LENDLEASE GROUP - Annual Report 2011

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ASX Announcement

2011 Annual Report to Securityholders and 2011 Securityholder Review

7 October 2011

Copies of the 2011 Annual Report to securityholders of Lend Lease and the 2011 Securityholder Review are attached. These documents are also available online at www.lendlease.com. Both documents will be sent to securityholders who have elected to receive a copy.

ENDS

For further information, please contact:

Investor Relations:

Sally Cameron Group Executive - Investor Relations Tel:02 9236 6464

Lend Lease Corporation Limited ABN 32 000 226 228 and

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

Level 4, 30 The Bond 30 Hickson Road Millers Point NSW 2000 Australia

Telephone +61 2 9236 6111 Facsimile +61 2 9252 2192 www.lendlease.com

Lend Lease annuaL report 2011

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Chief executive offcer’s report	1
Corporate Governance	2
Management discussion and analysis of
Financial Condition and results of operations (Md&a)	10
directors’ report	28
Lead auditor’s Independence declaration	52
Five Year profle	53
Consolidated Financial statements	54
securityholder Information	120
Corporate directory	124

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

Cover Image: Port Botany Container Terminal Expansion, Sydney, Australia. Photo courtesy of Sydney Ports Corporation

annual report 2011 Lend Lease Group 1

Chief exeCutive offiCer’s report

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Over the past financial year, Lend Lease has made significant inroads towards a position of international leadership in property and infrastructure. While there is further work to be done, we have materially enhanced our operating platforms and are now well placed to deliver growth in our chosen market sectors and segments. The management team and employees are strongly focused on safely executing our strategy and driving returns for securityholders.

progress on strategy

Lend Lease has a clear Restore-Build-Lead strategy to realise the long term growth potential of the Group. Fundamental to our ongoing success is the ability to operate Incident & Injury Free, and we are working hard to achieve this goal.

The first stage of the Group strategy, Restore, is coming to completion, with our businesses now restructured and realigned across four core regions. We have now moved into the next phase of our strategy, Build, where we have also achieved some significant milestones, including the acquisition of Valemus, which now forms our Australian infrastructure business. We are now focused on extracting the maximum value from the unique combination of businesses across the Group.

people

We recognise that the talent and the ongoing commitment of our employees is critical to Lend Lease achieving a leadership position. We have implemented a goal-focused performance management system and invested in senior manager training as part of our program to develop a high performance culture across the Group. In addition, the combined knowledge and experience of the Group’s senior management team has been further enhanced with a number of strategic internal and external appointments which underpin the Group’s ability to deliver on its key priorities and projects over the short to medium term.

infrastructure acquisition

For some time we have talked about the key growth trends that will impact and shape our business. These include urban regeneration, the ageing population, sustainability, infrastructure and growth in sovereign wealth funds and pension funds.

We have clear priorities to achieve our aim of becoming the leading international property and infrastructure group. over the next two years you will see the Group focus on delivery and execution of our development pipeline, successful integration of the infrastructure business in Australia, active portfolio management and positioning our offshore businesses in preparation for a market recovery.

In 2011, we significantly advanced our position in the infrastructure sector by acquiring Valemus Australia, the parent company of Abigroup, Baulderstone and Conneq. The acquisition materially increases Lend Lease’s capabilities and activities in the engineering and construction market in Australia. Integration of the new business is progressing well and it is on track to be a significant driver of earnings for Lend Lease from financial year 2012 onwards.

In the Americas, Lend Lease added to our pipeline in the US military housing privatization and lodgings sectors and we acquired DASCO, a developer of medical office buildings and outpatient care facilities with a strong development pipeline that will position Lend Lease in a rapidly growing sector. We also sold our 50 per cent interest in the King of Prussia retail centre as part of the Group’s focus on active portfolio management.

Lend Lease is well placed to deliver growth for securityholders. The integration of the infrastructure business, delivery of our exceptional development pipeline, particularly Barangaroo South, and continued recycling of capital will drive the Group’s growth over the coming years. As always, our commitment to safety and sustainability will underpin all our activities, and with the ongoing hard work and dedication of our people, we look forward to progressing on our path to becoming the leading international property and infrastructure group.

Building a platform for growth

During 2011, Lend Lease continued to add to its significant development pipeline and progress key projects. In Australia, the New South Wales Government approved the Concept Plan amendment for the $6 billion redevelopment of Barangaroo South in Sydney, as well as the first commercial building and basement and bulk excavation works on the site. In addition, all conditions precedent were met for the project agreement on the $2.5 billion Royal National Agricultural and Industrial Association (RNA) of Queensland urban regeneration project in Brisbane.

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In Asia, we completed the purchase of the Jurong Gateway mixed-use site, renamed Jem™, in conjunction with the Lend Lease managed Asian Retail Investment Fund. In Europe, we launched the Lend Lease managed UK Infrastructure Fund raising £220 million of capital, and we continued to progress major projects, signing a conditional regeneration agreement with the London Borough of Southwark for the £1.5 billion regeneration of Elephant & Castle and meeting all conditions on the Framework Agreement for the £1.3 billion second stage of The International Quarter, Stratford City, London.

steve McCann

GROUP CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR

2 Lend Lease Group annual report 2011

CorporAte GovernAnCe

Commitment to Governance

This statement sets out the principle features of Lend Lease’s corporate governance framework and main governance practices.

Lend Lease is committed to exceptional corporate governance policies and practices which are fundamental to the long term success and prosperity of Lend Lease and its subsidiaries (the Group) . Lend Lease continually reviews its governance practices to address its obligations as a responsible corporate entity.

A reference in this Corporate Governance Statement to the Board is a reference to the Boards of Directors of Lend Lease Corporation Limited ( LLC ) and Lend Lease Responsible Entity Limited ( LLreL ) which is the responsible entity of the Lend Lease Trust, unless indicated otherwise.

Throughout the year, Lend Lease’s corporate governance framework complied fully with the ASX Corporate Governance Council’s Principles and Recommendations. The table indicates where specific principles are dealt with in this statement.

Asx principle		reference in statement
principle 1	Lay solid foundations for management and oversight	2.1 and 2.6
principle 2	structure the board to add value	1.1, 1.2, 1.3, 2.3 and 3.1
principle 3	promote ethical and responsible decision-making	5.2, 6.1 and 6.2
principle 4	safeguard integrity in fnancial reporting	3.1
principle 5	Make timely and balanced disclosure	5.1
principle 6	respect the rights of shareholders	5.1
principle 7	recognise and manage risk	4.1, 4.2, 4.3, 4.4 and 4.5
principle 8	remunerate fairly and responsible	3.1

Date of this Corporate Governance statement

This Corporate Governance Statement reflects the corporate governance and other related policies and practices in place for the Group as at 1 September 2011. Further details can be found in the corporate governance area of the Lend Lease website at www.lendlease.com.

Governance structure

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Lend Lease Board
Group CEO
and Managing
Director
Nomination Personnel and Risk Management Sustainability Executive
Committee Organisation and Committee Management
Committee Audit Committee Team
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1. Composition of the Board

relevant governance documents (see www.lendlease.com)

Lend Lease Corporation Limited Constitution
Board Charter
Policy on Independence of Directors

1.1 Composition and Membership

The Board has a majority of independent Directors and an independent Chairman. Membership of the Board as at 1 September 2011 comprises:

n David Crawford, AO – Chairman and Independent Non-Executive Director
n Stephen McCann – Group Chief Executive Officer (CEO) and Managing Director
n Phillip Colebatch – Independent Non-Executive Director
n Gordon Edington – Independent Non-Executive Director
n Peter Goldmark – Independent Non-Executive Director
n Jane Hemstritch – Independent Non Executive Director
n Julie Hill – Independent Non-Executive Director
n David Ryan, AO – Independent Non-Executive Director
Profiles of each Director can be found in the Directors’ Report.

The Directors have a range of local and international experience and expertise, as well as specialised skills to assist with decision making and leading the Group for the benefit of securityholders.

1.2 Independent Directors

The Board’s Policy on the Independence of Directors sets out the criteria and guidelines for assessing the independence of Directors and assists the Board in determining whether a Director is to be regarded as independent.

The predominant test used by the Board is whether the Director is independent of management and free of any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the exercise of their unfettered and independent judgment. This general test of independence is supplemented by specific criteria and thresholds which encompass the definition of independence set out in the ASX Recommendations.

The Board evaluates the materiality of any interests or relationships that could be perceived to compromise independence on a case-bycase basis having regard to the circumstances of each Director. Where the Board is satisfied in the circumstances that the Director meets the general test of independence the Board may, in its absolute discretion, determine that a Director is independent even though not all of the criteria under the Policy are satisfied. Appropriate disclosures will be made to the market where the Board considers that an independent Director has ceased to be independent.

annual report 2011 Lend Lease Group 3

The Board assesses the independence of each Director annually and on disclosure by a Director of any new interests or relationships.

The Board considers that all the Non Executive Directors are independent. Executive Director, Stephen McCann Group CEO and Managing Director is not considered to be an independent Director due to his integral involvement in the day-to-day management of the Group’s businesses.

1.3 Chairman of the Board

The Chairman of the Board is elected by the Directors and serves as the primary link between the Board and management. It is the Chairman’s responsibility to provide leadership to the Board and ensure that the Board works effectively and discharges its responsibilities. The Board Charter prohibits the current or any former CEO of the Group from becoming Chairman.

David Crawford has been Chairman of the Board since May 2003.

1.4 Retirement and Re-election of Directors

In accordance with the Constitution of LLC, one-third of the Directors and any other Director who will have been in office for three or more Annual General Meetings since he or she was last elected (excluding the Managing Director) must retire from office and may offer themselves for re-election at each Annual General Meeting (AGM).

Peter Goldmark and David Ryan are standing for re-election at the 2011 AGM and the Board unanimously endorses their re-election.

1.5 Selection and Appointment of New Directors

The Nomination Committee is responsible for the selection and appointment of new Directors. Directors are selected having regard to, among other things, an individual’s skills, experience and expertise.

The process of selecting a new Director usually involves commissioning an international recruitment firm to identify and present appropriate candidates following a briefing as to the Board’s requirements. Candidates undergo a thorough recruitment process which involves formal interviews with each of the Directors of the Board and background checks. In making its selection the Board considers the breadth of experience and diversity of skills of the candidate as well as the ability to devote the time necessary to fulfil their duties as a Director. New Directors are nominated by the Board and then stand for election at the AGM following their appointment in order to be confirmed into office.

Jane Hemstritch is standing for election at the 2011 AGM and the Board unanimously endorses her election.

1.6 Induction and Briefing Programmes

New Directors are provided with a letter of appointment which sets out their rights, duties and responsibilities as a Director of Lend Lease. New Directors participate in an induction programme involving comprehensive briefings from management and site visits.

1.7 Directors’ Remuneration

Details of the Group’s Remuneration Policy and the remuneration of Directors is contained in the Directors’ Report.

Retirement Benefits Plan

In recognition of feedback from securityholders the Directors resolved in 2010 to discontinue the further award of retirement securities. Any accrued securities will be preserved and paid to the Director on retirement, except if the securities need to be sold at an earlier time to meet a tax liability in respect of the securities.

Further details of the retirement plan for Non Executive Directors are provided in the Directors’ Report.

2. role and responsibilites

relevant policies and charters (see www.lendlease.com)

Board Charter
Performance evaluation process

2.1 Board Responsibilities

The Board Charter sets out the role, structure, responsibilities and operation of the Board as well as the function and division of responsibilities between the Board and senior management.

The main responsibilities reserved to the Board include the following:

n approval of business strategy
n approval of business plans
n approval and monitoring of major investments or divestitures
n determining capital structure and distribution policy
n overseeing and approving half year and annual reporting
n overseeing risk management, internal control and compliance systems
n reviewing performance of the Group CEO and Executive Management Team
n succession planning for the Group CEO
n Non Executive Director selection
n reviewing Board performance
n reviewing certain governance policies

The Board Charter sets out these responsibilities in further detail.

The Board delegates authority for all other functions and matters necessary for the day-to-day management of the Group to the Group CEO. The Group CEO then delegates to senior management as required.

Limits of authority have been put in place by the Board for the Group CEO and senior management and the Group CEO is accountable to the Board for the authority delegated to other levels of management.

All Directors have access to Group information, senior management and employees as required to enable them to fulfil their responsibilities. Management briefings are given at every Board meeting, and Directors are regularly briefed on key business and industry developments and matters material to their role. Directors are also encouraged to attend externally administered training seminars and programmes.

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CorporAte GovernAnCe CONTINUED

2.2 Meetings

The number of Board and Committees meetings held during the financial year and the attendance of Directors at those meetings, is disclosed in the Directors’ Report on page 31. There are nine scheduled meetings each year and additional meetings are held in between scheduled meetings as required. Members of senior management may be invited to attend and present at Board meetings.

The number of Directors required to constitute a quorum is three.

2.3 Board Performance

The Board conducts an annual review of its performance, the Chairman and individual Directors retiring and seeking re-election at the AGM.

External Review

The last external review was conducted in March 2010 by Heidrick & Struggles. The findings of the external review were considered by the Board and appropriate action taken where required.

Internal Review and Assessment

The review process includes interviews with the Directors and senior management, may involve interviews with key stakeholders, and generates recommendations to ensure the Board continues to operate effectively with the requisite mix of skills, experience, and appropriate organisation and procedures.

The Chair of the Nomination Committee, acting in consultation with other Board members, is responsible for conducting an annual evaluation of the Group CEO and the Chairman of the Board.

2.4 Independent Decision Making

Any Director may seek external, independent, professional advice at the expense of Lend Lease. The policy of the Board is that external advice will be made available to all Directors, unless the Chairman of the Board determines otherwise. It is expected that a Director will consult the Chairman of the Board, Managing Director or Group Company Secretary before obtaining external advice. A copy of the advice is made available to all Directors.

To further facilitate independent decision making by the Board a separate session for Non Executive Directors to meet without management present is scheduled as a permanent agenda item at Board meetings.

2.5 Group Company Secretary

Appointed by the Board, the Group Company Secretary works with the Chairman of the Board to monitor and enhance corporate governance processes and to ensure that Board policies and procedures are followed.

2.6 Senior Management

Structure

The management structure of Lend Lease consists of the Group CEO and the Executive Management Team (EMT).

The EMT comprises the Group CEO, the Group Director of Operations, the Group Chief Financial Officer, the Group Head of Strategy and Mergers & Acquisitions, the Group General Counsel and Company Secretary, the 4 regional CEOs, the heads of the development and investment management businesses, the Managing Director of the project management and construction business in Australia, the Managing Director of Lend Lease’s infrastructure business in Australia and the Group Head of Sustainability. The EMT is responsible for managing the Group’s performance and key business issues in line with the Group’s long term strategy.

The EMT meet face-to-face on a regular basis and each meeting is chaired by the Group CEO.

Performance Review

The Group CEO is responsible for setting financial targets, operational and management goals for senior executives in consultation with the Personnel and Organisation Committee. Immediate, short term and long term goals form part of the performance management for most senior executives.

The Group CEO and the Personnel and Organisation Committee conduct a detailed review of the performance of senior executives against these goals on an annual basis at the end of each financial year. In addition, each senior executive also conducts a performance evaluation of their own performance.

A review of the performance of all senior executives was conducted in the financial year and was in accordance with the procedure described above.

Remuneration

Further information on executive incentive programmes and remuneration of senior executives is set out in the Directors’ Report.

3. Board Committees

relevant policies and charters (see www.lendlease.com)

Audit and Risk Committee Charter
Personnel and Organisation Committee Charter
Sustainability Committee Charter
Nomination Committee Charter

3.1 Overview of Board Committees

The Board has established four permanent Board Committees to assist, advise and make recommendations to the Board on matters falling within their areas of responsibility. The performance of the Committees, its membership and the Charters are periodically reviewed.

Each Committee is governed by a formal Charter setting out its objectives, roles and responsibilities, composition, structure, membership requirements and operation. Directors who are not members of the committees have a standing invitation to meetings of the Committees.

annual report 2011 Lend Lease Group 5

Further detail of these Committees is set out in the accompanying table.

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Nomination Personnel & Organisation Risk Management & Audit Sustainability
Peter Goldmark (Chair) Phillip Colebatch (Chair) David Ryan (Chair) Julie Hill (Chair)
Phillip Colebatch Julie Hill Phillip Colebatch Gordon Edington
David Crawford David Ryan Gordon Edington Peter Goldmark
Gordon Edington All members are
Julie Hill financially literate
David Ryan
Minimum of three, non Minimum of three Directors Minimum of three, Minimum of three Directors
executive Directors Majority of the Committee to be non executive and Majority of the Committee
Chair must be an independent independent independent Directors to be independent
director and not the Chair of Chair must be an Chair must not be Chair of Chair must be an
the Board independent director the Board independent director
All requirements were met in the All requirements were met in the All members must be financially All requirements were met in the
reporting period reporting period literate and at least one reporting period
member has accounting or
relevant financial expertise
All requirements were met in the
reporting period
Reviews size and composition Reviews and makes Makes recommendations to Oversees the Group’s Health
of the Board recommendations to the Board the Board on External Auditor & Safety and Environment
Identifies and evaluates on contractual arrangements for appointment and rotation of function
Board candidates the Group CEO and EMT audit partner Reviews the effectiveness of
Evaluates the performance of Reviews and makes Oversees quality and Group polices on corporate
recommendations to the Board effectiveness of audits social responsibility, workplace
the Board and the performance
of any directors standing for on remuneration programs Reviews performance of the diversity and equal opportunity
re-election at an AGM and performance targets for Internal Audit function Monitors the activities and
Establishes processes the Group CEO and EMT and Reviews the parameters of the programs of the Lend Lease
assessment of performance Foundation
for the review of Board Group’s risk/reward strategy
against these targets
succession planning Reviews the effectiveness of Assists the Board in its
Reviews continuing education Monitors and advises the Board the Group’s Enterprise Risk oversights of the Group’s
on succession planning for the compliance with application
and development plan for Management System and be
Non Executive Directors Group CEO and members of assured that material risk are regulatory requirements in
the EMT identified and appropriate risk relation to environmental
Reviews and approves the management processes are matters, socially responsibility
strategies and practices for in place initiatives and health and
people management safety issues
Reviews significant financial
Reviews and makes reporting issues and assess the
recommendations to the Board appropriateness of accounting
on the remuneration framework policies and methods chosen
for Non Executive Directors by management
Reviews and makes Makes recommendations to the
recommendations to the Board Board as to whether financial
on remuneration and required statements should be approved
disclosures
Monitors the effectiveness of
Group policies and practices
that relate to compliance
with laws, regulations and
accounting standards
The Committee has unrestricted The Chairman of the Committee The Group CFO, the Group The Chair liaises with the Group
access to senior management liaises regulary with the Group Head of Risk and Insurance Director of Operations, the
of the Group. The committee Head of Human Resources and the Head of Internal Audit Group Head of Environment,
reviews and recommends in on matters related to the have a separate direct reporting Health and Safety, the Global
cooperation with management, Committee to ensure that the relationship to the Chairman. Head of Sustainability and the
a process for the induction and Committee is appropriately One-on-one meetings are held Global Head of Diversity on
education of new Directors briefed on matters relating on at least a quarterly basis as at least a quarterly basis or
and a continuing education to employees. required. as required. These positions
and development plan for all The Committee meets with supply the Committee with
Non-Executive Directors. the external auditor without the information relevant to the
Committee’s function.
management present
as appropriate.
MeMBers
CoMposition
MAin AreAs of responsiBiLity
interACtion With MAnAGeMent
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CorporAte GovernAnCe CONTINUED

4. risk Management

relevant governance documents

(see www.lendlease.com)

Risk and Audit Committee Charter
– Risk Management Policy

4.1 Enterprise Risk Management

The Group uses an Enterprise Risk Management approach to identify, evaluate, address, monitor, quantify and report material business risks to the Risk Management and Audit Committee. The objective of this approach is to enhance stakeholder value through continuous improvement in the Group’s management of risk. The Group’s Corporate Risk Management is led by the Group Head of Risk and Insurance. Corporate Risk Management liaises with regional CEOs and risk specialists on both business specific and enterprise-wide risks. Corporate Risk Management’s objective is to assist the Group’s businesses to further develop their risk management processes. Its role includes:

n advising on and implementing risk treatment strategies at Group level;
n assisting management to embed Enterprise Risk Management;
n assisting Group businesses to implement and maintain effective risk management practices;
n maintaining effective early warning reporting systems; and
n consolidating information for presentation to the Risk Management and Audit Committee.

4.2 Risk Management Reporting

Management is responsible for keeping the Board’s Risk Management and Audit Committee informed on a regular basis of material business risks. In the reporting period, the Committee has received regular reports on material risks facing Lend Lease businesses worldwide, and management has reported to the Board as to the effectiveness of Lend Lease’s management of its known material business risks.

Lend Lease uses an online risk matrix to report and monitor risks in the following categories:

n Financial
n Legal / Regulatory
n Health & Safety
n Performance
n Environment & Community
n People
n Property / Business Continuity
n Information Technology

The categorisation drives functional accountability for managing the primary cause or consequence of the risk noting that all risks may impact our reputation or have a secondary effect.

The risk matrix defines the risk tolerance of Lend Lease by setting thresholds for impact and likelihood and defining the material business risks required to be reported to the Board.

4.3 Key Risk Management Practices

Operational businesses are responsible for risk management outcomes and implementing self-assurance programs to assess the effectiveness of risk management procedures. Formal internal and external audit procedures are utilised to provide supplementary assurance. The Group uses sensitivity analysis and value at risk modelling to identify the most important assumptions affecting the delivery of the Group’s business plans. Project control groups are set up as required to focus attention on particular risks. Some PCGs set up this year focused attention on:

n Integration of Lend Lease’s infrastructure business in Australia
n Group Policies and Procedures
n Global Environment Health & Safety Management System
n Succession Planning
n Operational Efficiency

The Group’s approach to risk management is guided by the International Standard on Risk Management, ISO 31000 on Risk Management.

4.4 Key Policies

In addition to Board delegated Limits of Authority, a number of key global and business unit specific policies govern the way Lend Lease conducts its business and manages material business risks. These policies (including the Risk Management Policy) are available at the corporate governance area of the Lend Lease website at www.lendlease.com.

4.5 Integrity in Financial Reporting, Risk Management and Internal Control

The Group CEO and the Group Chief Financial Officer have declared in writing to the Board that, for the year ended 30 June 2011:

With regard to the financial reports of the consolidated entity comprising Lend Lease Corporation Limited and its consolidated entities (“the Consolidated Entity”):

n the Consolidated Entity’s financial records have been properly maintained in accordance with section 286 of the Corporations Act 2001; and
n the Consolidated Entity’s Financial Report present a true and fair view of the Consolidated Entity’s financial position and performance and comply relevant Accounting Standards.

With regard to risk management and internal compliance and control systems of the Consolidated Entity, the statements made with respect to the integrity of the Consolidated Entity’s Financial Reports for the year ended 30 June 2011 are founded on a sound system of risk management and internal control and the system is operating effectively in all material respects in relation to financial reporting risk.

Since 30 June 2011, nothing has come to the attention of the Group CEO and the Group Chief Financial Officer that would indicate any material change to any of the statements made above.

4.6 External Auditor

KPMG is the external auditor of Lend Lease and its controlled entities. KPMG and its predecessor firms were appointed at the first Lend Lease AGM in 1958.

Performance Management

The Risk Management and Audit Committee has the responsibility to oversee and appraise the quality and effectiveness of the audits conducted by the external auditor.

annual report 2011 Lend Lease Group 7

Selection, Appointment and Rotation

The Risk Management and Audit Committee is responsible for making recommendations to the Board as to the selection, re-appointment or replacement of the auditor and the rotation of the lead audit partner. The audit partner is rotated every five years. The current lead audit partner is Chris Hall who was appointed with effect from 1 July 2006. Stuart Marshall has been appointed as the new lead audit partner with effect from 1 July 2011.

Provision of Non Audit and Other Services

Lend Lease has a comprehensive policy to ensure that services provided by the external auditor do not impact or have the potential to impact upon their independence. All non-audit services need to be approved by both the Chairman of the Risk Management and Audit Committee and the KPMG lead audit partner to ensure that the proposed arrangement does not, or will not be viewed as compromising KPMG’s independence.

For the year ended 30 June 2011 KPMG did not provide any non-audit and non-assurance services.

Attendance at Annual General Meeting

The external auditor is required to attend the AGM and is available to answer any questions on the conduct of any audits and the preparation and content of the Auditor’s Report.

Auditor’s Independence

The external auditor is required to provide to Lend Lease a written declaration that, to the best of the auditor’s knowledge and belief, there have been no contraventions of the auditor independence requirements set out in the Corporations Act or any applicable code of professional conduct in relation to the conduct of the audit.

A copy of the Lead Auditor’s Independence Declaration as required under section 307C of the Corporations Act has been included in the Directors’ Report.

Fees

Fees paid to the auditor during the financial year are detailed in the Directors’ Report.

5. Governance policies

relevant governance documents

(see www.lendlease.com)

External Communications and Continuous Disclosure Policy
Securities Trading Policy
Code of Conduct
– Political Donations Policy

5.1 Securityholder Communications and Continuous Disclosure

The Group has an External Communications and Continuous Disclosure Policy designed to ensure that Lend Lease complies with the continuous disclosure obligations set out in the ASX Listing Rules.

The Policy explains the continuous disclosure obligations of Lend Lease, the procedure to be followed when information needs to be disclosed to the market, contains guidance on how to identify information which may fall within the disclosure requirements and the consequences of breaching the Policy. The Policy sets out the protocols applicable to Directors, executive officers and employees designed to ensure that Lend Lease complies with these continuous disclosure obligations.

The Policy also sets out management accountabilities for ensuring that the market is fully informed, as well as procedures governing analyst briefings and public comment by Group spokespersons.

The Corporate Disclosure Manager is responsible for employee education on continuous disclosure obligations, external communications, monitoring of market information in relation to Lend Lease, maintaining records of information released to the market and ensuring that information on the Lend Lease website is up to date.

The Policy was updated in February 2011.

Communications with Securityholders

Lend Lease also recognises that whilst there is a legal obligation of disclosure, there is also an ethical obligation to securityholders to ensure that investor confidence is maintained through full and timely communication and disclosure to securityholders and the market.

The External Communications and Continuous Disclosure Policy is designed to facilitate this objective, and promotes effective communication with securityholders by ensuring that information (in addition to information that may otherwise be required to be disclosed pursuant to legal continuous disclosure obligations) may otherwise be important to a securityholder, such as information about the Group’s activities, is available to the investor in a timely and readily accessible manner.

The Policy ensures that any announcements made on the ASX are posted on the Lend Lease website as soon as practicable following confirmation of receipt by the ASX.

The Lend Lease website is the key information dissemination point to the broader market. In addition to including on the website all announcements to the market,

n copies of current and past annual and half-year reports are available on the website;
n presentations made to analysts or institutional investors are available on the website; and
n market briefings to analysts and institutional investors are webcast live and archived on the website for three months. Presentation material used during a webcast can be viewed simultaneously or accessed from the archive.

Annual General Meeting

The Annual General Meeting (AGM) is the primary opportunity for securityholders to meet face-to-face with the Board and senior executives. Lend Lease encourages participation at the AGM and securityholders are invited to submit questions ahead of, and during the AGM. Directors also make themselves available after the formal part of the AGM to meet with securityholders.

For securityholders who are unable to attend in person, the proceedings of the AGM are webcast live on the Lend Lease website and later archived for three months. Presentations made at the AGM are also available on the website for access by interested stakeholders. In addition, representatives of the media are invited to attend the AGM to enable a report of the proceedings to reach as wide an audience as possible.

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CorporAte GovernAnCe CONTINUED

5.2 Lend Lease Core Values and Code of Conduct

Core Values

The Core Values of Lend Lease underpin how the Group does business, how it interacts with stakeholders, and how its people operate in the workplace. The Core Values are promoted across all of the Group’s businesses and are as follows:

respect	We respect the ideas, culture, views and the health
	and safety of all people.
integrity	Integrity is non-negotiable. We don’t do it if it
	compromises the individual or Lend Lease’s integrity. In particular, we will not compromise on safety either within our organisation or in doing business with any of
	our clients or suppliers.
innovation	We challenge and seek to fnd a better solution, think
	outside the box and dare to do things differently. We are innovative and creative – we don’t just do it
	because we did it yesterday.
Collaboration	We redefne the way our business works by truly sharing knowledge, building on this and drawing
	insights. Through teamwork we value the insights of
	others and build on them – we truly take the time to
	help.
excellence	We strive for excellence in all we do. It is evident not
	only in the products and services we deliver, but in how
	we deliver them. Our employees embody excellence –
	whether it be in the decisions they make, the products they build, or the service they deliver. On construction
	sites in particular, but everywhere, excellence equals
	zero incidents.
trust	We insist on transparency and accountability from
	our people so that our business can achieve its goals. We build trusted relationships with our clients,
	partners and colleagues. We earn each other’s trust and the trust of our shareholders, partners and the communities in which we operate to do our best to deliver in their best interests.

Code of Conduct

The Lend Lease Code of Conduct sets out the standards of conduct expected of our businesses and people, regardless of location. It applies to all Directors and employees of Lend Lease and operates in conjunction with our Core Values and the Employee Conduct Guide. A copy of the Code of Conduct can be found on the Lend Lease website.

Employees are encouraged to apply the following “Lend Lease Test” when in doubt as to whether any action might breach the Code of Conduct:

“Would I be willing to see what I’m doing or about to do described in detail on the front page of a national newspaper to be read by family and friends?”

Employees must not undertake any action that fails the Lend Lease Test, even if it is not expressly prohibited by the Code of Conduct.

The Code is supported by various global, regional and local business unit policies and procedures.

Code of Conduct Breach Reporting

The Code of Conduct Breach Reporting Policy supports the Code of Conduct, and provides a mechanism for employees to raise concerns about unethical or illegal business conduct, including behaviour which seems to depart from the Core Values or Code of Conduct. This policy applies to all officers, employees and contractors of the Lend Lease Group in all jurisdictions where the Group operates. The action taken to investigate disclosures under this Policy depends on the particular circumstances. Generally, disclosures made under this Policy are treated confidentially.

The Policy also offers protection to anyone who reports concerns in good faith. If an individual’s identity is disclosed during the investigation process, the individual will not be disadvantaged in their employment by any Group company.

5.3 Conflicts of Interest

Directors are required, upon their appointment, to disclose to Lend Lease any interests or directorships which they have with other organisations and update this information if it changes during the course of the Directorship. Directors and senior executives are also required to identify any conflicts of interest they may have in dealing with the Group’s affairs and refrain, as appropriate, from participating in any discussion or voting on these matters. Directors are required to raise with the Group Company Secretary any matters that may give rise to a conflict of interest.

General guidelines in relation to managing conflicts of interest can be found in the Code of Conduct, and a range of procedures designed to ensure compliance have been implemented at a Group and business level.

5.4 Trading in Lend Lease Securities

The Lend Lease Securities Trading Policy was updated in November 2010 and sets out the circumstances in which Directors and employees may deal in Lend Lease securities. The policy complies with the requirements of the ASX Listing Rules in relation to Securities Trading Policies.

Directors and designated executives may only deal in Lend Lease securities during the six-week period commencing on the third business day after:

n the announcement of the annual results;
n the announcement of the half year results; and
n the AGM.

The Policy restricts all other employees from dealing in Lend Lease securities between the close of the financial year, or half year, and a day which is at least the next business day after the announcement of Lend Lease’s results.

The Policy reinforces the insider trading provisions of the Corporations Act. Trading in securities when in the possession of inside information that is not generally available to the public is prohibited at all times.

Lend Lease also prohibits Directors, designated executives and employees from entering into transactions or arrangements that operate to limit the economic risk of unvested entitlements to Lend Lease securities. In addition, the Policy prohibits Directors and designated executives from entering into margin loan arrangements in respect of Lend Lease securities.

annual report 2011 Lend Lease Group 9

5.5 Political Donations

The Lend Lease Group Political Donations Policy was updated in May 2011. Lend Lease sets a firm and consistent standard across the Group that aims to ensure that public confidence is maintained in the Group and its relationships with governments and community leaders.

Lend Lease will not make any donations whether in cash or in kind, to political parties or individuals holding or standing for public office. Lend Lease does however participate in public policy debate and policy development on issues that may impact the Group’s businesses and the interests of securityholders, employees and other stakeholders. At times, we do pay fees for Group employees to attend functions which involve discussion of issues relevant to the Group. Employees are required to obtain the prior approval of their Regional CEO before attending any function on behalf of Lend Lease which has political objectives. Where the function is primarily a political fundraiser or where the amount paid for attending the event is in excess of the reasonable value, these are considered to be donations and are not permitted under this Policy.

6. Diversity and inclusion Governance

relevant governance documents
(see www.lendlease.com)
– Diversity and Inclusion Policy – Sustainability Committee Charter
– Nomination Committee Charter

Lend Lease operates in some professional fields that have not traditionally been hospitable to women and minorities. The Group is committed to seeking out, valuing and rewarding the highest level of professional achievement by all individuals regardless of their gender, ethnicity or other background. Improving the diversity of our workforce is a key objective across our business.

There are five key goals that underpin the delivery of Lend Lease’s diversity agenda:

Become a leader in establishing and maintaining a diverse and inclusive workplace
Include and embed diversity principles in the Lend Lease culture so that they are followed in the Lend Lease community
Provide career development opportunities for every employee, irrespective of any differences.
Continually educate all employees about the importance of a diverse and inclusive workplace
Ensure fairness and parity in creating and maintaining a diverse and inclusive workplace.

Lend Lease operates in many countries around the world with regional headquarters servicing key markets in Australia, Asia, the Americas and Europe, Middle East and Africa. Within each of these regions that Lend Lease operates in, a Diversity and Inclusion leader oversees all diversity activities. Each region has its own ‘Diversity Council’, which are steering committees to facilitate a diverse, collaborative and inclusive culture. Diversity Councils oversee a number of Employee Resource Groups (ERGs). ERGs engage with employees directly, to further drive our diversity agenda and represent key diversity groups including women in the workplace, age & intergenerational diversity, all abilities groups, cultural diversity and lesbian, gay, bisexual, transgender and intersex groups.

Lend Lease has two Committees that oversee our Diversity and Inclusion strategies, namely the Sustainability Committee and the Nomination Committee. The Sustainability Committee oversees management’s Diversity and Inclusion strategy and initiatives. The Nomination Committee is responsible for identifying potential Board candidates who will enhance the Board’s diversity and overall strength. These Committees operate hand in hand, and are focused on our aspiration of achieving an employee base that reflects the broadest range of talent, viewpoints and professional skills that society can offer.

In addition, the Group Head of Diversity and Inclusion supplies the Sustainability Committee with information to allow that Committee to oversee the Group’s achievement of its diversity strategy.

Lend Lease is committed to becoming a leader in establishing and maintaining a diverse and inclusive workplace. Through internal and external benchmarking, Lend Lease can champion diversity and contribute to shifting business and community attitudes regarding diversity in the workplace.

6.1 Diversity and Inclusion Policy

The Lend Lease Diversity and Inclusion Policy was approved by the Board in April 2011. A copy of this Policy is available on the website.

The Board fully supports Diversity and Inclusion, and is instrumental in driving Lend Lease’s Diversity and Inclusion agenda.

6.2 Gender Diversity

In relation to gender diversity, the Board has set targets in accordance with the ASX Corporate Governance Principles and Recommendations. The proportion of women employees in the whole organisation, women in senior executive positions and women on the Board is shown on page 25 of the Securityholder Review. These targets are the measurable objectives that have been set by the Board.

Lend Lease will also use a number of other methods to assess performance in terms of achieving its diversity goals. These include:

n employee perceptions which are measured quantitatively and qualitatively . Periodic global employee engagement surveys will assess sentiment on a quantitative basis, and employee focus groups will capture sentiment on a qualitative basis. These surveys and groups identify issues, collect ideas and track and measure sentiment regarding a range of diversity topics including cultural diversity, workplace flexibility and women in the workplace. All results drive diversity priorities.
n employee resource Groups governed by Regional Diversity Councils, continually track issues and identify opportunities to further progress the Group’s Diversity and Inclusion agenda and performance.
n employee data such as workforce diversity, employee learning and development, succession planning and other recruitment issues, are tracked and used to further refine diversity and inclusion strategies, initiatives and processes. For example in relation to women, key data is tracked including women in our workforce by region, business, role and level, turnover rates, age and years of service. This data informs Lend Lease’s diversity strategies in relation to women on an ongoing basis.
n external benchmarking is undertaken on a regular basis. We compare ourselves to other organisations on a number of key Diversity and Inclusion Criteria.

10 Lend Lease Group annual report 2011

MAnAGeMent DisCussion AnD AnALysis of finAnCiAL ConDition AnD resuLts of operAtions (MD&A)

tA B L e o f C o n t e n t s

tA B L e o f C o n t e n t s
overview	11
Introduction	11
Results Summary	11
Securityholder Returns	12
Distributions	12
Group Funding	13
Cash Flow	13
Investments	14
Property Investment Revaluations	14
Australia	15
Key Financial Results	15
Development	15
Construction	17
Investment Management	18
Infrastructure Development	18
Asia	19
Key Financial Results	19
Development	19
Construction	19
Investment Management	19
europe	20
Key Financial Results	20
Development	20
Construction	20
Investment Management	21
Infrastructure Development	21
Americas	22
Key Financial Results	22
Development	22
Construction	22
Investment Management	23
Infrastructure Development	23
Corporate	24
Key Financial Results	24
Group Services	24
Group Treasury	24
Appendix 1 – Operating Results by Region Detail	25
Appendix 2 – Operating Results by Line of Business Detail	26
Appendix 3 – Operating Results by Region Detail in Local Currency	27

The following management discussion and analysis is based on the Lend Lease Group (the Group) Consolidated Financial Statements for the year ended 30 June 2011 and should be read in conjunction with those financial statements.

All currency amounts in the MD&A are expressed in Australian dollars unless otherwise specified.

annual report 2011 Lend Lease Group 11

overvieW MD&A

introduction

n The Development business operates in all four major geographic regions and is involved in the development of master-planned urban communities, inner-city mixed-use developments, apartments, retail and the retirement living and aged care sector;
n The Construction business operates in all four major geographic regions providing project management, engineering and construction services;
n The Investment Management business operates in all four major geographic regions and provides real estate investment management, retail property management and asset management services. This business includes the Group’s ownership interests in property investments held directly or indirectly through investments in the Group managed funds; and
n The Infrastructure Development business operates in Australia, Europe and the Americas and manages and invests in Public Private Partnership (PPP) projects.

results summary

results summary
	revenue	eBitDA	profit/(Loss) After tAx1,2
	June 2011 A$m June 2010 A$m	June 2011 A$m June 2010 A$m	June 2011 A$m June 2010 A$m

Australia	5,099.5 3,730.3 385.7 323.7 281.4 246.9
Asia	422.3 423.9 54.4 41.0 46.1 33.2
Europe	1,488.5 2,498.0 149.3 166.9 137.4 118.6
Americas	1,934.7 3,862.2 247.8 53.5 156.6 30.7
total operating Businesses	8,945.0 10,514.4 837.2 585.1 621.5 429.4
Group Services	12.7 14.5 (114.9) (103.5) (84.0) (75.2)
Group Treasury	56.4 41.1 (11.6) 0.9 (49.3) (26.9)
Group Amortisation	(2.9) (3.7)
total Corporate	69.1 55.6 (126.5) (102.6) (136.2) (105.8)
total operating	9,014.1 10,570.0 710.7 482.5 485.3 323.6
Property Investment Revaluations	10.7 33.7 7.5 22.0
total statutory	9,014.1 10,570.0 721.4 516.2 492.8 345.6

1 Profit after tax is after adjusting for the profit after tax attributable to non controlling interests of A$0.4 million (June 2010: A$2.6 million).
2 The foreign exchange rates applied are A$1 = £0.63 (June 2010: A$1 = £0.57), A$1 = US$1.00 (June 2010: A$1 = US$0.90) and A$1 = S$1.28 (June 2010: A$1 = S$1.25).

The Group’s operating profit after tax increased by 50% to A$485.3 million. Profit after tax includes A$101.7 million resulting from the agreement to sell the Group’s 50% interest in the King of Prussia shopping mall in the United States (US). Operating profit after tax was negatively impacted by foreign exchange movements of A$29.1 million due to a strengthening of the Australian dollar compared with the prior year.

The Group’s statutory profit after tax for the year ended 30 June 2011 was A$492.8 million (June 2010: A$345.6 million), which includes net property investment revaluations of A$7.5 million after tax (June 2010: A$22.0 million).

The Group made progress implementing its strategy through key acquisitions in Australia and the Americas, recycling mature assets and achieving key trading milestones on a number of its development projects in Australia, Asia and Europe.

Australia

In Australia, profit after tax increased by A$34.5 million to A$281.4 million due to higher profit from the development and construction businesses. The higher profit from development reflects the Group’s 100% ownership interest in Lend Lease Primelife for a full year and a profit on sale of the Group’s interest in the Hyatt Coolum development on the Queensland Sunshine Coast. The higher construction profit after tax reflects the acquisition of Valemus Australia (Valemus) in the second half of the financial year.

On 21 December 2010, the Group entered into an agreement with Bilfinger Berger SE to acquire 100% of Valemus, the parent company of Abigroup, Baulderstone and Conneq, which together now form the Group’s infrastructure business in Australia. The businesses are leading providers of services in the engineering, engineering services and construction markets in Australia. The acquisition has increased the Group’s capabilities and activities in the engineering and construction market and diversified its position in this sector. The acquisition was completed on 10 March 2011.

The Australian business continued to progress its development pipeline. In particular, approval was received from the New South Wales (NSW) Government for the Barangaroo South Concept Plan amendment, along with approval for the first commercial building and basement and bulk excavation works on the site. On 8 August 2011, the NSW Government released the Barangaroo Review. The Review confirmed that Barangaroo South has valid planning consent and that the Group followed all due process. The Review findings provide certainty that the A$6 billion project will proceed on schedule. The Group is on program to commence work in coming weeks on the construction of the basement and begin the first commercial tower before the end of the 2011 calendar year. Discussions with major tenants and capital partners continue to progress well.

12 Lend Lease Group annual report 2011

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MD&A

Asia

In Asia, profit after tax increased by A$12.9 million to A$46.1 million primarily due to the sale of the Group’s 25% ownership interest in the PoMo retail shopping centre in Singapore. During the year, the Group secured the Jurong Gateway site, a large mixed use suburban development in Singapore. This was a joint bid between the Group and one of its managed funds, the Asian Retail Investment Fund 3 (ARIF 3).

europe

In Europe, profit after tax increased by A$18.8 million to A$137.4 million reflecting the sale of the Group’s interest in UK Infrastructure Development assets to the Lend Lease PFI/PPP Infrastructure Fund LP (the UKIF). During the year, the UKIF was launched with £220 million in committed capital available to invest in social infrastructure assets over the next five years. The UKIF purchased established healthcare, education and accommodation PPP assets from the Group and has committed capital to fund the acquisition of future assets currently being delivered by the Group. The Group has a 10% co-investment in the UKIF. The Group also sold its interest in the Pier Walk office building at Greenwich Peninsula and its stake in the Lend Lease Overgate Partnership in the year.

A Conditional Regeneration Agreement was signed with the London Borough of Southwark for the £1.5 billion regeneration of Elephant and Castle. In addition, all conditions were met in relation to the Conditional Framework Agreement between the Group and London and Continental Railways (LCR) for the second stage of the Stratford City development, Stratford International Quarter. The development comprises 382,000 square metres (sqm) of commercial space and 300 residential units to be developed following the London 2012 Olympic and Paralympic Games. Work on stage one of the project, the Athletes’ Village for the Olympic Games, has continued to progress well in the year.

Americas

In the Americas, profit after tax increased by A$125.9 million to A$156.6 million. This includes A$101.7 million from the agreement to sell the Group’s 50% ownership interest in the King of Prussia shopping mall.

On 17 February 2011, the Group acquired The DASCO Companies LLC. This business focuses on the development, financing, leasing and management of property in the healthcare sector. The acquisition will create one of the US’s premier healthcare property platforms by combining DASCO’s expertise in the development and delivery of medical office buildings and outpatient care facilities with Lend Lease’s expertise in project management and construction, financial structuring and asset management.

While trading conditions in the construction business remain difficult, there was a significant improvement in the year, with a A$40.2 million reduction in the reported loss to A$4.8 million. The business substantially reduced its exposure in relation to the World Trade Center litigation following the James Zadroga 9/11 Health and Compensation Act (Zadroga Act) being passed by the US Congress and signed into law by the US President on 2 January 2011. The Zadroga Act establishes substantial limitations on the liability of certain entities that participated in the rescue, recovery and debris removal following the 11 September 2001 attacks on the World Trade Center. For the Group, liabilities, if any, arising out of the debris removal effort are now limited to available insurance.

The volume of construction projects secured in the year increased, reflecting some positive signs that market conditions are improving. The Infrastructure Development business was successful in reaching financial close with the US Department of the Army on North Haven Communities in Alaska and being appointed to implement the second phase of the US Department of the Army Privatisation of Army Lodging (PAL) program.

Corporate

Group Services costs after tax increased by A$8.8 million to A$84.0 million. This includes costs associated with the redesign of the organisation structure and business processes.

Group Treasury costs increased principally due to the consolidation of Lend Lease Primelife and its associated debt, an increase in net debt following the acquisition of Valemus and upfront costs associated with refinancing maturing credit facilities.

securityholder returns

securityholder returns
		June 2011	June 2010
Earnings per security (EPS) on statutory proft after tax1	cents	86.9	69.5
EPS on operating proft after tax1	cents	85.6	65.1
Return on equity (ROE) on statutory proft after tax2	%	14.2	12.6

1 EPS is calculated using the weighted average number of securities on issue, including treasury securities.

2 ROE is calculated as the statutory profit after tax divided by the weighted average equity for the year.

Distributions

A final distribution of 15 cents per security, unfranked, will be paid on 30 September 2011 (June 2010: 12 cents per security 100% franked). Together with the interim distribution of 20 cents per security, 50% franked (December 2009: 20 cents per security 100% franked), this represents a payout ratio of 41% of operating profit after tax for the year ended 30 June 2011.

annual report 2011 Lend Lease Group 13

Group funding

Group funding
		June 2011	June 2010
Net debt/(cash)1,5	A$m	875.4	(19.7)
Gross borrowings to total tangible assets2,5	%	17.7	15.1
Net debt to total tangible assets, less cash3,5	%	8.9	Note 3
Interest coverage4	times	6.7	6.7

1 Borrowings, including certain other financial liabilities, less cash.

2 Borrowings, including certain other financial liabilities, divided by total tangible assets.

3 Net debt divided by total tangible assets, less cash. This ratio was not relevant in the prior year as the Group was in a net cash position.

4 Operating EBITDA plus interest income divided by interest finance costs, including capitalised finance costs.

5 The foreign exchange rates applied are A$1 = £0.65 (June 2010: A$1 = £0.56), A$1 = US$1.07 (June 2010: A$1 = US$0.85) and A$1 = S$1.32 (June 2010: A$1 = S$1.23).

The Group had net debt as at 30 June 2011 of A$875.4 million, including certain other financial liabilities of A$227.7 million (June 2010: A$169.6 million). Interest coverage for the year ended 30 June 2011 is 6.7 times, consistent with the prior year. As at 30 June 2011 the Group was in compliance with all of the financial covenants contained within its credit facilities.

The average maturity of the Group’s drawn debt at 30 June 2011 is five years, with the earliest maturity date being October 2012. As at 30 June 2011, the mix of borrowings, adjusted for interest rate swaps and including other financial liabilities, is 51% at fixed rates and 49% at floating rates. Subsequent to the year end a number of interest rate swaps were implemented which increases the proportion of fixed rate interest borrowings to 62%.

In March 2011, the Group established a new five year A$225 million loan facility to partly fund the Valemus acquisition. On 3 June 2011, the Group also established a A$975 million syndicated loan facility which comprises a three year term tranche with a limit of A$595 million maturing in July 2014 and a five year term tranche with a limit of A$380 million maturing in July 2016. The proceeds were used to refinance the Group’s fully drawn A$570 million club facility that was due to mature in December 2011. Both of these new facilities are consistent with the Group’s standard terms and conditions and there are no changes to the Group’s existing financial covenants. The Group also secured a three year bonding facility maturing in July 2014; this facility replaced a bridge facility put in place at the time of the Valemus acquisition.

The Group is in a strong liquidity position with cash and cash equivalents of A$1,046.2 million as at 30 June 2011. In addition, the Group had undrawn committed bank facilities of A$815.7 million.

Cash flow

Cash flow
	June 2011	June 2010
	A$m	A$m
Net cash (used in)/provided by operating activities	(42.2)	167.7
Net cash (used in) investing activities	(687.0)	(249.6)
Net cash provided by fnancing activities	216.3	652.5
Effect of foreign exchange rate movements on cash and cash equivalents	(76.8)	(55.5)
net (decrease)/increase in cash and cash equivalents	(589.7)	515.1

Operating cash outflows of A$42.2 million represent the underlying cash flows from the Group’s operating businesses. Operating cash flows include A$584.3 million of investment in new development projects and have been impacted by lower revenue and the timing of cash receipts and payments on construction contracts in all regions. There was a significant improvement in operating cash flows in the second half of the financial year with a net inflow of A$95.3 million compared to an outflow of A$137.5 million in the first half of the year.

Investing cash outflows of A$687.0 million includes A$1,040.9 million of investments, including the acquisition of Valemus, the Jurong Gateway project in Singapore, The DASCO Companies LLC in the US and investment in PPP assets in Australia and the UK. This is partly offset by inflows of A$411.5 million from the sale of investments, including the Group’s interest in UK PPP assets, the Lend Lease Overgate Partnership in the UK and the PoMo shopping centre in Singapore.

Financing cash inflows of A$216.3 million relates to a net inflow from refinancing of the Group’s borrowings, financing of acquisitions and distribution payments in the year.

14 Lend Lease Group annual report 2011

MD&A

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investments

investments
	Lend Lease	Lend Lease
	Share of	Share of
	Income1	Income1	Market Value2	Market Value2
	June 2011	June 2010	June 2011	June 2010
	A$m	A$m	A$m	A$m
Australia	19.5	39.0	315.8	328.0
Asia	11.5	11.8	322.0	253.1
Europe	42.8	59.3	851.4	972.1
Americas	27.1	27.2	496.5	410.0
total	100.9	137.3	1,985.7	1,963.2

1 Represents the Group’s share of income before tax from investments, net of direct expenses and allocated overhead. The Group’s share of income includes gains on the disposal or redemption of available for sale financial assets and investments in associates accounted for using the equity method and excludes property investment revaluations.

2 Market value represents the Group’s assessment of the value of its interest in the underlying assets and is net of project specific debt.

The Group held property investments, directly or indirectly, with a market value of A$2.0 billion as at 30 June 2011. The market value of property investments has been impacted by negative foreign exchange movements of A$258.2 million during the year.

The decrease in value of the Australia investments is primarily due to the negative impact of foreign exchange movements on the New Zealand Retail Portfolio and the partial redemption of capital in the Real Estate Partnership Funds.

The increase in value of the Asia investments is due to the Group acquiring an interest in the Jurong Gateway project in Singapore, partly offset by the negative impact of exchange rate movements of A$20.4 million.

The decrease in the Europe assets is due to the sale of the Group’s 30.7% interest in the Lend Lease Overgate Partnership and the negative impact of exchange rate movements of A$133.6 million.

The value of 100% of Bluewater at 30 June 2011 increased by 9.3% to £1,574.4 million (A$2,422.2 million). The value of the Group’s 30% direct interest in Australian dollars, however, decreased by A$44.8 million to A$726.6 million, due to negative foreign exchange movements. As Bluewater is held as inventory, the asset is recorded at cost in the financial statements, which at 30 June 2011 was A$400.0 million (June 2010: A$451.9 million).

