LENDLEASE GROUP — Annual Report 2015

Sep 29, 2015

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30 September 2015
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2015 Annual Report to Securityholders

30 September 2015

Copy of the 2015 Annual Report to securityholders of Lend Lease is attached. It is also available online at www.lendlease.com. The 2015 Annual Report will be sent to securityholders who have elected to receive a copy.

The 2015 Lend Lease Annual General Meetings will be held in the Ballroom, Four Seasons Hotel, 199 George Street, Sydney NSW on Friday 13 November 2015 at 10.00am. Please note that the Notice of Meeting and Securityholder Review will be dispatched in the coming weeks, either electronically or via mail depending on the elected method of delivery.

ENDS

FOR FURTHER INFORMATION, PLEASE CONTACT:

Investors: Suzanne Evans Tel: 02 9236 6464 Mob: 0407 165 254

Media: Nadeena Whitby Tel: 02 9236 6865 Mob: 0467 773 032

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

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

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

ANNUAL REPORT 2015

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CONTENTS

Chairman’s Report	4
Chief Executive Ofcer’s Report	5
Corporate Governance Statement	6
Directors’ Report	17
Lead Auditor’s Independence Declaration	75
Five Year Profle	77
Consolidated Financial Statements	78
Securityholder Information	142
Portfolio Report	146
Corporate Directory	167
Lend Lease Corporation Limited ABN 32 000 226 228
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

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ANNUAL REPORT 2015 | LEND LEASE

LEND LEASE | ANNUAL REPORT 2015

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Strong Financial Performance

Lend Lease delivered a strong performance for the financial year ended 30 June 2015, with Profit after Tax of $619 million, versus $823 million in the financial year ended 30 June 2014, which included profit from the sale of Lend Lease’s 30 per cent interest in the Bluewater Shopping Centre in Kent in the UK. Overall our operating businesses had a strong year, with record settlements in our Australian residential operations, record residential pre sold revenue of $5.2 billion[1] and funds under management exceeding $20 billion.

Securityholders will receive a final distribution of 27.0 cents per security, with the dividend component franked to 25 per cent. This brings the full year distribution to 54.0 cents per security. The payout ratio for the year was 51 per cent, within the Board’s target range of 40 to 60 per cent of earnings.

The final dividend component was franked to 25 per cent primarily due to franking credits that were received by Lend Lease from Australian joint venture dividends paid during the year. The Group does not expect to be able to frank any distributions in FY16.

Maintaining Financial Strength

The Group maintained a strong financial position through the year, with cash and equivalents of $750.1 million as at 30 June 2015, gearing of 10.5 per cent and further undrawn capacity of $1,423.5 million. The strength of the Lend Lease balance sheet and access to third party capital, means we have the financial flexibility to fund our development pipeline and invest in growth opportunities, in line with our strategy.

Safety

In the 2015 financial year, there were no corporate reportable work related fatalities on a Lend Lease controlled operation globally. This is the second consecutive year where this significant milestone has been achieved. Globally, 83 per cent of operations did not report a critical incident.

As part of Lend Lease’s ongoing quest for excellence in the area of health and safety, this year a comprehensive internal and external review of our existing GMRs was completed. As a result, a refreshed approach and framework will be launched in October 2015 that shifts our focus to front end planning, design and procurement considerations as well as strict risk event controls around key risk exposures.

Chairman’s Report

Lend Lease delivered a strong financial result for the 2015 financial year with $619 million in Profit after Tax and a Distribution per Security of 54.0 cents. Our portfolio of development opportunities is well placed to deliver strong returns for securityholders over the medium term.

These new risk event requirements will be non negotiable and are aimed at achieving consistent and robust performance across all of our operations, irrespective of location or line of business.

For the year ended 30 June 2015, 29 per cent of our employees are women and 21 per cent of senior executive positions are held by women. Currently, we have two female Board members and two female direct reports to the Group CEO and Managing Director.

We will not waiver in our uncompromising commitment to operate incident and injury free or our adherence to standardised GMRs across all the projects and assets that Lend Lease controls.

Over the year, Lend Lease has achieved some prominent awards acknowledging our leadership as an employer for the Lesbian, Gay, Bisexual, Transgender and Intersex (LGBTI) community. For the fourth year running, we have been recognised as a top ten employer in the Australian Workplace Equality Index for LGBTI inclusion, the only property and construction organisation in the top thirty. In Australia, we continue to engage with the Australian Aboriginal community through activities in our Reconciliation Action Plan (RAP). This year, Lend Lease joined twelve other organisations in a ten year partnership with CareerTrackers agreeing to provide a minimum of 25 internship opportunities per year.

Creating Sustainable Places

Sustainability is a key component of Lend Lease’s business strategy. We believe that environmental, social and economic factors form an integral part of the management and value creation process across the property and infrastructure value chain. Our commitment is evidenced by 100 per cent of our major urban development projects ($30.1 billion) having achieved or targeting green certification.

In the past year, Lend Lease has received more than 69 awards recognising our environmental and social leadership. This includes our Australian Prime Property Fund Commercial (APPF Commercial) ranking first globally out of 707 participants in the 2015 Global Real Estate Sustainability Benchmark (GRESB) for the second year running and five retail, industrial and development funds ranking first in their catagories in the UK, Asia and Australia; and the US Energy Department recognising Lend Lease’s Military Housing portfolio (over 40,000 residential units) for achieving a 26 per cent energy saving five years ahead of schedule against its target of 20 per cent in the Obama Administration’s Better Buildings Challenge. We remain committed to the United Nations Global Compact, aligning and focusing our approach on human rights, labour, the environment and anti-corruption.

Our Board

This year we welcomed Steve Dobbs who joined the Board in January 2015. Steve has extensive experience in the construction and engineering industries. The Board Nomination Committee met eight times during the year and reviews Board composition at each meeting. The Board Nomination Committee believes the Lend Lease Board has the right composition of individuals who, in combination, bring a mix of expertise, skills, experience and diversity to contribute to the oversight and effective corporate governance at Lend Lease.

Outlook

Lend Lease has continued to grow its leadership position in the sectors in which it operates. The estimated end value of our global development pipeline of $44.9 billion provides us with growth opportunities and strong earnings visibility.

Our People

At Lend Lease, we know that people are our greatest asset and underpin our ability to deliver on our vision to create the best places. Investment in our people through education and training, employment opportunities and promoting diversity and inclusion means our people are supported to reach their potential.

My thanks to my fellow Board members, as well as the Lend Lease leadership team and all our employees, whose commitment and dedication has ensured we deliver on our vision and continue to improve our returns for securityholders.

Gender equity is a priority at Lend Lease and we are focused on ensuring that our processes, policies and opportunities are fair and equitable for all. We seek opportunities to be a thought leader in this space and are currently collaborating with a research project in Australia focused on Chairman women’s success in construction.

David Crawford AO

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Delivering on Our Strategy

Since 2009, Lend Lease has delivered on its strategy to become a leading international property and infrastructure group in the core markets in which it operates. Our strategy underpins our vision to create the best places and is the framework for how we operate.

Successful delivery of our ‘Restore, Build, Lead’ strategy placed the Group in a strong position. As we look to the future, our focus is on safely realising the value of our large pipeline of development opportunities and leveraging our integrated model. We are focused on optimal delivery and are targeting disciplined growth in our core sectors.

This last year saw Lend Lease significantly increase activity across projects around the globe. We have improved the safety and sustainability of our business, expanded our development pipeline to $44.9 billion, increased our funds under management to $21.3 billion and increased our construction backlog revenue to $17.3 billion. Over the last five years, our strategy has delivered a total securityholder return of circa 192 per cent.

Safety

Lend Lease is committed to operating incident and injury free wherever we have a presence. This remains central to our business and is embedded in all decision making. We are proud of our commitment and believe that Lend Lease is a leader in health and safety.

Diversified Earnings

The solid FY15 financial result demonstrated the benefits of our business and regional diversification. The Group delivered Profit after Tax of $619 million, a decrease of 25 per cent on the prior year which included the sale of Lend Lease’s interest in the Bluewater Shopping Centre, in the UK.

Our development pipeline has grown to an estimated end value of $44.9 billion and provides us with significant embedded growth. Our residential development business has achieved strong momentum with record settlements of 4,262, up 24 per cent on the prior year. We grew our portfolio of major urban regeneration projects by circa $8 billion, with new developments secured in Singapore, Malaysia and the United States.

In our Investment Management business we recorded a 31 per cent increase in funds under management, which has now risen to $21.3 billion.

Chief Executive Officer’s Report

Lend Lease has an established growth platform which includes an international pipeline of development projects, record growth in funds under management and solid construction backlog revenue. We are focused on the successful delivery of our pipeline, releasing embedded earnings and driving growth over the medium term.

Our Construction operations increased backlog revenue to $17.3 billion, up 7 per cent on the prior year, with $11.8 billion of new work secured and another $7 billion of building and engineering work at preferred status or secured post balance date.

Our People

Our people are at the heart of everything we do, so we continue to look for ways to support their health and wellbeing.

Since October 2014, we have launched a number of initiatives aligned to the Health and Wellbeing framework including ‘wellbeing leave’ to assist our people in focusing on their physical and mental wellbeing, and enhanced our global leave policies for new parents.

To support our future growth, we have invested circa $2.2 billion of production capital into our development pipeline, and now have 25 major residential apartment buildings and five commercial buildings in conversion or delivery globally, with pre sales reaching a record $5.2 billion.[1]

Every two years, Lend Lease conducts an employee engagement survey, with a partial survey conducted across a sample of employees in alternate years. A full employee engagement survey (conducted by Towers Watson) was completed in June 2015.

Building a Competitive Advantage

At Lend Lease, we have created a differentiated business through our integrated property model and established ourselves as a leading international property and infrastructure group. Our development pipeline includes major urban regeneration sites currently in delivery around the world including Barangaroo South and Darling Harbour Live in Sydney, Victoria Harbour in Melbourne and Elephant & Castle and The International Quarter in London. Urban regeneration projects now comprise approximately 70 per cent of our $44.9 billion development pipeline.

In addition to our regular survey questions, Lend Lease has moved beyond traditional measures of engagement and adopted a sustainable engagement metric. We achieved an 85 per cent sustainable engagement score, an increase of five percentage points from 2014 and in line with Global High Performing Companies.[2]

Outlook

Barangaroo South

Residential markets have remained strong in both Australia and the UK, delivering record residential settlements (up 24 per cent) and pre sold residential revenue (up 109 per cent). While demand currently remains strong, we are closely watching lead indicators for a change in the cycle and ensuring a disciplined approach to management of risks that may emerge.

At our largest urban regeneration site, the $6.9 billion Barangaroo South project in Sydney, we recorded several milestones during the year. Commercial Tower Two ‘topped out’ and at the end of the financial year the precinct welcomed its first tenant Westpac and two new leasing agreements were signed for Tower One with Marsh McClennan & Companies and Servcorp.

The outlook for Lend Lease continues to be strong. Our focus on growth is on track and we are delivering solid returns for our securityholders. With a strong balance sheet and access to third party capital, we are well positioned to deliver on the embedded earnings in our pipeline.

Tower One was sold into a new $2 billion wholesale fund and we finalised documentation with Crown Resorts to develop a world class integrated resort and hotel at the precinct.

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Steve McCann

Group Chief Executive Officer and Managing Director

1 Includes 100 per cent of revenue from joint venture projects. Joint venture partner share of revenue is circa $180 million. 2 Global High Performing Companies as defined by Towers Watson.

1 Includes 100 per cent of revenue from joint venture projects. Joint venture partner share of revenue is circa $180 million.

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LEND LEASE | ANNUAL REPORT 2015

Corporate Governance Statement

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.

Unless indicated otherwise, 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.

Australian Securities Exchange (ASX) Listed Entities are required to report on the extent to which the company followed the governance recommendations set by the ASX Corporate Governance Council during the reporting period. In March 2014, the ASX Corporate Governance Council issued a third edition of its Corporate Governance Principles and Recommendations (Principles). Throughout the reporting period, the Group considers that the corporate governance framework complied fully with the third edition of the Principles.

This Corporate Governance Statement reflects the corporate governance and other related policies and practices in place for the Group as at 1 September 2015 and has been approved by the Lend Lease Board. Copies of all the governance documents can be found in the corporate governance area of the Lend Lease website at www.lendlease.com.

1.0 Board and Management Roles and Responsibilities

Relevant governance documents (see www.lendlease.com)

• Board Charter

• Board Committee Charters

1.1 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 specifically reserved for the Board include the following:

• Approval of business strategy;

• Approval of business plans which includes operating budgets;

• Overseeing risk management, internal control and compliance systems;

• Overseeing the integrity of the Group’s financial accounts and reporting;

• Receiving, considering and approving financial reports;

• Approval and monitoring of major investments, transactions, acquisitions or divestitures;

• Determining capital structure and distribution policy;

• Reviewing performance of the Group CEO and Executive Management Team;

• Succession planning for the Group CEO;

• Non Executive Director selection;

• Reviewing Board performance;

• Promoting diversity at all levels within the Group including setting measurable objectives and assessing progress towards achievement; and

• Reviewing Group governance related policies.

1.2 Role of the Group CEO and Senior Management

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

Limits of Authority are in place which outline the matters specifically reserved for determination by the Board and those matters delegated to Board Committees or Group Executive Management. The Limits of Authority are reviewed on an annual basis. The Group CEO is accountable to the Board for the authority delegated to all levels of management. The Board delegations to Executive Management are reviewed on a regular basis in light of specific business, market and economic changes. All Directors have access to management to request information.

The management structure of Lend Lease consists of the Group CEO and the Global Leadership Team (GLT).

The GLT comprises the Group Chief Financial Officer, the Group Chief Risk Officer, the Group CEO International Operations (who is also CEO of Europe), the Group General Counsel, the Group Head of Corporate Affairs, the Group Head of Human Resources and the CEOs, Property Australia, Americas and Asia. The GLT is responsible for managing the Group’s performance and key business issues in line with the Group’s long term strategy. A written agreement is in place between the Group and each senior executive setting out the terms of their appointment.

The GLT meet on a regular basis and each meeting is chaired by the Group CEO.

Review of CEO and Senior Management

The Board sets goals for the Group CEO which are contained in a scorecard. The Group CEO is responsible for setting goals for the GLT in consultation with the People and Culture Committee. Scorecards for the CEO and GLT generally reflect short and medium goals and long term strategic initiatives. They tend to be categorised as financial and non financial and include financial performance, health and safety, delivery of key projects, embedding operational excellence and investing in people. Short Term Incentive (STI) outcomes are based on both the individual’s performance against their personal goals and based on the performance of the Group.

The Board has a rigorous process for the setting of scorecards at the start of the year and the evaluation of scorecards at the end of the year. The Group CEO and the People and Culture Committee conduct detailed reviews of the performance of the GLT against these goals at regular intervals during the year, culminating in a detailed review at the end of the financial year. In addition each member of the GLT also conducts an evaluation of their own performance. A review of the performance of all members of the GLT was conducted in the financial year and was in accordance with the procedure described above.

The reviews by management are reported to and considered by the People and Culture Committee for the purposes of its consideration and ultimate recommendations to the Board on performance against scorecards.

Remuneration

The Board has comprehensively outlined the Executive Reward Strategy and framework in the Remuneration Report. The Remuneration Report explains how performance has been linked to reward outcomes at Lend Lease. Further information is set out in the Remuneration Report on page 42.

1.3 Meetings

The Board program is formulated to reflect the geographic spread of the Lend Lease businesses with Board meetings scheduled in Australia and each of the regions where Lend Lease operates. These meetings run over two or three days. The Group’s senior management is invited to attend and present at Board meetings where appropriate. In addition to the formal meetings, Non Executive Directors attend business briefings and project site visits in each of the regions where they meet so that a deeper understanding can be gained of the activities and operations within each region.

The Board meets as often as necessary to fulfil its role and Directors are required to allocate sufficient time to the Group to perform their responsibilities effectively, including adequate time to prepare for Board meetings. There are eight scheduled Board meetings each year and additional meetings are held as required. During the year 13 meetings of the Board were held. Further detail on the number of Board and Committee meetings held during the financial year and the attendance of Directors at those meetings can be found in the Directors’ Report on page 22.

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

Lend Lease Board Regional Visitation Program

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01. Asia

03. United States

02. Australia

04. Europe

• Barangaroo (November 2014 and August 2015)

• Paya Lebar Central Site (April 2015)

• 201 Folsom Street • The International Quarter, San Francisco (January 2015) Stratford (July 2014)

• 313@somerset • The Library at the Dock (April 2015) (May 2015)

  • Board networking forum • Kings Gate and The Zig Zag supporting employee diversity Building, Kings Gate and regional top talent (July 2014) (January 2015) • Elephant & Castle (July 2015)

• American International School • 888 Collins Street (May 2015) (April 2015)

• 889 Collins Street (May 2015)

• Tun Razak Exchange Site (October 2014)

• Board networking forum supporting employee diversity and regional top talent (July 2014 and 2015)

• Board networking forum supporting employee diversity and regional top talent (October 2014)

The Board Charter sets out these responsibilities in further detail and is reviewed on a regular basis to ensure the balance of responsibilities remains appropriate.

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continued Corporate Governance Statement

1. Board and Management Roles and Responsibilities continued

1.4 Independent Decision Making

Any Director may seek external, independent, professional advice relating to their role as a Lend Lease Director at the expense of Lend Lease with the approval of the Chairman of the Board. The policy of the Board is that external advice will be made available to all Directors unless the Chairman of the Board determines otherwise. To facilitate independent decision making by the Board, the Non Executive Directors regularly meet without management present.

2. Structure and Composition of the Board

Relevant governance documents (see www.lendlease.com)

• Lend Lease Corporation Limited Constitution

• Board Charter

• Policy on Independence of Directors

• Performance Evaluation Process

2.1 Composition and Membership

The Board consists of nine directors of which eight are independent. The Group’s Managing Director and Chief Executive Officer, Stephen McCann, is the only executive on the Board. Membership of the Board as at 1 September 2015 comprises:

• David Crawford, AO – Chairman and Independent

• Non Executive Director

• Stephen McCann – Group Chief Executive Officer (CEO) and Managing Director

• Colin Carter, AM – Independent Non Executive Director

• Phillip Colebatch – Independent Non Executive Director

• Steve Dobbs – Independent Non Executive Director

• Jane Hemstritch – Independent Non Executive Director

• David Ryan, AO – Independent Non Executive Director

• Michael Ullmer – Independent Non Executive Director

• Nicola Wakefield Evans – Independent Non Executive Director Profiles of the Directors including their skills, experience and expertise relevant to their position as well as the period they have held office as a director can be found in the Directors’ Report on pages 18 to 20.

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.

a. Board Skills Matrix

The table below summarises the key skills and experience of the Directors.

Skills and Experience

Governance

Industry Experience (Building and Engineering, Property and Investment Management)

Financial Acumen

International Operations

Health, Safety and Environment

Sustainability

Strategy

Risk Management

Remuneration

Legal

Executive Leadership

2.2 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 judgement. 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.

The Board assesses the independence of each Director each year and at any time on disclosure by a Director of any new interests or relationships. The Board considers that all the Non Executive Directors are independent and have remained so throughout the year. In the case of Jane Hemstritch, the Board noted that she is also a Director of the Commonwealth Bank of Australia Limited which has at times been a substantial shareholder of the Group. Having regard to all the circumstances, including the portfolio nature of the Bank’s shareholding in the Group and the fact that investments of this nature would be unlikely to be considered by the Bank’s Board, the Directors (other than Mrs Hemstritch) determined that it was not in any way likely to materially interfere with, or reasonably be perceived to materially interfere with, the exercise of her unfettered and independent judgement as a Director of the Group. 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.

2.3 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. The Board Charter prohibits the current or any former CEO of the Group from becoming Chairman and the roles of Chairman and Managing Director are separate.

It is the Chairman’s responsibility to provide leadership to the Board and ensure that the Board works effectively and discharges its responsibilities. The Chairman is responsible for ensuring that each Director participates fully in Board activities and works with the Company Secretary to set and guide the Board agenda and ensure that Board meetings are held regularly throughout the year.

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

2.4 Company Secretary

Appointed by the Board, the 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. The Company Secretary is accountable directly to the Board through the Chair on all matters to do with the proper functioning of the Board. Details of the experience and qualifications of the Company Secretary are set out in the Directors’ Report on page 21.

2.5 Retirement and Re-election of Directors

Under the Constitution of LLC, at each Annual General Meeting (AGM) one-third of the Directors and any other Director who will have been in office for three or more AGMs since he or she was last elected (excluding the Managing Director) must retire from office and may submit themselves for re-election. Prior to standing, each Director undergoes a performance evaluation which is considered by the Board in making a recommendation in respect to re-election. securityholders are also provided with all material information relevant to a decision whether or not to elect or re-elect a Director.

New Directors must stand for election at the AGM immediately following their appointment.

2.6 Selection and Appointment of New Directors

The Nomination Committee is responsible for the recommendation to the Board in respect to the appointment of new Directors. The aim is to have a Board comprised of Directors with an appropriate mix and balance of skills, expertise, experience, diversity and independence. Both individually and collectively, the Board considers that the Directors have an appropriate mix and balance of these attributes.

The process of selecting a new Director involves reviewing the experience of current Directors, identifying any gaps in the Board skill-set and commissioning an international recruitment firm to identify and present appropriate candidates following a comprehensive briefing as to the Board’s requirements. The Board has regard to a number of factors when reviewing candidates including technical skills and expertise, experience across relevant industries and geographic locations and diversity of background. The candidates undergo a thorough process which involves formal interviews with the Directors as well as comprehensive background checks.

Board succession is constantly reviewed. During the year there were changes in the composition of the Board. Steve Dobbs was appointed to the Board in January 2015 and Peter Goldmark retired in November 2014.

2.7 Induction and Briefing Programs

New Directors are provided with a letter of appointment which sets out their rights, duties and responsibilities as a Director of Lend Lease. As part of their induction, new Directors also receive a comprehensive information pack and attend briefings with management to enable them to gain an understanding of the Group’s businesses, strategy, key issues and operations. Visits to Lend Lease sites are part of the induction program.

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 each scheduled Board meeting and Directors are regularly briefed on key business and industry developments and matters material to their role. Presentations by external speakers are organised as part of the Board program to give Directors an overview and understanding of macroissues affecting the Group. Directors are also encouraged to attend externally administered training seminars and programs.

2.8 Board Performance Assessment

Each year, the Board conducts a review of its performance, the Chairman and individual Directors retiring and seeking re-election at the AGM. The review process comprises a mixture of internal and external interviews. An external review is conducted biennially and an internal review is conducted each alternate year.

Internal Review and Assessment

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

The process of conducting reviews includes a formal assessment by each of the Directors to cover matters such as Board contribution and performance, interaction between management and between Board members, consideration of relevant skills and structure and conduct during Board meetings. The Chairman of the Nomination Committee conducts and oversees this review.

Committee succession planning and renewal was a key activity during the year. Changes were made to Committee composition following this review and became effective in August 2015:

• Steve Dobbs was appointed as a member of the Sustainability

Committee; and

• Nicola Wakefield Evans and Steve Dobbs were appointed as members of the Risk Management and Audit Committee.

External Review

The Miles Group conducted an external review of the Board during the reporting period focusing on these areas:

• Role of the Board;

• Size, composition and experience of the Board;

• Procedures and practices of the Board;

• Meeting arrangements and meeting discipline;

• Relationship with Management;

• Individual Director effectiveness; and

• New challenges.

The findings of the external review were considered by the Board and appropriate action was taken where required.

2.9 Directors’ Remuneration

Details of the Group’s Remuneration Policy and the remuneration of Directors is contained in the Remuneration Report on page 42. The structure of Non Executive Director remuneration is clearly distinguished from that of other Senior Executives. One of the key distinctions is that performance based components do not form part of Non Executive Directors’ remuneration in order to ensure their independence.

Retirement Benefits Plan

In recognition of feedback from securityholders, the Directors resolved in 2010 to discontinue further awards of retirement securities. Any accrued securities have been preserved and will be paid to the Director on retirement. Non Executive Directors appointed since January 2010 are not entitled to receive any retirement benefits, other than superannuation.

Further details of the retirement plan for Non Executive Directors are provided in the Directors’ Report on page 66.

Information Technology

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continued Corporate Governance Statement

3. Board Committees

Relevant governance documents (see www.lendlease.com)

• Audit and Risk Committee Charter

• People and Culture Committee Charter

• Sustainability Committee Charter

• Nomination Committee Charter

3.1 Overview of Standing Board Committees

The Board recognises the essential role of Committees in guiding the Company on specific issues. Four standing Board Committees have been established to assist, advise and make recommendations to the Board on matters falling within their areas of responsibility. Each of the Committees consist entirely of independent, Non Executive Directors. The Chair of each Committee is not a Chair of other Committees, or Chair of the Board. 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. The Committees are required to meet quarterly or more often as required. Directors who are not members of the Committees have a standing invitation to attend meetings of the Committees. From time to time special subcommittees are formed to give the Board better guidance and provide oversight concerning specific matters.

The four permanent Committees of the Board are:

Nomination Committee Colin Carter (Chair) Phillip Colebatch David Crawford Steve Dobbs Jane Hemstritch David Ryan Michael Ullmer Nicola Wakefield Evan s

• Peter Goldmark ceased to be a member of the Committee on his retirement in November 2014.

• Steve Dobbs was appointed as a member of the Committee in January 2015.

• Minimum of three, Non Executive Directors

• Chair must be an Independent Director and not the Chair of the Board.

• All requirements were met in the reporting period.

Risk Management and Audit Committee Sustainability Committee David Ryan (Chair) Michael Ullmer (Chair) Phillip Colebatch Colin Carter Michael Ullmer Steve Dobbs Nicola Wakefield Evans Nicola Wakefield Evans Steve Dobbs

People and Culture Jane Hemstritch (Chair) Colin Carter David Ryan

Nil • Nicola Wakefield Evans and Steve Dobbs • Peter Goldmark ceased to be a member were appointed as members of the of the Committee on his retirement in Committee in August 2015. November 2014.

• Steve Dobbs was appointed a member of the Committee in August 2015.

• Minimum of three Directors

• Minimum of three Directors

• Minimum of three, Non Executive Minimum of three Directors Directors. • Majority of the Committee to

• • All members must be independent. be independent.

• Majority of the Committee to be independent.

• All members must be independent.

• Chair must be an Independent Director

• Chair must be an Independent Director

• Chair must not be Chair of the Board.

• All requirements were met in the • All members must be financially literate • All requirements were met in the reporting period. and at least one member has accounting reporting period. or relevant financial expertise.

• All requirements were met in the reporting period.

Risk Management and Audit Committee

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.

People and Culture Committee

The People and Culture Committee was formerly known as the Personnel and Organisation Committee. The name of the Committee was changed in July 2015 to reflect the broader people and culture responsibility of the Committee

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. Full details of the Committee’s work on behalf of the Board are set out in the Remuneration Report.

Sustainability Committee

The Committee assists the Board in monitoring the decisions and actions of management in achieving Lend Lease’s aspiration to be a sustainable organisation.

Nomination Committee

The Committee assists the Board by considering nominations to the Board to ensure that there is an appropriate mix of expertise, skills, experience and diversity on the Board.

Membership, composition and key responsibilities of these Committees is set out in the accompanying table.

The number of meetings held by each Committee during the reporting period is set out in the Directors Report on page 22.

• Reviews and makes recommendations to • Makes recommendations to the Board • Oversees the Group’s Environment, the Board on contractual arrangements on external auditor appointment and Health and Safety function. for the Group CEO and GLT. rotation of audit partner. • Reviews the effectiveness of Group • Reviews and makes recommendations to • Oversees quality and effectiveness policies on corporate social responsibility. the Board on remuneration programs and of audits. • Monitors the activities and programs performance targets for the Group CEO • Reviews performance of the Internal of the Lend Lease Foundation. and GLT and assessment of performance Audit function. • Assists the Board in its oversight of the against these targets. • Reviews the parameters of the Group’s Group’s compliance with applicable • Monitors and advises the Board on risk/reward strategy. regulatory requirements in relation to succession planning for the Group CEO • Reviews the effectiveness of the Group’s environmental matters, socially and members of the GLT. Enterprise Risk Management system and responsibility initiatives and health • Reviews and approves the strategies and seeks assurances that material risks are and safety issues. practices for people management. identified and appropriate risk. • Reviews and makes recommendations to management processes are in place.

• Reviews size and composition of the Board.

• Identifies and evaluates Board candidates.

• Evaluates the performance of the Board and the performance of any Directors standing for re-election at an AGM.

• Establishes processes for the review of Board succession planning.

• Reviews continuing education and development plan for Non Executive Directors.

• Reviews and makes recommendations to management processes are in place. the Board on the remuneration framework • Reviews significant financial reporting for Non Executive Directors. issues and assess the appropriateness of • Reviews and makes recommendations to accounting policies and methods chosen the Board on remuneration and required by management.

• Reviews and makes recommendations to accounting policies and methods chosen the Board on remuneration and required by management. disclosures. • Make recommendations to the Board as

• • Reviews the effectiveness of Group to whether financial statements should policies on workplace diversity and equal be approved. opportunity. • Monitors the effectiveness of Group policies and practices that relate to compliance with laws, regulations and accounting standards.

• The Committee has unrestricted access to senior • The Chair liaises regularly with the Group • The Group CFO, the Group CRO and the • The Chair liaises with the Group Head management of the Group. The Committee Head of Human Resources on matters Group Head of Internal Audit have a of Sustainability and Group Head of reviews and recommends, in cooperation with related to the Committee, to ensure that separate direct reporting relationship to Environment, Health and Safety on at management, a process for the induction and the Committee is appropriately briefed on the Chair. One-on-one meetings are held least a quarterly basis or as required. education of new Directors and a continuing matters relating to employees. on at least a quarterly basis or as required. These function heads supply the education and development plan for all One-on-one meetings are also held with Committee with the information Non Executive Directors. the external auditor as required. relevant to the Committee’s function. • The Committee meets with the external auditor without management present quarterly or as required.

12 ANNUAL REPORT 2015 | LEND LEASE

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LEND LEASE | ANNUAL REPORT 2015

continued Corporate Governance Statement

4. Risk Management, Internal Control and Integrity in Financial Reporting

Relevant governance documents (see www.lendlease.com)

• Risk and Audit Committee Charter

• Risk Management Policy

4.1 Enterprise Risk Management

Risk management is a critical oversight responsibility of the Board. In 2014, a Group Chief Risk Officer (CRO) role was created. The role reports to the CEO and the CRO is empowered to lead and support the business in the management of risk. The CRO also has a separate reporting line to the Risk Management and Audit Committee.

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 CRO. 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:

• Advising on and implementing risk treatment strategies at Group level;

• Assisting management to embed Enterprise Risk Management;

• Assisting Group businesses to implement and maintain effective risk management practices;

• Maintaining effective early warning reporting systems; and

• 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:

• Financial

• Legal / Regulatory

• Health and Safety

• Performance

• Environment and Community

• People

• Property / Business Continuity

• Information Technology

• Fraud and Corruption

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 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.

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

4.4 Environmental and Social Sustainability Risks

There are a number of risks, both specific to Lend Lease and more general to the sectors the Group operates in that could have an adverse effect on achieving our objectives. The following outline provides an overview of economic, environmental or social risks and how the Group seeks to mitigate or manage them.

In 2015, Lend Lease created a new Sustainability framework to focus our efforts around 12 material social, environmental and economic elements with a clear long term aspiration for each. To provide additional near term focus, the Group has established concrete 2020 performance targets for energy, water and waste.

Our People: Training, Skills and Employment

The skills and experience of our people, as well as our supply chain, influence our ability to deliver complex projects as well as the Group’s strategy. One factor that influences our exposure to this risk is our approach to training, skills and employment. This is a material element of our approach to business. Lend Lease has a number of leading examples of skilling and education programs which create access to skilled trades and labour, as well as leadership and development programs for our own people.

Investing in education, skills training and employment so that the Group can attract great people drives a competitive advantage both in securing new work, as well as progressing against our strategy.

Energy, Water and Waste

The built environment is estimated to account for 30 per cent of greenhouse gas emissions (up to 80% in our cities), 30-40% of energy use and consume around a third of the world’s raw materials. Lend Lease has the opportunity to contribute to a sustainable property industry that actively protects and improves the environment. Designing, building and operating places with lighter environmental footprints, investing in renewable energy and materials, using less water, producing less waste and promoting environmental efficiency and awareness for our offices, projects, developments and assets under management is a key part of the Sustainability framework.

Materials and Supply Chain

As the Group continues to grow and evolve, we are aligning our approach to environmental and social risks across our supply chain to achieve our aspirations and targets.

We work closely with suppliers to ensure that they demonstrate compliance with environmental, social and ethical considerations.

Suppliers are expected to have human rights policies and records consistent with the requirements of Lend Lease’s Environment and Health and Safety Policies. We also expect our suppliers to have an Environmental Management System that ensures compliance with our global standards of operation and minimal impact on the environment. The environmental performance of any supplier and the sustainability of products and services is considered in the Group’s selection process.

Resilience and Adaptation

The Group recognises that the impacts of climate change are upon us. These climate change impacts are likely to increase in the future and pose an increased risk to the safety of communities and potential damage to real estate and infrastructure.

Lend Lease recognises that we must reduce our contribution to human induced climate change and is committed to assessing the exposure of our operations to climate change impacts. The Group creates mitigation plans that build resilience into our communities and business, as well as designing projects to respond to the impacts of climate change.

Further information on sustainability risks and how these risks are managed by the Group can be found at www.lendlease.com in the Sustainability section.

4.5 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) can be found in the Corporate Governance section of the Lend Lease website.

4.6 Integrity in Financial Reporting

When the Board considers the statutory half year and full year financial reports for the Group, written certifications regarding the integrity of those financial statements and the Group’s risk management and internal control systems are provided by the Group CEO and Group CFO.

For the year ended 30 June 2015, the Group CEO and Group CFO have declared in writing to the Board that:

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

• The Consolidated Entity’s financial records have been properly maintained in accordance with section 286 of the Corporations Act 2001 ; and

• The Consolidated Entity’s Financial Report presents a true and fair view of the Consolidated Entity’s financial position and performance and complies with 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 2015 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 2015, nothing has come to the attention of the Group CEO or the CFO that would indicate any material change to any of the statements made above.

The Group’s senior management has also reported to the Board on the effectiveness of the management of material business risks for the year ended 30 June 2015, and this has been reviewed by the Board.

4.7 Internal Audit Function

The Group has an Internal Audit function to provide the Board and senior management with financial, operational and environment, health and safety assurance around internal controls. The function is independent of the external auditor and is structured to manage reviews from a regional and global perspective. The function is led by the Group Head of Internal Audit who reports to the Group CFO and also has a direct reporting line to the Risk Management and Audit Committee. The role of Internal Audit is to provide objective assurance to the Risk Management and Audit Committee and senior management that operations and functions are efficient and effective, and that processes have a robust control environment. The Group Head of Internal Audit attends and reports at each Risk Management and Audit Committee meeting on reviews conducted during each quarter. The Group Head of Internal Audit also separately meets with the Chair of the Risk Management and Audit Committee on at least a quarterly basis.

4.8 External Auditor

KPMG is the external auditor of Lend Lease and its controlled entities. In 2013, the Board commenced a tender process for the role of external auditor for the Group. A thorough process was undertaken, including the appointment of former ASIC Chairman Alan Cameron, AO as Probity Officer to oversee its robustness and independence. At the conclusion of the audit tender process, it was announced that KPMG would continue as the Group’s external auditor.

In considering retaining KPMG as the existing auditor, an appropriate balance was required between ensuring audit independence and maximising audit quality. The Group is a large listed company, operating in a complex environment with complex business structures and operating models. KPMG has invested significant time and effort to understand the Group’s operations and the cumulative knowledge of Lend Lease obtained by KPMG over many years cannot be underestimated.

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. The external auditor attends each meeting of the Committee and at every meeting, time is set aside so that the Committee can meet with the external auditor without management present. The Committee Chairman meets with the external auditor at least quarterly, also in the absence of management.

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 lead partner is rotated every five years. The current audit engagement partner is Stuart Marshall who was appointed with effect from 1 July 2011.

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continued Corporate Governance Statement

4. Risk Management, Internal Control and

Integrity in Financial Reporting continued

• 4.8 External Auditor continued

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 partner to ensure that the proposed arrangement does not, or will not be viewed as compromising KPMG’s independence.

Under the terms of the policy, the auditor should be appointed for other service engagements only where it is best suited to undertake the work. The policy further provides that the auditor should not provide services having the potential to impair the independence of its role. Generally these include the following services:

• Bookkeeping, preparation of, and other services in relation to, accounting records and financial statements;

• Design and implementation of financial information systems or financial controls;

• Valuation services, appraisals or fairness opinions, where the results are material to the financial statements or where the external auditor would be required to audit those statements or opinions;

• Outsourced internal audit services;

• Secondments;

• Recruitment and other human resources services, including international assignee services;

• Actuarial services;

• Management functions;

• Legal services;

• Taxation advice of a strategic or tax planning nature;

• Broker-dealer, investment advisor or investment banking services;

• Work that is remunerated through a ‘success fee’ structure;

• Expert services unrelated to the audit; and

• Work that involves the auditor acting in an advocacy role for the Group.

The Chief Financial Officer and the auditor are each required to provide a statement that the non audit services have not impaired the auditor’s independence. During the year KPMG, the Company’s auditor, performed certain other assurance services in addition to its statutory duties.

The Board has considered the other assurance 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 assurance 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:

• All other assurance 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;

• The other assurance 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; and

• Apart from conducting the external audit of the Group and undertaking other assurance services, KPMG were not retained to undertake any other assignments of any kind for the Group.

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 at page 75.

Fees

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

Attendance at Annual General Meeting

The external auditor is required to attend the Annual General Meeting (AGM) and is available to answer any questions on the conduct of any audits and the preparation and content of the auditor’s report. Stuart Marshall will be in attendance at the 2015 AGM.

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.

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) that may otherwise be important to a securityholder, such as information about the Group’s activities, is available to investors 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 and includes all announcements made to the market, copies of current and past annual and half year reports and other presentations or market briefings made to analysts or institutional investors. The Investor Relations team has a program to facilitate effective communication with investors including:

• Briefings for full and half year results and presentations made to analysts or institutional investors which are also webcast live and made available on the website;

• An annual investor day which is webcast live; and

• Hosting a visitation program for analysts to Lend Lease sites.

Throughout the year, Investor Relations engages in domestic and international roadshows to meet with existing and potential securityholders. In addition, securityholders can contact the Investor Relations team or the share registry at any time, either by telephone or electronically. Relevant contact details are on our website and are also included on all communications sent to securityholders from the share registry.

Annual General Meeting

The AGM is the primary opportunity for securityholders to meet face-to-face with the Board and senior executives. The meeting provides an update to securityholders on the Group’s performance and offers an opportunity for securityholders to ask questions and vote on important matters affecting the business. Lend Lease encourages participation at the AGM and securityholders are invited to submit questions ahead of the AGM by completing the relevant form accompanying the Notice of Meeting or submitting questions electronically through the share registry. Directors also make themselves available after the formal part of the AGM to meet with securityholders. Members of the GLT are present at the meeting and available to answer questions.

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. Copies of the speeches delivered by the Chairman and the Group CEO and the outcome of voting on the items of business are released on the ASX. 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.

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 Be dedicated to relationships.

We respect all people, their ideas and cultures.

Integrity Be true to our word. Integrity is non negotiable. We leave a positive impact through our actions and behaviours. Innovation Be challenging in our approach. We strive to find the best solutions. We think outside the box and dare to do things differently. Collaboration Be one team. We work together to achieve more through our unified culture and shared knowledge. Excellence Be exceptional in everything we do. We seek, and are committed, to operating safely, achieving outstanding performance and the best outcomes. Trust Be open and transparent. We earn and instil trust by being accountable at every level and in all of our interactions.

Code of Conduct

The Lend Lease Code of Conduct which is endorsed by the Board, 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. The Employee Conduct Guide summarises what is expected of employees in relation to the Core Values and Code of Conduct, as well as our Group policies and procedures. Completion of the Employee Conduct Guide e-learning training program, is mandatory for all employees.

All employees of the Group are required to recertify their Employee Conduct Guide training on an annual basis.

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.

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

Lend Lease has systems and protocols in place to identify a conflict of interest and a framework for managing conflicts. A variety of measures have been adopted to manage conflicts of interest including Group policies, systems, lists and appropriate disclosures. 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 from participating in any discussion or voting on these matters. Directors are required to raise with the Company Secretary any matters that may give rise to a conflict of interest. Directors who have a conflict will not receive the relevant Board paper and are not present for the part of the Board meeting where the matter is considered.

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.

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continued Corporate Governance Statement

6. Diversity and Inclusion Governance

5. Governance Policies continued

5.4 Trading in Lend Lease Securities

Relevant governance documents (see www.lendlease.com)

The Lend Lease securities Trading Policy 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.

• Diversity and Inclusion Policy

• Sustainability Committee Charter

• Personnel and Organisation Charter

• Nomination Committee Charter

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

6.1 Diversity at Lend Lease

At Lend Lease, diversity and inclusion is defined as ‘All the ways in which we differ’. Lend Lease is committed to providing an inclusive workplace, where all employees can be their true and best self at work. We encourage and embrace diversity and inclusion in thought and experience, building stronger teams and better outcomes.

The policy includes additional requirements for Directors and Designated Executives who must not deal in Lend Lease securities in any period other than:

• The six week period commencing on the business day following the announcement of the annual results;

Our global inclusion strategy is focused on delivering flexibility at work, inclusive leadership, support for our employees as carers, and the achievement of gender equity in practice.

• The six week period commencing on the business day following the announcement of the half year results;

• The six week period commencing on the business day following the Annual General Meeting;

The Lend Lease Board of Directors reports on Lend Lease’s gender diversity performance in accordance with the ASX Corporate Governance Principles and Recommendations. Lend Lease has measurable objectives for gender diversity, shown below:

• A period during which Lend Lease has a current prospectus or other form of disclosure document on issue under which persons may subscribe for Lend Lease securities; or

• Any other period determined by the Board, in advance, to be an open window period.

• Two out of eight Non Executive Board Directors are women;

• At a senior management level, two direct reports to the Group CEO and Managing Director are female; and

The policy requires Directors and Designated Executives to notify the Group General Counsel or Company Secretary prior to any dealings and Directors must also promptly provide details of any trade to the Company Secretary for disclosure to the ASX.

• For the year ended 30 June 2015, 29 per cent of our employees are women and 21 per cent of senior executive positions are held by women.

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. The policy explicitly states that dealing in securities or procuring or communicating with others in relation to securities at any time is prohibited if it would be in breach of the insider trading rules.

The Group’s most recent ‘Gender Equality Indicators’ as defined in and published under the Workforce Gender Equality Act can be viewed at www.wgea.gov.au.

The Board assesses on at least an annual basis, the measurable objectives and the progress in achieving them. To encourage greater representation of women at senior levels, Lend Lease continues to develop initiatives targeting an improvement in gender diversity including refinement in recruitment processes, expansion in career and leadership development and mentoring.

Directors and Designated Executives must obtain the consent of the Chairman (or in his or her absence the Chair of the Risk Management and Audit Committee) and the Group General Counsel prior to entering into transactions or arrangements that operate to limit the economic risk of vested entitlements to Lend Lease securities, including margin loan arrangements. Transactions or arrangements must not be entered into other than during the prescribed trading periods.

6.2 Diversity and Inclusion Policy

The Board fully supports Diversity and Inclusion and has a Diversity and Inclusion Policy which is available on the Lend Lease website. The People and Culture Committee is responsible for overseeing the Group’s diversity strategy and its progress towards achieving the Group’s measurable objectives.

5.5 Political Donations

The Lend Lease Group Political Donations Policy 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.

The Board plays an active role in Lend Lease’s Diversity and Talent agenda and hosts regular networking forums with groups of high potential and diverse employees. The forums involve presentations and Q&A sessions from high potential and diverse employees, roundtable sessions and formal networking dinners.

Lend Lease does not make political donations, whether in cash or kind, to political parties or individuals holding, or standing for, elective office. Breaches of the Political Donations Policy are regarded as serious misconduct. The full policy is available on the Lend Lease website.

6.3 Diversity Governance

Directors’ Report

Table of Contents

1.	Board of Directors
a.	Board/Directors	18
b.	General Counsel and Company Secretary
	Qualifcations and Experience	21
c.	Ofcers Who Were Previously Partners of the Audit Firm	21
d.	Directors’ Meetings	21
e.	Interest in Capital	22
2.	Operating and Financial Review
a.	About Lend Lease	23
b.	Review of Group Performance	25
c.	Review of Regional Performance	31
d.	Appendix	39
3.	Remuneration Report
a.	Remuneration Overview	45
b.	Remuneration Disclosures	50
c.	Remuneration Governance	54
d.	How Rewards are Linked to Performance	58
e.	Executive Contracts	65
f.	Non Executive Directors’ Fees	66
g.	Equity Based Remuneration	67
h.	Appendix	72
4.	Other
a.	Dividends/Distributions	73
b.	Signifcant Changes in State of Afairs	73
c.	Events Subsequent to Balance Date	73
d.	Security Options	73
e.	Indemnifcation and Insurance of Directors and Ofcers	73
f.	Environmental Regulation	73
g.	Non Audit Services	74
h.	Rounding Of	74
Lead	Auditor’s Independence Declaration
under Section 307C of theCorporations Act 2001		75

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 2015 and the Auditor’s Report therein.

Diversity and Inclusion Councils are comprised of executives from across the Group. Diversity councils 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 diversity councils also oversee the activities of regionally based Employee Resource Groups. These groups have been set up to represent a diverse range of employees such as age, disability, ethnicity, marital or family status, religious or cultural background, sexual orientation and gender identity.

Further information on Diversity and Inclusion at Lend Lease can be found in the 2015 Securityholder Review.

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Directors’ Report

1. Board of Directors

a. Board/Directors

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

==> picture [165 x 105] intentionally omitted <==

D A Crawford AO

Chairman (Independent Non Executive Director)

Age 71

Term of Office

Mr Crawford joined the Board in July 2001 and was appointed Chairman in May 2003. Skills, Experience and Qualifications

Mr Crawford has extensive experience in risk management and business reorganisation. He has acted as a consultant, scheme receiver and manager, and liquidator to many large and complex corporations. Mr Crawford was previously Australian National Chairman of KPMG. He 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.

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.

Listed Company Directorships (held within the last three years)

• Inaugural Chairman and Non Executive Director of South32 Limited (appointed May 2015)

• Former Non Executive Director of BHP Billiton Limited (appointed May 1994, retired November 2014)

Other Current Appointments

• Chairman of Australia Pacific Airports Corporation Limited

Board Committee Memberships

• Member of the Nomination Committee

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S B McCan n

Group Chief Executive Officer and Managing Director (Executive Director) Age 50

Term of Office

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

Skills, 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 and Acquisitions and 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 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

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C B Carter AM

(Independent Non Executive Director)

Age 72

Term of Office

Mr Carter joined the Board in April 2012.

Skills, Experience and Qualifications

Mr Carter is one of the founding partners of The Boston Consulting Group in Australia, retiring as a Senior Partner in 2001, and continues as an advisor with that company. He has over 30 years of experience in management consulting advising on organisational, strategy and governance issues. His career has included major projects in Australia and overseas. Mr Carter has wide industry knowledge on corporate governance issues and has carried out Board performance reviews for a number of companies. He has co-authored a book on Boards, ‘Back to the Drawing Board’.

Mr Carter holds a Bachelor of Commerce degree from Melbourne University and a Master of Business Administration from Harvard Business School, where he graduated with Distinction and as a Baker Scholar. He is a Fellow of the Australian Institute of Company Directors.

Listed Company Directorships (held within the last three years)

• Non Executive Director of SEEK Limited (appointed March 2005)

• Non Executive Director of Wesfarmers Limited (appointed October 2002, retired November 2014)

Other Current Appointments

• President of Geelong Football Club

• Director of World Vision Australia

• Director of The Ladder Project

• Board Committee Memberships

• Chairman of the Nomination Committee

• Member of the People and Culture Committee

• Member of the Sustainability Committee

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P M Colebatch

(Independent Non Executive Director)

Age 70

Term of Office

Mr Colebatch joined the Board in December 2005.

Skills, Experience and Qualifications

Mr Colebatch 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.

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.

Listed Company Directorships (held within the last three years)

• Non Executive Director of Man Group plc (appointed September 2007)

• Former Director of Insurance Australia Group Limited (appointed January 2007, resigned August 2012)

Other Current Appointments

• Board of Trustees for the Prince of Liechtenstein Foundation and the LGT Group Foundation

• Board Committee Memberships

• Member of the Risk Management and Audit Committee

• Member of the Nomination Committee

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J S Hemstritch

S B Dobbs

(Independent Non Executive Director)

(Independent Non Executive Director)

Age 62

Age 58

Term of Office

Term of Office

Ms Hemstritch joined the Board in September 2011.

Mr Dobbs joined the Board in January 2015.

Skills, Experience and Qualifications

Skills, Experience and Qualifications

Mr Dobbs was Senior Group President, Ms Hemstritch has extensive senior Industrial and Infrastructure at Fluor executive experience in information Corporation until his retirement in June 2014. technology, communications, change Since joining Fluor in 1980, Mr Dobbs was management and accounting. She also has responsible for a wide diversity of markets broad experience across the financial services, including infrastructure, mining, telecommunications, government, energy and telecommunications, transportation, heavy manufacturing sectors and in business manufacturing, health care, water and expansion in Asia. During a 25 year career alternative power. He served the company with Accenture and Andersen Consulting, in numerous locations including the Ms Hemstritch worked with clients across United States, China, Europe and Australia, Asia and the US. She held a number Southern Africa. of leadership positions within the company Mr Dobbs is an industry expert in public and was Managing Director Asia Pacific for private partnerships and private finance Accenture from 2004 until her retirement in initiatives and has served as an advisor on 2007. Ms Hemstritch was a member of these issues to a number of Government Accenture’s global Executive Leadership Team ministries. He was a Governor of industry and oversaw the management of Accenture’s forums related to engineering and business in the Asia Pacific region which construction at the World Economic Forum spanned 12 countries and included 30,000 personnel.

Mr Dobbs is an industry expert in public private partnerships and private finance initiatives and has served as an advisor on these issues to a number of Government ministries. He was a Governor of industry forums related to engineering and construction at the World Economic Forum from 2008 to 2014 and served as Vice-Chair of the Forum’s Global Agenda Council on Infrastructure in 2013 and 2014.

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

Mr Dobbs holds a Doctorate in Engineering from Texas A&M University and is a registered professional engineer.

