREST SHARE OF PROFIT NET BOOK VALUE

a. Associates

December 2019

%

June 2019

%

December 2019

$m

December 2018

$m

December 2019

$m

June 2019

$m

Australia

Development

Lendlease Communities Fund 1 20.8 20.8 - - 4 4

Investments

Lendlease Sub Regional Retail Fund¹ 10.0 10.0 (1) - 34 36

Other - - 5 -

Total Australia (1) - 43 40

Asia

Investments

Lendlease Global Commercial REIT 24.3 - (10) - 256 -

Lendlease Asian Retail Investment Fund 48.7 - 14 - 5 -

Lendlease Asian Retail Investment Fund 2 38.6 38.2 - (1) 32 30

Lendlease Asian Retail Investment Fund 3 20.1 20.1 2 12 201 201

Total Asia 6 11 494 231

Europe

Development

Other - - 4 4

Total Europe - - 4 4

Americas

Investments

Other 1 1 2 2

Total Americas 1 1 2 2

Total 6 12 543 277

Less: Impairment - - (3) (7)

Total associates 6 12 540 270

1. Although the Group has a 10 per cent ownership interest in Lendlease Sub Regional Retail Fund, it holds 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.



12. Equity Accounted Investments continued

INTEREST SHARE OF PROFIT NET BOOK VALUE

b. Joint Ventures

December 2019

%

June 2019

%

December 2019

$m

December 2018

$m

December 2019

$m

June 2019

$m

Australia

Development

Circular Quay Tower 20.0 20.0 - - 103 93

Melbourne Quarter R1 50.0 50.0 - - 60 66

Melbourne Metro1 30.0 30.0 - - - -

Victoria Cross 75.0 - - - 110 -

Other2 - (1) 9 16

Investments

Lendlease Retirement Living Trust 75.0 75.0 30 58 1,427 1,397

Other (2) - 10 12

Total Australia 28 57 1,719 1,584

Asia

Development

The Exchange TRX 60.0 60.0 (1) - 375 364

Investments

CDR JV Ltd (313@somerset) 25.0 25.0 7 2 - 96

Paya Lebar Quarter 30.0 30.0 35 112 422 382

Total Asia 41 114 797 842

Europe

Development

Hungate (York) Regeneration Limited 50.0 50.0 1 - 7 6

Intown SRL Joint Venture 50.0 50.0 (1) - 36 38

LRIP LP 20.0 20.0 7 2 56 39

Silvertown 50.0 50.0 (2) (1) 4 6

Stratford City Business District Limited (International Quarter London) 50.0 50.0 1 4 135 130

Victoria Drive Wandsworth 50.0 50.0 (2) (3) 39 40

Investments

Treviso 50.0 50.0 - - 14 14

Other - (2) 1 8

Total Europe 4 - 292 281

Americas

Development

277 Fifth Avenue 40.0 40.0 - - 64 64

845 Madison 37.5 37.5 - - 51 44

Lendlease Towers LLC - 50.0 (25) (7) - 30

Americas Residential Partnership 50.0 50.0 1 (1) 365 341

Other - - 13 9

Construction

Lendlease Turner Joint Venture 50.0 50.0 10 17 - -

Total Americas (14) 9 493 488

Total 59 180 3,301 3,195

Less: Impairment - - (19) (13)

Total joint ventures 59 180 3,282 3,182

Total associates 6 12 540 270

Total equity accounted investments 65 192 3,822 3,4521. Balance includes the Melbourne Metro equity accounted investment of $70 million (June 2019: $70 million) net of a hedge reserve of $70 million (June 2019: $70 million).2. December 2018 balance has been restated for discontinued operations during the year. Refer to Note 21 ‘Discontinued Operations’ for further details.

Section B: Investment continued




c. Material Associates and Joint Ventures Summarised Financial InformationMaterial associates and joint ventures are determined by comparing individual investment carrying value and share of profit with the total equity accounted investment carrying value and share of profit, along with consideration of relevant qualitative factors.