The value of the Group’s 50% interest in King of Prussia at 30 June 2011 of US$531.3 million (June 2010: US$348.5 million) reflects the revaluation increment arising from the conditional agreement reached on 24 May 2011 to sell the asset. The Australian dollar equivalent value of A$496.5 million has been impacted by a negative foreign exchange movement of A$96.3 million. Given the conditional agreement to sell this asset, the revaluation increment of A$101.7 million, which is net of associated sale transaction costs, is included within operating profit after tax and as at 30 June 2011 the investment is classified as a non current asset held for sale.

property investment revaluations

property investment revaluations
	Unrealised	Unrealised	Unrealised	Unrealised
	Revaluation	Revaluation	Revaluation	Revaluation
	Gain/(Loss)	Gain/(Loss)	Gain/(Loss)	Gain/(Loss)
	Before Tax	Before Tax	After Tax	After Tax
	June 2011	June 2010	June 2011	June 2010
	A$m	A$m	A$m	A$m
Australia	1.0	(4.4)	1.0	(4.0)
Asia	13.6	44.2	9.5	31.0
Europe	(3.9)	(1.3)	(3.0)	(2.2)
Americas		(4.8)		(2.8)
total property investment revaluations	10.7	33.7	7.5	22.0

annual report 2011 Lend Lease Group 15

AustrALiA MD&A

Key financial results

The key financial results for the Australia region are summarised below.

	revenue	eBitDA	profit/(Loss) After tAx
	June 2011 A$m June 2010 A$m June 2011 A$m June 2010 A$m June 2011 A$m June 2010 A$m
Development	729.4 617.4 189.7 133.9 159.0 122.9
Construction	4,278.8 3,033.1 164.0 136.4 101.9 87.1
Investment Management	90.6 72.5 44.5 62.5 30.0 43.3
Infrastructure Development	0.7 7.3 (12.5) (9.1) (9.5) (6.4)
total Australia	5,099.5 3,730.3 385.7 323.7 281.4 246.9

In Australia, profit after tax increased by A$34.5 million to A$281.4 million. The current year results include the Group’s 100% ownership of Lend Lease Primelife for a full year, profit from the sale of development land at Hyatt Coolum and sale of 50% of the Group’s interest in the Hyatt Coolum Resort on the Queensland Sunshine Coast, and income from the New Zealand Retail Portfolio assets acquired in April 2010. The construction segment includes the results of the infrastructure business following the Valemus acquisition on 10 March 2011, net of acquisition costs.

Development

residential and Commercial

Residential and Commercial includes the development of residential land lots; residential built-form (including houses, terraces and apartments); and commercial (including retail, office, hotels, light industrial and social infrastructure). Sales results by product line are detailed below.

	resiDentiAL LAnD Lots	resiDentiAL BuiLt-forM	CoMMerCiAL3	totAL
	June 2011 June 2010	June 2011 June 2010	June 2011 June 2010	June 2011 June 2010

Settlements1 Number of units	2,299 2,658 172 234 2,471 2,892
Gross sales value (A$m)	497.2 510.6 205.6 165.1 208.1 114.1 910.9 789.8
Pre-sales1,2 Number of units	1,443 1,046 517 469 1,960 1,515
Gross sales value (A$m)	312.1 233.6 501.9 438.9 85.6 33.3 899.6 705.8

1 Includes 100% of joint venture projects and therefore will not necessarily correlate with the Group’s profit after tax.

2 Pre-sales represents contracts entered into prior to 30 June 2011 that have not settled and therefore do not form part of profit after tax in the current year. These sales are expected to settle in future years.
3 The number of units settled and pre-sales number of units are not relevant measures for Commercial.

	June 2011	June 2010
Number of projects	37	32
Backlog residential (number of units)1
− Zoned	56,040	38,595
− Unzoned	17,540	33,035
Backlog – Residential (units)	73,580	71,630
Backlog – Commercial (sqm/000s)	6,131.7	3,500.5

1 Backlog residential includes the total number of units in both Group-owned and joint venture projects. The actual number of units for any particular project can vary as planning applications are approved.

16 Lend Lease Group annual report 2011

MD&A

AustrALiA CONTINUED

retirement Living and Aged Care

Retirement living and aged care includes the development, management and ownership of retirement villages and aged care facilities. The key statistics for the business are detailed below.

	June 2011	June 2010
Retirement Living
Number of retirement villages1	70	70
Number of retirement units1	12,408	12,357
Number of primary retirement units settled1,2	224	234
Gross sales value of primary retirement units settled (A$m)1,2	89.7	78.8
Number of resale retirement units settled1,2	707	828
Gross sales value of resale retirement units (A$m)1,2	218.5	255.1
Aged Care
Number of aged care facilities1	30	32
Number of aged care beds1	2,317	2,370
Aged care occupancy (%)1	94.5	94.5
Development backlog1
− Retirement village units (with planning approval)	1,257	1,310
− Aged care beds (with licences)	299	179

1 The number of retirement villages and aged care facilities includes 100% of Group owned, joint venture and managed properties.

2 The June 2010 comparative has been adjusted to include 100% of Lend Lease Primelife.

Summary of trading for the development businesses in the year:

n The total number of residential land lots settled decreased by 14% from the prior year to 2,299 units principally as a result of lower settlements in South Australia and Queensland, reflecting current market conditions and a number of projects approaching completion. The number of residential land lot pre-sales however increased by 38% on the prior year to 1,443 units and these will be recognised as sales in the next financial year;
n The average sales price per residential land lot increased by 13% from A$192,100 to A$216,300, reflecting price increases in Victoria and an increased proportion of sales from the higher value NSW and ACT regions;
n Residential built-form unit settlements declined due to the timing of project completions. The prior year included settlements on Rouse Hill and The Merchant building at Victoria Harbour. The current year primarily includes settlements on Sugar Dock at Jacksons Landing;
n The average sales price per residential built-form unit increased by 69% from A$706,000 to A$1,195,000 reflecting the number of high value apartments at Sugar Dock settled in the current year. The prior year included a larger proportion of mid-market apartments at Rouse Hill and The Merchant in Victoria Harbour;
n The gross sales value of commercial projects of A$208.1 million includes the sale of Hyatt Coolum development land on the Sunshine Coast, along with 50% of the Group’s interest in the adjoining Hyatt Coolum Resort;
n Retirement living and aged care achieved resales of 707 units across its owned and managed retirement village portfolio. As at 30 June 2011, retirement living and aged care held contracts for 195 retirement unit resales and held contracts for 100 primary retirement unit sales;
n The aged care operations were 94.5% occupied as at 30 June 2011.

Key trading events in the year include:

n Approval was received from the NSW Government for the Barangaroo South Concept Plan amendment. Approval was also received for the first commercial building and basement and bulk excavation works on the site. On 8 August 2011, the NSW Government released the Barangaroo Review. The Review confirmed that Barangaroo South has valid planning consent and that the Group followed all due process. The Review findings provide certainty that the A$6 billion project will proceed on schedule. The Group is on program to commence work on the construction of the basement and the first commercial tower before the end of the 2011 calendar year. Discussions with major tenants and capital partners continue to progress well;
n The redevelopment of the Royal National Agricultural and Industrial Association of Queensland’s urban regeneration project has commenced with all conditions precedent now satisfied. The A$2.5 billion project will deliver new facilities for Queensland’s premier showground, with 340,000 sqm of residential, commercial and retail to be developed over the next 15 years;

annual report 2011 Lend Lease Group 17

n The commercial component of the Darling Quarter project in Sydney achieved practical completion during the year. The project is a campusstyle commercial development across two eight-storey buildings, providing accommodation for over 6,000 employees of the Commonwealth Bank of Australia. The development also includes a new youth theatre, cafes, restaurants, new parkland, a children’s illuminated playground and public car parking;
n The Group signed a development agreement with LandCorp in Western Australia for the first stage of the 710 hectare Alkimos community development with an estimated end value of A$400 million. Development of the initial 224 hectare stage is expected to commence in the 2012 financial year;
n The Group was selected by the Melton Shire Council as preferred proponent for the Atherstone (previously named Toolern) master-planned urban community project in Melton, Victoria during the year. Subsequent to 30 June 2011, the development agreement was signed. The project will comprise circa 4,500 dwellings with an estimated end value of A$1.2 billion;
n Sekisui House acquired a 50% interest in the 145 apartment development, Serrata, at Victoria Harbour in Melbourne. The Group has retained the remaining 50% interest and will provide development, project management and construction services to the joint venture;
n The Queensland Government endorsed the Urban Land Development Authority’s (ULDA) declaration to include Yarrabilba as one of three South East Queensland ‘model cities’. Yarrabilba is a master-planned urban community with potential for over 17,000 lots. The endorsement included the identification of an ‘Early Release Area’ involving the zoning of the first 520 lots at Yarrabilba. This allows the initial development to commence over the next 12 months while the ULDA finalises the Development Scheme for the entire site;
n The Group signed a land management agreement for a 438 hectare site at Werribee, Melbourne. The project will include approximately 4,000 homes and community infrastructure including four schools, sport and recreation facilities and a neighbourhood shopping centre;
n The Group acquired the freehold title to the Medina Manor aged care facility and the five retirement villages in the APN portfolio (which were previously leased to and managed by the Group);
n The Group entered into an unconditional option agreement to acquire the remaining 50% joint venture interest in the Claremont retirement village and aged care facility, which was subsequently executed and settled in July 2011.

Construction

Construction
	June 2011	June 2010
Proft after tax (A$m)	101.9	87.1
Gross proft margin (GPM) (A$m)	317.2	188.3
New work secured revenue (A$m)	3,365.1	1,340.6
Backlog revenue (A$m)	8,615.0	4,177.5
Backlog GPM (A$m)	631.3	209.9

Key trading events in the year include:

n On 21 December 2010, the Group entered into an agreement with Bilfinger Berger SE to acquire 100% of Valemus, the parent company of Abigroup, Baulderstone and Conneq, that together now form the Group’s infrastructure business in Australia. The businesses are leading providers of services in the engineering, construction, and engineering services markets in Australia. The acquisition has increased the Group’s capabilities and activities in the engineering and construction market and diversified its position in this sector. The acquisition was completed on 10 March 2011;
n Profit after tax increased by A$14.8 million to A$101.9 million and includes A$11.8 million profit from the infrastructure business following its acquisition in March 2011. The profit is net of A$20.5 million of transaction costs associated with the acquisition. The results are in line with expectations determined by the Group during the acquisition process;
n Key contributors to GPM in the year included Gold Coast University Hospital, the new Royal Children’s Hospital in Melbourne, the Commonwealth New Building Project in Canberra, 420 George Street and Darling Quarter in Sydney and the NSW Building the Education Revolution (BER) program;
n Backlog revenue is the expected revenue to be realised in future financial years from contracts committed at the end of the year. Backlog revenue at 30 June 2011 of A$8.6 billion includes A$6.0 billion backlog revenue from the infrastructure business, with key projects including the Queensland Children’s Hospital, upgrade to the Ipswich Motorway and redevelopment of the Mackay Base Hospital in Queensland, the Peninsula Link freeway in Victoria, the Hunter Expressway in NSW and the Adelaide Convention Centre in South Australia;
n Backlog revenue also includes a number of large government infrastructure projects in the project management and construction business such as Gold Coast University Hospital and the new Royal Children’s Hospital in Melbourne.

18 Lend Lease Group annual report 2011

AustrALiA CONTINUED

MD&A

investment Management

investment Management
	June 2011	June 2010
Proft after tax (A$m)	30.0	43.3
Funds under management (FUM)1(A$b)	7.7	7.1
Assets under management (AUM)2(A$b)	4.8	5.3

1 FUM represents the gross market value of real estate and other related assets in managed funds and investment mandates of the Group.
2 AUM is based on the Group’s assessment of the market value of retail assets for which the Group provides property and asset management services to thirdparty owners.

Key trading events in the year include:

n Profit after tax decreased by A$13.3 million to A$30.0 million, primarily due to the prior year including a profit from the sale of a proportion of the Group’s interest in the Australian Prime Property Funds (APPF). Underlying earnings increased due to higher management fees and income from the New Zealand Retail Portfolio assets acquired in April 2010;
n APPF Commercial (APPFC) raised A$200 million of equity in the year. APPFC will use the equity to pay down debt following the completion of a number of developments;
n Practical completion was reached on the 420 George Street development in Sydney, NSW. APPFC has a 25% interest in the development;
n The commercial component of the Darling Quarter project was completed during the year. The project is owned 50% by APPFC and 50% by a Lend Lease investment mandate client;
n Subsequent to 30 June 2011, APPF Retail had its credit rating raised by Standard & Poor’s to A+.

infrastructure Development

Key trading events in the year include:

n The loss after tax increased by A$3.1 million to A$9.5 million in the current year reflecting ongoing investment in the business, including costs associated with bidding for new opportunities which had not been awarded as at 30 June 2011;
n The Group, as part of the Pinnacle Education Consortium, completed construction of the South Australian New Schools PPP project during the year. The consortium was contracted to build and maintain six schools in Adelaide. The Group holds a 50% equity interest in the project and provides financial advisory, transaction management and asset management services to the consortium;
n The Capella Parking Consortium was announced as preferred bidder for the A$140 million Queen Elizabeth II Medical Centre Car Park Project in Perth during the year. Subsequent to 30 June 2011, the Consortium achieved financial close on this project. Fees from the project will be recognised in the 2012 financial year. The consortium will operate and manage a new multi-deck car park facility. The Group will hold a 33% equity interest in the project.

annual report 2011 Lend Lease Group 19

AsiA MD&A

Key financial results

The key financial results for the Asia region are summarised below.

	revenue	eBitDA	profit/(Loss) After tAx
	June 2011 A$m June 2010 A$m	June 2011 A$m June 2010 A$m	June 2011 A$m June 2010 A$m

Development	4.4 2.7 (0.4) (0.4) (0.3) (0.4)
Construction	401.7 403.4 24.0 25.2 16.0 18.3
Investment Management	16.2 17.8 30.8 16.2 30.4 15.3
total Asia	422.3 423.9 54.4 41.0 46.1 33.2

In Asia, profit after tax increased by A$12.9 million to A$46.1 million in the current year primarily due to a profit on sale of the Group’s 25% ownership interest in the PoMo retail centre in Singapore. Profit after tax was negatively impacted by foreign exchange movements of A$1.4 million.

Development

Development
	June 2011	June 2010
Number of development projects	2	2
Backlog – Commercial/Retail (sqm/000s)	144.0	144.0

The development loss after tax of A$0.3 million is due to costs associated with the Jurong Gateway project, which is in the early stages of development. During the year the Group finalised the purchase of the Jurong Gateway site, a large mixed-use suburban development in Singapore. This was a joint bid by the Group and one of its managed funds, the Asian Retail Investment Fund 3 (ARIF 3).

Construction

Construction
	June 2011	June 2010
Proft after tax (A$m)	16.0	18.3
Gross proft margin (A$m)	53.2	45.1
New work secured revenue (A$m)	864.8	326.9
Backlog revenue (A$m)1	746.9	289.9
Backlog GPM (A$m)1	39.2	34.9

1 Although backlog revenue and backlog GPM are realised over several years, the average foreign exchange rate for the current year has been applied to the closing backlog revenue and backlog GPM balances in their entirety as the average rates for later years cannot be predicted.

Key trading events in the year include:

n Profit after tax decreased by A$2.3 million to A$16.0 million. Key contributions to GPM in Asia included telecommunications rollouts across Japan, REC solar panel plant and Alcon ophthalmic pharmaceutical plant in Singapore and Corning Display Technologies in Taiwan;
n The increase in new work secured revenue is principally due to the Jurong Gateway mixed-use development project in Singapore and the Corning Display Technologies LCD glass manufacturing facility project in Taiwan;
n Backlog revenue as at 30 June 2011 includes Jurong Gateway and Stamford American International School in Singapore, telecommunications rollout projects in Japan, Corning Display Technologies in Taiwan, and KL Eco City and Setia City Mall in Malaysia.

investment Management

investment Management
	June 2011	June 2010
Proft after tax (A$m)	30.4	15.3
Funds under management (FUM)1(A$b)	2.0	1.6
Assets under management (AUM)2(A$b)	1.6	1.8

1 FUM represents the gross market value of real estate and other related assets managed on behalf of investors.

2 AUM represent the Group’s assessment of the value of the underlying assets.

Key events in the year include:

n Profit after tax increased by A$15.1 million to A$30.4 million due to a profit on sale of the Group’s 25% ownership interest in the PoMo retail shopping centre in Singapore;
n Asia FUM increased by A$0.4 billion, as a result of the launch of ARIF 3 following securing of the Jurong Gateway project in Singapore;
n Asia AUM decreased by $0.2 billion due to the sale of the Group’s 25% ownership interest in the PoMo retail shopping centre in Singapore.

20 Lend Lease Group annual report 2011

europe MD&A

Key financial results

The key financial results for the Europe region are summarised below.

	revenue	eBitDA	profit/(Loss) After tAx
	June 2011 A$m June 2010 A$m	June 2011 A$m June 2010 A$m	June 2011 A$m June 2010 A$m

Development	19.7 124.5 5.0 43.9 4.7 41.5
Construction	1,288.3 2,167.2 27.1 50.4 11.4 25.8
Investment Management	64.6 79.6 39.1 71.6 34.7 41.1
Infrastructure Development	115.9 126.7 78.1 1.0 86.6 10.2
total europe	1,488.5 2,498.0 149.3 166.9 137.4 118.6

Development

Development
	June 2011	June 2010
Proft after tax	4.7	41.5
Number of units settled1	55	634
Gross sales value of units settled (A$m)1,2	11.0	123.9
Number of pre-sales1,3	234	232
Gross sales value of pre-sales (A$m)1,3	13.6	11.6
Number of projects	23	24
Backlog (number of units)4
− Zoned (with planning approval)	12,209	12,165
− Unzoned (awaiting planning approvals)	2,783	260
Backlog – Residential (units)	14,992	12,425
Backlog – Commercial (sqm/000s)	777.9	384.0

1 Includes 100% of joint venture projects and therefore will not necessarily correlate with the Group’s profit after tax.
2 Gross sales value of units settled reflects residential and non residential revenue from projects.
3 Pre-sales represent contracts entered into prior to 30 June 2011 that have not settled and therefore do not form part of profit after tax in the current year. These sales are expected to settle in future years.
4 Backlog includes the total number of units in both Group-owned and joint venture projects. The actual number of units for any particular project can vary as planning approvals are obtained.

Key trading events in the year include:

n Profit after tax decreased by A$36.8 million to A$4.7 million. The result for the year ended 30 June 2010 included profit on sale of the Group’s investment in Meridian Delta Dome Limited and higher profits from the Athletes Village project and the UK residential business (formerly known as Crosby Lend Lease);
n Settlements relate to the sale of remaining inventory in the UK residential business. The Group has 24 completed units left to sell;
n The Group signed a Conditional Regeneration Agreement with the London Borough of Southwark for the regeneration of Elephant and Castle comprising more than 300,000 sqm of new build, mixed-use development together with major infrastructure improvements and a range of enhanced community facilities;
n The Group sold its interest in the Pier Walk office building at Greenwich Peninsula;
n All conditions were met in relation to the Conditional Framework Agreement between the Group and London and Continental Railways (LCR) for the second stage of the Stratford City development, Stratford International Quarter. The development comprises 382,000 sqm of commercial space and 300 residential units to be developed following the London 2012 Olympic and Paralympic Games.

Construction

Construction
	June 2011	June 2010
Proft after tax (A$m)	11.4	25.8
Gross proft margin (A$m)	116.4	163.8
New work secured revenue (A$m)	1,435.5	1,138.5
Backlog revenue (A$m)1	1,454.6	1,473.9
Backlog GPM (A$m)1	120.7	126.8

annual report 2011 Lend Lease Group 21

Key trading events in the year include:

n Profit after tax decreased by A$14.4 million to A$11.4 million reflecting challenging trading conditions across both the UK and Continental Europe. Key contributions to GPM included the Athletes’ Village project for the 2012 Olympic and Paralympic Games in London, the new BBC broadcasting centre, UK Ministry of Defence projects and the BP Global Alliance project across Europe;
n New work secured revenue increased by A$0.3 billion to A$1.4 billion and includes the Scottish National Arena in Glasgow, Bulford Housing for the UK Ministry of Defence and Manchester Creative & Media Academy.

investment Management

investment Management
	June 2011	June 2010
Proft after tax (A$m)	34.7	41.1
Funds under management (FUM)1(A$b)	1.2	1.4
Assets under management (AUM)2(A$b)	3.1	3.5

1 FUM represents the gross market value of real estate and other related assets managed on behalf of investors.
2 AUM represent the Group’s assessment of the value of the underlying assets.

Key trading events in the year include:

n Profit after tax decreased by A$6.4 million to A$34.7 million. The current year profit includes a profit on sale of the Group’s interest in the Lend Lease Overgate Partnership. The Lend Lease Overgate Partnership was sold in December 2010, with the Group realising proceeds of A$71.5 million for its 30.7% stake in the partnership. The June 2010 result included a profit on the sale of the Group’s 33.3% ownership interest in Performance Retail Limited Partnership;
n The Group launched the UKIF with £220 million in committed capital available to invest in social infrastructure assets over the next five years. The UKIF purchased established healthcare, education and accommodation PPP assets from the Group for A$125.9 million, with further consideration of approximately A$50.0 million due on transfer of certain other Group PPP assets still under construction and commissioning. The Group has a 10% co-investment in the UKIF;
n The Lend Lease Retail Partnership (LLRP) was extended for a further seven year period until November 2017. LLRP is a close-ended unlisted wholesale limited partnership in the UK that owns 25% of Bluewater in Kent and 100% of Touchwood shopping centre in Solihull. In addition to extending the life of LLRP, LLRP now has the potential to undertake selective acquisitions. The Group provides development, asset and property management services to LLRP and has a 4.01% investment in the partnership.

infrastructure Development

infrastructure Development
	June 2011 June 2010
Proft after tax (A$m)	86.6 10.2
Gross proft margin (A$m)1	9.5 14.8
Equity returns (A$m)2	102.6 41.4
Number of projects3	24 23
Invested equity (A$m)	118.7 147.3
Committed equity (A$m)	30.6 52.1
Backlog revenue (A$m)4	776.2 755.0
Backlog GPM (A$m)4	74.1 68.8

1 Gross profit margin relates to asset and facilities management services provided and does not include equity returns.
2 Including loan stock interest and the profit before tax from the sale of the Group’s interest in PPP assets to the UKIF and the sale of the Group’s interest in the Queen Mary’s Hospital, Roehampton. June 2010 included a profit after tax on the sale of the Group’s interest in the Queen’s Hospital, Romford.
3 Number of projects includes projects where the Group is preferred bidder and combines extensions of existing projects.
4 Backlog revenue and GPM disclosed includes a maximum of 10 years of backlog from facilities management even though PPP contracts run for up to 40 years.

Key trading events in the year include:

n Sale of the Group’s interest in operational healthcare, education and accommodation PPP assets in the UK to the UKIF for a consideration of A$125.9 million, with further consideration of approximately A$50.0 million due on transfer of certain other PPP assets still under construction and commissioning;
n Sale of the Group’s 50% interest in the Queen Mary’s Hospital, Roehampton.

22 Lend Lease Group annual report 2011

AMeriCAs MD&A

Key financial results

The key financial results for the Americas region are summarised below.

	revenue	eBitDA	profit/(Loss) After tAx
	June 2011 A$m June 2010 A$m June 2011 A$m June 2010 A$m June 2011 A$m June 2010 A$m
Development	1.1 (9.9) 0.2 (5.7) 0.1
Construction	1,366.2 2,927.1 (5.0) (66.7) (4.8) (45.0)
Investment Management	0.3 0.1 204.5 30.1 123.3 20.3
Infrastructure Development	567.1 935.0 58.2 89.9 43.8 55.3
total Americas	1,934.7 3,862.2 247.8 53.5 156.6 30.7

In the Americas, profit after tax increased by A$125.9 million to A$156.6 million. The increase in profit is primarily due to the agreement reached in May 2011 to sell the Group’s 50% interest in the King of Prussia shopping mall and a significant improvement in the operating results of the construction business. Profit after tax was negatively impacted by foreign exchange movements of A$16.8 million.

Development

Lend Lease DAsCo

On 17 February 2011, the Group acquired The DASCO Companies LLC. The business focuses on the development, financing, leasing and management of property in the healthcare sector. The business incurred a loss after tax of A$4.8 million from the date of acquisition through to 30 June 2011 due to transaction costs associated with the acquisition and integration of the business into the Group.

residential and Commercial

The residential and commercial development business focuses on large scale urban greenfield development and regeneration opportunities. The business has one project, Horizon Uptown in Denver, Colorado. The project will be launched when market conditions are more favourable. The business incurred a loss after tax of A$0.9 million in the year.

Construction

	June 2011	June 2010
Loss after tax (A$m)	(4.8)	(45.0)
Gross proft margin (A$m)	78.5	81.8
New work secured revenue (A$m)	3,074.0	898.4
Backlog revenue (A$m)1	2,937.4	1,183.7
Backlog GPM (A$m)1	77.6	60.5

1 Although backlog revenue and backlog GPM are realised over several years, the average foreign exchange rate for the current year has been applied to the closing backlog revenue and backlog GPM balances in their entirety as the average rates for later years cannot be predicted.

Key trading events in the year include:

n While trading conditions in the construction market remain difficult there was a significant improvement in the year with a A$40.2 million reduction in the reported loss to A$4.8 million;
n The loss after tax includes a charge of US$5.0 million before tax in relation to the settlement reached with the New York City Department of Investigation in relation to its investigation into billing practices in New York;
n The volume of construction projects secured in the year increased significantly, reflecting positive signs that market conditions are stabilising. Key projects secured include the Delta Air Lines Terminal 4 project at JFK Airport in New York and appointment as the construction services provider for 7-Eleven stores across the US and Canada;
n Backlog revenue increased by A$1.7 billion to A$2.9 billion as at 30 June 2011;
n The business substantially reduced its exposure in relation to the World Trade Center litigation following the James Zadroga 9/11 Health and Compensation Act (Zadroga Act) being passed by the US Congress and signed into law by the US President on 2 January 2011. Importantly, the Zadroga Act establishes substantial limitations on the liability of certain entities that participated in the rescue, recovery and debris removal following the 11 September 2001 attacks on the World Trade Center. For the Group, liabilities, if any, arising out of the debris removal effort are now limited to available insurance.

annual report 2011 Lend Lease Group 23

investment Management

Profit after tax increased by A$103.0 million to A$123.3 million.

On 24 May 2011, the Group entered into a conditional agreement to sell its 50% ownership interest in the King of Prussia shopping mall. The current year profit after tax includes A$101.7 million resulting from revaluation of the asset in anticipation of this transaction, net of associated costs. In addition, the result includes the Group’s share of operating income from the mall up until the date the sale was announced totalling US$26.8 million (before tax), compared to US$24.5 million (before tax) in the prior year.

The value of the Group’s 50% interest in King of Prussia as at 30 June 2011 was US$531.3 million (June 2010: US$348.5 million). The Australian dollar equivalent value of A$496.5 million has been impacted by a negative foreign exchange movement of A$96.3 million.

infrastructure Development

The key financial results for Infrastructure Development are detailed below.

	June 2011 June 2010
Proft after tax (A$m)	43.8 55.3
Gross proft margin (A$m)1	76.0 113.5
Equity returns (A$m)	3.8 3.9
New work secured revenue (A$m)	845.4 46.7
Number of projects2	26 20
Invested equity (A$m)3	50.8 61.3
Committed equity (A$m)	46.5 50.5
Backlog revenue4	2,685.7 2,670.2
Backlog GPM4	328.1 364.5
Backlog (number of units under management)
− Operational (secured)	44,285 41,700
− Preferred bidder (awarded)	5,430 2,350
Total Backlog	49,715 44,050

1 Gross profit margin relates to development, construction and asset management services provided.
2 Number of projects includes extensions of existing projects and projects where the Group is the preferred bidder.

3 The reduction in invested equity reflects the return of equity invested in the Hickham Phase 1 project.

4 Backlog disclosed includes 10 years of backlog from facilities management, even though the contracts run for up to 50 years. Although backlog is realised over several years, the average foreign exchange rate for the current year has been applied to the closing backlog balance in its entirety as the average rates for later years cannot be predicted. In local currency the backlog revenue is US$2,685.7 million (June 2010: US$2,403.2 million) and the backlog GPM is US$328.1 million (June 2010: US$328.0 million).

Key trading events in the year include:

n Reaching financial close with the US Department of the Army on North Haven Communities in Alaska. North Haven involves the development of family housing at two Army installations, Fort Wainwright and Fort Greely. The project has an initial development budget of US$377.0 million over the first seven years of the project;
n Being appointed to implement the second phase (Group B) of the US Department of the Army Privatisation of Army Lodging (PAL) program, which has a project value of US$350.0 million. The Group will also undertake additional work on the previously awarded first phase program, Group A, which has a project value of US$250.0 million;
n Profit after tax for the year includes costs incurred in bidding for project opportunities in Canada.

24 Lend Lease Group annual report 2011

CorporAte MD&A

Key financial results

The key financial results for Corporate are summarised below.

	revenue	eBitDA	profit/(Loss) After tAx
	June 2011 A$m June 2010 A$m	June 2011 A$m June 2010 A$m	June 2011 A$m June 2010 A$m

Group Services	12.7 14.5 (114.9) (103.5) (84.0) (75.2)
Group Treasury	56.4 41.1 (11.6) 0.9 (49.3) (26.9)
Group Amortisation	(2.9) (3.7)
total Corporate	69.1 55.6 (126.5) (102.6) (136.2) (105.8)

Group services

Group Services costs after tax increased by A$8.8 million to A$84.0 million and include costs associated with the redesign of the organisation structure and business processes.

Group treasury

Group Treasury manages the Group’s liquidity, foreign exchange exposures, interest rate risk and debt. The result for the year is detailed in the table below.

	profit/(Loss) Before tAx	profit/(Loss) After tAx
	June 2011 A$m June 2010 A$m June 2011 A$m June 2010 A$m
Interest revenue	56.4 41.1 37.4 29.3
Interest expense and other costs	(132.3) (85.0) (87.8) (56.3)
Net hedge beneft	1.7 0.9 1.1 0.1
total Group treasury	(74.2) (43.0) (49.3) (26.9)

interest revenue and expenses

n Interest revenue after tax increased by A$8.1 million to A$37.4 million in the current year, due to a combination of higher average cash balances prior to the acquisition of Valemus in March 2011 and higher average interest rates on invested cash. The interest rate on invested cash averaged 4.6% per annum for the year (June 2010: 3.1%);
n Interest expense and other costs after tax increased by A$31.5 million to A$87.8 million in the current year, due to the consolidation of Lend Lease Primelife and its associated debt, an increase in net debt following the acquisition of Valemus and upfront costs associated with refinancing maturing credit facilities.

hedging and foreign exchange exposure

n The Group hedges material foreign currency cash flows. Any foreign exchange gains or losses arising on the underlying cash flow or the hedging of business unit cash flows are allocated to the business unit’s operating profit;
n The Group uses natural hedging, where possible, to minimise its exposure to movement in foreign currency denominated net assets. The impact of foreign exchange movements on the Group’s net assets is accounted for in the Foreign Currency Translation Reserve (FCTR). In the year, the FCTR decreased by A$162.3 million due to a strengthening of the Australian dollar.

Group Liquidity

n At 30 June 2011, the Group was in a strong liquidity position, with cash and cash equivalents of A$1,046.2 million and undrawn committed bank facilities of A$815.7 million. The Group’s net debt position as at 30 June 2011 was A$875.4 million, including certain other financial liabilities of A$227.7 million;
n In March 2011, the Group established a new five year A$225 million loan facility to partly fund the Valemus acquisition. On 3 June 2011, the Group also established a A$975 million syndicated loan facility which comprises a three year term tranche with a limit of A$595 million maturing in July 2014 and a five year term tranche with a limit of A$380 million maturing in July 2016. The proceeds were used to refinance the Group’s fully drawn A$570 million club facility that was due to mature in December 2011. Both of these new facilities are consistent with the Group’s standard terms and conditions and there are no changes to the Group’s existing financial covenants. The Group also secured a three year bonding facility maturing in July 2014; this facility replaced a bridge facility put in place at the time of the Valemus acquisition.

annual report 2011 Lend Lease Group 25

AppenDix 1 MD&A

operating results by region Detail

	revenue	eBitDA	profit/(Loss) Before tAx1	profit/(Loss) After tAx2
	June 2011 A$m June 2010 A$m June 2011 A$m June 2010 A$m June 2011 A$m June 2010 A$m June 2011 A$m June 2010 A$m
Australia Development	729.4 617.4 189.7 133.9 182.4 122.3 159.0 122.9
Construction	4,278.8 3,033.1 164.0 136.4 147.4 133.7 101.9 87.1
Investment Management	90.6 72.5 44.5 62.5 42.7 61.2 30.0 43.3
Infrastructure Development	0.7 7.3 (12.5) (9.1) (13.3) (9.1) (9.5) (6.4)
total Australia	5,099.5 3,730.3 385.7 323.7 359.2 308.1 281.4 246.9
Asia Development	4.4 2.7 (0.4) (0.4) (0.4) (0.4) (0.3) (0.4)
Construction	401.7 403.4 24.0 25.2 23.8 25.0 16.0 18.3
Investment Management	16.2 17.8 30.8 16.2 30.7 16.2 30.4 15.3
total Asia	422.3 423.9 54.4 41.0 54.1 40.8 46.1 33.2
Europe Development	19.7 124.5 5.0 43.9 4.2 41.5 4.7 41.5
Construction	1,288.3 2,167.2 27.1 50.4 21.8 44.6 11.4 25.8
Investment Management	64.6 79.6 39.1 71.6 39.0 70.2 34.7 41.1
Infrastructure Development	115.9 126.7 78.1 1.0 91.3 13.9 86.6 10.2
total europe	1,488.5 2,498.0 149.3 166.9 156.3 170.2 137.4 118.6
Americas Development	1.1 (9.9) 0.2 (10.0) 0.1 (5.7) 0.1
Construction	1,366.2 2,927.1 (5.0) (66.7) (7.3) (71.0) (4.8) (45.0)
Investment Management	0.3 0.1 204.5 30.1 204.4 30.2 123.3 20.3
Infrastructure Development	567.1 935.0 58.2 89.9 59.8 92.8 43.8 55.3
total Americas	1,934.7 3,862.2 247.8 53.5 246.9 52.1 156.6 30.7
total operating Businesses	8,945.0 10,514.4 837.2 585.1 816.5 571.2 621.5 429.4
Corporate Group Services	12.7 14.5 (114.9) (103.5) (118.6) (107.4) (84.0) (75.2)
Group Treasury	56.4 41.1 (11.6) 0.9 (74.2) (43.0) (49.3) (26.9)
Group Amortisation	(2.9) (3.7) (2.9) (3.7)
total Corporate	69.1 55.6 (126.5) (102.6) (195.7) (154.1) (136.2) (105.8)
total operating	9,014.1 10,570.0 710.7 482.5 620.8 417.1 485.3 323.6
Property Investment Revaluations	10.7 33.7 10.7 33.7 7.5 22.0
total statutory	9,014.1 10,570.0 721.4 516.2 631.5 450.8 492.8 345.6

1 Profit before tax is before adjusting for the amount attributable to non controlling interests.

2 Profit after tax is after adjusting for the profit after tax attributable to non controlling interests of A$0.4 million (June 2010: A$2.6 million).

26 Lend Lease Group annual report 2011

AppenDix 2 MD&A

operating results by Line of Business Detail

	revenue	eBitDA	profit/(Loss) Before tAx1	profit/(Loss) After tAx2
	June 2011 A$m June 2010 A$m June 2011 A$m June 2010 A$m June 2011 A$m June 2010 A$m June 2011 A$m June 2010 A$m
Development Australia	729.4 617.4 189.7 133.9 182.4 122.3 159.0 122.9
Asia	4.4 2.7 (0.4) (0.4) (0.4) (0.4) (0.3) (0.4)
Europe	19.7 124.5 5.0 43.9 4.2 41.5 4.7 41.5
Americas	1.1 (9.9) 0.2 (10.0) 0.1 (5.7) 0.1
total Development	754.6 744.6 184.4 177.6 176.2 163.5 157.7 164.1
Construction Australia	4,278.8 3,033.1 164.0 136.4 147.4 133.7 101.9 87.1
Asia	401.7 403.4 24.0 25.2 23.8 25.0 16.0 18.3
Europe	1,288.3 2,167.2 27.1 50.4 21.8 44.6 11.4 25.8
Americas	1,366.2 2,927.1 (5.0) (66.7) (7.3) (71.0) (4.8) (45.0)
total Construction	7,335.0 8,530.8 210.1 145.3 185.7 132.3 124.5 86.2
Investment Management Australia	90.6 72.5 44.5 62.5 42.7 61.2 30.0 43.3
Asia	16.2 17.8 30.8 16.2 30.7 16.2 30.4 15.3
Europe	64.6 79.6 39.1 71.6 39.0 70.2 34.7 41.1
Americas	0.3 0.1 204.5 30.1 204.4 30.2 123.3 20.3
total investment Management	171.7 170.0 318.9 180.4 316.8 177.8 218.4 120.0
Infrastructure Development Australia	0.7 7.3 (12.5) (9.1) (13.3) (9.1) (9.5) (6.4)
Europe	115.9 126.7 78.1 1.0 91.3 13.9 86.6 10.2
Americas	567.1 935.0 58.2 89.9 59.8 92.8 43.8 55.3
total infrastructure Development	683.7 1,069.0 123.8 81.8 137.8 97.6 120.9 59.1
total operating Businesses	8,945.0 10,514.4 837.2 585.1 816.5 571.2 621.5 429.4
Corporate Group Services	12.7 14.5 (114.9) (103.5) (118.6) (107.4) (84.0) (75.2)
Group Treasury	56.4 41.1 (11.6) 0.9 (74.2) (43.0) (49.3) (26.9)
Group Amortisation	(2.9) (3.7) (2.9) (3.7)
total Corporate	69.1 55.6 (126.5) (102.6) (195.7) (154.1) (136.2) (105.8)
total operating	9,014.1 10,570.0 710.7 482.5 620.8 417.1 485.3 323.6
Property Investment Revaluations	10.7 33.7 10.7 33.7 7.5 22.0
total Group	9,014.1 10,570.0 721.4 516.2 631.5 450.8 492.8 345.6

1 Profit before tax is before adjusting for the amount attributable to non controlling interests.

2 Profit after tax is after adjusting for the profit after tax attributable to non controlling interests of A$0.4 million (June 2010: A$2.6 million).

annual report 2011 Lend Lease Group 27

AppenDix 3 MD&A

operating results by region Detail in Local Currency[1]

	revenue	eBitDA	profit/(Loss) Before tAx2	profit/(Loss) After tAx3
	June 2011 A$m June 2010 A$m	June 2011 A$m June 2010 A$m	June 2011 A$m June 2010 A$m	June 2011 A$m June 2010 A$m

Australia Development	729.4 617.4 189.7 133.9 182.4 122.3 159.0 122.9
Construction	4,278.8 3,033.1 164.0 136.4 147.4 133.7 101.9 87.1
Investment Management	90.6 72.5 44.5 62.5 42.7 61.2 30.0 43.3
Infrastructure Development	0.7 7.3 (12.5) (9.1) (13.3) (9.1) (9.5) (6.4)
GroupServices and Amortisation	12.7 14.5 (114.9) (103.5) (121.5) (111.1) (86.9) (78.9)
GroupTreasury	50.2 33.4 (9.7) 0.7 (18.2) 8.2 (12.6) 6.7
total Australia	5,162.4 3,778.2 261.1 220.9 219.5 205.2 181.9 174.7

	revenue	eBitDA	profit/(Loss) Before tAx2	profit/(Loss) After tAx3
	June 2011 A$m June 2010 A$m	June 2011 A$m June 2010 A$m	June 2011 A$m June 2010 A$m	June 2011 A$m June 2010 A$m

Asia Development	4.4 2.7 (0.4) (0.4) (0.4) (0.4) (0.3) (0.4)
Construction	401.7 403.4 24.0 25.2 23.8 25.0 16.0 18.3
Investment Management	16.2 17.8 30.8 16.2 30.7 16.2 30.4 15.3
GroupTreasury	0.4 0.6 0.4 0.6 0.3 0.6
total Asia	422.7 424.5 54.4 41.0 54.5 41.4 46.4 33.8

	revenue	eBitDA	profit/(Loss) Before tAx2	profit/(Loss) After tAx3
	June 2011 £m June 2010 £m	June 2011 £m June 2010 £m	June 2011 £m June 2010 £m	June 2011 £m June 2010 £m

Europe Development	12.4 70.9 3.2 25.0 2.6 23.7 3.0 23.7
Construction	811.6 1,235.3 17.1 28.7 13.7 25.4 7.2 14.7
Investment Management	40.7 45.4 24.6 40.8 24.6 40.0 21.9 23.4
Infrastructure Development	73.0 72.2 49.2 0.6 57.5 7.9 54.6 5.8
GroupTreasury	0.3 1.0 (1.6) (28.1) (21.8) (19.5) (15.7)
total Great British pounds	938.0 1,424.8 92.5 95.1 70.3 75.2 67.2 51.9
total Australian Dollars4	1,488.9 2,499.7 146.9 166.8 111.6 131.9 106.7 91.1

	revenue	eBitDA	profit/(Loss) Before tAx2	profit/(Loss) After tAx3
	June 2011 US$m June 2010 US$m	June 2011 US$m June 2010 US$m	June 2011 US$m June 2010 US$m	June 2011 US$m June 2010 US$m

Americas Development	1.1 (9.9) 0.2 (10.0) 0.1 (5.7) 0.1
Construction	1,366.2 2,634.4 (5.0) (60.0) (7.3) (63.9) (4.8) (40.5)
Investment Management	0.3 0.1 204.5 27.1 204.4 27.2 123.3 18.2
Infrastructure Development	567.1 841.5 58.2 80.9 59.8 83.5 43.8 49.8
GroupTreasury	5.4 4.8 0.5 0.2 (11.7) (12.2) (6.3) (6.0)
total us Dollars	1,940.1 3,480.8 248.3 48.4 235.2 34.7 150.3 21.6
total Australian Dollars4	1,940.1 3,867.6 248.3 53.8 235.2 38.6 150.3 24.0

1 Local currency results exclude foreign exchange movements other than Great British Pounds and US Dollars.

2 Profit before tax is before adjusting for the amount attributable to non controlling interests.

3 Profit after tax is after adjusting for the profit after tax attributable to non controlling interests of A$0.4 million (June 2010: A$2.6 million profit).

4 The foreign exchange rates applied are A$1 = £0.63 (June 2010: A$1 = £0.57), A$1 = US$1.00 (June 2010: A$1 = US$0.90) and A$1 = S$1.28 (June 2010: A$1 = S$1.25).

28 Lend Lease Group annual report 2011

DireCtors’ report

tA B L e o f C o n t e n t s

tA	B L e o f C o n t e n t s
1.	Governance	29
a.	Board/Directors	29
b.	Company Secretaries’ Qualifcations and Experience	30
c.	Offcers Who Were Previously Partners of the Audit Firm	31
d.	Directors’ Meetings	31
e.	Interest in Capital	31
2.	operations	32
a.	Principal Activities	32
b.	Review and Results of Operations	32
c.	Distributions	32
d.	Signifcant Changes in State of Affairs	32
e.	Events Subsequent to Balance Date	32
f.	Likely Developments	32
g.	Environmental Regulation	32
3.	remuneration report	33
a.	Snapshot of Changes	35
b.	Actual Executive Remuneration Outcomes – Audited	36
c.	About this Report – Audited	37
d.	Our Governance Policy	37
e.	Reward Strategy and Practice – Audited	38
f.	How Rewards are Infuenced by Performance – Audited	43
g.	Executive Contracts – Audited	45
h.	Statutory Executive Remuneration Disclosures – Audited	46
i.	Non-Executive Director Remuneration – Audited	49
4.	other	51
a.	Security Options	51
b.	Indemnifcation and Insurance of Directors and Offcers	51
c.	Non Audit Services	51
d.	Rounding Off	51
Lead Auditor’s independence Declaration under
section 307C of the Corporations Act 2001		52

The Directors present their Report together with the Annual Consolidated Financial Report of the consolidated entity, being Lend Lease Corporation Limited (‘the Company’) and its controlled entities including Lend Lease Trust (‘LLT’) (together referred to as the ‘Consolidated Entity’ or the ‘Group’), for the financial year ended 30 June 2011 and the Auditors’ Report thereon.

Following shareholder approval on 12 November 2009, the shares of the Company and the units in LLT were combined as stapled securities. From 13 November 2009, the shares in the Company and the units in LLT have been traded as one security under the name of Lend Lease Group on the Australian Securities Exchange (‘ASX’).

annual report 2011 Lend Lease Group 29

1. GovernAnCe DireCtors’ report

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From top to bottom: D A Crawford S B McCann P M Colebatch G G Edington

a. Board/Directors

The names, qualifications and experience of each person holding the position of Director of the Company at the date of this Report are:

D A Crawford AO, Chairman (Independent Non Executive Director)

Age 67

Mr Crawford joined the Board in July 2001 and was appointed Chairman in May 2003. Mr Crawford was appointed an Officer of the Order of Australia (AO) in June 2009 in recognition for service in various fields including to business as a Director of public companies, to sport particularly through the review and restructure of national sporting bodies, and to the community through contributions to arts and educational organisations.

Experience and Qualifications

Previously, Mr Crawford was National Chairman of the Australian firm of KPMG. He has extensive accounting and business experience having worked with many large corporations and governments. He holds a Bachelor of Commerce and Bachelor of Laws from the University of Melbourne. He is a Fellow of the Institute of Chartered Accountants.

Other Directorships and Positions

Mr Crawford is Non Executive Chairman of Foster’s Group Limited (appointed Director August 2001 and Chairman October 2007) and a Non Executive Director of BHP Billiton Limited (appointed May 1994). He was formerly a Non Executive Director of Westpac Banking Corporation (appointed May 2002, resigned December 2007) and National Foods Limited (appointed November 2001, resigned June 2005).

S B McCann, Group Chief Executive Officer and Managing Director (Executive Director) Age 46

Mr McCann was appointed Group Chief Executive Officer and Managing Director in December 2008 and joined the Board in March 2009.

Experience and Qualifications

Mr McCann joined Lend Lease in 2005. Prior to his current role, Mr McCann was Group Finance Director, appointed in March 2007 and Chief Executive Officer for Lend Lease’s Investment Management business from September 2005 to December 2007.

Mr McCann has more than 15 years experience in funds management and capital markets transactions. Prior to joining Lend Lease, Mr McCann spent six years at ABN AMRO, where his roles included Head of Property, Head of Industrial Mergers & Acquisitions and for the last three years, Head of Equity Capital Markets for Australia and New Zealand.

Previous roles also include Head of Property at Bankers’ Trust, four years as a mergers and acquisitions lawyer at Freehills, Melbourne and four years in taxation accounting.

Mr McCann holds a Bachelor of Economics (Finance major) and a Bachelor of Laws from Monash University in Melbourne, Australia.

Other Directorships and Positions Nil.

P M Colebatch

(Independent Non Executive Director) Age 66

Mr Colebatch joined the Board in December 2005 and is Chairman of the Personnel and Organisation Committee and a member of the Risk Management and Audit Committee.

Experience and Qualifications

Mr Colebatch has a Bachelor of Science and Bachelor of Engineering from the University of Adelaide, a Master of Science from Massachusetts Institute of Technology and a Doctorate in Business Administration from Harvard University. He has held senior management positions in insurance and investment banking, and was formerly on the Executive Board of Swiss Reinsurance Company, Zurich. He was previously on the Executive Board of Credit Suisse Group, Zurich, where he was Chief Financial Officer, and was subsequently Chief Executive Officer of Credit Suisse Asset Management.

Other Directorships and Positions

Mr Colebatch is a Non Executive Director of Insurance Australia Group Limited (appointed January 2007), a Non Executive Director of Man Group plc (appointed September 2007) and is on the Board of Trustees for the Prince of Liechtenstein Foundation and the LGT Group Foundation (appointed September 2009).

G G Edington CBE (Independent Non Executive Director) Age 65

Mr Edington joined the Board in 1999 and is a member of the Risk Management and Audit Committee and the Sustainability Committee.

Experience and Qualifications Qualified as a Chartered Surveyor,

Mr Edington brings to the Board extensive UK and international experience in the property sector. Mr Edington was a Director of BAA plc and Chairman of BAA International. He joined BAA plc in 1988, became a member of the Board in 1991 and has been the Chairman of six BAA companies. He is a past President of the British Property Federation, was the Chairman of UK property company Greycoat Estates Limited and was a member of the Bank of England Property Forum. Mr Edington was formerly Chairman of the Council of Trustees of the UK children’s charity, Action for Children, and was awarded a CBE for services to children.

Other Directorships and Positions

Mr Edington is on the Board of Trustees for the Fulham Palace Trust, based in the UK (appointed May 2011).

30 Lend Lease Group annual report 2011

1. GovernAnCe CONTINUED

DireCtors’ report

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From top to bottom: P C Goldmark J A Hill D J Ryan

P C Goldmark

(Independent Non Executive Director) Age 70

Mr Goldmark joined the Board in 1999 and is Chairman of the Nomination Committee and a member of the Sustainability Committee.

Experience and Qualifications

Until his retirement in December 2010, Mr Goldmark was Director, Climate and Air Program at Environmental Defense, a US based non-profit environmental advocacy organisation. He was the Chairman and Chief Executive Officer of The International Herald Tribune in Paris between 1998 and 2003. Prior to this, he was the President and Chief Executive Officer of the Rockefeller Foundation in New York for 10 years. Mr Goldmark has held positions including Senior Vice President of the Times-Mirror Corporation, Executive Director of the Port Authority of New York and New Jersey, and Director of the Budget for the State of New York. He now works as an independent consultant and columnist and is a writer and speaker on world affairs. Mr Goldmark graduated with a BA from Harvard College, Government Department, magna cum laude. He brings to Lend Lease his wide experience as a Chief Executive Officer and senior executive in the private and public sectors, both in the USA and internationally.

Other Directorships and Positions Mr Goldmark is on the Board of Solar Outdoor Lighting in the US (appointed January 2011).

J A Hill (Independent Non Executive Director)

Age 65

Ms Hill joined the Board in May 2006. She is Chairperson of the Sustainability Committee and a member of the Personnel and Organisation Committee.

Experience and Qualifications

Ms Hill has held a number of senior executive positions in the land development and housing construction industry in North America. She was formerly the Chairperson, President and Chief Executive Officer of Costain Homes, Inc. (US) and Vice President and General Manager, Mobil Land (Georgia) Corporation. She has a Bachelor of Arts from the University of California in Los Angeles and a Master of Arts in marketing and management from the University of Georgia.

Other Directorships and Positions

Ms Hill is a Non Executive Director of Wellpoint, Inc. (appointed March 1994). She was formerly a Non Executive Director of Resources Connection, Inc. (appointed January 2003, resigned December 2006) and Holcim (US) Inc (appointed February 2004, resigned January 2007). Ms Hill also sits on the Board of Directors of the Lord Abbett family of mutual funds, which is the trustee of 31 mutual funds of publicly held companies.

D J Ryan AO

(Independent Non Executive Director) Age 59

Mr Ryan joined the Board in December 2004. He is Chairman of the Risk Management and Audit Committee and a member of the Personnel and Organisation Committee.

Experience and Qualifications

Mr Ryan has a background in commercial banking, investment banking and operational business management. He has previously held senior executive management positions in investment banking and industry, as well as being the Chairman or a Non Executive Director of a number of listed public companies. He has a Bachelor of Business from the University of Technology in Sydney, Australia, and is a Fellow of the Australian Institute of Company Directors and CPA Australia.

Other Directorships and Positions

Mr Ryan is the Non Executive Chairman of Tooth & Co Limited (appointed Director September 1999 and Chairman January 2003) and ABC Learning Centres Limited (administrators appointed, receivers and managers appointed) (appointed Director June 2003 and Chairman 30 May 2008). He was formerly the Non Executive Chairman Transurban Holdings Limited (appointed Director April 2003, Chairman February 2007 and retired August 2010).

Former Directors

Mr M W Selway retired on 10 February 2010, having joined the Board on 17 June 2008.

b. Company secretaries’ Qualifications and experience

W Hara

Mr Hara was appointed Company Secretary in July 2007. Prior to his appointment as Group General Counsel and Company Secretary of Lend Lease in January 2007, Mr Hara was company secretary for another company listed on the ASX. Mr Hara has a Bachelor of Commerce and a Bachelor of Laws from the University of New South Wales and is a member of the Law Society of New South Wales.

W Lee

Ms Lee was appointed Assistant Company Secretary in January 2010. Prior to her appointment, Ms Lee was a company secretary for several subsidiaries of a publicly listed financial institution. Ms Lee has a Bachelor of Arts and a Bachelor of Laws from the University of Sydney, and is an Associate of Chartered Secretaries Australia.

annual report 2011 Lend Lease Group 31

c. officers Who Were previously partners of the Audit firm

Mr Crawford was a Partner and Australian National Chair of KPMG. He resigned from this position on 28 June 2001 prior to his appointment as a Director of the Company on 19 July 2001. KPMG or its predecessors was appointed as the Company’s auditor at its first Annual General Meeting in 1958.

d. Directors’ Meetings

During the financial year, twelve Board meetings were held. The Board recognises the essential role of Committees in guiding the Company on specific issues. Committees address important corporate issues, calling on senior management and external advisers prior to making a final decision or making a recommendation to the full Board.

There are four permanent Committees of the Board.

Nomination Committee

The Nomination Committee consists entirely of Non Executive Directors. The Committee assists the Board by considering nominations to the Board to ensure that there is an appropriate mix of expertise, skills and experience on the Board. During the financial year 1 July 2010 to 30 June 2011, all seven meetings of the Nomination Committee were held in conjunction with Board meetings and all Non Executive Directors routinely attend.