Listed Company Directorships (held within the last three years)

Listed Company Directorships (held within the last three years)

• Non Executive Director of Cummins Inc (appointed October 2010)

• Board Committee Memberships

• Non Executive Director of the Commonwealth Bank of Australia (appointed October 2006)

• Member of the Nomination Committee

• Non Executive Director of Tabcorp Holdings Ltd (appointed November 2008)

• Non Executive Director of Santos Limited (appointed February 2010)

• Other Current Appointments

• Member of the Advisory Board of Herbert Smith Freehills Global LLP

• Chairman of Victoria Opera Company Ltd

• Board Committee Memberships

• Chairman of the People and Culture Committee

• Member of the Nomination Committee

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continued Directors’ Report

1. Board of Directors continued

a. Board/Directors continued

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D J Ryan AO (Independent Non Executive Director) Age 63

Term of Office

Mr Ryan joined the Board in December 2004.

Skills, 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, as well as being the Chairman or a Non Executive Director of a number of listed public companies.

Mr Ryan 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 Current Appointments

• Director of First American Title Insurance Company of Australia Pty Ltd

• Director of First Mortgage Services Pty Ltd

• Advisory Board of Virgin Group Worldwide

Board Committee Memberships

• Chairman of the Risk Management and Audit Committee

• Member of the People and Culture Committee

• Member of the Nomination Committee

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M J Ullmer

(Independent Non Executive Director) Age 64

Term of Office

Mr Ullmer joined the Board in December 2011.

Skills, Experience and Qualifications

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

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

Listed Company Directorships (held within the last three years)

• Non Executive Director of Woolworths Limited (appointed January 2012)

Other Current Appointments

• Advisory Board of Nomura Australia

• Deputy Chairman of the Melbourne Symphony Orchestra

• Trustee of the National Gallery of Victoria

• Chairman of the Schools Connect Australia Board Committee Memberships

• Chairman of the Sustainability Committee

• Member of the Risk Management and Audit Committee

• Member of the Nomination Committee

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N M Wakefield Evans

(Independent Non Executive Director)

Age 54

Term of Office Ms Wakefield Evans joined the Board in September 2013.

Skills, Experience and Qualifications

Ms Wakefield Evans was an M&A lawyer for 29 years at King & Wood Mallesons where she was a partner for nearly 20 years. She has extensive experience as an equity capital markets and M&A lawyer, has been involved in a number of significant and ground-breaking M&A transactions and has advised some of the largest companies in Australia, Asia and globally. She is well known in Asia where she was the Managing Partner, International at King & Wood Mallesons, Hong Kong and is rated by a number of publications as one of the Asian region’s leading M&A, corporate governance, communications and resources and energy lawyers. Ms Wakefield Evans was also a key member of King & Wood Malleson’s corporate governance group and has deep experience providing strategic advice to a number of company boards. In October 2012, Ms Wakefield Evans was included in the Australian Financial Review and Westpac Group’s inaugural list of ‘Australia’s 100 Women of Influence.’ She is a member of Chief Executive Women Inc.

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

Listed Company Directorships (held within the last three years)

• Non Executive Director of Macquarie Group Limited (appointed February 2014)

• Non Executive Director of Toll Holdings Limited (appointed May 2011)

Other Current Appointments

• Director of Bupa Australia

• Director of O’Connell St & Associates

• Director of Asialink (University of Melbourne)

• Member of the Law Advisory Council of the University of New South Wales Law School

Board Committee Memberships

Former Directors

Mr P C Goldmark retired from the Board in November 2014, having joined the Board in December 1999.

b. General Counsel and Company Secretary Qualifications and Experience

K Pedersen

Ms Pedersen was appointed as Group General Counsel in January 2013. Before that she was Deputy General Counsel and Company Secretary for several large property and construction companies. Ms Pedersen has a Masters of Law from the University of Technology, Sydney and a Bachelor of Commerce/Bachelor of Laws from the University of New South Wales.

W Lee

Ms Lee joined Lend Lease in September 2009 and was appointed as a Company Secretary of Lend Lease in January 2010. Prior to her appointment, Ms Lee was a Company Secretary for several subsidiaries of a large financial institution listed on the ASX. She has over 10 years of company secretarial experience. Ms Lee has a Bachelor of Arts and a Bachelor of Laws from the University of Sydney, a Graduate Diploma in Applied Corporate Governance and is a Fellow of the Governance Institute Australia.

c. Officers Who Were Previously Partners of the Audit Firm

KPMG or its predecessors was appointed as the Company’s auditor at its first Annual General Meeting in 1958.

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. Mr Ullmer was also a Partner at KPMG from 1982 until October 1992.

d. Directors’ Meetings

Board Meetings

The Board meets as often as necessary to fulfil its role. Directors are required to allocate sufficient time to the Group to perform their responsibilities effectively, including adequate time to prepare for Board meetings. During the financial year ended 30 June 2015, 13 Board meetings were held. Four of these meetings were held in Australia, two in Asia and one each in the UK and Americas reflecting the geographic spread of the Lend Lease business. These meetings run over two or three days. In addition, five meetings were held via teleconference to discuss specific matters and matters were dealt with as required by circular resolution.

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. In addition there were nine special subcommittee meetings of the Board to deal with particular issues.

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 ended 30 June 2015, four meetings of the Risk Management and Audit Committee were held and one special subcommittee meeting of the Risk Management and Audit Committee was held to deal with a particular issue.

People and Culture Committee

The People and Culture Committee was formerly known as the Personnel and Organisation Committee and consists entirely of Non Executive Directors. The name of the Committee was changed in July 2015 to reflect the broader people and culture responsibility of the Committee. 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 ended 30 June 2015, five meetings of the People and Culture Committee were held. Full details of the Committee’s work on behalf of the Board are set out in the Remuneration Report.

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 ended 30 June 2015, five meetings of the Sustainability Committee were held.

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 ended 30 June 2015, all eight meetings of the Nomination Committee were held in conjunction with scheduled Board meetings and all Non Executive Directors routinely attended.

• Member of the Sustainability Committee

• Member of the Nomination Committee

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continued Directors’ Report

Attendance at Meetings of Directors 1 July 2014 to 30 June 2015

The number of Board and Board Committee meetings held, and the number of meetings attended by each Director during the 2015 Financial Year are set out in the tables below.

out in the tables below.
		Number of	Number of
	Membership	Meetings Held1	Meetings Attended
Board	D A Crawford (Chairman)	13	13
	S B McCann (CEO)	13	13
	C B Carter	13	13
	P M Colebatch	13	12
	S B Dobbs	5	5
	P C Goldmark	6	6
	J S Hemstritch	13	12
	D J Ryan	13	13
	M J Ullmer	13	13
	N M Wakefeld Evans	13	13
Board Subcommittee Meetings	D A Crawford	8	8
	S B McCann	8	8
	J S Hemstritch	1	1
	D J Ryan	9	9
	M J Ullmer	5	5
	N M Wakefeld Evans	8	8
Risk Management and Audit Committee Meetings	D J Ryan (Chairman)	4	4
	P M Colebatch	4	4
	M J Ullmer	4	4
	Standing Invitees:
	D A Crawford	4	4
	S B McCann	4	4
Risk Management and Audit Committee Subcommittee No. 1	D J Ryan (Chairman)	1	1
	M J Ullmer	1	1
People and Culture Committee	J S Hemstritch (Chairman)	5	5
	C B Carter	5	5
	D J Ryan	5	5
	Standing Invitees:
	D A Crawford	5	5
	S B McCann	5	5
Sustainability Committee	M J Ullmer (Chairman)	5	5
	P C Goldmark	3	3
	C B Carter	5	5
	N M Wakefeld Evans	5	5
	Standing Invitees:
	D A Crawford	5	5
	S B McCann	5	5
Nomination Committee	C B Carter (Chairman)	8	8
	D A Crawford	8	8
	P M Colebatch	8	8
	S B Dobbs	4	4
	P C Goldmark	4	4
	J S Hemstritch	8	8
	D J Ryan	8	8
	M J Ullmer	8	8
	N M Wakefeld Evans	8	8

1 Reflects the number of meetings held during the time the Director held office during the year. Five of the 13 meetings were out of schedule board teleconferences constituted to address specific issues. P M Colebatch and J S Hemstritch were unable to attend one each of these teleconferences, as these were called at short notice.

e. Interest in Capital

The interest of each of the Directors (in office at the date of this report) in the stapled securities of the Group at 24 August 2015 is set out below.

		Securities held			Securities held
	Securities held	benefcially/	Total	Securities held	benefcially/	Total
Director	directly 2015 indirectly 20151		2015	directly 2014	indirectly 20141	2014
D A Crawford	850	77,008	77,858	809	75,650	76,459
S B McCann	481,864	230,623	712,487	525,784	154,443	680,227
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
S B Dobbs		2,000	2,000	N/A	N/A	N/A
P C Goldmark2				8,441	16,353	24,794
J S Hemstritch		20,000	20,000		20,000	20,000
D J Ryan		35,312	35,312	15,792	15,481	31,273
M J Ullmer		50,000	50,000		25,000	25,000
N M Wakefeld Evans		4,000	4,000		4,000	4,000

2. Operating and Financial Review

The Operating and Financial Review is based on the Lend Lease Group (the Group) Consolidated Financial Statements for the year ended 30 June 2015 and should be read in conjunction with those financial statements. All currency amounts are expressed in Australian dollars unless otherwise specified.

a. About Lend Lease

Lend Lease is a leading international property and infrastructure group with operations in Australia, Asia, Europe and the Americas. People are the core of our business as they ultimately execute on strategy, our people live the Lend Lease values. Our vision is to create the best places . Places that leave a positive legacy and inspire and enrich the lives of people around the world. We do this through putting safety first and delivering innovative and efficient solutions which provide long term sustainable outcomes.

Our Business Activities

The principal activities of the Group include designing, developing, constructing, funding, owning, co-investing in, operating and managing property and infrastructure assets. The Group delivers these activities through a regional management structure focused on four major geographic regions: Australia, Asia, Europe and the Americas.

Our Business Model

The Group delivers the above activities in each region, in full (through the integrated model) or in part, to clients and investors across the property and infrastructure value chain.

Integrated Model

Development Construction Investment Management

• Core Capability: we provide project • Core Capability: we are a trusted global management and construction services investment manager and we provide in key global cities to produce the best property and asset management places for governments, businesses solutions. Our integrated model also and consumers. allows us to provide investors with access to new high quality product.

Property

• Core Capability: we acquire inner and outer urban development sites in key global cities; we create the best places for clients such as governments, businesses and consumers which will be ultimately used and enjoyed by people.

• Core Segment: building, engineering and construction services. • Core Products: property and infrastructure funds and mandates.

• • Core Products: commercial, retail, This also includes managing the

• apartments, health, education, defence, Group’s property and infrastructure

• roads, rail, bridges, tunnels, water, investments.

• energy and telecommunications.

• Core Products: apartments, commercial offices, retail centres, communities, healthcare facilities and retirement villages.

• Core Returns: fund and property

• • Core Returns: project management management fees in addition to

• and construction management fees. investment yields and capital growth on co-investments.

• Core Returns: value created through the development and sale of projects and development management fees received from external co-investors.

Infrastructure

• Core Capability: we arrange the development of Public Private Partnership (‘PPP’) projects for key government clients.

• Core Product: we manage and invest in infrastructure projects.

• Core Returns: origination fees for facilitation of PPP transactions, asset management fees, investment income and capital growth on capital contributions.

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

• 2 P C Goldmark retired in November 2014.

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continued Directors’ Report

2. Operating and Financial Review continued

• a. About Lend Lease continued

Our Business Strategy

To be the leading international property and infrastructure group.

Leading	International	Property	Infrastructure
Top three in each of our	Focus on four core regions	• Commercial	• Social
chosen markets and regions.	with defned geographies across Australia, Asia, Europe and the Americas.	• Residential • Retail	(e.g. health and education) • Economic (e.g. road, rail and
		• Retirement	telecommunications)
		• Industrial

Strategy Update

Since 2009, Lend Lease has delivered on its strategy to become a leading international property and infrastructure group in the core markets in which we operate. This performance has been recognised by equity markets, illustrated in Lend Lease’s Total Securityholder Return of ~192% between 1 January 2009 and 30 June 2015, compared to ~96% for the ASX 200 accumulation index over the same period.

Successful delivery of the previous five year strategy has placed the Group in a strong position where we must focus on delivering the value from our large development pipeline and construction backlog safely while also leveraging our integrated model and taking a disciplined approach to growing the business further in specific target sectors. To take advantage of this strong position and the changing global market context, the Group strategy has evolved. This strategy, called ‘Focus and Grow’, follows on from our ‘Restore, Build, Lead’ strategy, which was in place from 2009 until 2014. The ‘Focus and Grow’ strategy is defined by two core concepts:

Focus: We focus on delivering optimal performance safely at our target margins. This means investing in our people; remaining disciplined in our delivery; maximising opportunities around our integrated model and delivering on strong risk management.

Grow: This is about targeting disciplined growth in sectors, aligned with our six major trends, where we already have deep skills as a developer, contractor, or investment manager. The opportunity lies in either taking these skills into new markets or bringing them together to create innovative integrated solutions in response to customer needs.

We are always conscious of our portfolio drivers: earnings visibility, geographic and sector diversification and growth in our target areas.

The strategy is underpinned by a focus on six major trends, which drive long term demand in areas which the Group has existing capabilities:

Urban Regeneration	Urbanisation creates increasing pressure to plan for, and accommodate a denser population.
Infrastructure	Urbanisation and population growth are driving the need for improved productivity, creating strong demand for infrastructure at both the social and economic levels.
Ageing Population	An ageing population, requiring different housing solutions and greater healthcare support services in all our major markets.
Funds Growth	Continuing growth in funds under management (‘FUM’), consolidation of large pension funds and emergence of sovereign wealth funds as dominant investors.
Sustainability	Sustainability remains imperative for many governments, investors and consumers who demand defined standards to improve environmental and social outcomes.
Disruptive Technology (Added in 2015)	Disruptive Technology is rapidly changing the operating environment of business and will impact property and infrastructure ownership, utilisation and services.

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PAT by line of business(A$m)
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b. Review of Group Performance

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103.0
INFRASTRUCTURE
DEVELOPMENT
----- End of picture text -----

b. Review of Gro	up Per	formance			PAT by line of busin	ess(A$m) 1030
Financial		June 2015	June 2014	Percentage Movement		. INFRASTRUCTURE
Key Metrics Revenue1 EBITDA Proft after Tax (PAT)	A$m A$m A$m	13,298.6 967.0 618.6	13,973.1 1,192.8 822.9	(5%) (19%) (25%)	193.1 INVESTMENT MANAGEMENT	DEVELOPMENT
Operating Cash Flow	A$m	(166.6)	822.4	(120%)
Total Assets	A$m	18,959.2	15,751.8	20%
Net Debt Key Ratios Efective Tax Rate	A$m %	1,758.5 19.4	722.6 17.6	143% 10%	159.0 CONSTRUCTION	389.7 PROPERTY DEVELOPMENT
Gearing	%	10.5	5.7	84%
Return on Equity	%	12.4	18.2	(32%)
Key Returns Earnings per security Weighted avg security Payout ratio Distribution	cents no. % cents	106.8 579.4 51 54.0	142.7 576.6 50 71.0	(25%) 2% (24%)	PAT by region 112.3	90.1 AMERICAS

• Earnings per security cents 106.8 142.7 (25%) PAT by region Weighted avg security no. 579.4 576.6 90.1

• Payout ratio % 51 50 2% AMERICAS Distribution cents 54.0 71.0 (24%) 112.3 EUROPE

• The Group has delivered a strong performance with a significant contribution from the Australian businesses: • Profit after Tax of A$618.6 million is down 25% on the prior year, 17.3 predominantly due to the prior year including A$485.0 million in ASIA Property Development profits from the sale of the Bluewater Shopping Centre in the UK. In the current year, the result was driven by the solid performance from Property Development and Infrastructure Development in Australia;

• • Operating cash flow decreased to a A$166.6 million outflow as the Group had 625.1 AUSTRALIA

• forecast. This was due to significant investment into Property Development production during the year of A$1,721.5 million in relation to urban regeneration and communities projects in Australia and the UK. The prior year included cash received on the sale of the Bluewater Shopping Centre;

• Effective tax rate has increased to 19.4% (June 2014: 17.6%) primarily due to movements in the geographic mix of income;

• Return on equity of 12.4% is within the 11-15% target ROE range;

• Payout ratio 51% resulting in a full year distribution to security holders of 54.0 cents per stapled security;

• Earnings per security of 106.8 cents;

• Australia contributed A$625.1 million Profit after Tax driven by a strong performance from Property Development, Infrastructure Development and Investment Management activities; Property Development performance was driven by continued strong residential trading and the sell down of Tower 1 at Barangaroo South; Infrastructure Development recognised significant origination fees on the financial close of the Ravenhall Prison, Sydney Light Rail and East West Link PPP transactions. Following the November 2014 election in Victoria, the Victorian Government directed the East West Link Project vehicle to suspend works on the East West Link project. In June 2015, the project vehicle reached an agreement to effect a transfer to the State of the East West Connect business to provide a final resolution to the East West Link project; Investment Management benefited from growth in the underlying platform and returns from the Group’s co-investments;

• Asia contributed A$17.3 million Profit after Tax as the region focused on the origination of new urban regeneration developments, including Paya Lebar Central and the Lifestyle Quarter at Tun Razak Exchange which were secured in the second half of the year. These projects position the business well for future periods;

• Europe contributed A$112.3 million Profit after Tax, which included the sale of the UK Facilities Management business in July 2014; the Construction business returned to profitability due to contributions from key new projects secured and the integrated pipeline, in addition to the close out and settlement of the Global Renewables project in Lancashire; Property Development profits include a strong residential contribution, however were lower due to the prior year including the sale of the Group’s interest in the Bluewater Shopping Centre which generated A$485.0 million in Profit after Tax;

• Americas contributed A$90.1 million Profit after Tax, on the back of the construction business with continued strong market conditions in core markets in the US, coupled with strong performance from the military housing business. Recently secured urban regeneration developments place the business in a strong position for future periods;

• Group Services costs of A$124.6 million improved from the prior year by A$1.5 million; and

• Net Treasury costs of A$101.6 million were up A$5.1 million after tax from the prior year, primarily due to higher average net debt balances as a result of the investment of cash during the year.

1 Operating and finance revenue.

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LEND LEASE | ANNUAL REPORT 2015

continued Directors’ Report

2. Operating and Financial Review continued

b. Review of Group Performance continued

Property Development

Property Development
				Percentage
		June 2015	June 2014	Movement
Pipeline1	A$b	44.9	37.7	19%
Settlements1, 2	units	4,262	3,425	24%
Pre Sales1,2,3	A$m	5,222	2,496	109%
EBITDA	A$m	502.1	862.5	(42%)
EBITDA margin	%	26.1	36.2	(28%)

The Property Development segment performed strongly, delivering Profit after Tax of A$389.7 million led by solid trading in the Australian and European markets and the sale of Tower 1 at Barangaroo South. The prior year included the sale of the Bluewater Shopping Centre. Key achievements included:

• Sale of 100% of Tower 1 at Barangaroo South into Lend Lease One International Towers Sydney Trust, in which Lend Lease Trust holds a 37.5% investment;

• New work secured : the Group’s recent focus on leveraging its urban regeneration and residential development capabilities across the global markets in which we operate has resulted in a number of key projects secured during the year, with A$0.8 billion of new projects secured in Australia, A$5.8 billion in Asia and A$2.8 billion in the Americas;

• Finalisation of commercial documentation with Crown Resorts Limited for the proposed development of a world-class integrated resort at Barangaroo South in Sydney, Australia;

• Planning approvals achieved at West Grove at Elephant Park, the next phase of the Elephant and Castle development in London, UK;

• Commercial leasing included new tenancies with Marsh & McLennan Companies and Servcorp at Barangaroo South taking leasing across the three towers to 66%, as well as Agreements for Lease executed with the Financial Conduct Authority and Transport for London for the first two commercial plots at The International Quarter in London, UK;

• Launched seven new residential apartment buildings, taking the total major apartment buildings in conversion/delivery across Australia and Europe to 25;

• Residential settlements increased by 24% to 4,262 units reflecting continued strong trading conditions in Australia and the UK;

• Residential pre sales were up 109%, driven by the ongoing delivery of the Group’s residential apartment pipeline in Australia and the UK; and

• Retirement portfolio increased through the acquisition of eight villages, adding 1,208 units to the Retirement portfolio across New South Wales, Victoria and Western Australia.

Infrastructure Development

Construction

Construction
				Percentage
		June 2015	June 2014	Movement
New Work Secured1	A$b	11.8	10.2	16%
Backlog2	A$b	17.3	16.2	7%
EBITDA	A$m	279.0	271.5	3%
EBITDA margin	%	2.6	2.5	4%

The Construction segment delivered Profit after Tax of A$159.0 million, an increase of A$14.6 million from the prior year driven by strong performance from the Australian Building business, Europe and the Americas. Key achievements included:

• New work secured of A$11.8 billion across: Australia (A$6.5 billion), Asia (A$0.5 billion), Europe (A$1.6 billion) and the Americas (A$3.2 billion);

• Closing backlog revenue increased by A$1.1 billion to A$17.3 billion on the strength of new projects secured in Asia, Europe and the Americas and is comprised of Building (A$13.6 billion), Engineering (A$2.4 billion) and Services (A$1.3 billion); and

• Preferred bidder on ~A$7 billion of new work, including the Gateway Upgrade North project in Queensland, Australia and the delivery of our internal development pipeline for Paya Lebar Central and the Lifestyle Quarter of Tun Razak Exchange in Asia and the next stages of Elephant and Castle and The International Quarter in the UK.

Investment Management

Investment Management
				Percentage
		June 2015	June 2014	Movement
Funds under management3	A$b	21.3	16.3	31%
Asset under management3	A$b	11.4	10.7	7%
Investments3	A$m	1,410.3	1,160.4	22%
EBITDA	A$m	230.8	247.8	(7%)
EBITDA margin	%	108.8	84.1	29%

The Investment Management business has been a significant contributor to the current year delivering Profit after Tax of A$193.1 million. Key achievements included:

• A$2.1 billion of third party capital raised during the year, including the launch of Lend Lease One International Towers Sydney Trust, a capital raising completed by APPF Commercial and a new investment mandate in Asia to fund the Paya Lebar Central project;

• FUM increased due to the creation of two new investment vehicles to finance Tower 1 at Barangaroo South and Paya Lebar Central;

• Assets under management (‘AUM’) were higher than the prior year due to growth in the valuations of the underlying assets and favourable foreign exchange movements; and

• Investments increased due to co-investments in Lend Lease One International Towers Sydney Trust and Paya Lebar Central joint venture, in addition to additional equity contributions in Lend Lease International Towers Sydney Trust and positive revaluation gains across the portfolio.

Infrastructure Development
				Percentage
		June 2015	June 2014	Movement
Invested Equity4	A$m	320.4	186.0	72%
Committed Equity5	A$m	90.6	216.0	(58%)
EBITDA	A$m	131.0	22.6	480%
EBITDA margin	%	64.2	8.7	638%

The Infrastructure Development segment delivered Profit after Tax of A$103.0 million, an increase of A$86.8 million from the prior year due to origination fees received and profit on sale of the UK Facilities Management business during the year. The business is well positioned in both the Australian and American markets to contribute strongly to future earnings. Key achievements included:

• Financial close: the Group advised the consortium, comprising GEO, John Holland and Honeywell on the financial close of the Ravenhall Prison PPP in western Melbourne, Victoria;

• Financial close: the Group advised the consortium, comprising Queensland Investment Corp, John Laing, Lend Lease Group, Bouygues and Acciona on the financial close of the East West Link PPP transaction in Australia. Following the November 2014 election in Victoria, the Victorian Government directed the East West Link Project vehicle to suspend works on the East West Link project. In June 2015, the project vehicle reached an agreement to effect a transfer to the State of the East West Connect business to provide a final resolution to the East West Link project; and

• Financial close: the Group also advised the consortium, comprising First State Super, John Laing, Acciona, Alstom and Transdev on the financial close of the Sydney Light Rail PPP transaction in Sydney, New South Wales.

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

• 2 Residential Land Lots and Built-Form units.

• 3 Pre sales do not form part of Profit after Tax in the current year and are expected to be recognised in future years.

• 4 Invested equity refers to the equity contributed for each project, with the exception of the Global Renewables project in Lancashire, which represents the written down value of the asset at June 2014.

5 Committed equity refers to equity the Group has a future commitment to invest.

1

New work secured revenue is the total revenue to be earned from projects secured during the year.

2 Current year backlog revenue is the total revenue to be earned in future financial years, based on projects secured at June 2015. 3 Represents the Group’s assessment of the market value.

28

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ANNUAL REPORT 2015 | LEND LEASE

LEND LEASE | ANNUAL REPORT 2015

continued Directors’ Report

2. Operating and Financial Review continued

b. Review of Group Performance continued

Financial Performance

	June 2015	June 2014	Percentage
	A$m	A$m	Movement
Revenue and other income	13,532.7	14,125.8	(4%)
Cost of sales and other expenses	(12,585.6)	(12,992.3)	3%
Share of proft of equity accounted investments	19.9	59.3	(66%)
EBITDA	967.0	1,192.8	(19%)
Depreciation and amortisation	(79.5)	(87.7)	9%
EBIT	887.5	1,105.1	(20%)
Net fnance costs	(119.5)	(106.5)	(12%)
Operating Proft before Tax	768.0	998.6	(23%)
Income tax expense	(149.1)	(175.3)	15%
External non controlling interests	(0.3)	(0.4)	25%
Proft after Tax attributable to securityholders	618.6	822.9	(25%)

• EBITDA has decreased by A$225.8 million, predominantly due to the prior year including the sale of the Bluewater Shopping Centre. In the current year, the result was driven by solid performance from Property Development and Infrastructure Development in Australia;

• Depreciation and amortisation has reduced due to a lower fixed assets balance in Contruction Australia due to disposals in the prior year;

• Net finance cost increase is due to increased average net debt balances throughout the year used to fund development production; and

• Income tax expense decrease is due to lower pre-tax earnings, while the effective tax rate has increased primarily due to movements in the geographic mix of income.

Financial Position

Financial Position
	June 2015	June 2014	Percentage
	A$m	A$m	Movement
Cash and cash equivalents	750.1	1,715.8	(56%)
Inventories	4,104.2	3,131.5	31%
Equity accounted investments	1,235.8	578.0	114%
Investment properties	5,994.9	4,832.0	24%
Other fnancial assets	668.4	1,022.5	(35%)
Other assets	6,205.8	4,472.0	39%
Total assets	18,959.2	15,751.8	20%
Borrowings and fnancing arrangements	2,450.3	2,347.0	4%
Other fnancial liabilities	66.0	99.6	(34%)
Other liabilities	11,274.7	8,436.4	34%
Total liabilities	13,791.0	10,883.0	27%
Net assets	5,168.2	4,868.8	6%

Cash Flow

Cash Flow
	June 2015	June 2014	Percentage
	A$m	A$m	Movement
Cash fows from operating activities	(166.6)	822.4	(120%)
Cash fows from investing activities	(383.4)	(614.5)	38%
Cash fows from fnancing activities	(465.2)	(110.4)	(321%)
Efect of foreign exchange rate movements on cash and cash equivalents	49.5	8.8	463%
Total cash fows	(965.7)	106.3	(1,008%)

• Operating cash flows decreased to a A$166.6 million outflow as the Group had forecast. This was due to significant investment into Property Development production during the year of A$1,721.5 million in relation to urban regeneration and communities projects in Australia and the UK. The prior year included cash received on the sale of the Bluewater Shopping Centre;

• Investing cash outflows of A$383.4 million include acquisition of retirement villages of A$209.2 million, investments in Paya Lebar Central of A$160.3 million and equity contributions to Australian Infrastructure Development projects of A$121.6 million, offset by sale of co-investments in APPF Commercial and Industrial A$280 million; and

• Financing cash outflows of A$465.2 million primarily relate to the dividends paid during the year in addition to repayments on the syndicated multi-option facility, offset by drawdowns on the club revolving credit facility.

Group Funding

Group Funding
				Percentage
		June 2015	June 2014	Movement
Net debt1	A$m	1,758.5	722.6	143%
Gross borrowings to total tangible assets2	%	14.3	16.9	(15%)
Net debt to total tangible assets, less cash	%	10.5	5.7	84%
Interest coverage3	times	6.6	8.1	(19%)
Average cost of debt including margins	%	5.2	5.4	(4%)
Average debt duration4	years	3.9	4.7	(17%)
Debt mix fxed: foating	ratio	67:33	76:24
Undrawn facilities5	A$m	1,423.5	1,309.6	9%

• The increase in the Group’s net debt and gearing from the prior year is as a result of the continued investment of cash in Property Development production and acquisition of new Property Development sites during the year; and

• As at the end of the year, the available liquidity for the Group was approximately A$2.2 billion.

Debt Facilities

Debt Facilities
	Facility	Facility	Drawn
	(Local Currency)	A$6	June 20156	Available	Expiry
Syndicated multi-option facility	A$1,500m	A$1,498.8m	A$548.8m	A$950.0m	Various7
UK bond issue	£300m	A$606.5m	A$606.5m	A$0.0m	Oct 21
Club revolving credit facility	£330m	A$673.5m	A$285.7m	A$387.8m	Various8
US Private Placement	US$200m	A$259.7m	A$259.7m	A$0.0m	Various9
Singapore bond	S$275m	A$263.7m	A$263.7m	A$0.0m	Jul 17
Australian medium term notes	A$475m	A$475.5m	A$475.5m	A$0.0m	Various10

• Cash and cash equivalents reduced by 56% from the prior year due to significant investment into Property Development production and acquisition of new Property Development sites, such as Paya Lebar Central, the Lifestyle Quarter at Tun Razak Exchange, 281 Fifth Avenue and River South. The Group also increased investments in Retirement and Infrastructure Development, along with its level of equity investment in funds. The prior year included cash received on the sale of the Bluewater Shopping Centre;

• Inventories increased by A$972.7 million to A$4,104.2 million, largely due to an increase in work in progress in relation to key projects such as Victoria Harbour of A$193.5 million and Darling Harbour Live of A$154.9 million, both in Australia, and Elephant and Castle of A$251.7 million from the prior year;

• Equity accounted investments increased by A$657.8 million to A$1,235.8 million due to additional investments in Lend Lease One International Towers Sydney Trust of $191.3 million and Paya Lebar Central joint venture of A$160.3 million, in addition to the transfer from other financial assets and further investment related to ARIF 3 of A$154.7 million;

• Investment properties increased by A$1,162.9 million to A$5,994.9 million, primarily due to the acquisition of eight new retirement villages with a value of $933.5 million;

• Other financial assets decreased by A$354.1 million to A$668.4 million as a result of the sell down of investments in APPF Commercial and Industrial of A$280.0 million;

• Other assets increased by A$1,733.8 million to A$6,205.8 million in relation to continued progress on the Barangaroo South project; and

• Other liabilities increased by A$2,838.3 million to A$11,274.7 million, primarily due to an increase in Retirement resident liabilities arising from acquisition of the eight retirement villages during the year, deferred payments at Barangaroo South and other deferred payments.

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

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

• 3 EBITDA plus interest income, divided by interest finance costs, including capitalised finance costs.

• 4 The average debt duration calculation methodology has been revised in the current period to be based on total committed facilities. The prior year calculation was based on drawn debt only. The prior year comparative based on the revised methodology is 4.3 years.

• 5 Undrawn facilities balance is based on gross facility, drawn at face value.

• 6 Gross facility adjusted for unamortised transaction costs as recorded in the financial statements.

• 7 A$1,500 million syndicated multi-option facility maturing in June 2019 (A$600 million) and June 2020 (A$900 million) drawn to A$550 million at 30 June 2015. This is an extension of the existing A$1,500 million syndicated multi-option facility with original maturities of December 2017 (A$600 million) and December 2018 (A$900 million).

• 8 £165 million expires in December 2016 and £165 million expires in December 2017.

• 9 US$175 million expires in October 2015 and US$25 million expires in October 2017.

• 10 A$250 million expires in November 2018 and A$225 million expires in May 2020.

30

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ANNUAL REPORT 2015 | LEND LEASE

LEND LEASE | ANNUAL REPORT 2015

continued Directors’ Report

2. Operating and Financial Review continued

b. Review of Group Performance continued

Strategy Performance

Lend Lease has delivered on its strategy to become a leading international property and infrastructure group in the core markets in which we operate.

		Targets	2015 Current Status
Safety		• Operate incident and injury free • Operate only in regions/areas where we can ensure safety	• 83% of operations have not had a critical incident in the last 12 months • 2.2 LTIFR in the last 12 months
Returns		• Enhance returns for securityholders	• TSR of 20% for the year to June 2015 • Maintained payout ratio of 51%
Proftability		• Increase proftability – sustainability and diversifcation of income	• PAT growth – CAGR of 12.3% over the past fve years • ROE – delivered 12.4%, within target range
Pipeline		• Extend development pipeline across integrated mixed use projects • Broaden construction capabilities • Drive continued growth in funds under management	• Global pipeline A$44.9 billion – Urban Regeneration comprising ~70% • Continued progress across major international development sites • FUM growth of 31% in the past 12 months (A$21.3 billion)
Focus		• Creating leading positions and a leading safety culture • Operational Excellence and delivery	• Maintained focus on core growth initiatives including Urban Regeneration, Healthcare and Infrastructure

Outlook and Prospects

Lend Lease has continued profit growth in a challenging market. Our pipeline of opportunities provides earnings visibility and a platform for a strong growth trajectory.

Property Development: an estimated pipeline end value of A$44.9 billion within the Group’s Property Development business underpins our strategic direction of becoming the leading international property and infrastructure group.

• Urban Regeneration: the Group has 12 major Urban Regeneration projects with an estimated pipeline end value of ~A$30 billion across the globe, which includes Barangaroo South, Darling Harbour Live, Victoria Harbour, the Lifestyle Quarter at Tun Razak Exchange, Paya Lebar Central, Elephant and Castle and River South. The significant Urban Regeneration presence globally positions the Group well with good visibility of earnings; and

• Residential: the Group currently has ~55,000 Communities units and ~26,000 apartment built form units within closing backlog and has pre sold A$5.2 billion of residential land lot and built form units across Australia and the United Kingdom as at June 2015, which was up 109% on the prior year.

Infrastructure Development: the Group has more than A$320 million of invested equity in 17 projects across the globe, an increase of 72% on the prior year and also reached financial close on major PPP transactions in Australia during the year. The business is well positioned in both the Australian and American markets to contribute strongly to future earnings.

Construction: backlog revenue of A$17.3 billion remains robust;

• A$11.8 billion of new work was secured during the current year across our key markets; and

• Preferred bidder on ~A$7 billion of new work globally, including ~A$2 billion in Australia. The impact of this preferred work, along with components of integrated projects yet to come to market further supports the visibility of near to medium term earnings.

Investment Management: the Group has successfully raised A$2.1 billion of third party capital during the year and with A$21.3 billion in FUM, combined with A$11.4 billion in AUM and A$1.4 billion in Investment balances respectively, the Group has access to a solid base through which to source ongoing investment and asset management annuity income streams.

The strength of our balance sheet and access to third party capital means the Group has the financial capacity to fund our pipeline and invest in other opportunities, in line with our strategy.

Risks

We believe Lend Lease is well placed for 2016 and beyond. The Group’s result for future financial years remains subject to a number of risk factors. The Group has robust risk management practices in place to be able to deliver sustained long term growth in line with our strategy and manage and mitigate risks that may have an impact on earnings in future financial years, including:

Key Risk Property market risk and property market values	Mitigation
	• All Property Development project values are tested for impairment through the commercial assessment process every six months; and • The fair value for all completed properties, except those valued at less than A$10.0 million, is based on periodic, but at least triennial, valuations by qualifed external independent valuers. It is the policy of the Group to review the fair value of each property every six months.
Development activity risk	• Across the Residential development portfolio, pre sales target thresholds are set on projects prior to the commencement of construction. As at 30 June 2015, the Group also has substantial pre sold stock on hand; • The Group usually requires a minimum deposit upfront on transactions; • Pre leasing target thresholds are usually required to be met on commercial product prior to construction commencing, which helps to protect underlying commercial value; • The Group targets an optimal capital structure based on the risk profle of the development in order to deliver upon targeted returns; and • These, coupled with the integrated delivery model represent a mitigation in respect of development activity risk.

c. Review of Regional Performance

Australia

	REVENUE June 2015 A$m June 2014 A$m Percentage Movement	EBITDA June 2015 A$m June 2014 A$m Percentage Movement	PROFIT/(LOSS) AFTER TAX
			June 2015 A$m June 2014 A$m Percentage Movement
Property Development Infrastructure Development Construction Investment Management	1,560.2 988.5 58% 117.8 57.2 106% 5,912.7 6,459.2 (8%) 152.9 130.3 17%	452.8 260.3 74% 62.0 10.5 490% 152.6 188.6 (19%) 151.5 131.0 16%	353.9 225.3 57% 46.9 6.4 633% 89.3 104.3 (14%) 135.0 110.0 23%
Total	7,743.6 7,635.2 1%	818.9 590.4 39%	625.1 446.0 40%

In Australia , key movements in Profit after Tax included:

• Property Development Profit after Tax increased by A$128.6 million to A$353.9 million driven by continued strong residential conditions, with 3,838 settlements and 5,936 pre sales at June 2015. In addition, current year earnings were enhanced through the sell down of Barangaroo Tower 1 and finalisation of commercial documentation with Crown Resorts Limited for the proposed development of a world-class integrated resort at Barangaroo South in Sydney;

• Infrastructure Developmen t Profit after Tax increased by A$40.5 million to A$46.9 million. The current year includes revenue received following the financial close of Ravenhall Prison, Sydney Light Rail and East West Link transactions. Following the November 2014 election in Victoria, the Victorian Government directed the East West Link Project vehicle to suspend works on the East West Link project. In June 2015, the project vehicle reached an agreement to effect a transfer to the State of the East West Connect business to provide a final resolution to the East West Link project;

• Construction Profit after Tax decreased by A$15.0 million to A$89.3 million primarily due to lower revenue booked in the Engineering and Services businesses; and

• Investment Management Profit after Tax increased by A$25.0 million to A$135.0 million due to growth in the underlying platform, performance fees generated from Lend Lease Real Estate Partners Fund 3 and increased returns from co-investments.

Property Development

Residential includes the development of residential land lots and built-form product (including houses, terraces and apartments).

	RESIDENTIAL LAND LOTS June 2015 June 2014 Percentage Movement	RESIDENTIAL BUILT-FORM	TOTAL June 2015 June 2014 Percentage Movement
		June 2015 June 2014 Percentage Movement
Settlements1 Number of units no. Gross sales value A$m	3,822 3,033 26% 817.5 668.3 22%	16 215 (93%) 16.6 200.9 (92%)	3,838 3,248 18% 834.1 869.2 (4%)
Pre sales1,2 Number of units no. Gross sales value A$m	2,138 1,842 16% 494.0 405.2 22%	3,798 1,283 196% 3,413.7 1,127.5 203%	5,936 3,125 90% 3,907.7 1,532.7 155%
Backlog3 Zoned residential units no.	51,080 53,750 (5%)	14,890 13,810 8%	65,970 67,560 (2%)

Key trading events in the Residential sector during the year include:

Residential land lots:

  - **New work secured:** 410 hectares of land at Aurora, Epping from Places Victoria, with an estimated project end value of A$0.7 billion;

  - Entered into conditional agreements to acquire Mt Gilead, a 610 hectare property in Sydney’s south west;

  - **Settlements** increased by 26%, mainly due to Jordan Springs and Bingara Gorge in New South Wales, Stoneleigh Reserve and Yarrabilba in Queensland and the first settlements occurring at Harpley in Victoria;

  - **Pre sales** increased by 16% from the prior year to 2,138 units demonstrating strong demand in New South Wales, Victoria and Queensland;

  - **Gross sales:** value of settlements and pre sales are higher than the prior year in line with the increase in volumes; and

  - **Average price** per unit pre sold of A$230,000 has increased from A$220,000 in the prior year.

• Construction activity risk • Visibility of construction pipeline, with preferred positions on ~A$7 billion of work;

• The Group places a strong emphasis on safety in its assessment of future pipeline opportunities, which complements the focus on delivery execution;

• Regularly scheduled project reviews are carried out on all projects within the construction workbook; and

• The Group has in place a set of mandatory core procedures that address all phases and aspects of its construction operations.

Construction activity risk	• Visibility of construction pipeline, with preferred positions on ~A$7 billion of work; • The Group places a strong emphasis on safety in its assessment of future pipeline opportunities, which complements the focus on delivery execution; • Regularly scheduled project reviews are carried out on all projects within the construction workbook; and • The Group has in place a set of mandatory core procedures that address all phases and aspects of its construction operations.
Investment and asset	• Regular unit price and asset valuation reviews completed for funds, assets and investments portfolio; and
management activity risk	• Liquidity and debt maturity monitored regularly through formal internal reporting.

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

• 2 Pre sales do not form part of Profit after Tax in the current year and are expected to be recognised in future years. Pre sales land lots represent contracts entered into prior to 30 June 2015 that have not met the revenue recognition criteria. Pre sales built-form represents contracts entered into prior to 30 June 2015 for buildings that have not achieved completion. Joint venture sales are shown at 100% of sales value.

• 3 Backlog includes Group owned, joint venture and managed projects. The actual number of units for any particular project can vary as planning approvals are obtained.

32

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ANNUAL REPORT 2015 | LEND LEASE

LEND LEASE | ANNUAL REPORT 2015

continued Directors’ Report

2. Operating and Financial Review continued

• c. Review of Regional Performance continued

Australia continued

Property Development continued

Residential built-form units:

• New work secured with the acquisition of the remaining 50% of the Armadale joint venture in Victoria;

• Launched seven new residential apartment buildings across Darling Harbour Live in Sydney, New South Wales, Victoria Harbour and Toorak Park, both in Melbourne, Victoria and Brisbane Showgrounds in Brisbane, Queensland;

• Settlements decreased by 93%. Settlements in the prior year included Apartment completions at Richmond and Victoria Harbour. No new Apartment projects were completed in the current year resulting in a decrease in the overall number of settlements in the year;

• Pre sales sales increased by 196% to 3,798 units primarily driven by the launch of three apartment buildings at Darling Harbour Live (100% pre sold at 30 June), 889 Collins Street (93% pre sold) at Victoria Harbour, Toorak Park (75% pre sold) and The Yards (97% pre sold) at Brisbane Showgrounds. In addition strong sales performance continued at 888 Collins Street (97% pre sold) at Victoria Harbour and The Green (96% pre sold) at Brisbane Showgrounds; and

• Average price per unit pre sold of A$900,000 has increased from the prior year of A$880,000 due to the additional buildings pre sold at Darling Harbour Live during the year.

Commercial includes the development of product across sectors such as mixed use, retail, office, hotels, light industrial and social infrastructure.

Commercialincludes the development of product	across sectors such as mixed use,	retail, ofce, hotels,	light industrial and s	ocial infrastructure.
				Percentage
		June 2015	June 2014	Movement
Settlements gross sales value1	A$m	1,150.8	99.3	1,059%
Pre sales gross sales value1,2	A$m	394.2	92.4	327%
Backlog3	sqm/000s	5,182	5,466	(5%)

Key trading events in the Commercial sector during the year include:

• Commercial sell down of Tower 1 at Barangaroo South to the Lend Lease One International Towers Sydney Trust, in which Lend Lease Trust holds a 37.5% investment, development rights to Urbanest Student Accommodation at Darling Square and the Kings Gate commercial building at Brisbane Showgrounds;

• Finalisation of commercial documentation with Crown Resorts Limited for the proposed development of a world-class integrated resort at Barangaroo South;

• Commercial leasing : in total, the three commercial towers are now 66% leased at Barangaroo South. Marsh & McLennan Companies and Servcorp entered into Agreements for Lease for 10,400 sqm and 2,300 sqm of commercial floor space respectively in Tower 1; and

• Financial close reached with Infrastructure NSW and Sydney Harbour Foreshore Authority for two Project Delivery Agreements (PDAs) to develop the mixed use site Darling Square and the ICC Sydney Hotel, with an end value of ~A$1.9 billion.

Retirement includes the development, management and ownership of retirement villages.

Retirementincludes the development, management and o	wnership of retirement vill	ages.
				Percentage
		June 2015	June 2014	Movement
Number of units settled	no.	1,309	1,179	11%
Gross sales value of units settled	A$m	478.0	425.1	12%
Number of units reserved4	no.	395	317	25%
Number of retirement villages5	no.	78	70	11%
Number of retirement units5	no.	14,193	12,824	11%
Number of retirement units developed	no.	205	148	39%
Backlog units – zoned6	no.	666	945	(30%)

Key trading events in the Retirement sector during the year include:

• Settlements of 1,309 units, an increase of 11%, largely due to continued strong trading in New South Wales, Queensland and Victoria;

• Average price per unit settled was A$365,000 an increase of 1% from the prior year reflecting strong residential market conditions offset by a higher proportion of sales of serviced apartments and lower value sites;

• 395 units were reserved at 30 June 2015, with a gross value of A$158.4 million;

• 205 retirement units were also developed throughout the year, which included 88 units in New South Wales, 57 units in the ACT, and 60 units in Victoria; and

• Valuations of the retirement portfolio are based on discount rates between 12-17% and growth rates of between 1-5%. This year, the average discount rate for operating retirement villages was 13.3% and the average growth rate was 3.7%.

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

• 2 Pre sales do not form part of Profit after Tax in the current year and are expected to be recognised in future years.

• 3 Represents net developable land in relation to master-planned urban communities and net developable floor space for other developments. The actual land area and floor space for any particular project can vary as planning approvals are obtained.

• 4 Reserved units are where a refundable deposit has been taken.

• 5 Includes 100% of Group owned and managed properties. Only includes completed units.

• 6 Backlog units include Group owned and managed sites. The actual number of units for any particular village can vary as planning approvals are obtained.

			Percentage
Infrastructure Development		June 2015 June 2014	Movement
Number of projects1	no.	5 5
Estimated capital spend2	A$m	4,100.0 4,100.0
Invested equity3	A$m	200.9 79.3	153%
Committed equity4	A$m	70.0 191.4	(63%)

Key trading events in the Infrastructure Development business during the year include:

• Financial close: the Group advised the consortium, comprising GEO, John Holland and Honeywell on the financial close of the Ravenhall PPP in western Melbourne, Victoria;

• Financial close: the Group advised the consortium, comprising Queensland Investment Corp, John Laing, Lend Lease Group, Bouygues and Acciona on the financial close of the East West Link PPP transaction in Australia. Following the November 2014 election in Victoria, the Victorian Government directed the East West Link Project vehicle to suspend works on the East West Link project. In June 2015, the project vehicle reached an agreement to effect a transfer to the State of the East West Connect business to provide a final resolution to the East West Link project; and

• Financial close: the Group also advised the consortium, comprising First State Super, John Laing, Acciona, Alstom and Transdev on the financial close of the Sydney Light Rail PPP transaction in Sydney, New South Wales.

				Percentage
Construction		June 2015	June 2014	Movement
Revenue	A$m	5,912.7	6,459.2	(8%)
Gross proft margin	A$m	346.7	429.9	(19%)
New work secured revenue5	A$m	6,550.5	6,559.6
Backlog revenue6	A$m	9,871.2	9,555.2	3%

Key trading events in the Construction business during the year include:

• Revenue is 8% lower than the prior year largely due to lower revenue in the Engineering and Services businesses, which has also impacted gross profit margin;

• New work secured during the year included the following key projects:

• Building: A$3.9 billion; including the delivery of the Crown Sydney Hotel Resort at Barangaroo South, two Darling Harbour Live Project Delivery Agreements and managing contractor for Department of Defence facilities requirements for the New Air Combat Capability in Williamtown, all in New South Wales and construction of 888 Collins and 889 Collins, two further residential towers at Victoria Harbour in Victoria;

• Engineering: A$1.7 billion; including design and construction of the NorthConnex Motorway (M1 to M2) in Sydney and CBD Access Alliance, both in New South Wales; and

• Services: A$0.9 billion; including BHP maintenance contract in the Pilbara, Western Australia, operations and asset management of intelligent transport systems for Roads and Maritime Services in New South Wales, regional and metropolitan maintenance services nationally for Optus’ network and switchgear and electrical reticulation work for Sunshine Coast University Hospital in Queensland;

• Backlog revenue remains strong at A$9.9 billion, including: Building: A$6.3 billion; Engineering: A$2.3 billion; Services: A$1.3 billion; and

• Preferred bidder on ~A$2 billion of new work, including delivery of internal integrated projects and the Gateway Upgrade North project in Queensland which the Group successfully secured post balance date.

			Percentage
Investment Management	June 2015	June 2014	Movement
Funds under management7	A$b 13.8	10.9	27%
Assets under management7	A$b 6.1	6.0	2%
Investments7	A$m 814.0	821.1	(1%)

Key trading events in the Investment Management business during the year include:

• A$1.5 billion of third party capital raised during the year, including the launch of Lend Lease One International Towers Sydney Trust, in addition to capital raising completed by APPF Commercial;

• FUM increased 27% to A$13.8 billion as a result of the launch of Lend Lease One International Towers Trust Sydney on the sale of a share of the Group’s interest in commercial Tower 1 at Barangaroo South, an increase in the investment value of Lend Lease International Towers Sydney Trust, and asset acquisitions by APPF Commercial. Additionally, the Group restructured the close-ended Lend Lease Real Estate Partners Fund 3 into Lend Lease Sub Regional Retail Fund, an open-ended investment vehicle;

• The growth in FUM and performance fees achieved on investment mandates has resulted in a strong performance for the year; and

• Investments decreased in the current year, as the Group recycled A$180.0 million of its interest in APPF Industrial and A$100.0 million of its interest in APPF Commercial. These divestments were offset by the Group’s investment in Lend Lease One International Towers Sydney Trust, additional equity contributions to Lend Lease International Towers Sydney Trust and revaluations achieved across the portfolio.

• 1 Number of projects includes projects where the Group is preferred bidder. Where a project has multiple phases, these have been combined on completion for the purposes of presentation. Excludes origination fee for service projects with no equity commitment or on-going management responsibilities for the Group.

• 2 Estimated capital spend figures based on contract value.

• 3 Invested equity refers to the equity contributed for each project.

• 4 Committed equity refers to equity the Group has a future commitment to invest.

• 5 New work secured revenue is the total revenue to be earned from projects secured during the year.

• 6 Current year backlog revenue is the total revenue to be earned in future financial years, based on projects secured at June 2015. 7 Represents the Group’s assessment of the market value.