LENDLEASE GLOBAL COMMERCIAL REIT1 PAYA LEBAR QUARTER

LENDLEASE RETIREMENT LIVING TRUST

Income Statement

6 months December

2019 $m

6 months December

2018 $m

6 months December

2019 $m

6 months December

2018 $m

6 months December

2019 $m

6 months December

2018 $m

Revenue and other income 23 - 152 462 98 129

Other expenses (58) - (301) (20) (59) (51)

Income tax expense - - - - - -

Profit/(loss) for the period (35) - (149) 442 39 78

Other comprehensive loss (5) - - - 1 (3)

Total comprehensive income/(loss) (40) - (149) 442 40 75

Group’s ownership interest 24.3% - 30.0% 30.0% 75.0% 75.0%

Group’s total share of:

Profit/(loss) for the period (8) - (45) 133 30 58

Other adjustments (2) - 80 (21) - -

Total profit/(loss) for the period (10) - 35 112 30 58

Other comprehensive income/(loss) (3) - 4 15 1 (2)

Total comprehensive income/(loss) (13) - 39 127 31 56

The table below provides summarised financial information for those associates and joint ventures that are individually immaterial to the Group.

ASSOCIATES JOINT VENTURES

Income Statement


$m


$m


$m


$m¹

Aggregate amounts of the Group’s share of:

Profit/(loss) from continuing operations 16 13 (6) 9

Other comprehensive income 1 10 18 30

Aggregate amounts of Group’s share of total comprehensive income of individually immaterial equity accounted investments 17 23 12 39

1. December 2018 balance has been restated for discontinued operations during the year. Refer to Note 21 ‘Discontinued Operations’ for further details.

1. Lendlease Global Commercial REIT was listed on the Singapore Exchange on 2 October 2019.




LENDLEASE GLOBAL COMMERCIAL REIT1 PAYA LEBAR QUARTER

LENDLEASE RETIREMENT LIVING TRUST

Statement of Financial Position

December 2019

$m

June 2019

$m

December 2019

$m

June 2019

$m

December 2019

$m

June 2019

$m

Current Assets

Cash and cash equivalents 94 - 96 84 31 34

Other current assets 14 - 281 256 59 75

Total current assets 108 - 377 340 90 109

Non Current Assets

Investment properties 1,488 - 3,316 3,263 7,363 7,288

Other non current assets 19 - 2 - 2 2

Total non current assets 1,507 - 3,318 3,263 7,365 7,290

Current Liabilities

Resident liabilities - - - - 4,762 4,759

Financial liabilities (excluding trade payables) - - 1,988 1,911 - -

Other current liabilities 48 - 171 37 61 63

Total current liabilities 48 - 2,159 1,948 4,823 4,822

Non Current Liabilities

Financial liabilities (excluding trade payables) 543 - - - 623 586

Other non current liabilities 2 - 75 64 124 146

Total non current liabilities 545 - 75 64 747 732

Net assets 1,022 - 1,461 1,591 1,885 1,845

Reconciliation to Carrying Amounts

Opening net assets 1 July - - 1,591 875 1,845 1,720

Total comprehensive income/(loss)

for the period (40) - (149) 583 40 125

Acquisition/contributions 1,074 - 3 64 - -

Foreign currency translation for the period (12) - 16 69 - -

Closing net assets 1,022 - 1,461 1,591 1,885 1,845

% ownership 24.3% - 30.0% 30.0% 75.0% 75.0%

Group’s share of net assets 248 - 438 477 1,414 1,384

Other adjustments 8 - (16) (95) 13 13

Carrying amount at end of period 256 - 422 382 1,427 1,397

The table below provides summarised financial information for those associates and joint ventures that are individually immaterial to the Group.