Risk Management and Audit Committee

The Risk Management and Audit Committee consists entirely of Non Executive Directors. The principal purpose of the Committee is to assist the Board in fulfilling its corporate governance and oversight responsibilities in relation to the Group’s risk management and internal control systems, accounting policies and practices, internal and external audit functions and financial reporting. During the financial year 1 July 2010 to 30 June 2011, four meetings of the Risk Management and Audit Committee were held.

Personnel and Organisation Committee

The Personnel and Organisation Committee consists entirely of Non Executive Directors. The Committee’s agenda reflects the importance of human capital to the Group’s strategic and business planning and it assists the Board in establishing appropriate policies for people management and remuneration across the Group. During the financial year 1 July 2010 to 30 June 2011, seven meetings of the Personnel and Organisation Committee were held.

Sustainability Committee

The Sustainability Committee consists entirely of Non Executive Directors. The Committee assists the Board in monitoring the decisions and actions of management in achieving Lend Lease’s aspiration to be a sustainable organisation. During the financial year 1 July 2010 to 30 June 2011, four meetings of the Sustainability Committee were held.

Attendance at Meetings of Directors 1 July 2010 to 30 June 2011

Director	BoArD MeetinGs1	risK MAnAGeMent AnD AuDit CoMMittee MeetinGs	personneL AnD orGAnisAtion CoMMittee MeetinGs	sustAinABiLity CoMMittee MeetinGs
	Held2 Attended	Held2 Attended	Held2 Attended	Held2 Attended
D Crawford	12 12
P Colebatch	12 12	4 4	7 7
G Edington	12 12	4 4		4 4
P Goldmark	12 11			4 4
J Hill	12 10		7 7	4 4
S McCann	12 12
D Ryan	12 12	4 4	7 7

1 Three of the 12 meetings were out of schedule board teleconferences constituted to address specific issues. J Hill was unable to attend two of these teleconferences, both of which were called at short notice.

2 Reflects the number of meetings held during the time the Director held office during the year.

In addition, matters were dealt with as required by circular resolution.

e. interest in Capital

The interest of each of the Directors (in office at the date of this report) in the issued securities of the Company at 26 August 2011 and 17 August 2010 is set out below.

	Securities held			Securities held
Securities	benefcially/		Securities	benefcially/
held directly	indirectly	Total	held directly	indirectly	Total
Director 2011	20111	2011	2010	20101	2010
D Crawford	73,723	73,723		73,593	73,593
P Colebatch 5,023	13,300	18,323	5,023	13,300	18,323
G Edington 19,643	20,425	40,068	19,643	20,425	40,068
P Goldmark 3,000	21,794	24,794	3,000	21,794	24,794
J Hill 2,000	12,324	14,324	2,000	12,324	14,324
D Ryan	31,273	31,273		31,273	31,273
S McCann 83,269	61,367	144,636	181,339	4,470	185,809

1 Includes securities in the Retirement Plan beneficially held by Non Executive Directors.

32 Lend Lease Group annual report 2011

DireCtors’ report

2. operAtions

a. principal Activities

n The Development business operates in all four major geographic regions and is involved in the development of master-planned urban communities, inner-city mixed-use developments, apartments, retail and the retirement living and aged care sector;
n The Construction business operates in all four major geographic regions providing project management, engineering and construction services;
n The Investment Management business operates in all four major geographic regions and provides real estate investment management, retail property management and asset management services. This business includes the Group’s ownership interests in property investments held directly or indirectly through investments in the Group managed funds; and
n The Infrastructure Development business operates in Australia, Europe and the Americas and manages and invests in Public Private Partnerships (PPP) projects.

b. review and results of operations

A full review of operations is included in the Management Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section of the Annual Consolidated Financial Report.

c. Distributions

The 2010 final distribution of A$67.9 million (12 cents per security, 100% franked) referred to in the Directors’ Report dated 16 August 2010 was paid on 24 September 2010.

Details of distributions in respect of the current year are as follows:

	A$m
Interim distribution of 20 cents per security (50% franked) paid on 30 March 2011	113.1
Final distribution of 15 cents per security (nil% franked) declared by Directors to be paid on 30 September 2011	85.6
Total distributions declared	198.7

d. significant Changes in state of Affairs

e. events subsequent to Balance Date

No matters or circumstances have arisen since the end of the financial year that have significantly affected or may significantly affect the operations of the Group, the results of those operations or state of affairs of the Group in subsequent financial years.

f. Likely Developments

Details of likely developments in the Group’s operations in subsequent financial years are contained in the reports from the Chairman and Group Chief Executive Officer and Managing Director in the Annual Report. In the opinion of the Directors, disclosure of any further information would be likely to result in unreasonable prejudice to the Group.

g. environmental regulation

The Lend Lease Group is subject to various state and federal environmental regulations in Australia.

The Directors are not aware of any material non compliance with environmental regulations pertaining to the operations or activities during the period covered by this Report. In addition, the Lend Lease Group is registered and publicly reports the annual performance of its Australian operations under the requirements of the National Greenhouse and Energy Reporting (NGER) Act 2007 and Energy Efficiency Opportunities (EEO) Act 2006.

All Lend Lease businesses continue to operate an integrated Environment, Health and Safety Management System ensuring that non compliance risks and opportunities for environmental improvement are identified, managed and reported accordingly.

annual report 2011 Lend Lease Group 33

DireCtors’ report

3. reMunerAtion report

Message from the Board

Dear Securityholder,

In 2010, the Board completed an extensive review of Lend Lease’s Executive Reward Strategy. The objective of the Executive Reward Strategy is to enable the Group to attract, retain and motivate exceptional people, and to create value for our securityholders. The delivery of reward components over periods of up to four years encourages sustainable long term performance.

During the year ended 30 June 2011 the Group finalised implementation of the Executive Reward Strategy by implementing the following actions that were described in the 2010 Remuneration Report:

n a review of fixed remuneration to ensure market competitiveness. This follows two years of fixed remuneration freezes for executives (except for those who assumed different roles with greater responsibilities)
n a more robust Short Term Incentive (STI) program which provides a direct link between reward, profit generation and securityholder value creation
n re-weighting of the remuneration mix to focus on the elements where executives have the greatest influence while maintaining an appropriate balance between short and long term focus
n greater levels of deferral for our executives (50% of Short Term Incentives) over one and two years, delivered as securities, to align executives’ interests to those of our securityholders and reduce the risks associated with paying STI in cash immediately
n assessing Long Term Incentives (LTI) against a single performance hurdle which measures return to securityholders compared to the performance of the companies in the S&P ASX100 Index.

During the year we also expanded our business through the acquisition of Valemus Australia (Valemus), the parent company of Abigroup, Baulderstone and Conneq, which together now form the Group’s infrastructure business in Australia. Valemus employees will move to our Lend Lease reward strategy as soon as possible.

We will ensure that our Executive Reward Strategy continues to align to our business strategy and supports further sustainable growth. We will continue to listen to you and consider refinements to our reward strategy.

We have made a number of changes to this year’s Remuneration Report to improve its presentation and readability.

We continue to welcome your feedback on how we can further improve the Remuneration Report for the future.

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David Crawford, AO Chairman

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Phillip Colebatch Chairman, Personnel and Organisation Committee

34 Lend Lease Group annual report 2011

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To assist readers, key terms and abbreviations used in the remuneration report are set out below.

Term	Defnition
Earnings per Security (EPS)	Proft/(loss) after tax divided by the weighted average number of ordinary securities (excluding treasury securities). For some earlier LTI allocations the defnition of proft/(loss) after tax may have specifc inclusions or
	exclusions.
Executive Reward Strategy (ERS)	A framework and policy that governs how the most senior employees in the organisation are remunerated.
Fixed remuneration	Annual remuneration paid regularly with no performance conditions. May include benefts depending on the location of the individual and the specifc requirements of each jurisdiction. Benefts may include a car, medical
	insurance, superannuation or retirement contributions, life insurance and disability insurance.
Good Leaver	An employee who is ceasing employment for reasons such as retirement or redundancy and who may remain
	eligible for a part of an incentive opportunity.
Group	Lend Lease Corporation Limited and all of its subsidiaries.
Key Management Personnel	Those executives who have the authority and responsibility for planning, directing and controlling the activities
	of the Group directly or indirectly (as per Accounting Standard AASB 124_Related Party Disclosures_).
Long Term Incentive (LTI)	An incentive scheme which grants benefts to participating executives that may vest, in whole or part, should specifed performance measures be met over a 3 or 4 year period.
Other Executives	Those executives who are Key Management Personnel or are among the fve highest paid executives of the Group or one of the fve highest paid of the Company, excluding the Executive Director.
PAT	Proft after tax.
Personnel and Organisation Committee	A Board sub-committee made up entirely of independent Non-Executive Directors which assists the Board fulfl its responsibilities in people management and reward polices.
Region	The organisational unit responsible for all operations within a geography (with the objective of providing
	integrated property related services).
Remuneration mix	The relative weighting of each component of remuneration.
Short Term Incentive (STI)	Incentives awarded to individuals with direct reference to the achievement of Group, regional and individual
	performance over one year.
Target performance	A level of fnancial performance measured using proft after tax set by the Board.
Total Securityholder Return	Measures the movement in a Company’s security price, dividend yield and any return of capital over a specifc
(TSR)	period. It is often expressed in percentage terms.

annual report 2011 Lend Lease Group 35

a. snapshot of Changes

In 2011, Lend Lease implemented the changes described in the 2010 remuneration report. These changes are consistent with our Executive Reward Strategy, the objectives of which are set out below.

LenD LeAse strAteGiC vision

Our strategic vision is to be the leading international property and infrastructure company. We are committed to being Incident and Injury Free, creating and building innovative and sustainable solutions, forging partnerships and delivering strong investment returns.

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our executive reward strategy objectives will assist us to achieve our strategic vision
exeCutive reWArD strAteGy oBjeCtives
Creating an appropriate Partnering the interests of Encouraging a balanced focus on Implementing sustainable
remuneration level and mix securityholders and executives short and long term performance remuneration programs
for executives
our GuiDinG prinCipLes DeterMine hoW We seeK to AChieve our reWArD oBjeCtives
Simple, transparent and easy Consider and, as appropriate, A significant portion of Clear governance practices to
to communicate respond to the interests of internal remuneration is at risk but can minimise potential conflicts of
and external stakeholders be earned through achieving interest and enable effective
outstanding performance decision making by the Board
and management
iMpLeMentinG reWArD oBjeCtives – enhAnCeMents MADe DurinG 2011
----- End of picture text -----

remuneration mix: Incentive opportunities and remuneration mix have been defined for each executive. The remuneration mix has been weighted towards elements where the executive has greatest influence whilst balancing short and long term focus. These changes support a strong link between pay, performance and returns to securityholders.

fixed remuneration: Levels have been increased to maintain market competitive remuneration levels. Market benchmark groups have been refined to recognise comparable companies by size, complexity, scope, industry and location.

short term incentives (stis): Half of STI payments are to be delivered as securities and deferred for up to two years to create alignment with securityholders’ interests. Changes to STI pool funding provide a direct link to Lend Lease’s capacity to pay and value created for securityholders by linking the pool to profitability. Use of a balanced scorecard ensures performance is assessed holistically. An increase in STI opportunity to reward outstanding performance has been balanced by a high level of STI deferral and lower weighting to LTI.

Long term incentives (Ltis): Provided to a small number of key executives who have the most influence over securityholder value. LTI grants are tested against relative TSR to align reward to securityholder outcomes. Half of the grant is tested after three years and lapses if the performance hurdle is not achieved. The remaining half is tested after four years and lapses if the performance hurdle is not achieved. There is no re-testing.

impact of changes on the remuneration of the Group Chief executive officer and Managing Director (Group Ceo)

The Board made the following changes to the remuneration of the Group CEO, consistent with the Executive Reward Strategy (ERS) and with consideration of market benchmarks provided by PricewaterhouseCoopers (PwC).

n The Group CEO’s total target remuneration was increased by 2.9%. The increase to total target remuneration included an increase to fixed pay of 19.9% which was offset by a reduction in other elements of remuneration. The increase in fixed pay was to ensure that the Group CEO’s pay level is market competitive. The increase recognised that the Group CEO’s fixed pay was previously below that paid to CEOs of comparable companies with similar levels of global complexity. The increase also recognised that there had been no adjustment to the Group CEO’s fixed pay since his appointment in December 2008.
n A change in the Group CEO’s remuneration mix to reflect the objectives of the ERS which included:
an increase in the Group CEO’s maximum STI opportunity. The Group CEO can earn up to 150% of his target STI opportunity for outstanding performance. STI is paid 50% as cash and 50% as deferred securities;
the deferral of 50% of any STI award for up to two years, with the deferred amount paid as Lend Lease securities that are subject to continuing employment. The deferral period has increased to reinforce a longer-term outlook and further align remuneration outcomes with securityholder interests; and
a reduction in the Group CEO’s LTI opportunity balanced with the increased deferred STI opportunity. The LTI continues to be an integral part of the Group CEO’s remuneration to maintain long term focus.
n A single performance hurdle for the Group CEO’s LTI so that the full LTI award is only paid where Lend Lease TSR is at or above the 75th percentile of the TSR of companies in the S&P ASX 100 Index. Half of the LTI award is paid if Lend Lease TSR is at the 50th percentile, with pro rata vesting where Lend Lease TSR is between the 50th and 75th percentile. There is no vesting if Lend Lease TSR is below the 50th percentile. The LTI award is split so that one half is measured over a period of three years and the other half over four years. There is no retesting, so if the performance hurdle is not met the LTI award lapses.
n Following these changes the Group CEO’s total target remuneration has increased by 2.9%, however, in line with our objective of rewarding outstanding performance, the maximum remuneration of the Group CEO, if the Board awarded the maximum STI and if all LTI vested, was increased by 27.7%.

The actual remuneration paid to the Group CEO during the year ending 30 June 2011 is set out in Section 3b.

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b. Actual executive remuneration outcomes – Audited

Consistent with our intention to provide ongoing transparency and aligned with the recommendations of the Productivity Commission and the Corporations and Markets Advisory Committee, we have outlined below the actual amounts received during the year ended 30 June 2011 by the Executive Director and Other Executives. The table below also includes cash STI payments that relate to performance in the year ended 30 June 2011 which are due to be paid in September 2011.

Please refer to Section h for the statutory remuneration tables which are prepared consistent with the Accounting Standards and Corporations Act.

Deferred STI amounts from prior years that have vested during the year have been included (based on the security price at the relevant vesting date). As no LTI vested during the year, no value has been included. This table does not include any ‘at-risk’ awards that are still subject to performance or employment conditions.

						Retention,			Amount	Amount
		Fixed				granted			forfeited	forfeited
		remun-	Cash	Deferred		in prior	Other		during the	during the
$A000s	Year	eration1	STI2	STI3	LTI	years	incentives4	Total5	year STI6	year LTI7
Executive Director
Stephen McCann	2011	2,069	1,927	416				4,412	(770)
	2010	1,726	1,368	122		965		4,181	(224)	(438)
Other Executives
Scott Charlton	2011	1,303	780					2,083	(173)
(Part year only)	2010	349	191					540	(68)
Tarun Gupta	2011	812	462	84			250	1,608	(66)
David Hutton	2011	865	384	147			60	1,456	(328)
	2010	679	258	274				1,211	(133)	(171)
Daniel Labbad	2011	1,046	483	85				1,614
Rod Leaver	2011	1,220	481	146				1,847	(350)
	2010	860	481	149				1,490	(111)
Anthony Lombardo	2011	814	510	107				1,431
	2010	659	320	59		93		1,131	(59)	(93)
Robert McNamara	2011	747	439					1,186	(97)
Mark Menhinnitt	2011	876	456	105				1,437	(228)
	2010	784	354	250				1,388	(244)	(223)
Eng-Peng Ooi	2011	591	304	68				963	(305)
Brad Soller	2011	893	500	101				1,494	(200)
	2010	736	414	73		116		1,339	(148)	(115)

1 Fixed remuneration consists of salary, non-monetary benefits, superannuation and other long-term benefits, in line with statutory remuneration disclosure requirements.

2 Cash STI refers to 50% of the actual STI that was earned in the year ended 30 June 2011, which will be paid to the executive in cash in September 2011.

3 Deferred STI is the value of deferred securities granted on 1 September 2009 that vested on 1 September 2010. This value is based on the closing price on the vesting date (1 September 2010). Deferred STI also includes the value of any dividends received on deferred STI securities. The deferred portion of the STI relating to performance in the year ended 30 June 2011 is not included in this table as it has not yet vested.

4 Other incentives includes a performance based incentive for Tarun Gupta that vested during the year and a cash retention for David Hutton that recognised his contribution to the Barangaroo development project.

5 Total remuneration disclosed in this table is different from that disclosed in the statutory remuneration table in Section h as the statutory remuneration disclosure includes an amortised value for the STI deferred securities and a valuation of long term incentives that have not yet been paid and that are subject to meeting performance conditions and ongoing employment.

6 STI forfeited refers to the unearned component of each Executive’s maximum STI for the year ended 30 June 2011 and any STI that was earned in a prior year and forfeited during the year ended 30 June 2011.

7 LTI forfeited includes the value of LTI that lapsed during the year ended 30 June 2010 (for whatever reason e.g. termination or not meeting performance hurdles). The value has been determined based on the Lend Lease security price at the date of lapsing. No long term incentive awards were tested or vested during the year ended 30 June 2011.

annual report 2011 Lend Lease Group 37

c. About this report – Audited

This report forms part of the Directors’ Report and has been audited in accordance with the Corporations Act 2001 .

Who this report covers

This report presents the remuneration arrangements for Lend Lease’s Key Management Personnel and five highest paid Company and Group executives.

Non Executive Directors
David Crawford	Chairman, Independent Non Executive Director
Phillip Colebatch	Independent Non Executive Director
Gordon Edington	Independent Non Executive Director
Peter Goldmark	Independent Non Executive Director
Julie Hill	Independent Non Executive Director
David Ryan	Independent Non Executive Director
Executive Director
Stephen McCann	Group Chief Executive Offcer and Managing Director
Other Executives
Scott Charlton	Group Director of Operations
Tarun Gupta1	Group Head of Investment Management (appointed to this position on 1 July 2010)
David Hutton1	Group Head Centres of Excellence (appointed to this position on 1 July 2010)
Daniel Labbad	Chief Executive Offcer, Europe, Middle East and Africa (appointed to this position on 1 July 2010)
Rod Leaver	Chief Executive Offcer, Asia (appointed to this position on 1 April 2011, previously Chief Executive Offcer, Australia)
Anthony Lombardo1	Group Head of Strategy and Mergers & Acquisitions
Robert McNamara	Chief Executive Offcer, Americas (appointed to this position on 1 July 2010)
Mark Menhinnitt	Chief Executive Offcer, Australia (appointed to this position on 1 April 2011, previously Group Head of Public-Private
	Partnerships)
Eng-Peng Ooi	Chief Executive Offcer, Asia (appointed to this position on 1 July 2010. Ceased in this position on 31 March 2011)
Brad Soller	Group Chief Financial Offcer
Previously disclosed Executives2
Michael Bellaman	Chief Executive Offcer, Bovis Lend Lease Americas (resigned on 20 August 2010)
Murray Coleman	Managing Director Australia Project Management and Construction and Group Head of Environment, Health & Safety,
	Risk and Insurance (appointed to this position on 7 February 2011 previously Group Head of Project Management,
	Design and Construction Centre of Excellence)
William Hara	Group General Counsel and Company Secretary
Neil Martin	Director of Operations EMEA (appointed to this position on 1 January 2010); former Group Head of Health and Safety,
	Risk and Insurance

1 Included in this report as one of the five highest paid executives of the Company and the Group.

2 Previously disclosed executives are no longer required to be disclosed as they are neither Key Management Personnel nor in the top five highest paid Executives in the Group or Company during the year ended 30 June 2011.

d. our Governance policy

The Board is ultimately responsible for determining executive remuneration at Lend Lease. It is assisted in this regard by the Personnel and Organisation (P&O) Committee.

To support effective governance, the P&O Committee:

n consists entirely of independent Non-Executive Directors;

n has unrestricted access to senior management and company records; and

n can obtain independent legal or other professional advice.

In 2010, the Board appointed PwC to assist the P&O Committee in fulfilling its duties. PwC is engaged by the P&O Committee and provide advice and reports directly to the Committee.

The P&O Committee’s charter is available on the Lend Lease website: www.lendlease.com

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e. reward strategy and practice – Audited

Our Executive Reward Strategy provides Lend Lease with simple and transparent remuneration practices which have regard to the interests of both internal and external stakeholders (refer to table in Section a). In addition, to encourage strong performance, a significant portion of individual’s remuneration should be ‘at risk’, and underpinned by clear and balanced metrics.

Remuneration mix

For the year ended 30 June 2011, the Board set a target level of remuneration for each Executive having regard to market benchmarking completed by PwC. Target remuneration is made up of a mix of fixed remuneration, cash STI, deferred STI and LTI. The table below shows the target remuneration mix for the Group CEO and Other Executives.

The remuneration mix and levels of remuneration are set so that on-target performance will deliver total rewards close to the market median, with total rewards above the median for superior performance.

	Fixed		Deferred STI	LTI
Role	remuneration	Cash STI	(1-2 years)	(3-4 years)
Group CEO	30% – 35%	20% – 25%	20% – 25%	20% – 30%	Percentage
					of target
Other Executives	40% – 45%	20% – 25%	20% – 25%	15% – 20%	remuneration

The mix of executive reward is also designed to be aligned with the company’s long-term financial performance:

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yeAr 1 yeAr 2 yeAr 3 yeAr 4
Fixed remuneration
Cash STI
Deferred STI for 1 year
Deferred STI for 2 years
LTI 3 year performance period
LTI 4 year performance period
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A target level of remuneration is set for each Executive having regard to market benchmarking reports that are provided by external advisers. PwC completed market benchmarking during the year ended 30 June 2011.

The three elements of our executive remuneration – that is, fixed remuneration, short-term incentives and long-term incentives are described over the following pages.

Fixed remuneration

Fixed remuneration is a guaranteed annual salary. It may include benefits depending on the individual’s location and the specific requirements of each jurisdiction. Benefits might include a car, medical insurance, superannuation or retirement contributions, life insurance and disability insurance. International assignees may have additional benefits such as housing, schooling and tax return preparation.

Fixed remuneration for the Group CEO is recommended by the P&O Committee and approved by the Board. The P&O Committee approves the fixed remuneration of Other Executives. Fixed remuneration is reviewed annually and changes take effect from 1 September each year, except in the case of a new appointment.

Fixed remuneration is set toward the middle of the market of comparable roles in companies of a similar size and level of complexity to Lend Lease:

for Australian based Executives, in roles with an Australian focus, reference is made to companies listed on the ASX that are ranked between 26 and 75 by market capitalisation (excluding Companies domiciled overseas and property trusts where management is not typically employed by the trust);
for Executives in roles with global responsibilities, reference is made to a peer group of companies listed on the ASX that are ranked in the first 75 by market capitalisation and which have significant global operations. This reflects the complexity involved in running a company such as Lend Lease with a global footprint; and
relevant local comparator groups are used for Executives based in other countries.

Short-Term Incentives (STI)

STI is an ‘at risk’ component. At the start of the year executives are assigned a scorecard of measures which are aligned to the Group’s overall strategic objectives. The scorecard represents a balance of financial and non-financial measures (see examples on page 39). Executives’ performance against their individual scorecard objectives is assessed at the end of the financial year to determine their overall performance achievement.

annual report 2011 Lend Lease Group 39

STI opportunity

Target STI opportunities are set using the remuneration mix guidelines outlined above and are tested against the relevant market levels for each executive role.

Executives receive notification of a target STI opportunity annually. Each executive’s actual STI award may be higher (capped at 150% of target) or lower than their target award and will be determined by considering the company’s financial performance and also the individual’s overall performance achievement. Executives have the opportunity to earn up to 150% of their target opportunity for outstanding performance. This is to reinforce a strong link between performance and executive remuneration.

This represents a change from previous practice, where STI ‘target’ was the maximum award available. The P&O Committee approves the assessment of performance against objectives and the final STI outcomes for Other Executives. The Board assesses the performance of and determines the STI outcome for the Group CEO.

The pool of funds available to reward executives under the STI plan is determined by direct reference to Group financial performance and, where relevant, regional financial performance. Pool funding levels have been set by the Board and correspond to threshold, target and stretch levels of profit achievement. If profit performance is above target, sufficient funds will be available to pay average awards above target. Payments to individual executives are capped at 150% of target and total pool funding is capped at 125% of the target pool. Conversely, if profit performance is below target, average STI awards will be below target. An individual executive’s award will be determined based on their overall performance rating and contribution, relative to other executives. The total STI pool may be either partially or fully allocated to Executives each year.

STI deferral

Higher maximum STI opportunities have been coupled with a longer deferral period than in previous years to further align the interests of executives and securityholders. 50% of STI awards paid to the Group CEO and Other Executives are deferred into Lend Lease securities. 50% of the deferred portion (i.e. 25% of the total award) vests to recipients one year after payment of the non-deferred portion; the remaining 50% vests after two years. Securities are forfeited by the individual if they resign or are terminated for cause during the vesting period. Distributions are received by executives during the vesting period, subject to the executive continuing in employment.

These changes avoid the risks associated with paying STI awards entirely as cash and motivate executives to deliver sustainable performance as they have a substantial interest in Lend Lease securities.

STI measures

a. Group CEO scorecard

The Group CEO’s scorecard is approved annually by the Board to reflect Lend Lease’s key strategic priorities. The scorecard balances both financial and non-financial measures to enable the Board to assess achievement on a holistic basis, including management of risk and capital used to achieve profitability.

Financial measures focus on profit after tax (PAT), growth and capital management. Non-financial measures include achievement of strategic and operational excellence objectives as well as the successful implementation of safety and people leadership goals.

During the year ended 30 June 2011 the Group CEO made significant progress across these multi-dimensional areas. Financial performance exceeded targets.

The Group CEO led the acquisition of the Valemus business; drove heightened attention to profit and commercial advantage throughout the business; and oversaw the introduction of a group-wide pay for performance and succession planning process.

b. Other Executives scorecard

Executive performance is also measured using a balanced scorecard. Examples of the measures used are:

Executive performance is	also measured using a balanced scorecard. Examples of the measures used are:
Category	Measure	Reason Chosen
Financial	Growth – secured work in key business areas	Recognises the importance of
	Capital – return on equity or return on capital Proftability – achievement of proft and margin targets	delivering returns for securityholders and securing future revenue.
People and	Employee engagement measured using an independently run employee survey.	Employee engagement, effective
Leadership	Develop and retain top talent through leadership development and succession planning. Drive a performance culture by differentiating pay based on performance.	leadership, safety and a performance culture are key to delivering sustainable performance.
	Demonstrate Lend Lease leadership standards including safety, diversity,
	behaviour and environment.
Operational	Improve our service delivery, effciency and effectiveness, for example:	Client satisfaction and cost
Excellence	n support transformation cost saving target to reduce overhead;	management are important drivers
	n improved client feedback scores; and n achieve supply chain and procurement targets.	of current and future business performance.
Strategic	Individual specifc objectives based on key deliverables for role.	Ensures executives are focussed
		on initiatives that deliver future
		growth and improved business
		performance.

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Long-Term Incentives (LTI)

An annual grant of ‘performance securities’ is made to a limited number of executives. Performance securities can be converted to Lend Lease securities if the performance hurdle is achieved over a three-year and four-year period. For performance securities granted during the year, the performance hurdle is Lend Lease’s total securityholder return (TSR) compared to the companies in the S&P ASX 100 Index. The Board intends that LTI awards be settled in Lend Lease securities; however they may be settled in cash or other means at the Board’s discretion.

2010/11 LTI Plan

The key features of the 2010/11 LTI Plan are:

Eligibility	Eligibility is limited to 12 senior executives who were identifed as most able to infuence the strategic direction and long-term performance of Lend Lease.
Grant date	1 September 2010
Performance hurdle	Relative TSR was selected as the performance measure to link LTI awards to the delivery of superior securityholder returns relative to other S&P/ASX 100 companies over the performance period. This method was chosen after consultation with securityholders.
Performance period	50% of the 2010/2011 LTI grant is tested at three years. If the hurdle is not fully achieved at this time, those performance securities with a three year performance period will lapse. The remaining 50% of the performance securities are tested after four years. There is no opportunity to re-test any portion of the LTI grant.
Peer group	The relative TSR peer group consists of the S&P/ASX 100 companies determined at the start of the performance period. Participants only receive value if Lend Lease’s TSR is at or above the 50th percentile of companies in the peer group, refecting a focus on delivery of superior securityholder returns. The vesting schedule is: Relative TSRpercentile ranking Percentage of performance securities that vest if the relative TSR hurdle is met
	Below the 50thpercentile No vesting
	At the 50thpercentile 50% vesting
	Above the 50thpercentile but below the 75thpercentile Pro-rated vesting on a straight line basis between 50% and 100%
	At 75th percentile or greater 100% vesting
Termination and forfeiture	For ‘good leavers’, a pro-rata award may be paid after termination, subject to the original performance hurdle, unless there are exceptional circumstances (e.g. death or total and permanent disability) where the Board may determine and pay the award at the time of termination. If an executive is terminated for cause or resigns, unvested LTI is forfeited. Unvested LTI grants will be forfeited if an executive enters into a prohibited pre-vesting hedging arrangement in relation to their LTI awards.

Previous LTI plans

No LTI grants vested during the year ended 30 June 2011. LTI grants in prior years that are yet to be tested and are yet to vest are described below:

	2008/2009 LTI Plan	2009/2010 LTI Plan
Eligibility	Key executives and other senior management approved by the Board.
Award type	Performance and Retention.1⁄3Retention,1⁄3relative TSR	Performance. ½ EPS and ½ relative TSR.
	and1⁄3EPS.
Performance securities	Vesting of performance securities is subject to relative TSR and EPS performance.
Retention securities	Vesting of retention securities is subject to the participant’s	No retention securities.
	continuous employment with Lend Lease over the
	performance period.
Grant date	1 September 2008	1 September 2009
First vesting date	1 September 2011. If the grant does not fully vest at	1 September 2012 (50%)
	September 2011, the unvested relative TSR portion of performance securities may be tested at 1 March 2012 and 3 September 2012. Any unvested EPS portion of	1 September 2013 (50%) No further testing.
	performance securities may be tested at September 2012.
Relative TSR targets	The relative TSR peer group consists of S&P/ASX 100 Index companies. The vesting schedule for relative TSR is the
	same as the 2010/2011 grant, refer to above.
Relative TSR	Performance is tested three years from the date of grant	Half the grant is tested at three years and the remaining
performance period	and subsequently 3½ and 4 years from the date of grant if	half is tested at four years. Any part of the grant that is
	required. If any part of the performance hurdle is achieved	tested and does not meet the performance hurdle will
	at the relevant testing dates, the corresponding payout	lapse. There is no opportunity to retest the TSR grant.
	will be delivered following the vesting date if employment conditions are satisfed.

annual report 2011 Lend Lease Group 41

	2008/2009 LTI Plan	2009/2010 LTI Plan
EPS Targets	EPS is calculated on the basis of the following: statutory proft/(loss) after tax adjusted for exclusion of treasury	EPS is based on Statutory EPS, defned as the statutory proft/(loss) after tax, attributable to members of Lend
	securities, unrealised carrying value adjustments (but not	Lease Corporation Limited, divided by the weighted
	excluding unrealised adjustments on the value of inventory	average number of ordinary securities (excluding treasury
	held for sale); write-off of goodwill; movements in the value	securities). EPS tested performance securities will vest
	of investment properties; savings implementation costs; and one-off benefts from the UK pension plan. EPS tested performance securities will vest subject to performance against compound annual growth rate targets set by the Board.	subject to performance against targets set by the Board. The Board set both a minimum and a stretch aggregate EPS target, and a fnal year EPS target for the three-year and four-year performance periods.
	The EPS annual growth target set by the Board for the
	year ending 30 June 2011 was 12.1%.
	eps (As DefineD for Lti purposes) Target Actual	Aggregate EPS target The aggregate target was set at the start of the performance period, and actual performance is measured by the sum of
	EPS for 30 Jun 08 base N/A 87.8c EPS for 30 Jun 09 80.9c 30.0c – %growth fromprioryear -7.9% -65.8% EPS for 30 June 10 90.7c 68.3c	three-year and four-year EPS performance compared to the aggregate EPS target. Final year EPS target This is calculated by dividing the aggregate EPS target over the relevant performance period by the number of years in the
	– %growth fromprioryear 12.1% 127.7% t d l	performance period (i.e. three or four years) (‘qualifyingcondition’).

	2008/2009 LTI Plan	2009/2010 LTI Plan EPS is based on Statutory EPS, defned as the statutory proft/(loss) after tax, attributable to members of Lend Lease Corporation Limited, divided by the weighted average number of ordinary securities (excluding treasury securities). EPS tested performance securities will vest subject to performance against targets set by the Board. The Board set both a minimum and a stretch aggregate EPS target, and a fnal year EPS target for the three-year and four-year performance periods.

EPS Targets	EPS is calculated on the basis of the following: statutory proft/(loss) after tax adjusted for exclusion of treasury securities, unrealised carrying value adjustments (but not excluding unrealised adjustments on the value of inventory held for sale); write-off of goodwill; movements in the value of investment properties; savings implementation costs; and one-off benefts from the UK pension plan. EPS tested performance securities will vest subject to performance against compound annual growth rate targets set by the Board. The EPS annual growth target set by the Board for the year ending 30 June 2011 was 12.1%.

	eps (As DefineD for Lti purposes) Target Actual EPS for 30 Jun 08 base N/A 87.8c EPS for 30 Jun 09 80.9c 30.0c – %growth fromprioryear -7.9% -65.8% EPS for 30 June 10 90.7c 68.3c – %growth fromprioryear 12.1% 127.7% – two ear comound annual	Aggregate EPS target The aggregate target was set at the start of the performance period, and actual performance is measured by the sum of three-year and four-year EPS performance compared to the aggregate EPS target.
		Final year EPS target This is calculated by dividing the aggregate EPS target over the relevant performance period by the number of years in the performance period (i.e. three or four years) (‘qualifyingcondition’).
	y p growth rate 2.0% -12.0% EPS for 30 June 11 101.7 90.3 – %growth fromprioryear 12.1% 32.2% – three year compound annual growth rate 5.0% 0.9%	For vesting to occur, Lend Lease’s actual aggregate EPS must be equal to or greater than the aggregate EPS target. Vesting is, however, subject to a qualifying condition. Vesting will only occur where Lend Lease’s actual EPS in year three (or four) of the performance period is equal to or greater than the respective fnal year EPS target. Subject to meeting the fnal year EPS target at year three or year four, the table below shows how vesting will occur based on Lend Lease’s actual EPS performance at the vesting dates. EPSperformance levels Percentage of EPS tested performance securities that will vest Less than minimum aggregate EPS target 0% Equal to minimum aggregate EPS target 50% Greater than minimum aggregate EPS target, less than stretch target Pro-rated vesting (on a straight line basis) between 50% and 100% At or above stretch aggregate EPS target 100% Participants were advised of the EPS targets at the time the LTI grant was made in September 2009. The Board has committed to disclosing the EPS targets retrospectively in the Remuneration Report following the end of the relevant performance periods (being 30 June 2012 and 30 June 2013). In setting the minimum and stretch aggregate EPS targets, the Board has taken into account the forecast business plan performance as well as market expectations to determine robust but achievable performance targets for the 50% and 100% vesting thresholds of the EPS component of the LTI.
EPS performance period and vesting	EPS will be assessed over the period 1 July 2008 to 30 June 2011 and (if required) over the period 1 July 2008 to 30 June 2012. For vesting to occur, Lend Lease’s compound EPS growth rate over the test period must be equal to the compounded annual target rate over that period. The vesting schedule for EPS is as follows: Compound EPSgrowth Payout(% of award to vest) Less than the compound of target rates 0% Equal to the compound of target rates 50% Greater than the compound of target rates but less than 20% more than the compound of target rates Proportion of EPS grant vesting increases in a straight line between 50% and 100% At least 20% more than the compound of target rates 100% If full payout for the EPS component has not been achieved at 30 June 2011, the Board will determine a target EPS growth rate for the year ending 30 June 2012. The EPS target (if required) set by the Board for the year ending 30 June 2012 will be disclosed in the 2012 Remuneration Report.

42 Lend Lease Group annual report 2011

3. reMunerAtion report CONTINUED

DireCtors’ report

2008/2009 LTI Plan	2009/2010 LTI Plan
Termination and forfeiture The retention securities component is forfeited if the individual is not in employment at the frst vesting date	For ‘good leavers’, a pro-rata award may be paid after termination and be subject to the original performance
(including for ‘good leaver’ reasons).	conditions, unless there are exceptional circumstances
For ‘good leavers’, the individual may, subject to Board discretion and in specifed circumstances, receive a pro rata award for performance securities tested against	(e.g. death or total and permanent disability) where the Board may determine and pay the award at the time of termination.
relative TSR and EPS performance at the time of	Where an employee is terminated for cause or resigns,
termination. Where an employee is terminated for cause or	unvested LTI is forfeited.
resigns, unvested LTI is forfeited.	Unvested LTI grants will be forfeited if an executive enters
Unvested LTI grants will be forfeited if an executive enters	into a prohibited pre-vesting hedging arrangement in
into a prohibited pre-vesting hedging arrangement in relation to their LTI awards.	relation to their LTI awards.

Other incentive plans

Where appropriate, the Board will provide targeted incentives for specific business areas or individuals.

a. Performance awards – Other Executives

Mr McNamara CEO Americas, participates in an additional incentive plan that operates for the years ending 30 June 2011 and 30 June 2012 only, related to the performance of the Americas and is in addition to the STI plan.

During the year an opportunity to earn up to A$650,000 in deferred securities was granted. This plan was created in order to support the significant turnaround required in the Americas business. The plan requires achievement of financial and non-financial measures that are in addition to those set under the STI plan. The plan stipulates that this award is deferred so that 50% is provided after two years and the remaining 50% after three years subject to continuing in employment. It is intended that this award be settled in Lend Lease securities. Based on performance under the plan A$585,000 will be granted in deferred securities on 1 September 2011.

Mr Ooi, CEO Asia, participated in an additional incentive plan that concluded during the year ended 30 June 2011. Performance targets related to the performance of the Asian Retail Investment Fund were not met and no award was paid.

Mr Gupta, Group Head of Investment Management, participates in an additional incentive plan that operates for the years ending 30 June 2011 and 30 June 2012 only. Mr Gupta may earn up to A$500,000 each year based upon achievement of key performance indicators relating to growth in global funds under management, incremental profits from external equity and gross profit margin. This is reflective of market practice with regard to investment management incentive plans and recognises the relative contribution of Mr Gupta to the business. For the year ended 30 June 2011 Mr Gupta received A$250,000 under this plan.

b. Project Management and Construction incentive plan

A performance related incentive plan has been implemented for 12 critical employees in the Australian project management and construction business. In total awards made under the plan have a maximum value of A$3.3 million, earned over three years which are subject to achievement of profit targets. The first payment under this plan may be earned in the year ending 30 June 2012. The remuneration of these employees is not disclosed in this report.

c. Infrastructure incentive plans

During the year, Lend Lease acquired Valemus Australia (Valemus) the parent company of Abigroup, Baulderstone and Conneq which together now form the Group’s infrastructure business in Australia (infrastructure). The Board has approved a profit share plan for 55 infrastructure employees. Payments under the plan are subject to profit before tax targets and continuing employment. Payments to individual employees will be made over periods ranging from 18 months to 4½ years depending on the employee’s role and level in the Group. If all targets are met, the total value paid to all participants over the relevant periods will be approximately A$12 million.

STI deferral periods in line with the Lend Lease Executive Reward Strategy are being implemented for the most senior infrastructure employees.

A number of infrastructure employees have employment contracts that provide for a notice period that is longer than 12 months or a payment in lieu of notice that is greater than 12 months of fixed pay. These contract terms were put in place by Valemus prior to the acquisition by Lend Lease. Lend Lease is reviewing these contracts on a case by case basis to monitor compliance with the new Corporations Act limits on termination benefits.

d. Retention awards

When the Board believes an executive is an outstanding performer and the Group and securityholders would gain by encouraging them to remain with the Group, a retention award may be made.

No new retention awards were granted or paid in the current year to the Group CEO.

Mr Hutton was awarded a special cash retention award in recognition of his contribution to the Barangaroo development project. During the year a payment of A$60,000 was paid under this award with a further payment of A$80,000 due in June 2012 subject to continuing in employment.

The Board approved retention payments for the Managing Director of Infrastructure in Australia that total less than A$1.0 million spread over three years to offset an agreed reduction in fixed remuneration.

Details of the retention awards which have previously been granted to the Group CEO and Other Executives and which have not yet vested are shown in Section h.

annual report 2011 Lend Lease Group 43

Securities Trading Policy

The Lend Lease Securities Trading Policy applies to all employees of the Lend Lease group of companies. In accordance with the policy, directors and executives may only deal in Lend Lease securities during designated periods. Directors and executives must not enter into transactions or arrangements that operate to limit the economic risk of unvested entitlements to Lend Lease securities. No director or executive may enter into a margin loan arrangement in respect of Lend Lease securities.

f. how rewards are influenced by performance – Audited

Key financial indicators: Group performance over the past five years

The table below outlines some key indicators of Group performance over the past five years.

		June 2011	June 2010	June 2009	June 2008	June 2007
Statutory proft/(loss) after tax	A$m	492.8	345.6	(653.6)	265.4	497.5
Operating proft after tax	A$m	485.3	323.6	307.5	447.1	413.7
EPS on operating proft after tax1	cents	90.3	68.3	77.5	120.9	120.5
Total distributions2	A$m	198.7	160.6	186.7	308.9	308.5
(Decrease)/increase in closing price3	A$	1.64	0.32	(2.54)	(8.99)	4.55

1 EPS (Earnings per security) is calculated using the weighted average number of securities on issue excluding treasury securities.

2 The June 2011 distribution of A$85.6 million was declared subsequent to the reporting date.

3 Represents the movement in the security price over the year calculated using the closing security price at 30 June.

Linking rewards and performance

a. Fixed remuneration

Fixed remuneration is primarily set with reference to the individual’s role, responsibilities, performance and the remuneration paid to comparable roles in the external market. It is not generally linked with annual Group performance.

b. Short-term incentive (STI)

STIs are awarded to individuals based on an assessment of the executive’s overall performance and the profitability of the Group and Region where relevant. The Board determines the aggregate pool available to fund STIs based on the Group’s profit after tax.

On average, STI awards for the year ended 30 June 2011 are above target. This outcome reflects the Group’s profit after tax result, that was significantly above target performance. In line with performance for the year ended 30 June 2011, STI awards are presented in the table below:

Total target STI opportunity A$000s	% of sti opportunity % of Target STI Paid % of Maximum STI Paid Total A$ STI awarded STI awarded as cash Value of deferred STI to vest in Sept 20121 Value of deferred STI to vest in Sept 20131 Cash component Deferred component
Executive Director Stephen McCann 3,083	50 50 125 83 3,854 1,927 964 964
Other Executives Scott Charlton 1,155	50 50 135 90 1,560 780 390 390
Tarun Gupta 660	50 50 140 93 924 462 231 231
David Hutton 730	50 50 105 70 767 384 192 192
Daniel Labbad 644	50 50 150 100 967 484 242 242
Rod Leaver 875	50 50 110 73 963 482 241 241
Anthony Lombardo 680	50 50 150 100 1,020 510 255 255
Robert McNamara 650	50 50 135 90 878 439 220 220
Mark Menhinnitt 760	50 50 120 80 912 456 228 228
Eng-Peng Ooi2 406	100 – 75 50 304 304 – –
Brad Soller 800	50 50 125 83 1,000 500 250 250

1 Deferred STI is delivered as Lend Lease securities which are scheduled to be granted in September 2011.
2 Mr Ooi’s STI will be settled entirely as cash. This was agreed as part of Mr Ooi’s cessation arrangements.

44 Lend Lease Group annual report 2011

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DireCtors’ report

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c. Long-term incentive (LTI)
No long term incentive awards vested during the year.
Lend Lease’s relative TSR performance over the performance period for each outstanding LTI grant is shown below.
Relative TSR performance for Sept 2008 Grant
Comparative TSR performance from 1 September 2008 to 30 June 2011
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40% Lend Lease TSR
ASX 100 TSR
-50%
Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11
Relative TSR performance for Sept 2009 Grant
Comparative TSR performance from 1 September 2009 to 30 June 2011
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40% Lend Lease TSR
ASX 100 TSR
-50%
Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11
Relative TSR performance for Sept 2010 Grant
Comparative TSR performance from 1 September 2010 to 30 June 2011
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40% Lend Lease TSR
ASX 100 TSR
-50%
Sep 10 Dec 10 Mar 11 Jun 11
The historical vesting of LTI is as follows:
Grant date Vesting date Performance hurdle(s) Performance hurdle achievement
July 2007 30 June 2010 EPS, Relative TSR Not met
Total Shareholder Returns (TSR)
Total Shareholder Returns (TSR)
Total Shareholder Returns (TSR)
----- End of picture text -----

annual report 2011 Lend Lease Group 45

g. executive Contracts – Audited

Group CEO and Managing Director’s contract – Stephen McCann

Contract duration	No fxed term. Appointment as Managing Director not to exceed fve years, effective 4 March 2009.
Benefts	Total package includes fxed remuneration and superannuation.
	Additional benefts include vehicle lease cost, parking space at Lend Lease headquarters and life insurance to the value of three times fxed remuneration.
Variable remuneration	Eligible for STI and LTI plan at Board discretion.
eligibility
Non-compete period	12 months
Non-solicitation period	12 months
Notice by Lend Lease	12 months
Notice by Group CEO	6 months
Treatment on termination	Payment in lieu of notice: Where the Group CEO is not employed for the full period of notice, a payment in lieu of notice may be made. The payment in lieu of notice includes pro rata fxed remuneration and the cash value of statutory entitlements and benefts, and pro rata STI based on the level of performance achievement in the previous year.
	Treatment of incentives: The Group CEO may receive a pro rata STI award for the latest fnancial year based on
	assessment of his performance by the Board. LTIs will be treated according to ordinary award terms, and for the most
	recent LTI award before termination, the pro-rata period is increased by 12 months.
Other	The Group CEO has previously been granted retention awards. A number of these have not yet vested. They are
	described in Section h.

Executives are typically employed on contracts that have no fixed term. Benefits may include participation in the Employee Share Acquisition Plan, health/life insurance, car allowances, motor vehicle leases and salary continuance.

Lend Lease ensures that any termination benefits provided under the contract of any newly employed executive falls within the limits set by the Corporations Act so that the level of termination benefits does not require securityholder approval. There are some existing employment contracts within the Group that provide for a notice period that is longer than 12 months or a payment in lieu of notice that is greater than 12 months of fixed pay. These contracts were put in place prior to the changes to the Corporations Act in 2009 which changed the limit for termination benefits and complied with the limits in place at the time the contract was entered into. Lend Lease is reviewing these contracts on a case by case basis to monitor compliance with the new Corporations Act limits on termination benefits.

Executive	Notice by Lend Lease	Notice by executive	Treatment on termination for notice
Scott Charlton	6 months	6 months	Payment may be made in lieu of notice. Notice payment is based on fxed remuneration, superannuation and accrued leave.
Tarun Gupta	6 months	6 months	Payment may be made in lieu of notice.
David Hutton	12 months	6 months	Payment may be made in lieu of notice. Notice payment is based on fxed remuneration, superannuation plus projected STI (if eligible in that
			year) of 60% of the target cash opportunity.
Daniel Labbad	12 months	6 months	Payment may be made in lieu of notice. Company will provide
			repatriation support to Australia if not a resignation.
Rod Leaver	6 months	6 months	Payment may be made in lieu of notice. Notice payment is based on fxed remuneration and accrued but untaken leave.
Anthony Lombardo	12 months	6 months	Payment may be made in lieu of notice. Notice payment is based on fxed remuneration, superannuation plus projected STI (if eligible in that
			year) of 60% of the target cash opportunity.
Robert McNamara	3 months	3 months	Payment may be made in lieu of notice. Notice payment is based on base salary and other minimum benefts as required by applicable
			US legislation.
Mark Menhinnitt	12 months	6 months	Payment may be made in lieu of notice. Notice payment is based on fxed remuneration, superannuation plus projected STI (if eligible in that
			year) of 60% of the target cash opportunity.
Eng-Peng Ooi	6 months	6 months	Payment may be made in lieu of notice. Company will provide
			repatriation support to Australia if not a resignation.
Brad Soller	12 months	6 months	Payment may be made in lieu of notice. Notice payment is based on fxed remuneration, superannuation plus projected STI (if eligible in that
			year) of 60% of the target cash opportunity.

Executives are also eligible for participation in the STI and LTI plans subject to Board discretion.

Termination clauses are specified in each contract describing treatment on termination based on the reason for termination (e.g. resignation, with notice, due to illness, or immediate termination for cause).

46 Lend Lease Group annual report 2011

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DireCtors’ report

h. statutory executive remuneration Disclosures – Audited

A$000s Year	short-terM Benefits	short-terM Benefits	short-terM Benefits	post- eMpLoyMent Benefits	seCurity-BAseD pAyMent	seCurity-BAseD pAyMent	seCurity-BAseD pAyMent
	Cash salary1	Cash STI	Non- monetary benefts2	Super- annuation3	LTI equity- settled4	STI equity- settled	Retention5
Executive Director Stephen McCann 2011
	1,786 1,927 224 32 821 648 655 27 6,120
2010	1,518 1,368 159 27 642 546 1,031 22 5,313
Other Executives Scott Charlton 2011
	1,199 780 66 20 128 82 18 2,293
(Part year only) 2010	335 191 3 6 23 5 563
Tarun Gupta 2011	690 712 34 77 124 124 22 11 1,794
20109	–
David Hutton 2011	784 384 49 81 203 258 44 11 1,814
2010	594 258 10 67 168 189 44 8 1,338
Daniel Labbad 2011	820 483 165 61 199 128 45 1,901
20109	–
Rod Leaver 2011	1,043 481 120 17 61 259 1,981
2010	829 481 6 14 562 187 11 2,090
Anthony Lombardo 2011	727 510 59 17 152 160 21 11 1,657
2010	632 320 3 16 115 137 21 8 1,252
Robert McNamara 2011	713 439 34 273 35 1,494
20109	–
Mark Menhinnitt7 2011	778 456 86 230 152 51 12 1,765
2010	697 354 77 208 135 51 10 1,532
Eng-Peng Ooi8 2011	510 304 29 52 86 205 11 1,197
20109	–
Brad Soller 2011	847 500 14 19 193 178 26 13 1,790
2010	672 414 32 22 151 130 26 10 1,457
Previously disclosed executives10 Michael Bellaman11 2010 556 139 54 8 50 112 473 1,392
Murray Coleman 2010 683 345 30 72 159 117 530 8 1,944
William Hara 2010 563 267 14 160 175 39 7 1,225
Neil Martin 2010 399 134 183 136 92 78 19 6 1,047

1 Cash Salary includes the payment of cash allowances such as motor vehicle, superannuation and housing allowance. Rod Leaver does not include payment of accrued annual leave A$40,054 on transfer to the Singapore employing entity. David Hutton includes a cash retention payment of A$60,000.

2 Non-monetary benefits include car parking, relocation and expatriate benefits (such as health insurance, shipping of goods and tax return preparation), motor vehicle costs and annual leave.

3 Superannuation for defined benefit members in Australia (Tarun Gupta, David Hutton, Mark Menhinnitt, Eng-Peng Ooi) reflects the cost of contributions based on the long-term contribution rate applied to the notional salary in respect of each executive. Superannuation includes the value of life insurance premiums (Scott Charlton A$4,381, Tarun Gupta A$2,148, David Hutton A$3,758, Rod Leaver A$2,148, Anthony Lombardo A$2,148, Stephen McCann A$9,634, Mark Menhinnitt A$2,148, Eng-Peng Ooi A$2,020, Brad Soller A$3,532).

4 Fair value expense of LTI awards that are equity settled.

5 These amounts represent the amortisation of previous retention awards made including the retention component of the September 2008 LTI award.

6 Other long term benefits represent the accrual of statutory employee entitlements i.e. long service leave.

7 Mr Menhinnitt is included for the full year as he is in the top five highest paid for the Company and a Key Management Personnel (KMP) from 1 April 2011.

8 Mr Ooi ceased to be Key Management Personnel effective 1 April. Disclosures represent part-year remuneration from 1 July 2010 to 31 March 2011 while he was a KMP. 9 Individuals who were not Key Management Personnel or the five highest paid in the Group or the five highest paid in the Company during the year ended 30 June 2010 have no remuneration related to the year ended 30 June 2010 disclosed in this table.

10 Previously disclosed executives are no longer required to be disclosed as they are neither Key Management Personnel nor in the top five highest paid Executives in the Group or Company during the year ended 30 June 2011.

