LENDLEASE GROUP — Annual Report 2014

Aug 26, 2014

ASX Announcement

Full Year Financial Report – Lend Lease Trust

27 August 2014

Attached is the full year Financial Report for the year ended 30 June 2014 for the Lend Lease Trust.

ENDS

For further information, please contact:

Investors: Media: Suzanne Evans Vivienne Bower Tel: 02 9236 6464 / 0407 165 254 Tel: 02 9277 2174 / 0431 487 025

Head of Investor Relations Group Head of Corporate Affairs and Investor Relations

Lend Lease Trust ARSN 128 052 595

Annual Financial Report

June 2014

Lead Lease Responsible Entity Limited ABN 72 122 883 185 AFSL No. 308983 is the responsible entity of the Lend Lease Trust ARSN 128 052 595

Table of Contents

	Directors' Report	1
	Lead Auditor's Independence Declaration under Section 307C of the Corporations Act 2001	4
	Financial Statements
	Statement of Comprehensive Income	5
	Statement of Financial Position	5
	Statement of Changes in Equity	6
	Statement of Cash Flows	6
	Notes to the Financial Statements
1.	Significant Accounting Policies	7
2.	Revenue and Other Income	10
3.	Finance Revenue	10
4.	Distributions	10
5.	Earnings per Unit	11
6.	Cash and Cash Equivalents	11
7.	Loans and Receivables	11
8.	Equity Accounted Investments	12
9.	Other Financial Assets	14
10.	Borrowings and Financing Arrangements	15
11.	Issued Capital	15
12.	Financial Instruments	16
13.	Notes to the Statement of Cash Flows	18
14.	Related Party Information	18
15.	Audit Fees	18
16.	Commitments	18
17.	Contingent Liabilities	19
18.	Events Subsequent to Balance Date	19
	Directors' Declaration	20

Directors' Report

The Directors of Lend Lease Responsible Entity Limited (ABN 72 122 883 185), the Responsible Entity of Lend Lease Trust ('the Trust'), present their Report together with the Annual Financial Report of the Trust, for the year ended 30 June 2014 and the Auditor's Report thereon.

The Responsible Entity is a wholly owned subsidiary of Lend Lease Corporation Limited ('the Company') and forms part of the consolidated Lend Lease Group ('the Group'). The registered office and principal place of business of the Responsible Entity is Level 4, 30 The Bond, 30 Hickson Road, Millers Point NSW 2000.

1. Governance

a. Board/Directors

The name of each person who has been a Director of the Responsible Entity between 1 July 2013 and the date of this Report are:

D A Crawford, AO	Chairman and Director since 2009
S B McCann	Group Chief Executive Officer & Managing Director since 2009
C B Carter, AM	Director since 2012
P M Colebatch	Director since 2009
G G Edington, CBE	Retired November 2013
P C Goldmark	Director since 2009
J S Hemstritch	Director since 2011
D J Ryan, AO	Director since 2009
M J Ullmer	Director since 2011
N M Wakefield Evans	Appointed September 2013

b. Company Secretary

W Lee

Ms Lee was appointed in January 2010.

The qualifications and experience of each person holding the position of Director and Company Secretary of the Responsible Entity at the date of this Report is detailed in the 2014 Lend Lease Group Annual Report.

c. Interest in Capital

The interest of each of the Directors (in office at the date of this Report) in the issued stapled securities of the Group at 27 August 2014 is set out below.

Director	Securities Held Directly 2014	Securities Held Beneficially/ Indirectly 20141	Total 2014	Securities Held Directly 2013	Securities Held Beneficially/ Indirectly 20131	Total 2013
D A Crawford	809	75,650	76,459	778	74,773	75,551
S B McCann	525,784	154,443	680,227	292,961	154,443	447,404
C B Carter		15,000	15,000		15,000	15,000
P M Colebatch	5,023	13,300	18,323	5,023	13,300	18,323
G G Edington2				22,998	17,070	40,068
P C Goldmark	8,441	16,353	24,794	6,892	17,902	24,794
J S Hemstritch		20,000	20,000		20,000	20,000
D J Ryan	15,792	15,481	31,273	15,792	15,481	31,273
M J Ullmer		25,000	25,000		25,000	25,000
N M Wakefield Evans		4,000	4,000			–

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

2 G G Edington retired on 15 November 2013.

Directors' Report continued

2. Operations

a. Principal Activities

The principal activities of the Trust include direct and indirect property investments in the Australia region. For the year ended 30 June 2014 the Trust had ownership interests in indirect property investments in the Australia region.

b. Review and Results of Operations

For the year ended 30 June 2014 the Trust reported a profit after tax of A\$71,369,000 (June 2013: profit of A\$10,579,000).