ASSOCIATES JOINT VENTURES

December 2019 $m

June 2019 $m

December 2019 $m

June 2019 $m

Aggregate carrying value of individually immaterial equity accounted investments 284 270 1,433 1,403

1. Lendlease Global Commercial REIT was listed on the Singapore Exchange on 2 October 2019.

Section B: Investment continued



13. Other Financial Assets Fair Value Level1

December 2019 $m

June 2019

$m

Current Measured at Fair Value

Fair Value Through Profit or Loss – Designated at Initial Recognition

Lendlease International Towers Sydney Trust Level 3 - 87

Derivatives Level 2 15 10

Total current 15 97

Non Current Measured at Fair Value

Fair Value Through Profit or Loss – Designated at Initial Recognition

Lendlease International Towers Sydney Trust Level 3 156 151

Lendlease One International Towers Sydney Trust Level 3 56 54

Australian Prime Property Fund – Industrial Level 3 99 96

Australian Prime Property Fund – Commercial Level 3 382 369

Australian Prime Property Fund – Retail Level 3 67 74

Lendlease Public Infrastructure Investment Company Level 3 40 40

Military Housing Projects Initiative Level 3 209 211

Lendlease Asian Retail Investment Fund Level 3 - 44

Parkway Parade Partnership Limited Level 3 44 43

Other investments Level 3 11 11

Level 2 15 -

Level 1 9 10


Total other financial assets 1,103 1,200

a. Fair Value ReconciliationThe reconciliation of the carrying amount for Level 3 financial assets is set out as follows.

Unlisted InvestmentsDecember 2019

$mJune 2019

$m

Carrying amount at beginning of financial period 1,180 1,529

Disposals (91) (493)

Gains recognised in Income Statement 18 106

Other movements (43) 38

Carrying amount at end of financial year 1,064 1,180

The potential effect of using reasonably possible alternative assumptions for valuation inputs would not have a material impact on the Group.

1. Refer to Note 19 'Fair Value Measurement' for details on basis of determining fair value and valuation techniques.


Notes to the Consolidated Financial Statements continuedSection C: Liquidity and Working Capital

The ability of the Group to fund the continued investment in the property and infrastructure 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 disclosure 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. Borrowings and Financing Arrangements

a. Borrowings – Measured at Amortised CostDecember 2019

$mJune 2019

$m

Current

Commercial notes 225 225

Total current 225 225

Non Current

Commercial notes 1,528 1,502

Bank credit facilities 1,638 988


Total borrowings 3,391 2,715

b. Finance Facilities

The Group has access to the following lines of credit:

Commercial Notes

Facility available 1,753 1,727

Amount of facility used (1,753) (1,727)

Amount of facility unused - -

Bank Credit Facilities

Facility available 3,523 3,495

Amount of facility used (1,638) (988)

Amount of facility unused 1,885 2,507

Bank Overdrafts

Facility available and amount unused 124 124

Commercial notes include:• £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; • US$400 million of guaranteed unsecured senior notes issued in May 2016 in the US Reg. S market under Lendlease’s Euro Medium Term

Note Programme 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 under Lendlease’s Euro Medium

Term Note Programme with a 3.9 per cent coupon maturing in April 2027; • $225 million of unsecured medium term notes issued in May 2013 ($125 million) and June 2014 ($100 million) in the Australian bond market

with a 6.0 per cent per annum coupon maturing May 2020 has been classified as current for December 2019; and• $80 million of unsecured medium term notes issued as an A$ private placement in December 2018 with a 5.4 per cent per annum coupon

maturing in December 2028. Bank credit facilities include:• £400 million club bank facility maturing in March 2023 drawn to $343 million as at 31 December 2019;• $1,800 million syndicated cash advance facility maturing in December 2021 (Tranche A: $900 million) and September 2022 (Tranche B:

$900 million) are drawn to $562 million. As at 31 December 2019, Tranche A was drawn to $562 million and Tranche B was undrawn; and• $960 million A$ syndicated loan facility, maturing in March 2024. As at 31 December 2019, the $725 million Tranche A was fully drawn and

the $235 million Tranche B was undrawn.

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 finance arrangements.