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continued Directors’ Report

2. Operating and Financial Review continued

c. Review of Regional Performance continued

Asia

Asia
	REVENUE June 2015 A$m June 2014 A$m Percentage Movement	EBITDA June 2015 A$m June 2014 A$m Percentage Movement	PROFIT/(LOSS) AFTER TAX
			June 2015 A$m June 2014 A$m Percentage Movement
Property Development Construction Investment Management	1.0 12.5 (92%) 225.0 497.9 (55%) 45.5 90.8 (50%)	(11.7) (4.9) (139%) (13.5) 18.7 (172%) 64.3 80.3 (20%)	(10.4) (5.3) (96%) (15.8) 13.2 (220%) 43.5 65.8 (34%)
Total	271.5 601.2 (55%)	39.1 94.1 (58%)	17.3 73.7 (77%)

In Asia , key movements in Profit after Tax included:

• Property Development generated a loss due to an increased investment in the origination of pipeline opportunities;

• Construction profit decreased by A$29.0 million to a A$15.8 million loss after tax, due to a lower contribution from the telecommunication projects in Japan, a shift in focus on securing integrated projects and timing in securing of new work; and

• Investment Management Profit after Tax decreased by A$22.3 million to A$43.5 million, due primarily to performance fees earned in the prior year following the stabilisation of the developments of Jem in Singapore and Setia City Mall in Kuala Lumpur, Malaysia.

Property Development

The Property Development business has been focused on replenishing the pipeline as we look to secure opportunities across China, Japan, Malaysia and Singapore, which includes the pursuit of large urban regeneration development projects and senior living opportunities.

				Percentage
Backlog		June 2015	June 2014	Movement
Zoned residential built-form units1	no.	2,225
Commercial and retail2	sqm/000s	368

Key trading events in the Property Development business during the year include:

• New work secured: the Group executed a joint venture agreement with 1Malaysia Development Berhad to acquire and develop the Lifestyle Quarter within the Tun Razak Exchange urban regeneration project in Kuala Lumpur, Malaysia. The estimated development end value is A$2.8 billion; and

• New work secured: the Group in joint venture with the Abu Dhabi Investment Authority were officially awarded a large scale urban regeneration development site at Paya Lebar Central in the east of Singapore on 31 March 2015. The estimated development end value is A$3.0 billion.

				Percentage
Construction		June 2015	June 2014	Movement
Revenue	A$m	225.0	497.9	(55%)
Gross proft margin	A$m	28.0	56.3	(50%)
New work secured revenue3	A$m	481.3	159.4	202%
Backlog revenue4	A$m	396.7	173.3	129%
Key trading events in theConstructionbusiness during	the year include:
•Revenueis lower than the prior year due to the low opening backlog position at June 2014, which has also impacted gross proft margin;
•New work securedof A$0.5 billion has increased as	a result of signifcant projects secured during the current year, including early works for
the mixed-use Paya Lebar Central development and further telecommunication rollouts in Japan. These projects have				also contributed to the
improving backlog revenue position; and
•Preferred bidderon ~A$1 billion of new work, including the main stage of construction at Paya Lebar Central and the Lifestyle Quarter at
Tun Razak Exchange.
				Percentage
Investment Management		June 2015	June 2014	Movement
Funds under management5	A$b	5.3	3.6	47%
Assets under management5	A$b	4.3	3.8	13%
Investments5	A$m	520.2	255.3	104%

Europe

Europe
	REVENUE June 2015 A$m June 2014 A$m Percentage Movement	EBITDA June 2015 A$m June 2014 A$m Percentage Movement	PROFIT/(LOSS) AFTER TAX June 2015 A$m June 2014 A$m Percentage Movement
Property Development Infrastructure Development Construction Investment Management	317.6 1,360.0 (77%) 34.2 152.7 (78%) 1,258.0 1,079.7 17% 13.8 73.5 (81%)	66.3 612.1 (89%) 25.2 (31.9) 179% 23.0 (25.1) 192% 15.0 36.5 (59%)	48.8 458.7 (89%) 30.4 (15.0) 303% 18.5 (24.0) 177% 14.6 27.2 (46%)
Total	1,623.6 2,665.9 (39%)	129.5 591.6 (78%)	112.3 446.9 (75%)

In Europe , key movements in Profit after Tax included:

• Property Development Profit after Tax decreased by A$409.9 million to A$48.8 million. Current year Profit after Tax was driven by completions at Trafalgar Place at Elephant and Castle and Cobalt Place at Wandsworth, both in London, UK, as well as residential communities land sales in line with the strategy to divest the UK Regional Residential portfolio. The prior year included profit on the sale of the Group’s interest in the Bluewater Shopping Centre;

• Infrastructure Development Profit after Tax increased by A$45.4 million to A$30.4 million. The increase on the prior year was driven by the sale of the UK Facilities Management business;

• Construction Profit after Tax increased by A$42.5 million to A$18.5 million, due to contributions from key new projects secured and the integrated pipeline, in addition to the close out and settlement of the Global Renewables project in Lancashire during the year; and

• Investment Management Profit after Tax decreased by A$12.6 million to A$14.6 million with the profit on sale of the majority of the Group’s interest in the Lend Lease PFI/PPP Infrastructure Fund LP being offset by reduced investment income, following the sale of Bluewater in the prior year.

Property Development

				Percentage
Residential		June 2015	June 2014	Movement
Settlements1
Number of units settled (built-form)	no.	424	177	140%
Gross sales value of units settled	A$m	313.8	76.7	309%
Residential land settlements	sqm/000s	18.6	84.4	(78%)
Pre sales1,2
Number of pre sales	no.	1,658	1,095	51%
Gross sales value of pre sales	A$m	1,314.7	871.3	51%
Backlog
Zoned residential units3	no.	4,796	5,220	(8%)
Unzoned residential units3	no.	519	79	557%
Residential land	sqm/000s	44	63	(30%)

Key trading events in the Residential sector during the year include:

• Planning approvals achieved at West Grove at Elephant Park, the next phase of the Elephant and Castle development;

• Settlement s have increased by 140% in the current year due to a strong residential market, and the practical completion of integrated projects at Trafalgar Place at Elephant and Castle, Cobalt Place at Wandsworth, Potato Wharf in Manchester, and Beechwood in Cheshire. Additionally, settlement gross sales value includes the sale of a number of residential land sites;

• Pre sales progressed strongly on London integrated developments at One the Elephant (99% pre sold at 30 June), South Gardens (85% pre sold), and West Grove (48% pre sold), all at Elephant and Castle, Cobalt Place at Wandsworth (97% pre sold), and the residential units at Glasshouse Gardens (91% pre sold) at The International Quarter in Stratford;

• Average price per built form unit pre sold at A$790,000 has remained stable year on year; and

• Residential land backlog has decreased during the year due to land sales completed in line with the Group’s strategy to divest the UK Regional Residential portfolio.

Key trading events in the Investment Management business during the year include:

• A$0.6 billion of third party capital raised during the year via a managed investment mandate to fund the Paya Lebar Central urban regeneration development;

• FUM increased 47% to A$5.3 billion as a result of the investment mandate for Paya Lebar Central;

• AUM increase primarily relates to the market values of the underlying assets and foreign exchange movements; and

• Investments increased by A$264.9 million, due to the initial investment made in the Paya Lebar Central joint venture and the Group increasing its stake in ARIF 3 from 10.1% to 20.1%.

• 1 Backlog includes Group owned, joint venture and managed projects. The actual number of units for any particular project can vary as planning approvals are obtained. 2 Represents net developable land in relation to master-planned urban communities and net developable floor space for other developments. The actual land area and floor space for any particular project can vary as planning approvals are obtained.

• 3 New work secured revenue is the total revenue to be earned from projects secured during the year.

• 4 Current year backlog revenue is the total revenue to be earned in future financial years, based on projects secured at June 2015. 5 Represents the Group’s assessment of the market value.

• 1 Includes 100% of joint venture projects and therefore will not necessarily correlate with the Group’s Profit after Tax. 2 Pre sales do not form part of Profit after Tax in the current year and are expected to be recognised in future years.

• 3 Backlog includes Group owned, joint venture and managed projects. The actual number of units for any particular project can vary as planning approvals are obtained.

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continued Directors’ Report

2. Operating and Financial Review continued

• c. Review of Regional Performance continued

Europe continued

Europe continued
				Percentage
Commercial		June 2015	June 2014	Movement
Settlements gross sales value1	A$m	0.3	78.1	(100%)
Backlog2	sqm/000s	311	402	(23%)

Key trading events in the Commercial sector during the year include:

• Commercial backlog decrease driven by revisions at The International Quarter, Elephant and Castle, and Deptford; and

• Agreements for lease have been executed with the Financial Conduct Authority and Transport for London for the first two commercial plots at The International Quarter. Further, ground works commenced in May 2015 on the first commercial block at The International Quarter.

				Percentage
Infrastructure Development		June 2015	June 2014	Movement
Number of projects	no.	3	25	(88%)
Invested equity3	A$m	10.3	11.5	(10%)
Committed equity4	A$m	14.1	19.2	(27%)

Key trading events in the Infrastructure Development business during the year include:

• Sale of the UK Facilities Management business;

• Closure and settlement of the Global Renewables project in Lancashire in July 2014; and

• Exchange on sale of Majadahonda Hospital in Spain in March 2015, with financial completion anticipated in financial year 2016. Remaining projects include the Brescia and Treviso Hospitals in Italy.

				Percentage
Construction		June 2015	June 2014	Movement
Revenue	A$m	1,258.0	1,079.7	17%
Gross proft margin	A$m	102.9	62.2	65%
New work secured revenue5	A$m	1,566.3	678.3	131%
Backlog revenue6	A$m	1,463.4	1,073.1	36%

Key trading events in the Construction business during the year include:

• Gross Profit Margin increase was driven by the growth in the pipeline of key external and integrated development projects, in addition to the close out and settlement of the Global Renewables Project in Lancashire during the year;

• New work secured of A$1.6 billion includes Rathbone Square a residential, commercial, retail and public realm new building in London’s West End, North Wales Prison, a 2,010 inmate super prison, South Gardens at Elephant and Castle and Glasshouse Gardens, the first residential phase at The International Quarter;

• Backlog revenue has increased to A$1.5 billion from the prior year and is predominantly comprised of the new projects secured during the year as noted above; and

• Preferred bidder on ~A$1 billion of additional work to deliver the Group’s development pipeline at Elephant and Castle, The International Quarter and Deptford, which will be included in backlog in future financial years.

				Percentage
Investment Management		June 2015	June 2014	Movement
Funds under management7	A$b	2.2	1.8	22%
Assets under management7	A$b	1.0	0.9	11%
Investments7	A$m	76.1	84.0	(9%)

Key trading events in the Investment Management business during the year include:

• FUM increased primarily due to performance of the managed Lend Lease Retail Partnership and Lend Lease PFI/PPP Infrastructure Fund LP and favourable foreign exchange movements;

Americas

Americas
	REVENUE June 2015 A$m June 2014 $m Percentage Movement	EBITDA June 2015 A$m June 2014 A$m Percentage Movement	PROFIT/(LOSS) AFTER TAX
			June 2015 A$m June 2014 A$m Percentage Movement
Property Development Infrastructure Development Construction	48.2 23.5 105% 52.2 49.3 6% 3,541.2 2,979.2 19%	(5.3) (5.0) (6%) 43.8 44.0 116.9 89.3 31%	(2.6) 3.2 (181%) 25.7 24.8 4% 67.0 50.9 32%
Total	3,641.6 3,052.0 19%	155.4 128.3 21%	90.1 78.9 14%

In the Americas , key movements in Profit after Tax included:

• Property Development Profit after Tax decreased by A$5.8 million to a A$2.6 million loss after tax as the Group invested in the origination of urban regeneration opportunities;

• Infrastructure Development Profit after Tax increased by A$0.9 million to A$25.7 million. The stable result reflects the ongoing operations of the military housing projects; and

• Construction Profit after Tax increased by A$16.1 million to A$67.0 million due to strong performance in our core construction markets.

Property Development

Property Development
		Percentage
Residential	June 2015 June 2014	Movement
Backlog1
Zoned residential units	no. 130
Unzoned residential units	no. 3,400

Key trading events in the Residential sector during the year include:

• New work secured : the Group’s recent focus on the identification and execution of new urban regeneration developments has resulted in three new projects secured during the year, adding 3,530 residential built-form units to backlog: River South in Chicago, Illinois, Clippership Wharf in Boston, Massachusetts, and 281 Fifth Avenue in New York; and

• The Group is continuing to explore further new pipeline opportunities leveraging our urban regeneration and residential development capabilities.

				Percentage
Healthcare		June 2015	June 2014	Movement
Number of projects2	no.	3	6	(50%)
Commercial backlog3	sqm/000s	47	71	(34%)

Key trading events in the Healthcare sector during the year include:

• Sale of Bon Secours St Francis Medical Pavilion healthcare project in June 2015; and

• Construction completed on the Bon Secours DePaul Medical Plaza.

				Percentage
Infrastructure Development		June 2015	June 2014	Movement
Backlog revenue4	A$m	467.3	415.7	12%
Backlog (number of units under management)	no.	54,205	54,655	(1%)
New work secured revenue	A$m	56.6	44.9	26%
Invested equity5	A$m	109.2	95.2	15%
Committed equity6	A$m	6.5	5.4	20%

Key trading events in the Infrastructure Development business during the year include:

• New work secured : additional work of A$56.6 million originated from existing projects; and

• The military housing portfolio continues to reach stabilisation as initial development periods on existing projects reach completion. Opportunities remain for further development over the remaining term of the ground leases on existing projects.

• AUM increased due to valuation uplift of Touchwood and Queensgate, and favourable foreign exchange movements; and

• Investments decreased on the prior year following the sale of the majority of the Group’s investment in Lend Lease PFI/PPP Infrastructure Fund LP in September 2014, offset by an increase in the underlying value of the interest in the Lend Lease Retail Partnership.

• 1 Backlog includes Group owned, joint venture and managed projects. The actual number of units for any particular project can vary as planning approvals are obtained. Excludes the Horizon Uptown project in Colorado.

• 1 These values include 100% of joint venture projects and therefore will not necessarily fully correlate to the Group’s Profit after Tax.

• 2 Represents net developable land in relation to master-planned urban communities and net developable floor space for other developments. The actual land area and floor space for any particular project can vary as planning approvals are obtained.

• 3 Invested equity refers to the equity contributed for each project, with the exception of the Global Renewables project in Lancashire, which represents the written down value of the asset at June 2014.

• 4 Committed equity refers to equity the Group has a future commitment to invest.

• 5 New work secured revenue is the total revenue to be earned from projects secured during the year.

• 6 Current year backlog revenue is the total revenue to be earned in future financial years, based on projects secured at June 2015.

• 7 Represents the Group’s assessment of the market value.

• 2 Number of projects includes projects where the Group is the preferred bidder. Where a project has multiple phases, these have been combined on completion for the purposes of presentation. Excludes origination fee for service projects with no equity commitment or on-going management responsibilities for the Group.

• 3 Represents net developable land in relation to master-planned urban communities and net developable floor space for other developments. The actual land area and floor space for any particular project can vary as planning approvals are obtained.

• 4 Backlog revenue 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$360.0 million (June 2014: US$378.3 million).

• 5 Invested equity refers to the equity contributed for each project.

• 6 Committed equity refers to equity the Group has a future commitment to invest.

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LEND LEASE | ANNUAL REPORT 2015

continued Directors’ Report

2. Operating and Financial Review continued

c. Review of Regional Performance continued

Americas continued

Americas continued
				Percentage
Construction		June 2015	June 2014	Movement
Revenue	A$m	3,541.2	2,979.2	19%
Gross proft margin	A$m	186.3	168.8	10%
New work secured revenue1	A$m	3,206.3	2,751.0	17%
Backlog revenue2	A$m	5,524.9	5,363.1	3%

Key trading events in the Construction business during the year include:

• Gross Profit Margin increase driven by continued strong market conditions in core markets in the US, coupled with strong performance from the military housing business;

• New work secured of A$3.2 billion includes the following key projects: a 51 storey condominium tower in at 520 Park Avenue in New York, biological development and clinical manufacturing buildings in Boston, Massachusetts and a 35 storey condominium project at 9 Walton in Chicago, Illinois;

• Backlog revenue remains strong at A$5.5 billion. Key projects in backlog include a 57 storey, mixed use tower at 252 East 57th Street and a 60 storey residential building at 56 Leonard Avenue, both in New York, and approximately A$0.8 billion of construction related to military housing projects; and

• Preferred bidder for an additional ~A$3 billion of new residential and commercial construction contracts.

Corporate

Group Services costs of A$124.6 million improved by A$1.5 million from the prior year.

Group Treasury costs increased by A$5.1 million to $101.6 million due to higher average net debt balances as a result of the investment of cash during the year.

	PROFIT/(LOSS) BEFORE TAX June 2015 A$m June 2014 A$m Percentage Movement	PROFIT/(LOSS) AFTER TAX
		June 2015 $m June 2014 A$m Percentage Movement
Interest revenue Interest expense and other costs Net hedge cost	11.4 17.2 (34%) (141.3) (146.1) 3% (14.4) (7.1) (103%)	8.8 13.4 (34%) (100.4) (104.9) 4% (10.0) (5.0) (100%)
Total Group Treasury	(144.3) (136.0) (6%)	(101.6) (96.5) (5%)

Group Treasury is responsible for managing the Group’s liquidity, foreign exchange exposures, interest rate risk and debt.

Key trading elements of the Group Treasury contribution during the year include:

• Reduction in interest revenue of A$4.6 million after tax is due to lower average interest rates, lower average cash balances and near zero rates on offshore balances. The interest rate on consolidated cash averaged 2.0% per annum for the year (June 2014: 2.8%); and

• Decrease in interest expense of A$4.5 million after tax is also due to lower average interest rates compared to the prior year. The Group’s weighted average cost of debt at 30 June 2015 is 5.2% (June 2014: 5.4%).

d. Appendix

Appendix 1

Results by Region Detail

Results by Region Detail
	REVENUE1 June 2015 A$m June 2014 A$m	EBITDA1 June 2015 A$m June 2014 A$m	PROFIT/(LOSS) BEFORE TAX1,2 June 2015 A$m June 2014 A$m	PROFIT/(LOSS) AFTER TAX1,3
				June 2015 A$m June 2014 A$m
Australia Property Development Infrastructure Development Construction Investment Management
	1,560.2 988.5	452.8 260.3	448.5 257.3	353.9 225.3
	117.8 57.2	62.0 10.5	61.9 10.1	46.9 6.4
	5,912.7 6,459.2	152.6 188.6	116.7 142.5	89.3 104.3
	152.9 130.3	151.5 131.0	150.3 129.0	135.0 110.0
Total Australia	7,743.6 7,635.2	818.9 590.4	777.4 538.9	625.1 446.0
Asia Property Development Construction Investment Management
	1.0 12.5	(11.7) (4.9)	(11.9) (5.0)	(10.4) (5.3)
	225.0 497.9	(13.5) 18.7	(14.5) 16.4	(15.8) 13.2
	45.5 90.8	64.3 80.3	64.1 80.3	43.5 65.8
Total Asia	271.5 601.2	39.1 94.1	37.7 91.7	17.3 73.7
Europe Property Development Infrastructure Development Construction Investment Management
	317.6 1,360.0	66.3 612.1	64.4 611.1	48.8 458.7
	34.2 152.7	25.2 (31.9)	24.5 (20.6)	30.4 (15.0)
	1,258.0 1,079.7	23.0 (25.1)	19.8 (29.4)	18.5 (24.0)
	13.8 73.5	15.0 36.5	14.8 35.6	14.6 27.2
Total Europe	1,623.6 2,665.9	129.5 591.6	123.5 596.7	112.3 446.9
Americas Property Development Infrastructure Development Construction
	48.2 23.5	(5.3) (5.0)	(5.3) (5.0)	(2.6) 3.2
	52.2 49.3	43.8 44.0	45.8 45.4	25.7 24.8
	3,541.2 2,979.2	116.9 89.3	112.3 84.5	67.0 50.9
Total Americas	3,641.6 3,052.0	155.4 128.3	152.8 124.9	90.1 78.9
Total operating businesses	13,280.3 13,954.3	1,142.9 1,404.4	1,091.4 1,352.2	844.8 1,045.5
Corporate Group Services Group Treasury
	6.9 1.6	(156.8) (200.7)	(179.1) (217.6)	(124.6) (126.1)
	11.4 17.2	(19.1) (10.9)	(144.3) (136.0)	(101.6) (96.5)
Total Corporate	18.3 18.8	(175.9) (211.6)	(323.4) (353.6)	(226.2) (222.6)
Total	13,298.6 13,973.1	967.0 1,192.8	768.0 998.6	618.6 822.9

• 1 The foreign exchange rates applied to the Income Statement for the year to 30 June 2015 are A$1 = £0.53 (June 2014: A$1 = £0.56), A$1 = US$0.83 (June 2014: A$1 = US$0.91) and A$1 = S$1.09 (June 2014: A$1 = S$1.16).

2 Profit/(loss) before Tax is before adjusting for the amount attributable to external non controlling interests.

1 New work secured revenue is the total revenue to be earned from projects secured during the year. 2 Current year backlog revenue is the total revenue to be earned in future financial years, based on projects secured at June 2015.

3 Profit/(loss) after Tax is after adjusting for the Profit after Tax attributable to external non controlling interests of A$0.3 million (June 2014: A$0.4 million).

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LEND LEASE | ANNUAL REPORT 2015

continued Directors’ Report

2. Operating and Financial Review continued

d. Appendix continued

Appendix 2

Results by Line of Business Detail

Results by Line of Business Detail
	REVENUE1 EBITDA1 PROFIT/(LOSS) BEFORE TAX1,2 PROFIT/(LOSS) AFTER TAX1,3 June 2015 A$m June 2014 A$m June 2015 A$m June 2014 A$m June 2015 A$m June 2014 A$m June 2015 A$m June 2014 A$m
Property Development Australia Asia Europe Americas
	1,560.2 988.5 452.8 260.3 448.5 257.3 353.9 225.3
	1.0 12.5 (11.7) (4.9) (11.9) (5.0) (10.4) (5.3)
	317.6 1,360.0 66.3 612.1 64.4 611.1 48.8 458.7
	48.2 23.5 (5.3) (5.0) (5.3) (5.0) (2.6) 3.2
Total Property Development	1,927.0 2,384.5 502.1 862.5 495.7 858.4 389.7 681.9
Infrastructure Development Australia Europe Americas
	117.8 57.2 62.0 10.5 61.9 10.1 46.9 6.4
	34.2 152.7 25.2 (31.9) 24.5 (20.6) 30.4 (15.0)
	52.2 49.3 43.8 44.0 45.8 45.4 25.7 24.8
Total Infrastructure Development	204.2 259.2 131.0 22.6 132.2 34.9 103.0 16.2
Construction Australia Asia Europe Americas
	5,912.7 6,459.2 152.6 188.6 116.7 142.5 89.3 104.3
	225.0 497.9 (13.5) 18.7 (14.5) 16.4 (15.8) 13.2
	1,258.0 1,079.7 23.0 (25.1) 19.8 (29.4) 18.5 (24.0)
	3,541.2 2,979.2 116.9 89.3 112.3 84.5 67.0 50.9
Total Construction	10,936.9 11,016.0 279.0 271.5 234.3 214.0 159.0 144.4
Investment Management Australia Asia Europe
	152.9 130.3 151.5 131.0 150.3 129.0 135.0 110.0
	45.5 90.8 64.3 80.3 64.1 80.3 43.5 65.8
	13.8 73.5 15.0 36.5 14.8 35.6 14.6 27.2
Total Investment Management	212.2 294.6 230.8 247.8 229.2 244.9 193.1 203.0
Total operating businesses	13,280.3 13,954.3 1,142.9 1,404.4 1,091.4 1,352.2 844.8 1,045.5
Corporate Group Services Group Treasury
	6.9 1.6 (156.8) (200.7) (179.1) (217.6) (124.6) (126.1)
	11.4 17.2 (19.1) (10.9) (144.3) (136.0) (101.6) (96.5)
Total Corporate	18.3 18.8 (175.9) (211.6) (323.4) (353.6) (226.2) (222.6)
Total	13,298.6 13,973.1 967.0 1,192.8 768.0 998.6 618.6 822.9

Appendix 3

Results by Region Detail in Local Currency

	REVENUE1 June 2015 A$m June 2014 A$m	EBITDA1 June 2015 A$m June 2014 A$m	PROFIT/(LOSS) BEFORE TAX1,2 June 2015 A$m June 2014 A$m	PROFIT/(LOSS) AFTER TAX1,3
				June 2015 A$m June 2014 A$m
Australia
Property Development	1,560.2 988.5	452.8 260.3	448.5 257.3	353.9 225.3
Infrastructure Development	117.8 57.2	62.0 10.5	61.9 10.1	46.9 6.4
Construction	5,912.7 6,459.2	152.6 188.6	116.7 142.5	89.3 104.3
Investment Management Group Services Group Treasury	152.9 130.3	151.5 131.0	150.3 129.0	135.0 110.0
	6.9 1.6	(156.8) (200.7)	(179.1) (217.6)	(124.6) (126.1)
	9.6 15.1	(15.2) (9.9)	(94.1) (86.1)	(64.4) (59.0)
Total Australia	7,760.1 7,651.9	646.9 379.8	504.2 235.2	436.1 260.9
	REVENUE1	EBITDA1	PROFIT/(LOSS) BEFORE TAX1,2	PROFIT/(LOSS) AFTER TAX1,3
	June 2015 A$m June 2014 A$m	June 2015 A$m June 2014 A$m	June 2015 A$m June 2014 A$m	June 2015 A$m June 2014 A$m
Asia
Property Development	1.0 12.5	(11.7) (4.9)	(11.9) (5.0)	(10.4) (5.3)
Construction	225.0 497.9	(13.5) 18.7	(14.5) 16.4	(15.8) 13.2
Investment Management	45.5 90.8	64.3 80.3	64.1 80.3	43.5 65.8
Group Treasury	0.1 0.2	0.0 0.0	0.1 0.2	0.1 0.2
Total Asia	271.6 601.4	39.1 94.1	37.8 91.9	17.4 73.9
	REVENUE1 June 2015 £m June 2014 £m	EBITDA1 June 2015 £m June 2014 £m	PROFIT/(LOSS) BEFORE TAX1,2 June 2015 £m June 2014 £m	PROFIT/(LOSS) AFTER TAX1,3 June 2015 £m June 2014 £m
Europe Property Development Infrastructure Development Construction Investment Management Group Treasury
	168.3 761.6	35.0 342.8	34.1 342.2	25.8 256.9
	18.1 85.5	13.4 (17.9)	13.0 (11.5)	16.1 (8.4)
	666.7 604.6	12.2 (14.1)	10.5 (16.5)	9.8 (13.4)
	7.3 41.2	8.0 20.4	7.8 19.9	7.7 15.2
	1.0 1.1	(2.1) (0.3)	(18.7) (20.5)	(15.1) (16.0)
Total Great British pounds	861.4 1,494.0	66.5 330.9	46.7 313.6	44.3 234.3
Total Australian dollars4	1,625.3 2,667.9	125.6 590.9	88.1 560.0	83.7 418.4

	REVENUE1 June 2015 US$m June 2014 US$m	EBITDA1 June 2015 US$m June 2014 US$m	PROFIT/(LOSS) BEFORE TAX1,2 June 2015 US$m June 2014 US$m	PROFIT/(LOSS) AFTER TAX1,3 June 2015 US$m June 2014 US$m
Americas Development Infrastructure Development Construction Group Treasury
	40.0 21.4	(4.4) (4.6)	(4.5) (4.6)	(2.2) 2.9
	43.3 44.9	36.4 40.0	38.0 41.1	21.3 22.6
	2,939.2 2,711.1	97.0 81.3	93.2 76.9	55.6 46.3
	0.0 (0.1)	0.0 (0.3)	(12.3) (12.4)	(7.1) (8.3)
Total US dollars	3,022.5 2,777.3	129.0 116.4	114.4 101.0	67.6 63.5
Total Australian dollars4	3,641.6 3,052.0	155.4 127.9	137.9 111.0	81.4 69.8

• 1 Local currency results exclude foreign exchange movements other than Great British pounds and US dollars.

• 1 The foreign exchange rates applied to the Income Statement for the year to 30 June 2015 are A$1 = £0.53 (June 2014: A$1 = £0.56), A$1 = US$0.83 (June 2014: A$1 = US$0.91) and A$1 = S$1.09 (June 2014: A$1 = S$1.16).

• 2 Profit/(loss) before Tax is before adjusting for the amount attributable to external non controlling interests.

• 3 Profit/(loss) after Tax is after adjusting for the Profit after Tax attributable to external non controlling interests of A$0.3 million (June 2014: A$0.4 million).

• 2 Profit/(loss) before Tax is before adjusting for the amount attributable to external non controlling interests.

• 3 Profit/(loss) after Tax is after adjusting for the Profit after Tax attributable to external non controlling interests of A$0.3 million (June 2014: A$0.4 million).

• 4 The foreign exchange rates applied to the Income Statement for the year to 30 June 2015 are A$1 = £0.53 (June 2014: A$1 = £0.56), A$1 = US$0.83 (June 2014: A$1 = US$0.91) and A$1 = S$1.09 (June 2014: A$1 = S$1.16).

42

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continued Directors’ Report

3. Remuneration Report

Message from the Board

This Remuneration Report explains how our reward strategy supports the achievement of Lend Lease’s strategy and reports on the remuneration for Lend Lease’s Key Management Personnel (‘KMP’).

Contents

Welcome to the 2015 Remuneration Report where we explain how performance has been linked to reward outcomes at Lend Lease this year.

Continued Strong Financial Performance

Lend Lease has again delivered a strong financial performance in 2015 as we continued to deliver on the strategy to become the leading international property and infrastructure group in the core markets in which we operate. Revenue was A$13.3 billion, Profit after Tax was A$618.6 million and Return on Equity was 12.4%. Operating cash flow decreased to a A$166.6 million outflow as the Group had forecast. This was due to significant investment into Property Development production during the year.

In addition, the development pipeline is now worth A$44.9 billion, up 19% from 2014, construction backlog revenue increased by 7% to A$17.3 billion and funds under management increased by 31% to A$21.3 billion.

Successful delivery of the previous five year strategy has placed the Group in a strong position where we must focus on delivering the value from our large development pipeline and construction backlog safely, while also leveraging our integrated model, and taking a disciplined approach to growing the business further in specific target sectors. To take advantage of this strong position and the changing global market context, the Group strategy has evolved. This strategy, called ‘Focus and Grow’, follows on from our ‘Restore, Build, Lead’ strategy, which was in place from 2009 until 2014. The ‘Focus and Grow’ strategy is defined by two core concepts:

Focus: We focus on delivering optimal performance safely at our target margins. This means investing in our people; remaining disciplined in our delivery; maximising opportunities around our integrated model and delivering on strong risk management.

Grow: This is about targeting disciplined growth in sectors, aligned with our six major trends, where we already have deep skills as a developer, contractor, or investment manager. The opportunity lies in either taking these skills into new markets or bringing them together to create innovative integrated solutions in response to customer needs.

We are always conscious of our portfolio drivers: earnings visibility, geographic and sector diversification and growth in our target areas.

We also launched a new Lend Lease brand identity for the first time in 20 years. This new visual identity symbolises the diverse international Lend Lease business coming together as one Lend Lease, and will help position us to embark on this next evolution of the Lend Lease strategy.

The Link Between Lend Lease’s Strategy and Executive Reward Strategy

Our Executive Reward Strategy, which consists of a framework and policy that governs how the key senior employees in the organisation are remunerated, supports the achievement of Lend Lease’s strategy.

Our Executive Reward Strategy considers the interests of both internal and external stakeholders and aims to drive strong individual and team performance. The Executive Reward Strategy is implemented through four guiding principles: Simplicity, Responsiveness, Balance, and Governance and Risk Management. We seek long term outperformance through the execution of business strategy while managing business risk.

A key element of our Executive Reward Strategy is forging clear alignment between Senior Executives and securityholders. We believe that the medium-to-long term emphasis of remuneration at Lend Lease appropriately recognises the investment cycle of a group such as ours.

This is delivered through:

• A significant portion of remuneration being ‘at risk’ and tied to clear metrics;

• Extensive use of deferred and Long Term Incentives (with vesting over a period of up to four years); and

• Mandatory securityholdings by Senior Executives in Lend Lease securities (enforced through disposal restrictions on vested equity until the minimum levels are achieved).

We believe that our approach to executive reward has been a key factor in driving our success. In order to have the right people to lead the Group over the long term, Lend Lease has developed and embedded a competitive Executive Reward Strategy to deliver long term outperformance. For securityholders, this performance has been recognised by equity markets, illustrated in Lend Lease’s Total Securityholder Return of ~192% between 1 January 2009 and 30 June 2015, compared to ~96% for the ASX 200 accumulation index over the same period. This has been supported by the design of incentives for the CEO and Senior Executives.

Reflecting the Group’s strong securityholder returns, securityholders will note (on page 63) that the CEO and Senior Executives received 100% and 98% vesting of the two tranches of Long Term Incentives that were tested in the current reporting period. The Board feels that these outcomes are appropriate and reflect the alignment of the Executive Reward Strategy with securityholder outcomes based on a Relative Total Shareholder Return performance of 88th percentile and 74th percentile in the case of the respective four and three year LTI tranches.

We are also pleased to report that we received 99.12% of votes cast in favour of our Remuneration Report at the 2014 Annual General Meeting (‘AGM’).

No Other Changes in 2015

There were no changes introduced in 2015.

The Year Ahead

The Board has not made any further changes to our Executive Reward Strategy for the year ahead. We believe the Executive Reward Strategy updated in 2013 remains suited to Lend Lease’s business and appropriately considers the Group’s activities, strategy, market practice, and securityholder perspectives while providing remuneration that motivates and retains key executive talent. However, we will continue to review the Executive Reward Strategy to see if enhancements can be made to further support the new ‘Focus and Grow’ strategy.

Executives and Non Executive Directors Covered in this Report	44
a. Remuneration Overview	45
Lend Lease’s Executive Reward Strategy on a Page	45
2015 Highlights	46
Business Performance	47
Performance and STI Pool	47
CEO Scorecard and Performance	48
b. Remuneration Disclosures	50
Remuneration Awarded by the Board for the Year Ended 30 June 2015	50
Actual Remuneration Received in 2015	51
Statutory Disclosures – Remuneration of the CEO and Senior Executives for the Years Ended 2015 and 2014	52
Reconciliation of 2015 Statutory Remuneration Received with Actual Remuneration Received for the CEO	53
Comparison of Remuneration Tables	53
c. Remuneration Governance	54
Setting Remuneration Levels	55
Remuneration Mix	56
Mandatory Securityholding	57
d. How Rewards are Linked to Performance	58
Short Term Incentives (STI)	58
Long Term Incentives (LTI) (current year)	60
Prior Year LTI Awards	62
LTI Performance	63
How Risk Management is Incorporated into Executive Reward	64
e. Executive Contracts	65
CEO Contract	65
Senior Executive Contracts	65
Securities Trading Policy	65
f. Non Executive Directors’ Fees	66
Board and Committee Fees	66
Remuneration of Non Executive Directors for the Years Ended 2015 and 2014	66
g. Equity Based Remuneration	67
Deferred Securities	67
LTI Awards	69
Equity Holdings and Transactions for Year Ended 30 June 2015	71
h. Appendix	72
Terms Used in this Remuneration Report	72

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

We look forward to your comments on both our remuneration arrangements and the Remuneration Report.

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David Crawford, AO Jane Hemstritch Chairman Chairman, People and Culture Committee

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3. Remuneration Report continued

Executives and Non Executive Directors Covered in this Report

The following Executives and Non Executive Directors were considered Key Management Personnel (KMP) for the year ended 30 June 2015 and are covered by this report.

CEO and Senior Executives

Current Executives

Current Executives
Stephen McCann	Group Chief Executive Ofcer and Managing Director (CEO)
Tarun Gupta	Chief Executive Ofcer, Property – Australia
Denis Hickey	Chief Executive Ofcer, Americas since 27 August 2014
Daniel Labbad	Group Chief Operating Ofcer (Group COO) until 27 August 2014; Chief Executive Ofcer,
	Europe and Chief Executive Ofcer, International Operations since 27 August 2014
Rod Leaver	Chief Executive Ofcer, Asia
Anthony Lombardo	Group Chief Financial Ofcer
Robert McNamara	Chief Executive Ofcer, Americas until 27 August 2014 when he was appointed as Group Chief Risk Ofcer
Former Executives
David Saxelby	Chief Executive Ofcer, Construction and Infrastructure – Australia until 17 March 2015

Note: the term Senior Executives when used throughout this report refers to all the Executives listed above, unless specifically stated otherwise.

Non Executive Directors

Current Non Executive Directors

David Crawford	Independent Chairman
Colin Carter	Independent Non Executive Director
Phillip Colebatch	Independent Non Executive Director
Steve Dobbs	Independent Non Executive Director (appointed 1 January 2015)
Jane Hemstritch	Independent Non Executive Director
David Ryan	Independent Non Executive Director
Michael Ullmer	Independent Non Executive Director
Nicola Wakefeld Evans	Independent Non Executive Director
Former Non Executive Directors
Peter Goldmark	Independent Non Executive Director (ceased this role 14 November 2014)

a. Remuneration Overview

Lend Lease’s Executive Reward Strategy on a Page

The following provides a high level overview of the key aspects of Lend Lease’s Executive Reward Strategy, guiding principles and remuneration components.

VISION	To create the best places.
Strategy	Lend Lease is committed to becoming the leading international property and infrastructure group in the core markets in which we operate.
	Underpinned by
Our Executive Reward Strategy	A remuneration framework which attracts and retains the high calibre of executives needed to deliver on the strategy and aligns rewards with a focus on sustainable performance.
	Applying principles of
Our Executive Reward Strategy	Simplicity Simple, transparent and easy to communicate. Responsiveness Consider and, as appropriate, respond to the interests of internal and external stakeholders. Balance A signifcant portion of remuneration is at risk, but can be earned through achieving outstanding short and long term performance. Governance and Risk Management Clear governance and risk management practices minimise potential conficts of interest and enable efective decision making by the Board and management.
	Delivered through remuneration components of
Key Remuneration Components	Fixed remuneration. Short Term Incentives delivered as cash. Short Term Incentives delivered as deferred securities. Long Term Incentives.
	With business and operational risks managed by
Business and Operational Risk	Performance hurdles that appropriately refect the ‘long tail’ of risk and proftability in our business. Strengthened forfeiture and malus provisions. Substantial mandatory securityholding for the CEO and Senior Executives. Signifcant deferral of incentives for up to four years post award. KPIs that specifcally include focus on key operational risks including safety. Qualitative overlay built into performance assessment to ensure assessment is balanced and holistic. Board discretion encouraged to reward good decisions, account for unforeseen circumstances and limit windfall gains.
	While aligning management and securityholders through
Alignment with Securityholders	Substantial mandatory securityholding for the CEO and Senior Executives. Use of Total Shareholder Return and Return on Equity as the LTI performance hurdles. Signifcant deferral of incentives as Lend Lease securities for up to four years. Use of Total Shareholder Return and Return on Equity as the LTI performance hurdles. Sign fcant deferral of incentives as Lend Lease s curities for up to four years.
	Driving performance through Short Term Incentives
Short Term Incentives	Industry specifc measures That ensure a healthy development pipeline and backlog are built (which are key to long term sustainable value creation). Financial measures That measure boththe quality and growth in earnings and a qualitative overlay that reviews the overall th of the business. Strategic, operational and people measures To ensure management is focused on abalance of measuresthat underpin the growth and sustainability of the Group including operational efciency, safety and leadership. Fi ancial measures That measure bo the quality and growth in earnings and a qualitative ov rlay that revi ws the overall fnancial health of the business. Stra egic, operational and people measures To ensure managem nt is focused on a b lance of measures tha underpin the growth and sustainability of the Group including operat onal efciency, safety and leadership.
	And Long Term securityholder value creation through Long Term Incentives
Long Term Incentives	Performance period of three to four years Refects an appropriate balance between reward that motivates executives while refecting the long term ‘tail’ of proftability and risk associated with ‘today’s decisions’. Relative Total Shareholder Return Only rewards the CEO and Senior Executives for delivering returns superior to what a securityholder could achieve in the market and ensures management maintains a strong focus on securityholder outcomes. Return on Equity Is an important long term measure of how well the management team generates acceptable earnings from capital invested and rewards for decisions in respect of developing, managing, acquiring and disposing of assets. Relative Total Shareholder Return Only rewards the CEO and Senior Executives for delivering returns superior to what a s curityholder could achieve in the market and ensures ma agement mainta ns a strong focus on securityholder outcomes. Return o Equity Is an important long term measure of how well the management team generates acceptable earnings from c pital invested and rewards for decisions in respect of developing, managing, acquiring and disposing of assets.
	While maintaining the highest standards of governance
Governance	The Board holds ultimate discretion. Strict protocols in place for interactions with the Board’s remuneration advisor.

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3. Remuneration Report continued

• a. Remuneration Overview continued

2015 Highlights

The Group has delivered a strong performance:

• Zero fatalities;

• 83% of our operations have not had a critical incident in the last 12 months;

• Sustainability with 100% of our major urban development projects (A$30.1 billion) having achieved or targeting green certification;

• Profit after Tax of A$618.6 million is down 25% on the prior year, predominantly due to the prior year including A$485.0 million in Property Development profits from the sale of the Bluewater Shopping Centre in the UK; and

• Return on equity (‘ROE’) of 12.4% is within the 11-15% target ROE range.

Key highlights by business line include:

Property Development

The Property Development business performed strongly, delivering Profit after Tax of A$389.7 million led by solid trading in the Australian and European markets and the sale of Tower 1 at Barangaroo South. The prior year included the sale of the Bluewater Shopping Centre. Key achievements included:

• Sale of 100% of Tower 1 at Barangaroo South into Lend Lease One International Towers Sydney Trust, in which Lend Lease Trust holds a 37.5% investment;

• New work secured : the Group’s recent focus on leveraging its urban regeneration and residential development capabilities across the global markets in which we operate has resulted in a number of key projects secured during the year, with A$0.8 billion of new projects secured in Australia, A$5.8 billion in Asia and A$2.8 billion in the Americas;

• Finalisation of commercial documentation with Crown Resorts Limited for the proposed development of a world-class integrated resort at Barangaroo South in Sydney, Australia;

• Planning approvals achieved at West Grove at Elephant Park, the next phase of the Elephant and Castle development in London, UK;

• Commercial leasing included new tenancies with Marsh & McLennan Companies and Servcorp at Barangaroo South taking leasing across the three towers to 66%, as well as Agreements for Lease executed with the Financial Conduct Authority and Transport for London for the first two commercial plots at The International Quarter in London, UK;

• Launched seven new residential apartment buildings, taking the total apartment buildings in conversion/delivery across Australia and Europe to 25;

• Residential settlements increased by 24% to 4,262 units reflecting continued strong trading conditions in Australia and the UK;

Investment Management

The Investment Management business has been a significant contributor to the current year delivering Profit after Tax of A$193.1 million. Key achievements included:

• A$2.1 billion of third party capital raised during the year, including the launch of Lend Lease One International Towers Sydney Trust, a capital raising completed by APPF Commercial and a new investment mandate in Asia to fund the Paya Lebar Central project;

• Funds Under Management (‘FUM’) increased due to the creation of two new investment vehicles to finance Tower 1 at Barangaroo South and Paya Lebar Central;

• Assets Under Management (‘AUM’) were higher than the prior year due to growth in the valuations of the underlying assets and favourable foreign exchange movements; and

• Investments increased due to co-investments in Lend Lease One International Towers Sydney Trust and Paya Lebar Central joint venture, in addition to additional equity contributions in Lend Lease International Towers Sydney Trust and positive revaluation gains across the portfolio.

Business Performance has Consistently Improved

The table below outlines some key indicators of Group performance over the past five years for the year ended 30 June.

	2015	2014	2013	2012	2011
Statutory Proft after Tax	A$m 619	823	5491	501	493
Operating Proft after Tax	A$m 619	823	5501	507	485
EPSS on statutory Proft after Tax2	Cents 112.4	150.8	101.21	92.7	91.7
Total dividends/distributions3	A$m 313.2	409.8	241.5	217.5	198.7
Increase/(decrease) in closing price4	A$ 1.92	4.76	1.15	(1.77)	1.64
Annual Total Securityholder Return5	% 20	62	22	(16)	27
Return on Equity6	% 12.4	18.2	13.61	13.4	14.3

• 1 2013 has been adjusted to reflect the impact of first time adoption of the revised AASB 119 Employee Benefits standard and the new AASB 11 Joint Arrangements standard in 2014, with retrospective adjustment from 1 July 2012.

• 2 EPSS (Earnings per Stapled Security) is calculated using the weighted average number of securities on issue excluding treasury securities.

• 3 A$132.7 million Company dividend component franked to 25% was declared subsequent to the reporting date for June 2015.

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

• 5 Represents the movements in the Group’s security price, distribution yield and any return on capital over the financial year.

• 6 ROE is calculated as the annual statutory Profit after Tax divided by the arithmetic average of beginning, half year and year end securityholders’ equity.

Performance and STI Pool

• Residential pre sales were up 109%, driven by the ongoing delivery of the Group’s residential apartment pipeline in Australia and the UK; and

• Retirement portfolio increased through the acquisition of eight villages, adding 1,208 units to the Retirement portfolio across New South Wales, Victoria and Western Australia.

Infrastructure Development

The Infrastructure Development business delivered Profit after Tax of A$103.0 million, an increase of A$86.8 million from the prior year due to origination fees received and profit on sale of the UK Facilities Management business during the year. The business is well positioned in both the Australian and American markets to contribute strongly to future earnings. Key achievements included:

Incentives are funded by an incentive pool which represents a maximum that can be spent on incentives. Using an incentive pool ensures that there is a fair sharing of profits between securityholders and employees by capping the amount of profits that can be paid to employees. It also promotes a strong link between Group performance and STI outcomes because STI outcomes are moderated up or down by the available pool (and hence by Group performance).

Group PAT is one input into the overall determination of the STI pool. An assessment of overall profit, quality and sustainability of earnings and other financial and non financial factors are also considered. Group PAT was above target for 2015. Following an overall assessment of performance, the Board approved an STI pool at target for 2015.

• Financial close: the Group advised the consortium, comprising GEO, John Holland and Honeywell on the financial close of the Ravenhall Prison PPP in western Melbourne, Victoria;

• Financial close: the Group advised the consortium, comprising Queensland Investment Corp, John Laing, Lend Lease Group, Bouygues and Acciona on the financial close of the East West Link PPP transaction in Australia. Following the November 2014 election in Victoria, the Victorian Government directed the East West Link Project vehicle to suspend works on the East West Link project. In June 2015, the project vehicle reached an agreement to effect a transfer to the State of the East West Connect business to provide a final resolution to the East West Link project; and

• Financial close: the Group also advised the consortium, comprising First State Super, John Laing, Acciona, Alstom and Transdev on the financial close of the Sydney Light Rail PPP transaction in Sydney, New South Wales.

Construction

The Construction business delivered Profit after Tax of A$159.0 million, an increase of A$14.6 million from the prior year driven by strong performance from the Australian Building business, Europe and the Americas. Key achievements included:

• New work secured of A$11.8 billion across: Australia A$6.5 billion, Asia A$0.5 billion, Europe A$1.6 billion and the Americas A$3.2 billion;

• Closing backlog revenue increased by A$1.1 billion to A$17.3 billion on the strength of new projects secured in Asia, Europe and the Americas and is comprised of Building A$13.6 billion, Engineering A$2.4 billion and Services A$1.3 billion; and

• Preferred bidder on ~A$7 billion of new work, including the Gateway Upgrade North project in Queensland, Australia and the delivery of our internal development pipeline for Paya Lebar Central and the Lifestyle Quarter of Tun Razak Exchange in Asia and the next stages of Elephant and Castle and The International Quarter in the UK.

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3. Remuneration Report continued

CEO Scorecard and Performance

STI outcomes are based on both the individual’s performance against their personal Key Performance Indicators (KPIs) and based on the performance of the Group (and Region for regional executives). The personal KPIs for each Senior Executive are contained in a scorecard. The Board has a rigorous process for the setting of scorecards at the start of the year and the evaluation of scorecards at the end of the year.

Scorecards for the CEO and Senior Executives generally reflect short and medium goals and long term strategic initiatives. They tend to be categorised as financial and non financial (with a weighting on each) and include the financial performance, health and safety, delivery of key projects, sale of key assets, embedding operational excellence and investing in people.

The Board also assesses each Senior Executive against Lend Lease’s defined leadership capabilities (including health and safety, sustainability and diversity), values and behaviours. In this way, the STI rewards ‘what’ is achieved as well as ‘how’ it is achieved.

Lend Lease is committed to the safety and wellbeing of all employees. The Board’s view is that safety is part of the DNA of how Lend Lease does business - it is embedded as part of the culture and the behaviours required of all Executives at all times. The Board does consider these behaviours and outcomes in assessing the overall performance of the CEO and each Executive. However, the Board makes a holistic assessment, taking into account all relevant factors, rather than have a specific safety objective (with a specific weighting) in a scorecard. While the assessment is not structured formulaically or as a ‘gateway’ measure, expectations are clearly communicated to the CEO and Executives that poor health and safety outcomes may lead to a reduction in STI outcomes for the year.

The Board has assessed the CEO’s 2015 scorecard and made an overall judgement as to whether the scorecard results fully reflect performance and the management of risk. Following the Board’s assessment, the CEO’s STI awarded for the year ended 30 June 2015 was A$2,187,000 (being the cash and deferred components of his STI), which equated to 125% of the CEO’s target STI award. Refer to the table Remuneration Awarded by the Board on page 50 to see the total remuneration awarded to the CEO for 2015.