Key transactions during the year include:

• The acquisition of units in Australian Prime Property Fund Commercial A\$225,000,000 and Australian Prime Property Fund Industrial A\$239,059,000;
• The sale of 10% interest in Lend Lease International Towers Sydney Trust with a carrying value of A\$47,162,000. The Trust still retained a 15% interest in the investment after sale; and
• Further commitment of A\$18,250,000 invested into Lend Lease International Towers Sydney Trust.

c. Distributions

For the year ended 30 June 2014 the Trust declared distributions of A\$66,644,000 (June 2013: A\$6,589,000). Distributions of A\$25,951,000 were paid on 21 March 2014. The remaining distributions of A\$40,693,000 were provided for as at 30 June 2014 and will be paid on 22 September 2014.

d. Going Concern

The Financial Report has been prepared on a going concern basis. In preparing these financial statements, the Directors note that the Trust is in a net current asset deficiency position of A\$46,263,000 (June 2013: surplus of A\$416,913,000) due to a related party loan of A\$72,000,000 payable to Lend Lease Finance.

Lend Lease Corporation has provided a letter of financial support to the Trust to enable the Trust to continue its operations and fulfil all its financial obligations for at least the next 12 months.

e. Significant Changes in State of Affairs

There have been no significant changes in the Trust's state of affairs.

f. Events Subsequent to Balance Date

There were no material events subsequent to the end of the financial year.

g. Likely Developments

Details of likely developments in the operations of the Trust in subsequent financial years are contained in the likely developments section of the Directors Report in the Lend Lease Group Annual Report.

h. Environmental Regulation

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

The Directors are not aware of any material non compliance with environmental regulations pertaining to the operations or activities during the period covered by this Report. In addition, the 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.

3. Other

a. Security Options

No security options were issued during the year by the Trust, and there are no such options on issue.

Directors' Report continued

3. Other continued

b. Indemnification and Insurance of Directors and Officers

Rule 12 of the Trust's Constitution provides for indemnification in favour of each of the Directors named on page one of this Report; the officers of the Responsible Entity or of wholly owned subsidiaries or related entities of the Responsible Entity ('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.

Each of the Directors is also a Director of the Company and has entered into a Deed of Indemnity, Insurance and Access with the Company. That indemnity extends to indemnify each of the Directors in respect of their roles as officers of the Responsible Entity. The Responsible Entity has not entered into separate deeds of indemnity with the Directors.

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

In accordance with the Corporations Act 2001, Rule 12 of the Constitution also permits the Responsible Entity 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. Due to confidentiality obligations and undertakings for the policy, no further details in respect of the premium or policy can be disclosed.

c. Special rules for Registered Schemes

A\$768,000 in fees and other expenses were paid or are payable to Lend Lease Corporation Limited and its associates out of the assets of the Trust for the financial year ended 30 June 2014 (June 2013: A\$431,000).

No units in the Trust were held by the Responsible Entity at the end of the financial year. Associates of the Responsible Entity held 36,280,632 units as at the end of the financial year.

Details of the units issued in the Trust during the financial year are set out in the Statement of Changes in Equity.

Details of the value of the Trust assets as at the end of the financial year and the basis of the valuation are set out in the Statement of Financial Position and Note 1 to the Financial Statements.

Details of the number of Units in the Trust as at the end of the financial year are set out in Note 11 'Issued Capital'.

d. Lead Auditor's Independence Declaration under Section 307C of the Corporations Act 2001

The Lead Auditor's Independence Declaration is set out on page four and forms part of the Directors' Report for the year ended 30 June 2014.

e. Rounding Off

Lend Lease Trust is a Trust 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 financial statements and directors' report have been rounded off to the nearest thousand dollars, or, where the amount is A\$500 or less, zero, unless specifically stated otherwise.