Notes to the Consolidated Financial Statements continuedSection C: Liquidity and Working Capital continued

15. Issued Capital LENDLEASE CORPORATION LIMITED LENDLEASE TRUST

December 2019 June 2019 December 2019 June 2019

No. of Shares (m) $m

No. of Shares (m) $m

No. of Units (m) $m

No. of Units (m) $m

Issued capital at beginning of financial period 584 1,300 584 1,297 584 921 584 920

Distribution reinvestment plan (DRP) - 4 - 3 - 1 - 1

Issued capital at end of financial period 584 1,304 584 1,300 584 922 584 921

Buyback at beginning of financial period (20) (285) (10) (145) (20) (67) (10) (33)

On market buyback of securities - - (10) (140) - - (10) (34)

Buyback at end of financial period (20) (285) (20) (285) (20) (67) (20) (67)

Balance reflected in Retained Earnings/Reserves1 - 285 - 285 - 67 - 67

Issued capital at end of financial period 564 1,304 564 1,300 564 922 564 921

a. Issuance of SecuritiesAs at 31 December 2019, the Group had 564 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 PlansThe 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 2 March 2020. 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 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 ConditionsIssued capital for Lendlease Corporation Limited comprises of 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.

16. Loans and ReceivablesNote

December 2019 $m

June 2019 $m

Current

Trade receivables 772 1,012


759 999

Related parties 66 76

Retentions 464 330

Contract debtors 16a 254 349

Accrued income 16a 82 57

Other receivables 271 241



1. Stapled securities acquired as part of the Group’s on market stapled security buyback have been recorded in Retained Earnings for the Company and Buyback Reserves for the Trust. The program completed in February 2019.



16. Loans and Receivables continuedNote

December 2019 $m

June 2019 $m

Non Current



50 37

Retentions 169 351

Other receivables 312 300

Total non current 531 688

Total loans and receivables 2,426 2,738

a. Contract Assets NoteDecember 2019

$mJune 2019

$m

Current

Contract debtors 254 349

Construction contract assets 11 1,039 1,180

Accrued income 82 57

Total contract assets1 1,375 1,586

17. Trade and Other PayablesNote

December 2019 $m

June 2019 $m

CurrentTrade and accrued creditors 2,428 3,136

Construction contract liabilities 17a 430 1,404


Retentions 582 476

Deferred land payments 79 98

Unearned income 17a 115 283

Lease liabilities1 59 -

Other 94 309


Non Current Trade and accrued creditors 10 7

Retentions 141 309

Deferred land payments 603 635

Unearned income 17a 185 183

Lease liabilities1 440 -

Other 238 267


Total trade and other payables 5,412 7,125

As a result of the adoption of AASB 16 Leases, the Group has recognised amounts for right-of-use assets and lease liabilities. As at December 2019, the Group recognised right-of-use assets of $407 million within Property, plant and equipment.

1. As a result of the adoption of AASB 16 Leases, lease liabilities have been presented separately. June 2019 comparatives are $nil as lease liabilities were not recognised under AASB 117 Leases.

1. 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 and contract assets transferred to Disposal Group assets held for sale. Refer to Note 21 ‘Discontinued Operations’ for further details.



17. Trade and Other Payables continued

a. Contract LiabilitiesDecember 2019

$mJune 2019

$m

Current

Unearned income1 115 283

Construction contract liabilities2 430 1,404

Total current 545 1,687

Non Current

Unearned income1 185 183

Total non current 185 183

Total contract liabilities 730 1,870

1. Movements in Unearned income relates primarily to residential pre-sales 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 and Construction contract liabilities transferred to Disposal Group liabilities held for sale. Refer to Note 21 ‘Discontinued Operations’ for further details.

18. Cash and Cash EquivalentsNotes

December 2019 $m

June 2019 $m

Continuing

Cash 395 731

Short term investments 1 559

Total cash and cash equivalents from continuing operations 396 1,290

Disposal Group Assets Held for Sale

Cash 251 -

Short term investments 450 -

Total cash and cash equivalents classified as Disposal Group assets held for sale 21 701 -

Total cash and cash equivalents 1,097 1,290


Notes to the Consolidated Financial Statements continuedSection D: Other Notes

19. Fair Value MeasurementAll 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.

December 2019 June 2019

Note

Carrying Amount

$mFair Value

$m

Carrying Amount

$mFair Value

$m

Liabilities

Current

Commercial notes 14a 225 229 225 234

Non Current

Commercial notes 14a 1,528 1,676 1,502 1,640

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;

• 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; and

• 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 includes consideration of counterparty risk adjustments.

b. Fair Value MeasurementsThe valuation methods for each level 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; and• 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.