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PERFORMANCE
MEASURES REASON CHOSEN PERFORMANCE ASSESSMENT RESULT
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		PERFORMANCE MEASURES REASON CHOSEN PERFORMANCE ASSESSMENT RESULT	PERFORMANCE MEASURES REASON CHOSEN PERFORMANCE ASSESSMENT RESULT	PERFORMANCE MEASURES REASON CHOSEN PERFORMANCE ASSESSMENT RESULT	PERFORMANCE MEASURES REASON CHOSEN PERFORMANCE ASSESSMENT RESULT
FINANCIAL		Financial performance – 50% weighting
		• A range of fnancial metrics including targets for: – PAT; – EBITDA; – EBITDA margin; – ROE; and – Cash fow from operating and investing. • Targets focused on development pipeline/ backlog. • An assessment not only of the actual result on the stated metrics but also the overall fnancial health of the business including, amongst other things, an assessment of the components and quality of the actual result in comparison with the budget and an assessment of each business unit’s performance.	The Board believes that the combination of fnancial and pipeline/backlog measures appropriately recognises the crucial short to medium drivers of longer term securityholder value creation. Further, the Board believes the assessment of the overall fnancial health of the business ensures that the CEO is rewarded for decisions and outcomes that are sustainable and in the long term interests of securityholders.	The targets included signifcant stretch: • PAT of A$618.6 milion was signifcantly above budget but down on the prior year predominantly due to the prior year including profts from the sale of the Bluewater Shopping Centre in the UK. This was the second highest NPAT in the last 10 years; • EBITDA of A$967.0 million was slightly below target; • Return on Equity (ROE) of 12.4% and in line with target; • Cash fow from operating and investing activities outperformed against targets, despite the net investment into the production of the development pipeline; and • The CEO has delivered outstanding securityholder returns with security price growth of 15% for the year. The Board’s view is that the overall performance is very strong, apart from the Engineering business in Australia which was below target.	Exceeded Target

	PERFORMANCE MEASURES	REASON CHOSEN	PERFORMANCE ASSESSMENT	RESULT
	Non fnancial performance – 50% weighting
STRATEGIC	A range of strategic initiatives largely focused on agreeing and executing a new fve year strategy to reinforce Lend Lease’s leadership position and position Lend Lease for future growth and reduce earning volatility.	Having successfully completed the ‘Lead’ phase of the previous ‘Restore, Build, Lead’ Strategy, the Group was in a position to formulate and begin to execute on a new fve year strategy.	The CEO has evolved the Group’s fve-year strategy to reinforce Lend Lease’s leadership position, positioning for future growth and reduce earning volatility. The ‘Focus and Grow’ strategy follows on from our ‘Restore, Build, Lead’ strategy, which was in place from 2009 until 2014. The ‘Focus and Grow’ strategy is defned by two core concepts: Focus: We focus on delivering optimal performance safely at our target margins. This means investing in our people; remaining disciplined in our delivery; maximising opportunities around our integrated model and delivering on strong risk management. Grow: This is about targeting disciplined growth in sectors, aligned with our six major trends, where we already have deep skills as a developer, contractor, or investment manager. The opportunity lies in either taking these skills into new markets or bringing them together to create innovative integrated solutions in response to customer needs. We are always conscious of our portfolio drivers: earnings visibility, geographic and sector diversifcation and growth in our target areas. Other strategic highlights include: • A new Lend Lease brand identity was launched for the frst time in 20 years. This new visual identity symbolises the diverse international Lend Lease business coming together as one Lend Lease, ready to embark on the next evolution of the Lend Lease strategy. • The Group’s recent focus on leveraging its urban regeneration and residential development capabilities across the global markets in which we operate has resulted in a number of key projects secured during the year, with A$8.0 billion of new major projects secured including, A$5.8 billion in Asia and A$2.8 billion in the Americas. • Growth in apartment backlog across urban areas including Lend Lease’s frst apartments in Asia and Americas. • Maintained focus on core growth initiatives including Urban Regeneration, Healthcare and Infrastructure. • Disciplined recycling of capital deployed has allowed an increase in development production without straining the balance sheet.	At Target
PEOPLE	A range of metrics focused on developing leadership capability and identifying and retaining key talent, including specifc metrics for: • Broadening and deepening succession pools; • Increasing the female leadership pipeline; • Increasing employee engagement scores in focus areas; and • Expand Health, Safety and Environment focus.	Having the right people in management and senior leadership roles is critical to our long term success. The CEO plays an important role in this process and he is assessed on his ability to manage talent and succession risks at senior management levels.	The CEO has exceeded specifc targets in respect of succession plans for key leadership roles and has met gender diversity targets in respect of leadership roles: • Zero fatalities for a second year in a row. • 83% of operations have not had a critical incident in the last 12 months. However, reducing the rate of critical incidences has been a challenge and has been given renewed focus this year and for the year ahead. • The leadership pipeline (including the female leadership pipeline) was increased in excess of the target set. • Targets for retaining top talent have been exceeded. • Lend Lease remains a top 10 best employer for Lesbian, Gay, Bisexual, Transgender and Intersex (LBGTI) employees in Australia in 2015. • Global Sustainability framework enhanced and embedded within key processes. • Signifcant improvement in employee sustainable engagement scores against a benchmark for Global High Performing Companies as defned by Towers Watson.	Exceeded Target
OPERATIONAL EXCELLENCE	Specifc operational targets focused on fagship projects, integration of acquired businesses, operational efciencies, key agreements, and managing underperforming parts of the portfolio.	Delivery on key projects transforming the business through managing underperformance and generating efciency savings not only delivers short term return, but builds a foundation for long term success. Very specifc measures and initiatives are identifed to ensure Lend Lease manages such things to enable delivery of long term objectives.	Overall, the Board has determined that the CEO has met targets in respect of operational excellence. It is now the second year without a reported fatality and key projects are progressing well. The CEO has again made signifcant progress to successfully resolve the number and value of underperforming projects and assets, although there continues to be underperformance in some business units which require additional focus in FY16. There is also record pre sales of A$5.2 billion and increased development backlog, including a signifcant reweighting to ofshore markets: • Development pipeline increased by 19% to A$44.9 billion; • Funds under management increased by 31% to A$21.3 billion; • Closing backlog revenue increased by A$1.1 billion to A$17.3 billion on the strength of new projects secured in Asia, Europe and the Americas; • In the Americas, the securing of three new development opportunities in targeted gateway cities with a combined A$2.8 billion maximum end development value; • Ensured Asia region focused on the origination of new urban regeneration developments, including Paya Lebar Central and the Lifestyle Quarter at Tun Razak Exchange, positioning the business well for future periods; and • Achieving a successful agreement to efect a transfer to the State of the East West Connect business to provide a fnal resolution to the East West Link project.	At Target

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continued Directors’ Report

3. Remuneration Report continued

b. Remuneration Disclosures

In this section, we summarise the value of remuneration for the CEO and each Senior Executive. In addition to the required statutory table (based on the accounting disclosures), we have set out the Remuneration Awarded and the Actual Remuneration Received. The additional tables provide a more complete illustration of our approach to executive remuneration. An explanation of the differences between the tables is set below.

Remuneration Awarded by the Board in Respect of this Year

Remuneration Awarded illustrates what the Board awarded in relation to performance for this financial year. Some of these amounts have not yet been actually received and are ‘at risk’ and deferred until future financial years (such as the Deferred STI) and subject to future performance hurdles (such as the LTI).

Actual Remuneration Received in 2015

The table below outlines the Actual Remuneration Received by the CEO and by Senior Executives during the performance year. It is divided into two parts – 2015 Current Year Remuneration and Prior Year Remuneration.

2015 Current Year Remuneration represents fixed remuneration as well as the cash portion of the 2015 STI due to be paid in September 2015. Prior Year Remuneration represents deferred remuneration that was awarded in prior years that was paid or vested this year (with the value shown being the value of the securities at the vesting date).

Actual Remuneration received is different from:

• The Remuneration Awarded by the Board in relation to 2015 performance (which is set out on page 50). Actual Remuneration includes remuneration for this and previous years, whereas the Remuneration Awarded is wholly in respect of the current year; and

• The Statutory Remuneration disclosures (on page 52) which are prepared in accordance with the relevant accounting standards and represent a blend of actual amounts and accounting accruals.

Actual Remuneration Received in 2015

Actual Remuneration illustrates the actual fixed remuneration received this year as well as: (a) any amounts received in cash in this year from any prior year’s awarded incentives (irrespective of whether they related to this year’s Remuneration Awarded); and (b) the value of any deferred awards (including Deferred STI and/or LTI) that vested in this year.

Statutory Disclosures – Remuneration of the CEO and Senior Executives for the Years Ended 30 June 2015 and 2014

Statutory Remuneration is prepared in accordance with Australian Accounting Standards. It includes fixed remuneration, the cash portion of 2015 STI awarded (paid in September 2015), as well as the current year amortisation of both current and historic STI and LTI grants. There is also a reconciliation between the CEO’s actual remuneration received in 2015 and the statutory remuneration disclosure.

Remuneration Awarded by the Board for the Year Ended 30 June 2015

The Remuneration Awarded by the Board to the CEO and Senior Executives in relation to performance this year is set out in the table below.

The total STI awarded (being the sum of the Cash STI and deferred securities) reflects the result of the assessment of Group and individual performance from 1 July 2014 to 30 June 2015. The table also shows the STI outcome for each Senior Executive as a percentage of both target and maximum STI opportunity.

Deferred securities issued as part of the overall STI award may vest after a further one and two years. The value of deferred securities will depend on the price of Lend Lease securities at the date of vesting.

The amount actually received as a result of these awards will not be known until September 2018 when the testing of the LTI performance hurdle is completed, the vesting of STI deferred awards is completed and the value of Lend Lease securities is known.

A$000s6 Name	SHORT TERM Fixed remuner- ation1 STI cash2	‘AT RISK’ – DEFERRED TO FUTURE PERIODS STI DEFERRED SECURITIES TO VEST IN 2015 LTI awards (conditional on future performance)3 Sept 2016 Sept 2017	TOTAL POTENTIAL REMUNERATION (Actual value is dependent upon future service and future performance)	STI OPPORTUNITY % of target STI paid % of maximum STI paid	LTI FACE VALUE7
					Face Value
Stephen McCann	2,034 1,021	583 583 2,000	6,221	125% 83%	2,872
Tarun Gupta	1,000 585	360 360 400	2,705	145% 97%	574
Denis Hickey4	1,325 612	334 334 350	2,955	115% 77%	503
Anthony Lombardo	1,000 495	270 270 400	2,435	115% 77%	574
Daniel Labbad	1,208 575	321 321 350	2,775	120% 80%	503
Rod Leaver	1,284 409	205 205 300	2,403	75% 50%	431
Robert McNamara	1,222 564	308 308 370	2,772	115% 77%	531
David Saxelby5	1,100 -	- - 420	1,520	0% 0%	603

A$000s7 Name	2015 CURRENT YEAR REMUNERATION Fixed remuneration1 2015 STI cash2	PRIOR YEAR REMUNERATION STI deferred securities3 2011 LTI (Sept 10 grant)4 2012 LTI (Sept 11 grant)4 Total
Stephen McCann	2,095 1,021	2,742 1,393 1,198 8,449
Tarun Gupta	1,058 585	733 294 251 2,921
Denis Hickey5	1,815 612	490 - - 2,917
Anthony Lombardo	1,000 495	830 294 256 2,875
Daniel Labbad	1,716 575	855 305 276 3,727
Rod Leaver	1,466 409	879 395 324 3,473
Robert McNamara	1,426 564	1,585 834 250 4,659
David Saxelby6	1,100 900	435 - - 2,435

1 Fixed remuneration includes salary, non monetary benefits (excluding accrued annual leave expense) and superannuation. 2 The STI cash refers to the portion of the STI award for the year ended 30 June 2015 that will be paid in cash in September 2015. As outlined on page 59, the STI cash portion reflects 50% of the STI awarded up to an executive’s target STI and one-third of the STI awarded above their target. Note the value disclosed above as 2015 STI Cash for David Saxelby reflects the expense for FY15 in respect of a sign-on bonus provided to David Saxelby when he joined Lend Lease in 2012. David Saxelby’s STI awarded for FY15 (as disclosed in the Remuneration Awarded table) was $nil.

• 3 STI deferred securities refers to the amounts deferred in prior years that vested in the current year. This is calculated as the face value of the award at the date of vesting. The value for Robert McNamara includes A$913k in deferred incentives awarded to Mr McNamara in 2011 and 2012 specifically to support the significant turnaround required in the American business. For further information, refer to page 68.

• 4 LTI refers to the LTI awards granted in prior years that vested in the current year. This is calculated as the face value of the award at the date of vesting.

• 5 Denis Hickey became KMP on 27 August 2014 when he was appointed Chief Executive Officer, Americas. The amounts in the table above represent his total remuneration awarded and are not pro rated for his time as KMP.

• 6 David Saxelby was KMP up until 17 March 2015 when he ceased to be a member of the Global Leadership Team. The amounts in the table above represent his total remuneration awarded and are not pro rated for his time as KMP.

• 7 All executives are paid in local currency but reported in the above table in AUD based on the following 12 month average historic foreign exchange rates: GBP 0.53 (applied to Daniel Labbad), SGD 1.09 (applied to Rod Leaver), USD 0.83 (applied to Robert McNamara and Denis Hickey).

• 1 Fixed remuneration includes the contractually awarded amount of Total Package Value (including the value of any benefits salary sacrificed) but excluding any allowances or non monetary benefits.

• 2 The STI cash refers to the portion of the STI award for the year ended 30 June 2015 that will be paid in cash in September 2015. As outlined on page 59, the STI cash portion reflects 50% of the STI awarded up to an executive’s target STI and one-third of the STI awarded above their target.

• 3 LTI awards were granted on 1 September 2014. The value in the table above reflects the estimated fair value as distinct from the accounting fair value used in the Statutory Disclosures on page 52. The allocation is made on a fair value basis to provide a value per performance security reflective of the target value in the hands of the executives based on an estimate of the impact of the performance hurdles. Further explanation is provided on page 60.

• 4 Denis Hickey became KMP on 27 August 2014 when he was appointed Chief Executive Officer, Americas. The amounts in the table above represent his total remuneration awarded and are not pro rated for his time as KMP.

• 5 David Saxelby was KMP up until 17 March 2015 when he ceased to be a member of the Global Leadership Team. The amounts in the table above represent his total remuneration awarded and are not pro rated for his time as KMP.

• 6 All executives are paid in local currency but reported in the above table in AUD based on the following 12 month average historic foreign exchange rates: GBP 0.53 (applied to Daniel Labbad), SGD 1.09 (applied to Rod Leaver), USD 0.83 (applied to Robert McNamara and Denis Hickey).

7 LTI allocation is made on a fair value basis - refer page 60 for a detailed explanation of the rationale and allocation methodology. Face value is calculated using the security price at the date of grant (A$13.53).

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continued Directors’ Report

3. Remuneration Report continued

b. Remuneration Disclosures continued

Reconciliation of 2015 Statutory Remuneration with Actual Remuneration Received for the CEO

The following table shows the difference between the CEO’s Actual Remuneration Received (page 51) and the Statutory Remuneration disclosure (page 52).

Statutory Disclosures – Remuneration of the CEO and Senior Executives for the Years Ended 2015 and 2014

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POST-EMPLOYMENT SECURITY BASED
A$000s [9] SHORT TERM BENEFITS BENEFITS PAYMENTS [5]
Non LTI STI Other
Cash monetary equity equity long term
Name Year salary [1] STI cash [2] benefits [3] Superannuation [4] settled settled benefits [6] Total
Executive Director
Stephen McCann 2015 2,015 1,021 131 19 1,643 1,532 30 6,391
2014 1,989 1,079 94 24 1,232 1,741 30 6,189
Senior Executives
Tarun Gupta 2015 968 585 - 90 325 613 15 2,596
2014 927 546 25 102 245 441 14 2,300
Denis Hickey [7] 2015 1,382 515 148 14 161 509 - 2,729
Anthony Lombardo 2015 981 495 49 19 328 598 15 2,485
2014 971 518 - 18 250 527 15 2,299
Daniel Labbad 2015 1,382 575 194 169 319 616 16 3,271
2014 1,202 560 105 89 259 524 16 2,755
Rod Leaver 2015 1,448 409 23 - 307 379 - 2,566
2014 1,244 333 396 - 269 526 - 2,768
Robert McNamara 2015 1,334 564 132 7 311 820 - 3,168
2014 1,080 611 97 28 294 815 - 2,925
Former executives
David Saxelby [8] 2015 767 554 38 13 582 307 11 2,272
2014 1,082 347 54 18 111 360 16 1,988
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• 1 Cash salary includes the payment of cash allowances such as housing and motor vehicle allowance and holiday pay on termination.

• 2 STI cash refers to the portion of the STI award for the year ended 30 June 2015 that will be paid in cash in September 2015. As outlined on page 59, the STI cash portion reflects 50% of the STI awarded up to an executive’s target STI and one-third of the STI awarded above their target.

• 3 Non monetary benefits may include items such as car parking, relocation and expatriate benefits (such as house rental, health insurance, shipping of goods and tax return preparation) motor vehicle costs, travel benefits and annual leave.

• 4 Superannuation includes the value of pension contributions for non Australian based executives (previously disclosed as non monetary benefits). Tarun Gupta participated in the defined benefits superannuation plan which was partially closed 30 September 2014. The amount in the table above reflects the cost of contributions based on the actuarial long term contribution rate applied to the notional salary in respect of the executive to 30 September 2014. Lend Lease also directed the Trustee to pay to each member an amount determined by the Actuary, projecting into the future based on reasonable assumptions, such that each member was not expected to be adversely affected by the closure at any age up to 65.

• 5 The amounts for security based payments reflect the accounting expense on a fair value basis. The LTI is based on the accounting fair value at the date of grant.

• 6 Other long term benefits represent the accrual of long term leave entitlements (e.g. long service leave).

• 7 Denis Hickey became KMP on 27 August 2014 when he was appointed Chief Executive Officer, Americas. The information for the current year reflects his remuneration for the time he was KMP being the period 27 August 2014 to 30 June 2015.

• 8 David Saxelby was KMP up until 17 March 2015 when he ceased to be a member of the Global Leadership Team. The information for the current year reflects his remuneration for the time he was KMP being the period 1 July 2014 to 17 March 2015. The security based payments expense for the current period has been recalculated, in line with accounting standards, to reflect full entitlement to the unvested securities (but still subject to the original vesting conditions) through to the anticipated date on which David Saxelby ceases to provide services to the Group. Note the value disclosed above as STI Cash for David Saxelby reflects the expense for FY15 in respect of a sign-on bonus provided to David Saxelby when he joined Lend Lease in 2012. David Saxelby’s STI awarded for FY15 (as disclosed in the Remuneration Awarded table) was $nil.

• 9 All executives are paid in local currency but reported in the above table in AUD based on the following 12 month average historic foreign exchange rates: GBP 0.53 (applied to Daniel Labbad), SGD 1.09 (applied to Rod Leaver), USD 0.83 (applied to Robert McNamara and Denis Hickey).

Description	A$000’s	Vesting year1
2015 Total Actual Remuneration Received	8,449
Less 2011 LTI vesting	(1,393)	2015
Less 2012 LTI vesting	(1,198)	2015
Less Deferred STI vesting	(2,742)	2015
Accrued annual leave and long service leave expense	100
2013 and 2014 STI award – deferred securities component	1,532	2016 and 2017
LTI awards – Accounting expense:
• 2010/2011 LTI	19	2015
• 2011/2012 LTI	140	2015 and 2016
• 2012/2013 LTI	273	2016 and 2017
• 2013/2014 LTI	633	2017 and 2018
• 2014/2015 LTI	578	2018 and 2019
Total remuneration (statutory disclosures)	6,391

• 1 Based on the financial year ending 30 June of the relevant year.

Comparison of Remuneration Tables

The table below provides a comparison of the information included in each of the three remuneration presentations above (on pages 50 to 52).

Disclosure	Period covered	Fixed remuneration	STI	STI deferral	LTI
Awarded	Remuneration	Fixed remuneration	The cash portion of the STI	The deferred securities	The estimated fair value of
	disclosed will	includes the contractually	award that will be made in	portion of the STI	2015 LTI grants made in
	relate to both the	awarded amount of Total	September 2015 for year ended	earned in respect of the	September 2014.
	time in their current role (as KMP) and any other role they have held at Lend Lease during the fnancial year.	Package Value/Base Salary from 1 September 2014 or later. It excludes annual leave and long service leave accruals.	30 June 2015. (That is, the cash STI physically paid after year end but in respect of the 2015 fnancial year.) Note: this only covers the cash portion. Refer ‘STI deferral’ column for the treatment of the	year ended 30 June 2015 but deferred until September 2016 and 2017.	As described on page 60, these vest in 2017 and 2018 and are subject to relative TSR and ROE hurdles (as explained in detail on page 60).
			Deferred STI.
Actual	Same period as	Represents the sum of	Same as Awarded, being	The value of any	The value of any LTI
Received	Awarded. That is,	the Statutory disclosures	the cash portion of the STI	Deferred STI which	which vested during this
	remuneration	(below) for cash salary,	award that will be made in	vested during this	fnancial year (specifcally
	disclosed will	non monetary benefts	September 2015 for year	fnancial year.	in September 2014).
	relate to both the	and superannuation but	ended 30 June 2015.	The value shown	The value shown
	time in their	excludes the movement		represents the value	represents the value at
	current role	in annual leave accrual		at the date of vesting.	the date of vesting.
	(as KMP) and any other role they have held at Lend Lease during the fnancial year.	(which is included as a non monetary beneft in the Statutory table).		The Deferred STI which vested in this year were granted in 2013 and 2014 and vested in September 2014.	The LTI which vested in this year were awarded in 2011 and 2012.
Statutory	Only shows	The Statutory disclosures	The cash portion of the STI	Represents the	The accounting expense
	remuneration for	include a value for cash	award made in September	accounting expense in	attributed to this fnancial
	the time the	salary, non monetary	2015 for the year ended	respect of any Deferred	year for LTI awards made
	executive was KMP.	benefts, superannuation and other long term	30 June 2015. (That is, the cash STI physically paid after year	STI from 2013 and 2014, less an	in the 2011, 2012, 2013, 2014 and 2015 fnancial
		benefts in line with	end but relating to this year’s	adjustment for any	years.
		statutory remuneration	performance.)	amounts forfeited.
		disclosure requirements. Non monetary benefts also includes the movement in annual leave accrual.	Note: this only covers the cash portion. Refer ‘STI deferral’ column for the treatment of the Deferred STI.

54 ANNUAL REPORT 2015 | LEND LEASE

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LEND LEASE | ANNUAL REPORT 2015

continued Directors’ Report

3. Remuneration Report continued

c. Remuneration Governance

Robust governance is a critical part of a rigorous approach to executive remuneration.

Board

The Board has overall responsibility for executive remuneration at Lend Lease. The Board assesses the performance of, and determines the STI outcome for the CEO.

People and Culture (P&C) Committee

The People and Culture Committee was formerly known as the Personnel and Organisation Committee and consists entirely of Non Executive Directors. The name of the Committee was changed in July 2015 to reflect the broader people and culture responsibility of the Committee. 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.

• The P&C Committee assists the Board in determining executive remuneration at Lend Lease. In making recommendations to the Board, the P&C Committee has unrestricted access to Senior Management and Company records and obtains independent advice from outside experts.

• The P&C Committee consults with securityholders and other stakeholders.

• The P&C Committee approves the assessment of performance against KPIs and the final STI outcomes for Senior Executives (after considering the recommendations of the CEO).

• The P&C Committee met five times in 2015 and consists only of independent Non Executive Directors:

• J S Hemstritch – Chairman

• C B Carter – Member

• D J Ryan – Member

• In addition, the Risk Management and Audit Committee provides expertise in ensuring that Lend Lease’s remuneration arrangements appropriately incorporate risk within the context of Lend Lease’s broader risk management framework.

Management

Management makes recommendations to the P&C Committee in relation to developing and implementing the Executive Reward Strategy and structure. The CEO also provides his recommendations on pay and STI performance outcomes for his direct reports.

Independent Remuneration Advisor (PwC)

• The Board has appointed PwC as its independent remuneration advisor.

• Strict governance protocols were observed to ensure PwC’s advice to the P&C Committee was made free from undue influence by KMP.

• During the year, PwC did not provide a remuneration recommendation as defined in section 9B of the Corporations Act 2001 .

PwC provided advice on aspects of the remuneration of the KMP including:

• Market practice on executive remuneration structure; and

• Commentary on positioning of the CEO and Senior Executives’ remuneration against the market.

PwC’s advice was made free from undue influence by any of the KMP. Although a remuneration recommendation was not provided, consistent with good governance, the following arrangements were made to ensure that PwC’s advice was free of undue influence:

Setting Remuneration Levels

We benchmark our remuneration mix and levels to ensure we provide market competitive total rewards for on target performance, and total rewards above the market if outstanding performance is achieved

Remuneration is reviewed annually by the P&C Committee for the CEO and Senior Executives (or during the year if there are any role changes or new executive appointments). Strict governance guidelines are followed, as outlined on page 54.

Peer group and	The P&C Committee typically uses a number of sources for benchmarking CEO and Senior Executive remuneration
primary sources	including:
of data	• Data provided by the Board’s remuneration advisor, PwC, about remuneration delivered to similar type roles in
	companies of a similar size.
	– for Australian based executives, we refer 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). Consideration is also given to factors such as revenue.
	– relevant local comparator groups for executives based in other countries.
	• Publicly available data for comparable roles at peer organisations in Australia (including CIMIC (formerly Leighton),
	Mirvac and Stockland); and
	• Published remuneration surveys, remuneration trends and other data sourced from Mercer, Aon Hewitt, FIRG, Hay
	Group, Ernst & Young, Avdiev and others.
Market	Fixed remuneration is set with reference to the market median and 75th percentile. The positioning will depend upon
positioning	the specifc nature of the role, the individual’s performance and the overall remuneration mix.
	The remuneration outcomes for each Senior Executive will also take into consideration the target remuneration mix
	under the Executive Reward Strategy (as set out on page 56).
Application of	The P&C Committee has applied a number of principles when applying remuneration benchmarks to Lend Lease roles.
data to Lend Lease	These principles include:
CEO and Senior Executives	• Understanding the relative size, scale and complexity of the organisations in the data set (to ensure a fair comparison is made to organisations with similar global breadth and operational complexities as Lend Lease);
	• Understanding the relative size, scale and complexity of the roles in the data set;
	• Recognising an individual’s tenure, position, experience and performance;
	• Diferentiating risk profles between roles when reviewing pay mix;
	• Considering key talent including an emphasis on where we source talent from and where we lose talent to; and
	• Considering internal relativities, role and/or person criticality; and key talent and succession risk.
	In addition to the above, when setting remuneration levels, the P&C Committee takes into account Group and regional
	performance and the positioning of the Lend Lease Executive relative to the market.

• PwC was engaged by, and reported directly to, the Chair of the P&C Committee;

• The agreement for the provision of remuneration consulting services was executed by the Chair of the P&C Committee on behalf of the Board;

• Reports delivered by PwC were provided by PwC directly to the Chair of the P&C Committee; and

• PwC was permitted, where approved by the P&C Committee Chair, to speak to management to understand Company processes, practices and other business issues and obtain management’s perspectives. PwC has declared that they have not been unduly influenced by the KMP in carrying out their duties.

As a consequence, the Board is satisfied that advice and market data provided by PwC was made free from undue influence from any of the KMP.

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LEND LEASE | ANNUAL REPORT 2015

continued Directors’ Report

3. Remuneration Report continued

• c. Remuneration Governance continued

CEO Remuneration Mix

The charts below illustrate the percentage of the CEO’s total remuneration awarded that is made up of fixed remuneration, STI (both cash and deferred) and LTI for 2014 and 2015.

Remuneration Mix

Securityholder alignment and longer term focus through significant incentive deferral

The remuneration mix is structured so that a substantial portion of remuneration is delivered as Lend Lease securities (through either Deferred STI or LTI). This, along with the Mandatory Securityholding requirement (set out on page 57), ensures that the interests of executives are aligned with securityholders. In the case of the CEO in 2015, more than half of his remuneration is delivered as Lend Lease securities over a period of up to four years. As shown below, the Remuneration Awarded (refer page 50) to Senior Executives is delivered over a period of up to four years, over which time the Senior Executive is exposed to movements in the security price on any deferred amounts.

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Year 1 Year 2 Year 3 Year 4 Year 5 and beyond
Fixed remuneration
Cash STI
Deferred STI for 1 year The CEO and Senior Executives must
maintain a holding of Lend Lease
Deferred STI for 2 years
securities until the mandatory holding
requirement is achieved
LTI 3 year performance period
LTI 4 year performance period
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2015 2014
33 [%] 33
FIXED FIXED
REMUNERATION
32 [%] 28 [%]
LTI LTI
19 [%] 21 [%]
STI DEFERRED 16 [%] STI DEFERRED 18 [%]
STI CASH STI CASH
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33 [%]
FIXED
REMUNERATION
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The remuneration mix has been specifically designed to align to the execution of Lend Lease’s business strategy

The remuneration framework consists of three different components – fixed remuneration, Short Term Incentives and Long Term Incentives. The relative weighting of each component is referred to as the ‘remuneration mix’.

The Executive Reward Strategy provides for a target remuneration mix which links remuneration outcomes to the execution of business strategy over the short (one year), medium (two to three years) and long (three to four years) term. The target remuneration mix provided in the Executive Reward Strategy is shown below.

Percentage of Total Target Remuneration

			Deferred STI
			(Delivered as deferred	LTI
	Fixed Remuneration		securities vesting one and	(vesting three and four years
	(annual)	STI cash	two years from grant)	from grant)
Group CEO	30% – 35%	20% – 25%	20% – 25%	33%
Senior Executives	40% – 55%	20% – 25%	20% – 25%	20%

The remuneration mix percentages above reflect the desired remuneration mix for the CEO and Senior Executives. To the extent that any Senior Executive is not currently paid in line with this preferred remuneration mix, it is intended that future adjustments to remuneration will be made so as to, over a period of time, move the Senior Executive toward the desired remuneration mix (while taking into account the market benchmarking outlined on page 55). The Board anticipates this will mean that market adjustments for 2016 and beyond will be delivered predominately through increased LTI participation until the Board achieves its targeted remuneration mix (while allowing for adjustments to other components of remuneration where the market data indicates changes are required and/or where other factors used in determining an individual’s remuneration change).

Further, the remuneration mix based on Remuneration Awarded (set out on page 50) may be different to the target remuneration mix (shown above) based on performance.

Mandatory Securityholding

The Mandatory Securityholding requires the CEO and Senior Executives to hold a minimum amount of Lend Lease securities so that they have a significant personal investment in Lend Lease. Along with the Deferred STI and LTI, the Mandatory Securityholding provides additional alignment with securityholders and encourages the CEO and Senior Executives to consider long term securityholder value when making decisions.

Since the 2013 financial year, the CEO and other Senior Executives are required to accumulate and maintain a holding of Lend Lease securities calculated with reference to their fixed remuneration (divided by the security price to determine a number of securities that must be held). In the case of:

• The CEO – the requirement is 150% of Total Package Value (‘TPV’); and

• Senior Executives – the requirement is 100% of TPV or 100% of base salary for Senior Executives outside of Australia.

The mandatory holding for each Senior Executive is outlined below. The number of securities has decreased in FY15 as a result of the increased security price during the prior period.

	Total number of securities held by the	Number of securities required under the
Executive	Senior Executive as at 30 June 2015	Mandatory Securityholding as at 30 June 2015
Stephen McCann	712,487	229,000
Tarun Gupta	75,760	75,000
Denis Hickey	22,250	88,000
Daniel Labbad	100,415	96,000
Rod Leaver	109,534	89,000
Anthony Lombardo	173,251	75,000
Robert McNamara	267,185	83,000

Personally held securities may be counted towards the requirement. Importantly, unvested deferred securities and unvested LTI awards do not count toward this mandatory holding.

It is required that all executives should achieve the mandatory holding requirement within six years of appointment as KMP.

To ensure Senior Executives meet the required minimum, Lend Lease will impose a disposal restriction on 50% of any Senior Executives’ Deferred STI or LTI that vest until such time as the Senior Executive meets the mandatory securityholding requirements (for Senior Executives in Australia). This disposal restriction means that the Senior Executive will not be able to sell these securities until such time as Lend Lease agrees to lift the disposal restriction.

58 ANNUAL REPORT 2015 | LEND LEASE

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continued Directors’ Report

3. Remuneration Report continued

d. How Rewards are Linked to Performance

Short Term Incentives (STI)

STIs are based on performance against a scorecard of financial, strategic and non financial KPIs and Group and Regional performance

STI design	How the STI works
Overview	• STI awards are only provided where executives perform well against their individual scorecard of Key Performance
	Indicators (KPIs) and leadership capabilities. The KPIs include fnancial, strategic and operational goals. The Lend Lease
	leadership capabilities include safety, sustainability, diversity, values and behaviours. Combined, the STI rewards both
	‘what’ is achieved as well as ‘how’ it is achieved.
	• The funding model ensures a robust link between individual outcomes and Group performance to encourage all
	executives to think about both Group and individual goals.
	• A signifcant portion of a Senior Executive’s STI is delivered as deferred securities. This encourages Senior Executives to
	deliver sustainable performance and aligns the interests of executives and securityholders.
STI funding	• The pool of funds available to reward executives under the STI plan is determined by direct reference to Group fnancial performance and, where relevant, regional fnancial performance.
	• Pool funding levels are set by the Board and correspond to threshold, target and stretch levels of PAT achievement.
	In determining the pool of funds available, the Board also considers the overall fnancial health of Lend Lease and the
	sustainability and quality of earnings.
	• Typically, if proft performance is above target, sufcient funds will be available to pay average awards above target.
	Payments to individual executives are capped at 150% of their target STI.
	• Conversely, if PAT performance is below target, average STI awards will be below target. The CEO’s and Senior
	Executives’ awards will be determined based on their overall performance rating and contribution, relative to other
	executives.
STI targets	• STI is based on ‘target opportunities’ which are set using the remuneration mix outlined on page 56.
	• The minimum possible STI outcome is zero and the maximum possible STI outcome is 150% of the CEO’s and Senior
	Executives’ target STI opportunity. For a Senior Executive to earn their maximum STI, outstanding individual performance
	must be coupled with above target fnancial performance by the Group and/or relevant region.
	• The CEO and Senior Executives receive notifcation of a target STI opportunity annually.
STI Key	• STI outcomes are based on performance during the fnancial year, primarily measured through the use of the CEO and
Performance	Senior Executive scorecards.
Indicators	• The CEO and Senior Executive scorecards consist of measures relating to fnancial performance, people, strategy formulation and execution, and management and operational excellence. These KPIs fow from Lend Lease’s short,
	medium and long term strategic and business goals. The 2015 KPIs were aligned to the execution of the ‘Lead’ phase of
	the Group’s strategy.
	• The CEO 2015 scorecard (approved by the Board) and performance against the scorecard is set out in summary on
	pages 48 and 49.
	• Senior Executives are subject to a similar scorecard refecting Group or regional goals as appropriate.
	• Financial measures focus on PAT, fnancial performance, cash fow and capital management. Non fnancial measures
	include achievement of strategic and operational excellence objectives as well as the successful implementation of
	safety and people leadership goals.
	• Lend Lease is committed to the safety and wellbeing of all of its employees. Rather than have a specifc safety objective (with a specifc weighting), safety is a specifc outcome that the Board takes into account in assessing the overall
	performance of the CEO and each Executive. While it is not structured formulaically or as a ‘gateway’ measure,
	expectations are clearly communicated to the CEO and Executives that poor safety outcomes may lead to reduction in
	STI outcomes for the year.
	• The P&C Committee also assesses each Senior Executive against Lend Lease’s defned leadership capabilities (including
	safety, sustainability and diversity), values and behaviours. In this way, the STI rewards ‘what’ is achieved as well as ‘how’
	it is achieved.

STI design	How the STI works
How the STI is	• The actual STI award is delivered as a mix of cash and Deferred STI. The Deferred STI may be settled in Lend Lease
delivered	securities or in cash as determined by the Board. The signifcant portion (at least 50%) delivered as deferred securities
	encourages executives to deliver sustainable performance.
	• For STI awards up to ‘target’, 50% of the STI awarded is paid in cash in September following the performance year.
	The remaining 50% is deferred and delivered as Lend Lease securities. 50% of the deferred portion (i.e. 25% of the total
	award) vests one year after the grant and the other half of the deferred portion vests after two years.
	• For ‘above target’ STI awards, the above target portion is delivered one-third as cash and two-thirds deferred on the
	same basis as set out above.
	• Distributions are not paid on any unvested Deferred STI.
	• In calculating the value of the amount of Lend Lease securities or cash provided on vesting of any Deferred STI, the
	value of any distributions made during the vesting period is taken into consideration.
	• Lend Lease intends to purchase securities on market around September each year to satisfy Deferred STI awards.
	These securities are held in an employee share plan trust until vesting.
Malus	• The Board has the discretion to forfeit part or all of any unvested Deferred STI awards prior to their vesting where it
	transpires that the award(s) would provide a participant with a beneft that was unwarranted, or inappropriate:
	− For deferred securities allocated after 1 July 2012, the Board may reduce the number of deferred securities that may
	vest in the case of a material misstatement of the Group’s fnancial accounts; or
	− For deferred securities allocated after 1 July 2013, enhanced malus provisions apply.
	• It is anticipated that this will only be exercised in exceptional circumstances, including where the Board, acting
	reasonably, determines that:
	− There has been a material misstatement in the Group’s consolidated fnancial statements or those of any company in
	the Group including any misstatement which may be required to be disclosed to the ASX or any relevant regulator or
	other authority; or
	− The participant has engaged in misconduct, or other dereliction of duty (whether or not that misconduct or
	dereliction of duty would warrant summary dismissal), which the Board reasonably considers either has had, or may
	have, a serious impact for the Group or the relevant Group entity, whether fnancial, reputational, operational or
	otherwise.
	• The Board will be entitled to consider whether it is appropriate to exercise this discretion in respect of awards for all
	participants in a particular plan, in a region, in a business, in a team or for specifed participants only.
	• In considering the best interests of the Group, the Board would be required to take into account relevant information including:
	− The individual’s level of responsibility, accountability and infuence for the incident or event;
	− The quantum of any actual loss or damage;
	− Whether the Group’s directions, policies or practices have been breached;
	− Whether any known information at the time of the action or inaction was deliberately withheld; and
	− Any other circumstances the Board considers relevant to an assessment of the participant’s conduct and the
	seriousness of its impact for the Group.
	• The Board may also consider retaining the discretion to delay vesting of any unvested Deferred STI in the event it is
	reviewing whether to exercise such a discretion to reduce or forfeit unvested awards:
	− The CEO may exercise discretion under this policy in lieu of the Board for participants who are not Senior Executives.
	Where such discretion is exercised by the CEO, the CEO will notify the Board.
Termination	• Malus provisions work alongside the existing provisions in the deferred securities terms that allow the Board to adjust
	unvested awards on termination of employment. In particular:
	− If an employee is terminated for fraud or other serious misconduct, unvested deferred securities will lapse;
	− Where an employee is terminated for poor performance, the Board can adjust the number of unvested deferred
	securities at the time of termination; and
	− Deferred securities are forfeited by the individual if they resign or are terminated for cause during the vesting period.
	• For ‘good leavers’, the STI grant may remain on foot subject to the original vesting date.
	• In exceptional circumstances (such as death or total and permanent disability), the Board may exercise its discretion and
	pay the award at the time of termination of employment.
Mandatory	• Mandatory Securityholdings for the CEO and other Senior Executives will be accumulated as grants of deferred
Securityholding	securities awarded from September 2012 begin to vest.
Hedging	• Deferred securities are subject to the Securities Trading Policy, which prohibits executives from entering into any type
	of ‘protection arrangements’ (including hedging, derivatives and warrants).

60 ANNUAL REPORT 2015 | LEND LEASE

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continued Directors’ Report

3. Remuneration Report continued

• d. How Rewards are Linked to Performance continued

Long Term Incentives (LTI) (current year)

LTI is designed to reward our Senior Executives for achievement of long term value creation for securityholders

The LTI plan was reviewed in 2013 as part of the comprehensive review of the Executive Reward Strategy. In this section, we summarise the key features of the 2015 LTI plan (granted September 2014). The same features applied to the 2014 plan (granted September 2013). Following this table, we have also included a summary of the key features of the 2011, 2012 and 2013 grants as LTI remains unvested in respect of these years.

The key features of the 2015 plan (granted September 2014) are:

LTI design	How the LTI works
Overview	• LTI awards are designed to reward Senior Executives for delivering on Lend Lease’s long term strategy and for delivering
	sustained long term securityholder value.
	• LTI awards align the interests of Senior Executives and securityholders because of the Senior Executives’ exposure to the
	Lend Lease security price and through performance measures strongly tied to securityholder value.
	• This year’s LTI will vest half against a relative Total Shareholder Return (TSR) hurdle and half against a Return on Equity
	(ROE) hurdle.
	• Half of the LTI for each performance measure is tested after three years and half after four.
	• Relative TSR is measured against the S&P/ASX 100 companies.
	• ROE is measured against an absolute measure with progressive vesting between 11% and 15%.
Performance	• An annual grant of ‘performance securities’ is made to a limited number of executives.
securities	• The allocation is made on a fair value basis to provide a value per performance security more refective of the target
	value in the hands of the executives. The fair value is based on an estimate of the impact of the performance hurdles.
	For the TSR portion of the LTI, a discount of 35% is applied. 25% is applied to the ROE portion. This discount was
	determined to be appropriate after the Board took extensive advice by external valuation experts. Importantly, when
	Lend Lease introduced the fair value allocation methodology in 2014, the dollar value into which the fair value was
	divided was reduced by a similar discount to ensure there was no windfall gain to the Senior Executives.
	• The Board intends that the awards be settled in Lend Lease securities, although the award may be settled in cash or
	other means at the Board’s discretion.
Performance	• 50% of the performance securities are assessed over a three year period. If the hurdle is not fully achieved at this time,
period	those performance securities that have not vested will lapse.
	• The remaining 50% of the performance securities are assessed after four years.
	• There is no retesting on any portion of the LTI grant. If the performance hurdle is not met at the time of testing,
	the awards are forfeited.
	• This performance period was chosen as the Board believes that the time frame appropriately refects a balance
	between reward that motivates executives while refecting the long term ‘tail’ of proftability and risk associated with
	‘today’s decisions’.

LTI design

How the LTI works

Performance • For performance	securities granted 1 September 2014 (the 2015 plan), the award is 50% subject to Lend Lease’s	securities granted 1 September 2014 (the 2015 plan), the award is 50% subject to Lend Lease’s
hurdle Total Securityholder Return (TSR) compared to the companies in		the S&P/ASX 100 Index and 50% subject to Return
on Equity (ROE). Relative TSR	The vesting schedule is:	Percentage of performance securities that vest if the
	Relative TSR percentile ranking	Relative TSR hurdle is met
	Below the 50th percentile	No vesting
	At the 50th percentile	50% vesting
	Above the 50th percentile but below the 75th	Pro rata vesting on a straight line basis between 50%
	percentile	and 100%
	At the 75th percentile or greater	100% vesting

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• Relative TSR was selected as the performance measure to link LTI awards to the delivery of superior (i.e. above median) securityholder returns relative to the S&P/ASX 100 companies over the performance period. This method was chosen after consultation with securityholders. The S&P/ASX 100 companies are determined at the start of the performance period.

Return on Equity This is an absolute measure. The vesting schedule is:

	Percentage of performance securities that vest if the
Return on Equity	ROE hurdle is met
Less than 11%	No vesting
11%	25% vesting
Above 11% but below 15%	Pro rata vesting on a straight line basis between 25%
	and 100%
15% or greater	100% vesting

		This is an absolute measure. The vesting schedule is:
		Return on Equity Percentage of performance securities that vest if the ROE hurdle is met
		Less than 11% No vesting
		11% 25% vesting
		Above 11% but below 15% Pro rata vesting on a straight line basis between 25% and 100%
		15% or greater 100% vesting
Distributions Malus Termination of employment Mandatory Securityholding Hedging	• The above performance hurdles were chosen for the LTI after a detailed review in 2013, including extensive consultation with securityholders and other stakeholders. The Board believes that these measures, when combined with the STI scorecards, the vesting periods for Deferred STI and LTI and the Mandatory Securityholding requirements provides the most suitable link to long term securityholder value creation because: − The use of Relative Total Shareholder Return ensures that the CEO and Senior Executives deliver returns superior to what a securityholder could achieve in the market and ensures management maintain a strong focus on securityholder outcomes; and − Return on Equity refects the capital intensive nature of Lend Lease’s activities and is an important long term measure of how well the management team generates acceptable earnings from capital invested and rewards for decisions in respect of developing, managing, acquiring and disposing of assets. The ROE measure is chosen after extensive analysis of our business strategy, business mix, market conditions, internal forecasts, market consensus and the costs of capital. • The Group’s currently stated ROE target is 11-15%. The Board is comfortable that the vesting range provides a realistic goal at the lower end (bearing in mind only 25% vests on achievement of the lower end of the range, 11%) and realistic stretch at the upper end of 15%. • The hurdles are reviewed annually by the Board and the Board continues to believe that the ROE range will drive outperformance without incentivising excessive risk taking. • While the Board appreciates that there are at times diferent views held by diferent stakeholders, we believe that these measures provide the appropriate balance between market and non market measures.
	• Distributions are not paid on unvested performance securities. • In calculating the value of the awards which vest, the value of any distributions made during the vesting period is taken into consideration.
	• The Board may adjust the number of performance securities downwards prior to the date of vesting in the case of a material misstatement of the Group’s fnancial accounts. • The Board may adjust the number of LTI awards downwards where the Board reasonably determines that delivery of part or all of any LTI award would result in the Senior Executive receiving an inappropriate or unwarranted beneft (having regard to their personal performance, the performance of the Group and all other benefts they have received).
	• If the executive resigns or is terminated for cause, the unvested LTI is forfeited. • If the executive is terminated for poor performance, the Board can adjust unvested LTI prior to the vesting date. • For ‘good leavers’, the LTI grant may remain on foot subject to the original performance hurdle. • In exceptional circumstances (such as death or total and permanent disability), the Board may exercise its discretion and pay the award at the time of termination of employment.
	• Mandatory Securityholdings for the CEO and Senior Executives will be accumulated when LTI awards granted begin to vest.
	• Pre vesting hedging is prohibited. • Unvested LTI grants will also be forfeited if an executive enters into a prohibited pre vesting hedging arrangement in relation to their LTI awards.

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50[%] 4 YEAR TSR VESTED

continued Directors’ Report

3. Remuneration Report continued

d. How Rewards are Linked to Performance continued

LTI Performance

During the current year, two LTI awards were subject to performance testing:

2011 Award

Prior Year LTI Awards

The key features of the 2011 plan (granted 1 September 2010), the 2012 plan (granted 1 September 2011) and the 2013 plan (granted 1 September 2012) are the same as set out below.

LTI design	How the LTI works
Performance	• An annual grant of ‘performance securities’ is made to a limited number of executives.
securities	• The Board intends that the awards be settled in Lend Lease securities, although the award may be settled in cash or
	other means at the Board’s discretion.
	• On vesting, each performance security entitles executives to one Lend Lease security, or at the Board’s discretion,
	cash or other instruments of equivalent value.
Performance	• For performance securities granted 1 September 2012 (the 2013 plan), the performance hurdle is Lend Lease’s Total
hurdle	Securityholder Return (TSR) compared to the companies in the S&P/ASX 100 Index.
	• The S&P/ASX 100 companies are determined at the start of the performance period.
	• The vesting schedule is: Percentage of performance securities that vest if the
	Relative TSR percentile ranking Relative TSR hurdle is met
	Below the 50th percentile No vesting
	At the 50th percentile 50% vesting
	Above the 50th percentile but below the 75th percentile Pro rata vesting on a straight line basis between 50% and
	100%
	At the 75th percentile or greater 100% vesting
	• Relative TSR was selected as the performance measure to link LTI awards to the delivery of superior (i.e. above median)
	securityholder returns relative to the S&P/ASX 100 companies over the performance period. This method was chosen
	after consultation with securityholders.
Performance	• 50% of the performance securities are assessed over a three year period. If the hurdle is not fully achieved at this time,
period	those performance securities that have not vested will lapse.
	• The remaining 50% of the performance securities are assessed after four years.
	• There is no opportunity to retest any portion of the LTI grant. If the performance hurdle is not met, the awards are forfeited.
Distributions	• Distributions are not paid on unvested performance securities.
	• In calculating the value of the awards which vest, the value of any distributions made during the vesting period is taken
	into consideration.
Malus	• For performance securities allocated after 1 July 2012, the Board may adjust the number of performance securities
	downwards prior to the date of vesting in the case of a material misstatement of the Group’s fnancial accounts.
Termination of	• If the executive resigns or is terminated for cause, the unvested LTI is forfeited.
employment	• If the executive is terminated for poor performance, the Board can adjust unvested LTI prior to the vesting date.
	• For ‘good leavers’, the LTI grant may be pro rated upon termination of employment and remain on foot subject to the
	original performance hurdle.
	• In exceptional circumstances (such as death or total and permanent disability), the Board may exercise its discretion and
	pay the award at the time of termination of employment.
Mandatory	• Mandatory Securityholdings for the CEO and Senior Executives will be accumulated when LTI awards granted from
Securityholding	September 2012 begin to vest.
Hedging	• Unvested LTI grants will also be forfeited if an executive enters into a prohibited pre vesting hedging arrangement in
	relation to their LTI awards.

The 2011 LTI award vested subject to Relative TSR performance over a three and four year period (50% each).

The three year tranche (ie. 50% of the 2011 LTI award) was tested in the prior year (in September 2013). 84% vested (i.e. 42% of the total 2011 LTI award). The four year tranche (ie. 50% of the 2011 LTI award) was testing during this year (in September 2014). 100% vested (ie. 50% of the total 2011 LTI award).

2012 Award

The 2012 LTI award vested subject to Relative TSR performance over a three and four year period (50% each).

The three year tranche (ie. 50% of the 2012 LTI award) was tested during this year (in September 2014). 98% vested (i.e. 49% of the total 2012 LTI award). The four year tranche (ie. 50% of the 2012 LTI award) will be tested for vesting in September 2015).

The charts below outline the total hurdle achievement for the 2011 and 2012 LTI awards as at 30 June 2015.

2011 Award

2012 Award

1[%] 3 YEAR TSR FORFEITED

8[%]

50[%]

3 YEAR TSR FORFEITED

42% 3 YEAR TSR VESTED

4 YEAR TSR NOT YET TESTED VESTED

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49% 3 YEAR TSR VESTED

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continued Directors’ Report

3. Remuneration Report continued

d. How Rewards are Linked to Performance continued

How Risk Management is Incorporated into Executive Reward

The Board has placed a significant focus on incorporating risk management into the reward framework.

• Remuneration How risk management is incorporated into the remuneration component STI • The total value of STI awards is strongly linked to PAT and there are limits on the total incentive pool and individual STI payments.

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STI
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• In determining the total incentive pool amount, the Board also considers the overall financial health of Lend Lease and the sustainability and quality of earnings.

• STI outcomes are based on performance and are determined based on a scorecard of financial and non financial KPIs. These KPIs are structured as ‘building blocks’ to achieve Lend Lease’s short, medium and long term strategic and business goals.

• STI outcomes are modified based upon an assessment of the executive against Lend Lease’s defined leadership capabilities (including safety, sustainability and diversity), values and behaviours. In this way, the STI rewards ‘what’ is achieved as well as ‘how’ it is achieved.

• A significant portion (at least 50%) of the actual STI award is retained and deferred into securities. In this way, executives continue to be incentivised to drive performance and are exposed to movements in the Lend Lease security price.

• STI awards are subject to a malus clause which enables the Board to adjust downwards the number of deferred securities that vest to an individual in certain circumstances. This provision operates alongside existing provisions in the deferred securities terms that allow the Board to adjust unvested awards on termination of employment. In particular:

• If an employee is terminated for fraud or other serious misconduct, unvested deferred securities will lapse; and

• Where an employee is terminated for poor performance, the Board can adjust the number of unvested deferred securities at the time of termination.

• LTI • 50% of the LTI is assessed over a three year period and 50% is assessed over a four year period. There is no retesting.

• As performance is assessed based on a combination of Relative TSR and ROE, any adverse financial, reputational or other events that could occur over the vesting period should be reflected in the number and value of LTI performance securities that ultimately vest.

• Malus provisions apply to unvested LTI awards from 1 July 2012, with broader discretions applying for awards issued from July 2013.