D A Crawford, AO S B McCann

Sydney, 27 August 2014

Chairman Group Chief Executive Officer & Managing Director

Statement of Comprehensive Income

Year ended 30 June 2014

		June 2014	June 2013
	Note	A\$'000	A\$'000
Revenue and other income	2	50,460	412
Other expenses		(2,249)	(892)
Results from operating activities		48,211	(480)
Finance revenue	3	2,561	7,069
Net finance revenue		2,561	7,069
Share of profit of equity accounted investments	8	20,597	3,990
Profit before tax		71,369	10,579
Income tax expense
Profit after tax		71,369	10,579
Other comprehensive income net of tax
Total comprehensive income after tax		71,369	10,579
Basic/diluted earnings per unit (cents)	5	12.38	1.84

Statement of Financial Position

As at 30 June 2014

	Note	June 2014 A\$'000	June2013 A\$'000
Current Assets
Cash and cash equivalents	6	48,295	421,038
Loans and receivables	7	18,643	1,731
Total current assets		66,938	422,769
Non Current Assets
Loans and receivables	7	11,056
Equity accounted investments	8	80,925	89,240
Other financial assets	9	467,555
Total non current assets		559,536	89,240
Total assets		626,474	512,009
Current Liabilities
Trade and other payables		508	154
Distributions payable	4	40,693	5,702
Borrowings and financing arrangements	10	72,000
Total current liabilities		113,201	5,856
Total liabilities		113,201	5,856
Net assets		513,273	506,153
Equity
Issued capital	11	504,717	502,322
Retained earnings		8,556	3,831
Total equity attributable to unitholders		513,273	506,153

Financial Statements continued

Statement of Changes in Equity

Year ended 30 June 2014

	Note	June 2014 A\$'000	June 2013 A\$'000
Issued Capital
Opening balance at beginning of financial year Recapitalisation of Lend Lease Trust		502,322	572 500,300
Units issued through Distribution Reinvestment Plan (DRP)		2,395	1,450
Closing balance at end of financial year	11	504,717	502,322
Retained Earnings
Opening balance at the beginning of financial year		3,831	(159)
Profit after tax		71,369	10,579
Distributions paid and provided for	4	(66,644)	(6,589)
Closing balance at end of financial year		8,556	3,831

Statement of Cash Flows

Year ended 30 June 2014

	June 2014	June 2013
Note	A\$'000	A\$'000
Cash Flows from Operating Activities
Cash receipts in the course of operations	1,849
Cash payments in the course of operations	(1,895)	(738)
Interest received	3,506	5,751
Distributions received	17,899
13a Net cash provided by operating activities	21,359	5,013
Cash flows from Investing Activities
Acquisition of investment in joint venture	(18,250)	(85,250)
Sale of investment in joint venture	45,465
Acquisition of other financial assets	(464,059)
Net cash (used in) investing activities	(436,844)	(85,250)
Cash Flows from Financing Activities
Recapitalisation		500,300
Net proceeds from equity issue		1,450
Proceeds from borrowings	72,000
Distributions paid	(29,258)	(887)
Net cash provided by financing activities	42,742	500,863
Net (decrease)/increase in cash and cash equivalents	(372,743)	420,626
Cash and cash equivalents at beginning of financial year	421,038	412
Cash and cash equivalents at end of financial year 13b	48,295	421,038

Notes to the Financial Statements

1. Significant Accounting Policies

Lend Lease Trust ('the Trust') is domiciled in Australia.

The shares of the Company and the units in the Trust were combined as stapled securities and from 13 November 2009 have been traded as one security under the name of Lend Lease Group on the Australian Securities Exchange ('ASX').

The financial report was authorised for issue by the Directors on 27 August 2014.

1.1 Statement of Compliance

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards ('AASBs') adopted by the Australian Accounting Standards Board and the Corporations Act 2001. The financial report of the Trust also complies with International Financial Reporting Standards ('IFRSs') adopted by the International Accounting Standards Board.

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, which are stated at their fair value: fair value through profit or loss investments.

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 and liabilities and 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 of making the 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 Trust's accounting policies is set out in Note 1.7.

In accordance with Australian Securities and Investment Commission Class Order 98/100 dated 10 July 1998, amounts in the financial report are rounded off to the nearest thousand dollars unless otherwise indicated.

The accounting policies which are associated with a particular note are described in the note to which it relates.

Accounting policies have been consistently applied by the Trust and are consistent with those applied in the 30 June 2013 annual financial statements with the exception of the addition of the new significant accounting policies as stated in Note 1.3 'Impact of New/Revised Accounting Standards', Note 2 'Revenue and Other Income', Note 8 'Equity Accounted Investments', Note 9 'Other Financial Assets' and Note 10 'Borrowings and Financing Arrangements'.

Going Concern Basis of Preparation

The Financial Report has been prepared on a going concern basis. In preparing these financial statements, the Directors note that the Trust is in a net current asset deficiency position of A\$46,263,000 (June 2013: surplus of A\$416,913,000) due to a related party loan of A\$72,000,000 payable to Lend Lease Finance.