20. Contingent Liabilities 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, particularly in respect of claims for

defects and under warranties and indemnities. In many cases, there is uncertainty as to whether a future liability will arise in respect to these items. Where it is probable there will be liabilities from such claims, 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 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.


Notes to the Consolidated Financial Statements continuedSection D: Other Notes continued

21. Discontinued Operations

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: • The carrying amount will be recovered principally through a sale transaction rather than through continuing use; and • 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. Comparatives have also been restated for the Income Statement, Statement of Comprehensive Income and corresponding Notes to separately disclose the results of the discontinued operations from continuing operations.

On 25 February 2019, the Group announced that its Engineering and Services business is no longer a required part of the Group’s strategy. Management have 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 for a purchase price of $180 million. The transaction, which is expected to complete in the first half of calendar year 2020, is subject to conditions including client and third party consents and regulatory approvals including Foreign Investment Review Board. The sales process for the Services business continues at 31 December 2019.

The previously disclosed cost estimate to exit the Non core segment of $450 - $550 million pre tax remains appropriate with $22 million expensed to date. Exit related costs include: implementation and selling costs; indemnities included in any sale agreement; and potential costs to cover concluding projects retained by the Group.

The cost estimate, together with existing provisions, is considered appropriate to cover concluding retained projects and to exit the Non core segment.

At 31 December 2019, the results of the Engineering and Services business have been presented separately from the Construction segment as Non core. Refer to Note 1 ‘Segment Reporting’ for details.

The results of the discontinued operations are as follows:

Results from Discontinued Operations

6 monthsDecember 2019

$m


$m

Revenue from contracts with customers 1,665 1,525

Cost of sales (1,580) (1,926)

Gross profit/(loss) 85 (401)

Share of profit of equity accounted investments 2 2

Other income 2 2

Other expenses (83) (88)

Profit/(loss) before tax for discontinued operations 6 (485)

Income tax (expense)/benefit (1) 146

Total profit/(loss) after tax for discontinued operations as presented in the Income Statement 5 (339)



21. Discontinued Operations continuedDecember 2019 December 2018

Shares/ Securities Excluding

Treasury Securities

Shares/ Securities

on Issue

Shares/ Securities Excluding

Treasury Securities

Shares/ Securities

on Issue

Basic/Diluted Earnings Per Share (EPS) from Continuing Operations

Profit from continuing operations attributable to members of Lendlease Corporation Limited (Company) $m 276 276 248 248


Basic/Diluted EPS from continuing operations cents 49.3 48.9 43.7 43.4

Basic/Diluted Earnings Per Share (EPS) from Discontinued Operations

Profit/(loss) from discontinued operations attributable to members of Lendlease Corporation Limited (Company) $m 5 5 (339) (339)


Basic/Diluted EPS from discontinued operations cents 0.9 0.9 (59.7) (59.3)

Basic/Diluted Earnings Per Security (EPSS) from Continuing Operations

Profit from continuing operations attributable to securityholders of Lendlease Group $m 308 308 355 355


Basic/Diluted EPSS from continuing operations cents 55.0 54.6 62.6 62.2

Basic/Diluted Earnings Per Security (EPSS) from Discontinued Operations

Profit/(loss) from discontinued operations attributable to securityholders of Lendlease Group $m 5 5 (339) (339)


Basic/Diluted EPSS from discontinued operations cents 0.9 0.9 (59.8) (59.4)

The net cash flows for discontinued operations for the current and prior period are as follows:

Cash Flows from Discontinued Operations


$m


$m

Net cash inflow from operating activities 71 154

Net cash outflow from investing activities (42) (13)

Net cash outflow from financing activities (2) -

Net increase in cash and cash equivalents 27 141

The major classes of assets and liabilities held for sale are as follows:

Disposal Group Assets/(Liabilities) Held for SaleDecember 2019

$mJune 20191

$m

Cash and cash equivalents 701 -

Loans and receivables 367 -

Inventories 292 -

Other assets2 540 -

Total Disposal Group assets held for sale 1,900 -

Trade and other payables 1,640 -

Other liabilities 60 -

Total Disposal Group liabilities held for sale 1,700 -

Disposal Group net assets held for sale 200 -

1 . The Group had no assets or liabilities recorded as held for sale at 30 June 2019. Comparative balances for the Statement of Financial Position have not been restated.2. Includes $282 million of Property, plant and equipment and $183 million of Intangible assets.