• Mandatory • Executives are subject to a Mandatory Securityholding Policy that requires the CEO and Senior Executives to Securityholding accumulate and maintain a holding of Lend Lease securities. This will encourage the CEO and Senior Executives to take a long term perspective when making decisions and strengthens alignment with securityholders.

e. Executive Contracts

CEO Contract

The Board and the CEO entered into a new employment contract effective from 1 September 2013. The key terms are summarised below:

Fixed	The contract provides for fxed remuneration of A$2,034,000, which includes superannuation.
remuneration	There has been no change to the CEO’s fxed remuneration since this contract was agreed on 1 September 2013.
Incentives	STI and LTI plan participation is at the Board’s discretion. The CEO’s target STI for 2015 was A$1,750,000 and target LTI for
	2015 was A$2,000,000 (with the number of awards determined on a fair value basis). This results in a target 2015
	remuneration package of A$5,784,000.
Notice periods	The contract has no fxed term. The notice periods under the contract are as follows:
	Notice by CEO 6 months
	Notice by Lend Lease 12 months
	Payment in lieu of notice Where the 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.
	Non compete period 12 months
	Non solicitation period 12 months
	Treatment of incentives The CEO may continue to receive an STI award for the latest fnancial year based on
	assessment of his performance by the Board. LTI awards will be treated in accordance with
	the plan rules at that time. Deferred STI awards will remain on foot in certain mutually
	agreed termination circumstances.

Senior Executives’ Contracts

Senior Executives are typically employed on contracts that have no fixed term. Benefits may include health/life insurance, car allowances, motor vehicle leases and salary.

All Senior Executives now have termination benefits that are within the limit allowed by the Corporations Act without securityholder approval. 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).

The Group may make payment in lieu of notice. The notice period for each Senior Executive is shown below:

	Notice by	Notice by Senior
Senior Executives	Lend Lease	Executive	Treatment on termination with notice by Lend Lease
Current Executives
Tarun Gupta	6 months	6 months	Notice payment is based on Total Package Value. Payment for accrued leave is
			based on Total Package Value less superannuation.
Denis Hickey	6 months	6 months	Notice payment is based on base salary and other minimum benefts as required
			by applicable US legislation.
Daniel Labbad	9 months	6 months	Notice payment is based on base salary. Payment for accrued leave is based on
			base salary.
Rod Leaver	6 months	6 months	Notice payment and accrued leave is based on base salary.
Anthony Lombardo	12 months	6 months	Notice payment is based on Total Package Value. Payment for accrued leave is
			based on Total Package Value less superannuation.
Robert McNamara	3 months	3 months	Notice payment is based on base salary and other minimum benefts as required by
			applicable US legislation.
Former Executives David Saxelby	6 months	6 months	Notice payment is based on Total Package Value. Payment for accrued leave is
			based on Total Package Value less superannuation.

Securities Trading Policy

The Lend Lease securities Trading Policy applies to all employees of the Lend Lease Group. 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.

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f. Non Executive Directors’ Fees

Non Executive Directors receive a Board fee and fees for chairing or participating on Board Committees. The Chairman does not receive extra fees for participating in or chairing Committees.

The maximum aggregate remuneration payable to Non Executive Directors is A$3.0 million per year, as approved at the 2011 Annual General Meeting.

Board and Committee Fees

		Nomination	People and Culture	Risk Management and Audit	Sustainability
	Board	Committee	Committee	Committee	Committee
Chair fee A$	640,000	36,000	48,000	48,000	36,000
Member fee A$	160,000	Nil	36,000	36,000	20,000

The Board and Committee fees are set taking into consideration market data provided from the Board’s independent remuneration advisor. The Board has determined that the complexity of Lend Lease’s global business and the breadth of skills required to enable the Directors to adequately represent securityholder interests, means that the market comparators may include ASX 75 companies.

As an international company, all Directors are required to travel to Board meetings and site visits at Lend Lease locations around the world and it is important that the Board is not limited to only Australian based Directors. Due to the significant additional time, commitment fees are paid to compensate Directors for the time spent travelling to overseas meetings.

to compensate Directors for the time spent travelling to overseas meetings.
	Fee (each way) A$
Travel less than 4 hours	Nil
Travel between 4 and 10 hours	2,800
Travel over 10 hours	6,000

Board and Committee fees are paid as cash. Non Executive Directors are no longer entitled to retirement benefits. However, some Directors have retirement benefits or securities accrued previously.

Remuneration of Non Executive Directors for the Years Ended 2015 and 2014

A$000s	Year	SHORT TERM BENEFITS Base fees Committee chairman fees Committee membership fees Travel fees	POST EMPLOYMENT BENEFITS Superannuation1 Total
D A Crawford	2015	640 - - 41	19 700
	2014	640 - - 30	18 688
C B Carter	2015	160 36 56 35	19 306
	2014	160 36 38 30	18 282
P M Colebatch	2015	160 - 36 84	19 299
	2014	160 18 36 90	18 322
S B Dobbs	2015	80 - - 39	- 119
J S Hemstritch	2015	160 48 - 35	19 262
	2014	160 27 8 30	18 243
D J Ryan	2015	160 48 36 41	19 304
	2014	160 46 28 30	18 282
M J Ullmer	2015	160 36 36 41	19 292
	2014	160 36 36 30	18 280
N M Wakefeld Evans2	2015	160 - 20 41	21 242
	2014	133 - 10 18	14 175
Former Executive
P C Goldmark3	2015	67 - 8 47	9 131
	2014	160 - 20 62	18 260

g. Equity Based Remuneration

Deferred Securities

In 2015, deferred securities were granted to the CEO and Senior Executives based on the value of the 2014 STI award that was deferred (generally being 50% of the 2014 STI award). Half of the deferred securities awarded will vest after one year and half after two years (or over years one, two and three in the case of the CEO), subject to the CEO and Senior Executives continuing in employment to the date of vesting. Deferred securities are held in a trust during the vesting period.

Details of deferred securities’ awards are set out in the following table:

Name	Plan STI award performance year Grant date Vesting date Number granted Fair value per deferred security1 A$ Total fair value at grant date1,2 A$ Expense for the year ended 30 June 2015 A$ % Vested % Forfeited
Stephen McCann	Deferred STI 2012 1/09/12 1/09/14 120,382 8.17 983,250 - 100 -
	Deferred STI 2013 1/09/13 1/09/14 76,180 8.97 683,335 - 100 -
	Deferred STI 2013 1/09/13 1/09/15 76,180 8.97 683,335 341,667 - -
	Deferred STI 2013 1/09/13 1/09/16 76,180 8.97 683,335 227,778 - -
	Deferred STI 2014 1/09/14 1/09/15 47,414 13.53 641,511 641,511 - -
	Deferred STI 2014 1/09/14 1/09/16 47,414 13.53 641,511 320,756 - -
Total	443,750 4,316,277 1,531,712
Tarun Gupta	Deferred STI 2012 1/09/12 1/09/14 28,328 8.11 229,840 - 100 -
	Deferred STI 2013 1/09/13 1/09/14 24,236 8.97 217,397 - 100 -
	Deferred STI 2013 1/09/13 1/09/15 24,236 8.97 217,397 108,698 - -
	Deferred STI 2014 1/09/14 1/09/15 24,834 13.53 336,004 336,004 - -
	Deferred STI 2014 1/09/14 1/09/16 24,834 13.53 336,004 168,002 - -
Total	126,468 1,336,642 612,704
Denis Hickey	Deferred STI 2013 1/09/13 1/09/14 35,257 8.97 316,255 - 100 -
	Deferred STI 2013 1/09/13 1/09/15 35,257 8.97 316,255 133,001 - -
	Deferred STI 2014 1/09/14 1/09/15 22,018 13.53 297,904 250,566 - -
	Deferred STI 2014 1/09/14 1/09/16 22,018 13.53 297,904 125,283 - -
Total	114,550 1,228,318 508,850
Daniel Labbad	Deferred STI 2012 1/09/12 1/09/14 31,933 8.11 259,100 - 100 -
	Deferred STI 2013 1/09/13 1/09/14 29,348 8.97 263,252 - 100 -
	Deferred STI 2013 1/09/13 1/09/15 29,348 8.97 263,252 131,626 - -
	Deferred STI 2014 1/09/14 1/09/15 23,862 13.53 322,853 322,853 - -
	Deferred STI 2014 1/09/14 1/09/16 23,862 13.53 322,853 161,426 - -
Total	138,353 1,431,310 615,905
Rod Leaver	Deferred STI 2012 1/09/12 1/09/14 34,248 8.11 277,884 - 100 -
	Deferred STI 2013 1/09/13 1/09/14 28,761 8.97 257,986 - 100 -
	Deferred STI 2013 1/09/13 1/09/15 28,761 8.97 257,986 128,993 - -
	Deferred STI 2014 1/09/14 1/09/15 12,302 13.53 166,446 166,446 - -
	Deferred STI 2014 1/09/14 1/09/16 12,302 13.53 166,446 83,223 - -
Total	116,374 1,126,748 378,662

• 1 Directors have superannuation contributions paid on their behalf in accordance with superannuation legislation.

• 2 N M Wakefield Evans was appointed 1 September 2013. She was appointed as a member of the Sustainablilty Committee in January 2014. 3 P C Goldmark retired 14 November 2014.

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LTI Awards

g. Equity Based Remuneration continued

Deferred Securities continued

Name	Plan STI award performance year Grant date Vesting date Number granted Fair value per deferred security1 A$ Total fair value at grant date1,2 A$ Expense for the year ended 30 June 2015 A$ % Vested % Forfeited
Anthony Lombardo	Deferred STI 2012 1/09/12 1/09/14 29,201 8.11 236,925 - 100 -
	Deferred STI 2013 1/09/13 1/09/14 30,327 8.97 272,033 - 100 -
	Deferred STI 2013 1/09/13 1/09/15 30,327 8.97 272,033 136,017 - -
	Deferred STI 2014 1/09/14 1/09/15 22,765 13.53 308,010 308,010 - -
	Deferred STI 2014 1/09/14 1/09/16 22,765 13.53 308,010 154,005 - -
Total	135,385 1,397,011 598,032
Robert McNamara	Other Incentive3 2011 1/09/11 1/09/14 34,219 8.15 278,758 15,487 100 -
	Deferred STI 2012 1/09/12 1/09/14 17,850 8.11 144,830 - 100 -
	Other Incentive3 2012 1/09/12 1/09/14 31,784 8.11 258,922 21,577 100 -
	Other Incentive3 2012 1/09/12 1/09/15 31,784 8.11 258,922 86,307 - -
	Deferred STI 2013 1/09/13 1/09/14 30,500 8.97 273,585 - 100 -
	Deferred STI 2013 1/09/13 1/09/15 30,500 8.97 273,585 136,793 - -
	Deferred STI 2014 1/09/14 1/09/15 27,600 13.53 373,428 373,428 - -
	Deferred STI 2014 1/09/14 1/09/16 27,600 13.53 373,428 186,714 - -
Total	231,837 2,235,458 820,306
Former Executive David Saxelby	Deferred STI 2012 1/09/12 1/09/14 6,355 8.11 51,563 - 100 -
	Deferred STI 2013 1/09/13 1/09/14 24,833 8.97 222,752 - 100 -
	Deferred STI 2013 1/09/13 1/09/15 24,833 8.97 222,752 79,031 - -
	Deferred STI 2014 1/09/14 1/09/15 12,805 13.53 173,252 122,938 - -
	Deferred STI 2014 1/09/14 1/09/16 12,805 13.53 173,252 105,375 - -
Total	81,631 843,571 307,344

• 1 The fair value at grant date is the value of the Deferred STI award (as advised to the Executive).

• 2 At vesting, the minimum value is nil and the estimate of the maximum value is the fair value multiplied by the number of securities granted.

• 3 Mr McNamara participated in an additional incentive plan that operated for 2011 and 2012 only, related to the performance of the Americas. The plan was created in order to support the significant turnaround required in the Americas business.

LTI Awards
Name	Plan (for the year ended) Grant date Vesting date1 Number granted Fair value per deferred security2 A$ Total fair value at grant date2 A$ Expense for the year ended 30 June 2015 A$ % Vested % Forfeited
CEO Stephen McCann	June 2011 LTI (50%) Sept 2010 Sept 2014 87,680 5.20 455,936 18,997 100 -
	June 2012 LTI (50%) Sept 2011 Sept 2014 78,515 5.62 441,254 24,514 98 2
	June 2012 LTI (50%) Sept 2011 Sept 2015 78,515 5.90 463,238 115,809 - -
	June 2013 LTI (50%) Sept 2012 Sept 2015 85,964 5.38 462,489 154,163 - -
	June 2013 LTI (50%) Sept 2012 Sept 2016 85,965 5.53 475,384 118,846 - -
	June 2014 LTI (50%) Sept 2013 Sept 2016 140,067 7.71 1,079,924 359,975 - -
	June 2014 LTI (50%) Sept 2013 Sept 2017 140,069 7.80 1,092,530 273,133 - -
	June 2015 LTI (50%) Sept 2014 Sept 2017 106,128 11.14 1,182,266 328,407 - -
	June 2015 LTI (50%) Sept 2014 Sept 2018 106,128 11.27 1,195,532 249,069 - -
Total	909,031 6,848,553 1,642,913
Current Senior Executives Tarun Gupta June 2011 LTI (50%) Sept 2010 Sept 2014 18,489 5.20 96,143 4,006 100 - June 2012 LTI (50%) Sept 2011 Sept 2014 16,468 5.62 92,550 5,142 98 2 June 2012 LTI (50%) Sept 2011 Sept 2015 16,468 5.90 97,161 24,290 - - June 2013 LTI (50%) Sept 2012 Sept 2015 18,596 5.38 100,046 33,349 - - June 2013 LTI (50%) Sept 2012 Sept 2016 18,596 5.53 102,836 25,709 - - June 2014 LTI (50%) Sept 2013 Sept 2016 25,988 7.71 200,375 66,792 - - June 2014 LTI (50%) Sept 2013 Sept 2017 25,990 7.80 202,714 50,679 - - June 2015 LTI (50%) Sept 2014 Sept 2017 21,226 11.14 236,458 65,683 - - June 2015 LTI (50%) Sept 2014 Sept 2018 21,226 11.27 239,111 49,815 - -
	June 2012 LTI (50%) Sept 2011 Sept 2014 16,468 5.62 92,550 5,142 98 2
	June 2012 LTI (50%) Sept 2011 Sept 2015 16,468 5.90 97,161 24,290 - -
	June 2013 LTI (50%) Sept 2012 Sept 2015 18,596 5.38 100,046 33,349 - -
	June 2013 LTI (50%) Sept 2012 Sept 2016 18,596 5.53 102,836 25,709 - -
	June 2014 LTI (50%) Sept 2013 Sept 2016 25,988 7.71 200,375 66,792 - -
	June 2014 LTI (50%) Sept 2013 Sept 2017 25,990 7.80 202,714 50,679 - -
	June 2015 LTI (50%) Sept 2014 Sept 2017 21,226 11.14 236,458 65,683 - -
	June 2015 LTI (50%) Sept 2014 Sept 2018 21,226 11.27 239,111 49,815 - -
Total	183,047 1,367,394 325,465
Denis Hickey	June 2014 LTI (50%) Sept 2013 Sept 2016 20,009 7.71 154,273 43,253 - -
	June 2014 LTI (50%) Sept 2013 Sept 2017 20,010 7.80 156,074 32,819 - -
	June 2015 LTI (50%) Sept 2014 Sept 2017 18,573 11.14 206,903 48,340 - -
	June 2015 LTI (50%) Sept 2014 Sept 2018 18,573 11.27 209,225 36,663 - -
Total	77,165 726,475 161,075
Daniel Labbad	June 2011 LTI (50%) Sept 2010 Sept 2014 19,200 5.20 99,840 4,160 100 -
	June 2012 LTI (50%) Sept 2011 Sept 2014 18,119 5.62 101,829 5,657 98 2
	June 2012 LTI (50%) Sept 2011 Sept 2015 18,119 5.90 106,902 26,726 - -
	June 2013 LTI (50%) Sept 2012 Sept 2015 20,146 5.38 108,383 36,128 - -
	June 2013 LTI (50%) Sept 2012 Sept 2016 20,146 5.53 111,405 27,851 - -
	June 2014 LTI (50%) Sept 2013 Sept 2016 25,988 7.71 200,375 66,792 - -
	June 2014 LTI (50%) Sept 2013 Sept 2017 25,990 7.80 202,714 50,679 - -
	June 2015 LTI (50%) Sept 2014 Sept 2017 18,573 11.14 206,903 57,473 - -
	June 2015 LTI (50%) Sept 2014 Sept 2018 18,573 11.27 209,225 43,589 - -
Total	184,854 1,347,576 319,055

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• g. Equity Based Remuneration continued

LTI Awards continued

Name	Plan (for the year ended) Grant date Vesting date1 Number granted Fair value per deferred security2 A$ Total fair value at grant date2A$ Expense for the year ended 30 June 2015 A$ % Vested % Forfeited
Rod Leaver	June 2011 LTI (50%) Sept 2010 Sept 2014 24,889 5.20 129,423 5,393 100 -
	June 2012 LTI (50%) Sept 2011 Sept 2014 21,245 5.62 119,397 6,633 98 2
	June 2012 LTI (50%) Sept 2011 Sept 2015 21,245 5.90 125,346 31,336 - -
	June 2013 LTI (50%) Sept 2012 Sept 2015 21,502 5.38 115,681 38,560 - -
	June 2013 LTI (50%) Sept 2012 Sept 2016 21,502 5.53 118,906 29,727 - -
	June 2014 LTI (50%) Sept 2013 Sept 2016 24,011 7.71 185,133 61,711 - -
	June 2014 LTI (50%) Sept 2013 Sept 2017 24,013 7.80 187,294 46,823 - -
	June 2015 LTI (50%) Sept 2014 Sept 2017 15,920 11.14 177,349 49,264 - -
	June 2015 LTI (50%) Sept 2014 Sept 2018 15,920 11.27 179,339 37,362 - -
Total	190,247 1,337,868 306,809
Anthony Lombardo	June 2011 LTI (50%) Sept 2010 Sept 2014 18,489 5.20 96,143 4,006 100 -
	June 2012 LTI (50%) Sept 2011 Sept 2014 16,808 5.62 94,458 5,248 98 2
	June 2012 LTI (50%) Sept 2011 Sept 2015 16,807 5.90 99,164 24,791 - -
	June 2013 LTI (50%) Sept 2012 Sept 2015 19,216 5.38 103,379 34,460 - -
	June 2013 LTI (50%) Sept 2012 Sept 2016 19,216 5.53 106,262 26,565 - -
	June 2014 LTI (50%) Sept 2013 Sept 2016 25,988 7.71 200,375 66,792 - -
	June 2014 LTI (50%) Sept 2013 Sept 2017 25,990 7.80 202,714 50,679 - -
	June 2015 LTI (50%) Sept 2014 Sept 2017 21,226 11.14 236,458 65,683 - -
	June 2015 LTI (50%) Sept 2014 Sept 2018 21,226 11.27 239,111 49,815 - -
Total	184,966 1,378,064 328,039
Robert McNamara	June 2011 LTI (50%) Sept 2010 Sept 2014 52,533 5.20 273,171 11,382 100 -
	June 2012 LTI (50%) Sept 2011 Sept 2014 16,370 5.62 91,999 5,111 98 2
	June 2012 LTI (50%) Sept 2011 Sept 2015 16,370 5.90 96,583 24,146 - -
	June 2013 LTI (50%) Sept 2012 Sept 2015 17,412 5.38 93,674 31,225 - -
	June 2013 LTI (50%) Sept 2012 Sept 2016 17,412 5.53 96,286 24,071 - -
	June 2014 LTI (50%) Sept 2013 Sept 2016 24,011 7.71 185,133 61,711 - -
	June 2014 LTI (50%) Sept 2013 Sept 2017 24,013 7.80 187,294 46,823 - -
	June 2015 LTI (50%) Sept 2014 Sept 2017 19,634 11.14 218,723 60,756 - -
	June 2015 LTI (50%) Sept 2014 Sept 2018 19,634 11.27 221,177 46,079 - -
Total	207,389 1,464,040 311,304
Former Executive David Saxelby	June 2014 LTI (50%) Sept 2013 Sept 2016 29,520 7.71 227,603 130,101 - -
	June 2014 LTI (50%) Sept 2013 Sept 2017 29,521 7.80 230,260 156,582 - -
	June 2015 LTI (50%) Sept 2014 Sept 2017 22,288 11.14 248,288 146,819 - -
	June 2015 LTI (50%) Sept 2014 Sept 2018 22,288 11.27 251,074 148,467 - -
Total	103,617 957,225 581,969

Equity Holdings and Transactions for the Year Ended 30 June 2015

	Year Securities held at beginning of fnancial year Securities received during the year1 Other net change to securities Securities held at end of fnancial year
Non Executive Directors D A Crawford
	2015 76,459 1,399 77,858
	2014 75,551 908 76,459
C B Carter	2015 15,000 15,000
	2014 15,000 15,000
P M Colebatch	2015 18,323 18,323
	2014 18,323 18,323
S B Dobbs2	2015 2,000 2,000
J S Hemstritch	2015 20,000 20,000
	2014 20,000 20,000
D J Ryan	2015 31,273 4,039 35,312
	2014 31,273 31,273
M J Ullmer	2015 25,000 25,000 50,000
	2014 25,000 25,000
N M Wakefeld Evans	2015 4,000 4,000
	2014 4,000 4,000
Former Non Executive Director P C Goldmark3
	2014 24,794 24,794
Executive Director S McCann
	2015 680,227 382,260 (350,000) 712,487
	2014 447,404 432,823 (200,000) 680,227
Executives T Gupta
	2015 34,134 91,626 (50,000) 75,760
	2014 18,878 87,283 (72,027) 34,134
D Hickey5,6	2015 22,250 22,250
D Labbad4	2015 130,499 81,539 (111,623) 100,415
	2014 55,565 74,900 34 130,499
R Leaver	2015 175,534 114,582 (180,582) 109,534
	2014 87,743 87,791 175,534
A Lombardo	2015 205,420 98,962 (131,131) 173,251
	2014 106,560 98,860 205,420
R McNamara5	2015 155,980 111,205 267,185
	2014 46,564 109,416 155,980
Former Executive D Saxelby7
	2014 6,355 (5,000) 1,355
Total	2015 1,573,849 902,424 (792,898) 1,683,375
Total	2014 976,655 897,428 (276,085) 1,597,998

1 For the Executive Director and Executives, securities received relate to security entitlements under employee benefit vehicles.

• 2 S B Dobbs commenced 7 January 2015 and held securities indirectly prior to becoming a Director.

• 3 P C Goldmark resigned 14 November 2014.

• 4 Securities of 52,191 were received in the current period after tax obligations.

• 5 Securities received during the period were after tax obligations.

• 6 D Hickey became a KMP from 27 August 2014.

• 7 D Saxelby was a KMP until 17 March 2015.

Loans to Key Management Personnel

No loans were made to Key Management Personnel or their related parties during the current year or prior year.

• 1 At vesting, the minimum value is nil and the estimate of the maximum value is the fair value multiplied by the number of securities granted.

• 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 rounded to two decimal places.

Other Transactions with Key Management Personnel

From time to time, Directors and Executives of Lend Lease 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.

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h. Appendix

Terms Used in this Remuneration Report

Term	What it means
Earnings Per Stapled Security (‘EPSS’)	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.
Face value of a security	The value of a Lend Lease security at the applicable time.
Fair value of a security	The value of a Lend Lease security, derived by applying a discount rate determined by the
	Board, designed to refect the likelihood of vesting (in cases where there are performance
	hurdles to be met before vesting can occur).
Good leaver	An employee who is leaving Lend Lease for a reason such as retirement or redundancy, and
	who may remain eligible for part of an incentive opportunity.
Key Management Personnel (‘KMP’)	Those executives who have the authority and responsibility for planning, directing and
	controlling the activities of the Group directly or indirectly (as per Accounting Standard AASB
	124_Related Party Disclosures_).
KPIs	Key Performance Indicators.
Long Term Incentive (‘LTI’)	An incentive scheme which provides Lend Lease equity (or cash, in some circumstances) to
	participating executives that may vest, in whole or part, if specifed performance measures are
	met over a three or four year period.
LTI (face value)	Refers to the number of LTI performance securities granted multiplied by the Lend Lease
	security price at the applicable time.
PAT	Statutory Proft after Tax.
People and Culture (‘P&C’) Committee	The Board subcommittee that helps the Board fulfl its responsibilities in people management
	and reward policies. It is made up entirely of independent Non Executive Directors.
Return on Equity (‘ROE’)	ROE is calculated as the annual statutory Proft after Tax divided by the arithmetic average of
	beginning, half year and year end securityholders’ equity.
Senior Executives	Executives who are KMP.
Short Term Incentive (‘STI’)	Incentives awarded with direct reference to the achievement of Group, regional and individual
	performance. The measures are selected annually and align to our long term strategic priorities.
Total Package Value (‘TPV’)	Salary plus the value of salary package items such as motor vehicles and parking and
	compulsory superannuation contributions paid on behalf of an employee.
Total Shareholder Return/ Total	The movement in a company’s share/security price, dividend yield and any return of capital
Securityholder Return (‘TSR’)	over a specifc period. It is often expressed as a percentage.

4. Other

a. Dividends/Distributions

The 2014 final dividend/distribution of A$283.0 million (49.0 cents per security, nil% franked) referred to in the Directors’ Report dated 27 August 2014, was paid on 22 September 2014. Details of dividends/distributions in respect of the current year are as follows:

	A$m
Interim dividends/distributions of 27.0 cents per security (unfranked) paid on 18 March 20151	156.5
Final dividends/distributions of 27.0 cents per security (dividend component franked to 25%) declared by Directors to be
paid on 18 September 20152	156.7
Total dividends/distributions	313.2

1 Comprised of an unfranked dividend of 23.972895 cents per share paid by the Company, and a trust distribution of 3.027105 cents per unit paid by LLT.

2 Comprised of a 22.870839 cents per share dividend component franked to 25% payable by the Company, and a trust distribution of 4.129161 cents per unit payable by LLT.

b. Significant Changes in State of Affairs

There have been no significant changes in the Group’s state of affairs.

c. Events Subsequent to Balance Date

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

d. Security Options

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

e. Indemnification and Insurance of Directors and Officers

Rule 12 of the Company’s Constitution provides for indemnification in favour of each of the Directors named on pages 18 to 20 of this report; the officers of the Company or of wholly owned subsidiaries or related entities of the Company (‘Officers’) to the extent permitted by the Corporations Act 2001 . Rule 12 does not indemnify a Director, Company Secretary or Officer for any liability involving a lack of good faith.

In conformity with Rule 12 of the Company’s Constitution, the Company has entered into Deeds of Indemnity, Insurance and Access with each of the Directors named on pages 18 to 20 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.

f. Environmental Regulation

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

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

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4. Other continued

g. Non Audit Services

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

The Board has considered the other services provided during the year by the auditor and, in accordance with written advice provided by resolution of the 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:

• 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

• 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.

year are set out below.
	CONSOLIDATED
	June 2015 A$000s June 2014 A$000s
Audit and Other Assurance Services Audit services Other assurance services	5,535 5,447 464 472
Total audit and other assurance services	5,999 5,919
Non audit services
Total audit, non audit and other assurance services	5,999 5,919

h. 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.

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D A Crawford, AO

Chairman

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S B McCann

Group Chief Executive Officer and Managing Director Sydney, 24 August 2015

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Five Year Profile

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Five Year Profle
		30 June	30 June	30 June	30 June	30 June
Proftability		2015	2014	2013¹	20121	2011
Revenue	A$m	13,281	13,936	13,163	11,548	8,927
Proft before Tax	A$m	768	999	571	523	632
Proft after Tax	A$m	619	823	549	501	493
EBITDA	A$m	967	1,193	739	660	721
Earnings per stapled security on Proft after Tax2	cents	106.8	142.7	95.6	87.7	86.9
Proft after Tax to securityholders’ equity for the period (ROE)3	%	12.4	18.2	13.6	13.5	14.3
Dividend/Distribution payout ratio on Proft after Tax	%	51	50	44	43	41
Dividend/Distribution per stapled security	cents	54.0	71.0	42.0	38.0	35.0
Corporate Strength
Total assets	A$m	18,959	15,752	14,301	12,831	12,149
Cash	A$m	750	1,716	1,610	1,052	1,046
Borrowings	A$m	2,450	2,347	1,976	1,369	1,694
Current assets	A$m	6,496	4,933	4,833	4,317	4,097
Non current assets	A$m	12,463	10,819	9,468	8,515	8,052
Current liabilities4	A$m	9,706	7,576	6,957	6,736	5,794
Non current liabilities	A$m	4,085	3,307	3,077	2,266	2,722
Total equity	A$m	5,168	4,869	4,267	3,830	3,633
Operating cash fow	A$m	(167)	822	81	(46)	(42)
Net asset backing per security	A$	8.90	8.43	7.41	6.69	6.36
Ratio of current assets to current liabilities4	times	0.7	0.7	0.7	0.6	0.7
Ratio of current assets to current liabilities
(excluding resident and accommodation bond liabilities)4	times	1.2	1.1	1.1	1.0	1.2
Net debt to total tangible assets, less cash5	%	10.5	5.7	5.4	5.5	8.9
Borrowings to total equity	%	47.4	48.2	46.3	35.7	46.6
Borrowings to total equity plus borrowings	%	32.2	32.5	31.7	26.3	31.8
Gross borrowings to total tangible assets5	%	14.3	16.9	17.1	14.2	17.7
Securities on issue	m	580	577	576	573	571
Number of securityholders	no.	56,966	55,046	53,591	52,739	54,370
Number of equivalent full time employees6	no.	12,443	13,268	15,634	17,315	17,253
Securityholders’ Returns and Statistics
Proportion of securities on issue to top 20
securityholders	%	75.7	76.1	76.1	76.6	76.3
Security holdings relating to employees7	%	5.6	6.3	6.9	6.9	6.4
Weighted average number of securities	m	579	577	574	572	567
Total dividends/distributions8	A$m	313	410	242	218	199
Security price as at 30 June as quoted on the Australian
Securities Exchange	A$	15.03	13.11	8.35	7.20	8.97

• 1 June 2012 and June 2013 has been adjusted to reflect the impact of first time adoption of the revised AASB 119 Employee Benefits standard and the new AASB 11 Joint Arrangements standard in 2014, with retrospective adjustment from 1 July 2012.

• 2 Calculated using the weighted average number of securities on issue including treasury securities.

• 3 Return on equity is calculated as the annual Profit after Tax divided by the arithmetic average of beginning, half year and year end securityholders’ equity. 4 Ratio includes resident and accommodation bond liabilities related to the Retirement Living business. Under the current interpretation of accounting standards, these are required to be classified as current liabilities as any resident may choose to 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. Although a resident may choose to depart within 12 months, the Group’s obligation to settle with the departing resident for the majority of resident contracts is not due for a period greater than 12 months, which means these liabilities are effectively non current.

• 5 Net debt and gross borrowings include certain other financial liabilities of A$58.3 million (June 2014: A$91.4 million).

• 6 Casual and third party workers are excluded from full time equivalent employees from June 2014, comparative periods have been restated to conform with current period disclosure. The reduction from June 2014 mainly relates to the restructure of the Australian Construction business and the sale of the European Facilities Management Business. The reduction from June 2012 relates to the sale of the Aged Care business.

• 7 Securities held through employee benefit vehicles.

• 8 A$132.7 million Company dividend component franked to 25% was declared subsequent to the reporting date for June 2015.

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Consolidated Financial Statements

Table of Contents

Consolidated Financial Statements

Consolidated Financial Statements
Income Statement	79
Statement of Comprehensive Income	80
Statement of Financial Position	81
Statement of Changes in Equity	82
Statement of Cash Flows	84
Notes to the Consolidated Financial Statements	85

Notes Index

Section A: Performance

1.	Segment Reporting	86
2.	Dividends/Distributions	88
3.	Earnings per Share/Stapled Security	88
4.	Revenue	89
5.	Other Income	90
6.	Other Expenses	91
7.	Finance Revenue and Finance Costs	93
8.	Share of Proft of Equity Accounted Investments	94
9.	Taxation	97
10.	Events Subsequent to Balance Date	100
Section B: Investment
11.	Inventories	101
12.	Equity Accounted Investments	102
13.	Investment Properties	106
14.	Other Financial Assets	108
Section C: Liquidity and Working Capital
15.	Cash and Cash Equivalents	110
16.	Notes to Statement of Cash Flows	110
17.	Borrowings and Financing Arrangements	111
18.	Issued Capital	112
19.	Capital Management	113
20.	Liquidity Risk Exposure	113
21.	Commitments	114
22.	Loans and Receivables	115
23.	Trade and Other Payables	116
Section D: Risk Management
24.	Financial Risk Management	117
25.	Hedging	120
26.	Fair Value Measurement	121
27.	Contingent Liabilities	124
Section E: Basis of Consolidation
28.	Consolidated Entities	125
29.	Employee Beneft Vehicles	126
30.	Parent Entity Disclosures	127
31.	Related Party Information	128
Section F: Other Notes
32.	Intangible Assets	130
33.	Defned Beneft Plans	132
34.	Employee Benefts	134
35.	Impact of New and Revised Accounting Standards	136
36.	Other Signifcant Accounting Policies	137
Directors’ Declaration		138

Lend Lease Corporation Limited (‘the Company’) is incorporated and domiciled in Australia. The consolidated financial report of the Company for the financial year ended 30 June 2015 comprises the Company and its controlled entities including Lend Lease Trust (‘LLT’) (together referred to as the ‘consolidated entity’ or the ‘Group’). The Group is a for-profit entity and is an international property and infrastructure group. Further information about the Group’s primary activities is included in Note 1 ‘Segment Reporting’.

Shares in the Company and units in LLT are traded as one security under the name of 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 separately in the consolidated entity Statement of Financial Position within equity, notwithstanding that the unitholders of LLT are also the shareholders of the Company.

Following stapled securityholders’ approval on 14 November 2014, the Company has reallocated capital to LLT by reducing the Company’s share capital by A$400.5 million and applying that amount as additional capital to LLT. This capital reallocation did not affect the number of shares on issue nor the number of units held by securityholders and did not result in any cash distribution to members.

The consolidated financial report was authorised for issue by the Directors on 24 August 2015.

Income Statement

Year Ended 30 June 2015

Year Ended 30 June 2015
		June 2015	June 2014
		Note A$m	A$m
Revenue		4 13,280.9	13,935.9
Cost of sales		(11,613.3)	(11,760.7)
Gross proft		1,667.6	2,175.2
Other income		5 251.8	189.9
Other expenses		(1,051.8)	(1,319.3)
Results from operating activities		867.6	1,045.8
Finance revenue		7 17.7	37.2
Finance costs		7 (137.2)	(143.7)
Net fnance costs		(119.5)	(106.5)
Share of proft of equity accounted investments		8 19.9	59.3
Proft before Tax		768.0	998.6
Income tax expense		9 (149.1)	(175.3)
Proft after Tax		618.9	823.3
Proft after Tax attributable to:
Members of Lend Lease Corporation Limited		530.2	751.5
Unitholders of Lend Lease Trust		88.4	71.4
Proft after Tax attributable to securityholders		618.6	822.9
External non controlling interests		0.3	0.4
Proft after Tax		618.9	823.3
Basic/Diluted Earnings per Lend Lease Corporation Limited Share (EPS)
Shares excluding treasury shares	(cents)	3 96.4	137.7
Shares on issue	(cents)	3 91.5	130.3
Basic/Diluted Earnings per Lend Lease Group Stapled Security (EPSS)
Securities excluding treasury securities	(cents)	3 112.4	150.8
Securities on issue	(cents)	3 106.8	142.7

The accompanying notes form part of these consolidated financial statements.

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Consolidated Financial Statements continued

Statement of Comprehensive Income

Year Ended 30 June 2015

Year Ended 30 June 2015
		June 2015	June 2014
	Note	A$m	A$m
Proft after Tax		618.9	823.3
Other Comprehensive Income/(Expense) After Tax
Items that may be reclassifed subsequently to proft or loss:
Movements in fair value revaluation reserve	9b	5.9	4.2
Movements in hedging reserve	9b	(17.8)	(12.5)
Movements in foreign currency translation reserve	9b	56.61	57.6
Total items that may be reclassifed subsequently to proft or loss		44.7	49.3
Items that will not be reclassifed to proft or loss:
Movements in non controlling interest acquisition reserve	9b	(14.0)	(2.0)
Defned beneft plan remeasurements	9b	(56.3)	(25.6)
Total items that will not be reclassifed to proft or loss		(70.3)	(27.6)
Total comprehensive income after tax		593.3	845.0
Total comprehensive income after tax attributable to:
Members of Lend Lease Corporation Limited		503.6	773.2
Unitholders of Lend Lease Trust		88.4	71.4
Total comprehensive income after tax attributable to securityholders		592.0	844.6
External non controlling interests		1.31	0.4
Total comprehensive income after tax		593.3	845.0

1 Includes A$1.0 million relating to external non controlling interests (June 2014: A$nil).

Statement of Financial Position

As at 30 June 2015

As at 30 June 2015
		June 2015	June 2014
	Note	A$m	A$m
Current Assets
Cash and cash equivalents	15	750.1	1,715.8
Loans and receivables	22	3,631.0	1,777.3
Inventories	11	1,980.0	1,345.6
Other fnancial assets	14	42.7	50.4
Current tax assets		8.6
Other assets		83.2	43.5
Total current assets		6,495.6	4,932.6
Non Current Assets
Loans and receivables	22	320.1	633.8
Inventories	11	2,124.2	1,785.9
Equityaccounted investments	12	1,235.8	578.0
Investment properties	13a	5,994.9	4,832.0
Other fnancial assets	14	625.7	972.1
Deferred tax assets	9c	305.5	251.3
Property, plant and equipment		348.8	360.3
Intangible assets	32	1,444.7	1,323.7
Defned beneft plan asset		9.2	7.6
Other assets		54.7	74.5
Total non current assets		12,463.6	10,819.2
Total assets		18,959.2	15,751.8
Current Liabilities
Trade and other payables	23	5,036.1	4,034.1
Resident liabilities	13b	4,080.4	3,195.5
Provisions		328.8	254.6
Borrowings and fnancingarrangements	17a	227.3
Current tax liabilities			51.4
Other fnancial liabilities		33.7	40.0
Total current liabilities		9,706.3	7,575.6
Non Current Liabilities
Trade and other payables	23	1,586.0	722.3
Provisions		46.0	82.3
Borrowings and fnancingarrangements	17a	2,223.0	2,347.0
Defned beneft plan liability	33b	68.8	39.5
Other fnancial liabilities		32.3	59.6
Deferred tax liabilities	9c	128.6	56.7
Total non current liabilities		4,084.7	3,307.4
Total liabilities		13,791.0	10,883.0
Net assets		5,168.2	4,868.8
Equity
Issued capital	18	1,256.3	1,618.2
Treasury securities		(89.9)	(116.1)
Reserves		91.7	24.4
Retained earnings		2,936.0	2,824.0
Total equity attributable to members of Lend Lease Corporation Limited		4,194.1	4,350.5
Total equity attributable to unitholders of Lend Lease Trust		968.0	513.3
Total equity attributable to securityholders		5,162.1	4,863.8
External non controllinginterests		6.1	5.0
Total equity		5,168.2	4,868.8

The accompanying notes form part of these consolidated financial statements.

The accompanying notes form part of these consolidated financial statements.

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Consolidated Financial Statements continued

RESERVES

	RESERVES
Statement of Changes in Equity Year Ended 30 June 2015 Issued Capital A$m Treasury Securities1 A$m	Fair Value Revaluation Reserve A$m Hedging Reserve A$m Foreign Currency Translation Reserve A$m Non Controlling Interest Acquisition Reserve A$m Other Reserve A$m Equity Compensation Reserve A$m Other Compensation Reserve A$m Retained Earnings A$m Members of Lend Lease Corporation Limited A$m Unitholders of Lend Lease Trust A$m External Non Controlling Interests A$m Total Equity A$m
Balance as at 1 July2013 1,599.9 (118.0)	44.7 (78.5) (156.0) (73.4) 111.7 73.1 54.4 2,297.3 3,755.2 506.1 5.5 4,266.8
Total Comprehensive Income Proft for theperiod	751.5 751.5 71.4 0.4 823.3
Other Comprehensive Income(Net of tax)	4.2 (12.5) 57.6 (2.0) (25.6) 21.7 21.7
Total Comprehensive Income – –	4.2 (12.5) 57.6 (2.0) – – – 725.9 773.2 71.4 0.4 845.0
Other Comprehensive Income (Net of tax) Fair valuegains	10.2 10.2 10.2
Fair value hedging	(6.2) (6.2) (6.2)
Net investment hedging	(5.2) (5.2) (5.2)
Efect of foreign exchange movements	2.0 (6.6) 62.8 (1.7) 56.5 56.5
Efective cash fow hedges	(8.4) (8.4) (8.4)
Asset disposals and transfers	(1.8) 7.1 5.3 5.3
Defned beneftplans remeasurements	(25.6) (25.6) (25.6)
Other movements	(4.6) (0.3) (4.9) (4.9)
Other Comprehensive Income (Net of Tax) – –	4.2 (12.5) 57.6 (2.0) – – – (25.6) 21.7 – – 21.7
Transactions with Owners of the Company Distribution reinvestmentplan(DRP) 18.3	18.3 2.4 20.7
Dividends and distributions	(199.2) (199.2) (66.6) (265.8)
Treasurysecurities acquired (29.1)	(29.1) (29.1)
Treasurysecurities vested 31.0	31.0 31.0
Fair value movement on allocation and vestingof securities	1.1 1.1 1.1
Asset disposals and transfers	(0.7) (0.7)
Other movements	(0.2) (0.2)
Total other movements through reserves 18.3 1.9	– – – – – 1.1 – (199.2) (177.9) (64.2) (0.9) (243.0)
Balance as at 30 June 2014 1,618.2 (116.1)	48.9 (91.0) (98.4) (75.4) 111.7 74.2 54.4 2,824.0 4,350.5 513.3 5.0 4,868.8
Balance as at 1 July2014 1,618.2 (116.1)	48.9 (91.0) (98.4) (75.4) 111.7 74.2 54.4 2,824.0 4,350.5 513.3 5.0 4,868.8
Total Comprehensive Income Proft for theperiod	530.2 530.2 88.4 0.3 618.9
Other Comprehensive Income(Net of tax)	5.9 (17.8) 55.6 (14.0) (56.3) (26.6) 1.0 (25.6)
Total Comprehensive Income – –	5.9 (17.8) 55.6 (14.0) – – – 473.9 503.6 88.4 1.3 593.3
Other Comprehensive Income (Net of tax) Fair valuegains	8.9 8.9 8.9
Fair value hedging	(7.2) (7.2) (7.2)
Net investment hedging	(22.2) (22.2) (22.2)
Efect of foreign exchange movements	2.1 (1.3) 79.9 (14.1) 66.6 1.0 67.6
Efective cash fow hedges	(16.5) (16.5) (16.5)
Asset disposals and transfers	2.1 (2.1)
Defned beneftplans remeasurements	(56.3) (56.3) (56.3)
Other movements	0.1 0.1 0.1
Other Comprehensive Income (Net of Tax) – –	5.9 (17.8) 55.6 (14.0) – – – (56.3) (26.6) – 1.0 (25.6)
Transactions with owners of the Company Recapitalisation of Lend Lease Trust (400.5)	(400.5) 400.5
Distribution reinvestmentplan(DRP) 38.6	38.6 6.0 44.6
Dividends and distributions	(361.5) (361.5) (40.2) (401.7)
Treasurysecurities acquired (7.7)	(7.7) (7.7)
Treasurysecurities vested 33.9	33.9 33.9
Fair value movement on allocation and vestingof securities	4.5 4.5 4.5
Asset disposal and transfers	(23.3)2 53.52 2.92 33.1 (0.2) 32.9
Other movements	(0.4) (0.4) (0.4)
Total other movements through reserves (361.9) 26.2	(23.3) 53.5 2.9 – – 4.5 – (361.9) (660.0) 366.3 (0.2) (293.9)
Balance as at 30 June 2015 1,256.3 (89.9)	31.5 (55.3) (39.9) (89.4) 111.7 78.7 54.4 2,936.0 4,194.1 968.0 6.1 5,168.2

1 Opening balance for number of treasury securities 1 July 2014 was 32.1 million (1 July 2013: 34.1 million) and closing balance at 30 June 2015 was 28.8 million. 2 These movements in reserves were transferred to profit and loss in the period.

The accompanying notes form part of these consolidated financial statements.

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Statement of Cash Flows

Year Ended 30 June 2015

Year Ended 30 June 2015
		June 2015	June 2014
	Note	A$m	A$m
Cash Flows from Operating Activities
Cash receipts in the course of operations		11,896.7	14,126.7
Cash payments in the course of operations		(11,866.7)	(13,117.3)
Interest received		15.2	23.7
Interest paid		(151.2)	(149.6)
Dividends/distributions received		61.4	65.1
Income tax paid in respect of operations		(122.0)	(126.2)
Net cash (used in)/provided by operating activities	16	(166.6)	822.4
Cash Flows from Investing Activities
Sale/redemption of investments		615.0	147.7
Acquisition of investments		(653.0)	(606.0)
Sale of investment properties			17.8
Acquisition of/capital expenditure on investment properties		(209.2)	(119.4)
Net loans (to)/from associates and joint ventures		(22.5)	27.3
Acquisition of consolidated entities (net of cash acquired and acquisition costs)		(5.7)	30.7
Disposal of consolidated entities (net of cash disposed and transaction costs)		7.0	(7.5)
Disposal of property, plant and equipment		11.7	26.9
Acquisition of property, plant and equipment		(57.4)	(49.5)
Acquisition of intangible assets		(67.3)	(76.0)
Other investing activities		(2.0)	(6.5)
Net cash used in investing activities		(383.4)	(614.5)
Cash Flows from Financing Activities
Proceeds from borrowings		2,276.6	1,230.6
Repayment of borrowings		(2,333.4)	(950.2)
Dividends/distributions paid		(374.2)	(210.1)
Other fnancing activities		(34.2)	(180.7)
Net cash used in fnancing activities		(465.2)	(110.4)
Other Cash Flow Items
Efect of foreign exchange rate movements on cash and cash equivalents		49.5	8.8
Net (decrease)/increase in cash and cash equivalents		(965.7)	106.3
Cash and cash equivalents at beginning of fnancial year		1,715.8	1,609.5
Cash and cash equivalents at end of fnancial year	15	750.1	1,715.8

Notes to the Consolidated Financial Statements

Basis of Preparation

The consolidated financial report is a general purpose financial report which:

• has been prepared in accordance with Australian Accounting Standards (‘AASBs’) adopted by the Australian Accounting Standards Board, and the Corporations Act 2001 ;

• complies with International Financial Reporting Standards (‘IFRSs’) adopted by the International Accounting Standards Board;

• is presented in Australian dollars , with all values rounded off to the nearest tenth of a million dollars unless otherwise indicated, in accordance with Class Order 98/100; 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 within the notes to the financial statements for the basis of valuation of assets and liabilities measured at fair value.

Significant accounting policies have been:

• included in the relevant notes to which the policies relate, and other significant accounting policies are discussed in Note 36; and

• consistently applied to all financial years presented in the consolidated financial statements and by all entities in the Group, except as explained in Note 35 ‘Impact of New and Revised Accounting Standards’.

The preparation of a financial report that complies with AASBs requires management to make judgements, estimates and assumptions .

• This can affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

• Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

• The significant accounting policies highlight information about accounting judgements in applying accounting policies that have the most significant effects on reported amounts and further information about estimated uncertainties that have a significant risk of resulting in material adjustments within the next financial year.

The Group presents assets and liabilities in the Statement of Financial Position as current or non current.

• Current assets include assets held primarily for trading purposes, cash and cash equivalents, and assets expected to be realised in, or intended for sale or use in, the course of the Group’s operating cycle. All other assets are classified as non current.

• Current liabilities include liabilities held primarily for trading purposes, liabilities expected to be settled in the course of the Group’s operating cycle and those liabilities due within one year from the reporting date. All other liabilities are classified as non current. Refer to Note 13 ‘Investment Properties’, for further detail on classification of resident liabilities.

The accompanying notes form part of these consolidated financial statements.

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Section A: Performance

Profit after Tax (PAT) is the key measure used to assess the Group’s performance. This section of the Financial Report focuses on disclosure that enhances a user’s understanding of PAT. Segment reporting provides a breakdown of profit and revenue by geographic segment. The key line items of the Income Statement along with their components provide detail behind the reported balances. Group performance will also impact the earnings per stapled security and dividend payout, therefore disclosure on these items has been included in this section. Further information and analysis on performance can be found in the Operating and Financial Review, which forms part of the Directors’ Report.

1. Segment Reporting

Accounting Policies

The Group operates 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 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.

Segment performance is based on PAT. PAT 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.

The regional business units generate earnings from four lines of business, as follows:

Property Development

The Property Development business involves the development of inner and outer urban developments, apartments, commercial offices, retail centres, healthcare facilities and retirement villages.

Infrastructure Development

The Infrastructure Development business arranges, manages and invests in Public Private Partnership (‘PPP’) projects.

Construction

The Construction business involves project management, building, engineering and construction services.

The following tables set out other financial information by reportable segment.

Segment revenue1 A$m Finance revenue A$m	Finance expense A$m Share of results EAI2 A$m Depreciation and amortisation A$m	Material non cash items3 A$m Non current segment assets4 A$m	Group total assets A$m
Year Ended June 2015 Australia 7,743.6 3.0 (0.1) 50.3 (44.4) (107.5) 9,580.2 14,432.1
Asia5 271.5 3.6 (1.4) (3.4) 472.3 803.5
Europe6 1,623.6 1.0 (0.5) (35.7) (6.4) (25.6) 813.6 1,880.6
Americas 3,641.6 2.3 2.5 (5.0) 10.5 473.0 1,731.0
Total segment 13,280.3 6.3 (0.6) 20.7 (57.2) (126.0) 11,339.1 18,847.2
Corporate activities 18.3 11.4 (136.6) (0.8) (22.3) (75.4) 184.1 112.0
Statutory result 13,298.6 17.7 (137.2) 19.9 (79.5) (201.4) 11,523.2 18,959.2
Year Ended June 2014 Australia 7,635.2 4.6 (0.1) 40.9 (56.0) (85.6) 8,168.2 11,375.6
Asia5 601.2 0.1 5.3 (2.5) (0.3) 138.9 600.0
Europe6 2,665.9 13.7 (1.3) 9.4 (7.3) (43.8) 719.0 1,372.7
Americas 3,052.0 1.6 3.7 (5.0) 6.1 417.5 1,232.0
Total segment 13,954.3 20.0 (1.4) 59.3 (70.8) (123.6) 9,443.6 14,580.3
Corporate activities 18.8 17.2 (142.3) (16.9) 6.5 144.6 1,171.5
Statutory result 13,973.1 37.2 (143.7) 59.3 (87.7) (117.1) 9,588.2 15,751.8

1 Segment revenue represents revenue and finance revenue.

• 2 Equity accounted investments.