Lend Lease Corporation has provided a letter of financial support to the Trust to enable the Trust to continue its operations and fulfil all its financial obligations for at least the next 12 months.

1. Significant Accounting Policies continued

1.3 Impact of New/Revised Accounting Standards

New and Revised Accounting Standards Adopted 1 July 2013

The table below represents new and revised accounting standards, together with consequential amendments relevant to the Trust's results at 30 June 2014.

Accounting Standard	Requirement	Impact on Financial Statements
AASB 10 Consolidated Financial Statements and consequential amendments	AASB 10 introduces a new definition of control in determining whether an entity should be included within the consolidated financial statements of the parent company. AASB 10 replaces parts of AASB 127 Consolidated and Separate Financial Statements and UIG-112 Consolidation – Special Purpose Entities. The new standard has been applied with retrospective application.	As a result of adopting the new standard, there has been no significant impact on the Trust's financial position and performance.
AASB 11 Joint Arrangements and consequential amendments	AASB 11 establishes principles for financial reporting by parties to a joint arrangement. AASB 11 replaces AASB 131 Interests in Joint Ventures and UIG-113 Jointly Controlled Entities – Non-monetary Contributions by Venturers. The new standard has been applied with retrospective application. The Trust has revised its accounting policies to reflect this change. Refer to Note 8 'Equity Accounted Investments' for revised accounting policies.	There has been no significant financial impact to the Trust as a result of adopting this standard.
AASB 12 Disclosure of Interests in Other Entities	AASB 12 relates to disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. The new standard has been applied with retrospective application.	As a result of adopting the new standard, new disclosures have been introduced about the judgements made to determine whether control exists and summarised financial information about certain material joint arrangements and associates. Refer to Note 8 'Equity Accounted Investments'.
AASB 13 Fair Value Measurement and consequential amendments	AASB 13 introduces new guidance on fair value measurement and disclosure requirements when fair value is permitted by accounting standards. There have been no significant changes to the Trust's accounting policies where fair value is used as a measurement basis or disclosures on fair value are required. The new standard has been applied with prospective application.	As a result of adopting the new standard, there has been no significant impact on the Trust's financial position and performance. Disclosures required under the new standard in relation to the fair value hierarchy have been included in Note 12e 'Fair Value Measurement'.
AASB 2012-2 Disclosure – Offsetting Financial Assets and Financial Liabilities	AASB 2012-2 introduces new disclosure requirements for offsetting and netting arrangements for recognised financial assets and recognised financial liabilities.	As a result of adopting the new standard, there have been no significant changes to the Trust's disclosures.
AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non Financial Assets	AASB 2013-3 removes the requirements to disclose recoverable amounts for cash generating units (CGUs) that contain goodwill or identifiable assets with indefinite useful lives if there has been no impairment. It also requires the disclosure of the recoverable amount of an asset or CGU where an impairment loss has been recognised or reversed and detailed disclosures of how fair value less costs of disposal has been measured where applicable for an impairment loss or reversal. The amendment has been early adopted by the Trust for the year ended 30 June 2014.	As a result of adopting the amendment, there have been no significant changes to the Trust's disclosures.

1. Significant Accounting Policies continued

1.3 Impact of New/Revised Accounting Standards continued

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 2014 but are available for early adoption and have not been applied in preparing this report.

Accounting Standard	Requirement	Impact on Financial Statements
AASB 9 Financial Instruments and consequential amendments	AASB 9 addresses the classification, measurement and derecognition of financial assets, financial liabilities, and hedging. The standard becomes mandatory for the June 2019 financial year, and will be applied prospectively.	Based on the preliminary analyses performed, AASB 9 and consequential amendments are not expected to have a material impact on the Trust.
AASB 2013-5 Amendments to Australian Accounting Standards – Investment Entities	AASB 2013-5 provides an exemption from consolidation of subsidiaries under AASB 10 for entities that meet the definition of an 'investment entity', such as certain investment funds. Instead, such entities would measure their investment in particular subsidiaries at fair value through profit or loss. The standard becomes mandatory for the June 2015 financial year, and will be applied retrospectively.	Based on preliminary analyses performed, the amendments are not expected to have any impact on the Trust.
IFRS 15 Revenue from Contracts with Customers	IFRS 15 provides a new five step model for recognising revenue earned from a contract with a customer and will replace the existing AASB 118 Revenue and AASB 111 Construction Contracts. The standard becomes mandatory for the June 2018 financial year, and will be applied retrospectively.	The potential effect of this standard is yet to be determined.