11 Michael Bellaman agreed to his employment terminating 20 August 2010 and received a termination payment of A$1,268,328 in relation to contractual entitlements.

annual report 2011 Lend Lease Group 47

Remuneration components as a proportion of reported total remuneration[1]

Remuneration components as a proportion of reported total remuneration1
Fixed	perforMAnCe-BAseD
	STI2 LTI
Executive Director
Stephen McCann 30%	58% 12%
Other Executives Scott Charlton 43%	53% 4%
Tarun Gupta 43%	50% 7%
David Hutton 48%	41% 11%
Daniel Labbad 47%	44% 9%
Rod Leaver 53%	44% 3%
Anthony Lombardo 40%	52% 8%
Robert McNamara 39%	46% 15%
Mark Menhinnitt 43%	45% 12%
Eng-Peng Ooi 60%	31% 9%
Brad Soller 43%	48% 9%

1 Excludes retention awards.

2 STI includes the cash amount and the deferred amount accrued for performance for the year ended 30 June 2011.

Equity-based payments

a. Outstanding LTI awards

No LTI awards outlined below vested during the year ended 30 June 2011.

							Expense
					Fair value	Total fair	for the
					per equity	value at	year ended
	Plan			Number	instrument2	grant date	30 June 2011
Name	(for the year ended)	Grant date	Vesting date1	granted	A$	A$	A$
Executive Director
Stephen McCann	June 2009 LTI – A3	Sept 2008	August 2012	120,235	6.35	763,566	190,892
	June 2009 LTI – B3	Sept 2008	August 2011	60,135	7.01	421,464	140,488
	June 2010 LTI (50%)4	Sept 2009	August 2012	124,535	6.08	757,173	232,880
	June 2010 LTI (50%)4	Sept 2009	August 2013	124,535	6.31	785,816	182,444
	June 2011 LTI (50%)5	Sept 2010	Sept 2013	87,680	4.92	431,386	119,830
	June 2011 LTI (50%)5	Sept 2010	Sept 2014	87,680	5.20	455,936	94,987
total							961,521
Other Executives
Scott Charlton	June 2010 LTI (50%)4	Sept 2009	August 2012	16,220	6.08	98,615	30,330
	June 2010 LTI (50%)4	Sept 2009	August 2013	16,220	6.31	102,345	23,762
	June 2011 LTI (50%)5	Sept 2010	Sept 2013	30,222	4.92	148,692	41,304
	June 2011 LTI (50%)5	Sept 2010	Sept 2014	30,222	5.20	157,154	32,741
total							128,137
Tarun Gupta	June 2009 LTI – A3	Sept 2008	August 2012	18,947	6.35	120,313	30,082
	June 2009 LTI – B3	Sept 2008	August 2011	9,477	7.01	66,434	22,139
	June 2010 LTI (50%)4	Sept 2009	August 2012	14,594	6.08	88,732	27,291
	June 2010 LTI (50%)4	Sept 2009	August 2013	14,594	6.31	92,088	21,380
	June 2011 LTI (50%)5	Sept 2010	Sept 2013	18,489	4.92	90,966	25,268
	June 2011 LTI (50%)5	Sept 2010	Sept 2014	18,489	5.20	96,143	20,030
total							146,190

Refer to footnotes on page 49.

48 Lend Lease Group annual report 2011

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DireCtors’ report

							Expense
					Fair value	Total fair	for the
					per equity	value at	year ended
	Plan			Number	instrument2	grant date	30 June 2011
Name	(for the year ended)	Grant date	Vesting date1	granted	A$	A$	A$
Other Executives
continued
David Hutton	June 2009 LTI – A3	Sept 2008	August 2012	37,538	6.35	238,363	59,591
	June 2009 LTI – B3	Sept 2008	August 2011	18,769	7.01	131,569	43,856
	June 2010 LTI (50%)4	Sept 2009	August 2012	28,910	6.08	175,773	54,062
	June 2010 LTI (50%)4	Sept 2009	August 2013	28,910	6.31	182,422	42,353
	June 2011 LTI (50%)5	Sept 2010	Sept 2013	19,200	4.92	94,464	26,240
	June 2011 LTI (50%)5	Sept 2010	Sept 2014	19,200	5.20	99,840	20,800
total							246,902
Daniel Labbad	June 2009 LTI – A3	Sept 2008	August 2012	38,324	6.35	243,357	60,845
	June 2009 LTI – B3	Sept 2008	August 2011	19,168	7.01	134,368	44,779
	June 2010 LTI (50%)4	Sept 2009	August 2012	27,339	6.08	166,221	51,124
	June 2010 LTI (50%)4	Sept 2009	August 2013	27,339	6.31	172,509	40,052
	June 2011 LTI (50%)5	Sept 2010	Sept 2013	19,200	4.92	94,464	26,240
	June 2011 LTI (50%)5	Sept 2010	Sept 2014	19,200	5.20	99,840	20,800
total							243,840
Rod Leaver6	June 2011 LTI (50%)5	Sept 2010	Sept 2013	24,889	4.92	122,454	34,015
	June 2011 LTI (50%)5	Sept 2010	Sept 2014	24,889	5.20	129,423	26,963
total							60,978
Anthony Lombardo	June 2009 LTI – A3	Sept 2008	August 2012	18,045	6.35	114,598	28,649
	June 2009 LTI – B3	Sept 2008	August 2011	9,025	7.01	63,254	21,085
	June 2010 LTI (50%)4	Sept 2009	August 2012	23,351	6.08	141,974	43,666
	June 2010 LTI (50%)4	Sept 2009	August 2013	23,351	6.31	147,345	34,210
	June 2011 LTI (50%)5	Sept 2010	Sept 2013	18,489	4.92	90,966	25,268
	June 2011 LTI (50%)5	Sept 2010	Sept 2014	18,489	5.20	96,143	20,030
total							172,908
Robert McNamara	June 2010 LTI (50%)4	Sept 2009	August 2012	43,285	6.08	263,173	80,943
	June 2010 LTI (50%)4	Sept 2009	August 2013	43,285	6.31	273,128	63,412
	June 2011 LTI (50%)5	Sept 2010	Sept 2013	52,533	4.92	258,462	71,795
	June 2011 LTI (50%)5	Sept 2010	Sept 2014	52,533	5.20	273,171	56,910
total							273,060
Mark Menhinnitt	June 2009 LTI – A3	Sept 2008	August 2012	43,308	6.35	275,034	68,759
	June 2009 LTI – B3	Sept 2008	August 2011	21,661	7.01	151,810	50,603
	June 2010 LTI (50%)4	Sept 2009	August 2012	33,358	6.08	202,817	62,379
	June 2010 LTI (50%)4	Sept 2009	August 2013	33,358	6.31	210,489	48,870
	June 2011 LTI (50%)5	Sept 2010	Sept 2013	20,267	4.92	99,714	27,698
	June 2011 LTI (50%)5	Sept 2010	Sept 2014	20,267	5.20	105,388	21,955
total							280,264
Eng-Peng Ooi	June 2009 LTI – A3	Sept 2008	August 2012	9,456	6.35	60,045	15,013
	June 2009 LTI – B3	Sept 2008	August 2011	4,730	7.01	33,157	11,049
	June 2010 LTI (50%)4	Sept 2009	August 2012	10,396	6.08	63,208	19,441
	June 2010 LTI (50%)4	Sept 2009	August 2013	10,396	6.31	65,599	15,230
	June 2011 LTI (50%)5	Sept 2010	Sept 2013	14,933	4.92	73,470	20,409
	June 2011 LTI (50%)5	Sept 2010	Sept 2014	14,933	5.20	77,652	16,178
total							97,320

annual report 2011 Lend Lease Group 49

							Expense
					Fair value	Total fair	for the
					per equity	value at	year ended
	Plan			Number	instrument2	grant date	30 June 2011
Name	(for the year ended)	Grant date	Vesting date1	granted	A$	A$	A$
Other Executives
continued
Brad Soller	June 2009 LTI – A3	Sept 2008	August 2012	22,376	6.35	142,101	35,525
	June 2009 LTI – B3	Sept 2008	August 2011	11,191	7.01	78,435	26,145
	June 2010 LTI (50%)4	Sept 2009	August 2012	31,546	6.08	191,800	58,991
	June 2010 LTI (50%)4	Sept 2009	August 2013	31,546	6.31	199,055	46,215
	June 2011 LTI (50%)5	Sept 2010	Sept 2013	21,333	4.92	104,958	29,156
	June 2011 LTI (50%)5	Sept 2010	Sept 2014	21,333	5.20	110,932	23,111
total							219,143

1 Early vesting of the award may be available in certain circumstances. The award is forfeited on resignation, but in other cases of termination may be awarded on a pro-rata basis.
2 The fair value at grant date represents an actuarial valuation of the award using assumptions underlying the Black-Scholes methodology to produce a Monte-Carlo simulation model in accordance with Australian Accounting Standards.
3 The September 2008 grant had three components, with one-third of the grant being tested against EPS and one-third against TSR (Plan for the year ended June 2009 LTI – A), and the remainder vesting based on achievement of service conditions (Plan for the year ended June 2009 LTI – B). For components tested equally against TSR and EPS (Plan for the year ended June 2009 LTI – A) the weighted average fair value is disclosed.
4 The September 2009 grant is split into two equal tranches that vest independently after three and four years subject to meeting the performance hurdles described in Section e.
5 The September 2010 grant is split into two equal tranches that vest independently after three and four years subject to meeting the performance hurdles described in Section e.
6 As a consequence of Mr Leaver’s appointment to the role of Regional CEO, Australia, grants made under previous business unit specific LTI plans have been replaced by participation in the Group LTI plan and will be subject to the same terms and performance hurdles.
b. Outstanding retention awards

b. Outstanding retention awards
						Expense
				Fair value	Total fair	for the
				per equity	value at	year ended
			Number	instrument	grant date	30 June 2011
Name	Grant date	Vesting date1	granted	A$	A$	A$
Stephen McCann	Aug 2007	June 2012	141,367	17.68	2,500,000	514,374

1 Mr McCann must be employed at the vesting date for vesting to occur. In certain circumstances (e.g. termination without cause), pro-rata early vesting may be available.

i. non-executive Director remuneration – Audited

To maintain their independence and impartiality, Non Executive Directors’ rewards do not have any at-risk components. They may be affected by company performance with regard to personal security holdings and post-employment benefits delivered as Lend Lease securities.

On appointment to the Board, all non-executive directors enter into a service agreement with the company in the form of a letter of appointment. The letter summarises the Board policies and terms, including compensation, relevant to the office of director.

The total fees paid to the Non-Executive Directors are kept within the total aggregate fee pool of A$2,500,000 as approved by securityholders at the 2008 Annual General Meeting.

Board and Committee fees

There was no increase to Board or Board Committee fees during the year.

Board and Board Committee fees are set with reference to advice from external advisers and market data, with regard to factors such as the responsibilities and risks associated with the role in question.

	Chair fee	Member fee
	A$	A$
Board	640,000	160,000
Nomination Committee	36,000	Nil
Personnel and Organisation Committee	36,000	20,000
Risk Management and Audit Committee	44,000	36,000
Sustainability Committee	36,000	20,000

50 Lend Lease Group annual report 2011

3. reMunerAtion report CONTINUED

DireCtors’ report

The fees paid to compensate directors for time spent travelling to overseas meetings are shown below. All business-related expenses (e.g. travel) are also reimbursed.

Travel less than 4 hours A$ Travel between 4 and 10 hours A$ Travel over 10 hours A$	Travel less than 4 hours A$ Travel between 4 and 10 hours A$ Travel over 10 hours A$
Fee (each way) – 2,800 6,000
Statutory non-executive director remuneration disclosures short-terM post- eMpLoyMent Benefits seCurity- BAseD pAyMent A$000s Year Base fees Committee chairman fees Committee fees Travel fees Other benefts Super- annuation Other equity1 Total
David Crawford 2011 640	36 15 691
2010 640	35 14 118 807
Phillip Colebatch 2011 160	36 36 60 15 307
2010 160	36 36 66 14 44 356
Gordon Edington 2011 160	56 60 15 291
2010 160	56 78 14 41 349
Peter Goldmark 2011 160	36 20 66 15 297
2010 160	36 20 78 14 41 349
Julie Hill 2011 160	36 20 97 15 328
2010 160	36 20 83 14 41 354
David Ryan 2011 160	44 20 36 15 275
2010 160	44 20 35 14 43 316
Mark Selway2 2010 99	25 36 9 40 209

1 Other equity refers to the amount accrued under the Non Executive Directors’ Retirement Benefit Plan. This amount is not accessible until the director retires. The plan was discontinued from 1 January 2010. Amounts shown are for 12 months to 31 December 2009.

2 Mark Selway retired as a Director on 10 February 2010.

Post-employment benefits

During the year ended 30 June 2010 the non-executive directors resolved to discontinue the further award of retirement securities. Previously, non-executive directors were entitled to an annual accrual of Lend Lease securities to the value of 0.2 times their Director fee (Board and Board Committee fees only).

The value of retirement securities will fluctuate in line with the Lend Lease security price and securities are accessible only on retirement (unless securities need to be sold to meet a tax liability in respect of those securities).

Two non-executive directors appointed before 1 January 2001 have also accrued benefits under the previous Retirement Benefit Plan:

n Gordon Edington: A$164,640 (30 June 2010: A$153,640); and
n Peter Goldmark: A$167,680 (30 June 2010: A$156,960).

annual report 2011 Lend Lease Group 51

4. other

a. security options

No security options were issued during the year by the Company or any of its controlled entities, and there are no such options on issue.

b. indemnification and insurance of Directors and officers

Rule 12 of the Company’s Constitution provides for indemnification in favour of each of the Directors named on pages 29 to 30 of this Report; the Company Secretary, Mr W Hara; and officers of the Company or of wholly owned subsidiaries or related entities of the Company (‘Officers’) to the extent permitted by the Corporations Act 2001 . Rule 12 does not indemnify a Director, Company Secretary or Officer for any liability involving a lack of good faith.

In conformity with Rule 12 of the Company’s Constitution, the Company has entered into Deeds of Indemnity, Insurance and Access with each of the Directors named on pages 29 to 30 of this Report. The indemnities operate to the full extent permitted by law and are not subject to a monetary limit. The Company is not aware of any liability having arisen, and no claims have been made, during or since the financial year under the Deeds of Indemnity, Insurance and Access.

For related entities, the indemnification is provided under Rule 12 of the Company’s Constitution unless the Directors determine otherwise. For unrelated entities in which the Group has an interest, deeds of indemnity may be entered into between Lend Lease Corporation Limited and the Director or Officer. Since the date of the last report, the Company has not entered into any separate deeds of indemnity with a Director or officer of an unrelated entity.

No indemnity has been granted to an auditor of the Company in their capacity as auditor of the Company.

In accordance with the Corporations Act 2001 , Rule 12 of the Constitution also permits the Company to purchase and maintain insurance or pay or agree to pay a premium for insurance for Officers

against any liability incurred as an Officer of the Company or of a related body corporate. This may include a liability for reasonable costs and expenses incurred in defending proceedings, whether civil or criminal, and whatever their outcome. Due to confidentiality obligations and undertakings of the policy, no further details in respect of the premium or policy can be disclosed.

c. non Audit services

During the year KPMG, the Company’s auditor, performed certain other services in addition to its statutory duties.

The Board has considered the other services provided during the year by the auditor and, in accordance with written advice provided by resolution of the Risk Management and Audit Committee, is satisfied that the provision of those services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:

n All other services were subject to the corporate governance procedures adopted by the Group and have been reviewed by the Risk Management and Audit Committee to ensure they do not impact the integrity and objectivity of the auditor; and
n The other services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants , as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the Group, acting as an advocate for the Group or jointly sharing risks and rewards.

A copy of the Lead Auditors’ Independence Declaration, as required under Section 307C of the Corporations Act 2001 , is included at the end of this Report.

Details of the amounts paid to the auditor of the Company, KPMG, and its related practices for audit and other services provided during the year are set out below.

Constitution also permits the Company to purchase and maintain insurance or pay or agree to pay a premium for insurance for Offcers its related practices for audit and othe year are set out below.	r services provided during the
	ConsoLiDAteD
	June 2011 A$000s June 2010 A$000s
Audit and Other Assurance Services
Audit services	7,286 7,122
Other assurance services	2,105
total audit and other assurance services	9,391 7,122
Other Services
International assignees tax services	38
Other	78
total other services	– 116
total audit and other services	9,391 7,238

d. rounding off

Lend Lease Corporation Limited is a company of the kind referred to in the Australian Securities and Investments Commission Class Order 98/100 dated 10 July 1998 and, in accordance with that Class Order, amounts in the Consolidated Financial Statements and this Report have been rounded off to the nearest tenth of a million dollars or, where the amount is A$50,000 or less, zero, unless specifically stated to be otherwise.

This Report is made in accordance with a resolution of the Board of directors and is signed for and on behalf of the Directors.

==> picture [159 x 36] intentionally omitted <==

D A Crawford, Ao Chairman

==> picture [90 x 54] intentionally omitted <==

s B McCann

Group Chief Executive Officer and Managing Director

Sydney, 26 August 2011

52 Lend Lease Group annual report 2011

==> picture [528 x 786] intentionally omitted <==

annual report 2011 Lend Lease Group 53

five yeAr profiLe[1]

June 2011 June 2010 June 2009 June 2008 June 2007

Proftability
Revenue	A$m 8,927 10,502	14,683	14,581	14,180
Statutory proft/(loss) before tax	A$m 632 451	(749)	310	628
Operating proft before tax2	A$m 621 417	365	501	545
Statutory proft/(loss) after tax	A$m 493 346	(669)	254	498
Operating proft after tax2	A$m 485 324	292	436	446
Operating EBITDA2	A$m 711 483	396	517	551
Earnings per security on statutory proft/(loss)3	cents 86.9 69.5	(154.7)	63.4	124.3
Earnings per security on operating proft2,3	cents 85.6 65.1	67.4	108.7	111.4
Statutory proft/(loss) after tax to securityholders’ equity for the period (ROE)4	% 14.2 12.6	(25.1)	8.2	15.7
Distribution per security5	cents 35.0 32.1	41.0	77.0	77.0
Distribution payout ratio on operating proft after tax2,5	% 41 50	64	71	69
Corporate Strength
Total assets	A$m 12,149 11,366	8,291	8,550	9,336
Cash	A$m 1,046 1,636	1,121	843	550
Borrowings	A$m 1,694 1,447	1,125	929	1,076
Current assets	A$m 4,097 4,171	4,106	4,085	4,514
Non current assets	A$m 8,052 7,196	4,186	4,465	4,822
Current liabilities	A$m 5,794 5,541	4,087	3,915	3,869
Non current liabilities	A$m 2,722 2,465	1,790	1,653	2,224
Total equity	A$m 3,633 3,361	2,414	2,981	3,243
Cash fow (used in)/provided by operations	A$m (42) 168	382	269	357
Net asset backing per security	A$ 6.36 5.94	5.27	7.43	8.09
Ratio of current assets to current liabilities6	times 0.71 0.75	1.00	1.04	1.17
Net debt to total tangible assets, less cash7	% 8.9 n/a	2.9	4.1	9.8
Borrowings to total equity	% 46.6 43.0	46.6	31.2	33.2
Borrowings to total equity plus borrowings	% 31.8 30.1	31.8	23.8	24.9
Gross borrowings to total tangible assets8	% 17.7 15.1	16.9	14.5	15.7
Borrowings to total market capitalisation	% 33.1 34.9	35.1	24.3	14.5
Securities on issue	m 571 566	458	401	401
Number of securityholders	no. 54,370 55,492	52,684	51,632	49,051
Number of equivalent full-time employees	no. 17,181 11,094	10,656	12,039	10,817
Securityholders’ Returns and Statistics
Proportion of securities on issue to top 20 securityholders	% 76.3 75.3	74.3	75.4	76.9
Securityholdings relating to employees9	% 6.4 6.1	7.9	9.3	9.5
Total distributions10	A$m 199 161	187	309	309
Security price as at 30 June as quoted on the Australian Securities Exchange	A$ 8.97 7.33	7.01	9.55	18.54

1 Comparative information in respect of June 2007, June 2008 and June 2009 reflect the results in Lend Lease Corporation Limited and its controlled entities prior to stapling of the Lend Lease Trust (LLT) in November 2009. Refer to Note 1 ‘Significant Accounting Policies’ of the Consolidated Financial Statements. June 2010 and June 2009 have been adjusted to reflect the impact of aligning the accounting policies of an associate to those of the Group with respect to prior period adoption of AASB Interpretation 12 ‘ Service Concession Arrangements ’.
2 Operating profit excludes unrealised property investment revaluations of A$10.7 million gain before tax, A$7.5 million gain after tax (June 2010: A$33.7 million gain before tax, A$22.0 million gain after tax).
3 Calculated using the weighted average number of securities on issue including treasury securities. June 2009 has been adjusted by a factor of 1.02 in respect of new securities issued during March and April 2010 via a 5 for 22 single bookbuild accelerated renounceable entitlement offer at A$7.70 per new security.
4 Return on equity is calculated on average equity.
5 Distributions include interim and final distributions. June 2010 also includes the ‘in specie’ dividend of 0.1 cent following the stapling of LLT units to shares in the company in November 2009.
6 June 2011 and June 2010 ratio includes resident and accommodation bond liabilities recognised following the Primelife acquisition. These are required to be classified as current liabilities as any resident may depart within 12 months. The investment properties, property, plant and equipment, and intangible assets to which they relate, however, are required to be classified as non current.
7 The June 2010 ratio is not relevant as the Group was in a net cash position.
8 Net debt and gross borrowings include certain other financial liabilities of A$227.7 million (June 2010: A$169.6 million).
9 Securities held through employee benefit vehicles.
10 The June 2011 distribution of A$85.6 million was declared subsequent to the reporting date.

54 Lend Lease Group annual report 2011

ConsoLiDAteD finAnCiAL stAteMents

tA B L e o f C o n t e n t s

tA B L e o f C o n t e n t s	tA B L e o f C o n t e n t s
Income Statement		55
Statement of Comprehensive Income		56
Statement of Financial Position		57
Statement of Changes in Equity		58
Statement of Cash Flows		60
notes to the Consolidated financial statements
1.	Signifcant Accounting Policies	61
2.	Revenue	71
3.	Other Income	71
4.	Operating Expenses	71
5.	Finance Revenue and Finance Costs	72
6.	Taxation	73
7.	Distributions	76
8.	Earnings Per Stapled Security/Share	76
9.	Cash and Cash Equivalents	77
10.	Loans and Receivables	77
11.	Inventories	78
12.	Equity Accounted Investments	78
13.	Investment Properties	82
14.	Other Financial Assets	83
15.	Property, Plant and Equipment	83
16.	Intangible Assets	84
17.	Defned Beneft Plan Asset	87
18.	Non Current Asset Held for Sale	88
19.	Trade and Other Payables	89
20.	Resident and Accommodation Bond Liabilities	89
21.	Borrowings and Financing Arrangements	90
22.	Provisions	91
23.	Other Financial Liabilities	92
24.	Defned Beneft Plan (Asset)/Liability	92
25.	Issued Capital and Treasury Securities	94
26.	Reserves	95
27.	Contingent Liabilities	97
28.	Consolidated Entities	98
29.	Segment Reporting	101
30.	Capital Risk Management	103
31.	International Currency Management and Financial Instruments	103
32.	Commitments	109
33.	Notes to the Statement of Cash Flows	110
34.	Employee Benefts	111
35.	Key Management Personnel Disclosures	113
36.	Non Key Management Personnel Related Party Information	114
37.	Parent Entity Disclosures	116
38.	Events Subsequent to Balance Date	116
Directors’ Declaration		117
independent Auditor’s report		118

annual report 2011 Lend Lease Group 55

inCoMe stAteMent y e A r e n D e D 3 0 j u n e 2 0 11

		June 2011	June 2010
	Note	A$m	A$m
Revenue	2	8,926.7	10,501.5
Cost of sales		(7,894.2)	(9,617.1)
Gross proft		1,032.5	884.4
Other income	3	182.2	149.6
Other expenses		(855.4)	(727.0)
results from operating activities		359.3	307.0
Finance revenue	5	87.4	68.5
Finance costs	5	(125.2)	(94.1)
net fnance (costs)		(37.8)	(25.6)
Share of proft of equity accounted investments	12	310.0	169.4
proft before tax		631.5	450.8
Income tax expense	6	(138.3)	(102.6)
proft after tax		493.2	348.2
Proft after tax attributable to:
Members of Lend Lease Corporation Limited		492.8	345.6
Non controlling interests attributable to unitholders of Lend Lease Trust		–	–
proft after tax attributable to securityholders		492.8	345.6
Other non controlling interests		0.4	2.6
proft after tax		493.2	348.2
Basic/Diluted Earnings Per Lend Lease Corporation Limited Share
Shares excluding treasury shares (cents)	8	91.7	72.9
Shares on issue (cents)	8	86.9	69.5

The accompanying notes form part of these consolidated financial statements.

56 Lend Lease Group annual report 2011

stAteMent of CoMprehensive inCoMe

y e A r e n D e D 3 0 j u n e 2 0 11

		June 2011	June 2010
	Note	A$m	A$m
Proft After Tax		493.2	348.2
Other Comprehensive Income/(Expense) After Tax
Movements in Fair Value Revaluation Reserve	6b, 26	2.1	(6.7)
Movements in Hedging Reserve	6b, 26	42.8	(30.1)
Movements in Foreign Currency Translation Reserve	6b, 26	(162.3)	(56.1)
Movements in Non Controlling Interest Acquisition Reserve	6b, 26	24.6	10.1
Other movements			(2.5)
other comprehensive (expense)		(92.8)	(85.3)
total comprehensive income after tax		400.4	262.9
Total comprehensive income after tax attributable to:
Members of Lend Lease Corporation Limited		403.8	263.6
Non controlling interests attributable to unitholders of Lend Lease Trust		–	–
total comprehensive income after tax attributable to securityholders		403.8	263.6
Other non controlling interests		(3.4)	(0.7)
total comprehensive income after tax		400.4	262.9

The accompanying notes form part of these consolidated financial statements.

annual report 2011 Lend Lease Group 57

stAteMent of finAnCiAL position

y e A r e n D e D 3 0 j u n e 2 0 11

		June 2011	June 2010
	Note	A$m	A$m
Current Assets
Cash and cash equivalents	9	1,046.2	1,635.9
Loans and receivables	10	1,724.0	1,769.7
Inventories	11	692.5	587.8
Other fnancial assets	14	94.2	91.4
Current tax assets			9.8
Other assets		43.6	76.0
Non current asset held for sale	18	496.5
total current assets		4,097.0	4,170.6
Non Current Assets
Loans and receivables	10	330.3	365.2
Inventories	11	1,578.7	1,576.0
Equityaccounted investments	12	541.4	913.9
Investmentproperties	13	3,216.0	2,820.9
Other fnancial assets	14	272.0	273.7
Deferred tax assets	6c	115.7	95.7
Property,plant and equipment	15	595.2	352.7
Intangible assets	16	1,319.1	694.1
Defned beneftplan asset	17, 24	32.6	27.3
Other assets		51.0	76.3
total non current assets		8,052.0	7,195.8
total assets		12,149.0	11,366.4
Current Liabilities
Trade and otherpayables	19	3,263.1	3,295.1
Resident and accommodation bond liabilities	20	2,231.4	1,995.8
Current tax liabilities		0.8
Provisions	22	262.0	198.8
Other fnancial liabilities	23	37.1	51.5
total current liabilities		5,794.4	5,541.2
Non Current Liabilities
Trade and otherpayables	19	625.8	709.5
Provisions	22	74.2	84.1
Borrowings and fnancingarrangements	21	1,693.9	1,446.6
Other fnancial liabilities	23	201.4	146.9
Deferred tax liabilities	6c	126.7	59.6
Defned beneftplan liability	24		18.0
total non current liabilities		2,722.0	2,464.7
total liabilities		8,516.4	8,005.9
net assets		3,632.6	3,360.5
Equity
Issued capital	25	2,063.7	2,019.2
Treasurysecurities	25	(83.3)	(74.4)
Reserves	26	(108.4)	(29.0)
Retained earnings		1,725.6	1,404.5
total equity attributable to members of Lend Lease Corporation Limited		3,597.6	3,320.3
Non controllinginterests attributable to unitholders of Lend Lease Trust		0.6	0.6
total equity attributable to securityholders		3,598.2	3,320.9
Other non controllinginterests		34.4	39.6
total equity		3,632.6	3,360.5

The accompanying notes form part of these consolidated financial statements.

58 Lend Lease Group annual report 2011

stAteMent of ChAnGes in eQuity

y e A r e n D e D 3 0 j u n e 2 0 11

		June 2011	June 2010
	Note	A$m	A$m
Issued Capital and Treasury Securities
Issued Capital
Openingbalance at beginningof fnancialyear		2,019.2	1,195.9
Transactions with owners for theyear
Equityissue via institutionalplacement(net of transaction costs)		(0.7)	792.6
Equityissue – other			0.3
Distribution Reinvestment Plan(DRP)		45.2	30.4
Closing balance at end of fnancialyear	25	2,063.7	2,019.2
TreasurySecurities
Openingbalance at beginningof fnancialyear		(74.4)	(63.2)
Transactions with owners for theyear
Treasurysecurities acquired		(16.3)	(2.6)
Treasurysecurities vested		7.4	11.0
Movement on allocated treasury securities recognised directly in retained earnings and equity
compensation reserve			(19.6)
Closing balance at end of fnancialyear	25	(83.3)	(74.4)
total issued capital and treasury securities		1,980.4	1,944.8
Reserves (After Tax)
Fair Value Revaluation Reserve
Openingbalance at beginningof fnancialyear		37.8	44.5
Movements duringtheyear		2.1	(6.7)
Closing balance at end of fnancialyear	26	39.9	37.8
HedgingReserve
Openingbalance at beginningof fnancialyear		(88.2)	(58.1)
Movements duringtheyear		42.8	(30.1)
Closing balance at end of fnancialyear	26	(45.4)	(88.2)
Foreign CurrencyTranslation Reserve
Openingbalance at beginningof fnancialyear		(80.5)	(24.4)
Movements duringtheyear		(162.3)	(56.1)
Closing balance at end of fnancialyear	26	(242.8)	(80.5)
Non ControllingInterest Acquisition Reserve
Openingbalance at beginningof fnancialyear		(110.9)	(121.0)
Movements duringtheyear		24.6	10.1
Closing balance at end of fnancialyear	26	(86.3)	(110.9)
Other Reserve
Openingbalance at beginningof fnancialyear		110.4	104.6
Transaction with owners for theyear
Net proceeds from renounceable entitlement offer received by Lend Lease sponsored
employee security plans			7.1
Effect of foreign exchange rate/other movements		1.3	(1.3)
Closing balance at end of fnancial year	26	111.7	110.4
EquityCompensation Reserve
Openingbalance at beginningof fnancialyear		48.0	35.6
Transactions with owners for theyear
Movements attributable to allocation and vestingof securities		12.1	12.4
Closing balance at end of fnancial year	26	60.1	48.0
Other Compensation Reserve
Closing balance at beginning and end of fnancial year		54.4	54.4
total reserves	26	(108.4)	(29.0)

The accompanying notes form part of these consolidated financial statements.

annual report 2011 Lend Lease Group 59

	June 2011	June 2010
	A$m	A$m
Retained Earnings
Opening balance at beginning of fnancial year	1,404.5	1,238.5
Prior year adjustment1		(34.6)
Proft attributable to members of Lend Lease Corporation Limited	492.8	345.6
Transactions with owners for the year
Distributions paid	(135.8)	(135.5)
Distributions on treasury securities	8.6	8.4
Distributions under DRP	(45.2)	(30.4)
Movement on allocated treasury securities recognised directly in retained earnings	0.7	15.0
Other		(2.5)
Closing balance at end of fnancial year	1,725.6	1,404.5
Non Controlling Interests Attributable to Unitholders of Lend Lease Trust
Opening balance at beginning of fnancial year	0.6
Transactions with owners for the year
Movements attributable to the stapling of Lend Lease Trust units to Company shares		0.5
Security issue via institutional placement		0.1
Closing balance at end of fnancial year	0.6	0.6
Other Non Controlling Interests
Opening balance at beginning of fnancial year	39.6	41.8
Proft attributable to non controlling interests	0.4	2.6
Transactions with owners for the year
Movements attributable to dividends/distributions received	(1.7)	(1.4)
Effect of foreign exchange rate/other movements	(3.9)	(3.4)
Closing balance at end of fnancial year	34.4	39.6
total equity	3,632.6	3,360.5
Total Comprehensive Income After Tax for the Financial Year
Attributable to:
Members of Lend Lease Corporation Limited	403.8	263.6
Non controlling interests attributable to unitholders of Lend Lease Trust	–	–
total comprehensive income after tax attributable to securityholders	403.8	263.6
Other non controlling interests	(3.4)	(0.7)
total comprehensive income after tax	400.4	262.9

1 Refer to Note 1.2 ‘Basis of Preparation’ for further details.

The accompanying notes form part of these consolidated financial statements.

60 Lend Lease Group annual report 2011

stAteMent of CAsh fLoWs

y e A r e n D e D 3 0 j u n e 2 0 11

		June 2011	June 2010
	Note	A$m	A$m
Cash Flows from Operating Activities
Cash receipts in the course of operations		9,331.3	10,677.0
Cash payments in the course of operations		(9,306.7)	(10,545.3)
Property development receipts		454.3	504.4
Property development expenditure		(584.3)	(491.7)
Interest received		73.6	46.3
Interest paid		(113.4)	(80.1)
Dividends/distributions received		126.1	139.2
Income tax paid in respect of operations		(23.1)	(82.1)
net cash (used in)/provided by operating activities	33	(42.2)	167.7
Cash Flows from Investing Activities
Sale/redemption of investments		398.2	374.3
Acquisition of investments		(263.7)	(256.0)
Sale of investment properties		3.1
Acquisition of/capital expenditure on investment properties		(139.2)	(46.8)
Net loans to related parties		(12.8)	(21.7)
Acquisition of consolidated entities (net of cash acquired)	28b	(638.0)	(171.9)
Disposal of consolidated entities (net of cash disposed)	28c	10.2
Disposal of property, plant and equipment		14.4	3.4
Acquisition of property, plant and equipment		(47.5)	(15.8)
Acquisition of intangible assets		(7.7)	(71.7)
Other investing activities		(4.0)	(43.4)
net cash (used in) investing activities		(687.0)	(249.6)
Cash Flows from Financing Activities
Net proceeds from equity issue			789.1
Proceeds from borrowings		957.9	566.7
Repayment of borrowings		(566.7)	(577.2)
Distributions paid		(127.3)	(126.1)
Other fnancing activities		(47.6)
net cash provided by fnancing activities		216.3	652.5
Other Cash Flow Items
Effect of foreign exchange rate movements on cash and cash equivalents		(76.8)	(55.5)
net (decrease)/increase in cash and cash equivalents		(589.7)	515.1
Cash and cash equivalents at beginning of fnancial year		1,635.9	1,120.8
Cash and cash equivalents at end of fnancial year	9	1,046.2	1,635.9

The accompanying notes form part of these consolidated financial statements.

annual report 2011 Lend Lease Group 61

notes to the ConsoLiDAteD finAnCiAL stAteMents

1. significant Accounting policies

Lend Lease Corporation Limited (‘the Company’) is domiciled in Australia. The consolidated financial report of the Company for the financial year ended 30 June 2011 comprises the Company and its controlled entities including Lend Lease Trust (‘LLT’) (together referred to as the ‘consolidated entity’ or the ‘Group’).

Shares in the Company and units in LLT are traded as one security under the name of Lend Lease 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 as non controlling interests 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 26 August 2011.

1.1 Statement of Compliance

The consolidated financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards (‘AASBs’) adopted by the Australian Accounting Standards Board, and the Corporations Act 2001 . The consolidated financial report of the Group also complies with International Financial Reporting Standards (‘IFRSs’) adopted by the International Accounting Standards Board.

At 30 June 2011, the Group has adopted the amendments to AASB 101 Presentation of Financial Statements outlined in AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project . The change relates only to disclosure and had no impact on consolidated earnings per share or net profit. The changes have been applied retrospectively and allow the Group to disclose transactions recognised in ‘Other Comprehensive Income’ in Note 26 ‘Reserves’.

The opening retained earnings as at 1 July 2009 has been adjusted from A$1,238.5 million to A$1,203.9 million as a result of aligning the accounting policies of an associate to those of the Group with respect to the adoption of AASB Interpretation 12 Service Concession Arrangements in prior years. There is no significant impact on the consolidated income statement for the prior year as a result of this alignment, however the prior year statement of financial position has been adjusted to decrease loans and receivables by A$4.7 million from A$2,139.6 million to A$2,134.9 million, increase trade and other payables by A$23.8 million from A$3,980.8 million to A$4,004.6 million and increase hedging reserves by A$6.1 million from negative A$94.3 million to negative A$88.2 million.

The accounting policies set out below have been consistently applied to all financial years presented in the consolidated financial statements and by all entities in the consolidated entity, except as explained in Note 1.3 which addresses changes in accounting policies. Certain comparative amounts have been reclassified to conform with the current year’s presentation.

Basis of Consolidation

1.2 Basis of Preparation

The financial report is presented in Australian dollars 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, available for sale investments, investment properties, resident liabilities 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 in Note 1 for the basis of valuation of assets and liabilities measured at fair value.

The preparation of a financial report that complies with AASBs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Information about critical accounting judgements in applying the Group’s accounting policies is set out in Note 1.31.

From 1 July 2010, the Group moved to a regional structure as outlined in Note 29 ‘Segment Reporting’. Accordingly, the presentation format of the income statement has been changed from the prior year. The Group considers the revised presentation to be more appropriate having regard to the change in the segmental financial information reviewed by the Group Chief Executive Officer and Managing Director (the chief operating decision maker). Certain comparative amounts have been reclassified to conform with the current year’s income statement presentation. The change in presentation format of the income statement has no impact on the measurement of the Group’s financial result.

The Group consolidation comprises all entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are presently exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The Group invests in special purpose entities (‘SPEs’) for trading and investment purposes. The SPEs are consolidated if the substance of the relationship with the Group is such that the Group controls the SPE. The Group will also consolidate the SPE if the Group is expected to obtain the majority of the benefits and/or is exposed to the majority of the residual risks of an SPE or its net assets.

Intragroup balances and transactions, and any unrealised gains or losses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements. Investments in subsidiaries are carried at their cost of acquisition in the Company’s financial statements. The Company sponsors a number of employee benefit vehicles, including employee share plans. Under AASBs, these vehicles, while not legally controlled, are required to be consolidated for accounting purposes.

62 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

1. significant Accounting policies continued

1.3 Impact of Acquisition and New/Revised Accounting Standards

New and Revised Accounting Standards

A number of new amendments to standards and interpretations became operative for the financial year ended 30 June 2011 and have been applied in preparing these consolidated financial statements. None of these has materially impacted the Group and its policies.

New Accounting Standards and Interpretations Not Yet Adopted Certain new accounting standards and interpretations have been published that are not mandatory for the financial year ended 30 June 2011 but are available for early adoption and have not been applied in preparing this report. None of these is expected to have a significant effect on the Group and its policies, other than the following standards where the potential effect is yet to be determined:

n AASB 9 Financial Instruments , AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-17 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010). These standards address the classification, measurement and derecognition of financial assets and financial liabilities.
n IFRS 10 Consolidated Financial Statements introduces a new definition of control and addresses whether an entity should be included within the consolidated financial statements of the parent company.
n IFRS 11 Joint Arrangements establishes principles for financial reporting by parties to a joint arrangement.
n IFRS 12 Disclosure of Interests in Other Entities relates to disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities.
n IFRS 13 Fair Value Measurements introduces new guidance on fair value measurement and disclosure requirements when fair value is permitted by accounting standards.
n The amendments to IAS 19 Employee Benefits (June 2011) introduce changes to the accounting for and presentation of pensions and other post-employment benefits.

The standards above become mandatory for the June 2014 financial year and are to be applied retrospectively.

1.4 Revenue, Other Income and Profits

For aged care and retirement living:

n Deferred Management Fees (DMF):
DMF are earned in the retirement village business from both owned facilities and those which are leased/managed for third parties. A typical DMF contract provides for an annual retainer for a fixed period (e.g. 3% per annum of purchase or resale price for a period up to 12 years, or 36% in total) plus a share of the capital gain realised on turnover. The resulting DMF receivable is classified differently on balance sheet, between owned and managed retirement villages.

For both owned retirement villages (Investment Property) and managed retirement villages, DMF income is recognised on an annual accrual basis based upon the expected term of the resident’s licence and estimates of capital growth since the resident first occupied the unit.

For owned retirement villages, the DMF receivable is offset against the resident liabilities balance in current liabilities as they are net settled in the same future transaction.

In relation to leased and managed retirement villages, the DMF receivable is recognised as a receivable split between current and non current assets based on the expected rate of resident turnover.
n Aged Care Revenue:
Aged Care revenue comprises daily resident living contributions, retention fees and government funding, which are all determined in accordance with Federal Government authorised rates. This revenue is recognised as the services are provided. The Group is entitled to charge an annual retention fee to hostel residents. These annual fees are regulated by the Federal Government and are paid by a resident on departure. These fees are accrued during the resident’s period of occupancy.

Revenue and Profits from the Sale of Development Properties Revenue and profits from the sale of development properties are recognised in the income statement when:

n The significant risks and rewards have been transferred to the buyer;
n The Group retains neither continuing managerial involvement to the degree usually associated with ownership, nor effective control over the development properties sold;
n The revenue can be measured reliably and it is probable that the Group will receive the consideration due; and
n The Group can measure reliably the costs incurred or to be incurred.

Revenue from the Provision of Services

Revenue from the provision of services is recognised in the income statement in proportion to the stage of completion of the transactions at the balance sheet date.

For property construction: the value of work performed using the percentage complete method, which is measured by reference to actual costs to date as a percentage of total forecast costs for each contract.

For property and funds management: property development and management fee entitlements for services rendered.

Rental Revenue

Rental income is recognised in the income statement on a straight line basis over the term of the lease unless another systematic basis is more appropriate. Lease incentives granted are recognised as an integral part of the total rental income.

Dividends/Distributions

Dividend/distribution income is recognised when the right to receive payment is established, usually on declaration of the dividend.

annual report 2011 Lend Lease Group 63

Net Gains or Losses on Sale of Investments

Net gains or losses on sale of investments are recognised when an unconditional contract is in place.

Finance Revenue

Finance revenue is recognised on a time proportion basis using the effective interest method. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income.

In addition to its own current and deferred tax amounts, the Company also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from the Australian wholly owned subsidiaries of the Australian Tax Consolidated Group (after elimination of intragroup transactions).

The Australian Tax Consolidated Group has entered into a tax funding arrangement that requires wholly owned Australian subsidiaries to make contributions to the Company for tax liabilities and deferred tax balances arising from external transactions occurring after the implementation of tax consolidation. The contributions are broadly calculated as if each entity paid tax on a standalone basis.

1.5 Income Taxes

Income tax on the profit or loss for the financial year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the financial year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous financial years.

Deferred tax is measured using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. Measurement of deferred tax is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity or on different tax entities, but are intended to be settled on a net basis or to be realised simultaneously.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available, against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

The Company is the head entity of the Australian Tax Consolidated Group comprising all the Australian wholly owned subsidiaries. The Company entered into the Australian Tax Consolidation Regime effective 1 July 2002.

The assets and liabilities arising under the Australian tax funding arrangement are recognised as intercompany assets and liabilities (at call) with a consequential adjustment to income tax expense/revenue.

1.6 Impairment

The carrying amounts of the Group’s assets, including investment properties (see Note 1.8), inventories (see Note 1.13) and deferred tax assets (see Note 1.5) are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. For goodwill and intangible assets with an indefinite useful life, the recoverable amount is estimated annually. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount.

Impairment losses are recognised in the income statement unless an asset has been previously revalued through reserves.

Impairment losses recognised in respect of cash generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash generating unit (or group of units) and then to reduce the carrying amount of other assets in the unit (or group of units) on a pro-rata basis.

Calculation of Recoverable Amount

The recoverable amount of the Group’s investments in held to maturity securities and receivables is calculated as the present value of expected future cash flows, discounted at the original effective interest rate inherent in the asset. Cash flows relating to short term receivables are not discounted if the effect of discounting is immaterial (see Note 1.11 ‘Trade and Other Receivables’).

The recoverable amount of other assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the risks specific to the assets. For assets that do not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which each asset belongs.

64 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

1. significant Accounting policies continued

1.6 Impairment continued

Reversals of Impairment

An impairment loss in respect of a held to maturity security or receivable is reversed if a subsequent increase in the recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, an impairment loss is reversed when there is an indication that the impairment loss may no longer exist and there has been a change in estimates used to determine the recoverable amount.

An impairment loss is reversed (other than goodwill) only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

1.7 Investments

The Group classifies its investments in debt and equity securities in the following categories: financial assets at fair value through profit or loss, loans and receivables, held to maturity investments, and available for sale financial assets. The classification depends on the purpose for which the investments were acquired.

Financial Assets at Fair Value through Profit or Loss

This category has two subcategories: financial assets held for trading, and financial assets designated at fair value through profit or loss at inception. A financial asset is classified in this category if it is acquired principally for the purpose of selling in the short term (held for trading) or if so designated by management either to eliminate a measurement or recognition inconsistency, or where a group of financial assets is managed, and its performance is evaluated, on a fair value basis (at inception). Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the balance sheet date.

Loans and Receivables

Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except for maturities greater than 12 months after the balance sheet date which are included in non current assets.

Held to Maturity Investments

Held to maturity investments are non derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intent and ability to hold to maturity.

Available for Sale Financial Assets

Available for sale financial assets are non derivatives that are either designated in this category or not classified in any other category. They are included in non current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

Recognition and Measurement Criteria

Purchases and sales of investments are recognised on trade date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Investments are derecognised when the rights to receive cash flows from the investments have expired or been transferred and the Group has transferred substantially all the risks and rewards of ownership. Available for sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables and held to maturity investments are carried at amortised cost using the effective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are included in the income statement in the financial year in which they arise. Unrealised gains or losses arising from changes in the fair value of non monetary securities classified as available for sale are recognised in equity. When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains or losses from investment securities.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, and discounted cash flow analysis. Refer to Note 31e ‘Fair Values of Financial Assets and Liabilities’ for a summary of the basis of valuation of investments measured at fair value.

At each balance sheet date the Group assesses whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available for sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement but are recognised through other comprehensive income.

1.8 Investment Properties

Investment properties are measured at cost on initial recognition and then stated at fair value. The fair value for all properties, except those under development and valued at less than A$10 million, is based on periodic, but at least triennial, valuations by qualified external independent valuers. It is the policy of the Group to review the fair value of each property every six months. Fair value is based on current prices in an active market for similar properties in the same location and condition. If this information is not available, the Group uses alternative calculation methods such as discounted cash flow projections, recent prices on less active markets or capitalised income projections. Capitalised income projections are based on perpetuity of net operating income and deferred management fees using a capitalisation rate derived from market evidence. Any gain or loss arising from a change in fair value is recognised in the income statement. Rental income and deferred management fees from investment properties are accounted for as described in Note 1.4 ‘Revenue, Other Income and Profits’.

annual report 2011 Lend Lease Group 65

Retirement living investment properties, principally comprising retirement villages (both operating villages and villages under development) are held for long-term income yields and are not occupied by the Group. The Group makes a determination, on a property by property basis, as to whether a property should be considered an investment property. Factors taken into account include whether the property generates property related cash flows largely independent of other services provided to residents of the properties; whether the property is held for long-term capital appreciation rather than for short-term sale in the ordinary course of business; and the probable future use of land that is not currently generating cash flows.

When an item of owner occupied property, plant and equipment (see Note 1.14 ‘Property, Plant and Equipment’) becomes an investment property following a change in its use, any difference arising at the date of transfer between the carrying amount of the item and its fair value is recognised directly in equity if it is a gain. Upon disposal of the item, the gain is transferred to retained earnings. Any loss is recognised immediately in the income statement.

When an item of self constructed property, plant and equipment becomes an investment property following a change in its use, any difference between the fair value of the property at that date and its previous carrying amount is recognised in the income statement.

Expenses capitalised to properties may include the cost of acquisition, additions, refurbishments, redevelopments, borrowing costs and fees incurred.

1.9 Equity Accounted Investments (Associates and Joint Venture Entities)

Investments in associates and joint venture entities are accounted for using the equity method. Associates (including partnerships) are entities in which the Group, as a result of its voting rights, has significant influence, but not control, over financial and operating policies.

A joint venture entity is an entity which has a contractual arrangement whereby two or more parties undertake an economic activity which is subject to joint control.

The consolidated financial statements include the Group’s share of the total recognised gains or losses of associates and joint venture entities on an equity accounted basis. For associates, this is from the date that significant influence commences until the date that significant influence ceases, and for joint venture entities, this is from the date joint control commences until the date joint control ceases. Other movements in associates’ and joint venture entities’ reserves are recognised directly in consolidated reserves. Investments in associates and joint venture entities are carried at the lower of the equity accounted carrying amount and the recoverable amount. When the Group’s share of losses exceeds the carrying amount of the equity accounted investment (including assets that form part of the net investment in the associate or joint venture entity), the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred obligations in respect of the associate or joint venture entity. Dividends from associates and joint venture entities represent a return on the Group’s investment and as such are applied as a reduction to the carrying value of the investment. Unrealised gains arising from transactions with equity accounted investments are eliminated against the investment in the associate or joint venture entity to the extent of the Group’s interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Venture Capital Exemption

Investments held by Venture Capital’s investment portfolio are carried at fair value even though the Group may have significant influence or joint control over those entities. This accounting is permitted by AASB 128 Investments in Associates and AASB 131 Interests in Joint Ventures which require investments held by venture capital organisations to be excluded from their scope when those investments are designated as at ‘fair value through profit or loss’ from inception.

The investments made by Venture Capital are considered to be venture capital in nature due to management of the investments on a portfolio basis and are unrelated to the Group’s key business activities. The application of this exemption is assessed on each investment made by Venture Capital. Refer to Note 1.7 ‘Investments’ for an analysis of recognition and measurement criteria of investments classified and measured at ‘fair value through profit or loss’.

1.10 Non Current Assets Held For Sale

Non current assets that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. Immediately before classification as held for sale the assets are remeasured in accordance with the Group’s accounting policies. Thereafter the assets are measured at the lower of their carrying amount and fair value less cost to sell.

1.11 Trade and Other Receivables

Trade and Other Receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Cash flows relating to short term receivables are not discounted if the effect of discounting is immaterial.

A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and its fair value, which is estimated as the present value of estimated future cash flows, discounted at the effective interest rate where relevant. The amount of the provision is recognised in the income statement.

Deferred Management Fees Receivable

Deferred management fees receivable represent amounts owed to the Group in connection with resident occupancy at retirement villages subject to long-term management agreements. Deferred management fees receivable are calculated in accordance with resident contracts, refer to Note 1.4 ‘Revenue, Other Income and Profits’.

Accommodation Bond Retentions Receivable

Accommodation bond retentions receivable represent amounts owed to the Group in connection with resident occupancy at aged care facilities or nursing homes, and are calculated in accordance with resident contracts.

66 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

1. significant Accounting policies continued

1.12 Pre Contract and Project Bidding Costs

The Group expenses all pre contract and project bidding costs, unless there is a high degree of certainty that a contract will be entered into (at least preferred bidder status) and that the costs will be fully recoverable from contract revenues. Costs previously expensed are not subsequently reinstated when a contract award is achieved.

1.13 Inventories

Property Held for Sale

Property acquired for development and sale in the ordinary course of business is carried at the lower of cost and net realisable value. The net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The cost of property held for sale is based on the weighted average principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition, including borrowing costs incurred. Property expected to be sold within 12 months of the end of the financial year is classified as current inventory.

The recoverable amount of each holding is assessed at each balance date and a provision for diminution in value is raised where cost (including costs to complete) exceeds net realisable value. In determining the recoverable amount, regard is given to the market conditions affecting each property and the underlying strategy for selling the property.

Construction and Development Work in Progress

The gross amount of construction and development work in progress consists of costs attributable to work performed together with emerging profit and after providing for any foreseeable losses.

1.14 Property, Plant and Equipment

Owned Assets

Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation and impairment losses (see Note 1.6 ‘Impairment’). The cost of self constructed assets includes the cost of materials, direct labour and an appropriate proportion of production overheads.

Where an item of property, plant and equipment comprises components having different useful lives, they are accounted for as separate items of property, plant and equipment. The residual value, useful life and depreciation method applied to an asset are reassessed at least annually.

Leased Assets

Leases in which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Plant and equipment acquired by way of finance lease is stated at an amount equal to the lower of the fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation and impairment losses (see Note 1.6 ‘Impairment’). Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Subsequent Expenditure

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial year in which they are incurred.

Depreciation

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of items of property, plant and equipment, and major components that are accounted for separately. Amortisation is provided on leasehold improvements over the remaining term of the lease. Most plant is depreciated over a period not exceeding 20 years, furniture and fittings over three to 15 years, motor vehicles over four to eight years and computer equipment over three years. Land is not depreciated.