• 3 The material non cash items relate to impairments and provisions raised or written back, unrealised foreign exchange movements and investment property fair value gains or losses.

4 Excludes deferred tax assets, financial instruments and pension assets and are based on the geographical location of assets.

• 5 The majority of revenue and non current segment assets from Asia are attributable to Singapore.

• 6 The majority of revenue and non current segment assets from Europe are attributable to the UK.

Investment Management

The Investment Management business involves property and infrastructure investment management, property management and asset management and includes the Group’s ownership interests in property and infrastructure investments.

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

Financial Disclosure	PROFIT BEFORE TAX1	INCOME TAX BENEFIT/(EXPENSE)1	PROFIT AFTER TAX1
	June 2015 A$m June 2014 A$m	June 2015 A$m June 2014 A$m	June 2015 A$m June 2014 A$m
Australia	777.4 538.9	(152.3) (92.9)	625.1 446.0
Asia	37.7 91.7	(20.5) (18.0)	17.3 73.7
Europe	123.5 596.7	(11.2) (149.8)	112.3 446.9
Americas	152.8 124.9	(62.3) (46.0)	90.1 78.9
Total segment	1,091.4 1,352.2	(246.3) (306.7)	844.8 1,045.5
Reconciling items Corporate activities	(323.4) (353.6)	97.2 131.0	(226.2) (222.6)
Statutory result attributable to securityholders	768.0 998.6	(149.1) (175.7)	618.6 822.9
External non controlling interests			0.3 0.4
Statutory result	768.0 998.6	(149.1) (175.7)	618.9 823.3

Line of Business

The analysis of revenue by line of business is as follows.

June 2015	June 2014
A$m	A$m
Property Development 1,927.0	2,384.5
Construction 10,936.9	11,016.0
Investment Management 212.2	294.6
Infrastructure Development 204.2	259.2
Total segment 13,280.3	13,954.3
Corporate activities 18.3	18.8
Total revenue 13,298.6	13,973.1

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

1 External non controlling interests are included in both Profit before Tax and income tax benefit/(expense) but excluded from Profit after Tax in the regional segments.

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LEND LEASE | ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements continued

Section A: Performance continued

4. Revenue

2. Dividends/Distributions[1]

Accounting Policies

2. Dividends/Distributions1
Cents Per Share/Unit Franked Amount Per Share %	COMPANY/TRUST June 2015 A$m June 2014 A$m
Parent Company Interim Dividend December 2014 – paid 18 March 2015 24.0	139.0
December 2013 – paid 21 March 2014 17.5	100.9
Lend Lease Trust Interim Distribution December 2014 – paid 18 March 2015 3.0	17.5
December 2013 – paid 21 March 2014 4.5	25.9
Parent Company Final Dividend June 2015 – declared subsequent to reporting date2 22.9 25	132.7
June 2014 – paid 22 September 2014 42.0	242.3
Lend Lease Trust Final Distribution June 2015 – provided for (payable 18 September 2015) 4.1	24.0
June 2014 – paid 22 September 2014 7.0	40.7
	313.2 409.8

1 Interim dividends/distributions were not franked in the current and prior year. The final dividend component franked to 25% in the current year and was not franked in the prior year.

2 No provision for this dividend has been recognised in the Statement of Financial Position at 30 June 2015, as it was declared after the end of the financial year.

Dividend Franking

The amount of franking credits available for use in subsequent reporting periods as at 30 June 2015 is A$17.3 million, based on a 30% tax rate (30 June 2014: A$16.1 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 estimated future claims with the Australian Taxation Office in relation to the year ended 30 June 2015, 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.

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

Accounting Policies

The Group presents basic and diluted EPS/EPSS in the Income Statement.

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

Diluted EPS/EPSS is determined by adjusting the Profit/(loss) after Tax attributable to members of the Company and Group, and the weighted average number of ordinary shares/securities outstanding for the effects of all dilutive potential ordinary shares/securities. The Group currently does not have any dilutive potential ordinary shares/securities.

The issued units of LLT are presented separately within equity, and therefore the profit attributable to LLT is excluded from the calculation of basic and diluted earnings per Company share presented in the Income Statement.

• 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 construction and property development: the value of work performed using the percentage complete method, which is measured by reference to costs incurred to date as a percentage of total forecast costs for each contract. This measurement is an accounting judgement as management uses judgement to estimate expenses incurred to date as a percentage of total estimated costs.

• Property development also includes retirement living Deferred Management Fees (‘DMF’). A typical DMF contract provides for an annual fee for a fixed period on the property occupied by a resident (e.g. 3% per annum of purchase or resale price for a period up to 10 – 12 years, or 30% – 36% in total) plus a share of the capital gain realised on turnover. 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 infrastructure development: origination and asset management fee entitlements are recognised for services rendered.

• For investment management: funds and asset management fee entitlements are recognised for services rendered.

Revenue from the sale of development properties is recognised in the Income Statement when:

• the significant risks and rewards of ownership have been transferred to the buyer;

• the Group retains neither continuing managerial involvement to the degree usually associated with ownership, nor effective control over the development properties sold;

• the revenue can be measured reliably and it is probable that the Group will receive the consideration due; and

• the Group can reliably measure the costs incurred or to be incurred in respect of the transaction.

The measurement of revenue from the sale of development properties is another accounting judgement as it requires management to exercise its judgement in valuing the individual components of a development property sale, given the due consideration to cost inputs, market conditions and commercial factors.

Rental revenue , including lease incentives granted, is recognised in the Income Statement on a straight line basis over the term of the lease.

Other revenue primarily includes dividends/distributions and miscellaneous items. Dividend/distribution income is recognised when the right to receive payment is established, usually on declaration of the dividend/distribution.

Financial Disclosure	June 2015	June 2014
	A$m	A$m
Revenue from the provision of services Construction	10,934.8	11,011.3
Property Development	302.5	295.6
Infrastructure Development	197.8	238.9
Investment Management	164.5	205.4
Total revenue from the provision of services	11,599.6	11,751.2
Revenue from the sale of development properties	1,616.7	2,079.6
Rental revenue	9.7	53.3
Other revenue	54.9	51.8
Total revenue	13,280.9	13,935.9

Financial Disclosure	JUNE 2015	JUNE 2014
	Shares/ Securities excluding Treasury Securities Shares/ Securities on Issue	Shares/ Securities excluding Treasury Securities Shares/ Securities on Issue
Basic/Diluted Earnings Per Share (EPS) Proft attributable to members of Lend Lease Corporation Limited used in calculating basic/diluted EPS A$m		751.5 751.5
	530.2 530.2
Weighted average number of ordinary shares m	550.2 579.4	545.8 576.6
Basic/diluted EPS cents	96.4 91.5	137.7 130.3
Basic/Diluted Earnings Per Stapled Security (EPSS) Proft attributable to securityholders of Lend Lease Group used in calculating basic/diluted EPSS A$m		822.9 822.9
	618.6 618.6
Weighted average number of stapled securities m	550.2 579.4	545.8 576.6
Basic/diluted EPSS cents	112.4 106.8	150.8 142.7

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LEND LEASE | ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements continued

Section A: Performance continued

6. Other Expenses

5. Other Income

Accounting Policies

Accounting Policies

Other Income

Net gains or losses on sale of investments , including equity accounted investments, available for sale financial assets and consolidated entities are recognised when an unconditional contract is in place.

Net gains or losses on fair value remeasurements are recognised in accordance with the policies stated in Note 13 ‘Investment Properties’ and Note 14 ‘Other Financial Assets’.

Other expenses in general are recognised as incurred.

Employee Benefit Expenses

Employee benefits are expensed as the related service by the employee is provided and includes both equity and cash based payment transactions. Employee benefits recognised in the Income Statement are net of recoveries.

For cash bonuses, the Group recognises an accrued liability for the amount expected to be paid. This is based on a formula that takes into consideration the profit attributable to the Group’s securityholders after certain adjustments. Refer to Note 34a ‘Short Term Incentives’ for further detail.

Share Based Compensation

Financial Disclosure	June 2015	June 2014
	A$m	A$m
Net gain on sale of investments
Equity accounted investments	29.2	12.4
Other assets and liabilities	23.6	12.0
Consolidated entities	48.0
Total net gain on sale of investments	100.8	24.4
Net gain on transfer of investments
Available for sale fnancial assets	31.9	2.5
Net gain on fair value measurement
Investment properties		49.7
Derivative contracts held for trading	3.5	4.5
Fair value through proft or loss assets	21.4	13.0
Total net gain on fair value measurement	24.9	67.2
Other	94.2	95.8
Total other income	251.8	189.9

The Group operates equity settled share based compensation plans that are linked to Lend Lease’s security price. The fair value of the equity received in exchange for the grant is recognised as an expense and a corresponding increase in equity, in the Equity Compensation Reserve. The total amount to be expensed over the vesting period is determined by reference to the fair value of the equity granted.

The fair value is primarily determined using a Monte-Carlo simulation model. Refer to Note 34c ‘Amounts Recognised in the Financial Statements’ for further detail. Management consider the fair value assigned to be an area of estimation uncertainty as it requires judgements on Lend Lease’s security price and whether vesting conditions will be satisfied. Refer to Employee Benefits Note 34b ‘Long Term Incentives’ for detail on vesting conditions.

At each balance sheet date, the Group 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 equity 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.

Superannuation Accumulation Plan Expense

All employees in Australia and New Zealand are entitled to benefits on retirement, disability or death from the Group’s superannuation accumulation plan. The majority of these employees are party to a defined contribution plan and receive fixed contributions from the Group. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as an employee benefit expense when they are due. The Group also operates a defined benefit superannuation plan, membership of which is now closed. Refer to Note 33 ‘Defined Benefit Plans’ for further detail.

Impairment

The carrying amounts of the Group’s assets, subject to impairment tests are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. The calculation of this recoverable amount is dependent on the type of asset. The material assets’ accounting policies will contain further information on these calculations.

An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the Income Statement unless an asset has been previously revalued through reserves.

Reversals of Impairment

Impairment losses on assets can be reversed (other than goodwill) when there is a subsequent increase in the recoverable amount. The increase could be due to a specific event, the indication of impairment may no longer exist or there is a change in estimates used to determine the recoverable amount.

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

Operating Lease Expense

Payments made under operating leases, including lease incentives, are recognised in the Income Statement on a straight line basis over the term of the lease.

Depreciation and Amortisation

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 – 15 years, motor vehicles over four – eight years and computer equipment over three years.

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Notes to the Consolidated Financial Statements continued

Section A: Performance continued

7. Finance Revenue and Finance Costs

6. Other Expenses continued

Accounting Policies

6. Other Expensescontinued
Financial Disclosure	June 2015	June 2014
	A$m	A$m
Proft before income tax includes the following other expense items:
Employee beneft expenses1	2,259.1	2,349.4
Superannuation accumulation plan expense	43.5	29.0
Net defned beneft plans expense2	4.5	10.7
Expenses include impairments raised/(reversals) relating to:
Loans and receivables	(9.9)	85.7
Property inventories	4.3	90.4
Property, plant and equipment	7.8	1.5
Equity accounted investments	(4.2)	2.3
Other fnancial assets	3.7	3.2
Net fair value loss on investment properties	12.1
Operating lease expense	84.3	81.3
Depreciation and amortisation	79.5	87.7
Net foreign exchange loss	14.3	10.7

1 Total expense before recoveries through projects. 2 The Lend Lease Superannuation Plan (Australia) was partially closed on 30 September 2014. An immaterial asset remains on the Statement of Financial Position.

Auditors’ Remuneration	June 2015	June 2014
	A$000s	A$000s
Amounts received or due and receivable by the auditors of Lend Lease Group for: Audit and Other Assurance Services Audit services	5,535	5,447
Other assurance services	464	472
Total audit and other assurance services	5,999	5,919
Non audit services
Total audit, other assurance and non audit services	5,999	5,919

Finance revenue is recognised as it is earned using the effective interest method, which applies the interest rate that discounts estimated future cash receipts over the expected life of the financial instrument. The discount is then recognised as finance revenue over the remaining life of the financial instrument.

Finance costs include interest, amortisation of discounts or premiums relating to borrowings and amortisation of costs incurred in connection with the arrangement of new borrowings facilities. Costs incurred in connection with the arrangement of borrowings are capitalised and amortised over the life of the borrowings. Finance costs are expensed immediately as incurred unless they relate to acquisition and development of qualifying assets. Qualifying assets are assets that take more than six months to prepare for their intended use or sale. Finance costs related to qualifying assets are capitalised.

Financial Disclosure	June 2015	June 2014
	A$m	A$m
Finance Revenue Related parties	0.2	13.9
Other corporations	13.6	20.6
Total interest fnance revenue	13.8	34.5
Interest discounting	3.9	2.7
Total fnance revenue	17.7	37.2
Finance Costs Other corporations	149.0	151.8
Less: Capitalised interest fnance costs1	(26.4)	(19.7)
Total interest fnance costs	122.6	132.1
Non interest fnance costs	14.6	11.1
Interest discounting		0.5
Total fnance costs	137.2	143.7
Net fnance costs	(119.5)	(106.5)

1 The weighted average interest rate used to determine the amount of interest finance costs eligible for capitalisation was 5.4% (30 June 2014: 5.74%), which is the effective interest rate.

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LEND LEASE | ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements continued

Section A: Performance continued

8. Share of Profit of Equity Accounted Investments

Accounting Policies

Investments in associates and joint ventures are accounted for using the equity method. The share of profit recognised under the equity method is the Group’s share of the investment’s profit or loss based on ownership interest held. Associates (including partnerships) are entities in which the Group, as a result of its voting rights, has significant influence, but not control or joint control, over the financial and operating policies. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

For associates, this is from the date that significant influence commences until the date that significant influence ceases, and for joint ventures, this is from the date joint control commences until the date joint control ceases.

Financial Disclosure	June 2015	June 2014
	A$m	A$m
Associates
Share of Proft	24.8	21.4
Joint Ventures
Share of (Loss)/Proft	(4.9)	37.9
Total share of proft of equity accounted investments	19.9	59.3

a. Associates	SHARE OF PROFIT/(LOSS)1
	June 2015 A$m June 2014 A$m
Australia Lend Lease Real Estate Partners 32	8.1 18.7
Lend Lease Communities Fund 1	0.7 (0.2)
Lend Lease Sub Regional Retail Fund2	3.3
Total Australia	12.1 18.5
Asia Lend Lease Asian Retail Investment Fund 2	3.1 0.9
Lend Lease Asian Retail Investment Fund 3	7.3
Total Asia	10.4 0.9
Americas Other	2.3 2.0
Total Americas	2.3 2.0
Total associates	24.8 21.4

b. Joint Ventures	SHARE OF PROFIT/(LOSS)1
	June 2015 A$m June 2014 A$m
Australia Lend Lease International Towers Sydney Trust	31.7 20.6
Sunshine Coast University Hospital	4.5 3.7
Other	1.2 (1.9)
Total Australia	37.4 22.4
Asia CDR JV Ltd (313@somerset)	(6.8) 4.2
Other	0.2
Total Asia	(6.8) 4.4
Europe Majadahonda Hospital	1.3 2.0
Global Renewables Lancashire Holdings Limited2	(40.7) (2.5)
Other	3.7 9.9
Total Europe	(35.7) 9.4
Americas Other	0.2 1.7
Total Americas	0.2 1.7
Total joint ventures	(4.9) 37.9
Total equity accounted investments	19.9 59.3

• 1 Reflects the contribution to the Group’s profit, and is after tax paid by the equity accounted investment vehicles themselves, where relevant. However, for various equity accounted investments, the share of tax is paid by the Group and is included in the Group’s current tax expense.

• 2 The current year share of loss represents the recycling of the hedge reserve to the Income Statement of A$(39.4) million and A$(1.3) million share of loss.

• 1 Reflects the contribution to the Group’s profit, and is after tax paid by the equity accounted investment vehicles themselves, where relevant. However, for various equity accounted investments, the share of tax is paid by the Group and is included in the Group’s current tax expense.

• 2 Lend Lease Real Estate Partners 3 was restructured during the period to Lend Lease Sub Regional Retail Fund commencing as a new fund. The Group has significant influence over the investment as a result of assessing the Group’s overall voting rights over the fund and applies equity accounting.

96

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LEND LEASE | ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements continued

Section A: Performance continued

9. Taxation

8. Share of Profit of Equity Accounted Investments continued

Accounting Policies

c. Material Associates and Joint Ventures Summarised Financial Information

The table below provides summarised financial information for those associates and joint ventures that are material to the Group. Refer to Note 12c ‘Equity Accounted Investments’ for determination of material associates and joint ventures. The information disclosed reflects the amounts presented in the financial statements of the relevant joint ventures and associates and, where indicated, the Group’s share of those amounts. They have been amended to reflect adjustments made by the Group when using the equity method, including fair value adjustments and differences in accounting policies. The nature and principal activities of the material associates and joint ventures is investing in property assets.

Income Statement	LEND LEASE ASIAN RETAIL INVESTMENT FUND 31	LEND LEASE ASIAN RETAIL INVESTMENT FUND 31	LEND LEASE INTERNATIONAL TOWERS SYDNEY TRUST	LEND LEASE INTERNATIONAL TOWERS SYDNEY TRUST	CDR JV LTD (313@SOMERSET)	CDR JV LTD (313@SOMERSET)
	June 2015 A$m	June 2014 A$m	June 2015 A$m	June 2014 A$m	June 2015 A$m	June 2014 A$m
Revenue from provision of services	63.6				56.6 49.9
Interest income			0.1 0.1
Fair value revaluations	11.0		217.5 112.8		(47.8) (1.2)
Interest expense	(11.3)				(15.0) (11.2)
Other expenses	(22.8)		(6.2) (3.4)		(20.0) (18.7)
Income tax expense	(4.3)				(1.0) (2.0)
Proft/(loss) for the period2	36.2 –		211.4 109.5		(27.2) 16.8
Other comprehensive income	48.8				54.0 19.3
Total comprehensive income	85.0 –		211.4 109.5		26.8 36.1
Group’s ownership interest	20.1%		15.0% 15.0%3		25.0% 25.0%
Group’s total share of: Proft/(loss)	7.3 –		31.7 20.6		(6.8) 4.2
Other comprehensive income	9.8				13.5 4.8
Total comprehensive income	17.1 –		31.7 20.6		6.7 9.0
Dividends received from associates and joint ventures	– –		– –		5.3 7.5

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

Current tax is the expected tax payable on the taxable income for the financial year, using applicable tax rates (and tax laws) at the balance sheet date in each jurisdiction, and any adjustment to tax payable in respect of previous financial years.

Deferred tax is the expected tax payable in future periods as a result of past transactions or events and is calculated by comparing the accounting balance sheet to the tax balance sheet. Temporary differences are provided for any differences in the carrying amounts of assets and liabilities between the accounting and tax balance sheets. The following temporary differences are not provided for:

• The initial recognition of 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 are not likely to reverse in the foreseeable future.

Measurement of deferred tax is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using applicable tax rates (and tax laws) at the balance sheet date.

Recognition of deferred tax assets is only to the extent it is probable that future taxable profits will be available so as the related tax asset will be realised. Deferred tax assets may include the following:

• Deductible temporary differences;

• Unused tax losses; and

• Unused tax credits.

Management consider the estimation of future taxable profits to be an area of estimation uncertainty as a change in any of the assumptions used in budgeting and forecasting would have an impact on the future profitability of the Group. The Group prepares financial budgets and forecasts, covering a five year period, which are reviewed on a regular basis. These forecasts and budgets form the basis of future profitability to support the carrying value of the deferred tax assets. The performance of the Group is influenced by a variety of general economic and business conditions, which are outside the control of the Group, including the level of inflation, interest rates, exchange rates, commodity prices, ability to access funding, oversupply and demand conditions and government fiscal, monetary and regulatory policies.

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

Tax Consolidation

The Company is the head entity of the Australian Tax Consolidated Group comprising all the Australian wholly owned subsidiaries, which excludes LLT. As a consequence, all members of the Australian Tax Consolidation Group are taxed as a single entity.

1 Since June 2014, Lend Lease Real Estate Partners 3 has ceased to be a material associate as its units were transferred into Lend Lease Sub Regional Retail Fund. Lend Lease Asian Retail Investment Fund 3 is a new material associate. This investment was transferred into ‘Equity Accounted Investments’ from ‘Other Financial Assets’.

2 There was no depreciation and amortisation expense in the current or prior period in the profit/(loss).

3 During the period, the Group sold 10% of its interest. At 30 June 2014, the Group held a 15% interest.

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

Income Statement	ASSOCIATES	ASSOCIATES	JOINT VENTURES June 2015 A$m June 2014 A$m
	June 2015 A$m	June 2014 A$m	June 2015 A$m
Aggregate amounts of the Group’s share of: Proft/(loss) from continuing operations	17.5 2.7		(29.8) 13.1
Other comprehensive income/(expense)	3.1 0.9		(2.8) (7.5)
Aggregate amounts of Group’s share of total comprehensive income/ (expense) of individually immaterial equity accounted investments	20.6 3.6		(32.6) 5.6

98

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LEND LEASE | ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements continued

Section A: Performance continued

9. Taxation continued

a. Income Tax Expense

a. Income Tax Expense
June 2015	June 2014
A$m	A$m
Recognised in the Income Statement Current Tax Expense Currentyear (29.1)	116.1
Adjustments forprioryears (17.7)	(6.9)
Benefts of tax losses recognised (18.6)	(13.5)
(65.4)	95.7
Deferred Tax Expense Origination and reversal of temporarydiferences 218.9	99.7
Temporarydiferences recognised/recovered (10.5)	(27.9)
Net tax losses written of/(recognised) 4.5	(20.6)
Change in tax rate 3.3	2.9
Adjustments forprioryears (1.7)	25.5
214.5	79.6
Total income tax expense 149.1	175.3
Reconciliation of Efective Tax Rate Proft before Tax 768.0	998.6
Income tax using the domestic corporation tax rate 30% 230.4	299.6
Adjustments forprioryear tax claim (17.7)	(6.9)
Non assessable and exempt income1 (70.3)	(60.1)
Non allowable expenses2 8.9	31.3
Net writeof/(recognition)of tax losses through income tax expense 13.8	(4.6)
Temporarydiferences recognised through income tax expense3 (18.2)	(27.9)
Utilisation of capital losses on disposal of assets (7.4)	(10.6)
Efect of tax rates in foreignjurisdictions4 17.1	(40.4)
Other (7.5)	(5.1)
Income tax expense 149.1	175.3
Deferred Tax Recognised Directly in Equity Relatingto:
Equityissue costs 0.1	1.5
Fair value revaluation reserve (5.7)	3.4
Defned beneftplans remeasurements (12.9)	(4.5)
Foreign currencytranslation reserve on equityaccounted investments 9.3
Hedgingreserve 0.1
Non controllinginterest acquisition reserve 3.0	3.0
Total deferred tax(beneft)/expense recognised directly in equity (6.1)	3.4

• 1 Includes LLT profit and tax exemptions obtained for major asset sales in the period.

• 2 Includes accounting expenses for which a tax deduction is not allowed permanently.

• 3 Includes temporary differences recognised in a previous period but are subsequently written off to the income tax expense in the current period and temporary differences that arose in a previous period but were not recognised until the current period.

• 4 The Group operates in a number of foreign jurisdictions for trading purposes which have significantly lower tax rates than Australia such as the United Kingdom and Singapore and higher tax rates such as the United States of America and Japan.

b. Tax Effect Relating to Other Comprehensive Income

	JUNE 2015 Before Tax A$m Tax (Expense)/ Beneft A$m Net of Tax A$m	JUNE 2014
		Before Tax A$m Tax (Expense)/ Beneft A$m Net of Tax A$m
Movements in fair value revaluation reserve	0.2 5.7 5.9	7.6 (3.4) 4.2
Movements in hedgingreserve	(17.7) (0.1) (17.8)	(12.5) (12.5)
Movements in foreign currencytranslation reserve	64.9 (9.3) 55.61	57.6 57.6
Movements in non controlling interest acquisition reserve	(14.0) (14.0)	(1.7) (0.3) (2.0)
Movements in defned beneft plan remeasurements in retained earnings	(69.2) 12.9 (56.3)	(30.1) 4.5 (25.6)
Total other comprehensive income net of tax	(35.8) 9.2 (26.6)	20.9 0.8 21.7

• 1 Excludes non controlling interests A$1.0 million (June 2014: A$nil).

c. Deferred Tax Assets and Liabilities

c. Deferred Tax Assets and Liabilities
	JUNE 2015 Assets A$m Liabilities A$m		JUNE 2014
	Assets A$m		Assets A$m		Liabilities A$m
Recognised Deferred Tax Assets and Liabilities Deferred tax assets and liabilities are attributable to the following: Loans and receivables			8.1 (150.8)
	7.6 (425.4)
Inventories	240.7 (271.2)		92.4 (188.0)
Other fnancial assets	2.1 (68.4)		0.6 (70.5)
Other assets	12.7 (5.5)		0.3 (2.9)
Equity accounted investments	5.9 (64.0)		4.5 (41.9)
Investment properties	0.7 (140.2)		(109.8)
Property, plant and equipment	22.1 (17.2)		22.5 (13.6)
Intangible assets	(9.3)		(1.8)
Net defned beneft plans	42.7 (25.9)		26.4 (14.5)
Trade and other payables	153.9 (0.1)		127.8 (0.1)
Resident liabilities	150.0		138.9
Provisions	134.9		93.1
Borrowings and fnancing arrangements	0.6 (0.4)		0.6 (0.8)
Other fnancial liabilities			1.7
Unused revenue tax losses recognised	420.61		242.91
Unused capital tax losses recognised	6.9		12.9
Items with a tax base but no carrying value	24.8 (21.7)		24.4 (7.8)
Total deferred tax assets/(liabilities)	1,226.2 (1,049.3)		797.1 (602.5)
Deferred tax set of	(920.7) 920.7		(545.8) 545.8
Net deferred tax assets/(liabilities)	305.5 (128.6)		251.3 (56.7)
June 2015	1 July 2014 A$m	Recognised in Income A$m Recognised in Equity A$m		Other/ Foreign Exchange A$m 30 June 2015 A$m
Movement in temporary diferences during the fnancial year: Loans and receivables
	(142.7) (274.0) (1.1) (417.8)
Inventories	(95.6) 117.3 (52.2) (30.5)
Other fnancial assets	(69.9) 6.2 5.7 (8.3) (66.3)
Other assets	(2.6) 5.8 4.0 7.2
Equity accounted investments	(37.4) (18.7) (9.4) 7.4 (58.1)
Investment properties	(109.8) (29.7) (139.5)
Property, plant and equipment	8.9 (6.6) 2.6 4.9
Intangible assets	(1.8) (2.8) (4.7) (9.3)
Net defned beneft plans	11.9 (9.3) 12.9 1.3 16.8
Trade and other payables	127.7 17.1 9.0 153.8
Resident liabilities	138.9 (63.3) 74.4 150.0
Provisions	93.1 11.7 30.1 134.9
Borrowings and fnancing arrangements	(0.2) 0.4 0.2
Other fnancial liabilities	1.7 (1.6) (0.1)
Unused revenue tax losses recognised	242.9 46.4 131.3 420.6
Unused capital tax losses recognised	12.9 (3.7) (2.3) 6.9
Items with a tax base but no carrying value	16.6 (9.7) (3.1) (0.7) 3.1
Total deferred tax assets/(liabilities)	194.6 (214.5) 6.1 190.7 176.9

• 1 Includes research and development tax credits carried forward.

100

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Notes to the Consolidated Financial Statements continued

Section A: Performance continued

Section B: Investment

9. Taxation continued

c. Deferred Tax Assets and Liabilities continued

June 2014 1 July 2013 A$m	Recognised in Income A$m Recognised in Equity A$m	Other/ Foreign Exchange A$m 30 June 2014 A$m
Loans and receivables (146.2) 3.4 0.1 (142.7)
Inventories (107.4) 10.0 1.8 (95.6)
Other fnancial assets (53.5) (13.3) (3.4) 0.3 (69.9)
Other assets (0.3) 0.1 (2.4) (2.6)
Equity accounted investments (21.4) (16.1) 0.1 (37.4)
Investment properties (66.2) (31.5) (12.1) (109.8)
Property, plant and equipment 7.0 0.5 1.4 8.9
Intangible assets (0.6) (1.2) (1.8)
Net defned beneft plans 2.9 4.1 4.5 0.4 11.9
Trade and other payables 128.6 (1.9) 1.0 127.7
Resident liabilities 152.7 (43.8) 30.0 138.9
Provisions 97.1 (4.3) 0.3 93.1
Borrowings and fnancing arrangements 0.6 (0.8) (0.2)
Other fnancial liabilities 6.3 (4.1) (0.5) 1.7
Unused revenue tax losses recognised 133.4 20.6 88.9 242.9
Unused capital tax losses recognised 10.4 2.6 (0.1) 12.9
Items with a tax base but no carrying value 24.8 (3.9) (4.5) 0.2 16.6
Total deferred tax assets/(liabilities) 168.2 (79.6) (3.4) 109.4 194.6
June 2015 A$m June 2014 A$m
Unrecognised Deferred Tax Assets Deferred tax assets have not been recognised in respect of the following items: Capital losses 27.5 41.9
Revenue losses 57.3 35.3
Deductible temporary diferences 65.5 74.4
Total unrecognised deferred tax assets 150.3 151.6

Of the unrecognised deferred tax asset of A$150.3 million, only A$12.5 million expires by 2035. The remainder of the unrecognised deferred tax assets have no expiry date.

10. Events Subsequent to Balance Date

Investment in the property and infrastructure development pipeline, joint ventures in property projects, the retirement sector, and more passive assets, such as property funds, drives the current and future performance of the Group. This section includes disclosures for property such as Inventories and Investment Properties and indirect property assets such as Equity Accounted Investments and Other Financial Assets contained within the Statement of Financial Position.

11. Inventories

Accounting Policies

Development Properties

Property acquired for development and sale in the ordinary course of business is carried at the lower of cost and net realisable value (‘NRV’). The cost of development properties includes expenditure incurred in acquiring the property, preparing it for sale and borrowing costs incurred. The NRV is the estimated selling price, less the estimated costs of completion and selling expenses. Management consider the estimation of both selling prices and costs of completion to be an area of estimation uncertainty , as these estimations take into consideration market conditions affecting each property and the underlying strategy for selling the property.

The recoverable amount of each property is assessed at each balance date and accounting judgement is required to assess whether a provision is raised where cost (including costs to complete) exceeds NRV.

Inventories are expensed as cost of sales in the Income Statement. Management uses accounting judgement in determining the following:

• The apportionment of cost of sales through either land area or sales revenue;

• The amount of cost of sales, which includes costs incurred to date and final forecast costs; and

• The nature of the expenditure, which may include acquisition costs, development costs, borrowing costs and those costs incurred in preparing the property for sale.

Construction Work in Progress

The gross amount of construction and development work in progress consists of costs attributable to work performed, including recoverable pre contract and project bidding costs and emerging profit after providing for any foreseeable losses. In applying the accounting policies on providing for these losses accounting judgement is required.

Work in progress is presented as part of inventories for all contracts in which costs incurred plus recognised profits exceed progress billings. If progress billings and recognised losses exceed costs incurred plus recognised profits, then the difference is presented in trade and other payables.

Financial Disclosure	June 2015	June 2014
	A$m	A$m
Current Development properties	1,115.2	580.6
Construction work in progress	857.9	755.6
Other	6.9	9.4
Total current	1,980.0	1,345.6
Non Current Development properties	2,124.2	1,785.9
Total inventories	4,104.2	3,131.5

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

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Notes to the Consolidated Financial Statements continued

Section B: Investment continued

12. Equity Accounted Investments

Accounting Policies

Equity Accounted Investments (Associates and Joint Ventures)

As discussed in Note 8 ‘Share of Profit of Equity Accounted Investments’, investments in Associates and Joint Ventures are equity accounted. The share of investment recognised under the equity method is the Group’s share of the investment’s net assets based on ownership interest held.

Investments in associates and joint ventures are carried at the lower of the equity accounted carrying amount and the recoverable amount. When the Group’s share of losses exceeds the carrying amount of the equity accounted investment (including assets that form part of the net investment in the associate or joint venture entity), the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has obligations in respect of the associate or joint venture.

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

Service Concession Arrangements (‘SCAs’)

The Group equity accounts its investment in project companies with SCAs through public private partnerships (‘PPPs’). These arrangements provide facilities management and maintenance services with terms generally of 25 to 30 years. They also incorporate contractual obligations to make available the individual assets for their prescribed use and, where necessary, overhaul or replace major items of plant and equipment related to the assets with payment obtained through periodic draw-downs from the relevant government authorities.

Joint Operations

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities relating to the arrangement.

Investments in joint operations are accounted for by recognising amounts on a line by line basis in accordance with the accounting standards applicable to the particular assets, liabilities, revenues and expenses in relation to the Group’s interest in the joint operation.

Financial Disclosure	June 2015	June 2014
	A$m	A$m
Associates
Investment in associates	236.8	129.3
Less: Impairment	(6.3)	(10.5)
Total associates	230.5	118.8
Joint Ventures
Investment in joint ventures	1,012.4	465.8
Less: Impairment	(7.1)	(6.6)
Total joint ventures	1,005.3	459.2
Total equity accounted investments	1,235.8	578.0

a. Associates

a. Associates
	INTEREST June 2015 % June 2014 %	NET BOOK VALUE
		June 2015 A$m June 2014 A$m
Australia Lend Lease Real Estate Partners 31	25.0	81.9
Lend Lease Communities Fund 1	20.8 20.8	9.9 17.7
Lend Lease Sub Regional Retail Fund1	10.0	36.7
Other		0.5 0.5
Total Australia		47.1 100.1
Asia Lend Lease Asian Retail Investment Fund 2	35.9 35.9	28.7 23.3
Lend Lease Asian Retail Investment Fund 3	20.1	154.7
Total Asia		183.4 23.3
Europe Other		4.6 4.5
Total Europe		4.6 4.5
Americas Other		1.7 1.4
Total Americas		1.7 1.4
Total		236.8 129.3
Less: Impairment		(6.3) (10.5)
Total associates		230.5 118.8

• 1 Lend Lease Real Estate Partners 3 was restructured during the period to Lend Lease Sub Regional Retail Fund commencing as a new fund. Although the Group has a 10% ownership interest, it holds 20% of the voting rights over the fund and has significant influence over the investment. As a result the Group applies equity accounting for its ownership interest.

104

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Notes to the Consolidated Financial Statements continued

Section B: Investment continued

12. Equity Accounted Investments continued

b. Joint Ventures

b. Joint Ventures
	INTEREST June 2015 % June 2014 %	NET BOOK VALUE
		June 2015 A$m June 2014 A$m
Australia1 Lend Lease International Towers Sydney Trust	15.0 15.0	181.5 80.9
Darling Harbour Live	50.0 50.0	116.2 100.4
Lend Lease One International Towers Sydney Trust	37.5	191.3
Sunshine Coast University Hospital	50.0 50.0	89.2 83.0
New Bendigo Hospital	50.0 50.0	18.2 22.6
Eastern Goldfelds Regional Prison	50.0 50.0	3.3 10.5
Other		8.2 12.1
Total Australia		607.9 309.5
Asia CDR JV Ltd (313@somerset)	25.0 25.0	105.7 104.6
Paya Lebar Central	30.0	158.7
Other		0.7 0.3
Total Asia		265.1 104.9
Europe1 Stratford City Business District Limited	50.0 50.0	26.5 23.6
Majadahonda Hospital	25.0 25.0	9.0 9.3
Hungate (York) Regeneration Limited	50.0 50.0	6.0 5.4
Other		10.3 11.6
Total Europe		51.8 49.9
Americas 281 Fifth Avenue	40.0	51.9
River South Properties	60.0	30.9
Other		4.8 1.5
Total Americas		87.6 1.5
Total		1,012.4 465.8
Less: Impairment		(7.1) (6.6)
Total joint ventures		1,005.3 459.2
Total equity accounted investments		1,235.8 578.0

1 Equity accounted profit in Note 8 ‘Share of Profit of Equity Accounted Investments’ for certain investments has been aggregated into ‘Other’ as not material.

c. Material Associates and Joint Ventures Summarised Financial Information

The table below provides summarised financial information for those associates and joint ventures that are material to the Group. Material associates and joint ventures have been determined by comparing individual investment net book value with the total equity accounted investment balance. The information disclosed reflects the amounts presented in the financial statements of the relevant joint ventures and associates and, where indicated, the Group’s share of those amounts. They have been amended to reflect adjustments made by the Group when using the equity method, including fair value adjustments and differences in accounting policies. The nature and principal activities of the material associates and joint ventures is investing in property assets.

Statement of Financial Position	LEND LEASE ASIAN RETAIL INVESTMENT FUND 31	LEND LEASE ASIAN RETAIL INVESTMENT FUND 31	LEND LEASE INTERNATIONAL TOWERS SYDNEY TRUST June 2015 A$m June 2014 A$m	CDR JV LTD (313@SOMERSET)	CDR JV LTD (313@SOMERSET)
	June 2015 A$m	June 2014 A$m	June 2015 A$m	June 2015 A$m	June 2014 A$m
Current assets Cash and cash equivalents	89.9		4.2 0.9	38.8 39.2
Other current assets	0.4		10.3 3.0	2.8 3.1
Total current assets	90.3 –		14.5 3.9	41.6 42.3
Non current assets	1,357.3 –		2,236.2 1,233.5	1,059.6 983.3
Total current liabilities2	(24.8) –		(733.9) (364.5)	(14.0) (23.5)
Non current liabilities Financial liabilities (excluding trade payables)	(22.3)		(306.9) (132.7)	(629.2) (559.8)
Other non current liabilities	(629.0)		(200.7)	(17.2) (7.4)
Total non current liabilities	(651.3) –		(306.9) (333.4)	(646.4) (567.2)
Net assets	771.5 –		1,209.9 539.5	440.8 434.9
Reconciliation to Carrying Amounts Opening net assets 1 July	344.4		539.5 357.0	434.9 428.8
Proft for the period	36.2		211.4 109.5	(27.2) 16.8
Other comprehensive income	48.9			54.3 19.3
Dividends paid				(21.2) (30.0)
Acquisition/contributions	342.0		459.0 73.0
Closing net assets	771.5 –		1,209.9 539.5	440.8 434.9
Group’s share of net assets	154.7 –		181.5 80.9	110.1 108.7
Other adjustments				(4.4) (4.1)
Carrying amount at end of period	154.7 –		181.5 80.9	105.7 104.6

1 Since June 2014, Lend Lease Real Estate Partners 3 has ceased to be a material associate as its units were transferred into Lend Lease Sub Regional Retail Fund. Lend Lease Asian Retail Investment Fund 3 is a new material associate. This investment was transferred into ‘Equity Accounted Investments’ from ‘Other Financial Assets’.

2 Lend Lease International Towers Sydney Trust had current financial liabilities of A$458.5 million (June 2014: A$225.8 million).

There were no capital expenditure or lease commitments contracted but not provided for during the current or prior year for the material associates and joint ventures.

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

Statement of Financial Position	ASSOCIATES		JOINT VENTURES
	June 2015 A$m	June 2014 A$m	June 2015 A$m	June 2014 A$m
Aggregate carrying value of individually immaterial equity accounted investments	75.8	36.9	718.1	273.7

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Notes to the Consolidated Financial Statements continued

Section B: Investment continued

13. Investment Properties

c. Valuation Technique

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

Accounting Policies

Investment properties on initial recognition are measured at cost, including transaction costs and subsequently stated at fair value.

The fair value for all properties, except those under construction and those valued at less than A$10.0 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. Management consider the calculation of the fair value to be an area of estimation uncertainty . While this represents the best estimation of fair value at the reporting date, actual sale prices achieved (should the investment properties be sold) may be higher or lower than the most recent valuation. This is particularly relevant in periods of market illiquidity or uncertainty.

Rental revenue and deferred management fees from investment properties are accounted for as described in Note 4 ‘Revenue’. Expenses capitalised to properties may include the cost of acquisition, additions, refurbishments, redevelopments, borrowing costs and certain fees incurred.

Retirement living investment properties principally comprises retirement villages (both operating villages and villages under development) held for long term income yields, which are not occupied by the Group.

Resident liabilities are initially recognised as the amount paid by residents of retirement living investment properties to occupy the apartments and units. Subsequently they are measured at face value being the principal paid, plus the resident’s share of capital gains based on market values of the underlying property at balance date, less deferred management fees earned to date.

Resident liabilities are non interest bearing and are classified as current liabilities because any resident may choose to depart within 12 months. Although a resident may choose to depart within 12 months, the Group’s obligation to settle with the departing resident for the majority of resident contracts is not due for a period greater than 12 months, which means these liabilities are effectively non-current. History has also shown that residents stay for an average period of 11 years in independent living units (‘ILUs’) and six years in serviced apartments (‘SAs’).

Deferred management fees receivable on owned sites (‘DMF’) represent amounts owed to the Group in connection with resident occupancy at retirement villages subject to long term management agreements. The DMF is calculated in accordance with resident contracts, refer to Note 4 ‘Revenue’ for further detail.

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

• Weighted average discount rate of 13.3% (June 2014: 13.3%);

• Weighted average future growth rate of 3.7% (June 2014: 3.8%);

• Average length of stay: 11 years for independent living units (June 2014: 11 years) and six years for serviced apartments (June 2014: six years); and

• A discounted cash flow valuation model using a 50 year terminal yield.

• For retirement living properties included in assets under construction, the assumptions adopted in determining the fair values at 30 June 2015 included:

• Discount rates between 14.0% and 17.0% (June 2014: 14.0% and 17.0%) based on the stage of development and the assessed project risk; and

• Growth rates are generally between 2.0% and 4.0% (June 2014: between 2.0% and 4.0%) based on price and cost escalation assumptions determined by individual property factors.

d. Fair Value Measurement

There are different levels of fair value measurements, refer to Note 26b ‘Fair Value Measurements’ for definitions. When fair value is calculated using inputs that are not based on observable market data, then assets are considered a level 3 fair value. The fair value measurement for net investment properties of A$1,779.0 million (June 2014: A$1,545.0 million) has been categorised as a level 3 fair value based on the inputs to the valuation technique used as noted above.

Net investment properties includes net retirement living properties after deducting resident liabilities and related deferred revenue, A$1,587.7 million (June 2014: A$1,328.8 million), retail properties A$74.9 million (June 2014: A$81.5 million) and assets under construction A$116.4 million (June 2014: A$134.7 million).

There were no investment properties that were considered levels 1 or 2.

e. Fair Value Reconciliation

Reconciliation of carrying value for level 3 net investment properties.

Financial Disclosure

Financial Disclosure
June 2015	June 2014
a. Investment Properties – Non Current A$m	A$m
Retirement living properties 5,803.6	4,615.8
Retail properties 74.9	81.5
Assets under construction 116.4	134.7
Total investment properties 5,994.9	4,832.0
Reconciliations Reconciliations of the carrying amount for investment properties are as follows: Carrying amount at beginning of fnancial year 4,832.0	4,052.3
Acquisition/(disposal) of investment properties 933.5	448.7
Capital expenditure 102.9	103.9
Fair value (loss)/gain recognised through the Income Statement (12.1)	49.7
Increase attributable to capital gain 130.8	109.5
Foreign exchange rate/other movements 7.8	67.9
Carrying amount at end of fnancial year 5,994.9	4,832.0
b. Resident Liabilities – Current Gross resident liabilities 4,742.8	3,673.9
Deferred management fees receivable on owned sites (662.4)	(478.4)
Total resident liabilities 4,080.4	3,195.5

e. Fair Value Reconciliation Reconciliation of carrying value for level 3 net investment properties.
	June 2015	June 2014
	A$m	A$m
Carrying amount at beginning of fnancial period	1,545.0	1,296.4
Additions/(disposals)	307.8	229.9
Gains/(losses) recognised in:
Income Statement – other income		49.7
Income Statement – other expenses	(12.1)
Other comprehensive income – foreign currency translation	(12.0)	22.4
Other movements	(49.7)	(53.4)
Carrying amount at end of fnancial period	1,779.0	1,545.0

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

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Notes to the Consolidated Financial Statements continued

Section B: Investment continued

14. Other Financial Assets

Accounting Policies

The following table summarises the accounting policies of investments the Group classifies as material financial assets, the classification depends on the purpose for which the investments were acquired.

Investment Category	Classifcation Criteria Initial Recognition Subsequent Measurement Impairment
Financial assets at fair value through proft or loss	Held for Trading - if it is acquired principally for the purpose of selling in the short term,unless they are designated as hedges, refer to Note 25 ‘Hedging’ for further detail. Typically this includes derivatives such as forward exchange contracts and interest rate swaps. At fair value (generally transaction price). Transaction costs are recorded as expenses when they are incurred. Fair value, any changes in fair value are refected in the Income Statement. Fair value losses are refected in the Income Statement. Designated at Fair Value Through Proft or Loss at initial recognition - either to eliminate a measurement or recognition inconsistency, or where a group of fnancial assets is managed, and its performance is evaluated, on a fair value basis.
Loans and receivables	Refer to Note 22 ‘Loans and Receivables’.
Available for Sale (‘AFS’)	Non derivative fnancial assets that are either designated in this category or not classifed in any other category. Typically include investments the Group do not control or have signifcant infuence over and are not managed on a fair value basis. At fair value (generally transaction price) plus transaction costs directly attributable to the acquisition or issue. Transaction costs are incremental costs that would only have been incurred in relation to the transaction. Fair value, unrealised gains or losses arising from changes in the fair value are recognised in equity, in theFair Value Revaluation Reserve. When AFS fnancial assets are sold, transferred or impaired, the accumulated fair value adjustments in the reserves are included in the Income Statement as gains or losses. AFS assets are generally impaired when there is a signifcant or prolonged decline in the fair value of the asset below its cost. The cumulative loss, measured as the diference between the acquisition cost and the current fair value, less any impairment loss on that fnancial asset previously recognised in proft or loss – is removed from equity and recognised in the Income Statement. Impairment losses previously recognised in the Income Statement on equity instruments are not reversed through the Income Statement but are recognised through other comprehensive income.

Financial Disclosure	June 2015	June 2014
	A$m	A$m
Current Measured at Fair Value Available for Sale		1.2
Fair Value Through Proft or Loss – Designated at Initial Recognition Negotiable instruments	37.9	36.9
Derivatives	4.8	12.3
Total current	42.7	50.4
Non Current Measured at Fair Value Available for Sale Australian Prime Property Fund – Retail	43.5	42.2
Lend Lease Core Plus Fund	11.4	33.7
Lend Lease Retail Partnership	71.8	62.9
Lend Lease Asian Retail Investment Fund	33.7	33.2
Lend Lease Asian Retail Investment Fund 31		60.6
Parkway Parade Partnership Limited	34.2	29.5
Other	133.7	114.1
	328.3	376.2
Fair Value Through Proft or Loss – Designated at Initial Recognition Australian Prime Property Fund – Industrial	71.3	239.3
Australian Prime Property Fund – Commercial	173.6	228.2
Other unlisted investments	42.3	119.2
	287.2	586.7
Held to Maturity Other	10.2	9.2
	10.2	9.2
Total non current	625.7	972.1
Total other fnancial assets	668.4	1,022.5

• 1 The Group increased its investment in Lend Lease Asian Retail Investment Fund 3 in the period. The Group is now considered to have significant influence over the investment and therefore the asset is now recognised as an equity accounted investment. Refer to Note 12 ‘Equity Accounted Investments’.

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Notes to the Consolidated Financial Statements continued

Section C: Liquidity and Working Capital

The ability of the Group to fund the continued investment in the property and infrastructure pipeline, invest in new opportunities and meet current commitments is dependent on available cash and access to third party capital. This section contains disclosure on the financial assets, financial liabilities, cash flows and equity that are required to finance the Group’s activities, including existing commitments and the liquidity risk exposure associated with financial liabilities. The section also contains disclosures for the Group’s trading assets, excluding inventories, and the trading liabilities incurred as a result of trading activities used to generate the Group’s Performance.

15. Cash and Cash Equivalents

Accounting Policies

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

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

Financial Disclosure	June 2015	June 2014
	A$m	A$m
Cash	462.5	528.7
Short term investments	287.6	1,187.1
Total cash and cash equivalents	750.1	1,715.8

Short term investments earned variable rates of interest which averaged 2.0% per annum during the year ended 30 June 2015 (30 June 2014: 2.8%).

16. Notes to Statement of Cash Flows

16. Notes to Statement of Cash Flows
	June 2015	June 2014
	A$m	A$m
Reconciliation of Proft after Tax to Net Cash Provided by Operating Activities
Proft after Tax(IncludingExternal Non ControllingInterests)	618.9	823.3
Amortisation and depreciation	79.5	87.7
Netgain on sale of investments, plant and equipment	(100.8)	(21.2)
(Writeback)/impairment of equityaccounted investments	(4.2)	2.3
Impairment of other fnancial assets	3.7	3.2
Impairment ofproperty, plant and equipment	7.8	1.5
Net unrealised foreign exchange loss/(gain)and currencyhedgingcosts	75.2	(8.5)
Net fair valuegain on investments	(24.9)	(17.5)
Share ofproft of equityaccounted investments	(19.9)	(59.3)
Dividends/distributions from equityaccounted investments	17.7	34.2
Fair value loss/(gain)on investmentproperties	12.1	(49.7)
Other	(109.1)	(91.8)
Net cash provided by operating activities before changes in assets and liabilities	556.0	704.2
Changes in Assets and Liabilities Adjusted for Efects of Purchase and
Disposal of Consolidated Entities and Operations During the Financial Year
(Increase)/decrease in receivables	(1,340.9)	277.7
Increase in inventories	(754.3)	(115.3)
(Increase)/decrease in other assets	(9.4)	5.8
Increase in net defned beneftplans	(48.1)	(13.5)
Increase/(decrease)inpayables	1,343.2	(67.4)
Increase/(decrease)in operatingderivatives assets/liabilities	8.6	(8.6)
Decrease in deferred tax items	200.9	79.6
Increase in current tax	(173.1)	(30.5)
Increase/(decrease)in otherprovisions	50.5	(9.6)
Net cash (used in)/provided by operating activities	(166.6)	822.4

17. 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 using the effective interest rate method. Under the amortised cost method the difference between the amount initially recognised and the redemption value is recorded in the Income Statement over the period of the borrowing on an effective interest basis. Borrowings are referred to in this section using their redemption value when describing the terms and conditions.