1.4 Income Tax

Under current Australian income tax legislation the Trust is not liable for income tax, including capital gains tax, to the extent that unitholders are presently entitled to the taxable income of the Trust.

1.5 Trade and Other Payables

Trade and other payables are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the Trust. Trade and other payables are stated at amortised cost or at cost when the impact of discounting would be immaterial.

Trade and other payables are presented as current liabilities unless there is an unconditional contractual right for the Trust to defer payment for at least 12 months from the reporting date.

1.6 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.

1.7 Key Sources of Estimation Uncertainty

Valuation of Financial Assets and Liabilities

Where financial assets and liabilities are carried at fair value, the fair value is based on assumptions of future events and involves estimates. Refer to Note 12e 'Fair Value Measurement' for a summary of the basis of valuation of financial assets and liabilities measured at fair value including the level in the fair value hierarchy in which such valuations have been classified.

2. Revenue and Other Income

Accounting Policies

Revenue is measured at the fair value of the consideration received or receivable and is recognised when the amount can be reliably measured and future economic benefits will flow to the Trust.

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

Other Income

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

Net gains or losses on fair value remeasurements are recognised in accordance with the policies stated in Note 9 'Other Financial Assets'.

Financial Disclosure	June 2014 A\$'000	June 2013 A\$'000
Distribution income	26,371
Net gain on sale of equity accounted investments	19,511
Net gain on fair value remeasurement of fair value through profit or loss assets	3,496
Other income – related parties	1,082	412
Total revenue and other income	50,460	412

3. Finance Revenue

Accounting Policies

Finance revenue is recognised on a time proportion basis using the effective interest method

Financial Disclosure	June 2014 A\$'000	June 2013 A\$'000
Finance revenue – external parties Finance revenue – related parties	2,561	6,713 356
Total revenue and other income	2,561	7,069

4. Distributions

	Cents	June 2014	June 2013
	Per Unit	A\$'000	A\$'000
Lend Lease Trust Interim Distribution
December 2013 – paid 21 March 2014	4.5	25,951
December 2012 – paid 27 March 2013	0.2		887
		25,951	887
Lend Lease Trust Final Distribution
June 2014 – provided for (payable 22 September 2014)	7.0	40,693
June 2013 – paid 27 September 2013	1.0		5,702
		40,693	5,702
		66,644	6,589

5. Earnings per Unit

Accounting Policies

.

Basic earnings per unit ('EPU') is determined by dividing profit/(loss) after tax attributable to the unitholders of the Trust, excluding any costs of servicing equity other than ordinary units, by the weighted average number of ordinary units outstanding during the financial year, adjusted for bonus elements in ordinary units issued during the financial year. Diluted EPU is determined by adjusting the profit/(loss) after tax attributable to the unitholders of the Trust and the weighted average number of ordinary units outstanding for the effects of all dilutive potential ordinary units

Financial Disclosure		June 2014	June 2013
Basic/Diluted Earnings Per Unit (EPU)
Profit after tax	A\$'000	71,369	10,579
Weighted average number of units (000's)		576,630	574,265
Basic/diluted EPU (cents)		12.38	1.84

6. Cash and Cash Equivalents

Accounting Policies

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

Bank overdrafts (if applicable) are shown as a current liability on the Statement Financial Position and are shown as a reduction to the cash balance in the Statement of Cash Flows.

Financial Disclosure	June 2014 A\$'000	June 2013 A\$'000
Cash	94	42,461
Short term investments	48,201	378,577
Total cash and cash equivalents	48,295	421,038

Short term investments earned variable rates of interest which averaged 2.8% per annum during the year ended 30 June 2014 (30 June 2013 average interest rate: 3.2% per annum).

7. Loans and Receivables

Accounting Policies

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 Trust 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 fair value, which is estimated as the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the Statement of Comprehensive Income.

Financial Disclosure	June 2014 A\$'000	June 2013 A\$'000
Current
Other receivables – external parties	18,643	963
Other receivables – related parties		768
Total current	18,643	1,731
Non Current
Other receivables – external parties	11,056
Total non current	11,056	–
Total loans and receivables	29,699	1,731

8. Equity Accounted Investments

Accounting Policies

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

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

The financial statements include the Trust's share of the total recognised gains or losses of associates and joint ventures 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, this is from the date joint control commences until the date joint control ceases.