Section D: other Notes continued


Notes to the Consolidated Financial Statements continuedSection E: Basis of Consolidation

22. Consolidated EntitiesThe material consolidated entities of the Group listed below were wholly owned during the current and prior period.

PARENT ENTITY EUROPE

Lendlease Corporation Limited Lendlease Construction (Europe) Limited

AUSTRALIA Lendlease Construction Holdings (Europe) Limited

Capella Capital Lendlease Pty Limited Lendlease Europe Finance plc

Capella Capital Partnership Lendlease Europe Limited

Lendlease Building Pty 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 Engineering Pty Limited Lendlease Singapore Pte. Limited

Lendlease Finance Limited AMERICAS

Lendlease Infrastructure Investments Pty Limited Lendlease (US) Capital, Inc.

Lendlease International Pty Limited Lendlease (US) Construction, Inc.

Lendlease Real Estate Investments Limited Lendlease (US) Construction LMB, Inc.

Lendlease Responsible Entity Limited Lendlease (US) Public Partnerships, LLC

Lendlease Services Pty Limited Lendlease (US) Public Partnerships Holdings LLC

Lendlease Trust¹ Lendlease Development, Inc.

During the current and prior period, there were no acquisitions of material consolidated entities.

During the current and prior period, the following disposals of material consolidated entities occurred.

31 December 2018

Americas Residential Partnership 50.0 19 July 2018 172

1. Lendlease Trust is a consolidated entity of the Group as the parent entity is deemed to control it. Lendlease Trust is not wholly owned.

31 December 2019

Ownership Interest Disposed

%Date

Disposed

Gross Consideration

received/receivable

$m

Victoria Cross Commercial Head Trust 25.0 21 December 2019 31


Directors’ Declaration

In the opinion of the Directors of Lendlease Corporation Limited (the Company):1. The financial statements and notes 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 31 December 2019 and of its performance for the half

year ended on that date; and b. Complying with Australian Accounting Standards AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.2. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the Directors:

M J Ullmer, AO S B McCann Chairman Group Chief Executive Officer and Managing Director

Sydney, 20 February 2020


KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Liability limited by a scheme approved under Professional Standards Legislation.

Independent Auditor’s Review Report

To the members of Lendlease Corporation Limited

Report on the Half-year Financial Report

Conclusion

We have reviewed the accompanying Half-year Financial Report of Lendlease Corporation Limited (the Company) as the deemed parent presenting the stapled security arrangement of Lendlease Group.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the Half-year Financial Report of Lendlease Corporation Limited is not in accordance with the Corporations Act 2001, including:

giving a true and fair view of the Lendlease Group’s financial position as at 31 December 2019 and of its performance for the Half-year ended on that date; and

complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

The Half-year Financial Report comprises:

Consolidated statement of financial position as at 31 December 2019;

Consolidated statement of profit or loss, Consolidated statement of comprehensive income, Consolidated statement of changes in equity and Consolidated statement of cash flows for the Half-year ended on that date;

Notes 1 to 22 comprising a summary of significant accounting policies and other explanatory information; and

The Directors’ Declaration.

The Lendlease Group (the Group) consists of Lendlease Corporation Limited and the entities it controlled at the Half year’s end or from time to time during the Half-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.

Responsibilities of the Directors for the Half-year Financial Report

The Directors of the Company are responsible for:

the preparation of the Half-year Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001; and

such internal control as the Directors determine is necessary to enable the preparation of the Half-year Financial Report that is free from material misstatement, whether due to fraud or error.


Auditor’s responsibility for the review of the Half-year Financial Report

Our responsibility is to express a conclusion on the Half-year Financial Report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the Half-year Financial Report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Company’s financial position as at 31 December 2019 and its performance for the half-year ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As auditor of Lendlease Corporation Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a Half-year Financial Report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.

KPMG D M McLennan

Partner

Sydney

20 February 2020

lendlease group appendix 4d and 2020 half year

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