1.15 IT Software Systems

Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives (three to five years).

Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Costs directly associated with producing identifiable and unique software products that will generate economic benefits exceeding costs beyond one year are recognised as intangible assets.

Direct costs include software development, employee costs and an appropriate portion of relevant overheads.

Computer software development costs recognised as assets are amortised over their estimated useful lives (three to five years).

1.16 Intangible Assets

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets and contingent liabilities of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisition of subsidiaries is included in intangible assets as goodwill. Goodwill on acquisition of associates is included in the carrying value of investments in associates.

Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Goodwill is not amortised. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

For the purposes of impairment testing, goodwill is allocated to cash generating units (or groups of cash generating units) that are expected to benefit from the synergies of the combinations, irrespective of whether other assets or liabilities of the acquiree are assigned to those units or groups of units.

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.

annual report 2011 Lend Lease Group 67

Approved Provider Aged Care Places (Bed Licences)

Bed licences held by the Group include owned and managed bed licences. Of the owned bed licences, only those acquired from third parties are recognised on balance sheet and are initially recorded at cost. All owned bed licences are assessed as having an indefinite useful life as these licences are issued for an unlimited period and therefore are not subject to amortisation but tested annually for impairment (at the same time every year) in accordance with AASB 136 Impairment of Assets . These licences are issued by the Federal Government to approved providers and can also be purchased from third parties or managed on their behalf as approved by the Federal Government. Holders of bed licences receive Federal Government funding in accordance with predetermined rates. Managed bed licences that revert to aged care facility owners on expiration of long-term leasehold/ management agreements have a finite life and are amortised over the term of the agreements, generally 20 years.

Management Agreements and Other Intangible Assets

Management agreements and other intangible assets acquired by the Group are stated at cost less accumulated amortisation and impairment losses (see Note 1.6 ‘Impairment’). Amortisation is charged to the income statement on a straight line basis over the estimated useful lives of the intangible assets, ranging from three to 20 years.

The recoverable amount of management agreements and other intangible assets is assessed at least annually using independent valuations or alternative calculation methods, such as discounted cash flow projections.

1.17 Employee Benefits

Superannuation/Pension Obligations

Group companies operate various superannuation and pension schemes. The schemes are generally funded through payments to insurance companies or trustee-administered funds, determined by periodic actuarial calculations.

The Group has both defined benefit and defined contribution plans. A defined benefit plan is a pension plan that defines the amount of pension benefit an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity.

The asset and liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high quality corporate or government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability.

In calculating the consolidated entity’s obligation in respect of a plan, to the extent that any cumulative unrecognised actuarial gain or loss exceeds 10% of the greater of the present value of the defined benefit obligation and the fair value of plan assets, that portion is recognised in the income statement over the expected average remaining working lives of the employees participating in the plan. Otherwise, the actuarial gain or loss is not recognised in the income statement, it is recognised in the balance sheet against the defined benefit plan asset or liability.

Past service costs are recognised immediately in the income statement, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, past service costs are amortised on a straight line basis over the vesting period.

For defined contribution plans, the Group pays contributions to publicly or privately administered superannuation/pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as an employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

Current Employee Entitlements

The provisions for employee entitlements to wages, salaries, annual leave and sick leave represent present obligations resulting from employees’ services provided up to the balance date, calculated at undiscounted amounts based on remuneration, wage and salary rates that the Group expects to pay at each balance sheet date, including related on-costs. Non accumulating non monetary benefits, such as medical care, housing, cars and free or subsidised goods and services, are expensed based on the net marginal cost to the consolidated entity as the benefits are taken by the employees.

Non Current Employee Entitlements

The provision for employee entitlements to long service leave represents the present value of the estimated future cash outflows to be made resulting from employees’ services provided up to balance sheet date. Consideration is given to expected future increases in wage and salary rates, including related on-costs and expected settlement dates based on turnover history.

Share Based Compensation

The Group operates cash settled and equity settled share based compensation plans that are referable to Lend Lease’s security price. The fair value of the employee services received in exchange for the grant is recognised as an expense and a corresponding liability (if cash settled) or a corresponding increase in equity (if equity settled). The total amount to be expensed over the vesting period is determined by reference to the fair value of the services granted. At each balance sheet date, the entity revises its estimates of the entitlement due. It recognises the impact of revision of original estimates, if any, in the income statement, and a corresponding adjustment to a liability (in the case of cash settled) or equity (in the case of equity settled) over the remaining vesting period. Changes in entitlement for equity settled plans are not recognised if they fail to vest due to market conditions not being met.

68 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

1. significant Accounting policies continued

1.17 Employee Benefits continued

Termination Benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after balance sheet date are discounted to present value.

Profit Sharing and Bonus Plans

The Group recognises a liability and an expense for bonuses and profit sharing, based on a formula that takes into consideration the profit attributable to the Group’s securityholders after certain adjustments. The Group recognises a provision when contractually obliged or when there is a past practice that has created a constructive obligation.

Accommodation Bonds

Accommodation bonds are paid typically by residents of low care aged care beds. Accommodation bonds are recognised at an amount equal to the proceeds received and are non interest bearing liabilities. Accommodation bonds are also classified as current liabilities because they are repayable following departure of the resident from the facility, notwithstanding that history has shown that residents stay for an average period of three years.

1.20 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost and any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance date.

1.21 Foreign Currency Translation

1.18 Trade and Other Payables

Trade Creditors

Liabilities are recognised for amounts to be paid in the future for goods or services received, whether or not billed to the Group. Trade accounts payable are normally settled within 60 days. Trade and other payables are stated at amortised cost or cost when the impact of discounting would be immaterial.

Functional and Presentation Currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial report is presented in Australian dollars, which is the Company’s functional and presentation currency.

Transactions and Balances

Insurance Claims

A liability for outstanding claims is recognised in respect of Lend Lease’s wholly owned special purpose captive insurance subsidiary. The liability covers claims incurred but not yet paid, claims incurred but not reported and the anticipated direct and indirect costs of settling those claims. The liability for outstanding claims is measured at the present value of the expected future payments, reflecting the fact that all the claims do not have to be paid out in the immediate future. The discount rates used are risk free rates.

Financial Guarantee Contracts

Financial guarantee contracts, including the Company guarantees of Group entities’ borrowings, are recognised when issued as a financial liability. The liability is measured initially at fair value and subsequently at the higher of the best estimate to settle the obligation (see Note 1.23 ‘Provisions’) and the initial fair value less accumulated amortisation. Fair value is determined using a probability weighted discounted cash flow approach.

1.19 Resident and Accommodation Bond Liabilities

Resident Liabilities

This represents an amount paid by residents to occupy apartments and units classified as investment property. Resident liabilities are measured at face value, representing the principal amount plus the resident’s share of capital gains based on market values of the underlying property at balance date, less deferred management fees.

Resident liabilities are non interest bearing and are classified as current liabilities because any resident may depart within 12 months, notwithstanding that history has shown that residents stay for an average period of 11 years in independent living units (ILUs) and seven years in serviced apartments.

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains or losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges in foreign operations.

Translation differences on non monetary items, such as equities held at fair value through profit or loss, are reported as part of the fair value gain or loss. Translation differences on non monetary items, such as equities classified as available for sale financial assets, are included in the fair value revaluation reserve in equity.

Group Companies

The results and balance sheet of all Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency (A$) are translated into the presentation currency as follows:

n Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
n Income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
n All resulting exchange differences are recognised as a separate component of equity.

annual report 2011 Lend Lease Group 69

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments, are taken to the foreign currency translation reserve. When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operating, financing and investing activities. Derivative financial instruments are recognised initially at fair value on the date a derivative contract is entered into and subsequently remeasured at fair value. Recognition of any resultant gain or loss depends on the nature of the item being hedged.

The fair value of forward exchange contracts is their value at the current quoted forward price at the balance sheet date.

1.22 Derivative Financial Instruments and Hedging Activities

Fair Value Hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

Cash Flow Hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in equity. The gain or loss relating to the ineffective portion is recognised immediately in the income statement.

Amounts accumulated in equity are recycled to the income statement when the hedged item will affect profit or loss (for instance, when the forecast sale that is hedged takes place). However, when the forecast transaction that is hedged results in the recognition of a non financial asset (for example, inventory) or a liability, the gains or losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset or liability.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.

The fair value of interest rate derivatives is the estimated amount the Group would receive or pay to terminate the swap at the balance sheet date, taking into account current interest rates and the current creditworthiness of the swap counterparties.

Net Investment Hedge

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity; the gain or loss relating to the ineffective portion is recognised immediately in the income statement. Gains or losses accumulated in equity are included in the income statement on disposal of the foreign operation.

1.23 Provisions

A provision is recognised on the balance sheet when the Group has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre tax rate that reflects current market assessments of the time value of money and, when appropriate, the risks specific to the liability.

A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced publicly. Future operating costs are not provided for.

A provision for onerous contracts is recognised when the expected benefits to be derived from a contract by the Group are lower than the unavoidable cost of meeting its obligations under the contract.

1.24 Finance Costs

Finance costs include interest, amortisation of discounts or premiums relating to borrowings, amortisation of ancillary costs incurred in connection with arrangement of new borrowings facilities and foreign exchange differences net of hedged amounts on borrowings.

Ancillary costs incurred in connection with the arrangement of borrowings are capitalised and amortised over the life of the borrowings.

Finance costs are expensed immediately as incurred unless they relate to qualifying assets. Qualifying assets are assets that take more than six months to prepare for their intended use or sale.

1.25 Earnings Per Stapled Security/Share (EPS)

The Group presents basic and diluted EPS in the income statement.

Basic EPS is determined by dividing profit/(loss) after income tax attributable to members of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.

Diluted EPS is determined by adjusting the profit/(loss) after tax attributable to members of the Company, and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

The issued units of LLT are presented as a non controlling interest, and therefore the profit attributable to LLT is excluded from the calculation of basic and diluted earnings per Company share presented in the income statement. A basic and diluted earnings per stapled security is disclosed in the notes to the consolidated financial statements.

1.26 Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, bank overdrafts and other short term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Bank overdrafts (if applicable) are shown as a current liability on the balance sheet and are shown as a reduction to the cash balance in the statement of cash flows.

Held for Trading Derivatives

Certain derivative instruments do not qualify for hedge accounting or hedge accounting treatment is not sought. These instruments are classed as held for trading and changes in their fair value are recognised immediately in the income statement.

70 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

1. significant Accounting policies continued

1.27 Issued Capital

Ordinary shares are classified as equity. Preference issued capital is classified as equity if it is non redeemable and any dividends are discretionary, or is redeemable but only at the Company’s option. Distributions on preference share capital classified as equity are recognised as distributions within equity.

Preference issued capital is classified as a liability if it is redeemable on a specific date or at the option of the securityholders, or if dividend payments are not discretionary. Distributions thereon are recognised in the income statement as interest expense.

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a change in equity.

Dividends on redeemable preference shares are recognised as a liability on an accrual basis. Other dividends are recognised as a liability in the financial year in which they are declared.

1.28 Goods and Services Tax

Revenue, expenses and assets are recognised net of the amount of goods and services tax (‘GST’), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the Australian Taxation Office (‘ATO’) is included as a current asset or liability in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

1.29 Service Concession Arrangements (SCAs)

The Group has investments providing SCAs, originating through public private partnerships, in the areas of healthcare, education and government facilities. These arrangements provide facilities management and maintenance services for a fixed payment per annum (subject to inflationary increases per year) with terms generally 25 to 30 years. They also incorporate contractual obligations to make available the individual assets for their prescribed use and, where necessary, overhaul or replace major items of plant and equipment related to the assets with payment obtained through periodic draw-downs from the relevant government authorities.

The Group equity accounts its investment in project companies with SCAs. In the project company holding the SCA the consideration receivable in respect of construction and services in the operational phase of the SCA is accounted for as a ‘loan or receivable’ and measured at amortised cost. Revenue arising from services provided will be recognised based on the fair value of each service provided. Borrowing costs and lifecycle costs are expensed as incurred.

1.31 Key Sources of Estimation Uncertainty

Impairment of Goodwill and Other Intangible Assets

Note 16a ‘Goodwill’ contains information about the assumptions and their risk factors relating to goodwill impairment testing.

The Group assesses whether goodwill is impaired at least annually in accordance with Note 1.6 ‘Impairment’. These calculations involve an estimation of the recoverable amount of the cash generating units to which the goodwill is allocated.

The recoverable amount of other intangible assets (including management agreements and aged care bed licences) are assessed annually in accordance with Note 1.16 ‘Intangible Assets’.

Valuation of Assets and Recoverable Amounts

The Group assesses the fair value of certain assets by using estimation techniques where there is no available market price. The Group assesses the recoverability of the carrying value of assets held at cost or amortised cost using estimations of their recoverable amount. For current and deferred tax assets refer to Note 1.5 ‘Income Taxes’. For investment properties, loans and receivables and inventories refer to Notes 1.8 ‘Investment Properties’, 1.11 ‘Trade and Other Receivables’ and 1.13 ‘Inventories’. Refer to Note 31e ‘Fair Values of Financial Assets and Liabilities’ for a summary of the basis of valuation of financial assets measured at fair value.

Defined Benefit Superannuation Fund Obligations

Various actuarial assumptions are utilised in determining the Group’s defined benefit superannuation/pension fund obligations. These assumptions are discussed in Notes 17g and 24g ‘Principal Actuarial Assumptions’.

Share Based Compensation

The Group assesses the fair value of its cash settled and equity settled share based compensation plans. The fair value assigned represents an estimate of the value of the award to employees, which requires judgements on Lend Lease’s security price and whether vesting conditions will be satisfied. Refer to Note 1.17 ‘Employee Benefits’ for the accounting policy for share based compensation.

Critical Accounting Judgements in Applying the Group’s Accounting Policies

In the process of applying the Group’s accounting policies, the Group makes various judgements, apart from those involving estimations, that can significantly affect the amounts recognised in the consolidated financial statements. These include:

n When all the significant risks and rewards of ownership of development properties are substantially transferred to the purchaser;
n The percentage of completion on construction work performed; and
n Whether the substance of the relationship between the Group and a special purpose entity indicates that the special purpose entity should be consolidated by the Group.

1.30 Accounting Estimates and Judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Group and are believed to be reasonable under the circumstances. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

annual report 2011 Lend Lease Group 71

	June 2011	June 2010
	A$m	A$m
2. revenue
revenue from the provision of services
Construction	7,333.6	8,530.6
Infrastructure Development	665.9	1,048.7
Development	334.8	234.0
Investment Management	97.0	91.5
total revenue from the provision of services	8,431.3	9,904.8
Revenue from the sale of development properties	369.1	454.4
Rental revenue	70.8	60.9
Dividends/distributions received	7.8	22.1
Other revenue	47.7	59.3
total revenue	8,926.7	10,501.5
3. other income
Net gain on disposal of equity accounted investments	127.3	53.0
Fair value gain on remeasurement of investment properties	22.3
Net gain on disposal of controlled entities	4.7
Fair value gain on derivative contracts	12.2	12.5
Net gain on disposal of other assets and liabilities	2.4	11.8
Discount on acquisition of controlled entity		48.3
Net gain on disposal of available for sale fnancial assets	0.2	24.0
Other	13.1
total other income	182.2	149.6
4. operating expenses
proft before income tax includes the following operating expense items:
Employee beneft expenses	1,641.3	1,269.7
Superannuation accumulation plan expense	27.6	27.3
Net defned beneft plan expense	16.5	30.6
Expenses include impairments/provisions raised/(written back) relating to:
Loans and receivables	(9.0)	10.4
Other fnancial assets	1.2	12.1
Property inventories	2.4	(2.2)
Operating lease expense	67.7	60.5
Depreciation and amortisation	52.1	39.8
Net foreign exchange gain	(5.7)	(3.7)

72 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

	June 2011	June 2010
	A$000s	A$000s
4. operating expensescontinued
Auditors’ remuneration
Amounts received or due and receivable by the auditors of Lend Lease Group for:
Audit and Other Assurance Services
Audit services	7,286	7,122
Other assurance services	2,105
total audit and other assurance services	9,391	7,122
Other Services
International assignees tax services		38
Other		78
total other services	–	116
	June 2011	June 2010
	A$m	A$m
5. finance revenue and finance Costs
Finance Revenue
Related parties	23.0	31.6
Other corporations	55.8	33.2
total interest fnance revenue	78.8	64.8
Interest discounting	8.6	3.7
total fnance revenue	87.4	68.5
Finance Costs
Related parties		0.3
Other corporations	117.4	81.9
_Less:_Capitalised interest fnance costs	(2.4)
total interest fnance costs	115.0	82.2
Non interest fnance costs	10.0	6.4
Interest discounting	0.2	5.5
total fnance costs	125.2	94.1
net fnance (costs)	(37.8)	(25.6)

annual report 2011 Lend Lease Group 73

	June 2011	June 2010
	A$m	A$m
6. taxation
a. Income Tax Expense
Recognised in the Income Statement
Current Tax Expense
Current year	57.4	115.5
Adjustments for prior years	(10.3)	(40.9)
Benefts of tax losses recognised	(15.4)	(21.5)
	31.7	53.1
Deferred Tax Expense
Origination and reversal of temporary differences	106.6	49.5
total income tax expense	138.3	102.6
Reconciliation of Income Tax Expense
Proft before tax	631.5	450.8
income tax using the domestic corporation tax rate (30%)	189.4	135.2
Non assessable dividends/income	(8.9)	(2.8)
Loss accounted for using the equity method	(0.8)	(4.0)
Non allowable expenses	17.6	16.3
Other net recovery of tax losses	(21.5)	(4.7)
Tax temporary differences not recognised in the year	(3.7)	(5.9)
Temporary differences (recognised/recovered)/written off	(6.6)	15.9
Variation in tax rates	27.6	3.8
Non assessable gain on disposal of investments	(32.7)	(16.1)
Over provision in prior years	(10.3)	(40.9)
Other	(11.8)	5.8
income tax expense	138.3	102.6
Deferred Tax Recognised Directly in Equity
Relating to:
Equity issue costs	1.6	(6.6)
Fair value revaluation reserve	1.5	(4.4)
Hedging reserve	(0.5)	(0.6)
Foreign currency translation reserve on equity accounted investments	(2.5)	(1.5)
total deferred tax recognised directly in equity	0.1	(13.1)

74 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

	june 2011	june 2010
	Before Tax A$m Tax (Expense) /Beneft A$m Net of Tax A$m Before Tax A$m Tax (Expense) /Beneft A$m Net of Tax A$m
6. taxationcontinued b. Tax Effect Relating to Other Comprehensive Income
Movements in Fair Value Revaluation Reserve	3.6 (1.5) 2.1 (11.1) 4.4 (6.7)
Movements in Hedging Reserve	42.3 0.5 42.8 (30.7) 0.6 (30.1)
Movements in Foreign Currency Translation Reserve	(164.8) 2.5 (162.3) (57.6) 1.5 (56.1)
Movements in Non Controlling Interest Acquisition Reserve	21.4 3.2 24.6 7.3 2.8 10.1
Other Movements	(2.5) (2.5)
total other comprehensive income net of tax	(97.5) 4.7 (92.8) (94.6) 9.3 (85.3)

	june 2011	june 2010
	Assets A$m Liabilities A$m	Assets A$m Liabilities A$m

c. Deferred Tax Assets and Liabilities Recognised Deferred Tax Assets and Liabilities Deferred tax assets and liabilities are attributable to the following:
Loans and receivables	17.9 (7.1) 22.4 (16.0)
Inventories	45.6 (295.5) 45.0 (367.0)
Other fnancial assets	4.2 (26.2) 10.1 (27.3)
Other assets	1.6 (0.1) 0.2 (0.5)
Equity accounted investments	5.5 (71.4) 7.7 (169.4)
Non current asset held for sale	(140.2)
Investment properties	(36.4) (17.7)
Property, plant and equipment	16.8 (7.6) 21.1 (0.3)
Intangible assets	(1.0) (0.1) 0.5
Defned beneft plan asset	(9.1) (8.2)
Trade and other payables	236.0 (6.7) 259.7 (0.2)
Resident and accommodation bond liabilities	16.3 10.4
Provisions	87.6 75.4
Other fnancial liabilities	2.0 2.6
Defned beneft plan liability	(0.6) 5.1
Unused revenue tax losses recognised	138.2 147.2
Items with a tax base but no carrying value	37.9 (18.6) 51.2 (15.9)
total deferred tax assets/(liabilities)	608.6 (619.6) 658.6 (622.5)
Deferred tax set off	(492.9) 492.9 (562.9) 562.9
net deferred tax assets/(liabilities)	115.7 (126.7) 95.7 (59.6)

annual report 2011 Lend Lease Group 75

				Foreign
		Recognised	Recognised	Exchange/
	1 July 2010	in Income	in Equity	Other	30 June 2011
	A$m	A$m	A$m	A$m	A$m
Movement in temporary differences during the fnancial year:
june 2011
Loans and receivables	6.4	5.2	0.4	(1.2)	10.8
Inventories	(322.0)	38.3		33.8	(249.9)
Other fnancial assets	(17.2)	(5.8)	(1.6)	2.6	(22.0)
Other assets	(0.3)	9.0		(7.2)	1.5
Equity accounted investments	(161.7)	(0.8)	2.7	93.9	(65.9)
Non current asset held for sale		(84.6)		(55.6)	(140.2)
Investment properties	(17.7)	(18.7)			(36.4)
Property, plant and equipment	20.8	(1.7)		(9.9)	9.2
Intangible assets	0.5	(1.6)			(1.1)
Defned beneft plan asset	(8.2)	(0.9)			(9.1)
Trade and other payables	259.5	(51.7)		21.5	229.3
Resident and accommodation bond liabilities	10.4	5.9			16.3
Provisions	75.4	(3.0)		15.2	87.6
Other fnancial liabilities	2.6	(0.6)			2.0
Defned beneft plan liability	5.1	(5.1)		(0.6)	(0.6)
Unused revenue tax losses recognised	147.2	23.0		(32.0)	138.2
Items with a tax base but no carryingvalue	35.3	(13.5)	(1.6)	(0.9)	19.3
total deferred tax assets/(liabilities)	36.1	(106.6)	(0.1)	59.6	(11.0)

				Foreign
		Recognised	Recognised	Exchange/
	1 July 2009	in Income	in Equity	Other	30 June 2010
	A$m	A$m	A$m	A$m	A$m
june 2010
Loans and receivables	10.0	(6.0)		2.4	6.4
Inventories	(153.6)	(14.6)		(153.8)	(322.0)
Other fnancial assets	(26.0)	4.0	4.4	0.4	(17.2)
Other assets	(0.7)	0.4			(0.3)
Equity accounted investments	(145.8)	(24.8)	2.1	6.8	(161.7)
Investment properties		(17.7)			(17.7)
Property, plant and equipment	22.4	0.3		(1.9)	20.8
Intangible assets	0.1	0.4			0.5
Defned beneft plan asset	(9.0)	0.8			(8.2)
Trade and other payables	96.8	(2.1)		164.8	259.5
Resident and accommodation bond liabilities		(3.3)		13.7	10.4
Provisions	69.1	11.5		(5.2)	75.4
Other fnancial liabilities		2.6			2.6
Defned beneft plan liability	12.8	(6.0)		(1.7)	5.1
Unused revenue tax losses recognised	169.8	(12.2)		(10.4)	147.2
Items with a tax base but no carryingvalue	7.0	17.2	6.6	4.5	35.3
total deferred tax assets/(liabilities)	52.9	(49.5)	13.1	19.6	36.1

76 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

	June 2011	June 2010
	A$m	A$m
6. taxationcontinued
c. Deferred Tax Assets and Liabilities continued
Unrecognised Deferred Tax Assets
Deferred tax assets have not been recognised in respect of the following items:
Capital losses	62.0	68.8
Revenue losses	69.5	96.9
Deductible temporary differences	277.4	300.2
total unrecognised deferred tax assets	408.9	465.9

The unrecognised deferred tax asset of A$408.9 million includes A$8.5 million that will expire by 2030.

		Franked
		Amount
	Cents	Per Share	June 2011	June 2010
	Per Share	%	A$m	A$m
7. Distributions1,2
Interim Dividend
December 2010 – paid 30 March 2011	20.0	50	113.1
December 2009 – paid 31 March 2010	20.0	100		92.2
November 2009 – dividend ‘in specie’ of Lend Lease Trust units	0.1	100		0.5
Final Dividend
June 2011 – declared subsequent to reporting date3	15.0		85.6
June 2010 – paid 24 September 2010	12.0	100		67.9
			198.7	160.6

1 No distributions were declared or paid by Lend Lease Trust in respect of the financial year ended 30 June 2011 (June 2010: nil).

2 Includes distributions paid on treasury securities.

3 No provision for this distribution has been recognised in the statement of financial position at 30 June 2011 as it was declared after the end of the financial year.

Dividend Franking

The dividend franking account balance at 30 June 2011 is A$30.6 million based on a 30% tax rate (30 June 2010: A$56.7 million). This is calculated after adjusting for franking credits which will arise from the payment of income tax provided in the financial statements and tax losses utilised in the current financial year. The Group has outstanding claims with the Australian Tax Office in relation to the year ended 30 June 2011, and prior years, which are not reflected in the above franking account balance. Should these claims be successful this will result in the franking account balance being reduced as a consequence.

	june 2011	june 2010
	Shares Excluding Treasury Shares Shares on Issue	Shares Excluding Treasury Shares Shares on Issue

8. earnings per stapled security/share1 Basic/Diluted Earnings Per Share (EPS)
Proft attributable to members of Lend Lease Corporation Limited used in calculating basic/diluted EPS A$m	492.8 492.8 345.6 345.6
Weighted average number of ordinary shares m	537.4 566.9 473.8 497.2
Basic/diluted EPS Cents	91.7 86.9 72.9 69.5

1 The earnings per stapled security are equivalent to the earnings per share for the year to 30 June 2011 as the earnings attributable to Lend Lease Trust for the year were nil (June 2010: nil).

annual report 2011 Lend Lease Group 77

	June 2011	June 2010
	A$m	A$m
9. Cash and Cash equivalents
Cash	863.2	390.8
Short term investments	183.0	1,245.1
total cash and cash equivalents	1,046.2	1,635.9

Short term investments earned variable rates of interest which averaged 4.6% per annum during the year ended 30 June 2011 (30 June 2010: 3.1%).

	June 2011	June 2010
	A$m	A$m
10. Loans and receivables
Current
Trade debtors	1,258.9	1,112.7
_Less:_Impairment	(31.3)	(40.2)
	1,227.6	1,072.5
Related parties	60.1	50.9
_Less:_Impairment		(1.3)
Managed property funds	56.7	40.1
Retentions	134.9	269.9
Other receivables	253.3	358.0
_Less:_Impairment	(8.6)	(20.4)
total current	1,724.0	1,769.7
Non Current
Related parties	313.3	383.0
Less: Impairment	(109.1)	(170.1)
Retentions	31.3	14.0
Other receivables	96.2	138.8
_Less:_Impairment	(1.4)	(0.5)
total non current	330.3	365.2
total loans and receivables	2,054.3	2,134.9

As at the reporting date, A$984.7 million of the trade debtors were current (30 June 2010: A$890.5 million) and A$274.2 million were past due (30 June 2010: A$222.2 million). Of the past due amount, A$242.9 million was not impaired (30 June 2010: A$182.0 million). ‘Past due’ is defined under accounting standards to mean any amount outstanding for one or more days after the contractual due date. Of the total trade debtors, 10.9% (30 June 2010: 13.5%) are aged greater than 90 days. Other than trade debtors, no other loans and receivables are considered past due at 30 June 2011 (30 June 2010: A$13.4 million).

	June 2011	June 2010
	A$m	A$m
Impairment
Carrying amount at beginning of fnancial year	232.5	228.0
Bad and doubtful debts impairment loss net of provisions (written back)/raised	(9.6)	9.1
Other movements (including foreign exchange rate movements)	(72.5)	(4.6)
Carrying amount at end of fnancial year	150.4	232.5
total impairment as a percentage of total loans and receivables	6.8%	9.8%

The credit quality of all loans and receivables, including those neither past due nor impaired, is assessed and monitored on an ongoing basis.

To determine the impairment provision for the financial year, the Group considers how economic and market conditions will affect the credit worthiness of certain entities. The impairment provision relates to specific loans and receivables that have been identified as being impaired, including related party loans where the Group’s interest in a development was via an equity accounted investment.

78 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

		June 2011	June 2010
	Note	A$m	A$m
11. inventories
Current
Development properties	11a	361.0	369.7
Construction work in progress	11b	319.5	218.1
Other		12.0
total current		692.5	587.8
Non Current
Development properties	11a	1,578.7	1,576.0
total inventories		2,271.2	2,163.8
a. Development Properties
Australia		1,399.6	1,330.3
Europe		528.9	600.3
Americas		11.2	15.1
total development properties		1,939.7	1,945.7
b. Construction Work in Progress
Construction work in progress comprises:
Contract costs incurred to date		56,438.6	59,315.7
Proft recognised to date		6,722.0	2,651.3
		63,160.6	61,967.0
_Less:_Progress billings received and receivable on contracts		(63,928.6)	(62,952.9)
net construction work in progress		(768.0)	(985.9)
Costs in excess of billings – inventories		319.5	218.1
Billings in excess of costs – trade payables	19	(1,087.5)	(1,204.0)
		(768.0)	(985.9)
12. equity Accounted investments
Associates
Investment in associates		349.4	368.8
_Less:_Impairment		(14.2)	(14.9)
total associates		335.2	353.9
Joint Ventures
Investment in joint ventures		222.4	580.0
_Less:_Impairment		(16.2)	(20.0)
total joint ventures		206.2	560.0
total equity accounted investments		541.4	913.9

annual report 2011 Lend Lease Group 79

	interest	shAre of profit/(Loss) After tAx	net BooK vALue
	June 2011 % June 2010 % June 2011 A$m June 2010 A$m June 2011 A$m June 2010 A$m
a. Associates Australia
Lend Lease Primelife Group1	100.0 100.0 3.7
Lend Lease Real Estate Partners 3	25.0 25.0 3.3 0.3 51.8 51.4
Lend Lease Communities Fund 1	20.8 20.8 (2.1) (1.0) 16.6 17.8
Other	4.7 6.8 5.4 5.3
total Australia	5.9 9.8 73.8 74.5
Asia
Asia Pacifc Investment Company No. 2 Limited	21.1 21.1 20.0 16.5 121.7 116.6
CDR JV Ltd (313@somerset)	25.0 25.0 4.8 36.4 91.4 96.8
Triple Eight JV Ltd (Jurong Gateway)	25.0 50.4
Other	0.4 0.8 7.7 7.5
total Asia	25.2 53.7 271.2 220.9
Europe
Lend Lease Overgate Partnership2	30.7 1.8 16.6 68.4
Other	2.5 3.9 4.5
total europe	1.8 19.1 3.9 72.9
Americas
Other	1.4 1.3 0.5 0.5
total Americas	1.4 1.3 0.5 0.5
total	34.3 83.9 349.4 368.8
_Less:_Impairment	(14.2) (14.9)
total associates	34.3 83.9 335.2 353.9

1 In December 2009, the Group acquired the remaining 56.8% interest in Primelife which is now classified as a controlled entity. Share of profit represents the amount attributable to the period prior to acquisition when the investment was classified as an associate.

2 In December 2010 the Group’s interest in the Lend Lease Overgate Partnership was sold.

80 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

	interest	shAre of profit/(Loss) After tAx	net BooK vALue
	June 2011 % June 2010 % June 2011 A$m June 2010 A$m June 2011 A$m June 2010 A$m
12. equity Accounted investmentscontinued b. Joint Ventures1 Australia
Caroline Springs Joint Venture	50.0 50.0 15.7 15.4 7.6 23.9
Casey 2 Joint Venture (Springbank)	50.0 50.0 4.6 0.8 23.3 20.6
Forde Development (ACT)	50.0 50.0 4.4 3.6 4.0 6.6
McKinnon Road Development	51.0 51.0 3.2 0.4 7.0 7.4
Pyrmont Trust (Jacksons Landing)	50.0 50.0 3.7 (2.1) 13.3 14.5
D2G Joint Venture	64.0 12.5 12.7
V5 Trust – Convesso	50.0 50.0 (0.1) (0.9) 21.8 14.9
Other	16.8 32.5 54.6 27.3
total Australia	60.8 49.7 144.3 115.2
Europe
Catalyst Healthcare (Manchester) Holdings Ltd	50.0 50.0 1.3 (0.3) 6.7 6.6
Majadahonda Hospital	25.0 25.0 2.2 1.6 16.4 11.6
Waste 2 Resources Ltd Liability Partnership	50.0 50.0 (6.0)
Global Renewables Lancashire Holdings Limited	50.0 (5.4) 20.0
Other	(7.3) 11.1 30.3 32.3
total europe	(9.2) 6.4 73.4 50.5
Americas
King of Prussia Associates2	50.0 50.0 217.8 23.3 410.0
Other	6.3 6.1 4.7 4.3
total Americas	224.1 29.4 4.7 414.3
total	275.7 85.5 222.4 580.0
_Less:_Impairment	(16.2) (20.0)
total joint ventures	275.7 85.5 206.2 560.0

1 Where the Group has an ownership interest in a joint venture greater than 50% but does not have the capacity to control financial and operating decisions, the joint venture is not consolidated.
2 In May 2011 the Group entered into an agreement to dispose of its 50% interest in King of Prussia Associates, which was subsequently reclassified within the statement of financial position. Refer to Note 18 ‘Non Current Asset Held for Sale’.

annual report 2011 Lend Lease Group 81

	june 2011	june 2010
	Associates A$m Joint Ventures A$m Associates A$m Joint Ventures A$m
c. Associates and Joint Ventures Additional Disclosures Lend Lease’s Share of Results
Revenue	114.3 771.3 142.8 719.8
Fair value revaluations	14.5 16.4 64.8 43.5
Expenses	(94.0) (696.9) (130.1) (643.5)
share of proft before tax	34.8 90.8 77.5 119.8
Income tax (expense)/beneft	(0.6) 3.4 6.4 (2.2)
share of proft after tax	34.2 94.2 83.9 117.6
Other Adjustments
Adjustments due to differences in accounting policies1	189.9 (4.8)
Movement in share of unrecognised losses	11.3 (25.8)
Fair value adjustments/other	0.1 (19.7) (1.5)
proft of equity accounted investments	34.3 275.7 83.9 85.5
Lend Lease’s Share of Balance Sheet
Current assets	72.8 652.3 36.6 708.6
Non current assets	741.0 1,387.9 630.2 2,266.1
total assets	813.8 2,040.2 666.8 2,974.7
Current borrowings	36.6 19.6 157.0 53.9
Current other liabilities	52.0 386.2 28.1 342.5
Non current borrowings	343.7 1,147.6 103.9 2,096.1
Non current other liabilities	28.9 437.7 6.5 609.2
total liabilities	461.2 1,991.1 295.5 3,101.7
share of net assets/(liabilities)	352.6 49.1 371.3 (127.0)
Other Adjustments
Due to differences in accounting policies and fair value adjustments on acquisitions1	397.6
Impairment	(14.2) (16.2) (14.9) (20.0)
Unrecognised share of losses	84.2 152.2
Other	(3.2) 89.1 (2.5) 157.2
net assets attributable to equity accounted investments	335.2 206.2 353.9 560.0
Commitments Share of capital expenditure and lease commitments contracted but not provided for and payable are as follows:
Due within one year	3.8 2.4
Due between one and fve years	1.0 0.1
Due later than fve years

1 Primarily relates to adjustments to King of Prussia Associates to align the investment property accounting policies with Australian Accounting Standards. In May 2011, the Group entered into an agreement to dispose of its 50% interest in King of Prussia Associates, which was subsequently reclassified within the statement of financial position. Refer to Note 18 ‘Non Current Asset Held for Sale’.

82 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

	June 2011	June 2010
	A$m	A$m
13. investment properties
Retirement living properties	2,965.3	2,579.9
Retail properties	99.8	115.5
Assets under construction	150.9	125.5
total investment properties	3,216.0	2,820.9
Reconciliations
Reconciliations of the carrying amount for investment properties are as follows:
Carrying amount at beginning of fnancial year	2,820.9	147.7
Acquisition of consolidated entities		2,452.3
Acquisition of retirement living properties	202.8	20.2
Capital expenditure	112.2	29.4
Fair value gain/(loss) recognised through income statement	22.3	(31.8)
Transfer from inventories and property plant and equipment		72.3
Increase attributable to residents’ capital	73.4	94.3
Foreign exchange rate/other movements	(15.6)	36.5
Carrying amount at end of fnancial year	3,216.0	2,820.9
Leases as Lessor
The future minimum lease payments receivable from retail property tenants under non cancellable operating
leases are as follows:
Less than one year	5.9	8.2
Between one and fve years	20.7	28.4
Later than fve years	14.1	23.1
total future minimum lease payments receivable	40.7	59.7

Valuations

Refer to Note 1.8 ‘Investment Properties’ for the basis of valuation of investment properties. The key assumptions used in the fair value assessments including those classified as assets under construction, have been derived from market evidence and are summarised as follows:

Retirement Living Properties

For retirement living properties the key long term assumptions adopted in the basis of valuation at the reporting date included:

n Weighted average discount rate of 13.2% (June 2010: 13.3%);
n Weighted average future growth rate of 3.9% (June 2010: 3.9%); and
n Average length of stay: 11 years for independent living units (June 2010: 11 years) and seven years for serviced apartments (June 2010: five years).

For retirement living properties included in assets under construction, the assumptions adopted in determining the fair values at 30 June 2011 included discount rates between 14% and 17% (June 2010: 14% and 17%) based on the stage of development and the assessed project risk, and a weighted average growth rate of 3.9% (June 2010: 3.9%).

Retail Properties

When determining the fair value of investment properties, the capitalisation rates used were between 7.4% and 12.5% for UK properties (June 2010: 8.1% and 10.8%) and between 7.0% and 8.8% for Australian properties (June 2010: 7.0% and 8.8%).

annual report 2011 Lend Lease Group 83

		June 2011	June 2010
	Note	A$m	A$m
14. other financial Assets
Current Measured at Fair Value
Available for Sale		12.1	11.7
Fair Value Through Proft or Loss – Designated at Initial Recognition
Negotiable instruments		69.6	75.8
Derivatives		12.5	3.9
total current		94.2	91.4
Non Current Measured at Fair Value
Available for Sale
Australian Prime Property Fund		48.0	46.9
Lend Lease Core Plus Fund		43.3	43.5
Lend Lease Retail Partnership		41.3	41.8
Other		95.8	107.8
		228.4	240.0
Fair Value Through Proft or Loss – Designated at Initial Recognition
Unlisted equity investments		36.9	33.7
Held to Maturity		6.7
total non current		272.0	273.7
total other fnancial assets		366.2	365.1
15. property, plant and equipment
Land, buildings and leasehold improvements		360.9	319.2
_Less:_Accumulated depreciation and impairment		(53.8)	(43.5)
		307.1	275.7
Plant and equipment		548.8	196.9
_Less:_Accumulated depreciation and impairment		(260.7)	(119.9)
		288.1	77.0
total property, plant and equipment		595.2	352.7
Reconciliations
Reconciliations of the carrying amounts for each class of property, plant and equipment are as follows:
Land, Buildings and Leasehold Improvements
Carrying amount at beginning of fnancial year1		275.7	86.3
Acquisition of consolidated entities	28b	38.6	229.2
Additions		19.7	3.6
Disposals		(7.4)	(3.2)
Transfer to investment properties			(21.9)
Depreciation		(8.9)	(13.4)
Effect of foreign exchange rate/other movements		(10.6)	(4.9)
Carrying amount at end of fnancial year		307.1	275.7

1 The carrying amount at 1 July 2009 (opening June 2010 balance) of A$86.3 million represents A$127.8 million of costs and A$41.5 million of accumulated depreciation and impairment.

84 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

		June 2011	June 2010
	Note	A$m	A$m
15. property, plant and equipmentcontinued
Plant and Equipment
Carrying amount at beginning of fnancial year1		77.0	43.8
Acquisition of consolidated entities	28b	216.7	32.4
Additions		42.0	12.1
Disposals		(13.2)	(1.6)
Transfer to investment properties			(0.3)
Depreciation		(32.4)	(15.6)
Effect of foreign exchange rate/other movements		(2.0)	6.2
Carrying amount at end of fnancial year		288.1	77.0
1 The carrying amount at 1 July 2009 (opening June 2010 balance) of A$43.8 million represents A$149.0 million of costs and
A$105.2 million of accumulated depreciation and impairment.
16. intangible Assets
Goodwill	16a	1,077.3	437.3
Aged care bed licences	16b	168.6	159.0
Management agreements	16c	60.1	77.2
Other intangibles	16d	13.1	20.6
total intangible assets		1,319.1	694.1
a. Goodwill
Construction		1,056.3	437.3
Development		21.0
total goodwill		1,077.3	437.3
Reconciliations
Reconciliations of the carrying amounts for each category of goodwill are:
Construction
Carrying amount at beginning of fnancial year		437.3	477.1
Acquisition of consolidated entity	28b	681.7
Effect of foreign exchange rate/other movements		(62.7)	(39.8)
Carrying amount at end of fnancial year		1,056.3	437.3
Development
Acquisition of consolidated entity	28b	24.0
Effect of foreign exchange rate		(3.0)
Carrying amount at end of fnancial year		21.0	–

Goodwill Allocation

Goodwill relating to the Construction business is allocated to cash generating units (‘CGUs’) identified according to regions as set out below.

	June 2011	June 2010
	A$m	A$m
Construction
Australia	701.8	20.1
Asia	7.3	7.3
Americas	131.5	165.6
Europe	215.7	244.3
total goodwill	1,056.3	437.3

annual report 2011 Lend Lease Group 85

Impairment Tests and Key Assumptions Used – Construction

The recoverable amount of the Construction CGUs is determined based on value in use (‘VIU’) calculations. For the Construction CGUs, the assumptions used for determining the recoverable amount of each CGU are based on past experience and expectations for the future, utilising both internal and external sources of data and relevant industry trends.

No impairment arose as a result of the review of goodwill for the Construction CGUs for the year ended 30 June 2011. Based on information available and market conditions at 30 June 2011, a reasonably foreseeable change in the assumptions made in this assessment would not result in impairment of Construction goodwill.

The following describes the key assumptions on which management has based its cash flow projections when determining VIU relating to the Construction CGUs.

Cash Flows

The VIU calculations use pre tax cash flow projections based on actual operating results, and financial forecasts covering a five-year period which have been approved by management. These forecasts are based on management estimates to determine income, expenses, capital expenditure and cash flows for each CGU.

Growth Rate

The terminal value growth rate used to extrapolate the cash flows beyond the five-year period is 3.0% (June 2010: 3.0%). The growth rate reflects the forecast long term average growth rate for each CGU and the countries in which they operate.

Discount Rate

The discount rate applied to the cash flow projections is between 13.0% and 16.5% (June 2010: between 14.0% and 16.0%). The Group’s weighted average cost of capital is used as a starting point for determining the discount rate, with appropriate adjustments for the risk profile relating to the relevant CGUs and the countries in which they operate. The discount rates used are pre tax.

	June 2011	June 2010
	A$m	A$m
b. Aged Care Bed Licences
Reconciliation
Reconciliation of the carrying amounts of aged care bed licences are as follows:
Carrying amount at beginning of fnancial year	159.0
Acquisition of consolidated entities		95.0
Additions	9.6	64.0
Carrying amount at end of fnancial year	168.6	159.0

Impairment Tests and Key Assumptions Used – Aged Care Bed Licences

The recoverable amount of bed licences is determined based on VIU calculations with the aged care portfolio as the relevant cash generating unit. The assumptions used for determining the recoverable amount are based on past experience and expectations for the future, utilising both internal and external sources of data and relevant industry trends.

No impairment arose as a result of the review of aged care bed licences for the year ended 30 June 2011. Based on information available and market conditions at 30 June 2011, a reasonably foreseeable change in the assumptions made in this assessment would not result in impairment of the carrying value of aged care bed licences.

The following describes the key assumptions on which management has based its cash flow projections when determining VIU relating to aged care bed licences.

Cash Flows

Growth Rate

The forecast accommodation bond growth rate on bondable beds is 5.0% (June 2010: 5.0%). This is based on historical bond growth achieved across the portfolio and expected future growth. The growth rate on other cash flows is 3.0% (June 2010: 3.0%). These growth rates reflect the forecast long term average growth rate for aged care.

Discount Rate

The discount rate applied to the cash flow projections is 11.0% (June 2010: 11.0%). The Group’s weighted average cost of capital is used as a start point for determining the discount rate, with appropriate adjustments for the risk profile relating to the CGU and the sector in which it operates. The discount rate used is pre tax.

86 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

	June 2011	June 2010
	A$m	A$m
16. intangible Assetscontinued
c. Management Agreements
Management agreements	72.9	87.1
_Less:_Accumulated amortisation	(12.8)	(9.9)
total management agreements	60.1	77.2
Reconciliation
Reconciliation of the carrying amounts of management agreements are as follows:
Carrying amount at beginning of fnancial year1	77.2	28.9
Acquisition of consolidated entities		64.9
Amortisation	(3.6)	(4.2)
Other	(13.5)	(12.4)
Carrying amount at end of fnancial year	60.1	77.2
d. Other Intangibles
Other intangibles	37.9	37.9
_Less:_Accumulated amortisation and impairment	(24.8)	(17.3)
total other intangibles	13.1	20.6
Reconciliations
Reconciliations of the carrying amounts of other intangibles are as follows:
Carrying amount at beginning of fnancial year2	20.6	20.0
Additions	2.7	9.3
Amortisation	(8.6)	(7.4)
Impairment		(0.5)
Effect of foreign exchange rate/other movements	(1.6)	(0.8)
Carrying amount at end of fnancial year	13.1	20.6

1 The carrying amount at 1 July 2009 (opening June 2010 balance) of A$28.9 million represents A$46.9 million of costs and A$18.0 million of accumulated amortisation.

2 The carrying amount at 1 July 2009 (opening June 2010 balance) of A$20.0 million represents A$30.4 million of costs and A$10.4 million of accumulated amortisation and impairment.

annual report 2011 Lend Lease Group 87

	June 2011	June 2010
	A$m	A$m
17. Defned Beneft plan Asset1
a. Balance Sheet Amounts
The amounts recognised in the balance sheet are determined as follows:
Fair value of plan assets	152.9	148.2
Present value of defned beneft obligations	(143.9)	(137.0)
Unrecognised actuarial loss	21.3	16.1
recognised asset for defned beneft obligations	30.3	27.3
b. Reconciliation of the Fair Value of Plan Assets
Fair value of plan assets at beginning of fnancial year	148.2	128.5
Expected return on plan assets	9.2	6.7
Actuarial (losses)/gains	(0.3)	14.6
Contributions by Group companies	6.2	6.3
Contributions by plan participants	1.6	1.9
Taxes and premiums paid	(1.2)	(1.5)
Transfers in	0.1
Accumulation insurance premium met from surplus	(1.2)
Benefts paid	(9.7)	(8.3)
fair value of plan assets at end of fnancial year	152.9	148.2
c. Reconciliation of the Present Value of Funded Obligations
Present value of funded obligations at beginning of fnancial year	137.0	133.4
Current service cost	6.1	5.5
Interest cost on beneft obligation	6.0	5.7
Contributions by plan participants	1.6	1.9
Actuarial losses	5.2	0.3
Taxes and premiums paid	(1.2)	(1.5)
Transfers in	0.1
Accumulation insurance premium met from surplus	(1.2)
Benefts paid	(9.7)	(8.3)
present value of funded obligations at end of fnancial year	143.9	137.0
d. Expense Recognised in the Income Statement
Current service cost	6.1	5.5
Interest cost on beneft obligation	6.0	5.7
Expected return on plan assets	(9.2)	(6.7)
Actuarial loss recognised	0.3	4.5
net defned beneft plan expense	3.2	9.0
e. Actual Return on Plan Assets	9.0	21.3

1 Relates to the Lend Lease Superannuation Fund (Australia).

88 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

	June 2011	June 2010
	%	%
17. Defned Beneft plan Asset continued
f. Categories of Plan Assets
Cash	1.2	6.0
Equity instruments1	56.4	50.8
Fixed interest securities	38.7	39.0
Property	3.7	4.2
	100.0	100.0
g. Principal Actuarial Assumptions
Discount rate (net)	4.5	4.4
Expected rate of return on assets2	7.0	6.5

1 The fair value of plan assets includes Lend Lease securities to the value of A$0.1 million (June 2010: A$0.1 million).
2 The expected rate of return on assets assumption is determined by weighting the expected long term return for each asset class by the target allocation of assets to each asset class. The returns used for each asset class are net of tax, investment fees and administration expenses.

h. Employer Contributions

For the year ending 30 June 2012, total employer contributions to the plan are expected to be A$6.7 million.

	ConsoLiDAteD
	June 2011 A$m June 2010 A$m June 2009 A$m June 2008 A$m June 2007 A$m
i. Historical Summary
Plan assets	152.9 148.2 128.5 156.3 167.3
Defned beneft plan obligation	(143.9) (137.0) (133.4) (126.4) (116.1)
surplus/(defcit)	9.0 11.2 (4.9) 29.9 51.2
Experience (losses)/gains arising on plan assets	(0.3) 14.6 (32.9) (19.2) 17.2
Experience (losses)/gains arising on plan liabilities	(5.8) 1.4 3.0 (8.3) (6.8)

18. non Current Asset held for sale

In May 2011 the Group announced it had entered into a conditional agreement to dispose of its 50% interest in King of Prussia Associates, the owner of the King of Prussia shopping mall in the United States. Prior to commencing the disposal process, this investment was classified as an equity accounted investment (joint venture) by the Group. The transaction is subject to customary conditions and is expected to complete within the next 12 months.

	June	2011	June	2010
		A$m		A$m
King of prussia Associates		496.5		–

annual report 2011 Lend Lease Group 89

		June 2011	June 2010
	Note	A$m	A$m
19. trade and other payables
Current
Trade creditors		1,651.4	1,413.6
Construction revenue – amounts due to customers1	11b	1,087.5	1,204.0
Unearned premium reserve2		3.1	15.8
Insurance claim reserve2		19.8	8.9
Related parties		65.2	54.8
Retentions and deferred payments		324.2	520.6
Other		111.9	77.4
total current		3,263.1	3,295.1
Non Current
Insurance claim reserve2		30.7	41.9
Related parties		4.3	1.2
Retentions and deferred payments		438.8	510.3
Other		152.0	156.1
total non current		625.8	709.5
total trade and other payables		3,888.9	4,004.6

1 Represents construction contracts where the total progress billings issued to clients (together with foreseeable losses if applicable) on a project exceed the costs incurred to date plus recognised profit on the contract.
2 Unearned premium and insurance claim reserves relate to Lend Lease’s wholly owned special purpose captive insurance subsidiary. The ‘cost’ of the liability for outstanding claims (insurance claim reserves) is measured as the current estimate of the present value of expected future payments against claims incurred at the reporting date under insurance contracts issued by the special purpose captive insurance subsidiary. These expected future payments are discounted using a riskfree rate.

free rate.
	June 2011	June 2010
	A$m	A$m
20. resident and Accommodation Bond Liabilities
Current
Gross resident liabilities	2,446.1	2,054.2
Deferred management fees receivable on owned sites	(368.4)	(197.5)
total resident liabilities3	2,077.7	1,856.7
Accommodation bond liabilities	153.7	139.1
total resident and accommodation bond liabilities4	2,231.4	1,995.8

3 For retirement village properties, deferred management fees receivable on owned sites are offset against the gross resident liabilities as these amounts are settled net in the same transaction.
4 Resident and accommodation bond liabilities are required to be classified as current liabilities under Australian Accounting Standards, as residents may depart the accommodation at any time, notwithstanding that history has shown that residents stay for an average period of 11 years in independent living units (ILU), seven years in serviced apartments (SA) and three years in aged care facilities. Retirement village total resident liabilities of A$2,077.7 million, which is net of deferred management fees receivable, are repayable out of the amounts paid to the Group by incoming retirement village residents for the right to occupy retirement living and aged care properties (comprising both ILU and SA). The gross value of these retirement living properties, which are classified as non current assets, was A$2,965.3 million at 30 June 2011 (refer Note 13 ‘Investment Properties’). The fair value of retirement living properties was A$825.3 million, representing the gross investment property value, less resident liabilities and related deferred revenue.

90 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

	June 2011	June 2010
	A$m	A$m
21. Borrowings and financing Arrangements
a. Borrowings – Measured at Amortised Cost
Non Current
Commercial notes	735.0	879.9
Bank credit facilities	958.9	566.7
total borrowings	1,693.9	1,446.6
b. Finance Facilities
The Group has access to the following lines of credit.
Commercial Notes
Facility available	735.0	879.9
Amount of facility used	(735.0)	(879.9)
Amount of facility unused	–	–
Bank Credit Facilities
Facility available	1,756.9	1,245.3
Amount of facility used	(958.9)	(566.7)
Amount of facility unused	798.0	678.6
Bank Overdrafts
Facility available	17.7	10.0
Amount of facility used
Amount of facility unused	17.7	10.0

Commercial notes include £300.0 million of 6.125% annual coupon guaranteed notes due 12 October 2021 that were issued in October 2006 in the UK public bond market and US$300.0 million of guaranteed senior notes at 5.75% (all in rate) issued in the US private placement debt market maturing in October of 2012, 2015 and 2017.