Financial Disclosure

Financial Disclosure
	June 2015	June 2014
	A$m	A$m
a. Borrowings – Measured at Amortised Cost
Current
Commercial notes	227.3
Total current	227.3	–
Non Current
Commercial notes	1,378.1	1,464.0
Bank credit facilities	844.9	883.0
Total non current	2,223.0	2,347.0
Total borrowings	2,450.3	2,347.0
b. Finance Facilities
The Group has access to the following lines of credit:
Commercial Notes
Facility available	1,605.4	1,464.0
Amount of facility used	(1,605.4)	(1,464.0)
Amount of facility unused	–	–
Bank Credit Facilities
Facility available	2,182.7	2,108.0
Amount of facility used	(844.9)	(883.0)
Amount of facility unused	1,337.8	1,225.0
Bank Overdrafts
Facility available and amount unused	85.7	84.6

Commercial notes include:

• £300.0 million of guaranteed unsecured notes issued in October 2006 in the UK bond market with a 6.125% p.a. coupon maturing in October 2021;

• US$200.0 million of guaranteed unsecured senior notes issued in October 2005 in the US private placement market with a weighted average 5.69% p.a. coupon maturing in October 2015 and October 2017;

• S$275.0 million of senior unsecured notes issued in July 2012 in the Singapore bond market with a 4.625% p.a. coupon maturing in July 2017; and

• A$475.0 million of unsecured medium term notes issued in May 2013 (A$375.0 million) and June 2014 (A$100.0 million) in the Australian bond market comprising A$250.0 million with a 5.5% p.a. coupon maturing in November 2018 and A$225.0 million with a 6.0% p.a. coupon maturing in May 2020.

Bank credit facilities include:

• £330.0 million club bank facility maturing in December 2016 (£165.0 million) and December 2017 (£165.0 million) drawn to £140.0 million (A$285.7 million) at 30 June 2015; and

• A$1,500.0 million syndicated multi-option facility maturing in June 2019 (A$600.0 million) and June 2020 (A$900.0 million) drawn to A$550.0 million at 30 June 2015. This is an extension of the existing A$1,500.0 million syndicated multi-option facility with original maturities of December 2017 (A$600.0 million) and December 2018 (A$900.0 million) drawn to A$875.0 million at June 2014.

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

• Consistent with prior periods, the Group has not defaulted on any obligations of principal or interest in relation to its borrowings and finance arrangements and other financial liabilities.

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Notes to the Consolidated Financial Statements continued

Section C: Liquidity and Working Capital continued

17. Borrowings and Financing Arrangements continued

	INTEREST EXPOSURE Fixed A$m Floating A$m Total A$m 998.9 834.5 1,833.4 606.5 10.4 616.9 1,605.4 844.9 2,450.3 697.1 873.5 1,570.6 766.9 9.5 776.4 1,464.0 883.0 2,347.0	CURRENCY
		A$ A$m US$ A$m £ A$m S$ A$m Total A$m
June 2015 Between one and fve years
		1,024.3 259.7 285.7 263.7 1,833.4
More than fve years		616.9 616.9
Total		1,024.3 259.7 902.6 263.7 2,450.3
June 2014 Between one and fve years
		1,121.7 214.9 234.0 1,570.6
More than fve years		227.3 549.1 776.4
Total		1,349.0 214.9 549.1 234.0 2,347.0

18. Issued Capital

Accounting Policies

Issued Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity.

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a change in equity. Repurchased shares are classified as treasury shares and are recognised as a deduction from equity. Dividends/distributions are recognised as a liability in the financial year in which they are declared.

Financial Disclosure	LEND LEASE CORPORATION LIMITED	LEND LEASE CORPORATION LIMITED	LEND LEASE TRUST	LEND LEASE TRUST
	June 2015	June 2014	June 2015 No. of Units (m) A$m	June 2014
	No. of Shares (m) A$m	No. of Shares (m) A$m		No. of Units (m) A$m
Issued capital at beginning of fnancial year	577.5 1,618.2	575.5 1,599.9	577.5 504.7	575.5 502.3
Transactions with owners for the year: Recapitalisation of Lend Lease Trust
	(400.5)		400.5
Distribution Reinvestment Plan	3.0 38.6	2.0 18.3	3.0 6.0	2.0 2.4
Issued capital at end of fnancial year	580.5 1,256.3	577.5 1,618.2	580.5 911.2	577.5 504.7

a. Issuance of Securities

Following stapled securityholders’ approval on 14 November 2014, the Company has reallocated capital to LLT by reducing the Company’s share capital by A$400.5 million and applying that amount as additional capital to LLT. This capital reallocation did not affect the number of shares on issue nor the number of units held by securityholders and did not result in any cash distribution to members.

As at 30 June 2015, the Group had 580.5 million stapled securities on issue, equivalent to the number of Lend Lease Corporation shares and Lend Lease Trust (‘LLT’) units on issue as at that date. The issued units of LLT are not owned by the Company and are therefore presented separately in the Consolidated Statement of Financial Position within equity.

b. Security Accumulation Plans

The Group’s Distribution Reinvestment Plan (‘DRP’) was reactivated in February 2011. The last date for receipt of an election notice for participation in the DRP is 1 September 2015. 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.

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

19. Capital Management

The Group assesses capital management as part of its broader strategic plan. The Group focuses on interrelated financial parameters, including return on equity, earnings growth and borrowing capacity. The Group also monitors its gearing ratio, 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 2015 is BBB-/Baa3 (June 2014: BBB-/Baa3).

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.

20. Liquidity Risk Exposure

Further information on Liquidity Risk is disclosed in Note 24 ‘Financial Risk Management’. As disclosed in Note 27 ‘Contingent Liabilities’ in certain circumstances the Company guarantees the performance of particular Group entities in respect of their obligations including bonding and bank guarantees. Issued bank guarantees have cash collateralisation requirements if the bank guarantee facility is not renewed by the provider. At 30 June 2015, 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$nil (June 2014: A$4.2 million) against letter of credit facilities.

The following are the contractual cash flow maturities of financial liabilities including estimated interest payments.

Note	Carrying amount A$m Contractual cash fows A$m Less than one year A$m	One to two years A$m Two to fve year A$m	More than fve years A$m
June 2015 Non Derivative Financial Liabilities Trade and other payables1,2 23 4,983.7 5,170.8 3,994.7 212.7 248.4 715.0
Resident liabilities3 13b 4,080.4 4,080.4 4,080.4
Borrowings and fnancing arrangements 17a 2,450.3 3,012.1 340.1 397.9 1,576.5 697.6
Other fnancial liabilities 58.3 63.3 29.2 23.7 10.4
Total 11,572.7 12,326.6 8,444.4 634.3 1,835.3 1,412.6
Derivative Financial Liabilities Foreign exchange contracts: Outfow (4.5) (458.8) (451.0) (7.8)
Infow 454.3 446.5 7.8
Interest rate derivatives: Outfow (3.2) (3.2) (3.2)
Total 26b (7.7) (7.7) (4.5) – – (3.2)
June 2014 Non Derivative Financial Liabilities Trade and other payables1,2 23 3,921.5 4,026.3 3,410.3 268.9 244.1 103.0
Resident liabilities3 13b 3,195.5 3,195.5 3,195.5
Borrowings and fnancing arrangements 17a 2,347.0 3,093.1 145.1 333.0 1,722.3 892.7
Other fnancial liabilities 91.4 94.0 33.0 28.0 33.0
Total 9,555.4 10,408.9 6,783.9 629.9 1,999.4 995.7
Derivative Financial Liabilities Foreign exchange contracts: Outfow (2.5) (232.1) (232.1)
Infow 1.4 231.0 231.0
Interest rate derivatives: Outfow (7.1) (7.1) (4.7) (2.4)
Total 26b (8.2) (8.2) (5.8) – – (2.4)

• 1 The carrying amount of trade and other payables excludes A$1,042.1 million of current and A$596.3 million of non current amounts (June 2014: A$671.1 million of current and A$163.8 million of non current amounts) as they do not meet the definition of a financial liability under Australian Accounting Standards.

• 2 The repayment of these amounts will be funded through collection of outstanding loans and receivables: June 2015: A$3,951.1 million (June 2014: A$2,411.1 million).

• 3 Resident 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$4,080.4 million (June 2014: A$3,195.5 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 (refer to Note 13 ‘Investment Properties’).

Other contractually committed cash flows the Group is exposed to are detailed in Note 21 ‘Commitments’.

The Group does not have authorised capital or par value in respect of its issued stapled securities.

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Notes to the Consolidated Financial Statements continued

Section C: Liquidity and Working Capital continued

22. Loans and Receivables

21. Commitments[1]

21. Commitments1
	June 2015	June 2014
	A$m	A$m
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	194.1	234.4
Plant and equipment	8.9	8.8
	203.0	243.2
At balance date, commitments in relation to non cancellable operating leases are payable as
follows:
Due within one year	66.5	72.9
Due between one and fve years	126.3	157.4
Due later than fve years	10.2	12.9
	203.0	243.2
b. Finance Lease Commitments
At balance date, commitments in relation to the fnance leases are payable as follows:
Due within one year	26.0	31.8
Due between one and fve years	32.3	59.6
Recognised in other fnancial liabilities	58.3	91.4
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	379.2	163.9
Due between one and fve years	239.3	98.8
	618.5	262.7

• 1 The commitments outlined in this note do not include the commitments of the material joint ventures and associates (refer to Note 12 ‘Equity Accounted Investments’).

Accounting Policies

Loans and receivables, which include trade and other receivables, are non derivative financial assets with fixed or determinable payments that are not equity securities. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. Other receivables include receivables related to investment management, property development, and miscellaneous items.

Loans and receivables are carried at amortised cost using the effective interest method, which applies the interest rate that discounts estimated future cash receipts over the term of the loans and receivables. Cash flows relating to short term trade and other receivables are not discounted if the effect of discounting is immaterial. The discount, if material, is then recognised as revenue over the remaining term.

A provision for impairment of loans and 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 the loans and 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.

Retentions receivable on construction contracts represent deposits held by the Group until the satisfaction of conditions specified in the contract are rectified.

Financial Disclosure	June 201 5	June 2014
	A$m	A$m
Current Trade receivables	1,140.1	1,263.0
Less: Impairment	(18.0)	(15.8)
	1,122.1	1,247.2
Related parties	41.7	43.9
Retentions	335.3	203.7
Other receivables	2,137.9	293.9
Less: Impairment	(6.0)	(11.4)
Total current	3,631.0	1,777.3
Non Current Related parties	180.3	150.0
Less: Impairment	(116.8)	(122.3)
Retentions	57.6	78.7
Other receivables	199.0	530.2
Less: Impairment		(2.8)
Total non current	320.1	633.8
Total loans and receivables	3,951.1	2,411.1

As at the reporting date, A$886.9 million of the trade debtors were current (30 June 2014: A$1,045.3 million) and A$253.2 million were past due (30 June 2014: A$217.7 million). Of the past due amount, A$235.3 million was not impaired (30 June 2014: A$202.5 million). ‘Past due’ is defined under accounting standards to mean any amount outstanding for one or more days after the contractual due date. Of the total trade debtors, 5.5% (30 June 2014: 7.9%) are aged greater than 90 days. Other than trade debtors, no other loans and receivables are considered past due at 30 June 2015 (30 June 2014: A$nil).

	June 2015	June 2014
	A$m	A$m
Impairment
Carrying amount at beginning of fnancial year	152.3	118.1
Bad and doubtful debts impairment loss net of provisions (written back)/raised	(9.9)	85.7
Other movements (including foreign exchange rate movements)	(1.6)	(51.5)
Carrying amount at end of fnancial year	140.8	152.3
Total impairment as a percentage of total loans and receivables	3.6%	6.3%

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 creditworthiness 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.

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Notes to the Consolidated Financial Statements continued

Section C: Liquidity and Working Capital continued

23. Trade and Other Payables

Accounting Policies

Section D: Risk Management

The Group’s activities expose it to a variety of financial risks. The Group’s overall financial risk management strategy focuses on the unpredictability of financial markets and seeks to minimise adverse effects on the Group’s performance. Treasury policies have been approved by the Board for managing this risk. This section contains disclosures of financial risks the Group is exposed to and how the Group manage these risks. The impact of contingent liabilities is also considered in this section.

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 45 days. Trade and other payables are carried at amortised cost using the effective interest method, which applies the interest rate that discounts estimated future cash outflows over the term of the trade and other payables. Cash flows relating to short term trade and other payables are not discounted if the effect of discounting is immaterial. The discount, if material, is then recognised as an expense over the remaining term.

Construction Revenue – Amounts Due to Customers

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 are recognised as a liability.

Retentions

Retentions are amounts payable for the purpose of security and for the provision of defects in accordance with contract terms. Release of retention amounts are in accordance with contractual terms.

Other

Other primarily relates to unearned income and deposits received in advance on pre sold apartments. These amounts will be recognised as income in line with the ‘Revenue from the sale of development properties’ accounting policy in Note 4 ‘Revenue’.

Financial Disclosure	June 2015	June 2014
	A$m	A$m
Current Trade creditors	2,775.2	2,593.7
Construction revenue – amounts due to customers	743.3	600.5
Insurance claim reserve	17.6	17.1
Related parties	254.3	126.5
Retentions and deferred payments	710.1	380.6
Other	535.6	315.7
Total current	5,036.1	4,034.1
Non Current Insurance claim reserve	15.0	15.7
Related parties	13.0	56.6
Retentions and deferred payments	756.0	329.1
Other	802.0	320.9
Total non current	1,586.0	722.3
Total trade and other payables	6,622.1	4,756.4

24. Financial Risk Management

The Group operates across numerous jurisdictions and markets. The Lend Lease Asset and Liability Committee oversees the management of the Group’s Treasury risks, within the parameters of a Board approved Treasury Policy, and maintains a Group-wide framework for financial risk management and reviews issues of material risk exposure within the scope of the Treasury Policy. A summary of key risks identified, exposures and management of exposures is detailed in the table below.

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----- Start of picture text -----

Risks Identified Definition Exposures Management of Exposures
Foreign Currency The risk in local currency terms • Foreign currency earnings • Physical financial instruments, including
that the value of a financial • Net investments in natural hedges from matching foreign
commitment or a recognised foreign operations assets and liabilities
asset or liability, will fluctuate • Transactions settled in • Derivative financial instruments, mainly
due to changes in foreign foreign currency foreign exchange contacts
currency exchange rates • Further information on • Speculative trading is not permitted
exposures is detailed in Note
24a ‘Foreign Currency
Risk Exposure’
Credit The risk that a counterparty will • Recoverability of loans and • Policies in place so that customers and
not be able to meet its receivables suppliers are appropriately credit assessed
obligations in respect of a • Recoverability of other • Treasury Policy sets out credit limits for each
financial instrument, resulting in financial assets and cash counterparty based on minimum investment-
a financial loss to the Group deposits grade ratings
• Further information on
exposures is detailed in Note
24b ‘Credit Risk Exposure’
Liquidity The risk of having insufficient • Insufficient levels of • Maintaining sufficient levels of cash
funds to settle financial liabilities committed credit facilities and committed credit facilities to meet
as and when they fall due • Settlement of financial financial commitments and working
liabilities capital requirements
• Further information on • Managing to funding portfolio benchmarks
exposures is detailed in Note as outlined in the Treasury Policy
20 ‘Liquidity Risk Exposure’ • Timely review and renewal of credit facilities
Interest Rate The risk that the value of a • Financial assets, mainly cash • Physical financial instruments
financial instrument or cash flow at bank • Derivative financial instruments,
associated with the instrument • Financial liabilities, mainly mainly interest rate swaps
will fluctuate due to changes in borrowings and finance • Managing to hedging limits in respect
market interest rates arrangements of recourse funding as outlined in the
• Further information on Treasury Policy
exposures is detailed in • Speculative trading is not permitted
Note 24c ‘Interest Rate
Risk Exposure’
Equity Price The risk that the fair value of either • All traded and/or non traded • Material investments within the portfolio are
a traded or non traded equity financial instruments managed on an individual basis. The Group’s
investment, derivative equity measured at fair value portfolio is monitored closely as part of
instrument, or a portfolio of such capital recycling initiatives
financial instruments, increases or
decreases in the future
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Notes to the Consolidated Financial Statements continued

Section D: Risk Management continued

24. Financial Risk Management continued

c. Interest Rate Risk Exposure

The Group’s exposure to interest rate risk on its financial assets and liabilities is set out as follows.

CARRYING AMOUNT

a. Foreign Currency Risk Exposure

The net asset exposure by currency is detailed below.

	A$m	US$m	£m	S$m	€m	NZ$m	Other m
June 2015
Net asset/(liability) exposure (local currency)	4,605.5	61.9	(77.8)	244.3	70.7	273.3	64.0
June 2014
Net asset/(liability) exposure (local currency)	4,714.1	(103.5)	(153.1)	72.1	90.5	269.8	98.0

Sensitivity Analysis

The sensitivity analysis of the Group’s Australian dollar denominated Income Statement and Statement of Financial Position to foreign currency movements is based on a 10% fluctuation (June 2014: 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, and exclude the effects of the foreign exchange contracts above.

A 10% movement in the average foreign exchange rates would have impacted the Group’s Profit after Tax as follows.

	10% WEAKENING INCREASE/(DECREASE) IN PROFIT AFTER TAX June 2015 A$m June 2014 A$m 8.6 7.6 8.9 51.9 1.9 8.4 (0.2) (1.8)	10% STRENGTHENING INCREASE/(DECREASE) IN PROFIT AFTER TAX
	June 2015 A$m June 2014 A$m	June 2015 A$m June 2014 A$m
USD		(7.0) (6.2)
GBP		(7.4) (41.9)
SGD		(1.5) (6.7)
EUR		0.2 1.5
	19.2 66.1	(15.7) (53.3)

	CARRYING	AMOUNT
	June 2015	June 2014
	A$m	A$m
Fixed Rate
Financial assets	261.5	736.4
Financial liabilities	(2,359.0)	(1,946.4)
	(2,097.5)	(1,210.0)
Variable Rate
Financial assets	327.0	1,166.8
Financial liabilities	(848.1)	(892.2)
	(521.1)	274.6

Sensitivity Analysis

At 30 June 2015 it is estimated that an increase of one percentage point in interest rates would have decreased the Group’s Profit after Tax and retained earnings by A$1.8 million (June 2014: A$0.6 million decrease in the Group’s Profit after Tax and retained earnings). A one percentage point decrease in interest rates would have increased the Group’s Profit after Tax and retained earnings by A$1.8 million (June 2014: A$0.6 million increase 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.

A 10% movement in the foreign exchange spot rates at balance date would have impacted the Group’s net assets as follows.

	10% WEAKENING INCREASE/(DECREASE) IN NET ASSETS June 2015 A$m June 2014 A$m 9.3 (11.9) (18.1) (27.8) 25.0 7.1 11.6 15.8 25.6 28.3	10% STRENGTHENING INCREASE/(DECREASE) IN NET ASSETS
	June 2015 A$m June 2014 A$m	June 2015 A$m June 2014 A$m
USD		(7.6) 9.8
GBP		14.6 27.4
SGD		(20.6) (5.7)
EUR		(9.4) (12.7)
NZD		(21.1) (23.1)
	53.4 11.5	(44.1) (4.3)

b. Credit Risk Exposure

• The maximum exposure to credit risk at balance date on financial instruments recognised in the Statement of Financial Position (excluding investments of the Group) equals the carrying amount, net of any impairment.

• The Group is not exposed to any significant concentrations of credit risk on either a geographic or industry specific basis.

• Credit risk on financial instruments is managed under a Board approved credit policy that determines acceptable counterparties. Derivative counterparties and cash deposits are limited to recognised financial intermediaries with a minimum investment-grade credit rating as determined by a recognised rating agency.

• There was A$3.7 million impairment recorded during the year against other financial assets (June 2014: A$3.2 million).

• Refer to Note 22 ‘Loans and Receivables’ for information relating to impairment on loans and receivables.

• In certain circumstances, the Group will hold either financial or non financial assets as collateral to further mitigate the potential credit risk on selected transactions. During the current and prior year, the Group did not hold financial or non financial assets as collateral. At any point in time, the Group will hold other collateral such as bank guarantees and performance bonds to mitigate potential credit risk as a result of default by a counterparty or otherwise.

120

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ANNUAL REPORT 2015 | LEND LEASE

LEND LEASE | ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements continued

Section D: Risk Management continued

25. Hedging

Accounting Policies

The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operating, financing and investing activities. Derivative financial instruments are recognised initially at fair value on the date a derivative contract is entered into and subsequently remeasured at fair value. Hedge accounting recognises the offsetting effects on profit or loss of changes in the fair value of the derivative financial instruments and the hedged item. The accounting for hedges that meet the criteria for hedge accounting are summarised in the following table.

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|||||
|---|---|---|---|
|Hedge|Recognition of|Discontinuance of|
|Classification|Exposures Hedged|Hedged Gains or Losses|Hedge Accounting|
|Fair Value|Hedges the exposure to|Changes in the fair value of derivatives that|The Group discontinues fair value|
|changes in fair value of a|are designated and qualify as fair value|hedge accounting if the hedging|
|recognised asset, liability|hedges are recognised in the|Income|instrument expires or is sold,|
|or firm commitment that|Statement|, together with any changes in the|terminated or exercised, the hedge|
|could affect profit or loss.|fair value of the hedged asset or liability that|no longer meets the criteria for|
|are attributable to the hedged risk.|hedge accounting or the Group|
|revokes the designation.|
|Cash Flow|Hedges the exposure to|The effective portion of changes in the fair value|When a hedging instrument|
|variability in cash flows|of derivatives that are designated and qualify as|expires or is sold, or when a|
|that is attributable to a|effective cash flow hedges are recognised in|hedge no longer meets the|
|particular risk associated|other comprehensive income, through the|criteria for hedge accounting,|
|with a recognised asset or|hedging reserve|. The gain or loss relating to the|any cumulative gain or loss|
|liability or a highly|ineffective portion is recognised immediately in|existing in equity at that time|
|probable forecast|the Income Statement.|remains in equity and is|
|transaction and could|Amounts accumulated in the hedge reserve|recognised when the forecast|
|affect profit or loss.|are recycled to the Income Statement when|transaction is ultimately|
|A hedge of the foreign|the hedged item will affect profit or loss|recognised in the Income|
|currency risk of a firm|(for instance, when the forecast sale that is|Statement. When a forecast|
|commitment is accounted|hedged takes place). However, when the|transaction is no longer expected|
|for as a cash flow hedge.|forecast transaction that is hedged results in|to occur, the cumulative gain or|
|the recognition of a non financial asset|loss that was reported in equity is|
|(for example, inventory) or a liability, the gains|immediately transferred to the|
|or losses previously deferred in the hedge|Income Statement.|
|reserve are transferred from equity and|
|included in the initial measurement of the cost|
|of the asset or liability.|
|Net Investment|Hedges the exposure to the|Hedges of net investments in foreign operations|Gains or losses accumulated|
|effects of changes in|are accounted for similarly to cash flow hedges.|in equity are included in the|
|exchange rates in net|Any gain or loss on the hedging instrument|Income Statement on disposal|
|investments in a foreign|relating to the effective portion of the hedge is|of the foreign operation.|
|operation. As the foreign|recognised in equity; the gain or loss relating to|
|operation’s net assets are|the ineffective portion is recognised|
|reported in the|immediately in the Income Statement.|
|consolidated financial|
|Exchange differences arising from the|
|statements, this type of|
|translation of the net investment in foreign|
|hedging can only be|
|entities, and of borrowings and other currency|
|carried out at the|
|instruments designated as hedges of such|
|consolidation level.|
|investments, are taken to the|foreign|
|currency translation reserve.|

----- End of picture text -----

The Group currently applies hedge accounting under AASB 139 Financial Instruments: Recognition and Measurement. The Group has minimal hedges designated as fair value. The Group primarily uses forward foreign exchange contracts as cash flow hedges for highly probable sale, purchase and dividend transactions. The Group also uses forward foreign exchange contracts to hedge cross border intercompany loans and transactions which mainly net off in the Income Statement. Interest rate swaps are used to manage the Group’s exposure to interest rates arising from borrowings, these are treated as cash flow hedges and are mainly on borrowings within equity accounted investments.

The Group’s foreign exchange derivative contracts held at reporting date to hedge specific foreign currency exposures are as follows.

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||||||
|---|---|---|---|---|
|WEIGHTED AVERAGE|GROSS RECEIVABLE/(PAYABLE)|
|EXCHANGE RATE|UNDER CONTRACTS|
|Contracts to (buy)/sell the following|June 2015|June 2014|June 2015|June 2014|
|currencies at an agreed exchange rate:|(A$1=)|(A$1=)|A$m|A$m|
|buy GBP|0.49|0.55|(226.9)|(881.4)|
|sell GBP|0.51|0.55|13.4|115.8|
|buy USD|0.77|0.93|(339.9)|(458.3)|
|sell USD|0.79|0.94|60.4|123.8|
|buy EUR|0.68|0.66|(32.7)|(49.6)|
|sell EUR|0.71|0.69|36.4|47.6|
|buy SGD|1.04|1.17|(97.9)|(28.3)|
|sell SGD|1.03|1.17|23.2|8.0|
|buy JPY|94.08|(56.6)|
|sell JPY|95.57|2.6|
|buy MYR|2.91|90.52|(41.4)|(8.3)|
|sell MYR|2.90|22.5|
|buy MXN|12.45|12.43|(0.2)|(5.2)|
|sell MXN|12.33|0.2|
|Total|(636.9)|(1,135.9)|

----- End of picture text -----

There are a total of two foreign currency contracts that will mature in one to two years.

26. Fair Value Measurement

Accounting Policies

The accounting policies for financial instruments held at fair value are included in Note 14 ‘Other Financial Assets’ and Note 25 ‘Hedging’. Management consider the valuation of the financial instruments to be an area of estimation uncertainty . While this represents the best estimation of fair value at the reporting date, the fair values may differ if there is volatility in market prices or foreign exchange rates in future periods.

All financial instruments recognised in the Statement of Financial Position, including those instruments carried at amortised cost, are recognised at amounts that represent a reasonable approximation of fair value, with the exception of the following borrowings.

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|||||||
|---|---|---|---|---|---|
|JUNE 2015|JUNE 2014|
|Carrying|Carrying|
|Amount|Fair Value|Amount|Fair Value|
|Note|A$m|A$m|A$m|A$m|
|Liabilities|
|Current|
|Commercial notes|17a|227.3|230.7|–|–|
|Non Current|
|Commercial notes|17a|1,378.1|1,624.2|1,464.0|1,702.3|

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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.

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Notes to the Consolidated Financial Statements continued

Section D: Risk Management continued

26. Fair Value Measurement continued

a. Basis of Determining Fair Value

The determination of fair values of financial assets and liabilities that are measured at fair value in the annual financial report are summarised as follows:

• The fair value of unlisted investments is determined based on an assessment of the underlying net assets, future maintainable earnings and any special circumstances pertaining to the particular investment;

• 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;

• The fair values of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with generally accepted valuation techniques; these include the use of recent arm’s length transactions, reference to other assets that are substantially the same, and discounted cash flow analysis; and

• The fair value of derivative instruments comprises forward foreign exchange contracts, which are valued using forward rates at balance date, and interest rate swap contracts, which are measured at the present value of future cash flows estimated and discounted based on applicable yield curves derived from quoted interest rates and includes consideration of counterparty risk adjustments.

b. Fair Value 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.

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

June 2015 Note	CONSOLIDATED CARRYING AMOUNT
Financial Assets Available for sale investments
	328.3 328.3
Fair value through proft or loss – negotiable instruments	37.9 37.9
Fair value through proft or loss – unlisted investments	287.2 287.2
Held to maturity investments	10.2 10.2
Derivatives	4.8 4.8
14	37.9 4.8 625.7 668.4
Financial Liabilities Derivatives 20
	– 7.7 – 7.7
June 2014
Financial Assets Available for sale investments	377.4 377.4
Fair value through proft or loss – negotiable instruments	36.9 36.9
Fair value through proft or loss – unlisted investments	586.7 586.7
Held to maturity investments	9.2 9.2
Derivatives	12.3 12.3
14	36.9 12.3 973.3 1,022.5
Financial Liabilities Derivatives 20	– 8.2 – 8.2

c. Fair Value Reconciliation

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

c. Fair Value Reconciliation Reconciliation of the carrying amount for Level 3 fnancial instruments is set	out as follows.
		Available
		for Sale	Unlisted	Held to Maturity
		Investments	Investments	Investments
June 2015	Note	A$m	A$m	A$m
Carrying amount at beginning of fnancial period		377.4	586.7	9.2
Additions/(disposals)		(20.3)	(320.5)
Gains/(losses) recognised in:
Income Statement – other income			21.1
Income Statement – other expenses		(3.7)
Other comprehensive income – fair value		12.2
Other comprehensive income – foreign currency translation		27.6	(0.1)	1.2
Other movements1		(64.9)		(0.2)
Carrying amount at end of fnancial year	14	328.3	287.2	10.2
1 Includes transfer out A$(65.1) million to ‘Equity Accounted Investments’.
June 2014
Carrying amount at beginning of fnancial period		340.3	105.5	8.5
Additions/(disposals)		(2.3)	466.3
Gains/(losses) recognised in:
Income Statement – other income			14.9
Income Statement – other expenses		(3.2)
Other comprehensive income – fair value		14.3
Other comprehensive income – foreign currency translation		7.0		0.9
Other movements2		21.3		(0.2)
Carrying amount at end of fnancial year	14	377.4	586.7	9.2

2 Includes transfer out A$(5.0) million to ‘Equity Accounted Investments’ and A$26.1 million transfer in from ‘Loans and Receivables’.

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

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Notes to the Consolidated Financial Statements continued

Section D: Risk Management continued

Section E: Basis of Consolidation

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 to 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 of the Company’s subsidiaries.

• A contingent liability exists in relation to the Lend Lease Retirement Benefit Fund. This is disclosed in detail in Note 29b ‘Employee Security Ownership Vehicles’.

• In September 2004, a class action was filed against a number of parties who responded to the World Trade Center (‘WTC’) 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). LL LMB is one of the beneficiaries of an insurance policy administered by the WTC Captive Insurance Company (an entity established by the US Congress to protect the City of New York and its contractors from claims that may arise from the clean-up that followed the WTC emergency).

As of 30 June 2015, there were only three cases remaining against a WTC Captive insured beneficiary, including two cases filed by individuals against LL LMB and 79 other contractors as co-defendants seeking damages for injuries and illnesses allegedly suffered from their participation in the clean-up efforts. These two claims were the first new claims involving LL LMB in over a year and a half when filed in 2014, and the WTC Captive is defending these claims. LL LMB will need to defend any other claims that may be filed by plaintiffs who bring claims against LL LMB. Any such litigation would need to proceed through a number of stages before any liability could attach to LL LMB. It is not possible to quantify the potential for any future claims or any potential liability thereof at this stage. It is also not possible at this time to ascertain how the limitation of liability in the James Zadroga 9/11 Health and Compensation Act of 2010 (‘Zadroga Act’) will apply to any particular claim against LL LMB going forward; but, as to contractors such as LL LMB, the Zadroga Act limits liability to those amounts remaining in the WTC Captive insurance policy, plus any insurance coverage that was available and applicable on 11 September 2001 for the particular contractor. More detailed notes on the history of this issue are disclosed in the 30 June 2013 annual consolidated financial report.

• On 17 July 2012, the attorneys for LL LMB were contacted by the New York State Attorney General’s (‘NYSAG’) Office seeking information with respect to certain past billing practices of LL LMB and its use of minority-owned business enterprises on construction projects, which were the subject of the now resolved investigations by the New York County District Attorney’s Office, the US Attorney’s Office for the Eastern District of New York, and the US Attorney’s Office for the Southern District of New York that were the subject of disclosures made previously in this note to the consolidated financial statements. Refer to the 30 June 2012 and 30 June 2013 annual consolidated financial reports for further information on these investigations. There was an initial meeting in August 2012 between LL LMB and NYSAG. There was no further contact from NYSAG until 5 August 2014 at which time the NYSAG Office made further inquiry of LL LMB and to which LL LMB responded. The inquiry by the NYSAG has been limited to projects performed pursuant to contracts with New York State agencies. LL LMB has cooperated with the inquiry but at this stage the discussions remain preliminary, and it is not possible to quantify what, if any, financial consequences will be associated with this matter.

• Various actions have been commenced which seek damages or contribution from various subsidiaries of the Company (‘LLP entities’) in respect of transactions entered into in mid 2007 in relation to a number of retirement villages which were at that time part of the Prime Trust portfolio. The liquidator of Australian Property Custodian Holdings Limited (Receivers and Managers Appointed) (Controllers Appointed) (In Liquidation) (‘APCH’) has commenced proceedings against the LLP entities. In addition APCH has commenced proceedings against third parties in relation to the same transactions and those third parties have made apportionment and/or contribution claims against the LLP entities. The LLP entities are vigorously defending all proceedings. The relevant transactions all occurred prior to the LLP entities becoming subsidiaries of the Company and at the relevant time the LLP entities were controlled by APCH or entities related to William Lewski, a director of the LLP entities at the time.

This section provides information on how the Group structure affects the financial position and performance of the Group as a whole. The disclosures detail the types of entities and transactions included in the consolidation and those excluded.

28. Consolidated Entities

Accounting Policies

The Group consolidation comprises all subsidiaries controlled by the Company. Control exists when the Company:

• Has the power to direct the relevant activities such as key operating, financial and investing decisions;

• Has exposure or rights to variable returns from its involvement with the investee such as dividends, loans and fees; and

• Has the ability to use its power over the investee to affect the amount of returns.

In assessing control, potential voting rights that are presently exercisable or convertible are taken into account. Management uses accounting judgement in determining whether the Group controls an entity by applying the above control criteria and reviewing the substance of its relationship with the entity.

• The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies with adjustments made to bring into line any dissimilar accounting policies that may exist.

• External non controlling interests are allocated their share of total comprehensive income and are presented within equity in the consolidated Statement of Financial Position, separately from the equity of securityholders.

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

PARENT ENTITY

Lend Lease Corporation Limited

AUSTRALIA

EUROPE

Lend Lease Construction (EMEA) Limited Lend Lease Construction Holdings (EMEA) Limited Lend Lease Europe Finance plc Lend Lease Europe Limited Lend Lease Residential (CG) plc

Capella Capital Lend Lease Pty Limited Capella Capital Partnership Lend Lease Building Pty Limited Lend Lease Building Contractors Pty Limited Lend Lease Communities (Australia) Limited Lend Lease Development Pty Limited Lend Lease Engineering Pty Limited Lend Lease Finance Limited Lend Lease Infrastructure Investments Pty Limited Lend Lease International Pty Limited Lend Lease (Millers Point) Trust Lend Lease Primelife Limited Lend Lease Real Estate Investments Limited Lend Lease Responsible Entity Limited Lend Lease Services Pty Limited Lend Lease Trust[1] PLT New Zealand Limited

ASIA

Lend Lease Japan Inc. Lend Lease Singapore Pte Limited

AMERICAS

Lend Lease (US) Capital, Inc. Lend Lease (US) Construction, Inc. Lend Lease (US) Construction LMB, Inc. Lend Lease (US) Healthcare Development LLC Lend Lease (US) Public Partnerships, LLC

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

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

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Notes to the Consolidated Financial Statements continued

Section E: Basis of Consolidation continued

28. Consolidated Entities continued

The following material disposals of consolidated entities occurred during the current and prior year.

The following materialdisposalsof consolidated entities oc	curred during the current and prior year	.
	Ownership		Gross Consideration
	Interest Disposed	Date	Received/Receivable
June 2015	%	Disposed	A$m
Europe
Lend Lease Facilities Management (EMEA) Ltd	100	7 Jul 14	62.3
June 2014
Europe
Bovis Lend Lease S.A.1	100	31 Dec 13	11.5
Blueco Limited	100	24 Jun 14	–
Lend Lease Global Investment Plc	100	24 Jun 14	–
Bluewater Ground Lease Limited	100	24 Jun 14	–
Greenhithe Holdings Limited	100	24 Jun 14	–
Greenhithe Investments Limited	100	24 Jun 14	–

1 Consideration receivable has been deferred over 10 years.

29. Employee Benefit Vehicles

The Company sponsors a number of employee benefit vehicles, including employee security plans and employee security ownership vehicles. These vehicles while not legally controlled, are required to be consolidated for accounting purposes.

a. Employee Security Plans

Employees own approximately 5.61% (June 2014: 6.28%) of the issued capital of the Group through various Lend Lease employee security plans and ownership vehicles details of which are outlined below.

• Australia: Employee Share Acquisition Plan (‘ESAP’): ESAP was established in December 1988 for the purpose of employees acquiring securities in the Group and is funded by Lend Lease subscriptions.

• 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 Australia-based 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. No new awards are being allocated from this Plan.

• 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 Group securities for UK-based Group employees. These plans are currently not accepting new contributions whilst Lend Lease makes all profit share payments to employees in cash.

• Americas: US Rabbi Trust (‘Rabbi Trust’) was established in 2004 and updated in 2005 for the acceptance of employee profit share contributions used to acquire Group securities for US-based employees. This part of the plan is not currently accepting new contributions and only holds cash or short term investments.

• Employee Share Acquisition Plan (STI) (‘ESAP STI’): ESAP STI was established in July 2014 for the purpose of acquiring and allocating securities granted as the deferred component of Executive Short Term Incentive (‘STI’) awards which are funded by Lend Lease subscriptions. Securities are currently allocated to employees across Australia, Singapore, Malaysia, the UK and US.

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.

Distributions and/or Voting Rights

Generally, employees in the various operating security plans are entitled to distributions and voting rights for allocated securities. The plans reflect this intention subject to regulatory, legal and tax constraints. Voting and 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. Employee Security Ownership Vehicles

In addition to the plans discussed above, Lend Lease has established a range of employee security 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 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 has discretion as to the distribution of the RBF Funds. In 1992 a deed poll was executed which allows for the distribution of the income of RBF to the Company to fund employee benefit activities through Lend Lease Foundation. In the event of a change of control of the Group, the RBF trustee may distribute RBF funds to employees who cease to be employees during the 12 months after a change of control. 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$220.6 million at 30 June 2015 (June 2014: A$201.9 million). However, as RBF is consolidated by the Group, this potential obligation is disclosed as a contingent liability.

• EIT was established in 1985 as a benefit vehicle to enable employees to invest in the Group. There are no current employee allocations. In 1992 a deed poll was executed which allows for distribution of the unallocated income of EIT to the Company to fund employee benefit activities through Lend Lease Foundation. 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 other benefit vehicles such as RBF. Any payments out of EIT are an obligation of EIT and not the Group, and cannot exceed the assets of EIT of A$175.6 million as at 30 June 2015 (June 2014: A$147.3 million). No contingency is recorded in these financial statements for potential payments on a change of control as the potential for such payments is considered remote, with any termination of EIT in such circumstances, and the subsequent distribution to other vehicles, entirely at the discretion of the EIT trustee.

• The EIT and RBF arrangements are subject to periodic review to assess their ongoing role and operation.

30. 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 2015.

	COMPANY
	June 2015 A$m June 2014 A$m
Results Proft after Tax	253.3 301.2
Other comprehensive income after tax	0.8 6.2
Total comprehensive income after tax	254.1 307.4
Financial Position Current assets	4,529.7 4,229.6
Non current assets	2,310.8 2,135.8
Total assets	6,840.5 6,365.4
Current liabilities	4,333.7 3,408.6
Non current liabilities	51.9 43.5
Total liabilities	4,385.6 3,452.1
Net assets	2,454.9 2,913.3
Issued capital	1,256.3 1,618.2
Treasury securities	(90.9) (117.1)
Reserves	229.4 224.0
Retained earnings	1,060.1 1,188.2
Total equity	2,454.9 2,913.3

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.

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Notes to the Consolidated Financial Statements continued

Section E: Basis of Consolidation continued

31. Related Party Information

b. Associates and Joint Ventures

Interests held in associates and joint ventures by Lend Lease are set out in Note 12 ‘Equity Accounted Investments’.

Transactions between the Lend Lease Group and its associates and joint ventures principally relate to:

a. Consolidated Entities

Intragroup balances and transactions, and any unrealised gains or losses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements. Investments in subsidiaries are carried at their cost of acquisition less impairments in the Company’s financial statements.

• Property Development: development management services and the sale and purchase of development properties with Lend Lease managed funds;

• Infrastructure Development: provision of project management, engineering and construction services and asset management services. Loan stock is also provided to projects on which interest is earned based upon project specific risks and returns.

• Construction: provision of project management, building, engineering and construction services; and

Lend Lease Corporation Limited provides a wide range of corporate services to its consolidated entities. Corporate management fees and/or guarantee fees are charged to these entities for these services. These services principally relate to:

• Administration, company secretarial, accounting, legal, tax, insurance, information technology and public relations;

• Human resources and employee services including the administration of salaries and superannuation and employee security based payment plans (refer to Note 6 ‘Other Expenses’ and Note 29 ‘Employee Benefit Vehicles’); and

• Financing 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 unsecured and repayable on demand. In addition, guarantees are provided to particular Group entities in respect of their obligations. These include bonding and bank guarantee facilities used primarily by the Construction business as well as performance guarantees for certain Development business commercial built-form developments. Guarantee fees are charged under normal terms and conditions.

The following represents the transactions that occurred during the financial year and the balances outstanding at year end between Lend Lease Corporation Limited and its consolidated entities.

Corporation Limited and its consolidated entities.
	COMPANY
	June 2015 A$000s June 2014 A$000s
Transactions Corporate management fees	46,539 31,261
Guarantee fees	11,615 13,797
Dividend income	395,966 384,729
Interest income	17,037 15,266
Interest expense	116,882 85,181
Outstanding Balances (Net of Provisions Raised) Receivables	4,514,336 4,237,648
Payables	4,277,178 3,340,380

Transactions that occurred during the financial year between entities in the Lend Lease Group included:

• Investment Management: provision of property and infrastructure investment management, property management and asset management services.

A non interest bearing loan has also been provided to a joint venture and at 30 June 2015 the loan balance was A$28.6 million (June 2014: A$28.6 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 ventures is as follows.

	June 2015	June 2014
	A$m	A$m
Revenue
Provision of services
Associates	29.1	14.5
Joint ventures	1,148.6	414.4

Other transactions and outstanding balances with associates and joint ventures have been disclosed in Note 4 ‘Revenue’, Note 5 ‘Other Income’, Note 6 ‘Other Expenses’, Note 7 ‘Finance Revenue and Finance Costs’, Note 22 ‘Loans and Receivables’ and Note 23 ‘Trade and Other Payables’. Transactions with joint operations are included in the consolidated Income Statement and Statement of Financial Position.

c. Key Management Personnel

The key management personnel compensation is as follows.

c. Key Management Personnel The key management personnel compensation is as follows.
	June 2015	June 2014
	A$m	A$m
Short term employee benefts	18,221	16,513
Post employment benefts	475	472
Security based payments	9,350	7,554
Other long term benefts	87	91
Total	28,133	24,630

Information regarding individual Directors’ and Senior Executives’ remuneration is provided in the Remuneration Report within the Directors’ Report.

• Provision of project management, design services, construction management and engineering services to development projects;

• Provision of development management services;

• Provision of investment management services;

• Provision of payroll, transaction and management services;

• Receipt and payment of superannuation contributions;

• Reimbursement of expenses made on behalf of subsidiaries;

• Loan advances and repayments between subsidiaries;

• Premium payments and receipts for the Group’s insurance policies; and

• Dividends received or due and receivable from subsidiaries.

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Notes to the Consolidated Financial Statements continued

Section F: Other Notes

32. Intangible Assets

Accounting Policies

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

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

For the purposes of impairment testing, goodwill is allocated to cash generating units (‘CGU’) (or groups of CGU), that are expected to benefit from the business combination in which the goodwill arose. CGUs are an identifiable group of assets that generate cash associated with the goodwill. Management consider this is an area of estimation uncertainty as these calculations involve an estimation of the recoverable amount of the CGU to which the goodwill is allocated. The Construction CGU uses the value in use basis, which requires the Group to estimate the future cash flows expected to arise from the CGU and a suitable discount rate in order to calculate the recoverable amount.

Management agreements and other intangible assets acquired by the Group are stated at cost less accumulated amortisation and impairment losses (see Note 6 ‘Other Expenses’). Amortisation is charged to the Income Statement on a straight line basis over the estimated useful lives of the intangible assets, ranging from three to 20 years.

c. Impairment Tests and Key Assumptions Used – Construction

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

No impairment arose as a result of the review of goodwill for the Construction CGUs for the year ended 30 June 2015. Based on information available and market conditions at 30 June 2015, 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 2014: 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 rates applied to the cash flow projections vary between 14.0% and 20.0% (June 2014: between 14.0% and 20.0%). 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.

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Financial Disclosure June 2015 June 2014
Note A$m A$m
Goodwill 32a 1,230.2 1,170.4
Management agreements 71.9 62.9
Other intangibles 142.6 90.4
Total intangible assets 1,444.7 1,323.7
a. Goodwill
Construction 1,201.0 1,146.2
Development 29.2 24.2
Total goodwill 1,230.2 1,170.4
Reconciliations
Reconciliations of the carrying amounts for each category of goodwill are as follows:
Construction
Carrying amount at beginning of financial year 1,146.2 1,124.3
Additions during the year 2.2
Effect of foreign exchange rate/other movements 52.6 21.9
Carrying amount at end of financial year 32b 1,201.0 1,146.2
Development
Carrying amount at beginning of financial year 24.2 24.2
Effect of foreign exchange rate movements 5.0
Carrying amount at end of financial year 29.2 24.2
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b. Goodwill Allocation

Goodwill relating to the Construction business is allocated to CGUs identified according to regions as set out below.

Construction
Australia	745.7	743.5
Europe	265.3	244.0
Americas	182.6	151.3
Asia	7.4	7.4
Total goodwill	1,201.0	1,146.2

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Notes to the Consolidated Financial Statements continued

Section F: Other Notes continued

33. Defined Benefit Plans

Accounting Policies

Group companies operate pension plans. The plans are generally funded through payments to insurance companies or trusteeadministered funds as determined by periodic actuarial calculations.

A defined benefit plan is a pension plan that defines the amount of pension benefit an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The asset or liability recognised in the Statement of Financial Position in respect of defined benefit plans is the present value of the defined benefit obligation i.e. ‘the pension liability’ at the balance sheet date less the fair value of plan assets. The present value of the pension liability is determined by discounting the estimated future cash outflows using interest rates of high quality corporate or government bonds, that:

• Are denominated in the currency in which the benefits will be paid; and

• Have terms to maturity approximating the terms of the related pension liability.

The defined benefit obligation is calculated at least annually by independent actuaries using the projected unit credit method, which in simplistic terms proportions the benefit based on service. Management consider the valuation of defined benefit plans undertaken by the actuaries to be an area of estimation uncertainty as a number of key assumptions must be adopted to determine the valuation.

Actuarial losses/(gains) will arise where there is a difference between previous estimates and actual experience, or a change to assumptions in relation to demographic and financial trends. These actuarial losses/(gains) are recognised in the period they occur, directly in other comprehensive income as remeasurements. They are included in retained earnings in the Statement of Changes in Equity and in the Statement of Financial Position.

Past service costs are recognised immediately in the Income Statement.

a. Lend Lease Superannuation Plan (Australia)

The Lend Lease Superannuation Plan (Australia) was partially closed on 30 September 2014. An immaterial asset remains on the Statement of Financial Position.

b. Lend Lease Construction UK Pension Scheme

Lend Lease Construction Holdings (EMEA) Limited (‘UK Construction’) sponsors a funded defined benefit pension scheme (‘the Scheme’) for qualifying UK employees. The Scheme is administered by a separate board of Trustees which is legally separate from UK Construction. The Scheme’s Trustees are composed of representatives of both the employer and employees. The Trustees are required by law to act in the interest of all relevant beneficiaries and are responsible for the investment policy with regard to the assets plus the day to day administration of the benefits.

The Scheme is a funded defined benefit scheme, with final salary section providing retirement benefits based on final salary and the index-linked section providing retirement benefits based on career average salary. A separate section, the Personal Investment Section, provides retirement benefits on a defined contribution basis. The UK Construction’s contributions to members’ Personal Investment Fund accounts are not included in these disclosures.

The final salary section closed to future accrual on 31 August 2008 and the index-linked section closed to future accrual on 31 January 2012. There were no Scheme amendments affecting defined benefits payable, curtailments or settlements during the year. UK Construction pays deficit funding contributions plus 4.0% of members’ basic salaries to cover the Scheme’s expected administration costs and costs of benefits payable on death in service. During the period the triennial actuarial valuation report was received for 31 March 2014, the recovery plan was amended to eliminate the deficit at valuation date. The amendment required special one off deficit recovery payments, resulting in A$31.6 million being paid in the period and the annual deficit recovery payments under original recovery plan of A$14.6 million was extended by a further two years to March 2020. The Scheme expects to pay A$19.1 million in contributions to its defined benefit plan in 2016, this includes the annual deficit recovery payment under the triennial actuarial valuation.

The defined benefit plan is exposed to actuarial risk and market (investment) risk, the information which follows provides additional detail on risk.

Financial Disclosure	June 2015	June 2014
	A$m	A$m
i. Statement of Financial Position Amounts
The amounts recognised in the Statement of Financial Position are determined as follows:
Defned beneft obligations	1,144.1	875.6
Fair value of plan assets	(1,075.3)	(836.1)
Net defned beneft liability	68.8	39.5

Financial Disclosure	June 2015	June 2014
	A$m	A$m
ii. Reconciliation of Defned Beneft Obligations
Defned beneft obligations at beginning of fnancial year	875.6	752.8
Included in Income Statement
Interest cost	37.5	36.2
Remeasurements Included in Other Comprehensive Income
Actuarial loss/(gain) arising from:
Demographic assumptions	(9.4)
Financial assumptions	117.7	31.8
Experience adjustments	30.4	(0.4)
Other
Benefts paid	(27.1)	(27.7)
Efect of foreign exchange rate movements	119.4	82.9
Defned beneft obligations at end of fnancial year	1,144.1	875.6
iii. Reconciliation of the Fair Value of Plan Assets
Fair value of plan assets at beginning of fnancial year	836.1	738.2
Included in Income Statement
Interest income	36.0	35.7
Administration costs	(3.4)	(3.4)
Remeasurements Included in Other Comprehensive Income
Actual return on plan assets excluding interest income	69.8	(6.3)
Other
Contributions by Group companies	51.1	18.8
Benefts paid	(27.1)	(27.7)
Efect of foreign exchange rate movements	112.8	80.8
Fair value of plan assets at end of fnancial year	1,075.3	836.1
iv. Expense Recognised in the Income Statement
Net interest cost	1.5	0.5
Administration costs	3.4	3.4
Net defned beneft plan expense	4.9	3.9
v. Fair Value of Plan Assets
Plan assets comprise of:
Equities
UK	110.6	86.2
Global	289.4	231.6
Investment funds	153.3	128.7
Infrastructure	22.4	16.9
Government index-linked bonds	310.2	248.5
Corporate bonds	144.5	118.7
Other assets	44.9	5.5
	1,075.3	836.1

The investment funds target an absolute level of return. The plan assets can be categorised as Level 1, where the fair value is determined using an unadjusted quoted price for an identical asset, or Level 2, where the fair value is derived either directly or indirectly from observable inputs. At the year end, approximately A$144.3 million of global equities (June 2014: A$120.0 million), all the investment funds and bonds were Level 2. UK Construction and Trustees have agreed a long term strategy for reducing investment risk as and when appropriate. This includes an asset-liability matching policy which aims to reduce the volatility of the funding level of the pension plan by investing in assets such as index-linked bonds which perform in line with the liabilities of the plan so as to protect against inflation being higher than expected. The current benchmark allocation is 55.0% growth assets and 45.0% matching assets (June 2014: 55.0% growth assets and 45.0% matching assets).