Other movements in associates' and joint ventures' reserves are recognised directly in the Trust's reserves. Investments in associates and joint ventures are carried at the lower of the equity accounted carrying amount and the recoverable amount. When the Trust'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 Trust has recourse to obligations in respect of the associate or joint venture.

Distributions from associates and joint ventures represent a return on the Trust's investment and as such are applied as a reduction to the carrying value of the investment. Unrealised gains arising from transactions with equity accounted investments are eliminated against the investment in the associate or joint venture to the extent of the Trust's interest in the associate or joint venture. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Financial Disclosure					June 2014 A\$'000	June 2013 A\$'000
a. Joint Ventures
Investment in Joint Ventures					80,925	89,240
	Interest June 2014 %	June 2013 %	Share of Profit June 2014 A\$'000	June 2013 A\$'000	Net Book Value June 2014 A\$'000	June 2013 A\$'000
Joint Ventures
Lend Lease International Towers Sydney Trust1	15.0	25.0	20,597	3,990	80,925	89,240
1 Sale of 10% interest in Lend Lease International Towers Sydney Trust did not change the assessment of joint control.

b. Material Joint Ventures summarised financial information

The table below provides summarised financial information for those joint ventures that are material to Lend Lease Trust. The information disclosed reflects the amounts presented in the financial statements of the relevant joint ventures and are not the reporting entities share of those amounts. They have been amended to reflect adjustments made by Lend Lease Trust when using the equity method, including fair value adjustments and differences in accounting policies.

		Lend Lease International Towers Sydney Trust
	June 2014 A\$'000	June 2013 A\$'000
Statement of Comprehensive Income
Revenue from provision of services
Interest income	52	165
Depreciation and amortisation
Fair value revaluations	112,820	18,290
Interest expense
Other expenses	(3,334)	(2,494)
Income tax expense
Profit for the period	109,538	15,961
Other comprehensive income
Total comprehensive income	109,538	15,961
Dividends received from joint ventures	–	–
Lend Lease Trust's share of comprehensive income of joint ventures	20,597	3,990

8. Equity Accounted Investments continued

b. Material Joint Ventures summarised financial information continued

	Lend Lease International Towers Sydney Trust
	June 2014 A\$'000	June 2013 A\$'000
Statement of Financial Position
Current Assets
Cash and cash equivalents	936	2,440
Other current assets	2,927	17,268
Total current assets	3,863	19,708
Non current assets	1,233,520	871,183
Total non current assets	1,233,520	871,183
Current liabilities
Financial liabilities (excluding trade payables)	225,788
Other current liabilities	138,691	133,747
Total current liabilities	364,479	133,747
Non current liabilities
Financial liabilities (excluding trade payables)	132,673
Other non current liabilities	200,732	400,183
Total non current liabilities	333,405	400,183
Net assets	539,499	356,961
Reconciliation to Carrying Amounts
Opening net assets 1 July	356,961
Profit for the period	109,538	15,961
Acquisition/contributions	73,000	341,000
Closing net assets	539,499	356,961
Lend Lease Trust's share of net assets and carrying amount at end of year	80,925	89,240

9. Other Financial Assets

Accounting Policies

The Trust classifies its investments in equity securities as financial assets at fair value through profit or loss.

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 the Trust 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 in line with the Trust's documented risk management or investment strategy (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.

Recognition and Measurement Criteria

Purchases and sales of investments are recognised on trade date – the date on which the Trust 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 Trust 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 Statement of Comprehensive Income 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 Statement of Comprehensive Income 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 Trust 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 12e 'Fair Value Measurement' for a summary of the basis of valuation of investments measured at fair value.

Financial Disclosure	June 2014 A\$'000	June 2013 A\$'000
Non Current Measured at Fair Value
Fair Value Through Profit or Loss – Designated at Initial Recognition
Australian Prime Property Fund – Industrial	239,318
Australian Prime Property Fund – Commercial	228,237
Total other financial assets	467,555	–

10. Borrowings and Financing Arrangements

Accounting Policies

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

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

Financial Disclosure	June 2014 A\$'000	June 2013 A\$'000
Current Loan from related party	72,000
Total borrowings	72,000	–

During the current year, the Trust made a drawdown of A\$72,000,000 on a non interest bearing Revolving Loan Facility entered into with a related party in the Lend Lease Group. In accordance with the loan agreement, this loan is repayable in full on the maturity date being May 2022 or on such earlier date as the lender determines.