Bank credit facilities include a committed bank facility maturing in July 2013 of £360.0 million (A$553.8 million) in the UK which was drawn to £150.0 million (A$230.8 million) at 30 June 2011, an A$975.0 million committed bank facility maturing in July 2014 (A$595.0 million) and July 2016 (A$380.0 million) which was drawn to A$500.0 million at 30 June 2011 and a fully drawn A$225.0 million term facility maturing in December 2015.

The bank overdraft facilities may be drawn at any time and are repayable on demand.

Consistent with prior years, the Group has not defaulted on any obligations of principal or interest in relation to its borrowing and financing arrangements and other financial liabilities (refer Note 23 ‘Other Financial Liabilities’).

Refer to Note 31d ‘Liquidity Risk’ for analysis of the management of the Group’s liquidity risk.

The following schedule profiles the borrowings by currency and interest exposure.

	interest exposure
June 2011
Less than one year
Between one and fve years
More than fve years
total
June 2010
Less than one year
Between one and fve years
More than fve years
total

annual report 2011 Lend Lease Group 91

	June 2011	June 2010
	A$m	A$m
22. provisions
Current
Employee benefts	177.6	104.3
Maintenance and warranty1	16.0	19.3
Restructure (including employee terminations)	31.3	22.4
Other	37.1	52.8
total current	262.0	198.8
Non Current
Employee benefts	24.1	14.0
Other	50.1	70.1
total non current	74.2	84.1
total provisions	336.2	282.9
Reconciliations
Reconciliations of the carrying amounts of each class of provision, except for employee benefts, are as follows:
Current
Maintenance and Warranty
Carrying amounts at beginning of fnancial year	19.3	28.7
Provisions written back during fnancial year	(4.0)	(2.2)
Payments made during fnancial year	(1.0)	(5.7)
Effect of foreign exchange rate/other movements	1.7	(1.5)
Carrying amount at end of fnancial year	16.0	19.3
Restructure (Including Employee Terminations)
Carrying amounts at beginning of fnancial year	22.4	55.2
Provisions raised during fnancial year	37.2	10.9
Payments made during fnancial year	(27.2)	(40.9)
Effect of foreign exchange rate/other movements	(1.1)	(2.8)
Carrying amount at end of fnancial year	31.3	22.4
Other
Carrying amounts at beginning of fnancial year	52.8	46.0
Provisions raised during fnancial year	23.0	26.3
Payments made during fnancial year	(33.2)	(37.2)
Effect of foreign exchange rate/other movements	(5.5)	17.7
Carrying amount at end of fnancial year	37.1	52.8
Non Current
Other
Carrying amounts at beginning of fnancial year	70.1	39.0
Provisions raised during fnancial year		9.6
Payments made during fnancial year	(12.3)	(10.8)
Effect of foreign exchange rate/other movements	(7.7)	32.3
Carrying amount at end of fnancial year	50.1	70.1

1 Represents maintenance and warranty provisions to cover specific or estimated claims that arise due to defects or legal disputes in relation to completed projects. The timing of the utilisation of these provisions varies across each completed project.

92 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

June 2011	June 2010
A$m	A$m
23. other financial Liabilities Current Derivatives (measured at fair value)
Forward foreign exchange contracts 4.1	19.6
Interest rate swap contracts 6.7	8.4
Finance leases 26.3	0.2
Other (measured at amortised cost)	23.3
total current 37.1	51.5
Non Current
Bluewater lease liability (measured at amortised cost) 126.4	146.7
Finance leases 75.0	0.2
total non current 201.4	146.9
total other fnancial liabilities 238.5	198.4
24. Defned Beneft plan (Asset)/Liability1 a. Balance Sheet Amounts The amounts recognised in the balance sheet are determined as follows:
Present value of defned beneft obligations 593.1	671.2
Fair value of plan assets (586.7)	(592.5)
Unrecognised actuarial losses (8.7)	(60.7)
recognised (assets)/liability for defned beneft obligations (2.3)	18.0
b. Reconciliation of the Present Value of Defned Beneft Obligations
Present value of defned beneft obligations at beginningof fnancial year 671.2	691.2
Current service cost 11.4	12.6
Interest cost on beneft obligation 31.6	35.5
Contributions by plan participants 0.2	0.2
Actuarial (gains)/losses (3.5)	49.6
Benefts paid (24.4)	(32.6)
Effect of foreign exchange rate movements (93.4)	(85.3)
present value of defned beneft obligations at end of fnancial year 593.1	671.2
c. Reconciliation of the Fair Value of Plan Assets
Fair value of plan assets at beginningof fnancial year 592.5	559.2
Expected return on plan assets 29.7	27.9
Actuarialgains 41.4	62.8
Contributions by Group companies 31.7	43.2
Contributions by plan participants 0.2	0.2
Benefts paid (24.4)	(32.6)
Effect of foreign exchange rate movements (84.4)	(68.2)
fair value of plan assets at end of fnancial year 586.7	592.5
d. Expense Recognised in the Income Statement
Current service cost 11.4	12.6
Interest cost on beneft obligation 31.6	35.5
Expected return on plan assets (29.7)	(27.9)
Net actuarial loss recognised in the period	1.4
net defned beneft plan expense 13.3	21.6
e. Actual Return on Plan Assets 68.9	92.3

1 Relates to the Lend Lease Construction UK Pension Scheme.

annual report 2011 Lend Lease Group 93

	June 2011	June 2010
	%	%
f. Categories of Plan Assets
Equity instruments	38.8	34.2
Debt instruments	44.6	47.9
Other assets	16.6	17.9
	100.0	100.0
g. Principal Actuarial Assumptions
Discount rate (net)	5.4	5.4
Expected rate of return on assets1	6.4	6.3

1 The long term rate of return on the pension plan assets is determined by looking at the expected long term return on each asset class based on analysis of historical markets. Assets with higher volatility are assumed to generate higher returns consistent with widely accepted capital market principles. The expected returns are net of investment manager expenses. The overall expected rate of return on assets is derived by weighting the expected rate of return for each asset over the asset allocation for the scheme.

h. Employer Contributions

For the year ending 30 June 2012, total employer contributions to the plan are expected to be A$15.7 million. In addition, a deficit contribution of A$13.8 million is expected to be paid.

h. Employer Contributions For the year ending 30 June 2012, total employer contributions A$13.8 million is expected to be paid.	to the plan are expected to be A$15.7 million. In addition, a defcit contribution of
	ConsoLiDAteD
	June 2011 A$m June 2010 A$m June 2009 A$m June 2008 A$m June 2007 A$m
i. Historical Summary
Plan assets	586.7 592.5 559.2 627.7 661.0
Defned beneft plan obligation	(593.1) (671.2) (691.2) (686.2) (778.3)
(Defcit)	(6.4) (78.7) (132.0) (58.5) (117.3)
Experience gains/(losses) arising on plan assets	41.4 62.8 (115.5) (12.7) 18.5
Experience gains/(losses) arising on plan liabilities	(4.3) 17.2 (27.4) (0.9) (7.1)

94 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

	LenD LeAse CorporAtion LiMiteD	LenD LeAse trust
	June 2011 June 2010 No. of Shares m A$m No. of Shares m A$m	June 2011 June 2010 No. of Units m A$m No. of Units m A$m

25. issued Capital and treasury securities Issued Capital
Issued capital at beginning of fnancial year	565.6 2,019.2 457.6 1,195.9	565.6 0.6
Movements during fnancial year
Equity issue net of transaction costs	(0.7) 104.7 792.6	104.7 0.1
Equity issue – other	0.1 0.3	0.1
Distribution Reinvestment Plan	5.3 45.2 3.2 30.4	5.3
Equity issue to effect stapling of the Company’s shares to Lend Lease Trust units		460.8 0.5
issued capital at end of fnancial year 570.9 2,063.7 565.6 2,019.2		570.9 0.6 565.6 0.6

Issuance of Securities

As at 30 June 2011 the Group had 570.9 million stapled securities on issue equivalent to the number of Lend Lease Corporation shares and Lend Lease Trust units on issue as at that date. The issued units of Lend Lease Trust are not owned by the Company and are therefore presented as non controlling interests in the consolidated statement of financial position within equity.

Security Accumulation Plans

The Group’s Distribution Reinvestment Plan (‘DRP’) was reactivated in February 2011. The last date for receipt of an election notice for participation in the DRP is 15 September 2011. The issue price is the arithmetic average of the daily volume weighted average price of Lend Lease stapled securities traded (on the Australian Securities Exchange) for the period of six 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.

Terms and Conditions

Issued capital for Lend Lease Corporation Limited comprises ordinary shares fully paid.

A stapled security represents one share in the Company stapled to one unit in Lend Lease Trust.

Stapled securityholders have the right to receive declared dividends from the Company and distributions from Lend Lease Trust 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.

	LenD LeAse CorporAtion LiMiteD	LenD LeAse trust
	June 2011 June 2010 No. of Shares m A$m No. of Shares m A$m	June 2011 June 2010 No. of Units m A$m No. of Units m A$m

Treasury Securities1
Balance at beginning of fnancial year	29.9 74.4 30.8 63.2 29.9
Movements during fnancial year:
Treasury securities acquired	1.9 16.3 0.3 2.6 1.9
Treasury securities vested	(0.9) (7.4) (1.2) (11.0) (0.9)
Movement on allocated treasury securities recognised directly in retained earnings and equity compensation reserve	19.6
Issue of Lend Lease Trust units upon stapling of Company shares to Lend Lease Trust units2	29.9
Balance at end of fnancial year	30.9 83.3 29.9 74.4 30.9 – 29.9 –

1 Represents unallocated Lend Lease stapled securities held by employee benefit vehicles, including employee security plans, which Lend Lease sponsors. The value reflects the original historical cost to the Group. The consolidated balance represents the Company shares which are disclosed in the statement of financial position as treasury securities as a reduction of equity. The Lend Lease Trust balance is disclosed in the statement of financial position within non controlling interests attributable to unitholders of Lend Lease Trust.

2 Units in Lend Lease Trust were issued at 0.1 cents per unit.

annual report 2011 Lend Lease Group 95

		June 2011	June 2010
	Note	A$m	A$m
26. reserves
Fair Value Revaluation Reserve
Opening balance at beginning of fnancial year		37.8	44.5
Comprehensive income for the year
Revaluation gain recognised in equity		2.6	6.7
Revaluation gain transferred to income statement on asset disposal			(17.0)
Revaluation loss on asset impairment transferred to the income statement			4.0
Effect of foreign exchange rate movements/other movements		(0.5)	(0.4)
Closing balance at end of fnancial year	26a	39.9	37.8
Hedging Reserve
Opening balance at beginning of fnancial year		(88.2)	(58.1)
Comprehensive income for the year
Movements attributable to effective cash fow hedges on equity accounted investments		(10.0)	(37.3)
Transfer of ineffective cash fow hedge movement to income statement			(1.1)
Hedging loss transferred to income statement on asset disposal		35.7
Effect of foreign exchange rate/other movements		17.1	8.3
Closing balance at end of fnancial year	26b	(45.4)	(88.2)
Foreign Currency Translation Reserve
Opening balance at beginning of fnancial year		(80.5)	(24.4)
Comprehensive income for the year
Movements attributable to translation of foreign operations		(162.3)	(57.6)
Transfer of foreign currency translation reserve to income statement on return of capital			1.5
Closing balance at end of fnancial year	26c	(242.8)	(80.5)
Non Controlling Interest Acquisition Reserve
Opening balance at beginning of fnancial year		(110.9)	(121.0)
Comprehensive income for the year
Effect of foreign exchange rate/other movements		24.6	10.1
Closing balance at end of fnancial year	26d	(86.3)	(110.9)
Other Reserve
Opening balance at beginning of fnancial year		110.4	104.6
Transaction with owners for the year
Net proceeds from renounceable entitlement offer received by Lend Lease
sponsored employee security plans			7.1
Effect of foreign exchange rate/other movements		1.3	(1.3)
Closing balance at end of fnancial year	26e	111.7	110.4
Equity Compensation Reserve
Opening balance at beginning of fnancial year		48.0	35.6
Transactions with owners for the year
Movements attributable to allocation and vesting of securities		12.1	12.4
Closing balance at end of fnancial year	26f	60.1	48.0
Other Compensation Reserve
Closing balance at beginning and end of fnancial year	26g	54.4	54.4
total reserves		(108.4)	(29.0)

96 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

26. reserves continued

Nature and Purpose of Reserves

a. Fair Value Revaluation Reserve

Unrealised gains or losses arising from changes in the fair value and foreign exchange rate differences on translation of non monetary securities classified as available for sale financial assets are recognised in the fair value revaluation reserve. Amounts are recognised in the income statement when the associated securities are sold, redeemed or impaired.

b. Hedging Reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments relating to hedged transactions that have not occurred.

c. Foreign Currency Translation Reserve

The foreign currency translation reserve recognises the foreign currency differences, net of income tax, arising from the translation of foreign operations, the translation of transactions that hedge the Group’s net investment in a foreign operation, or the translation of foreign currency monetary items forming part of the net investment in a foreign operation.

d. Non Controlling Interest Acquisition Reserve

The non controlling interest acquisition reserve arises from the additional acquisition of non controlling interests, subsequent to obtaining control of the acquired entity. The reserve represents the premium on the cost of acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired entity.

e. Other Reserve

Other reserve includes realised capital profits on the disposal of assets which did not attract capital gains tax. In addition, gains realised by Lend Lease sponsored employee security plans upon renouncing their rights to participate in the Group’s single bookbuild accelerated renounceable entitlement offer in March 2010 have been recognised in other reserve.

f. Equity Compensation Reserve

The fair value of equity settled share-based compensation is recognised in the income statement and the equity compensation reserve over the vesting period of the underlying grant. Additionally, unallocated Lend Lease securities held by consolidated employee benefit vehicles that are used to meet equity related employee arrangements are recognised in the equity compensation reserve at their original historic cost to the Group.

g. Other Compensation Reserve

Unallocated Lend Lease securities held by consolidated employee benefit vehicles that are used to cash settle certain share based payment arrangements are recognised in the other compensation reserve at their original historic cost to the Group. On allocation, the securities are revalued to their current market value against the income statement. Following the distribution of the proceeds to the beneficiary, the difference between the original cost of the securities and the market value is recognised in retained earnings as a ‘gain/(loss) on utilisation of treasury securities’.

annual report 2011 Lend Lease Group 97

27. Contingent Liabilities

The Group has the following contingent liabilities:

There are a number of legal claims and exposures that arise from the normal course of business. There is significant uncertainty as to whether a future liability will arise in respect of these items. The amount of liability, if any, that may arise cannot be measured reliably at this time. The Directors are of the opinion that all known liabilities have been brought to account and that adequate provision has been made for any anticipated losses.

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 Development business commercial built-form developments. These guarantees are provided in respect of activities that occur in the ordinary course of business and any known losses in respect of the relevant contracts have been brought to account.

A contingent liability exists in relation to the Lend Lease Retirement Benefit Fund. This is disclosed in detail in Note 34b ‘Lend Lease Employee Benefit Vehicles’.

In September 2004, a class action was filed against a number of parties who responded to the World Trade Center emergency and debris removal following the events of 9/11. The action was brought against more than 50 defendants, including the City of New York and Lend Lease (US) Construction LMB Inc. formerly known as Bovis Lend Lease LMB, Inc. (‘LL LMB’) (a subsidiary of Lend Lease). Judge Alvin K Hellerstein of the United States Federal Court for the Southern District of New York refused to certify the class action and as such the litigation proceeds as a consolidated action by individual claimants. The number of claimants who have brought proceedings against LL LMB is approximately 16,337 (comprising 9,845 first named claimants and 6,492 derivative claimants – for example, spouses).

LL LMB is one of the beneficiaries of the approximately US$1.0 billion captive insurance policy (administered by the WTC Captive) established by the US Congress to protect the City of New York and its contractors against liabilities that may arise from the clean-up. LL LMB and other defendants have also benefited from certain project specific insurance.

On 23 June 2010, Judge Hellerstein signed an ‘Order Approving Modified and Improved Agreement of Settlement’. The settlement agreement (as amended from the agreement announced on 12 March 2010) between counsel representing the claimants in these proceedings, the WTC Captive and counsel representing the defendants insured by the WTC Captive (including LL LMB) requires the WTC Captive to contribute a total of US$712.5 million (plus US$3.5 million in administrative costs), subject to certain conditions. The agreement does not impose any financial obligations on LL LMB. The settlement became fully effective on 5 January 2011 upon the signing by the parties of the Affirmation of Final Settlement recognising that more than 95% of the plaintiffs who have brought claims against the defendants insured by the WTC Captive have accepted the settlement terms and have ‘opted in’ to the settlement, and all other necessary conditions have been satisfied.

Additionally, on 2 January 2011, the US President signed the James Zadroga 9/11 Health and Compensation Act of 2010 into law. Among other things, this legislation re-opens the September 11th Victim Compensation Fund, such that current claimants may also now be eligible to seek compensation from the United States government. The Act also limits the liability of the City of New York and various contractors, including LL LMB, for claims related to the clean up operations. The Regulations, which make the Act operative, are currently being promulgated.

LL LMB may still need to defend claims made by plaintiffs who do not opt into the settlement, who are ineligible or otherwise decline to participate in the re-opened Victim Compensation Fund, or who bring new claims against LL LMB. As at 30 June 2011, there were 198 such claims, of which 30 name LL LMB as a defendant. To establish any liability on the part of LL LMB, the claimants must prove that LL LMB owed them a duty of care, breached that duty, and that their injuries were caused by the conduct of LL LMB. Any such litigation therefore would still need to proceed through a number of stages before any liability could attach to LL LMB. As with all litigation, to the extent that the claimants are able to establish liability against LL LMB, it is not possible at this stage to quantify what that liability may or may not be or whether or not that liability will be entirely covered by insurance. It is also not possible at this time to ascertain how the limitation of liability in the Zadroga Act will apply to any particular claim against LL LMB going forward but, as to contractors such as LL LMB, the Act limits liability to those amounts remaining in the WTC Captive Insurance Company plus any insurance coverage that was available and applicable on 11 September 2001 for the particular contractor.

In April 2009, LL LMB received notice of investigations being conducted by the US Attorney’s Office for the Eastern District of New York and the New York County District Attorney’s Office. The investigations relate to allegations regarding, among other things, payroll and billing practices on construction projects and LL LMB’s use of minority-owned business enterprises. In July 2011, LL LMB received notice that the US Attorney’s Office for the Southern District of New York is conducting a civil investigation into payroll and billing practices at federally-funded construction projects. LL LMB is co-operating with the authorities in their investigations. Until the investigations are complete, it is not possible to quantify what the financial consequences associated with this matter will be. Lend Lease has engaged independent advisers to conduct a review of LL LMB’s practices and has recognised a provision to cover legal costs and make-good payments.

98 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

28. Consolidated entities

a. Investments in Consolidated Entities

The material consolidated entities of the Group listed below were wholly owned during the current and prior year:

Parent Entity

Lend Lease Corporation Limited

Australia

Lend Lease Project Management and Construction (Australia) Pty Limited Lend Lease (Australia) Communities Limited Lend Lease Development Pty Limited Lend Lease Millers Point Trust Lend Lease Primelife Limited Lend Lease Real Estate Investments Limited Lend Lease Securities and Investment Pty Limited Lend Lease Finance Limited Lend Lease International Pty Limited Lend Lease Singapore Investments Pty Limited Lend Lease Trust Lend Lease Infrastructure Holdings Pty Limited (newly incorporated during the year)

Europe

Lend Lease Construction Holdings (EMEA) Limited Bovis Lend Lease International Limited Lend Lease Construction (EMEA) Limited Bovis Lend Lease Overseas Holdings Limited Blueco Limited Lend Lease Europe Holdings Limited Lend Lease Europe Limited Lend Lease Infrastructure (EMEA) Limited Lend Lease Residential Group (EMEA) Limited Lend Lease Residential (GC) plc Lend Lease Europe Finance plc

Asia

Lend Lease Singapore Pty Limited[1]

Americas

Lend Lease (US) Construction Holdings, Inc. Lend Lease (US) Construction, Inc. Lend Lease (US) Construction, LMB, Inc. ML Bovis Holdings Limited Lend Lease (US) Public Partnerships, LLC Yarmouth Lend Lease King of Prussia, Inc. Lend Lease (US) Holdings, Inc. Lend Lease Americas Holdings, Inc. Lend Lease (US) Services, Inc. Lend Lease (US) Capital, Inc.

1 Lend Lease Singapore Pty Limited is incorporated in Singapore.

	Ownership
	Interest
	Acquired	Date
	%	Acquired
b. Acquisitions
During the year the consolidated entity acquired an interest in the following entities:
June 2011
Australia
Lend Lease Infrastructure Pty Limited (formerly Valemus Australia Pty Limited)	100	10 Mar 11
Americas
The DASCO Companies, LLC	100	17 Feb 11
June 2010
Australia
Lend Lease Trust (formerly Sheffeld Diversifed Fund No. 2)1	100	2 Oct 09
Lend Lease Trust No. 2 (formerly Sheffeld Diversifed Fund No.1)1	100	2 Oct 09
Lend Lease Responsible Entity Limited (formerly Sheffeld Funds Management Limited)	100	2 Oct 09
Lend Lease Primelife Group	56.8	15 Dec 09

1 On 2 October 2009, Lend Lease Corporation Limited acquired 100% of the voting interests in Lend Lease Trust and Lend Lease Trust No. 2. Subsequent to the acquisition of Lend Lease Trust, the units of Lend Lease Trust were stapled to shares in Lend Lease Corporation Limited as set out in Note 1 ‘Significant Accounting Policies’.

annual report 2011 Lend Lease Group 99

Acquisition of Lend Lease Infrastructure Pty Limited (formerly Valemus Australia Pty Limited)

On 10 March 2011 the Group completed the acquisition of 100% of Valemus Australia Pty Limited (‘Valemus’), the parent company of Abigroup, Baulderstone and Conneq. Following the acquisition, Valemus Australia Pty Limited was renamed Lend Lease Infrastructure Pty Limited with Abigroup, Baulderstone and Conneq which together now form the Group’s infrastructure business in Australia, continuing to operate as separate business units within the Australian Construction reporting segment.

These businesses are providers of services in the engineering and construction markets and the acquisition is consistent with the Group’s strategic direction of increasing its capabilities in both these markets.

The following summarises the consideration transferred to complete the acquisition:

	A$m
Cash consideration1	874.0
Transfer of parent company receivables2	192.6
total consideration transferred3	1,066.6

1 Net cash outflow (excluding transaction costs) in the cash flow statement of (A$629.4 million) to acquire Valemus represents cash consideration paid (A$874.0 million) net of cash acquired (A$244.6 million). Transaction costs of A$20.5 million have been included in ‘Other Expenses’ in the Group income statement.
2 Immediately prior to acquisition, Valemus was owed A$192.6 million by its parent, Bilfinger Berger SE. At settlement the Group assumed this receivable balance and accordingly the cash consideration transferred to complete the acquisition was reduced.
3 Amount comprises A$960.0 million base consideration plus A$80.0 million plus A$5.0 million per month from 1 October 2010 to completion (A$26.6 million) in lieu of 2010 profits of Valemus not distributed.

The amounts recognised as at the acquisition date for the identifiable assets acquired and liabilities assumed are shown below.

	Fair Value
Identifable assets acquired and liabilities assumed	A$m
Cash and cash equivalents	244.6
Trade and other receivables	679.9
Inventories	148.4
Property, plant and equipment	255.3
Deferred tax asset	68.0
Equity accounted investments	52.5
Finance lease liabilities	(98.9)
Payables	(862.0)
Provisions	(88.3)
Deferred tax liability	(14.6)
total net identifable assets	384.9
Total consideration transferred	1,066.6
Goodwill on acquisition	681.7

The goodwill is attributable to several factors including Valemus’ substantial future project pipeline and the synergies and scale benefits from combining the acquired operations with those of the existing Construction business of the Group. The goodwill arising from the transaction is not deductible for tax purposes.

Indemnities have been provided to the Group by the previous owners of Valemus (an indemnity asset of A$26.2 million has been recognised at the date of acquisition). Whilst the underlying financial terms of the indemnities remain confidential, negotiation of such an arrangement is customary for a transaction of this type. The net financial impact of the indemnity arrangement in the post acquisition period to 30 June 2011 and for future periods covered by the term of the indemnity is not material to the results of the Group.

The financial and operational integration of the infrastructure business into the Group is continuing and is expected to be finalised by 31 December 2011. Accordingly, at 30 June 2011 the fair values ascribed to the net identifiable assets remain provisional as permitted by Australian Accounting Standards.

Gross contractual amounts due for trade and other receivables include A$423.0 million of trade receivables of which A$3.1 million is expected to be uncollectible at the acquisition date.

In the period from 10 March 2011 to 30 June 2011, the infrastructure business contributed revenue of A$1.3 billion and profit after tax of A$32.3 million (excluding transaction costs and the cost to the Group of funding the transaction). If the acquisition had occurred on 1 July 2010, management estimates that the Group’s consolidated revenue and profit after tax for the full year would have been A$11.3 billion and A$555.4 million respectively.

There were no significant additional accounting policies impacting the Group as a result of the acquisition.

100 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

28. Consolidated entities continued

b. Acquisitions continued

Acquisition of The DASCO Companies, LLC

On 17 February 2011, the Group obtained control of The DASCO Companies, LLC (‘DASCO’), a provider of development, financing, leasing and management services in the healthcare real estate sector in the United States. The acquisition is in line with the Group’s continuing strategy to leverage its integrated property delivery model.

management services in the healthcare real estate sector in the United States. The acquisition is in line with the Group’s continuing leverage its integrated property delivery model.	strategy to
	Fair value
	A$m
Net identifable assets	0.1
Total purchase consideration	24.1
Goodwill on acquisition	24.0

The total purchase consideration comprises A$8.6 million cash and A$15.5 million estimated contingent consideration. The contingent consideration represents the fair value of deferred earn out payments linked to future financial performance of DASCO. The goodwill is attributable to the development of future investment projects and is expected to be deductible on a straight line basis over a period of up to 15 years for tax purposes.

Ownership Interest Disposed %	Date Disposed Consideration Received A$m
c. Disposals June 2011 During the year the consolidated entity disposed of its interest in the following entities. The operating results to the date of disposal have been included in consolidated proft. Australia



LLD (Coolum Western) Pty Limited 100	23 Dec 10 13.4
Coeur de Lion Holdings Pty Limited1 50	23 Dec 10 5.0
June 2010 During the year, the consolidated entity disposed of its interests in the following entity. The operating results to that date were included in consolidated proft. Europe
First Base Adelaide Wharf 45	29 Jun 10 0.2
1 The Group still holds 100% in Coeur de Lion Holdings Pty Limited but due to the agreement in place where the economic outco Australia, this has been deconsolidated and is now classified as an equity accounted investment.	mes are shared with Sekisui House ConsoLiDAteD
	June 2011 A$m June 2010 A$m
Details of the disposals of consolidated entities are as follows: Sale Proceeds
Cash received	13.4 0.2
total sale proceeds	13.4 0.2
Net Assets of Entities Disposed
Cash and cash equivalents	3.2 0.2
Trade and other receivables	2.4 1.1
Inventories	9.8
Property, plant and equipment	14.9
Deferred tax assets	4.5
Other assets	1.8
Trade and other payables	(9.6) (1.3)
Deferred tax liabilities	(1.8)
Provisions	(16.5)
net assets disposed	8.7 –
Cash Flows Resulting from Sale
Cash consideration	13.4 0.2
Cash disposed	(3.2) (0.2)
net infows of cash	10.2 –

annual report 2011 Lend Lease Group 101

29. segment reporting

The segment results are discussed and analysed in the Management Discussion and Analysis of Financial Condition and Results of Operations (MD&A) included with this report.

From 1 July 2010, the Group moved to a regional management structure focused on four major geographic regions: Australia, Asia, Europe and the Americas, to better support the Group’s integrated model and provide a platform to develop regional investment opportunities. The Group has identified these operating segments based on the internal reports that are reviewed and used by the Group Chief Executive Officer and Managing Director (the chief operating decision maker) in assessing performance and in determining the allocation of resources.

The regional business units operate across four lines of business, as follows:

Development

The Development business operates in all four major geographic regions and is involved in the development of master-planned urban communities, inner-city mixed-use developments, apartments, retail and the retirement living and aged care sector.

Construction

The Construction business operates in all four major geographic regions providing project management, engineering and construction services.

Investment Management

The Investment Management business operates in all four major geographic regions and provides real estate investment management, retail property management and asset management services. This business includes the Group’s ownership interests in property investments held directly or indirectly through investments in the Group’s managed funds.

Infrastructure Development

The Infrastructure Development business operates in Australia, Europe and the Americas and manages and invests in large public private partnership projects.

Segment performance is based on operating profit after tax. Operating profit after tax is 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. Financial information regarding the performance of each reportable segment and a reconciliation of these reportable segments to the financial statements is included below.

	operAtinG resuLt Before tAx	inCoMe tAx expense	operAtinG resuLt After tAx
	June 2011 A$m June 2010 A$m June 2011 A$m June 2010 A$m June 2011 A$m June 2010 A$m
Australia	359.2 308.0 (77.8) (61.1) 281.4 246.9
Asia	54.0 40.6 (7.9) (7.4) 46.1 33.2
Europe	156.0 167.7 (18.6) (49.1) 137.4 118.6
Americas	246.5 51.9 (89.9) (21.2) 156.6 30.7
total segment	815.7 568.2 (194.2) (138.8) 621.5 429.4
Reconciling items
Corporate activities	(195.7) (154.1) 59.5 48.3 (136.2) (105.8)
Property investment revaluations	10.7 33.7 (3.2) (11.7) 7.5 22.0
statutory result attributable to securityholders	630.7 447.8 (137.9) (102.2) 492.8 345.6
Other non controlling interests	0.8 3.0 (0.4) (0.4) 0.4 2.6
statutory result	631.5 450.8 (138.3) (102.6) 493.2 348.2

Lend Lease Group annual report 2011

102

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

29. segment reporting continued

The following tables set out other financial information by reportable segment.

Segment Revenue June 2011 A$m Interest Revenue June 2011 A$m Interest Expense June 2011 A$m Share of Results EAI1 June 2011 A$m Depreciation and Amortisation June 2011 A$m Material Non Cash Items2 June 2011 A$m	Non Current Segment Assets3 June 2011 A$m	Group Total Assets June 2011 A$m
Australia 5,099.5 2.5 66.7 (31.1) (66.2)	5,910.0	8,200.9
Asia4 422.3 25.2 (0.3) (6.2)	297.5	532.9
Europe5 1,488.5 18.7 (1.6) (7.4) (10.0) (18.8)	1,095.6	1,649.3
Americas 1,934.7 225.5 (3.1) (13.2)	262.4	1,462.2
total segment 8,945.0 21.2 (1.6) 310.0 (44.5) (104.4)	7,565.5	11,845.3
Corporate activities 69.1 57.6 (113.4) (7.6) 23.2	66.2	303.7
statutory result 9,014.1 78.8 (115.0) 310.0 (52.1) (81.2)	7,631.7	12,149.0

Segment Revenue June 2010 A$m Interest Revenue June 2010 A$m Interest Expense June 2010 A$m Share of Results EAI1 June 2010 A$m Depreciation and Amortisation June 2010 A$m Material Non Cash Items2 June 2010 A$m	Non Current Segment Assets3 June 2010 A$m	Group Total Assets June 2010 A$m
Australia 3,730.3 4.0 (2.2) 59.5 (12.0) (30.0)	4,484.9	5,581.1
Asia4 423.9 53.7 (0.3) (2.2)	229.0	446.1
Europe5 2,498.0 19.2 (1.5) 25.5 (14.3) (26.9)	1,257.5	2,030.5
Americas 3,862.2 0.1 30.7 (5.1) (30.5)	742.9	1,771.0
total segment 10,514.4 23.3 (3.7) 169.4 (31.7) (89.6)	6,714.3	9,828.7
Corporate activities 55.6 41.5 (78.5) (8.1) (40.9)	84.8	1,537.7
statutory result 10,570.0 64.8 (82.2) 169.4 (39.8) (130.5)	6,799.1	11,366.4

1 Equity accounted investments.

2 Excludes depreciation and amortisation.

3 Non current segment assets exclude deferred tax assets, financial instruments and pension assets and are based on the geographical location of assets.

4 The majority of revenue and non current assets from Asia are attributable to Singapore.

5 The majority of revenue and non current assets from Europe are attributable to the UK.

Line of Business

The analysis of revenue by line of business is as follows:

	revenue
	June 2011 A$m June 2010 A$m
Development	754.6 744.6
Construction	7,335.0 8,530.8
Investment Management	171.7 170.0
Infrastructure Development	683.7 1,069.0
total segment	8,945.0 10,514.4
Corporate Activities	69.1 55.6
total revenue	9,014.1 10,570.0

No revenue from transactions with a single external customer amount to 10% or more of the Group’s revenue.

annual report 2011 Lend Lease Group 103

30. Capital risk Management

The Group assesses capital management as part of its broader strategic plan. The Group focuses on interrelated financial parameters, including return on equity, earnings growth and borrowing capacity. The Group also monitors its gearing ratio, interest coverage ratio and weighted average cost of debt. These are all taken into account when the Group makes decisions on how to invest its capital and evaluate its existing investments.

The Group’s capital includes total equity, borrowings, and other interest bearing liabilities. When investing capital, the Group’s objective is to deliver strong total securityholder returns and to maintain an investment grade credit rating by maintaining an appropriate financial profile. The S&P/ Moody’s long term credit rating at 30 June 2011 is BBB-/Baa3 (June 2010: BBB-/Baa3). The Group was also in compliance with its financial covenants in respect of its borrowing facilities.

The capital structure of the Group can be changed by equity issuance, paying distributions to securityholders, the distribution reinvestment plan and changing the level of debt.

31. international Currency Management and financial instruments

The Group operates across numerous jurisdictions and markets. The Lend Lease Financial Markets Risk Committee oversees the management of the Group’s foreign currency, credit, interest rate and liquidity risk exposures, within the parameters of a Board approved policy. The Lend Lease Risk Management and Audit Committee maintains a Group-wide framework for risk management and reviews issues of material risk exposure.

a. Foreign Currency

Foreign Currency Risk

Foreign currency risk is the risk in local currency terms that the value of a financial commitment or a recognised asset or liability, will fluctuate due to changes in foreign currency exchange rates.

The Group is exposed to foreign currency risk primarily from foreign currency earnings, net investments in foreign operations, and transactions settled in foreign currency. The Group manages these exposures using both physical (this includes borrowings in the relevant foreign currency which act as a natural hedge for the net investments held in these foreign currencies) and derivative financial instruments (mainly forward foreign exchange contracts) to hedge foreign currency exposures. Speculative trading is not permitted.

The Group currently applies hedge accounting under AASB 139 Financial Instruments: Recognition and Measurement on a very limited basis as the majority of forward foreign exchange contracts relate to cross border intercompany loans and transactions which mainly net off in the income statement. The Group has minimal hedges designated as fair value and cash flow hedges (refer to Note 1.22 ‘Derivative Financial Instruments and Hedging Activities’ for the accounting treatment of such hedges).

Net Investments in Foreign Operations

Net investments in foreign operations are exposed to foreign currency translation risk. Foreign currency gains and losses arising from translation of net investments in foreign operations are recognised in the Foreign Currency Translation Reserve until realised. The Group does not generally use derivatives to hedge net investments in foreign operations.

The net asset exposure by currency is detailed below:

	AUD	USD	GBP	SGD	EUR	NZD	Other
	m	m	m	m	m	m	m
june 2011
Net asset exposure (local currency)	2,585.8	66.0	113.7	410.6	100.1	369.3	84.0
june 2010
Net asset exposure (local currency)	2,100.1	46.8	211.0	327.2	88.7	312.9	185.7

104 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

31. international Currency Management and financial instruments continued

a. Foreign Currency continued

Foreign Currency Derivatives (Not Hedge Accounted)

The Group’s foreign exchange derivative contracts held at reporting date to hedge specific foreign currency exposures are as follows:

	WeiGhteD AverAGe exChAnGe rAte	Gross reCeivABLe/(pAyABLe) unDer ContrACts
	June 2011 (A$1=) June 2010 (A$1=)	June 2011 A$m June 2010 A$m

Contracts to (buy)/sell the following currencies at an agreed exchange rate :
buy GBP	0.66 0.60 (59.0) (69.9)
sell GBP	0.65 0.59 117.2 450.1
buy USD	1.05 0.86 (365.6) (328.5)
sell USD	1.07 0.88 32.2 38.0
buy EUR	0.76 0.71 (24.7) (32.0)
sell EUR	0.75 0.70 59.0 70.0
buy SGD	1.29 1.20 (38.7) (32.4)
sell SGD	1.30 1.21 16.6
sell New Zealand dollars	1.30 1.27 201.7 205.9
sell Canadian dollars	1.03 0.90 8.8 6.8
buy Canadian dollars	1.02 1.02 (3.1)
total	(72.2) 324.6

All contracts to buy or sell foreign currency mature within one year.

Sensitivity Analysis

The sensitivity analysis of the Group’s Australian dollar denominated income statement and balance sheet to foreign currency movements is based on a 10% fluctuation (June 2010: 10% fluctuation) on the average rates during the financial year and the spot rate at balance date respectively. This analysis assumes that all other variables, in particular interest rates, remain constant.

A 10% movement in the average foreign exchange rates would have impacted the Group’s profit after tax as follows:

	10% WeAKeninG	10% strenGtheninG
	Increase/ (Decrease) in Proft After Tax June 2011 A$m Increase/ (Decrease) in Proft After Tax June 2010 A$m	Increase/ (Decrease) in Proft After Tax June 2011 A$m Increase/ (Decrease) in Proft After Tax June 2010 A$m

USD	14.9 2.4 (13.7) (1.9)
GBP	12.6 10.7 (10.2) (8.8)
SGD	5.8 7.2 (5.1) (5.9)
EUR	(1.5) (0.8) 1.2 0.7
	31.8 19.5 (27.8) (15.9)

A 10% movement in the foreign exchange spot rates at balance date would have impacted the Group’s net assets as follows:

	10% WeAKeninG	10% strenGtheninG
	Increase in Net Assets June 2011 A$m June 2010 A$m	Decrease in Net Assets June 2011 A$m June 2010 A$m

USD	7.1 6.1 (5.8) (5.0)
GBP	17.8 41.9 (17.0) (34.2)
SGD	31.1 29.6 (27.9) (24.2)
EUR	14.2 14.1 (11.6) (11.5)
NZD	28.0 27.8 (25.1) (22.8)
	98.2 119.5 (87.4) (97.7)

annual report 2011 Lend Lease Group 105

b. Credit Risk

Credit risk represents the risk that a counterparty will not be able to complete its obligations in respect of a financial instrument, resulting in a financial loss to the Group. The Group has exposure to credit risk from recognised financial assets.

The maximum exposure to credit risk at balance date on financial instruments recognised in the balance sheet (excluding investments of the Group) equals the carrying amount, net of any impairment.

The Group has no significant concentrations of credit risk on either a geographic or industry specific basis and has policies in place so that sales of products and services are made to customers with an appropriate credit history.

Credit risk on financial instruments is managed under a Board approved credit policy that determines acceptable counterparties. Derivative counterparties and cash deposits are limited to recognised financial intermediaries with a minimum investment grade credit rating as determined by a recognised rating agency. The policy sets out credit limits for each counterparty based on these ratings.

There was an impairment of A$1.2 million recorded during the year against other financial assets (June 2010: A$8.1 million).

Refer to Note 10 ‘Loans and Receivables’ for information relating to impairment on loans and receivables.

Collateral

In certain circumstances, the Group will hold either financial or non financial assets as collateral to further mitigate the potential credit risk on selected transactions. During the period, the Group did not hold financial or non financial assets as collateral to mitigate potential credit risk as a result of default by a counterparty or otherwise (June 2010: a trade debtor of A$27.0 million was secured by a first registered mortgage over land parcels).

c. Interest Rate Risk

Interest rate risk is the risk that the value of a financial instrument or cash flow associated with the instrument will fluctuate due to changes in market interest rates. The Group uses physical and derivative financial instruments to assist in managing its interest rate risk. Speculative trading is not permitted.

The Group’s exposure to interest rate risk on its financial assets and liabilities is set out as follows:

	CArryinG AMount
	June 2011 A$m June 2010 A$m
Fixed Rate
Financial assets	220.7 239.7
Financial liabilities	(1,235.6) (902.4)
	(1,014.9) (662.7)
Variable Rate
Financial assets	1,043.3 1,661.6
Financial liabilities	(1,103.9) (728.6)
	(60.6) 933.0

Sensitivity Analysis

At 30 June 2011 it is estimated that an increase of one percentage point in interest rates would have increased the Group’s profit after tax and retained earnings by A$5.0 million (June 2010: A$4.4 million increase in the Group’s profit after tax and retained earnings). A one percentage point decrease in interest rates would have decreased the Group’s profit after tax and retained earnings by A$3.9 million (June 2010: A$4.1 million decrease in the Group’s profit after tax and retained earnings). The increase or decrease in interest income/expense is proportional to the increase or decrease in interest rates. Interest rate derivatives have been included in this calculation.

d. Liquidity Risk

Liquidity risk is the risk of having insufficient funds to settle financial liabilities as and when they fall due. This includes having insufficient levels of committed credit facilities.

The Group aims to manage its liquidity risk exposure by maintaining sufficient levels of cash and committed credit facilities to meet financial commitments as and when they fall due.

Liquidity risk is reduced through prudent cash management which ensures sufficient levels of cash are maintained to meet working capital requirements. It also allows flexibility of liquidity by matching maturity profiles of short term investments with cash flow requirements, and timely review and renewal of credit facilities.

The Group’s main liquidity risk is the ability to refinance its current borrowings; at 30 June 2011 all borrowings are non current. During the period, the A$570.0 million club facility maturing in December 2011 was replaced with an A$975.0 million facility comprising two tranches:

i. A$595 million tranche maturing in July 2014; and
ii. A$380 million tranche maturing in July 2016.

106 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

31. international Currency Management and financial instruments continued

d. Liquidity Risk continued

As disclosed in Note 27 ‘Contingent Liabilities’, in certain circumstances the Company guarantees the performance of particular Group entities in respect of their obligations including bonding and bank guarantees. Issued bank guarantees have cash collateralisation requirements if the bank guarantee facility is not renewed by the provider. At 30 June 2011, the Group does not anticipate a significant liquidity risk in relation to these facilities in the next 12 months.

The Group has provided collateral of A$16.2 million (June 2010: A$114.1 million) against letter of credit facilities.

The following are the contractual cash flow maturities of financial liabilities (excluding financial guarantees), including estimated interest payments and excluding the impact of netting agreements.

		Carrying	Contractual	Less than	One to	Two to	More than
		Amount	Cash Flows	One Year	Two Years	Five Years	Five Years
	Note	A$m	A$m	A$m	A$m	A$m	A$m
June 2011
Non Derivative Financial Liabilities
Trade and other payables	191,2	2,699.7	2,729.0	2,180.0	123.3	240.1	185.6
Resident and accommodation bond liabilities3	20	2,231.4	2,231.4	2,231.4
Borrowings and fnancing arrangements	21	1,693.9	2,335.6	97.1	200.5	1,222.0	816.0
Other fnancial liabilities	23	227.7	251.8	36.1	38.3	175.8	1.6
total		6,852.7	7,547.8	4,544.6	362.1	1,637.9	1,003.2
Derivative Financial Liabilities
Foreign exchange contracts:	23
Outfow		(9.9)	(718.2)	(718.2)
Infow		5.8	715.0	715.0
Interest rate derivatives:	23
Outfow		(6.7)	(6.7)	(2.3)	(1.8)	(2.6)
total		(10.8)	(9.9)	(5.5)	(1.8)	(2.6)	–
June 2010
Non Derivative Financial Liabilities
Trade and other payables	191,2	2,623.5	2,744.7	2,041.6	136.4	253.9	312.8
Resident and accommodation bond liabilities3	20	1,995.8	1,995.8	1,995.8
Borrowings and fnancing arrangements	21	1,446.6	2,018.3	97.9	650.2	259.4	1,010.8
Other fnancial liabilities	23	170.4	179.7	27.3	2.6	149.8
total		6,236.3	6,938.5	4,162.6	789.2	663.1	1,323.6
Derivative Financial Liabilities
Foreign exchange contracts:	23
Outfow		(36.5)	(850.8)	(850.8)
Infow		16.9	832.9	832.9
Interest rate derivatives:	23
Outfow		(8.4)	(9.5)	(2.7)	(2.3)	(4.5)
total		(28.0)	(27.4)	(20.6)	(2.3)	(4.5)	–

1 The carrying amount of trade and other payables excludes A$1,111.0 million of current and A$78.2 million of non current amounts (June 2010: A$1,259.2 million of current and A$121.9 million of non current amounts) as they do not meet the definition of a financial liability under the Australian Accounting Standards.

2 The repayment of these amounts will be funded through collection of outstanding loans and receivables: June 2011: A$2,054.3 million (June 2010: A$2,134.9 million).

3 Resident and accommodation bond liabilities are required to be classified as less than one year as any resident may depart at any time. The balance includes retirement village total resident liabilities of A$2,077.7 million (June 2010: A$1,856.7 million), which is net of deferred management fees receivable, and is repayable out of the amounts paid to the Group by incoming retirement village residents for the right to occupy retirement living and aged care properties. (Refer Note 13 ‘Investment Properties’ and Note 20 ‘Resident and Accommodation Bond Liabilities’).

Other contractually committed cash flows the Group is exposed to are detailed in Note 32 ‘Commitments’.

annual report 2011 Lend Lease Group 107

e. Fair Values of Financial Assets and Liabilities

Financial Instruments

All financial instruments recognised on the balance sheet, 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 non current borrowings.

Note	june 2011	june 2010
	Carrying Amount A$m Fair Value A$m	Carrying Amount A$m Fair Value A$m
Liabilities Non Current

Commercial notes 21	735.0 750.1	879.9 904.6

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.

Basis of Determining Fair Value

The determination of fair values of financial instruments that are not measured at cost or amortised cost in the financial report are summarised as follows:

n The fair value of unlisted equity investments is determined based on an assessment of the underlying net assets, future maintainable earnings and any special circumstances pertaining to the particular investment;
n The fair value of unlisted investments in property funds has been determined by reference to the fair value of the underlying properties which are valued by independent appraisers;
n 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
n 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.

Fair Value Measurements

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

n Level 1: The fair value is determined using the unadjusted quoted price for an identical instrument in an active market for identical assets or liabilities;
n Level 2: The fair value is calculated using predominantly observable market data other than unadjusted quoted prices for an identical instrument; and
n Level 3: The fair value is calculated using inputs that are not based on observable market data.

n Level 3: The fair value is calculated using inputs that are not based on observ	able market data.
Note	ConsoLiDAteD CArryinG AMount
	Level 1 A$m Level 2 A$m Level 3 A$m Total A$m
June 2011 Financial Assets

Available for sale	11.7 0.4 228.4 240.5
Fair value through proft and loss – negotiable instruments	69.6 69.6
Fair value through proft and loss – unlisted equity investments	36.9 36.9
Held to maturity non current receivable	6.7 6.7
Derivatives	12.5 12.5
14	81.3 12.9 272.0 366.2
Financial Liabilities
Derivatives 23	10.8 10.8

During the year there were no transfers between Level 1, Level 2 and Level 3 fair value hierarchies.

108 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

31. international Currency Management and financial instruments continued

e. Fair Values of Financial Assets and Liabilities continued

Fair Value Measurements continued

e. Fair Values of Financial Assets and Liabilities continued Fair Value Measurements continued
Note	ConsoLiDAteD CArryinG AMount
	Level 1 A$m Level 2 A$m Level 3 A$m Total A$m
June 2010 Financial Assets
Available for sale	9.8 1.9 240.0 251.7
Fair value through proft and loss – negotiable instruments	75.8 75.8
Fair value through proft and loss – unlisted equity investments	33.7 33.7
Derivatives	3.9 3.9
14	85.6 5.8 273.7 365.1
Financial Liabilities
Derivatives 23	28.0 28.0

Reconciliation

Reconciliation of the carrying amount for Level 3 financial instruments is set out as follows:

		Unlisted			Unlisted
	Available	Equity	Held to	Available	Equity	Held to
	for Sale	Investments	Maturity	for Sale	Investments	Maturity
	June 2011	June 2011	June 2011	June 2010	June 2010	June 2010
	A$m	A$m	A$m	A$m	A$m	A$m
Carrying amount at beginning of fnancial year	240.0	33.7		372.0	12.4
Additions	24.6	3.2	6.7	20.9	27.7
Disposals				(153.1)
Revaluation gain recognised in other comprehensive income	3.1			9.2
Effect of foreign exchange rate/other movements	(39.3)			(9.0)	(6.4)
Carrying amount at end of fnancial year	228.4	36.9	6.7	240.0	33.7	–

f. Equity Price Risk

Equity price risk is the risk that the fair value of either a traded or non traded equity investment, derivative equity instrument, or a portfolio of such financial instruments, increases or decreases in the future. The Group is exposed to equity price risk on all traded and or non traded financial instruments measured at fair value.

annual report 2011 Lend Lease Group 109

	June 2011	June 2010
	A$m	A$m
32. Commitments1
The Group leases various land and buildings, and plant and equipment under non cancellable operating leases.
The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases
are renegotiated.
a. Operating Lease Commitments
The estimated aggregate amount of non cancellable operating lease expenditure agreed or contracted but not provided for in the fnancial statements is as follows:
Land and buildings – self occupied	259.2	187.4
Plant and equipment	25.8	11.4
	285.0	198.8
At balance date, commitments in relation to non cancellable operating leases are payable as follows:
Due within one year	60.6	47.6
Due between one and fve years	169.4	114.7
Due later than fve years	55.0	36.5
	285.0	198.8
b. Finance Lease Commitments
At balance date, commitments in relation to the fnance leases are payable as follows:
Due within one year	26.3	0.2
Due between one and fve years	199.8	146.8
Due later than fve years	1.6	0.1
recognised as a liability	227.7	147.1
Lease liabilities provided for in the fnancial statements are as follows:
Current	26.3	0.2
Non current	201.4	146.9
	227.7	147.1
c. Investments
At balance date capital commitments existing in respect of interests in equity accounted investments and other investments contracted but not provided for in the fnancial statements are as follows:
Due within one year	52.5	111.1
Due between one and fve years	88.1	117.8
Due later than fve years	1.9	4.3
	142.5	233.2

1 The commitments outlined in this note do not include the commitments of the entities accounted for using the equity method (refer to Note 12 ‘Equity Accounted Investments’).

110 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

	June 2011	June 2010
	A$m	A$m
33. notes to the statement of Cash flows
Reconciliation of Proft After Tax to Net Cash Provided by Operating Activities
Proft After Tax (Including Non Controlling Interest)	493.2	348.2
Amortisation and depreciation	52.1	39.8
Net gain on sale of fnancial assets	(0.2)	(24.0)
Net gain on sale of other assets	(127.3)	(53.2)
Net gain on sale of controlled entities	(4.7)
(Write back) of investments accounted for using the equity method	(1.7)	(12.6)
Impairment of other fnancial assets	1.2	12.1
Net unrealised foreign exchange (gain)/loss and currency hedging costs	(38.0)	18.3
Net fair value gain on fair value through proft and loss asset/liabilities	(12.2)	(8.7)
Proft of equity accounted investments	(310.0)	(169.4)
Discount on acquisition of controlled entity		(48.3)
Dividends/distributions from equity accounted investments	121.9	99.2
Impairment of goodwill and intangibles		0.5
Fair value (gain)/loss on investment properties	(22.3)	31.8
Other	(9.5)	2.3
net cash provided by operating activities before changes in assets and liabilities	142.5	236.0
Changes in Assets and Liabilities Adjusted for Effects of Purchase and Disposal of Subsidiaries
and Operations During the Financial Year
Decrease in receivables	500.9	622.4
Increase in inventories	(87.0)	(366.0)
Increase in other assets	(27.8)	(52.5)
Increase in net defned beneft plan assets/liabilities	(20.8)	(25.0)
Decrease in payables	(670.7)	(180.4)
Decrease in other liabilities	(14.2)	(48.4)
Decrease in deferred tax items	109.3	46.1
Decrease/(increase) in current tax asset/liability	13.5	(37.5)
Decrease in other provisions	(12.2)	(28.7)
Decrease in other intangibles	24.3	1.7
net cash (used in)/provided by operating activities	(42.2)	167.7

annual report 2011 Lend Lease Group 111

34. employee Benefits

a. Lend Lease Employee Security Plans

Currently employees own approximately 6.39% of the issued capital of the Group through various Lend Lease employee security plans, details of which are outlined below.

n Australia: Employee Share Acquisition Plan (‘ESAP’): ESAP was established in December 1988 for the purpose of employees acquiring securities in the Group and is funded by Lend Lease subscriptions. Those subscriptions have been used to acquire securities in the Group at market value on behalf of employees, who may be nominated as members of ESAP. Employees may also be allocated securities by way of bonus arrangements on the basis of individual, corporate and business unit performance.
n UK/Europe/Asia: Employee Share Plan: The European (Guernsey based) Restricted Share Plan (‘the Restricted Share Plan’) was established in 1998. The Plan is similar in operation to the Australiabased ESAP. Securities in the Restricted Share Plan may be allocated to employees in the UK, Europe and Singapore based on individual and business unit performance. The Restricted Share Plan can acquire the Group securities at market value on behalf of employees. The value of allocations to employees is ultimately based on a combination of the Group security price and the respective currencies and Australian dollar exchange rates.
n In 2002, two UK-based Inland Revenue approved Share Incentive Plans (‘SIP’) were established for the acceptance of employee profit share contributions used to acquire the Group securities for UKbased Group employees. These plans are currently not accepting new contributions whilst Lend Lease makes all profit share payments to employees in cash.

Eligibility

The rules for eligibility for particular plans are determined by reference to the regulatory, legal and tax rules of each country in which the Group operates.

Dividends/Distributions and/or Voting Rights

Generally, employees in the various operating security plans are entitled to dividends/distributions and voting rights for allocated securities. The plans reflect this intention subject to regulatory, legal and tax constraints. Voting and dividend/distribution rights on any unallocated securities reside with the trustees of the relevant security plan trusts. The trustee may exercise these rights in accordance with any fiduciary or governance rules pertaining to the deed or trust laws in the legal and tax jurisdiction within which the trust operates.

b. Lend Lease Employee Benefit Vehicles

In addition to the plans discussed above, Lend Lease has established a range of employee share ownership vehicles, including Lend Lease Retirement Benefit Fund (‘RBF’) and Lend Lease Employee Investment Trust (‘EIT’).

RBF was established in 1984 with shareholder approval for the benefit of employees. The balance of the assets of RBF at 30 June 2011 was 14.9 million (June 2010: 14.9 million) Group stapled securities. The Lend Lease securities in RBF are not available for allocation to employees other than in the event of a change of control of the Group and, in accordance with RBF’s trust deed, the capital of the trust is not available to the Group.

The RBF trustee is independent of the Group. In the event of a change of control, the RBF Trustee may distribute RBF funds to employees who cease to be employees during the 12 months after a change of control. The RBF trustee has discretion as to how RBF funds are distributed following a change of control. Under Australian Accounting Standards, RBF, while not legally controlled, is required to be consolidated for accounting purposes and payments from it on a change of control will impact the Group’s financial statements. Any payments that the RBF

trustee may make as a result of a change of control of the Group are an obligation of RBF and not the Group. Any payments made will need to be funded by RBF and therefore cannot exceed the value of the assets of RBF, which was A$141.8 million at 30 June 2011 (June 2010: A$117.5 million). However, as RBF is consolidated by the Group, this potential obligation is disclosed as a contingent liability.

EIT was established in 1985 to enable employees to invest in the Group. At 30 June 2011, 10.9 million (June 2010: 11.6 million) Group securities were held by EIT, of which 10.6 million securities were available for allocation to employees. In accordance with EIT’s trust deed, the capital of the EIT is not available to the Group.

As with RBF, Australian Accounting Standards require consolidation of EIT for accounting purposes, regardless of the control of EIT by an independent trustee. Therefore payments from EIT impact the Group’s financial statements. On a change of control, the EIT trustee may (but is not required to) terminate the trust and distribute allocated proceeds to employees and unallocated proceeds to the Lend Lease Superannuation Fund or to RBF. Any payments are an obligation of EIT and not the Group, and cannot exceed the assets of the EIT of A$101.8 million as at 30 June 2011 (June 2010: A$92.1 million). No contingency is recorded in these financial statements as the potential for such payments is remote, with any termination of EIT in such circumstances, and any subsequent distribution to other funds, entirely at the discretion of the EIT trustee.

It should be noted that given the timing and basis on which these vehicles purchased their Group securities, any capital gains tax payable on the Lend Lease securities sold by these vehicles as a result of a change of control (or otherwise) may be recognised from an accounting viewpoint as a tax expense of the consolidated entity.

c. Share Based Payments

Short Term Incentives (STI)

The STI plan is an annual incentive plan whereby a number of employees receive benefits which are dependent upon the achievement of both Lend Lease financial targets and also individual goals. The total value of the potential benefit varies by executive and is tested against relevant market levels for each role.

The STI plan comprises a cash element which is paid in September following year end. For more senior employees where potential benefit is typically higher the plan also includes a deferred element. Deferral periods are for one or two years. The deferred element is normally awarded as Lend Lease securities and in some instances as cash. Securities are held in trust on behalf of the employee for the deferral period. For employees to receive the full deferral they must be employed by the Group at the date of vesting.

Long Term Incentives (LTI)

The LTI plan is designed to:

n Align executives with the long term interests of Lend Lease securityholders; and
n Retain high calibre executives by providing competitive rewards that relate to the performance of the Group, the individual executive and the Group security price.

An annual grant of ‘performance securities’ is made to a limited number of executives in September each year. The Personnel & Organisation Committee intends that performance securities can be converted to Lend Lease securities if the performance hurdle is achieved over a three-year and four-year period.

In the event of a change in control of the Group, awards will vest upon change in control, to the extent that performance conditions have been met. Participants would then be entitled to a pro-rata settlement.

112 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

34. employee Benefits continued

c. Share Based Payments continued

Arrangements for LTI Awards Granted in the June 2009 Financial Year

For awards granted 1 September 2008 the performance hurdle is based on three equal measures: long term profitability as measured by EPS; TSR compared to the TSR of the individual ASX 100 listed companies as at the commencement of the performance period; and a retention component. The performance measures are:

n TSR measured against the ASX 100 companies (with 50% vesting at median performance, rising proportionately to 100% on reaching top quartile performance);
n EPS on the basis of EPS reported in the Group’s financial statements adjusted for exclusion of treasury shares, and exclusion of unrealised carrying value adjustments, write-off of goodwill, movements in the value of investment properties, savings implementation costs and one-off benefits from the UK Pension Plan; and
n Retention component which will vest if the executive remains in employment with Lend Lease for three years from the grant date.

Each of the three components is measured and can vest independently. The executive must remain with the Group until vesting date for the award to vest. The period may be shortened if an executive is a ‘good leaver’.

Arrangements for LTI Awards Granted in the June 2010 Financial Year

For awards granted 1 September 2009 the performance hurdle is based on two equal measures: long term profitability as measured by EPS and TSR compared with the TSR of the individual ASX 100 listed companies as at the commencement of the performance period. The performance measures are:

n TSR measured against the ASX 100 companies (with 50% vesting at median performance, rising proportionately to 100% on reaching top quartile performance); and
n EPS on the basis of EPS reported in the Group’s financial statements adjusted for exclusion of treasury shares.

Each of the two performance hurdles is measured and can vest independently. 50% of the award is measured after three years, the remaining 50% of the award is measured after four years. The executive must remain with the Group until vesting date for the award to vest. The period may be shortened if an executive leaves employment by reason of death or total and permanent disability. Where employment ceases for redundancy or other circumstances as determined by the Personnel & Organisation Committee a pro-rata award may be retained subject to the original vesting date and performance conditions.

50% of the award is measured after three years, the remaining 50% of the award is measured after four years. The executive must remain with the Group until vesting date for the award to vest. The period may be shortened if an executive leaves employment by reason of death or total and permanent disability. Where employment ceases for redundancy or other circumstances as determined by the Personnel & Organisation Committee a pro-rata award may be retained subject to the original vesting date and performance conditions.

Other LTI Awards

A limited number of other LTI awards have been granted to executives by the Personnel & Organisation Committee. These awards tend to have performance hurdles based on internal business unit performance targets, such as earnings before tax, operating margin and funds under management. The relevant performance hurdles must be satisfied in order for awards to vest, but the hurdles can vest independently. The executive must remain with the Group until vesting date for the award to vest.

The Board has approved a profit share plan for 55 senior infrastructure business employees. Payments under the plan are subject to earnings before tax targets and continuing employment. Payments to individual employees will be made over periods ranging from 18 months to four and a half years depending on the employee’s role and level in the Group. If all targets are met, the total value paid to all participants will be approximately A$12.0 million. In addition, the Board has approved retention payments totalling less than A$1.0 million spread over three years to offset agreed reductions in fixed remuneration at acquisition.

Retention Awards

When the Board believes an employee is an outstanding performer and Lend Lease and its security holders will gain from incentivising him or her to remain with Lend Lease, a retention award may be made. As an incentive to remain with the Group requires a degree of certainty of value delivered to the individual at the end of the retention period, performance conditions are not generally applied to the ultimate payment of such an award.

Amounts Recognised in the Financial Statements

LTI awards are valued using a Monte-Carlo simulation methodology where the security price can be projected based on the assumptions underlying the Black-Scholes formula. Retention awards are valued by discounting the security price by the expected dividends assumed to be paid from the valuation date until the vesting date (if applicable). The model inputs include the Lend Lease Group security price, a risk free interest rate, expected volatility and dividend yield.

During the financial year ended 30 June 2011, an A$18.3 million expense was recognised in the income statement in relation to equity settled security based payment awards (June 2010: A$17.5 million).

Arrangements for LTI awards in the June 2011 Financial Year

For awards granted 1 September 2010 the performance hurdle is based on TSR compared with the TSR of the individual ASX 100 listed companies at the commencement of the performance period. TSR is measured against ASX 100 companies (with 50% vesting at median performance, rising proportionately to 100% on reaching top quartile performance).

annual report 2011 Lend Lease Group 113

35. Key Management personnel Disclosures

Key management personnel compensation details are set out in Section 3 of the Directors’ Report.

Equity Holdings and Transactions

Security Holdings Financial Year Ended 30 June 2011

Equity Holdings and Transactions Security Holdings Financial Year Ended 30 June 2011
		Securities	Securities
		Held at	Received	Other	Securities
		Beginning of	During	Net Change	Held at End of
	Year	Financial Year	the Year1,2	to Securities	Financial Year
Non Executive Directors
D Crawford	2011	73,593		130	73,723
	2010	48,128	25,465		73,593
P Colebatch	2011	18,323			18,323
	2010	10,891	7,432		18,323
G Edington	2011	40,068			40,068
	2010	31,323	8,745		40,068
P Goldmark	2011	24,794			24,794
	2010	20,703	4,091		24,794
J Hill	2011	14,324			14,324
	2010	10,233	4,091		14,324
D Ryan	2011	31,273			31,273
	2010	21,242	10,031		31,273
Former
M Selway3	2010	6,488	4,089	(10,577)
Executive Director
S McCann	2011	185,809	58,827	(100,000)	144,636
	2010	73,301	112,508		185,809
Executives
S Charlton	2011	5,000			5,000
	2010		5,000		5,000
B Soller	2011	37,824	13,826		51,650
	2010	12,407	25,417		37,824
D Labbad	2011	431	11,667		12,098
R Leaver	2011	25,875	19,991	(25,165)	20,701
M Menhinnitt	2011	107,846	14,399		122,245
R McNamara	2011		4,706		4,706
E Ooi4	2011	160,787	33,485	(6,042)	188,230
total	2011	725,947	156,901	(131,077)	751,771
total	2010	234,716	206,869	(10,577)	431,008

1 Non Executive Directors’ security allocations relating to retirement benefits were made in arrears on 1 January each year. This plan was discontinued from 1 January 2010. Refer to Section 3i. of the Directors’ Report for further details.
2 For the Executive Director and executives, relates to security entitlements under employee benefit vehicles.
3 M Selway retired effective 10 February 2010.
4 E Ooi ceased to be key management personnel effective 1 April 2011.

114 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

35. Key Management personnel Disclosures continued

Key Management Personnel Compensation

The key management personnel compensation included in ‘Employee Benefit Expenses’ (refer to Note 4 ‘Operating Expenses’) is as follows:

	June 2011	June 2010
	A$000s	A$000s
Short term employee benefts	15,817	6,971
Post employment benefts	377	148
Share based payments	4,466	2,917
Other long term benefts	70	37
	20,730	10,073

Loans to Key Management Personnel

No loans were made to key management personnel or their related parties during the current year or prior year.

Other Transactions with Key Management Personnel

From time to time Directors and executives of the Company or its consolidated entities, or parties related to them, may purchase goods from the consolidated entity. These purchases are on terms and conditions no more favourable than those entered into by unrelated customers.

36. non Key Management personnel related party information

Consolidated Entities

Lend Lease Corporation Limited

Lend Lease Corporation Limited provides a wide range of corporate services to its consolidated entities. Corporate management fees are charged to these entities for these services. These services principally relate to:

n Administration, company secretarial, accounting, legal, tax, insurance, information technology and public relations;
n Human resources and employee services including the administration of salaries and superannuation, the provision of a defined benefit plan for a number of Australian employees (refer to Note 17 ‘Defined Benefit Plan Asset’) and security based payment plans (refer to Note 26 ‘Reserves’ and Note 34 ‘Employee Benefits’); and
n Finance and treasury services, which includes working capital facilities and long term financing. Interest is earned or incurred only on long term loans provided to or drawn with subsidiaries based on project specific risks and returns. Outstanding balances arising from working capital facilities and long term financing are typically repayable on demand. In addition, financial guarantees are provided on the borrowings of subsidiaries for which guarantee fees are charged under normal terms and conditions.

The following represents the transactions that occurred during the financial year and the balances outstanding at the year end between Lend Lease Corporation Limited and its consolidated entities.

Corporation Limited and its consolidated entities.
	CoMpAny
	June 2011 A$m June 2010 A$m
Transactions
Corporate management fees	36.8 34.0
Guarantee fees	11.2 12.1
Dividend income	12.7 73.1
Interest income	3.5
Interest expense	4.0
Outstanding balances (net of provisions raised)
Receivables	4,876.9 4,084.6
Payables	2,113.6 1,353.3

annual report 2011 Lend Lease Group 115

Consolidated Entities

Transactions that occurred during the financial year between entities in the Lend Lease Group included:

n Provision of project management, design services, construction management and engineering services to development projects;
n Provision of payroll, transaction and management services;
n Provision of investment management services;
n Receipt and payment of superannuation contributions;
n Reimbursements of expenses made on behalf of subsidiaries;
n Loan advances and repayments between subsidiaries;
n Premium payments and receipts for the Group’s insurance policies; and
n Dividends received or due and receivable from subsidiaries.

Associates and Joint Venture Entities

Interests held in associates and joint venture entities by Lend Lease are set out in Note 12 ‘Equity Accounted Investments’ to the financial statements.

Transactions between the Lend Lease Group and its associates and joint venture entities principally relate to:

n Development business: development management services and the sale and purchase of development properties with Lend Lease managed funds;
n Investment Management: provision of strategic investment advice, asset management, retail property management and investment portfolio management services;
n Construction: provision of construction, project management and design services; and
n Infrastructure Development business: provision of construction, project management and design services, asset and facilities management services. Loan stock is also provided to projects on which interest is earned based upon project specific risks and returns.

A subordinated non interest bearing loan has been provided to a joint venture and at 30 June 2011 the loan balance was A$25.4 million (June 2010: A$31.3 million). A non interest bearing loan has also been provided to a joint venture and at 30 June 2011 the loan balance was A$30.3 million (June 2010: A$26.4 million).

Except as noted above, transactions and outstanding balances are typically on normal terms and conditions.

Revenue earned by Lend Lease during the year as a result of transactions with its associates and joint venture entities is as follows:

	June 2011	June 2010
	A$m	A$m
Revenue
Provision of services
Associates	15.5	141.4
Joint venture entities	322.3	550.0

Other transactions and outstanding balances with associates and joint venture entities have been disclosed in Note 2 ‘Revenue’, Note 3 ‘Other Income’, Note 4 ‘Operating Expenses’, Note 5 ‘Finance Revenue and Finance Costs’, Note 10 ‘Loans and Receivables’ and Note 19 ‘Trade and Other Payables’.

Managed Funds

Lend Lease holds investments in a number of property funds for which it is also the fund manager. In addition to those property funds classified as associates and joint venture entities (refer to above and Note 12 ‘Equity Accounted Investments’), Lend Lease holds interests in property funds which are classified as available for sale financial assets (refer to Note 14 ‘Other Financial Assets’).

Transactions between the Lend Lease Group and such property funds classified as available for sale are priced on a commercial basis. These transactions relate principally to:

n Investment management: provision of strategic investment advice, asset management and investment portfolio management services;
n Asset management: provision of property management services, property portfolio advisory services, maintenance and insurances, strategic advice and management supervision services, administration, marketing and risk management services; and
n Development businesses: provision of property capital works, design and construction services, development and refurbishment, and the sale of development properties.

During the year the following transactions occurred.

During the year the following transactions occurred.
	June	2011	June	2010
		A$m		A$m
Revenue
Provision of services		65.4		51.2

116 Lend Lease Group annual report 2011

notes to the ConsoLiDAteD finAnCiAL stAteMents CONTINUED

37. parent entity Disclosures

The following summarises the financial information of the Group’s parent entity, Lend Lease Corporation Limited (‘the Company’), as at and for the year ended 30 June 2011.

year ended 30 June 2011.
	CoMpAny
	June 2011 A$m June 2010 A$m
Results
Loss after tax	(55.7) (49.6)
Other comprehensive expense after tax	(0.2)
total comprehensive expense after tax	(55.7) (49.8)
Financial Position Assets/Liabilities
Current assets	4,861.8 4,269.3
Non current assets	840.9 836.3
total assets	5,702.7 5,105.6
Current liabilities	2,186.5 1,419.5
Non current liabilities	53.0 30.4
total liabilities	2,239.5 1,449.9
net assets	3,463.2 3,655.7
Issued capital	2,063.7 2,019.2
Treasury securities	(90.5) (79.9)
Reserves	213.5 203.3
Retained earnings	1,276.5 1,513.1
total equity	3,463.2 3,655.7

Parent Entity Contingencies

In respect of the contingent liabilities of the Group disclosed in Note 27 ‘Contingent Liabilities’, the Company participates in the provision of guarantees of Group entities and manages the legal action in relation to the World Trade Center.

38. events subsequent to Balance Date

There were no material events subsequent to the end of the financial year.

annual report 2011 Lend Lease Group 117

DireCtors’ DeCLArAtion

In the opinion of the Directors of Lend Lease Corporation Limited (‘the Company’):

The financial statements and notes and the remuneration disclosures contained in the Remuneration Report in the Directors’ Report are in accordance with the Corporations Act 2001 , including:
a. Giving a true and fair view of the financial position of the Company and consolidated entity as at 30 June 2011 and of their performance for the financial year ended on that date; and
b. Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001 .
The financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1.1.
There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Group Chief Executive Officer and Group Chief Financial Officer for the financial year ended 30 June 2011.

Signed in accordance with a resolution of the Directors:

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D A Crawford, Ao Chairman

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s B McCann Managing Director

Sydney, 26 August 2011

118 Lend Lease Group annual report 2011

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Lend Lease Group annual report 2011

119

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120 Lend Lease Group annual report 2011

seCurityhoLDer inforMAtion

securities exchange Listings and Code

Lend Lease Group is listed on the Australian Securities Exchange and trades under the code LLC.

In the US, Lend Lease securities are traded on the over-the-counter market in the form of sponsored American Depositary Receipts (ADRs) under the symbol LLESY. Each ADR represents one ordinary security. Information about ADRs is available from the depositary, The Bank of New York Mellon (www.adrbny.com).

Lend Lease requested to be de-listed from the New Zealand Securities Exchange during the year, effective 29 April 2011.

share Accumulation plan

The Share Accumulation Plan is designed to be a convenient way for securityholders with a registered address in Australia or New Zealand to build their securityholdings without incurring transaction costs. The laws of other countries make it difficult for us to offer securities in this way. Lend Lease securityholders are able to reinvest their distributions to acquire more Lend Lease securities through the Distribution Reinvestment Plan (DRP) or the Share Election Plan (SEP). Securityholders may also make contributions of between A$500 and A$2,500 to acquire new Lend Lease securities under the Share Purchase Plan (SPP). Together the DRP, SEP and SPP constitute the Share Accumulation Plan.

The rules of each of these plans are set out in the Share Accumulation Plan Information Sheet. Copies are available on the Lend Lease website. Please note that the Share Election Plan and the Share Purchase Plan are currently suspended.

Key sources of information for securityholders

We report the following to securityholders each year:

n Securityholder Review
n Annual Report
n Sustainability Report (online only)

We report each March and September to securityholders with the distribution statements.

electronic communications

Securityholders have the option of receiving the following communications and all other company-related information electronically:

n Securityholder Review;
n Annual Report and Securityholder Review;
n Distribution statements; and
n Notice of Annual General Meetings.

notice of Annual General Meetings

Lend Lease makes both the Annual Report and the Securityholder Review available in an interactive version online. A hard copy of the Annual Report and/or the Securityholder Review will only be sent to those securityholders who elect to receive them in that form. In addition, you may elect to receive notification that the Annual Report and the Securityholder Review are available online.

Securityholders who wish to register their email address should go to the website of the Lend Lease share registry www.investorcentre.com/ecomms.

For registry contact details see page 124.

privacy Legislation

Under Chapter 2C of the Corporations Act 2001 , a securityholder’s information (including the name, address and details of securities held) is required to be included in Lend Lease’s public register. This information must continue to be included in Lend Lease’s public register for seven years after a person ceases to be a securityholder. These statutory obligations are not altered by the Privacy Amendment (Private Sector) Act 2000. Information is collected to administer the securityholder’s holding and if some or all of the information is not collected, then it might not be possible to administer the holding. Lend Lease’s privacy policy is available on its website.

annual report 2011 Lend Lease Group 121

Distribution and share Accumulation plan issue price history

		Distribution		Company
Payment Date	Distribution	Per Security	Franking Rate	Tax Rate	DRP Price A$	SEP Price A$	SPP Price A$
30 Sept 2011	Final	15 cents	0%	30%	1	suspended	suspended
30 Mar 2011	Interim	20 cents	50%	30%	$8.4298	suspended	suspended
24 Sep 2010	Final	12 cents	100%	30%	suspended	suspended	suspended
31 Mar 2010	Interim	20 cents	100%	30%	suspended	suspended	suspended
20 Nov 2009	In specie	0.1 cents	100%	30%	N/A	N/A	N/A
25 Sept 2009	Final	16 cents	100%	30%	$9.4997	suspended	suspended
01 Apr 2009	Interim	25 cents	60%	30%	$5.292	suspended	suspended
26 Sept 2008	Final	34 cents	45%	30%	$9.357	suspended	suspended
26 Mar 2008	Interim	43 cents	40%	30%	suspended	suspended	suspended
12 Sept 2007	Final	42 cents	50%	30%	suspended	suspended	suspended
27 Mar 2007	Interim	35 cents	50%	30%	suspended	suspended	suspended
13 Sept 2006	Final	31 cents	100%	30%	suspended	$15.50	suspended
14 Mar 2006	Interim	30 cents	100%	30%	suspended	$13.32	suspended
14 Sep 2005	Final	29 cents	100%	30%	suspended	$13.14	suspended
08 Mar 2005	Interim	28 cents	Nil	N/A	suspended	suspended	suspended
15 Sep 2004	Final	26 cents	Nil	N/A	suspended	suspended	suspended
17 Mar 2004	Interim	18 cents	Nil	N/A	suspended	suspended	suspended
18 Sep 2003	Final	20 cents	Nil	N/A	$10.64	suspended	suspended
19 Mar 2003	Interim	10 cents	100%	30%	$8.71	$8.71	$8.71
19 Sep 2002	Final	9 cents	100%	30%	$11.02	$11.02	$11.02
20 Mar 2002	Interim	9 cents	100%	30%	$11.79	$11.79	$11.79
13 Sep 2001	Final	8 cents	100%	30%	$10.97	suspended	$10.97
14 Mar 2001	Interim	13 cents	Nil	N/A	$14.85	suspended	$14.85
14 Sep 2000	Final	32 cents	100%	34% Class C	$19.82	$19.82	suspended
15 Mar 2000	Interim	32 cents	100%	36% Class C	$20.34	$20.34	$20.34
16 Sep 1999	Final	31 cents	100%	36% Class C	$19.66	$19.66	$19.66
17 Mar 19992	Interim	29 cents	100%	36% Class C	$21.46	$21.46	$21.46
17 Sep 1998	Final	54 cents	100%	36% Class C	$34.12	$34.12	$34.12
18 Mar 1998	Interim	53 cents	100%	36% Class C	$35.06	$35.06	$35.06
18 Sep 1997	Final	50 cents	100%	36% Class C	$30.48	$30.48	$30.48
19 Mar 1997	Interim	48 cents	100%	36% Class C	$23.41	$23.41	$23.41
01 Nov 1996	Final	47 cents	100%	36% Class C	$20.71	$20.71	$20.71
29 Mar 1996	Interim	43 cents	100%	36% Class C	$17.47	$17.47	N/A
03 Nov 1995	Final	38 cents	100%	39% Class A	$16.89	$16.89	N/A
28 Jun 1995	2nd Interim	11 cents	100%	39% Class A	$16.84	$16.84	N/A
31 Mar 1995	Interim	36 cents	100%	39% Class A	$15.08	$15.08	N/A
28 Oct 1994	Final	36 cents	100%	39%	$15.18	$15.18	N/A
27 Jun 1994	2nd Interim	10 cents	100%	39%	$15.10	$15.10	N/A
13 Apr 1994	Interim	34 cents	100%	39%	$16.10	$16.10	N/A
22 Oct 1993	Final	33 cents	100%	39%	Suspended	Suspended	N/A
15 Jul 1993	Special	10 cents	Nil	N/A	$12.79	$12.79	N/A
29 Mar 1993	Interim	33 cents	100%	39%	Suspended	Suspended	N/A

1 The DRP Price for 30 September 2011 was not available at the time of printing.

2 1:1 bonus issue was implemented in December 1998.

122 Lend Lease Group annual report 2011

seCurityhoLDer inforMAtion CONTINUED

security information at a Glance at 31 August 2011 (31 August 2010)

	2011	2010
Number of securityholders	53,819	55,619
Units issued	571 million	566 million
Percentage owned by 20 largest securityholders	76.45%	75.47%
Interim distribution	20 cents per security	20 cents per security
	(50% franked)	(100% franked)
Final distribution	15 cents per security	12 cents per security
	(0% franked)	(100% franked)
Total distribution	35.0 cents per security	32.1 cents per security1
Distribution payout ratio2	41%	50%1

1 Total dividend includes ‘ in specie’ dividend of Lend Lease Trust (LLT) units of 0.1 cents per security.

2 Distribution payout ratio is based on Operating Profit after Tax which excludes unrealised property investment revaluations.

spread of securityholdings

Details of the spread of securityholdings at 31 August 2011 (31 August 2010) are as follows:

	2011	2010
1 – 1,000 securities	27,378	28,765
1,001 to 5,000	21,788	22,059
5,001 to 10,000	3,031	3,089
10,001 to 100,000	1,533	1,606
100,001 and over	89	100
total number of securityholders	53,819	55,619
	3,079	3,491
	(representing	(representing
securityholders with less than a marketable parcel	65,478 securities)	99,002 securities)

annual report 2011 Lend Lease Group 123

twenty Largest securityholders at 31 August 2011

twenty Largest securityholders at 31 August 2011
		% of Issued
Name	No. of units	Capital
NATIONAL NOMINEES LIMITED	126,193,074	22.10
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED	102,680,491	17.99
J P MORGAN NOMINEES AUSTRALIA LIMITED	93,294,485	16.34
CITICORP NOMINEES PTY LIMITED	25,649,437	4.49
COGENT NOMINEES PTY LIMITED	16,498,537	2.89
LEND LEASE EMPLOYEE HOLDINGS CUSTODIAN PTY LIMITED	14,914,384	2.61
LEND LEASE EMPLOYEE HOLDINGS CUSTODIAN PTY LTD	10,944,343	1.92
LEND LEASE EMPLOYEE HOLDINGS CUSTODIAN PTY LIMITED	7,066,467	1.24
QUEENSLAND INVESTMENT CORPORATION	5,579,035	0.98
JP MORGAN NOMINEES AUSTRALIA LIMITED	5,113,564	0.90
AMP LIFE LIMITED	5,045,283	0.88
AUSTRALIAN REWARD INVESTMENT ALLIANCE	4,556,914	0.80
ARGO INVESTMENTS LIMITED	3,843,609	0.67
UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD	2,919,121	0.51
TASMAN ASSET MANAGEMENT LTD	2,706,353	0.47
CITICORP NOMINEES PTY LIMITED	2,553,651	0.45
UBS NOMINEES PTY LTD	2,058,016	0.36
CITICORP NOMINEES PTY LIMITED	1,941,244	0.34
RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED	1,451,516	0.25
QUESTOR FINANCIAL SERVICES LIMITED	1,441,801	0.25
		76.45

substantial securityholders in the Company’s register at 31 August 2011

			% of Issued
Name	Date of last notice received	No. of units	Capital
Franklin Resources Inc and its affliates1	6 July 2011	46,427,733	8.13%
National Australia Bank Limited	16 March 2011	43,224,472	7.64%
Lend Lease Employee Holdings Custodian Pty Limited2	15 March 2010	34,626,669	6.63%
Ausbil Dexia Limited	15 March 2010	27,495,153	5.27%

1 Franklin Resources Inc acquired Balanced Equity Management Pty Limited.

2 This is a Lend Lease employee benefit vehicle.

124 Lend Lease Group annual report 2011

CorporAte DireCtory

Annual General Meeting 2011

The 2011 General Meeting of Lend Lease Corporation Limited and Meeting of Securityholders of Lend Lease Trust will be held at 10am on Wednesday 9 November 2011 at the Palladium at Crown, Level 1, 8 Whiteman Street, Southbank, Victoria. Full details are contained in the Notice of Meetings sent with this Report.

Contact Details

Lend Lease Corporation Limited ABN 32 000 226 228 Incorporated in NSW Australia and Lend Lease Responsible Entity Limited ABN 72 122 883 185 AFS Licence 308983 as responsible entity for Lend Lease Trust ABN 39 944 184 773 ARSN 128 052 595

Registered Office

2012 Financial Calendar

february: Announcement of Half Year Results March: Interim distribution payable August: Announcement of Full Year Results september: Final distribution payable november: Annual General Meeting

Share Registry Information

Computershare investor services pty Limited

ABN 48 078 279 277 GPO Box 242, Melbourne, Victoria 3001 Australia

1300 850 505 (within Australia) +61 3 9415 4000 (outside Australia)

Level 4, 30 The Bond, 30 Hickson Road Millers Point NSW 2000 Australia

Contact

T: 61 (2) 9236 6111 F: 61 (2) 9252 2192 W: www.lendlease.com

By printing this document on ecoStar, the environmental impact was reduced by: 1,901.7 kg of landfill 360 kg of greenhouse gases 41,746 litres of water 3,856 kWh of energy 3,093 kg of wood

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This report was printed on ecoStar using vegetable based printing inks. ecoStar is manufactured from 100% post consumer recycled paper in a process chlorine free environment under the ISO 14001 environmental management system which guarantees continuous improvement. ecoStar is an environmentally responsible paper made carbon neutral (CN) and the fibre source has been independently certified by the Forest Stewardship Council (FSC).

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Lend Lease Group Level 4 30 The Bond 30 Hickson Road Millers Point NSW 2000 T +61 2 9236 6111 F +61 2 9252 2192 www.lendlease.com

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Lend Lease securityhoLder review 2011

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Quick facts & highLights

Lend Lease achieved earnings growth across all regions and continued to build a strong development pipeline

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n New infrastructure business in Australia following acquisition of Abigroup, Baulderstone and Conneq

n Over 17,000 employees, an increase of over 6,000 employees from the 2010 financial year

n Funds under management of $10.9 billion

n Credit rating (Standard & Poor’s/Moody’s) of BBB-/Baa3 (stable)

50% increase

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----- Start of picture text -----

operating
Profit after
tax ($ million)
$161.7m
485.3
445.9
435.9
323.6
291.7
07 08 09 10 11
----- End of picture text -----

operating Profit after tax ($ million) $161.7m

31% increase

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----- Start of picture text -----

earnings per
security (cents)
20.5c
111.4
108.7
85.6
67.4 65.1
07 08 09 10 11
----- End of picture text -----

9% increase

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----- Start of picture text -----

distribution per
security (cents)
2.9c
77.0 77.0
41.0
35.0
32.1
07 08 09 10 11
----- End of picture text -----

n Profit growth in all regions contributed to an increase in Operating Profit after Tax of 50 per cent.

n The Group achieved milestones on major projects and recycled assets.

n 41 per cent of Operating Profit after Tax was distributed to securityholders.
n For definitions of metrics refer to Glossary on page 28.

n Comparative information in respect of FY07, FY08 and FY09 reflect the results in Lend Lease Corporation Limited and its controlled entities prior to stapling of the Lend Lease Trust in November 2009.

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----- Start of picture text -----

Cover Image: Darling Quarter, Sydney, Australia
All financial amounts in this report are in Australian Dollars
unless otherwise specified
----- End of picture text -----

1 Strategic Direction
2 About Lend Lease
4 Chairman’s Report
5 Chief Executive Officer’s Report
6 Trends Underpinning Strategy
7 Progress on Strategy
8 Safety

10 Review of Operations

24 Sustainability

26 Directors’ Profiles

27 Remuneration Summary

28 Glossary

29 Corporate Directory

Securityholder review 2011 Lend Lease Group 1

strategic direction

Lend Lease is committed to becoming the leading international property and infrastructure group

We will only operate in sectors and locations where we have core capabilities that enable us to establish a competitive value proposition. This is how we are creating long term value for securityholders.

Leading

We aim to be one of the top three businesses in our chosen markets and sectors.

We will achieve industry leading positions through disciplined growth and diversification in selected markets.

international

Our operations are centred around four regions.

austraLia

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asia

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americas

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euroPe, the middLe east & africa (emea)

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see Pages

sectors

Our key sectors are property and infrastructure.

We operate and invest in sub-sectors that fit with our core capabilities.

ProPerty

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We operate in property sub-sectors that include:

n Commercial

n Residential

n Retail

n Retirement

n Industrial

infrastructure

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We operate in infrastructure sub-sectors that include:

n Social e.g. health
n Economic e.g. roads

capabilities

Lend Lease has core capabilities in the sectors we operate in.

n Development

n Investment management

n Construction

n Asset & property management The acquisition of Valemus Australia, comprising Abigroup, Baulderstone and Conneq, provides Lend Lease with new capabilities in the engineering and construction market in Australia.

Our strong skills and experience across these capabilities enable us to provide end-to-end solutions to our clients.

see next Page for more detaiL

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14-23

Lend Lease Group 2 Securityholder review 2011

about Lend Lease

Lend Lease is a leading, fully integrated international property and infrastructure group with operations in Australia, Asia, the Americas, Europe and the Middle East.

We work with clients and investors on everything from funding a project right through to developing and constructing state-of-the-art buildings and infrastructure, including hospitals, roads and rail. We also create vibrant residential communities, productive workplaces and attractive retail destinations.

We can do this because Lend Lease offers the complete range of services across the property and infrastructure spectrum including development; investment management; construction; and asset & property management.

Our projects span all key sectors from retail and commercial to residential and retirement. We’re also involved in partnerships with the public sector to deliver essential infrastructure such as hospitals and military communities through the Public Private Partnerships (PPP) procurement model.

Using a truly collaborative approach, we guide clients and investors beyond just maximising value to safe, innovative and sustainable solutions. We combine our global expertise with best practice project management and a strong understanding of local markets. We work in partnership with our clients, stakeholders and the wider community to deliver projects with the best possible outcomes for everyone.

Sustainability leadership

Sustainability has always defined the way we do business. We consider the environmental, social, ethical and financial impacts of every decision we make. We strive to do meaningful work that protects our natural environment, supports responsible economic growth and improves the quality of people’s lives.

Our values

Our values underpin the way we do business. They drive the way we engage with each other, our clients, partners and stakeholders.

n Respect
n Integrity
n Innovation
n Collaboration
n Excellence
n Trust

our vaLue chain

from the big Picture to the minute detaiL

we find Sourcing the best property opportunities

deveLoPment

we buy we fund we design Structuring the Providing the right Creating innovative right deal investment solutions and sustainable property solutions investment construction management

ProPerty

Lend Lease Group securityhoLder review 2011 3

Our aim is to be the leading international property and infrastructure group

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safety first

Lend Lease is committed to operating Incident & Injury Free wherever we have a presence. This is central to our business approach and it is embedded in all our decision-making.

To assist us in achieving our vision we have developed a set of operating disciplines and specific environmental, health and safety leadership behaviours, all of which are aimed at ensuring those who work with us and for us operate in a manner which ensures we never compromise on our vision.

This year we made significant progress in our efforts to further develop our people in the area of safety. Our Uncompromising Leadership program is aimed at providing our leaders with the necessary tools for them to do the right thing, all of the time, every time.

we buiLd we manage Project management, Continually building and engineering with our enhancing the value international construction reach of property over time

asset & ProPerty management

Over the past five years, we have achieved a material improvement in our incident frequency rates and have significantly reduced our fall of person incidents by 80 per cent. We deeply regret however that one person lost his life this year in the Australian infrastructure business. Our Asia, EMEA and Americas businesses reported no fatalities in the last financial year.

We believe that safety transcends individuals and companies. We will not compromise on safety because achieving our Incident & Injury Free vision is in everyone’s interest.

see Pages

8-9

infrastructure

Lend Lease Group Securityholder review 2011

chairman’s rePort

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Over the past year Lend Lease continued to execute our Restore-Build-Lead strategy. The Group delivered an Operating Profit after Tax of $485.3 million, a 50 per cent increase on the prior year. Earnings growth was achieved across all regions, despite challenging economic conditions in the UK, Europe and the Americas and the impact of the high Australian dollar.

Statutory Profit after Tax for the year was $492.8 million, including net property revaluation gains of $7.5 million. Securityholders will receive a final distribution of 15.0 cents per security, unfranked. This brings the full year distribution to 35.0 cents per security, which at 41 per cent is within the Group’s payout ratio of Operating Profit after Tax.

Financial strength

The Group retained its strong financial position with cash of over $1 billion as at 30 June 2011, gearing of 8.9 per cent and undrawn capacity of $815.7 million. Our financial strength and access to third party capital means we have the financial flexibility to fund our development pipeline and invest in new opportunities that are in line with our strategy.

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Group strategy

Outlook

The Group remains committed to becoming a leader in the markets and sectors that we operate in and has a clear strategy to realise the long term potential of our business. The most significant achievement in the period has been the acquisition of the Valemus businesses, Abigroup, Baulderstone and Conneq, that together form Lend Lease’s infrastructure business in Australia. This transaction is in line with our strategy to grow in the infrastructure sector and it has secured us an excellent platform in the engineering and construction market in Australia.

Having focused on building a solid platform over the past few years, Lend Lease is in a very good position. While uncertainty remains in global markets, particularly Europe, we have a prudent strategy for growth in all our regions. Our financial result this year clearly demonstrates that we are pursuing the right strategy.

Lend Lease delivered earnings growth in all regions despite economic uncertainly in global markets. The Group has established a strong platform from which to grow and create long term value for securityholders.

Commitment to safety, sustainability and people

Underpinning our strategy is a constant commitment to safety, sustainability and people. As always, safety remains our number one priority. We have made good progress as evidenced by a significant reduction in lost time injuries. Tragically one of our subcontractors had a fatality on one of our sites during the year, a stark reminder that we must always be vigilant and focused on our goal of being Incident & Injury Free.

I was also pleased to announce recently the appointment to the Board of Directors, Ms Jane Hemstritch as a Non-Executive Director.

My thanks to fellow Board members, the management team and our Lend Lease employees for their ongoing dedication and hard work in positioning Lend Lease for growth. I also thank investors for their continued support as we build Lend Lease to deliver long term securityholder returns.

Lend Lease continues to be recognised as a sustainability leader by developing and investing in sustainable solutions through clean technology and buildings, green utilities and creating vibrant places to enjoy. Focusing on legacies for future generations is a key driver for our employees and a drawcard in attracting new talent.

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To ensure we attract, retain and motivate people, Lend Lease has further enhanced our remuneration policy to measure and reward employee performance against clear objectives that are aligned with long term value creation for securityholders. We have always encouraged diversity at Lend Lease, and during the year the Board formalised this philosophy by approving a new Diversity Policy. We believe that a diverse workplace leads to greater creativity, stronger leadership and a positive impact on our bottom line. The proportion of women employed by the Group was 32 per cent at 30 June 2011, and during the past twelve months we increased the proportion of senior executive positions held by women from 17 per cent to 23 per cent.

David Crawford AO CHAIRMAN

Securityholder review 2011 Lend Lease Group 5

chief executive officer’s rePort

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Progress on strategy

People

We recognise that the talent and the ongoing commitment of our employees is critical to Lend Lease achieving a leadership position. We have implemented a goalfocused performance management system and invested in senior manager training as part of our program to develop a high performance culture across the Group. In addition, the combined knowledge and experience of the Group’s senior management team has been further enhanced with a number of strategic internal and external appointments which underpin the Group’s ability to deliver on its key priorities and projects over the short to medium term.

Infrastructure acquisition

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We have clear priorities to achieve our aim of becoming the leading international property and infrastructure group. Over the next two years you will see the Group focus on delivery and execution of our development pipeline, successful integration of the infrastructure business in Australia, active portfolio management and positioning our offshore businesses in preparation for a market recovery.

Building a platform for growth

In the Americas, we added to our pipeline in the US military housing privatisation and lodgings sectors, and we acquired DASCO, a developer of medical office buildings and outpatient care facilities with a strong development pipeline that will position Lend Lease in a rapidly growing sector. We also sold our 50 per cent interest in the King of Prussia retail centre as part of the Group’s focus on active portfolio management.

In Asia, we completed the purchase of the Jurong Gateway mixed-use site, renamed Jem[™] , in conjunction with the Lend Lease managed Asian Retail Investment Fund. In Europe, we launched the Lend Lease managed UK Infrastructure Fund raising £220 million of capital, and we continued to progress major projects, signing a conditional regeneration agreement with the London Borough of Southwark for the £1.5 billion regeneration of Elephant & Castle and meeting all conditions on the Framework Agreement for the £1.3 billion second stage of The International Quarter, Stratford City, London.

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Steve McCann GROUP CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR

Infrastructure 5

trends underPinning strategy

Lend Lease’s strategy is underpinned by five major trends.

Urban regeneration 1

n By 2030, more than 60 per cent of the world’s population will live in urban areas
n Increasing urban density is creating strong demand for urban regeneration

Lend Lease is delivering major urban regeneration projects in Australia, and the United Kingdom (see pages 14 – 23).

Ageing population

n Australian population aged 65+ is expected to grow by 69 per cent over the next 15 years
n Demand for retirement homes and associated services will increase rapidly

Lend Lease is the largest owner and operator of senior living communities in Australia.

Sustainability 3

n Governments are responding to climate change and providing more support for sustainability initiatives
n Energy costs are likely to increase, creating demand for alternative energy sources and energy efficient solutions

Lend Lease is a leader in sustainability, constantly researching new sustainable product solutions, technologies and materials to use on its developments and across its business operations.

Funds growth

n Capital from sovereign wealth funds is expected to increase with a portion being allocated to the property asset class
n Institutional capital will continue to increase, with the global ageing population driving growth in superannuation and pension assets
n Urbanisation and growth in the resources industry is creating pressure on governments to deliver extensive social and economic infrastructure

Lend Lease’s acquisition of Abigroup, Baulderstone and Conneq provides significant capability in the Australian engineering and construction market.

Lend Lease has one of the largest investment management businesses in Australia and has over $10.9 billion funds under management worldwide at 30 June 2011.

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Lend Lease Group securityhoLder review 2011 7

Progress on strategy

Lend Lease is well on the way to achieving its aim to be the leading international property and infrastructure group.

Lead

Outperformance

n World class property and infrastructure solutions company

build

n Strong, integrated offering

n Trusted investment manager

Disciplined expansion

restore

A focused core business

n Right Structure

Develop an organisational structure that mirrors strategy and creates a more integrated product and service offering

n Cost out Reduce overheads through the right structure and improvements in efficiencies

n Drive efficiency Upgrade systems and processes globally and align support functions to deliver efficient and cost effective outcomes

n Capital Management Create an efficient capital structure to fund development pipeline and improve portfolio management through focus on investment opportunities within core capabilities across our integrated business model

Achievements this year

n Progressed business transformation, including reengineering of our core business processes, organisation redesign of our corporate and regional businesses and enhancing our information and communication technology platform

n Reshape portfolio Align portfolio to strategy so we focus on core geographies and sectors where we can operate safely and profitably. This includes divestment of non-core assets
n Growth platform Capitalise on key growth trends identified on page six
n Operational excellence Best practice in policies, procedures and operating disciplines
n Invest in people Talent management to ensure we attract, retain and motivate talented people

Achievements this year

n Consolidated international footprint
n Acquired and commenced integration of Abigroup, Baulderstone and Conneq
n Launched UK Infrastructure Fund
n Agreed to sell interest in King of Prussia retail centre in the United States
n Implemented globally consistent approach to performance management, strengthening the link between Group and individual performance and reward
n Conducted second global employee engagement survey

Setting the industry standard

n Portfolio of successful projects

n Best in class execution

n Raised $1.2 billion in debt
n Raised almost $2.7 billion in debt and equity for managed funds
n Achieved risk-adjusted capital allocation target weighting to Australia of 60 per cent
n Sold $345 million of assets, including UK infrastructure assets
n Moved to unified brand ‘Lend Lease’

Lend Lease Group securityhoLder review 2011

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safety

Safety is our number one priority and Lend Lease is committed to operating Incident & Injury Free

This year, we have continued to focus on safety leadership, our operating disciplines and positive behaviours. These key focus areas provide assurance that we are able to drive cultural change.

Uncompromising Leadership

This year a primary focus has been on embedding exceptional safety leadership through our Uncompromising Leadership program.

During the year, we transformed our management systems and processes into an integrated environmental, health and safety system. By integrating the identification, evaluation and mitigation of all risks into a comprehensive environmental, health and safety system, we will gain greater operational integrity and transparency, and exceed environmental, health and safety compliance on all our projects.

For us, a culture of safety starts at the top. Uncompromising leaders see safety as their individual responsibility and encourage others to identify and mitigate risk. Our expectation is that senior management visibly demonstrate their commitment to safety by personally endorsing our safety initiatives and actively engaging with all of our stakeholders to ensure that health and safety is an integral part of our business.

For several years now, we have tracked our safety performance against our Global Minimum Requirements (GMRs) for health and safety. The GMRs prescribe physical and operational safety standards for virtually all business activities. Our aim is to ensure that all of our operations worldwide are consistently managed to the highest international and leading practice standards. We also want to foster learning and continuous improvement, and to share best practice across our industry and have now integrated environmental standards in the GMRs. All employees undertake our Safety Passport training course, which is the minimum safety training required for all roles across the business.

Throughout the year, almost 400 managers and senior staff were trained in the Uncompromising Leadership program. More than 800 people have completed the program since its inception in mid 2009.

Uncompromising leadership is about setting an example and taking a strong stance when faced with any situation that compromises the safety of employees and contractors. We believe that there is no compromise between safety and business success, and that the behaviours of our people are critical to achieving our vision to become Incident & Injury Free.

Safety performance

Preventing fatalities is our absolute priority and we deeply regret that one person lost his life this year on one of our operations. The fatal incident occurred on the last day of the 2011 financial year within Lend Lease’s infrastructure business at Abigroup’s Gladstone Seawall Project in Queensland, Australia. Our Asia, EMEA and Americas businesses reported no fatalities this year.

As in previous years, falls-related incidents were the most prevalent high-risk incidents. However, of the 108 critical environmental, health and safety incidents recorded over the year, the most common circumstance across the Group was the fall of materials. Encouragingly, the number and rate of fall of person incidents was down 40 per cent on the 2010 financial year, and more than 80 per cent over the past five years. This is a significant improvement, however no incident is acceptable and we will continue to strive for further improvement in all areas.

In response to these results, our GMRs have been revised to ensure that there are clear processes in place to manage the identification of risks associated with each activity (with revised protocols for high risk activities), including revised requirements for worker competence; improved clarity around contractor management requirements; specific details related to change management; and the implementation of a ‘Safe Start’ process for all activities. A new physical GMR section has also been added that deals exclusively with the standards required to prevent the fall of materials.

We will continue to promote safety improvements through these initiatives and personal commitment to uncompromising safety leadership in our vision to become Incident & Injury Free.

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Lend Lease Group securityhoLder review 2011 9

fatalities

2007 – 2011

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Asia Americas
EMEA Australian infrastructure business
Australia Millions of hours worked
10 250
9 225
8 200
7 175
6 150
5 125
4 100
3 75
2 50
1 25
0 0
Number of fatalities
Number of hours worked (millions)
07 08 09 10 11
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A marked decrease in the number and rate of fatal incidents has resulted since the 2009 financial year.

notes

n The Australian infrastructure business commenced reporting incidents to the Lend Lease Group from March 2011

Lost time injuries 2007 – 2011

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Asia Americas
EMEA Australian infrastructure business
Australia
1000
900
800
700
600
500
400
300
200
100
0
Number of LTIs
07 08 09 10 11
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During the year, we achieved an overall reduction in the number and rate of Lost Time Injuries (LTIs) across Group operations compared to the 2010 financial year. A total of 371 LTIs were recorded during the year compared to 428 in the previous year. The Group portfolio averaged an improved Lost Time Injury Frequency Rate (LTIFR) of 2.86 compared to 3.38 for the 2010 financial year. The LTIFR has decreased across the Australia, Asia and Americas regions.

notes

n The LTI Frequency rate is calculated as the number of Lost Time Injuries per million hours worked
n The Australian infrastructure business commenced reporting incidents to Lend Lease Group from March 2011

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incident circumstances Asia Americas
by region EMEA Australian infrastructure business
Australia
50
40
30
20
10
0
The fall of materials represents 51 per cent of all critical incidents. While the rate of this circum-
stance has remained static, the number and rate of fall of person incidents has decreased by more
than 80 per cent in the past five years.
HiPo reportable Other Manual handling Service strike
Fall of materials >2m/6ftFall of materials <2m/6ftStruck by moving vehicleFall of person >2m/6ftElectrical shock >110 voltsFailure of work equipment perm structures >2m/6ftCollapse of temp or perm structures <2m/6ftCollapse of temp or Contact with machinerySlip, trip, stepping on/ striking againstFall of person <2m/6ftExplosion/failure of pressurised systemMinor property damage incident <US$100,000
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The fall of materials represents 51 per cent of all critical incidents. While the rate of this circumstance has remained static, the number and rate of fall of person incidents has decreased by more than 80 per cent in the past five years.

notes

n HiPo – Hi potential (for injury or disruption)

n The Australian infrastructure business commenced reporting incidents to Lend Lease Group from March 2011

Lend Lease Group securityhoLder review 2011

review of oPerations

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Year in review

juLy 2010

Implemented regional structure.

Finalised terms for a conditional regeneration agreement for £1.5 billion regeneration of Elephant & Castle, London with the London Borough of Southwark.

Signed development agreement with LandCorp for $400 million first stage of Alkimos, a new residential community in Perth.

august 2010

sePtember 2010

Signed implementation agreement with Japanese house builder Sekisui House Australia for a range of residential developments in Australia.

Secured second phase (Group B) of the US Privatization of Army Lodging Group program and further work on the first phase (Group A); total value US$600 million.

Reached financial close on the North Haven Communities in Alaska where 1,815 family houses will be developed at two Army installations, Fort Wainwright and Fort Greely.

october 2010

Achieved inclusion on 2010 Dow Jones World Sustainability Index with a score of 78 per cent, well ahead of the average industry score of 43 per cent.

november 2010

Awarded £160 million construction management contract by British Land plc. for office, retail and residential buildings at Regent’s Place in central London.

Appointed preferred bidder for Wandsworth Building Schools for the Future project in London.

incLusion on 2011 dow jones worLd sustainabiLity index with a score of

Lend Lease Group securityhoLder review 2011 11

december 2010

Launched the £220 million UK Infrastructure Fund, with seed assets sourced from the sale of several social infrastructure assets in the United Kingdom delivered by Lend Lease.

Obtained approval for Concept Plan amendment for Barangaroo South project in Sydney.

Sold Overgate retail centre in the United Kingdom for proceeds of £43 million.

Extended Lend Lease Retail Partnership term for seven years.

Announced agreement to acquire Valemus Australia comprising Abigroup, Baulderstone and Conneq.