Financial Arrangements

The Trust has access to the following financial facilities:

	June 2014 A\$'000	June 2013 A\$'000
Related party loan facility
Facility available	300,000
Amount of facility used	(72,000)
Amount of facility unused	228,000	–

11. Issued Capital

Accounting Policies

Ordinary units are classified as equity. When issued capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a change in equity. Distributions are recognised as a liability in the financial year in which they are declared.

Financial Disclosure	June 2014 No of units 000's	June 2014 A\$'000	June 2013 No of units 000's	June 2013 A\$'000
Issued Capital
Issued capital at beginning of financial year	575,508	502,322	572,790	572
Recapitalisation of Lend Lease Trust				500,300
Distribution Reinvestment Plan (DRP)	1,968	2,395	2,718	1,450
Issued capital at end of financial year	577,476	504,717	575,508	502,322

Issuance of Securities

At 30 June 2014 Lend Lease Trust had 577,475,833 units on issue equivalent to the number of Lend Lease Corporation shares on issue. The issued units of the Trust and shares on issue by Lend Lease Corporation Limited are stapled securities.

Security Accumulation Plans

The Distribution Reinvestment Plan ('DRP') was reactivated in February 2011. The last date for receipt of an election notice for participation in the DRP is 4 September 2014. 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 five consecutive business days immediately following the record date for determining entitlements to distribution. If that price is less than 50 cents, the issue price will be 50 cents. Stapled securities issued under the DRP rank equally with all other stapled securities on issue.

Terms and Conditions

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

Stapled securityholders have the right to receive declared dividends from the Company and distributions from the Trust and are entitled to one vote per stapled security at securityholders' meetings. Ordinary stapled securityholders rank after all creditors in repayment of capital.

12. Financial Instruments

a. Credit Risk

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted. The credit risk on financial assets recognised in the Statement of Financial Position equals the carrying amount. No provision for doubtful debts has been raised as no impairment has been identified.

b. Liquidity Risk

Liquidity Risk is the risk of having insufficient availability of funds to settle financial liabilities as and when they fall due. The Trust held the following financial liabilities at 30 June 2014:

	Carrying Amount A\$'000	Contractual Cash Flows A\$'000	Less than One Year A\$'000	One to Two Years A\$'000	Two to Five Years A\$'000	More than Five Years A\$'000
June 2014
Trade and other payables	508	508	508
Distributions payable	40,693	40,693	40,693
Borrowings and financing arrangements1	72,000	72,000	72,000
	113,201	113,201	113,201	–	–	–
June 2013
Trade and other payables	154	154	154
Distributions payable	5,702	5,702	5,702
	5,856	5,856	5,856	–	–	–

1 The Trust is in a net current asset deficiency position of A\$46,263,000 (June 2013: surplus of A\$416,913,000) due to a related party loan of A\$72,000,000 payable to Lend Lease Finance. Lend Lease Corporation has provided a letter of financial support to the Trust to enable the Trust to continue its operations and fulfil all its financial obligations for at least the next 12 months.

c. Currency Risk

The Trust does not have an exposure to currency risk.

d. Interest Rate Risk

Interest rate risk is the risk that the value of a financial instrument of cash flow associated with the instrument will fluctuate due to change in the market interest rates.

Sensitivity Analysis

At 30 June 2014 it is estimated that an increase of one percentage point in interest rates would have increased the Trust's profit before tax by approximately A\$837,000 (June 2013: A\$1,832,000). A one percentage decrease would have an equal and opposite effect on equity and profit or loss. The increase or decrease in interest income/expense is proportional to the increase or decrease in interest rates.

The Trust's exposure to interest rate risk on financial instruments is set out below, the Trust has no fixed rate instruments.

		Carrying Amount
		June 2014	June 2013
	Note	A\$'000	A\$'000
Variable Rate Instruments
Cash and cash equivalents	6	48,295	421,038

e. Fair Value Measurement

Basis of Determining Fair Value

The determination of fair values of financial assets and liabilities that are not measured at cost or amortised cost in the financial report are summarised as follows:

• 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; and
• 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.

12. Financial Instruments continued

e. Fair Value Measurement continued

Fair Value Measurements

The table below analyses financial assets and liabilities carried at fair value, by valuation method. The different levels have been defined as follows:

• Level 1: The fair value is determined using the unadjusted quoted price for an identical asset or liability in an active market for identical assets or liabilities;
• Level 2: The fair value is calculated using predominantly observable market data other than unadjusted quoted prices for an identical asset or liability; and
• Level 3: The fair value is calculated using inputs that are not based on observable market data.

	Note		Carrying Amount
		Level 1 A\$'000	Level 2 A\$'000	Level 3 A\$'000	Total A\$'000
June 2014
Financial Assets
Fair value through profit or loss – unlisted equity investments	9			467,555	467,555
		–	–	467,555	467,555

During the year there were no transfers between Level 1, Level 2 and Level 3 fair value hierarchies.

	Note	Carrying Amount
		Level 1 A\$'000	Level 2 A\$'000	Level 3 A\$'000	Total A\$'000
June 2013

Financial Assets

		–	–	–	–
Fair value through profit or loss – unlisted equity investments	9

Reconciliation

Reconciliation of the carrying amount for Level 3 financial instruments is set out as follows.

	June 2014 Unlisted Equity Investments A\$'000	June 2013 Unlisted Equity Investments A\$'000
Carrying amount at beginning of financial period
Additions/disposals	464,059
Gains/losses recognised in Statement of Comprehensive Income – revenue and other income	3,496
Carrying amount at end of financial year	467,555	–

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

13. Notes to the Statement of Cash Flows

	June 2014 A\$'000	June 2013 A\$'000
a. Reconciliation of Profit After Tax to Net Cash Provided by Operating Activities
Profit after tax Profit of equity accounted investment Gain on sale of equity accounted investment Fair value gain on fair value through profit or loss assets	71,369 (20,597) (19,511) (3,496)	10,579 (3,990)
Changes in assets and liabilities
(Increase) in receivables	(6,760)	(1,730)
Increase in payables	354	154
Net cash provided by operating activities	21,359	5,013
b. Cash and Cash Equivalents
Disclosed in the Statement of Financial Position as follows:
Cash	94	42,461
Short term investments	48,201	378,577
Total cash and cash equivalents	48,295	421,038

14. Related Party Information

Key Management Personnel Disclosures

The Trust does not employ personnel in its own right. However it is required to have an incorporated Responsible Entity to manage its activities. The Responsible Entity is considered to be the Key Management Personnel of the Trust.

Responsible Entity's Remuneration

In accordance with the Trust's Constitution, the Responsible Entity is entitled to receive costs incurred in performance of its duties and expense reimbursements where expenses have been incurred on behalf of the Trust.

As at 30 June 2014, A\$768,000 (June 2013: A\$431,000) was charged to the Trust, the amount owed to the Responsible Entity was A\$nil (June 2013: A\$nil).

Other Related Party Transactions

The Trust received other income of A\$1,082,000 from the Company (June 2013: A\$412,000) and as at 30 June 2014, A\$nil (June 2013: A\$412,000) was receivable from the Company. In addition the Trust had finance income of A\$nil which was receivable from the Company (June 2013: A\$356,000).

15. Audit Fees

During the year audit fees of A\$53,000 (June 2013: A\$31,000) were incurred and A\$34,000 was accrued to 30 June 2014 (June 2013: A\$11,000).

Other audit services charges for the year ended 30 June 2014 totalled A\$26,000 (June 2013: A\$46,000).

16. Commitments

	June 2014 A\$'000	June 2013 A\$'000
At balance date, capital commitments existing in respect of interests in equity accounted investments in the financial statements are as follows:
Due within one year	141,279	73,079
Due between one and five years	96,621	341,671
	237,900	414,750

17. Contingent Liabilities

In certain circumstances, the Trust, as part of the Stapled Group, 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. These guarantees are provided in respect of activities that occur in ordinary course of business and any known losses in respect of the relevant contracts have been brought to account.

The Trust does not have any other contingent liabilities at 30 June 2014.

18. Events Subsequent to Balance Date

There were no material events subsequent to the end of the financial year.

Directors' Declaration

In the opinion of the Directors of Lend Lease Responsible Entity Limited, the Responsible Entity of Lend Lease Trust ('the Trust'):

• 1. The financial statements and notes are in accordance with the Corporations Act 2001, including:
• a. Giving a true and fair view of the financial position of the Trust as at 30 June 2014 and of its performance for the financial year ended on that date; and
• b. Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.
• 1. The financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1.1.
• 1. There are reasonable grounds to believe that the Trust will be able to pay its debts as and when they become due and payable.
• 1. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2014.

Signed in accordance with a resolution of the Directors:

D A Crawford, AO S B McCann

Sydney, 27 August 2014

Chairman Group Chief Executive Officer & Managing Director