Selected as preferred proponent for $1.2 billion Atherstone residential community project (previously known as Toolern) in Melbourne.

january 2011

Obtained project approval for Calderwood community project, Sydney.

february 2011

Announced half year result with strong 17.2 per cent operating profit growth and 10.5 per cent statutory profit growth.

Moved to unified brand ‘Lend Lease’.

Acquired United States healthcare developer, DASCO.

march 2011

Awarded US$186 million Delta Air Lines Terminal 4 expansion contract in New York.

Executed Heads of Terms Agreement with Ministry of National Development for commercial space at Jurong Gateway, Singapore.

Completed acquisition of Abigroup, Baulderstone and Conneq.

Sold PoMo mixed-use asset in Singapore for proceeds of $24 million.

Selected as construction service provider for 7-Eleven, Inc construction portfolio across the United States and Canada.

Achieved financial close on Wandsworth Building Schools for the Future project, London.

Started construction on $2.5 billion RNA Showgrounds urban regeneration project, Brisbane.

HM Treasury, London – a UK Infrastructure Fund asset.

aPriL 2011

Signed land management agreement for Werribee, a new $1 billion residential community in Victoria.

may 2011

Signed agreement to sell interest in King of Prussia retail centre near Philadelphia, United States.

Secured $100 million contract for a coal rolling stock maintenance facility at Nebo, Queensland.

june 2011

Secured $975 million syndicated loan facility.

Appointed managing contractor for the $892 million Stage Two of Queensland Children’s Hospital, Brisbane.

Secured $122 million contract for the refurbishment and expansion of the University of New South Wales Wallace Wurth building, Sydney.

Secured $106 million contract to upgrade Section B of the Bruce Highway, central Queensland.

Launched new commercial district The International Quarter, Stratford City, London in conjunction with London & Continental Railways.

Lend Lease Group securityhoLder review 2011

review of oPerations CONTINUED

Five Year Summaries[1]

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||||||||||
|---|---|---|---|---|---|---|---|---|
|fy11|FY10|FY09|FY08|FY07|
|Profitability|
|Revenue|[($]|[m)]|8,927|10,502|14,683|14,581|14,180|
|Statutory Profit/(loss) after Tax|[2]|[($]|[m)]|493|346|(669)|254|498|
|Operating Profit after Tax|[2]|[($]|[m)]|485|324|292|436|446|
|Operating EBITDA|($|m)|711|483|396|517|551|
|Corporate strength|
|Total assets|[($]|[m)]|12,149|11,366|8,291|8,550|9,336|
|Total equity|[($]|[m)]|3,633|3,361|2,414|2,981|3,243|
|Net asset backing per security|[($]|[)]|6.36|5.94|5.27|7.43|8.09|
|Gearing|[3]|(%)|8.9|n/a|2.9|4.1|9.8|
|Interest coverage ratio|[4]|(times)|6.7|6.7|5.1|7.7|7.9|

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Securityholder value

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||||||||||
|---|---|---|---|---|---|---|---|---|
|Distribution per security|[4]|(cents)|35.0|32.1|41.0|77.0|77.0|
|Distribution payout ratio on Operating Profit after Tax|[2, 5]|(%)|41|50|64|71|69|
|Total distributions|[2]|($|m)|199|161|187|309|309|
|Earnings per security on Statutory Profit/(loss)|after Tax|[6]|(cents)|86.9|69.5|(154.7)|63.4|124.3|
|Earnings per security on Operating Profit|after Tax|[6]|(cents)|85.6|65.1|67.4|108.7|111.4|
|Return on Equity|[2]|(%)|14.2|12.6|(25.1)|8.2|15.7|
|Security price as at 30 June as quoted on the Australian|
|Securities Exchange|($|)|8.97|7.33|7.01|9.55|18.54|
|Employees|
|Total equivalent full-time employees (at 30 June)|[7]|(no.)|17,181|11,094|10,656|12,039|10,817|
|Lost Time Injury Frequency Ratio|[8]|(no.)|2.86|3.38|2.92|3.71|5.26|
|Senior executive positions held by women|[9]|(%)|23|17|n/a|n/a|n/a|
|Employee engagement score|[10]|77|n/a|79|n/a|n/a|

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1 Comparative information in respect of FY07, FY08 and FY09 reflect the results in Lend Lease Corporation Limited and its controlled entities prior to stapling of the Lend Lease Trust (LLT) in November 2009. Includes the Australian infrastructure business from the date of acquisition, except as separately indicated.

2 For definitions of metrics refer to Glossary on page 28.

3 Net debt to total tangible assets, less cash. The June 2010 ratio is not relevant as the Group was in a net cash position.

4 Operating EBITDA plus interest income divided by interest finance costs, including capitalised finance costs.

5 June 2010 distribution includes the ‘in specie’ dividend of 0.1 cent following the stapling of LLT units to shares in the company in November 2009.

6 2009 has been adjusted by a factor of 1.02 in respect of new securities issued during March and April 2010 via a 5 for 22 single bookbuild accelerated renounceable entitlement offer at $7.70 per new security.

7 Increase in full time equivalent employees in FY11 due to the acquisition of Abigroup, Baulderstone and Conneq.

8 Injuries per million hours worked.

9 Defined as within the Group’s top four tiers of management. Excludes the Australian infrastructure business.

10 Employee engagement score is out of 100; prepared by Towers Watson. Excludes the Australian infrastructure business.

Securityholder review 2011 Lend Lease Group 13

Looking forward

The Group’s financial strength and access to third party capital enables it to fund its development requirements and invest in new opportunities.

Lend Lease has built a solid growth platform over the past few years and, despite continuing uncertainty and volatility in global markets, we are tracking well against our financial targets shown in the ‘Key financial targets’ table. Our financial strength and access to third party capital means we have the financial flexibility to fund our development pipeline and invest in new opportunities that are in line with our strategy. We have clear priorities over the next one to two years to achieve our aim of becoming the leading international property and infrastructure group. These are:

Integrate the infrastructure business and deliver on earnings accretion

A key priority is to successfully integrate Abigroup, Baulderstone and Conneq into Lend Lease. Each business will continue to focus on its core competencies and ‘business as usual’ execution. We will commit resources including people and capital into businesses to support accelerated growth in certain sectors and markets over time. This will enable sector and geographic specialisation, allowing us to best match our skills and expertise to opportunities and achieve market leading positions in the sectors we operate in.

Continue to progress major projects

Lend Lease has an exceptional development pipeline and our focus remains on successful project execution. We will also concentrate on securing capital partners and sourcing quality tenants for our developments. Our largest development, Barangaroo South in Sydney, is on track with the Concept Plan amendment approved in December 2010, and construction of the basement and first commercial tower set to commence before the end of the 2011 calendar year.

Disciplined portfolio management

We’re now focusing on our portfolio and on extracting the maximum value from the unique combination of businesses we operate. Over the next two years we will concentrate on portfolio management by divesting assets and redeploying that capital into our development pipeline. As a developer, we are not a long-term holder of assets, so when market opportunities arise we will recycle capital from lower yielding assets and redeploy that capital into higher yielding opportunities.

Position offshore businesses for market recovery

We will continue to position our offshore businesses to leverage a market recovery. A key opportunity is to grow the profitability of the construction pipeline as activity levels increase in the Americas and EMEA construction sectors. In America, the Lend Lease DASCO platform has a robust pipeline of opportunities in the healthcare sector. In EMEA, we will invest capital in our urban regeneration projects as they progress and continue to recycle capital.

The Group has a positive operating outlook and we remain focused on optimising securityholder returns. We will continue to drive operational excellence and focus on our cost base. We have significant opportunities and clear plans on where we will allocate our capital. Lend Lease is well on the way to delivering our Return on Equity target of 15 per cent over the medium term.

Key financial targets

	financial metric Return on equity Credit rating Gearing Interest coverage ratio Annuity income Distribution payout ratio	target Greater than 15% per annum Committed to investment grade rating Less than 20% Greater than 5 times Greater than 15% of EBITDA 40% to 60% of Operating Proft after Tax

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Lend Lease Group 14 securityhoLder review 2011

14.0% increase

review of oPerations CONTINUED

Australia in Review

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operating Profit
after tax ($ million)
$34.5m
281.4
246.9
10 11
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“ In Australia, Lend Lease has secured significant projects over the past few years and we are a leading player across most of our markets. Our integrated capability to deliver services across the property and infrastructure value chain gives us ample opportunity to maximise value from our regional portfolio.”

mark menhinnitt, chief executive officer, australia

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fy11 FY10 % Change
Operating Profit after Tax ($ million) [1] 281.4 246.9 14.0
Development pipeline:
— Residential lots and apartments (units) 73,580 71,630 2.7
— Retirement living units 1,257 1,310 (4.0)
— Commercial (sqm/000s) 6,132 3,501 75.1
Infrastructure development — number of projects 2 1 100.0
Construction pipeline:
— New work secured revenue ($ billion) [1] 3.4 1.3 161.5
— Backlog revenue ($ billion) [1] 8.6 4.2 104.8
Funds under management ($ billion) 7.7 7.1 8.4
Assets under management ($ billion) 4.8 5.3 (9.4)
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Lend Lease has built a solid platform in the Australian region and in the last twelve months we progressed our significant development pipeline and grew funds under management. We achieved an Operating Profit after Tax of $281.4 million, 14 per cent higher than the previous year. The result includes the infrastructure business we acquired in March as well as a 12-month contribution from retirement living and aged care, where we have continued to achieve operational efficiencies.

During the year, we secured major planning approvals on Barangaroo South in Sydney including the Concept Plan amendment, the first commercial building and basement and bulk excavation works. The favourable conclusion of the Government Review in July 2011 will allow the $6.0 billion project to proceed on schedule. In addition, we started construction on the $2.5 billion RNA project in Brisbane.

1 Includes Australian infrastructure business from 10 March 2011

Our infrastructure development business secured the Queen Elizabeth II Medical Centre car park project in Perth, which reached financial close subsequent to 30 June 2011. The business is also shortlisted on a number of other projects.

Outlook

The economic environment in Australia is stable with a positive outlook for most of our sectors, particularly infrastructure. We are in a strong position and a key priority is to achieve planning outcomes and to secure tenants and capital partners for our major development projects. We will also continue to focus on growing our funds under management and construction backlog, driving operational excellence in the retirement living and aged care platform and integrating the infrastructure business.

In the communities business, we replenished our backlog with new projects, including Atherstone (previously known as Toolern) and Werribee in Victoria, and are on track to have the total residential land backlog zoned by the end of 2011. While there were lower residential settlements in the year, there was an increase in residential average lot prices and higher residential pre-sales at 30 June 2011 compared to the previous year. In the apartments business, we are finishing our last two buildings at Jacksons Landing in Sydney, while at Victoria Harbour in Melbourne momentum is shifting from commercial to residential, with two apartment buildings under construction.

Over the year, our investment management business continued to generate strong returns for our fund investors. At financial year-end we had $7.7 billion of funds under management as well as 15 retail assets under management and we see good opportunities to grow the scale of the business.

We completed construction on projects including Darling Quarter and Mid City/420 George Street in Sydney. Along with these projects, key profit contributors included Gold Coast University Hospital and the new Royal Children’s Hospital in Melbourne. Backlog revenue at 30 June 2011 was $8.6 billion, with $6.0 billion related to our new infrastructure business.

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Jacksons Landing, Sydney

value: $1.3 billion Period: 1996-2012

After more than a decade, Australia’s largest waterfront development, Jacksons Landing on the edge of Sydney’s CBD, is nearing completion with construction of the final two apartment buildings well underway.

in our cities, there simply are not enough sites available to build new communities, so regenerating existing sites like Jacksons Landing is increasingly becoming the only option. Lend Lease is at the forefront of this worldwide trend.

Initially acquired by John Macarthur for a gallon of rum in the late 1700s, today Jacksons Landing is worth $1.3 billion. It has become one of the most sought after locations for inner-city living in Sydney, and is now home to over 3,000 residents, from young professionals through to empty nesters, living in over 25 buildings.

Lend Lease worked closely with the local authorities and community to create a place that is culturally sensitive and environmentally sustainable for future generations. Some of the heritage that has been preserved at Jacksons Landing includes historic stables built in 1920 that have been converted into four terraces across three levels. On completion, Jacksons Landing will include 1,350 dwellings, 35,000 sqm of commercial, 1,000 sqm of restaurants and retail, and 3.2 ha of public open space, including four parks and a foreshore promenade.

Jacksons Landing is a wonderful example of Lend Lease’s ability to regenerate an underutilised urban area and create a thriving community. Our development philosophy is not just about constructing buildings, it’s about creating vibrant places for people and families to live and work. With increasing density

Darling Quarter, Sydney

client: Sydney Harbour Foreshore Authority, Australian Prime Property Fund Commercial (APPF Commercial) / Institutional Investor, Commonwealth Bank of Australia

value: $500 million

Period: 2008-2011

Sydney’s $500 million Darling Quarter is the latest example of Lend Lease’s ability to partner with government and attract capital to create innovative projects that appeal to quality tenants.

Bank of Australia, it includes two eightstorey campus-style buildings with around 55,000 sqm of office space. The buildings have received a 6 Star Green Star v2 Office Design certified rating, the highest available sustainability rating. Commonwealth Bank Place is owned by one of our managed funds, APPF Commercial, in joint venture with an institutional investor.

Darling Quarter is a collaborative effort between Lend Lease and the Sydney Harbour Foreshore Authority, and follows our successful partnership at Darling Park. Located on the western fringe of the Sydney CBD, Darling Quarter reconnects the city to the south end of Darling Harbour, where Lend Lease has delivered an interactive work and entertainment area for city workers and the community.

To ensure Darling Quarter thrives as a destination, Lend Lease created a new retail precinct, children’s theatre and playground. We also created the Community Green, a public space for people to sit, relax and enjoy their food. The park includes a 4,000 sqm playground, the largest and most elaborate interactive water play feature in Sydney, making this area a great space for families as well.

Within the Darling Quarter precinct, Lend Lease conceived, designed and constructed a low rise campus-style commercial development, Commonwealth Bank Place. Completed in July 2011 and leased to Commonwealth

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securityhoLder review 2011 Lend Lease Group 15
Jacksons Landing, Sydney –
view from Anzac Bridge.
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Lend Lease Group 16 Securityholder review 2011

review of oPerations CONTINUED

Infrastructure in Australia Review

The acquisition of Abigroup, Baulderstone and Conneq provides Lend Lease with an excellent platform for strategic growth in the infrastructure sector.

Strategic fit

Abigroup, Baulderstone and Conneq joined Lend Lease in March 2011 via the acquisition of Valemus Australia. Together they form Lend Lease’s Australian infrastructure business, delivering market leading engineering and construction solutions through Abigroup and Baulderstone in the construction industry, and through Conneq in the infrastructure asset maintenance services industry.

Lend Lease acquired Abigroup, Baulderstone and Conneq as part of its strategy to grow in the infrastructure sector. The expertise of these companies in road, rail, marine, ports, power, defence and social infrastructure has increased the Group’s capability in this sector and diversified our position in the construction market, making us the second largest contractor in Australia.

Following the acquisition, the Group retained a strong balance sheet, with gearing well below the target of 20 per cent, providing significant financial flexibility to fund our development pipeline. At 30 June 2011, the infrastructure business had backlog revenue of $6.0 billion with another $900 million of work pending.

The market outlook for the engineering construction sector is very positive, with a forecast that the sector will yield near double-digit growth (in terms of value of work) over the next 24 months[1] . There is a large backlog of infrastructure projects in Australia and the infrastructure business has an extensive government client base, which has created a solid platform for growth for the infrastructure business.

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Ipswich Motorway upgrade, Queensland.
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Coming together with Lend Lease

key facts

n Acquisition completed 10 March 2011

n Purchase price of $960 million, and a further payment of $80 million plus $5 million per month from 1 October 2010 to completion in March 2011 in lieu of 2010 profits not distributed

n Funded from cash reserves and a new five year $225 million debt facility, with no new equity required
n Warranties and indemnities obtained
n 15 per cent earnings per security accretion expected in the full year ending 30 June 2012
n Over 8,000 employees (including permanent and casual workers)

We are currently integrating Abigroup, Baulderstone and Conneq into the Group. Integration is expected to bring substantial opportunities as we extract cost and revenue synergies and leverage the new skills available to us, including an ability to self-perform infrastructure work on major development projects. The integration process has also confirmed there is a positive cultural fit with the Group, and the depth of expertise within the businesses will add considerably to its market offering.

Abigroup, Baulderstone and Conneq are operating independently to each other and the rest of Lend Lease while the Group works through a strategic review process to determine the best operating model for the future. This process has already ascertained areas for specialisation of skills and offerings in the Australian construction business. We are also identifying best practice approaches to safety, risk management, policies, procedures and operating disciplines that we will be implementing across the Group.

1 BIS Shrapnel, Engineering Construction in Australia 2010/11 to 2024/25, March 2011

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Gas-fired power station, Mortlake.
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Securityholder review 2011 Lend Lease Group 17

abigroup

One of Australia’s largest multi-disciplinary engineering construction and building contractors. Specialist expertise in road, rail, water infrastructure, energy, telecommunications, resources and mining.

Origin Alliance (Ipswich Motorway Upgrade Dinmore to Goodna)

client: Department of Transport and Main Roads, Queensland value: $908 million (to Abigroup) Period: 2008-2012

As part of the Origin Alliance, Abigroup is upgrading eight kilometres of the Ipswich motorway between Dinmore and Goodna in Queensland. The $1.95 billion project is one of the largest alliance projects in Australia and the largest federally-funded road project in Queensland. Using Abigroup’s extensive plant and vehicle fleet and large workforce, the project will employ more than 1,000 staff and contractors at its peak and is on track for completion in 2012.

The project includes widening the motorway from four to six lanes, upgrading major interchanges as well as building new road and pedestrian bridges, cross motorway connections and service roads. When complete, the upgraded motorway will improve safety, ease congestion and enhance commuter access to public transport as well as improve cycle and pedestrian facilities on this busy transport corridor west of Brisbane.

A unique component of the project was infilling abandoned coal mines around Redbank and Goodna under the new motorway and structures. The team completed this in September 2010 using a purpose-built on-site concrete mixing plant to produce a grout to fill the mines.

baulderstone

Engineering construction and building services. Specialist expertise in bridges, tunnels, defence, marine and ports, water infrastructure, power and correctional facilities.

Port Botany Container Terminal Expansion, Sydney

client: Sydney Ports Corporation value: $529 million (to Baulderstone) Period: 2008-2011

Baulderstone, with joint venture partner Jan de Nul NV, recently completed a project for Sydney Ports Corporation to expand Port Botany in Sydney. With marine the fastest growing infrastructure sector in Australia, successfully delivering this project positions Baulderstone strongly for future market growth.

The project involved designing and constructing a new terminal to almost double the capacity of the port. The joint venture delivered an additional 1,850 metres of extra berth capacity by reclaiming 60 ha of land. The project also included constructing road and rail access and a public boat ramp, and upgrading Foreshore Beach and Penrhyn Estuary.

The project presented a number of construction challenges with 216 precast concrete wall sections manufactured and constructed on-site. With each section measuring 20 metres high and 9 metres wide and weighing 640 tonnes, installation was by way of a purpose built shear-leg crane barge. While engineering innovations delivered a more efficient port, Baulderstone also delivered positive environmental outcomes, including improving the local ecosystem in Botany Bay.

conneq

Engineering and specialist asset management services for industrial infrastructure. Specialist expertise in energy plants and networks and infrastructure including power, industrial and resource sectors.

550MW Gas Fired Power Station, Mortlake, Victoria

client: Origin Energy Period: 2009-2011

Conneq is a leading installer of gas-fired power plants in Australia and is now in the final stages of completing the 550 MW Mortlake Power Station in south-western Victoria for Origin Energy.

The Mortlake Power Station is powered by two Siemens SGTS 4000F gas turbines, the first time this technology has been installed in Australia. The open cycle power station is designed to produce significantly less carbon emissions than a typical coal-fired power station of the same capacity.

Conneq’s scope on the project included installing the gas turbines and generators, as well as the design and construction of the balance of plant. In addition to the power station, Conneq also constructed the associated switchyard.

Mortlake is the latest in a long line of gas-fired power plants successfully delivered by Conneq at more than a dozen locations across the nation. When commissioned, Mortlake Power Station will supply peaking power to Victorian homes in times of high electricity demand.

Lend Lease Group 18 Securityholder review 2011

review of oPerations CONTINUED

Asia in Review

“ We have a solid base of project management and construction work in the industrial, commercial, telecommunications and life sciences sectors, and will capitalise on this and our retail development pipeline to grow Lend Lease in Asia, alongside our managed funds.”

rod Leaver, chief executive officer, asia

38.9% increase

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operating Profit
after tax ($ million)
$12.9m
46.1
33.2
10 11
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Lend Lease achieved a strong result in Asia, with a 38.9 per cent increase in Operating Profit after Tax to $46.1 million. In our project management and construction business, new work secured was up significantly on the previous year as we secured a number of new contracts including the Jem™ (Jurong Gateway) development in Singapore and a LCD glass manufacturing facility for Corning in Taiwan. Backlog revenue was also higher and includes development of the Setia City Mall and KL Eco City in Malaysia, the Stamford American International School in Singapore for repeat client Cognita, and telecommunications infrastructure projects in Japan.

At the end of the financial year, Lend Lease had $2.0 billion in funds under management in Asia. There is strong investor appetite for quality retail assets and we took advantage of that demand to sell our 25 per cent interest in PoMo, a mixed-use asset in Singapore in March 2011. We also provide asset management services to Parkway Parade and 313@somerset in Singapore, and we are actively pursuing investment management-led opportunities in China.

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fy11 FY10 % Change
Operating Profit after Tax ($ million) 46.1 33.2 38.9
Development pipeline:
— Commercial (sqm/000s) 144 144 –
Construction pipeline:
— New work secured revenue ($ million) 864.8 326.9 164.5
— Backlog revenue ($ million) 746.9 289.9 157.6
Funds under management ($ billion) 2.0 1.6 25.0
Assets under management ($ billion) 1.6 1.8 (11.1)
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Outlook

The strong fundamentals that we have seen across most markets in Asia are expected to continue. We will continue to focus on the successful delivery of the high quality pipeline of retail projects in Singapore and Malaysia. We will capitalise on our strong track record in retail development and look for additional retail and mixed use opportunities in partnership with our managed funds. In our project management and construction business we will

leverage our position in the industrial, commercial and life sciences sectors to develop market leading positions and continue to pursue opportunities in the telecommunications sector in Japan. In addition, we will continue to recycle capital when opportunities arise.

During the year, we finalised the purchase of the Jurong Gateway development site (see case study on page 19) in partnership with the Lend Lease managed Asian Retail Investment Fund 3 (ARIF), resulting in ARIF being fully invested. The development is consistent with the Group’s strategy and represents a significant opportunity for Lend Lease to grow its retail platform in Singapore, leveraging on the Group’s integrated capabilities. Lend Lease will provide development, design, project management, construction and retail property management services on the project.

Securityholder review 2011 Lend Lease Group 19

Stamford American International School, Singapore

Stamford American International School, Singapore.

client: Cognita value: $88 million Period: 2010-2012

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As well as setting benchmarks for sustainability, safety as always is our number one priority. The project achieved a significant safety milestone in June when we reached 500,000 safe work hours on site with zero lost-time injury, zero high potential risk, zero near misses, and zero property damage. As part of our commitment to safety leadership, Lend Lease recently collaborated with the National Crane Safety Taskforce and Workplace Safety and Health Council in their efforts to improve crane operation safety in the construction industry in Singapore, using the Stamford American International School to demonstrate safe crane lifting.

Lend Lease is well on the way to delivering its third major design and construct project for international education group and repeat client, Cognita, in Singapore. Lend Lease has already completed two projects for Cognita at the Australian International School, and we are half way through the first phase of the Stamford American International School’s Permanent Campus, that incorporates 28,000 sqm of learning, athletic and recreational facilities due to be completed in 2012.

We have worked with Cognita since 2006 and they selected us again because we have a proven track record of delivering their projects safely and sustainably and within time and budget. We are working with Cognita to set new environmental and design standards for educational institutions in Singapore, and are benchmarking the Campus against a range of sustainability rating tools including the Singapore Building Construction Authority (BCA) Green Mark, Australian Green Star and American LEED.

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Jem[™] , Singapore

developed by: Lend Lease and Lend Lease managed fund, Asian Retail Investment Fund (ARIF)

end project value: SGD1.6 billion Period: 2010-2014

and the Singapore Government are jointly funding research and development at Jem[™] to help create the next generation of the Green Mark tool. While Government tenants will directly benefit from the innovative environmental initiatives that Lend Lease implements, the broader property industry will also benefit from the next generation of the Green Mark rating tool, which will provide new benchmarks to which developers will aspire. The opportunity to be involved in this new rating solution came from Lend Lease’s long-term partnership with the Singapore Government on green buildings and sustainable practices.

already been leased, and tenants include Robinsons Department Store, Marks & Spencer and a Cathay Cineplex.

Lend Lease has commenced construction on its new mixed use development, Jem[™] , located in the western growth area of Singapore, at Jurong Gateway. Jem[™] will become the third-largest suburban commercial and retail hub in the city state. The overall project is being developed over three years and Lend Lease and its managed fund, ARIF, were awarded the first mixed use development site in the Jurong Lakeside masterplan in June last year.

Lend Lease is also delivering 32,000 sqm of prime office space, due to be completed in 2014. The Ministry of National Development has signed a 30-year lease on the space. This is the first time a Singapore Government agency has committed to a long-term lease on a privately developed project, and its move to Jem[™] will be a catalyst for accelerating the development of this growth region.

Work started in April 2011 on the 75,000 sqm retail space. The centre will span six levels and include the first department store and largest cinema in western Singapore, as well as a hypermarket and diverse retail offering. Fifty per cent of the retail space has

Jem[™] is targeting a BCA Green Mark Platinum Award, the highest rating tool for sustainability in the country. Lend Lease

Lend Lease Group 20 Securityholder review 2011

review of oPerations CONTINUED

Americas in Review

“ In the Americas we continue to lead the military housing market and are targeting opportunities in key urban centres that enable us to leverage our leadership positions in multi-sites, construction and healthcare.”

bob mcnamara, chief executive officer, americas

410.1% increase

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----- Start of picture text -----

operating Profit
after tax ($ million)
$125.9m
156.6
30.7
10 11
----- End of picture text -----

Lend Lease achieved an excellent result in the Americas region with Operating Profit after Tax of $156.6 million, up $125.9 million on the previous year. This was principally due to an agreement to sell Lend Lease’s 50 per cent interest in the King of Prussia retail centre near Philadelphia as part of our program of active portfolio management, as well as an encouraging improvement in the performance of the construction business.

Despite tough market conditions contributing to lower construction revenue, the volume of projects secured in the year increased significantly, reflecting positive signs that market conditions are stabilising. We were awarded a number of major projects during the year including a $186 million (US$186 million) expansion of the Delta Air Lines Terminal 4 at JFK Airport in New York, and a contract for construction services for new 7-Eleven stores across the United States and Canada.

Lend Lease is a leader in planning, designing, building, and managing residential communities for military personnel across the United States and we have over 49,000 units under management. During the year we secured further work from the US Army, with the $350 million (US$350 million) second phase (Group B) of Privatization of Army Lodgings program, and reached financial close on the $377 million (US$377 million) Wainwright Greely project in Alaska. In addition to the major infrastructure development work, we have a long tail of recurring earnings from this business through operations and maintenance.

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fy11 FY10 % Change
Operating profit after tax ($ million) 156.6 30.7 410.1
Development pipeline:
— Residential lots and apartments 3,860 3,855 0.1
— Commercial (sqm/000s) 371 841 (55.9)
Infrastructure development — number of projects 26 20 30.0
Construction pipeline:
— New work secured revenue ($ billion) 3.1 0.9 244.4
— Backlog revenue ($ billion) 2.9 1.2 141.7
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In February we acquired DASCO which provides end-to-end real estate solutions for healthcare providers in the United States. The business has a substantial existing development pipeline of deals and exclusive positions, and provides opportunities to leverage Lend Lease’s integrated model, including construction, and fund and asset management. As part of our capital recycling strategy, we will use part of the proceeds from the sale of King of Prussia to fund our healthcare development pipeline.

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----- Start of picture text -----

St Francis Millenium Medical Office
building, Greenville SC (DASCO)
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Outlook

In the Americas we continue to see signs of recovery across key sectors, however market conditions are patchy, so we remain cautious and disciplined in our approach. Our key priorities are to leverage the construction business as the economy improves in the United States, and continue to look at opportunities in Latin America. We will also invest in the large pipeline of opportunities in the rapidly growing healthcare market.

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Lend Lease Group securityhoLder review 2011 21

US Department of the Army Privatization of Army Lodging (PAL)

client: US Department of the Army value: US$600 million Period: 2009-2016

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Lend Lease’s leadership in creating military housing communities was cemented during the year when we were awarded additional contracts from the US Army.

Lend Lease has partnered with the US Army since 2009 to deliver the US Army Privatization of Army Lodging (PAL) program, phases A and B. The program involves working with the InterContinental Hotels Group to renovate and build hotel facilities for military personnel and government officials visiting military bases around the United States. This work is separate to Lend Lease’s contract to upgrade and build housing communities at a number of US Army bases.

Last year, we once again lived up to our reputation for successful project delivery with the official opening of the

Holiday Inn Express[®] at Fort Polk in August, the first branded hotel on a military installation. This was followed in November by the renovated 274-room Holiday Inn Express[®] at Fort Hood. In January 2011, we opened the largest Holiday Inn Express[®] in the world at Fort Sill, and then in April we finished renovations at Fort Polk’s Cypress House. We capped our successful year with the opening of the new 193-room Holiday Inn Express[®] at Fort Rucker in June.

These latest contracts from the US Army reflect Lend Lease’s outstanding performance in this PPP over the past 12 years. When we complete PAL phases A and B in 2016, Lend Lease will have delivered 8,500 hotel rooms across 21 US Army posts.

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Holiday Inn Express [®] , Fort Polk,
Louisiana.
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Centro Roberto Garza Sada, Mexico

client: Universidad de Monterrey value: US$34 million Period: 2008 – 2012

A striking architectural design is not the only trend being set by the Centro Roberto de Garza Sada at the University of Monterrey in Mexico. Lend Lease’s project management and construction expertise is also ensuring the centre is built to industry leading safety and sustainability benchmarks.

Designed by Pritzker prize-winning architect Tadao Ando, this six-storey rectangular building is a hybrid steel and fair-faced, cast-in-place concrete structure. The main feature is an elegant design located at the building base that recreates the winging movement of two oriental fans. The complexity of the design and the building’s unique shape presented Lend Lease with a complex construction challenge, so we used the latest project management software, Building Information Modelling, to help us coordinate the design and build stages in the most efficient sequence.

The erection of the steel structure started in August 2010 and is almost complete. Planning and construction has used industry best safety practices that are setting new benchmarks for the Mexican construction industry. Lend Lease used reinforced and engineered lifting points to move and safely erect the heavy steel structural beams. In addition, we installed specially engineered guard rails as the primary safety measure to prevent falls instead of fall arrest harnesses.

Reflecting its futuristic external design, the building includes cutting-edge technology to make it highly sustainable, with a low carbon footprint, including reduced energy and water consumption. When completed in 2012, the centre will apply for a LEED Certification, an internationally recognised green building rating tool.

Centro Roberto Garza Sada, Mexico.

Lend Lease Group 22 Securityholder review 2011

review of oPerations CONTINUED

EMEA in Review

“ In EMEA, Lend Lease has a prudent strategy for growth that takes into account the variable market conditions. We have consolidated our footprint, refocused on core sectors and continued to recycle capital. We are now well positioned with our construction business and major urban regeneration projects to realise value as markets stabilise.”

dan Labbad, chief executive officer, emea

15.9% increase

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----- Start of picture text -----

operating Profit
after tax ($ million)
$18.8m
137.4
118.6
10 11
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Lend Lease achieved a good profit result in the EMEA region, despite continuing tough market conditions. Operating Profit after Tax was $137.4 million, a 15.9 per cent increase on the previous year, principally due to the sale of the Group’s interest in PPP assets to the Lend Lease UK Infrastructure Fund in the first half of the year. The sale of our interest in the Lend Lease Overgate Partnership also contributed to the result.

Conditions remained challenging in the United Kingdom and Europe in the construction business. While this was reflected in lower overall revenue and profit for the year, new work secured revenue increased by a healthy 27.3 per cent to $1.4 billion. Project wins underpinning this improved pipeline include Regent’s Place, a $254 million (£160 million) commercial construction management contract for British Land, and a $124 million (£78 million) contract to build the Scottish National Arena in Glasgow.

In the development business, we achieved significant progress on major projects during the year, including the Athletes’ Village. We have performed exceptionally well on this project, having already handed over half the athlete bed spaces and we are on track to complete on time and on budget. We signed a conditional agreement with the London Borough of Southwark for the regeneration of Elephant & Castle. In addition, we met all conditions on the Framework Agreement for the second stage of the development of The International Quarter, Stratford City in London. This site is set to become an exciting new commercial precinct.

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fy11 FY10 % Change
Operating Profit after Tax ($ million) 137.4 118.6 15.9
Development pipeline:
— Residential lots and apartments 14,992 12,425 20.7
— Commercial (sqm/000s) 778 384 102.6
Infrastructure development – number of projects [1] 24 23 4.3
Construction pipeline:
— New work secured revenue ($ billion) 1.4 1.1 27.3
— Backlog revenue ($ billion) 1.5 1.5 —
Funds under management ($ billion) 1.2 1.4 (14.3)
Assets under management ($ billion) 3.1 3.5 (11.4)
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1 Extensions of existing projects are classified as separate projects

Outlook

In Europe, we continued to progress major projects including the $1.5 billion (£921 million) BP Retail service station rollout across Europe. We also reached financial close on the $167 million (€120 million) phase 2 of Brescia Hospital PPP in Northern Italy. Lend Lease is an equity partner and will provide project management for the construction program.

While the ongoing volatility in European markets will result in tough trading conditions, our key priorities are to continue to recycle capital, progress major development projects and leverage the construction business as markets stabilise.

At 30 June 2011, our investment management business had $1.2 billion of funds under management as well as five retail assets under management including Bluewater retail centre in the United Kingdom. The UK Infrastructure Fund we launched this year has uncommitted capacity of $183 million (£115 million) to take additional PPP assets from our future development pipeline.

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Lend Lease PFI/PPP Infrastructure Fund LP

The UK Infrastructure Fund (the Fund) was established by Lend Lease in December 2010 in conjunction with Dutch pension fund manager, PGGM Vermogensbeheer B.V. The Fund secured over £220 million in capital to invest in UK social infrastructure assets, initially covering healthcare, education and accommodation projects and was initiated with a portfolio of 15 infrastructure assets acquired from Lend Lease, including hospitals, schools and colleges. Lend Lease holds a 10 per cent direct investment in the Fund.

The creation of the Fund achieved a number of key strategic objectives for Lend Lease. These include directly investing alongside third party capital, generating additional revenue streams by providing asset and facilities management services to the projects, and recycling infrastructure development equity positions.

During the first five years of its 28 year life, the Fund will invest in additional Lend Lease infrastructure projects, providing investors with access to more quality assets from its development pipeline.

Athletes’ Village, London, United Kingdom

client: Olympic Delivery Authority Period: 2007-2012 (Phase 1)

Athletes’ Village will be home to 23,000 athletes and officials during the London 2012 Olympic and Paralympic Games, before being transformed into a residential community after the Games. Lend Lease has been overseeing the development, project management and construction of Athletes’ Village for the Olympic Delivery Authority since May 2007 and is on target to reach handover ahead of schedule.

Homes at the Village are designed and built to meet the Code for Sustainable Homes Level 4 standard and will be 83 per cent more energy efficient than Part L of the Building Regulations 2006. Retail and commercial units, together with the Chobham Academy, are targeted to achieve the BREEAM ‘excellent’ standard of design for environmental performance of buildings.

With less than a year to go before the London 2012 Olympic and Paralympic Games, Athletes’ Village is 85 per cent complete at the end of July 2011.

Built on 27 ha, Athletes’ Village will offer 2,818 homes across 11 residential plots, over 10 ha of public open spaces, a state-of-the-art education academy, a multi-use health and community centre, a multi-storey car park and six kilometres of road network.

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Lend Lease Group
securityhoLder review 2011 23
HM Treasury,
a UK Infrastructure
Fund asset
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Lend Lease Group 24 securityhoLder review 2011

sustainabiLity

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Environment

Lend Lease is committed to identifying, understanding and reducing the environmental impacts of our activities. Wherever we work in the world, we strive to leave a positive environmental legacy. We are actively investing in clean technologies, expanding our green building practices and leading the way through partnerships that generate real environmental change.

Environmental innovation

We are implementing strategies that address our impacts and reduce our greenhouse gas emissions globally by partnering with some of the world’s leading thinkers on the built environment, climate change and sustainability.

In the Americas, Lend Lease is participating in President Obama’s Better Buildings Challenge, an energyefficiency program developed to create jobs, save money, reduce the US’s dependence on foreign oil and make our air cleaner. As part of the challenge, we will partner with the US Department of Energy for technology and resources to achieve our goal of reducing energy consumption by 20 per cent within the next two to five years for our Military Housing Privatization Initiative portfolio.

In Australia, Lend Lease’s managed fund, APPF Commercial, has committed to working with other major property owners to improve the sustainability of Sydney’s commercial and public sector buildings.

Management systems

Throughout the year, we incorporated our environmental management systems and processes into an integrated environmental, health and safety management system. By integrating the identification, analysis, evaluation and mitigation of risk into a comprehensive and consistent business-wide framework, we have increased our operational integrity, transparency and insight. Through this system we hope to set new benchmarks in environmental reporting and performance.

We have maintained our position on external social, environment and good governance reporting indices in 2011. This year we have been recognised by the Dow Jones Sustainability World Index – achieving an overall score of 80 per cent, two percentage points higher than last year and well ahead of the average industry score of 45 per cent.

Performance

green projects completed

energy by region

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----- Start of picture text -----

Asia Australia
EMEA Americas
600
540
480
420
360
300
240
180
120
60
08 09 10 11
0
notes
n MWh – Mega Watt Hour – 1,000 kWh
n Includes both fuels and electricity
n These figures do not include data from the Australian
infrastructure business
green trained employees
2000 20
1800 18
1600 16
1400 14
1200 12
1000 10
800 8
600 6
400 4
200 2
07 08 09 10
0 0
MWh (’000)
% of Workforce
Number of Projects Completed
----- End of picture text -----

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----- Start of picture text -----

Asia Australia
EMEA Americas
50
45
40
35
30
25
20
15
10
5
0
LEED GreenStar GreenMark
BREEAM
Number of projects completed
----- End of picture text -----

notes

n Note that due to their differences, it is not accurate to compare a rating from one scheme against another. For example, a LEED Platinum rating is not comparable with a BREEAM Outstanding rating
n Based on 2010 calendar year data
n Includes rating which apply to both the design stage and proof at practical completion, across all possible categories (e.g. Retail, Commercial, Tenancy)
n It is not possible to have a 3 star rated building under Green Star

We have continued our focus on environmental considerations in the investment, design, construction and operations of green building. We currently employ over 1,500 green trained professionals.

Number of employees accredited in Green Building Council accredited schemes (i.e. Green Star, LEED, BREEAM, Green Mark) Number of employees trained in Green Building Council accredited schemes (i.e. Green Star, LEED, BREEAM, Green Mark) % of workforce trained or accredited in Green Building Council endorsed schemes (i.e. Green Star, LEED, BREEAM, Green Mark)

notes

n Based on 2010 calendar year data

Lend Lease Group securityhoLder review 2011 25

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Our People

An engaged and productive workforce is essential for Lend Lease to successfully deliver its projects and create strong returns for securityholders. We are committed to building our people capability and making Lend Lease a great place to work. That commitment spans all levels of our organisation, from building our technical and leadership skills, to ensuring our employees have positive and productive experiences, every day.

Diversity

Diversity governance

Lend Lease aims to create working environments where employees are respected for who they are and what they achieve. We define diversity and inclusion as all the ways in which we differ. Our aim is to create workplaces where our people are respected and encouraged to fulfil their potential.

Each region has a diversity council chaired by the regional Chief Executive Officer, a senior business leader or a diversity manager. Diversity councils are steering committees that facilitate a diverse, collaborative and inclusive culture. They provide the opportunity for discussion on ways to increase diversity and achieve best practice in terms of diversity policies.

The Lend Lease Board of Directors report on Lend Lease’s gender diversity performance in accordance with the Australian Securities Exchange (ASX) Corporate Governance Principles and Recommendations. Lend Lease has measurable objectives for gender diversity, shown below.

The diversity councils also oversee the activities of regionally based employee resource groups that represent and engage with employees directly on diversity related matters. Representatives from our employee resource groups sit on our diversity councils, together with a small number of human resource and senior management representatives. Our employee resource groups represent a range of diversity types such as age and intergenerational diversity, all abilities, cultural diversity, lesbian, gay, bisexual, transgender and intersex (LGBTI), and women in the workplace.

Proportion of women on the Lend Lease board

n Two out of eight Board Directors are women.

Proportion of employees who are women

n At the end of the financial year, 32 per cent of our employees were women.[1]

Employee engagement

Proportion of women in senior executive positions

A priority at Lend Lease is to make the employee experience positive and productive, for the individual and the company. During the past year, Lend Lease achieved an Employee Engagement score of 77 per cent, above the industry average of 76 per cent. We have outperformed our peers on areas such as our commitment to safety; sustainability leadership and diversity. However, there are a number of areas that we can improve including further developing and improving employee skills, and improving the efficiency of our processes and systems.

n At 1 July 2010, 17 per cent of senior executive positions were held by women.[2]
n At this time we set a target of 23 per cent by 30 June 2012.[3]
n At 30 June 2011, we had already reached our target, with 23 per cent of senior executive positions held by women.
n Lend Lease is committed to maintaining this level during the current financial year.
1 excludes employees from Lend Lease’s Australian infrastructure business and our retirement living and aged care business
2 woman in the top four tiers of management
3 excludes employees in Lend Lease’s Australian infrastructure business

Social and community

Concern for, and pride in, the impact we have on the communities we work in has always been a hallmark of the way we do business at Lend Lease. On all our projects, proactive community engagement and stakeholder relations are crucial in delivering a successful project. Our activities include providing education and employment programs, improving the local environment and encouraging people to interact with each other to create a strong sense of community.

Foundation

In addition, Lend Lease’s Foundation uses the collective knowledge, skill and passion of our employees to improve the communities where we live and work. Over 80 per cent of employees utilise Foundation to focus on personal wellbeing, personal development and the community. In 2010 we ran 467 programs in 16 countries.

Community Day is one of Foundation’s key programs. On this day employees’ skills are matched with community needs, supporting a range of projects that address social, economic and environmental issues. Last year over 4,000 Lend Lease employees supported over 250 Community Day projects around the world.

BeOnsite

One thriving example of our social responsibility programs is BeOnsite. In 2007 Lend Lease established BeOnsite in the United Kingdom, a national not-for-profit organisation that provides disadvantaged people with industry training and long-term employment in the property sector. Since its inception, BeOnsite has led to more than 12,000 people finding construction employment and a further 26,000 people securing retail roles.

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Lend Lease Group 26 Securityholder review 2011

directors’ ProfiLe

D A Crawford AO, Chairman

S B McCann, Group Chief Executive Officer and Managing Director

Age 67

Age 46

Independent Director since July 2001 and Chairman since May 2003.

Appointed Group Chief Executive Officer in December 2008 and Managing Director in March 2009.

Mr Crawford holds a Bachelor of Commerce and Bachelor of Laws from the University of Melbourne and is a Fellow of the Institute of Chartered Accountants.

Mr McCann holds a Bachelor of Economics and a Bachelor of Laws from Monash University in Melbourne, Australia.

G G Edington CBE

P M Colebatch Age 66

Age 65

Independent Director since December 1999 and member of each of the Risk Management and Audit and Sustainability Committees.

Independent Director since December 2005, Chairman of the Personnel and Organisation Committee and member of the Risk Management and Audit Committee.

Mr Edington is a Chartered Surveyor and has been awarded a CBE for services to children.

Mr Colebatch holds a Bachelor of Science and Bachelor of Engineering from the University of Adelaide, a Master of Science from Massachusetts Institute of Technology and a Doctorate in Business Administration from Harvard University.

D J Ryan AO

J A Hill

Age 65

Age 59

Independent Director since May 2006, Chairperson of the Sustainability Committee and member of the Personnel and Organisation Committee.

Independent Director since December 2004, Chairman of the Risk Management and Audit Committee and member of the Personnel and Organisation Committee.

Ms Hill holds a Bachelor of Arts from the University of California in Los Angeles and a Master of Arts in marketing and management from the University of Georgia.

Mr Ryan holds a Bachelor of Business from the University of Technology in Sydney, Australia, and is a Fellow of the Australian Institute of Company Directors and CPA Australia.

Lend Lease is committed to exceptional corporate governance policies and practices, which are fundamental to the long term success and prosperity of the Group. Lend Lease continually reviews its governance practices to address its obligations as a responsible corporate entity.

Full details of the Directors’ skills, experience and expertise, and their directorships can be found in the Lend Lease Group 2011 Annual Report.

P C Goldmark

Age 70

Independent Director since December 1999, Chairman of the Nomination Committee and member of the Sustainability Committee.

Mr Goldmark holds a BA from Harvard College, Government Department and graduated magna cum laude.

J Hemstritch

Age 58

Independent Director since September 2011.

Ms Hemstritch holds a Bachelor of Science degree in Biochemistry and Physiology from the University of London. She is a Fellow of the Institute of Chartered Accountants in Australia and in England and Wales, and is a member of Chief Executive Women Inc.

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Securityholder review 2011 Lend Lease Group 27

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remuneration summary

The objective of the executive reward strategy is to create value for securityholders by enabling the Group to attract, retain and motivate exceptional people.

The following principles guide the implementation of our executive reward strategy:

n remuneration practices should be simple, transparent and easy to communicate;
n consider, and, as appropriate, respond to the interests of internal and external stakeholders;
n a significant portion of remuneration is at risk but can be earned through achieving outstanding performance; and
n clear governance practices to minimise potential conflicts of interest and enable effective decision making by the Board and management.

			Post
	Base	Short term	employment
	fees	fees	benefts	Total
Non-Executive Directors	$000’s	$000’s	$000’s	$000’s
D Crawford	640	36	15	691
P Colebatch	160	132	15	307
G Edington	160	116	15	291
P Goldmark	160	122	15	297
J Hill	160	153	15	328
D Ryan	160	100	15	275

		Short term	Short term	Long term
	Fixed	incentive -	incentive -	incentive -
	Remuneration1	cash settled	equity settled	equity settled	Total
Executive Director $000’s		$000’s	$000’s	$000’s	$000’s
S	McCann 2,069	1,927	648	1,476	6,120
1	Fixed remuneration includes cash salary, non-monetary benefits, post-employment
	benefits (superannuation and life insurance) and other	long term benefits as
	outlined in section 3h. of the Remuneration Report in the Lend Lease Group		2011
	Annual Report.

Lend Lease Group 28 securityhoLder review 2011

gLossary

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Performance

Operating Profit after Tax – Statutory Profit after Tax excluding net unrealised property investment revaluations

Statutory Profit after Tax – Profit after tax attributable to securityholders, determined in accordance with Australian Accounting Standards

Securityholder value

Distribution – Interim and final dividend/distribution from the Company and Trust

Distribution payout ratio – Distribution divided by Operating Profit after Tax

Earnings per Security – Operating Profit after Tax divided by the weighted average number of securities on issue during the year (including treasury securities)

Return on Equity – A measure of profitability that reveals how much profit the Group generates from funds invested by securityholders. It is calculated as Statutory Profit after Tax attributable to securityholders divided by average ordinary equity for the year (including treasury securities)

Operational

BREEAM – The Building Research Establishment Environmental Assessment Method and rating system for measuring the environmental performance of buildings in the United Kingdom

Capital recycling – Sale of larger assets such as retail centres or co-investments in funds and investment of the capital from sale into higher yielding opportunities. Capital recycling is an ongoing part of the business and contributes to profit

Construction backlog revenue – The balance of work to be completed under existing construction contracts

Development backlog – Allotments that are yet to be developed, but which have signed development agreements in place

Development pipeline – Development projects that have not yet commenced, nor been formally awarded, but where the Group has been named as the preferred bidder or an exclusive agreement has been entered into

EMEA – Europe, Middle East & Africa

Financial close – The point at which the parties to a project procured under a public sector infrastructure development contract are irrevocably committed through the execution of unconditional contracts

Green Star rating – Green Star is a national voluntary environmental rating system used by the Green Building Council of Australia to evaluate the environmental design and achievements of buildings

securityhoLder review 2011 Lend Lease Group 29

corPorate directory

LEED – Leadership in Energy and Environmental Design, an internationally-recognised green building certification system used in the Americas and Asia

New work secured revenue – Estimated revenue to be earned from construction contracts secured during the period. When formal contracts are signed, the new work secured becomes part of construction backlog revenue

Public Private Partnerships (PPP) – A joint procurement arrangement for infrastructure development contracts between the public and private sectors

Zoned – Land that has received planning approval from the relevant authority

Annual General Meeting 2011

2012 financial calendar

february Announcement of Half Year Results march Security price quoted ex distribution march Interim distribution record date march Interim distribution payable august Announcement of Full Year Results september Security price quoted ex distribution september Final distribution record date september Final distribution payable november Annual General Meeting

Contact details

Registered office

Level 4, 30 The Bond, 30 Hickson Road Millers Point NSW 2000 Australia

Contact

T: +61 2 9236 6111 F: +61 2 9252 2192 W: www.lendlease.com

Share registry information

Computershare Investor Services Pty Limited ABN 48 078 279 277 GPO Box 242, Melbourne, Victoria 3001 Australia

1300 850 505 (within Australia)

+61 3 9415 4000 (outside Australia)

Environmental credentials

By using ecoStar offset rather than a non recycled paper, the environmental impact was reduced by:

1,718.4kg of landfill 326kg of CO2 of greenhouse gases 2,329km travel in the average European car 37,721 litres of water 3,485kWh of energy 2,794kg of wood

Source:

European BREF (data on virgin fibre paper). Carbon footprint data audited by the Carbon Neutral Company.

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Lend Lease group Level 4 30 The Bond 30 Hickson Road Millers Point NSW 2000 T +61 2 9236 6111 F +61 2 9252 2192 www.lendlease.com

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AI assistant

LENDLEASE GROUP — Annual Report 2011

65243_rns_2011-10-06_5c8017c6-dd31-427c-ac33-25c51125b814.pdf

ASX Announcement

2011 Annual Report to Securityholders and 2011 Securityholder Review

7 October 2011

ENDS

Investor Relations:

Contents

Chief exeCutive offiCer’s report

progress on strategy

people

infrastructure acquisition

Building a platform for growth

CorporAte GovernAnCe

Commitment to Governance

Date of this Corporate Governance statement

Governance structure

1. Composition of the Board

relevant governance documents (see www.lendlease.com)

1.1 Composition and Membership

1.2 Independent Directors

1.3 Chairman of the Board

1.4 Retirement and Re-election of Directors

1.5 Selection and Appointment of New Directors

1.6 Induction and Briefing Programmes

1.7 Directors’ Remuneration

Retirement Benefits Plan

2. role and responsibilites

2.1 Board Responsibilities

CorporAte GovernAnCe CONTINUED

2.2 Meetings

2.3 Board Performance

External Review

Internal Review and Assessment

2.4 Independent Decision Making

2.5 Group Company Secretary

2.6 Senior Management

Structure

Performance Review

Remuneration

3. Board Committees

relevant policies and charters (see www.lendlease.com)

3.1 Overview of Board Committees

CorporAte GovernAnCe CONTINUED

4. risk Management

relevant governance documents

(see www.lendlease.com)

4.1 Enterprise Risk Management

4.2 Risk Management Reporting

4.3 Key Risk Management Practices

4.4 Key Policies

4.5 Integrity in Financial Reporting, Risk Management and Internal Control

4.6 External Auditor

Performance Management

Selection, Appointment and Rotation

Provision of Non Audit and Other Services

Attendance at Annual General Meeting

Auditor’s Independence

Fees

5. Governance policies

relevant governance documents

(see www.lendlease.com)

5.1 Securityholder Communications and Continuous Disclosure

Communications with Securityholders

Annual General Meeting

CorporAte GovernAnCe CONTINUED

5.2 Lend Lease Core Values and Code of Conduct

Core Values

Code of Conduct

Code of Conduct Breach Reporting

5.3 Conflicts of Interest

5.4 Trading in Lend Lease Securities

5.5 Political Donations

6. Diversity and inclusion Governance

6.1 Diversity and Inclusion Policy

6.2 Gender Diversity

MAnAGeMent DisCussion AnD AnALysis of finAnCiAL ConDition AnD resuLts of operAtions (MD&A)

tA B L e o f C o n t e n t s

introduction

LENDLEASE GROUP Annual Report 2011