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Notes to the Consolidated Financial Statements continued

Section F: Other Notes continued

33. Defined Benefit Plans continued

• b. Lend Lease Construction UK Pension Scheme continued

b. Lend Lease Construction UK Pension Schemecontinued
	June 2015	June 2014
vi. Principal Actuarial Assumptions
Discount rate %	3.5	4.2
RPI Infation %	3.2	3.4
Average pension increase in payments %	2.5	2.4
Future mortality - years
Male	25.4	25.4
Female	27.0	26.8

The liabilities are calculated using a discount rate set with reference to corporate bond yield, if assets underperform this yield will create a deficit. A decrease in corporate bond yield will increase the value placed on the Scheme’s liabilities, although this will be partially offset by an increase in the value of the Scheme’s corporate bond holdings. The majority of the Scheme’s benefit obligations are linked to inflation and higher inflation will lead to higher liabilities, although in most cases this will be capped to protect against extreme inflation. The majority of the assets are either unaffected by or loosely correlated with inflation, meaning that an increase in inflation will also increase the deficit. The majority of the Scheme’s obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the liabilities. The mortality assumptions are based on standard mortality tables which allow for expected future mortality improvements, the assumption is that a member aged 63 will live for a further 25.4 years (June 2014: 25.4 years) if they are male and 27 years if they are female (June 2014: 26.8 years). At 30 June 2015, the weighted average duration of the defined benefit obligation was 19 years (June 2014: 20 years).

vii. Sensitivity Analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligations by the amounts shown below.

	0.1% Increase in Discount Rate A$m 0.1% Decrease in Discount Rate A$m 0.1% Increase RPI Infation and Pension Payment A$m	0.1% Decrease RPI Infation and Pension Payment A$m 1 Year Increase in Future Mortality A$m	1 Year Decrease in Future Mortality A$m
June 2015 Defned beneft obligations (20.2) 20.8 16.7 (15.9) 30.2 (30.8)
June 2014 Defned beneft obligations (16.3) 16.8 16.9 (16.5) 21.1 (20.5)

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Non-pensioner benefits are linked to RPI in the period up to retirement. Once in payment, pension increases are linked to RPI but with a 0% floor and different caps applying to different periods of pensionable service. The inflation sensitivity reflects a change in RPI inflation and the associated increases in payment.

34. Employee Benefits

Detailed information regarding the Group’s reward strategy is provided in the Remuneration Report within the Directors’ Report. A summary of key incentives are as follows.

a. 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 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 generally 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 Lend Lease employee security plans on behalf of the employee for the deferral period, refer to Note 29a ‘Employee Security Plans’. For employees to receive the full deferral, they must generally be employed by the Group at the date of vesting.

b. Long Term Incentives (‘LTI’)

The LTI plan is designed to:

Arrangements for LTI awards

LTI design	How the LTI works
Performance Securities Performance Period Termination of Employment Performance Hurdles Vesting Schedule Vesting Schedule	• An annual grant of ‘performance securities’ is made to a limited number of executives. • The Board intends that the awards be settled in Lend Lease securities, although the award may be settled in cash or other means at the Board’s discretion. • On vesting, each performance security entitles executives to one Lend Lease security, or at the Board’s discretion, cash or other instruments of equivalent value. • In the event of a change in control of the Group, 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.
	• 50% of the performance securities are assessed over a three year period. If the hurdle is not fully achieved at this time, those performance securities that have not vested will lapse. • The remaining 50% of the performance securities are assessed after four years. • There is no retesting on any portion of the LTI grant. If the performance hurdle is not met, the awards are forfeited.
	• 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 Board, based on the recommendation of the Personnel and Organisation Committee, a pro rata award may be retained subject to the original vesting date and performance conditions.
	June 2014 and 2015 Financial Years June 2011 to 2013 Financial Years
	• 50% subject to Lend Lease’s Total Securityholder Return (‘TSR’) compared to the companies in the S&P/ ASX 100 Index. The S&P/ASX 100 companies are determined at the start of the performance period. • 50% subject to Return on Equity (‘ROE’) • Lend Lease’s Total Securityholder Return (‘TSR’) compared to the companies in the S&P/ASX 100 Index. The S&P/ASX 100 companies are determined at the start of the performance period
	• TSR Relative TSR percentile ranking % of performance securities that vest if the relative TSR hurdle is met
	Below the 50th percentile At the 50th percentile Above the 50th percentile but below the 75th percentile At the 75th percentile or greater No vesting 50% vesting Pro rata vesting on a straight line basis between 50% and 100% 100% vesting
	• ROE % of performance securities that vest if the ROE hurdle is met
	Less than 11% 11% Above 11% but below 15% 15% or greater No vesting 25% vesting Pro rata vesting on a straight line basis between 25 and 100% 100% vesting

Other LTI Awards

A limited number of other LTI awards have been granted to executives by the Board, based on the recommendation of the People and Culture Committee. These awards tend to have performance hurdles based on internal business unit performance targets, such as earnings before tax, operating margins 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.

c. 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 2015, a A$38.6 million expense was recognised in the Income Statement in relation to equity settled security based payment awards (June 2014: A$33.9 million). No accrual was reversed during the financial year (June 2014: A$1.5 million) relating to previously accrued expenses.

• Motivate Senior Executives to achieve the Group’s long term strategic goals and only provide reward where the Group delivers better securityholder value than its peers; and

• Align the interests of executives and securityholders given that the value received is linked to the Group’s security price.

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Notes to the Consolidated Financial Statements continued

Section F: Other Notes continued

35. Impact of New and Revised Accounting Standards

New and Revised Accounting Standards Adopted 1 July 2014

The table below represents new and revised accounting standards, together with consequential amendments relevant to the Group’s results at 30 June 2015 .

Accounting Standard	Requirement	Impacts for the year ended 30 June 2015
AASB 2013-4	AASB 2013-4 permits the continuation of	As a result of adopting the amendments, there
Amendments to Australian Accounting	hedge accounting in circumstances where a	has been no impact on the Group’s fnancial
Standards – Novation of Derivatives and	derivative that has been designated as a	statements.
Continuation of Hedge Accounting	hedging instrument, is novated from one
	counterparty to a central counterparty as a
	consequence of laws or regulations.
	This amendment has been applied with
	retrospective application.
AASB 2013-5	AASB 2013-5 provides an exemption from	As a result of adopting the amendments, there
Amendments to Australian Accounting	consolidation of subsidiaries under AASB 10	has been no impact on the Group’s fnancial
Standards – Investment Entities	for entities that meet the defnition of an	statements.
	‘investment entity’, such as certain investment
	funds. Instead, such entities would measure
	their investment in particular subsidiaries at
	fair value through proft or loss.
	This amendment has been applied with
	retrospective application.

36. Other Significant Accounting Policies

a. Foreign Currency Translation

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

Foreign currency transactions are translated into Australian dollars using the exchange rate on the date of the transactions. Assets and liabilities denominated in foreign currencies are translated to Australian dollars at balance date.

Foreign exchange gains or losses resulting are recognised in the Income Statement for monetary assets and liabilities such as receivables and payables, except for qualifying cash flow hedges and qualifying net investment hedges in foreign operations that are recognised in other comprehensive income. Refer to Note 25 ‘Hedging’ for further detail.

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

Group Entities

The results and Statement of Financial Position of all Group entities that are not presented in Australian dollars (none of which has the currency of a hyperinflationary economy) are translated as follows:

• Revenue and expenses are translated at average exchange rates (unless this average is not a reasonable approximation of transaction rate, in which case revenue and expenses are translated at the date of the transactions);

• Assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at balance date; and

• All resulting exchange differences are recognised in other comprehensive income, in the foreign currency translation reserve.

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

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 2015 but are available for early adoption and have not been applied in preparing this report.

Accounting Standard	Requirement	Impacts for the year ended 30 June 2015
AASB 9	AASB 9 addresses the classifcation,	Based on the preliminary analyses performed,
Financial Instruments and	measurement and derecognition of fnancial	AASB 9 will impact the classifcation of available
consequential amendments	assets, fnancial liabilities, and hedging.	for sale fnancial assets within the Statement of
	The standard becomes mandatory for the June 2019 fnancial year, and will be applied prospectively.	Financial Position, while other amendments are not expected to have a material impact on the Group.
AASB 15	AASB 15 provides a new fve step model for	The potential efect of this standard is yet to be
Revenue from Contracts	recognising revenue earned from a contract	determined.
with Customers and	with a customer and will replace the existing
consequential amendments	AASB 118 Revenue and AASB 111 Construction
	Contracts.
	The standard becomes mandatory for the
	June 2019 fnancial year and will be applied
	retrospectively.
AASB 2014-3	AASB 2014-3 amends_AASB 11 Joint_	Based on preliminary analysis performed, the
Amendments to Australian	_Arrangements_to provide clarifcation that	amendments are not expected to have any
Accounting Standards –	acquisition of interests in joint operations	signifcant impact on the Group as acquisitions
Accounting for Acquisitions of	which constitute a business should apply all	are currently accounted for in line with the
Interests in Joint Operations	of the principles of accounting and disclosures	proposed amendment.
	in_AASB 3 Business Combinations._
	The standard becomes mandatory for the
	June 2017 fnancial year and will be applied
	retrospectively.

b. Goods and Services Tax

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

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

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Directors’ Declaration

In the opinion of the Directors of Lend Lease Corporation Limited (‘the Company’):

1. The financial statements and notes and the remuneration disclosures contained in the Remuneration Report in the Directors’ Report are in accordance with the Corporations Act 2001, including:

2. a. Giving a true and fair view of the financial position of the Company and Consolidated Entity as at 30 June 2015 and of their performance for the financial year ended on that date; and

3. b. Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.

4. The financial statements and notes also comply with International Financial Reporting Standards as disclosed in the Basis of Preparation.

5. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

6. 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 2015.

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
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Group Chief Executive Officer and Managing Director

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Sydney, 24 August 2015

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Auditor’s report

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Securityholder Information

Securities Exchange Listing 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).

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:

• Securityholder Review; and

• Annual Report.

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:

• Securityholder Review;

• Annual Report and Securityholder Review;

• Distribution statements; and

• 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 when 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 167.

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.

Dispute Resolution

There is a dispute resolution mechanism that covers complaints by securityholders. For more information, please contact Lend Lease Investor Relations at +61 2 9236 6464 or send us an email at LendLeaseInvestorRelations@lendlease.com

Distribution and Share Accumulation Plan Issue Price History

LEND LEASE GROUP

LEND LEASE GROUP
Distribution Period ending Payment date	A Lend Lease Corporation dividend	B Lend Lease Trust dstribution	C	DRPprice SEPprice	SPPprice
			Total distribution per security1
Final 30 Jun 15 18 Sep 15	$0.23	$0.04	$0.27 $13.44 Suspended Suspended
Interim 31 Dec 14 21 Mar 15	$0.24	$0.03	$0.27 $16.86 Suspended Suspended
Final 30 Jun 14 22 Sep 14	$0.42	$0.07	$0.49 $14.08 Suspended Suspended
Interim 31 Dec 13 21 Mar 14	$0.18	$0.04	$0.22 $11.47 Suspended Suspended
Final 30 Jun 13 27 Sep 14	$0.19	$0.01	$0.20 $9.94 Suspended Suspended
Interim 31 Dec 12 27 Mar 13	$0.22	$0.00	$0.22 $10.20 Suspended Suspended
Final 30 Jun 12 30 Sep 12	$0.22	N/A	$0.22 $7.79 Suspended Suspended
Interim 31 Dec 11 30 Mar 12	$0.16	N/A	$0.16 $7.49 Suspended Suspended
Final 30 Jun 11 30 Sep 11	$0.15	N/A	$0.15 $7.28 Suspended Suspended
Interim 31 Dec 10 30 Mar 11	$0.20	N/A	$0.20 $8.43 Suspended Suspended
Final 30 Jun 10 24 Sep 10	$0.12	N/A	$0.12 Suspended Suspended Suspended
Interim 31 Dec 09 31 Mar 10	$0.20	N/A	$0.20 Suspended Suspended Suspended
In specie N/A 20 Nov 09	$0.00	N/A	$0.00 N/A Suspended Suspended
1 The shares of Lend Lease Corporation and the units	in Lend Lease Trust were combined a		s stapled securities in November 2009
Final N/A 25 Sep 09	$0.16 N/A		$0.16 $9.50 Suspended Suspended
Interim N/A 1 Apr 09	$0.25 N/A		$0.25 $5.29 Suspended Suspended
Final N/A 26 Sep 08	$0.34 N/A		$0.34 $9.26 Suspended Suspended
Interim N/A 26 Mar 08	$0.43 N/A		$0.43 Suspended Suspended Suspended
Final N/A 12 Sep 07	$0.42 N/A		$0.42 Suspended Suspended Suspended
Interim N/A 27 Mar 07	$0.35 N/A		$0.35 Suspended Suspended Suspended
Final N/A 13 Sep 06	$0.31 N/A		$0.31 Suspended $15.50 Suspended
Interim N/A 14 Mar 06	$0.30 N/A		$0.30 Suspended $13.32 Suspended
Final N/A 14 Sep 05	$0.29 N/A		$0.29 Suspended $13.14 Suspended
Interim N/A 8 Mar 05	$0.28 N/A		$0.28 Suspended Suspended Suspended
Final N/A 15 Sep 04	$0.26 N/A		$0.26 Suspended Suspended Suspended
Interim N/A 17 Mar 04	$0.18 N/A		$0.18 Suspended Suspended Suspended
Final N/A 18 Sep 03	$0.20 N/A		$0.20 $10.64 Suspended Suspended
Interim N/A 19 Mar 03	$0.10 N/A		$0.10 $8.71 $8.71 $8.71
Final N/A 19 Sep 02	$0.09 N/A		$0.09 $11.02 $11.02 $11.02
Interim N/A 20 Mar 02	$0.09 N/A		$0.09 $11.79 $11.79 $11.79
Final N/A 13 Sep01	$0.08 N/A		$0.08 $10.97 Suspended $10.97
Interim N/A 14 Mar 01	$0.13 N/A		$0.13 $14.85 Suspended $14.85
Final N/A 14 Sep00	$0.32 N/A		$0.32 $19.82 $19.82 Suspended
Interim N/A 15 Mar 00	$0.32 N/A		$0.32 $20.34 $20.34 $20.34
Final N/A 16 Sep99	$0.31 N/A		$0.31 $19.66 $19.66 $19.66
Interim N/A 17 Mar 99	$0.29 N/A		$0.29 $21.46 $21.46 $21.46
Final N/A 17 Sep98	$0.54 N/A		$0.54 $34.12 $34.12 $34.12
Interim N/A 18 Mar 98	$0.53 N/A		$0.53 $35.06 $35.06 $35.06
Final N/A 18 Sep97	$0.50 N/A		$0.50 $30.48 $30.48 $30.48
Interim N/A 19 Mar 97	$0.48 N/A		$0.48 $23.41 $23.41 $23.41
Final N/A 1 Nov 96	$0.47 N/A		$0.47 $20.71 $20.71 $20.71
Interim N/A 29 Mar 96	$0.43 N/A		$0.43 $17.47 $17.47 N/A
Final N/A 3 Nov 95	$0.38 N/A		$0.38 $16.89 $16.89 N/A
2nd Interim N/A 28 Jun 95	$0.11 N/A		$0.11 $16.84 $16.84 N/A
Interim N/A 31 Mar 95	$0.36 N/A		$0.36 $15.08 $15.08 N/A

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Security Information at a Glance at 1 September 2015 (comparative 30 August 2014)

	2015	2014
Number of securityholders 57,821 55,374
Units issued 580 million 577 million
Percentage owned by 20 largest securityholders 75.37% 75.42%
Interim dividend/distribution 27 cents per security 22 cents per security
Total dividend/distribution 54 cents per security 71 cents per security
Dividend payout ratio 51% 50%

Spread of Securityholdings as at 1 September 2015 (comparative 30 August 2014)

	2015	2014
1 to 1,000 securities 30,199 27,919
1,001 to 5,000 22,842 22,657
5,001 to 10,000 3,118 3,109
10,001 to 100,000 1,596 1,596
100,001 securities and over 93 93
Total number of securityholders 57,848 55,374
Securityholders with less than a marketable parcel 2,402 2,291 (representing 28,597 securities) (representing 26,274 securities)

Securities Purchased on Market

The following securities were purchased on market during the financial year for the purpose of funding employee incentive awards through Lend Lease securities.

through Lend Lease securities.
	Number of securities purchased Average price paid per security
Stapled securities 486,774 A$15.80

Twenty Largest Securityholders at 1 September 2015

Twenty Largest Securityholders at 1 September 2015
Name	No. of Units % of Issued Capital
HSBC Custody Nominees (Australia) Limited 132,272,916 22.79
J P Morgan Nominees Australia Limited 94,042,590 16.20
National Nominees Limited 91,878,980 15.83
Citicorp Nominees Pty Limited 38,581,882 6.65
BNP Paribas Noms Pty Ltd 17,765,861 3.06
LL Employee Holdings Custodian Pty Limited 14,075,522 2.42
LL Employee Holdings Custodian Pty Ltd 10,870,532 1.87
Citicorp Nominees Pty Limited 9,926,011 1.71
LL Employee Holdings Custodian Pty Limited 6,416,738 1.11
Argo Investments Limited 3,893,609 0.67
HSBC Custody Nominees (Australia) Limited 3,418,926 0.59
UBS Wealth Management Australia Nominees Pty Ltd 2,486,301 0.43
AMP Life Limited 2,153,643 0.37
HSBC Custody Nominees (Australia) Limited 1,993,078 0.34
SBN Nominees Pty Limited 1,966,310 0.34
Forsyth Barr Custodians Ltd 1,185,618 0.20
CS Fourth Nominees Pty Ltd 1,170,384 0.20
Questor Financial Services Limited 1,167,495 0.20
Avanteos Investments Limited 1,152,431 0.20
BNP Paribas Nominees Pty Ltd 1,098,297 0.19
437,517,124 75.37

Substantial Securityholders as Shown in the Company’s Register at 1 September 2015

Name	Date of Last Notice Received	No. of Units	% of Issued Capital
LL Employee Holdings Custodian Pty Ltd*	1/09/2015	31,362,792	5.40%

*This is a Lend Lease employee benefit vehicle

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Portfolio Report

Table of Contents

Key Portfolio Metrics

Property Development

Key Portfolio Metrics	147
Property Development	147
Infrastructure Development	148
Construction	149
Investment Management	150
Group Assets	150
Australia	151
Property Development	151
Infrastructure Development	153
Construction	154
Investment Management	157
Asia	159
Property Development	159
Construction	159
Investment Management	159
Europe	161
Property Development	161
Infrastructure Development	161
Construction	162
Investment Management	163
Americas	164
Property Development	164
Infrastructure Development	165
Construction	166

Property Development
	AUSTRALIA June 2015 June 2014	ASIA June 2015 June 2014	EUROPE June 2015 June 2014	AMERICAS June 2015 June 2014	TOTAL
					June 2015 June 2014
Residential, Commercial and Healthcare Number of development projects1 no.	30 35	2	20 30	7 7	59 72
Backlog Units and SQM2 Residential – Land units zoned no.	51,080 53,750			3,860 3,860	54,940 57,610
Residential – Built-form units zoned/ unzoned3 no.	14,890 13,810	2,225	5,315 5,299	3,530	25,960 19,109
Total residential units no.	65,970 67,560	2,225	5,315 5,299	7,390 **3,860 **	80,900 76,719
Residential land4 sqm/000s			44 63		44 63
Commercial zoned sqm/000s4 sqm/000s	5,182 5,466	368	311 402	423 442	6,284 6,310
Retirement Living Villages – owned no.	74 66				74 66
Villages – managed/leased/other no.	4 4				4 4
Number of villages no.	78 70				78 70
Units – owned no.	12,981 11,612				12,981 11,612
Units – managed/leased/other no.	1,212 1,212				1,212 1,212
Number of units5 no.	14,193 12,824				14,193 12,824
Backlog units – zoned6 no.	666 945				666 945

1 Where a project has multiple stages these have been combined in line with the planning process. Does not include the Mt Gilead project in Australia as the acquisition is subject to a number of conditions including planning. Includes projects where the Group is the preferred bidder.

• 2 Backlog includes Group owned, joint venture and managed projects. The actual number of units for any particular project can vary as planning approvals are obtained.

• 3 Includes 22,041 zoned and 3,919 unzoned units at June 2015 (June 2014: 19,030 zoned and 79 unzoned units).

The Portfolio Report is based on the Lend Lease Group (the Group) Consolidated Financial Statements for the year ended 30 June 2015 and should be read in conjunction with those financial statements.

• 4 Represents net developable land in relation to master-planned urban communities, and net developable floor space for other developments. The actual land area and floor space for any particular project can vary as planning approvals are obtained.

• 5 Includes 100% of Group owned and managed properties. Only includes completed units.

• 6 Backlog units include Group owned and managed sites. The actual number of units for any particular village can vary as planning approvals are obtained.

All currency amounts in the Portfolio Report are expressed in Australian dollars unless otherwise specified.

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Key Portfolio Metrics continued

Infrastructure Development

	AUSTRALIA June 2015 June 2014	ASIA June 2015 June 2014	EUROPE June 2015 June 2014	AMERICAS June 2015 June 2014	TOTAL
					June 2015 June 2014
Number of Projects1 Operational Under construction Preferred bidder	1 1 4 4		1 22 1 2 1 1	17 18 1 1	19 41 5 6 2 2
Total number of projects	5 5		32 25	18 19	26 49
Invested Equity A$m3 Operational Under construction Preferred bidder	15.2 15.0 185.7 64.3		6.1 7.3 4.2 4.2	109.2 95.2	130.5 117.5 189.9 68.5
Total invested equity A$m	200.9 79.3		10.3 11.5	109.2 95.2	320.4 186.0
Committed Equity A$m4 Operational Under construction Preferred bidder	70.0 191.4		1.6 5.6 12.5 13.6	6.5 5.4	6.5 5.4 71.6 197.0 12.5 13.6
Total committed equity A$m	70.0 191.4		14.1 19.2	6.5 5.4	90.6 216.0
Backlog revenue A$m			84.72 2,442.9	467.3 415.7	552.0 2,858.6

• 1 Number of projects includes projects where the Group is preferred bidder. Where a project has multiple phases, these have been combined on completion for the purposes of presentation. Excludes origination fee for service projects with no equity commitment or ongoing management responsibilities for the Group. The Australian Infrastructure Development projects are managed by the Capella Capital business.

• 2 The UK Facilities Management business, in addition to the Global Renewables project in Lancashire, were divested during the year.

• 3 Invested equity refers to the contributed equity for each project, with the exception of the Global Renewables project which represents the written down value of the asset at June 2014.

• 4 Committed equity refers to equity the Group has a future commitment to invest.

Construction

Construction
	AUSTRALIA	ASIA	EUROPE	AMERICAS	TOTAL
	June 2015 A$m June 2014 A$m	June 2015 A$m June 2014 A$m	June 2015 A$m June 2014 A$m	June 2015 A$m June 2014 A$m	June 2015 A$m June 2014 A$m
New work secured revenue1 Building Engineering Services	3,894.5 3,796.5 1,735.3 1,583.3 920.7 1,179.8	424.3 59.4 57.0 100.0	1,566.3 673.0 5.3	3,206.3 2,751.0	9,091.4 7,279.9 1,792.3 1,688.6 920.7 1,179.8
Total new work secured revenue	6,550.5 6,559.6	481.3 159.4	1,566.3 678.3	3,206.3 2,751.0	11,804.4 10,148.3
Backlog Revenue2 Building Engineering Services	6,269.9 6,515.1 2,342.5 2,022.2 1,258.8 1,017.9	375.2 128.9 21.5 44.4	1,463.4 1,071.1 2.0	5,524.9 5,363.1	13,633.4 13,078.2 2,364.0 2,068.6 1,258.8 1,017.9
Total backlog revenue	9,871.2 9,555.2	396.7 173.3	1,463.4 1,073.1	5,524.9 5,363.1	17,256.2 16,164.7

	AUSTRALIA	ASIA	EUROPE	AMERICAS	TOTAL
	June 2015 % June 2014 %	June 2015 % June 2014 %	June 2015 % June 2014 %	June 2015 % June 2014 %	June 2015 % June 2014 %
Backlog Realisation Year ending June 2016 Year ending June 2017 Post June 2017	49 54 24 29 27 17	69 82 26 18 5	66 88 25 8 9 4	53 50 25 24 22 26	52 55 25 26 23 19
Total	100 100	100 100	100 100	100 100	100 100
		BUILDING	ENGINEERING	SERVICES	TOTAL
		June 2015 % June 2014 %	June 2015 % June 2014 %	June 2015 % June 2014 %	June 2015 % June 2014 %
Backlog Realisation Year ending June 2016 Year ending June 2017 Post June 2017		55 55 24 31 21 14	42 55 28 25 30 20	38 46 24 19 38 35	52 55 25 26 23 19
Total		100 100	100 100	100 100	100 100

• 1 New work secured revenue is the total revenue to be earned from projects secured during the year.

• 2 Current year backlog revenue is the total revenue to be earned from projects in future financial years, based on projects secured as at 30 June 2015. Although backlog revenue is realised over several years, the average foreign exchange rate for the current year has been applied to the closing backlog revenue balance in its entirety, as the average rates for later years cannot be predicted.

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Investment Management

Investment Management
	AUSTRALIA	ASIA	EUROPE	AMERICAS	TOTAL
	June 2015 June 2014	June 2015 June 2014	June 2015 June 2014	June 2015 June 2014	June 2015 June 2014
Investments Investments1(A$m) Investment income2(A$m)	814.0 821.1 40.5 38.3	520.2 255.3 12.3 8.8	76.1 84.0 2.6 41.5		1,410.3 1,160.4 55.4 88.6
Funds Under Management (FUM)1 FUM at the beginning of the period Foreign exchange movement Additions Reductions Net revaluations	10.9 10.3 3.0 0.7 (0.8) (0.4) 0.7 0.3	3.6 3.3 0.6 0.2 1.2 0.1 (0.1) (0.1) 0.1	1.8 1.4 0.3 0.2 0.1 0.2		16.3 15.0 0.9 0.4 4.2 0.8 (0.9) (0.5) 0.8 0.6
FUM (A$b)	13.8 10.9	5.3 3.6	2.2 1.8		21.3 16.3
Assets Under Management (AUM) Number of centres AUM1(A$m) GLA under management (sqm/000s)3	16 16 6,112.8 5,974.0 740.9 753.1	4 4 4,288.8 3,819.9 294.8 294.8	2 2 1,009.8 869.4 141.7 141.7		22 22 11,411.4 10,663.3 1,177.4 1,189.6

• 1 Represents the Group’s assessment of the market value.

• 2 Represents the Group’s share of income before tax, excluding revaluations (after tax for equity accounted investments), net of direct expenses.

• 3 Represents the gross lettable area of the centres, with the exception of Asia which represents the net lettable area of the centres.

Group Assets[1]

Group Assets1
	AUSTRALIA	ASIA	EUROPE	AMERICAS	TOTAL
	June 2015 June 2014	June 2015 June 2014	June 2015 June 2014	June 2015 June 2014	June 2015 June 2014
Property Development Infrastructure Development Construction Investment Management	10,974.7 7,796.6 386.7 302.3 2,138.0 2,331.5 932.7 945.2	24.8 (3.3) 208.4 252.0 570.3 351.3	1,033.8 612.6 (1.4) 58.9 730.8 621.1 117.4 80.1	198.5 91.2 178.1 157.4 1,354.4 983.4	12,231.8 8,497.1 563.4 518.6 4,431.6 4,188.0 1,620.4 1,376.6
Total segment	14,432.1 11,375.6	803.5 600.0	1,880.6 1,372.7	1,731.0 1,232.0	18,847.2 14,580.3
Corporate activities					112.0 1,171.5
Total assets	14,432.1 11,375.6	803.5 600.0	1,880.6 1,372.7	1,731.0 1,232.0	18,959.2 15,751.8

• 1 The foreign exchange rates applied to the Statement of Financial Position as at 30 June 2015 are A$1 = £0.49 (June 2014: A$1 = £0.55), A$1 = US$0.77 (June 2014: A$1 = US$0.93) and A$1 = S$1.04 (June 2014: A$1 = S$1.17).

Australia

Property Development

Residential and Commercial Project Listing

Project Sector Location1 Ownership Interest Estimated Completion Date2	RESIDENTIAL Backlog Land Units3,4 Backlog Built-Form Units3,4	COMMERCIAL
		Estimated Backlog sqm/000s5
Zoned Projects Springbank Rise Communities ACT Owned (50% interest) 2016	50
Bingara Gorge Communities NSW Land management 2026	625	39
Calderwood Valley (formerly River Oaks) Communities NSW Land management 2040	5,125	87
St Marys – Jordan Springs (including other precincts)6 Communities NSW Owned (100% interest) 2023	1,875 295	668
St Marys – Ropes Crossing7 Communities NSW Service agreement 2016	35
The New Rouse Hill Communities NSW Land management 2017	175 440
Darling Harbour Live Urban Regeneration NSW Staged payments 2021	1,525	69
Barangaroo South Urban Regeneration NSW Staged payments (100% interest) 2023	775	291
Fernbrooke Ridge Communities Qld Land management 2018	515
Rocky Springs Communities Qld Land management 2054	9,895	1,093
Springfeld Lakes Communities Qld Land management 2028	4,655 440	88
Stoneleigh Reserve Communities Qld Owned (100% interest) 2016	45
Woodlands7 Communities Qld Service agreement 2016	45
Yarrabilba Communities Qld Staged acquisition (100% interest) 2043	13,550 2,470	1,887
Brisbane Showgrounds Urban Regeneration Qld Land management 2025	2,815	100
Subtotal zoned (carried forward)	36,590 8,760	4,322

• 1 Locations are Australian Capital Territory (ACT), New South Wales (NSW) and Queensland (Qld).

• 2 Estimated completion date represents the expected financial year in which the last unit will be settled for master-planned communities, and the construction completion date for apartments and non-residential projects.

• 3 Backlog includes the total number of units in Group owned, joint venture and managed projects. The actual number of units for any particular project can vary as planning approvals are obtained.

• 4 Backlog units do not include the Mt Gilead project in Sydney’s South West as the acquisition is subject to a number of conditions including planning.

• 5 Represents net developable land in relation to master-planned urban communities and net developable floor space for other developments. The actual land area and floor space for any particular project can vary as planning approvals are obtained.

• 6 Where a project has multiple stages these have been combined in line with the planning process.

• 7 Projects managed on behalf of the Lend Lease Communities Fund 1. The Group holds a 20.8% co-investment position in the fund.

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Australia continued

Property Development continued

Residential and Commercial Project Listing continued

Residential and Commercial Project Listing continued
Project Sector Location1 Ownership Interest Estimated Completion Date2	RESIDENTIAL Backlog Land Units3,4 Backlog Built-Form Units3,4	COMMERCIAL
		Estimated Backlog sqm/000s5
Subtotal zoned projects (brought forward) Blakes Crossing Communities SA Staged acquisition (100% interest) 2019	36,590 8,760 680	4,322 7
Springwood Communities SA Staged acquisition 2016	40
Richmond Apartments Vic Owned (100% interest) 2019	365
Toorak Park (formerly Armadale) Apartments Vic Owned (100% interest) 2018	465
Atherstone Communities Vic Land management 2034	4,075	80
Aurora Communities Vic Owned (100% interest) 2026	3,120	180
Edgewater Communities Vic Owned (100% interest) 2016	20
Harpley Communities Vic Land management 2026	3,870	313
Laurimar Communities Vic Owned (100% interest) 2016	95 5
Mayfeld Communities Vic Owned (100% interest) 2017	280
Melton East Communities Vic Staged acquisition 2021	770	48
Melbourne Quarter (formerly Batman’s Hill) Urban Regeneration Vic Land management 2021	930	120
Victoria Harbour Urban Regeneration Vic Land management 2021	3,175	35
Alkimos Communities WA Land management 2022	1,540	55
Waterbank Urban Regeneration WA Land management 2023	1,190	22
Total zoned	51,080 14,890	5,182

• 1 Locations are South Australia (SA), Victoria (Vic) and Western Australia (WA).

• 2 Estimated completion date represents the expected financial year in which the last unit will be settled for master-planned communities, and the construction completion date for apartments and non residential projects.

• 3 Backlog includes the total number of units in Group owned, joint venture and managed projects. The actual number of units for any particular project can vary as planning approvals are obtained.

• 4 Backlog units do not include the Mt Gilead project in Sydney’s South West as the acquisition is subject to a number of conditions including planning.

• 5 Represents net developable land in relation to master-planned urban communities and net developable floor space for other developments. The actual land area and floor space for any particular project can vary as planning approvals are obtained.

Retirement Living Portfolio Summary

Location1	OWNED Number of Villages Units2	MANAGED/LEASED/OTHER Number of Villages Units2	TOTAL Number of Villages Units2 Backlog Units3
Qld	12 2,906	3 1,137	15 4,043
NSW	17 3,109		17 3,109 335
Vic	25 3,923	1 75	26 3,998 70
SA	3 386		3 386
WA	10 1,596		10 1,596 43
ACT	2 65		2 65 218
NZ	5 996		5 996
Total retirement villages	74 12,981	4 1,212	78 14,193 666

• 1 Locations are Queensland (Qld), New South Wales (NSW), Victoria (Vic), South Australia (SA), Western Australia (WA), Australian Capital Territory (ACT), and New Zealand (NZ).

• 2 Includes 100% of Group owned and managed properties. Only includes completed units.

• 3 Backlog units include Group owned and managed sites. The actual number of units for any particular village can vary as planning approvals are obtained.

Infrastructure Development

Project Listing

Project Listing
			Actual	Operational	Estimated	Invested	Committed
			Financial Close	Term	Capital Spend1	Equity2	Equity3
Project	Location	Status	Date	Years	A$m	A$m	A$m
Healthcare
Queen Elizabeth II
Medical Centre Car Park	WA	Operational	Jul 11	26	140	15.2
Sunshine Coast		Under
University Hospital4	Qld	construction	Jul 12	25	1,480	64.8	19.1
		Under
New Bendigo Hospital	Vic	construction	May 13	25	630	31.6
Justice
Eastern Goldfelds		Under
Regional Prison	WA	construction	Dec 12	25	250	20.4
		Closed -
Ravenhall Prison5	Vic	Origination Fee	Sep 14
Mixed-Use
		Under
Darling Harbour Live	NSW	construction	Dec 13	25	1,600	68.9	50.9
Rail
		Closed -
Sydney Light Rail5	NSW	Origination Fee	Mar 15
Total					4,100	200.9	70.0

• 1 Represents total estimated capital spend over the contract duration.

• 2 Invested equity refers to the contributed equity for each project.

• 3 Committed equity represents future contributions the Group has a commitment to invest.

• 4 Excludes client provisional funding.

• 5 No equity commitment or ongoing management responsibilities for the Group.

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Construction

Major Projects – Building[1,2]

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Construction
Project Location [3] Client Contract Type [4] ValueA$m [5] Secured Date [6] [Completion ] Date [7] Sector Description
Commercial Design and construction of the basement, infrastructure works, commercial office and
Barangaroo South NSW Lend Lease/Barangaroo Development Authority LS 2,780 2012 2017 & Residential residential buildings
Sunshine Coast University Hospital [8] Qld Queensland Health LS 1,564 2013 2017 Healthcare Design and construction of a new 738 bed hospital
Darling Harbour Live Partnership/Infrastructure NSW/ Entertainment/ Design and construction PPP contract for the redevelopment of the Sydney
ICC Sydney (Formerly Darling Harbour Live) NSW Sydney Harbour Foreshore Authority LS 1,135 2014 2017 Recreation Convention, Exhibition and Entertainment Precinct
Crown Sydney Hotel Resort [9] NSW Crown Resorts Limited 1,000 2015 2019 Hotel Delivery of the Crown Sydney Hotel Resort at Barangaroo South
Facilities Requirements for the New Air Combat Capability – Managing contractor for the design and delivery of the facilities required to support
RAAF Williamtown NSW Commonwealth Department of Defence MC 950 [10] 2015 2019 Defence the Joint Strike Fighter aircrafts at RAAF Williamtown New South Wales
Residential/
Hotel/ Design and construction of 539 apartments, a hotel, infrastructure and public realm as
Darling Square and ICC Sydney Hotel NSW Lend Lease Haymarket LS/MC 671 2015 2019 Infrastructure part of the Darling Harbour redevelopment
New Bendigo Hospital Vic Victorian Government/Bendigo Health LS 630 2013 2017 Healthcare Design and construction of a new 372 bed hospital in Bendigo
Design and construction of new buildings, alterations and refurbishment of existing
Cairns Base Hospital Qld Queensland Health MC 330 2011 2016 Healthcare hospital
Managing contractor of a new 52,000 square metre hospital facility and
Box Hill Hospital Redevelopment Vic Department of Health, Victoria MC 324 2012 2016 Healthcare refurbishment of the existing hospital
Department of Planning, Transport and Infrastructure,
Adelaide Convention Centre Redevelopment SA South Australia MC 304 2011 2017 Commercial Construct only of the redevelopment and extension of the existing convention centre
Australian Prime Property Fund and another institutional Design and construction of the redevelopment of Lakeside Joondalup Shopping
Lakeside Joondalup WA investment partner GMP 255 2010 2016 Retail Centre
Monash Children’s Hospital Vic Department of Health MC 182 2014 2017 Healthcare Managing contractor of a new 230 bed hospital
888 Collins Street Vic Lend Lease Development CM 178 2015 2017 Residential Construction of a residential development
Design and construction of a new University health science facility for teaching and
Adelaide Medical and Nursing Schools SA The University of Adelaide MC 170 2014 2017 Healthcare research
889 Collins Street Vic Lend Lease Development CM 170 2015 2018 Residential Construction of a residential development
Air Warfare Destroyer and Landing Helicopter Dock, Managing contractor of maintenance and training facilities to support future navy war
Ship Sustainment Facilities NSW Commonwealth Department of Defence MC 159 2013 2016 Defence ships at Randwick, Watsons Bay and Garden Island in New South Wales
Concavo, Victoria Harbour Vic Lend Lease Development MC 139 2011 2016 Residential Design and construction of new waterfront apartments along Victoria Harbour
Managing contractor of new facilities, refurbished facilities and infrastructure at
Defence Logistics Transformation Program Qld Commonwealth Department of Defence MC 135 2013 2016 Defence Laverack Barracks
----- End of picture text -----

• 1 Disclosure of major projects is subject to client approval. This could impact the projects available for disclosure.

• 2 Backlog revenue as at 30 June 2015 for the projects listed on pages 154 and 155 totals $5,931 million, representing 95% of the total backlog revenue for the region in relation to Building projects.

• 3 Locations are New South Wales (NSW), Queensland (Qld), Victoria (Vic), South Australia (SA) and Western Australia (WA).

• 4 Contract types are Lump Sum (LS), Managing Contractor (MC), Guaranteed Maximum Price (GMP) and Construction Management (CM).

• 5 Construction value represents the Group’s share of the total construction value of the project.

• 6 Secured date represents the financial year in which the project was secured.

• 7 Completion date represents the financial year in which the project is expected to be completed.

• 8 Includes client provisional funding.

• 9 The Crown Sydney Hotel Resort project was secured in the late stages of the financial year and the final contract details including contract value are in the process of being finalised.

• 10 Contract value relates to client budget.

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Construction continued

Major Projects – Engineering[1,2]

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Construction
Project Location [3] Client Contract Type [4] ValueA$m [5] Secured Date [6] [Completion ] Date [7] Sector Description
North Connex M1 / NSW Transurban D&C 1,279 2015 2019 Roads Design and construct of the 9km
M2 Tunnel [8] and twin motorway tunnels
Highways
Tintenbar to NSW NSW Roads D&C 625 2012 2016 Roads Construction of a new 16.3 kilometre
Ewingsdale, and Maritime and section of the highway, several
Pacific Highway, Services Highways bridges and a 400 metre tunnel
Northern NSW
Oxley Highway to NSW NSW Roads D&C 582 2014 2017 Roads Design and construction of 23
Kundabung, and Maritime and kilometres of upgrade works to the
Pacific Highway Services Highways highway, including major bridge
crossings across the Hastings and
Wilson Rivers
Nambucca to NSW NSW Roads D&C 556 2013 2016 Roads Design and construction of 22
Urunga, and Maritime and kilometres of dual carriageway and
Pacific Highway, Services Highway bridges
Mid-North Coast
Headland Park and NSW Barangaroo D&C 203 2012 2016 Marine Design and construction of the
Barangaroo North Delivery and Ports headland park, including a new
Project Works Authority harbour cove
Epping to NSW Transport for ALL 147 2013 2017 Rail Construction of a third rail track
Thornleigh New South between Epping and Thornleigh
Third Track [8] Wales
CBD Alliance NSW NSW Roads ALL 108 2014 2016 Roads Construction of cycleways and bus
and Maritime and relocation works in the Sydney City
Services Highways Centre, construction of a pedestrian
bridge over Anzac Parade, and
installation and modification of lifts
in the Sydney Harbour Bridge
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• 1 Disclosure of major projects is subject to client approval. This could impact the projects available for disclosure.

• 2 Backlog revenue as at 30 June 15 for the projects listed totals A$2,062 million, representing 88% of the total backlog revenue for the region in relation to Engineering projects.

• 3 Locations are New South Wales (NSW).

• 4 Contract types are Design and Construct (D&C) and Alliance (ALL).

• 5 Construction value represents the Group’s share of the total construction value of the project.

• 6 Secured date represents the financial year in which the project was secured.

• 7 Completion date represents the financial year in which the project is expected to be completed.

• 8 Represents the Group’s interest in the project joint venture.

Investment Management

Investments

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Lend Lease Market Value [1 ] Market Value [1 ]
Interest June 2015 June 2014
Region % A$m A$m
Lend Lease One International Towers Sydney Trust [2] Australia 37.5 191.3
Lend Lease International Towers Sydney Trust Australia 15.0 181.5 80.9
Australian Prime Property Fund – Commercial [3] Australia 10.4 178.9 233.3
Craigieburn Central Australia 25.0 81.2 87.8
Australian Prime Property Fund – Industrial [4] Australia 11.2 76.1 244.0
Australian Prime Property Fund – Retail Australia 1.1 43.5 42.2
Lend Lease Sub Regional Retail Fund [5] Australia 10.0 36.7
Lend Lease Core Plus Fund Australia 13.3 11.4 33.7
Lend Lease Real Estate Partners New Zealand Fund New Zealand 5.3 7.0 6.7
Lend Lease Communities Fund 1 Australia 20.8 4.1 8.5
Lend Lease Retail Partners – Australia Fund Australia 2.6 2.3 2.1
Lend Lease Real Estate Partners Fund 3 [5] Australia 81.9
Total Investments 814.0 821.1
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• 1 Represents the Group’s assessment of the market value.

• 2 During the year the Group made an investment of A$191.3 million in Lend Lease One International Towers Sydney Trust resulting in 37.5% ownership of the fund.

• 3 During the year the Group made a net divestment of A$62.6 million of equity in Australian Prime Property Fund - Commercial of reducing the investment held from 19.1% to 10.4% of the fund.

• 4 During the year the Group divested A$180.0 million of equity in Australian Prime Property Fund - Industrial reducing the investment held from 38.4% to 11.2% of the fund.

• 5 During the year the Group restructured Lend Lease Real Estate Partners Fund 3 into an open-ended vehicle, Lend Lease Sub Regional Retail Fund. The Group reduced its holding in the vehicle from 25% to 10%.

Funds Under Management

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Market Value [1 ] Market Value [1 ]
June 2015 June 2014
Fund Fund Type Asset Class A$b A$b
Australian Prime Property Fund – Retail Core Retail 4.6 4.4
Australian Prime Property Fund – Commercial Core Commercial 2.5 1.7
Lend Lease International Towers Sydney Trust Core Commercial 2.3 1.3
Managed Investment Mandates Core Various 1.7 1.6
Lend Lease One International Towers Sydney Trust Core Commercial 0.9
Australian Prime Property Fund – Industrial Core Industrial 0.8 0.6
Lend Lease Sub Regional Retail Fund [2] Core Retail 0.6
Lend Lease Real Estate Partners New Zealand Fund Enhanced Retail 0.2 0.2
Lend Lease Core Plus Fund Core Plus Various 0.1 0.4
Lend Lease Retail Partners – Australia Fund Core Plus Retail 0.1 0.1
Lend Lease Real Estate Partners Fund 3 [2] Enhanced Retail 0.5
Lend Lease Communities Fund 1 [3] Value Add Residential 0.1
Total FUM 13.8 10.9
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• 1 Represents the Group’s assessment of the market value.

• 2 During the year the Group restructured Lend Lease Real Estate Partners Fund 3 into an open-ended vehicle, Lend Lease Sub Regional Retail Fund.

• 3 Lend Lease Communities Fund FUM is A$45m which rounds down to 0.

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Assets Under Management

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Market Value [2 ] Market Value [2 ]
GLA June 2015 June 2014
Shopping centres Managed on behalf of sqm/000s [1] A$m A$m
Cairns Central, Qld APPF Retail 52.8
Caneland Central, Qld APPF Retail 65.6
Sunshine Plaza, Qld APPF Retail/Other joint owners 75.9
Erina Fair, NSW APPF Retail/Other joint owners 114.2
Macarthur Square, NSW APPF Retail/Other joint owners 94.6
Mid City (retail), NSW APPF Retail/Other joint owners 9.1
Lakeside Joondalup, WA APPF Retail/Other joint owners 93.1
Craigieburn Central, Vic APPF Retail/Lend Lease 62.7 6,112.8 5,974.0
Caroline Springs Square, Vic APPF Retail/Lend Lease Core Plus Fund 21.0
Menai Marketplace, NSW Lend Lease Sub Regional Retail Fund [3] 16.5
Settlement City, NSW Lend Lease Sub Regional Retail Fund [3] 19.4
Southlands Boulevarde, WA Lend Lease Sub Regional Retail Fund [3] 21.4
Armadale Shopping City, WA Lend Lease Sub Regional Retail Fund [3] 31.0
Northgate, WA Lend Lease Sub Regional Retail Fund [3] 15.9
Stud Park, Vic Lend Lease Retail Partners – Australia Fund 26.9
Watertown, WA Other owner 20.8
Total 740.9 6,112.8 5,974.0
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1 GLA represents the gross lettable area of the centres.

2 Represents the Group’s assessment of the market value.

• 3 During the year the Group restructured Lend Lease Real Estate Partners Fund 3 into an open-ended vehicle, Lend Lease Sub Regional Retail Fund.

Asia

Property Development

Property Development
						Estimated
			Ownership	Estimated	Backlog	Commercial
			Interest	Completion	Built-Form	Backlog
Project	Sector	Location	%	Date1	Units2	sqm/000s3
Zoned Projects
	Urban
Paya Lebar Central	Regeneration	Singapore	30	2018	425	135
	Urban
The Lifestyle Quarter at Tun Razak Exchange	Regeneration	Malaysia	60	2024	1,800	233
Total zoned					2,225	368

• 1 Estimated completion represents the expected financial year in which the last unit will be settled for master-planned communities, and the construction completion date for apartments and non residential projects.

• 2 Backlog includes the total number of units in Group owned, joint venture and managed projects. The actual number of units for any particular project can vary as planning approvals are obtained.

• 3 Commercial space has been disclosed based on GFA. GFA in Asia refers to the total area of the covered floor space measured between the centre line of party walls, including the thickness of external walls but excluding voids. The actual land area and floor space for any particular project can vary as planning approvals are obtained.

Construction

Major Projects[1,2]

				Construction
			Contract	Value4	Secured	Completion
Project	Location	Client	Type3	A$m	Date5	Date6	Sector	Description
								Design and supply
SoftBank		SoftBank					Telecommunica-	of concrete
Fast Pole	Japan	Mobile	MC	142	2011	2017	tions	telecommunications poles
								Early works component of a
								design, construct and project
Paya Lebar								manage a mixed use residential, retail and ofce
Central-		Roma Central						development at Paya Lebar
Early Works	Singapore	Pte. Ltd.	GMP	94	2015	2016	Mixed Use	Central

• 1 Disclosure of major projects is subject to client approval. This could impact the projects available for disclosure.

• 2 Backlog revenue as at 30 June 2015 for the projects listed totals A$103.3million, representing 26% of the total Construction backlog revenue for the region.

3 Contract type is Managing Contractor (MC) and Guaranteed Maximum Price (GMP).

• 4 Construction value represents the Group’s share of the total construction value of the project.

• 5 Secured date represents the financial year in which the project was secured.

• 6 Completion date represents the financial year in which the project is expected to be completed.

Investment Management

Investments

Investments
	Lend Lease	Market Value1 Market Value1 Market Value1 Market Value1
	Interest June 2015 June 2014 June 2015 June 2014
	%	S$m S$m A$m	A$m
Lend Lease Asian Retail Investment Fund (ARIF) ARIF 1 (313@somerset)2	10.1	35.0 38.8 33.7	33.2
ARIF 2 (Setia City Mall)3	35.9	29.8 27.2 28.7	23.3
ARIF 3 (Jem)4	20.1	160.9 70.9 154.7	60.6
313@somerset2	25.0	114.6 127.2 110.2	108.7
Paya Lebar Central Joint Venture	30.0	165.1 158.7
Parkway Parade Partnership Limited	4.9	35.6 34.5 34.2	29.5
Total Investments		541.0 298.6 520.2	255.3

• 1 Represents the Group’s assessment of the market value.

• 2 The Group owns 25% of the 313@somerset retail centre through its investment in CDR JV Ltd, with the remaining 75% held by ARIF 1, in which the Group holds a 10.1% interest.

• 3 The Group directly owns 35.9% of ARIF 2, which has a 50% ownership interest in Setia City Mall.

• 4 During the year, the Group made an additional investment of A$68.7 million in ARIF 3 increasing its investment from 10.1%. The Group directly owns 20.1% of ARIF 3, which has a 75% ownership interest in Jem.

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Funds Under Management

Funds Under Management
Fund	Fund type	Asset class	Market Value1 June 2015 S$b Market Value1 June 2014 S$b Market Value1 June 2015 A$b	Market Value1 June 2014 A$b
Lend Lease	Core/	Retail and
Asian Retail Investment Fund (ARIF)	Value Add	Commercial	2.5 2.5 2.4	2.2
Managed Investment Mandate	Value Add	Retail and Commercial	1.3 1.3
Parkway Parade Partnership Limited	Core Plus	Retail and Commercial	1.2 1.2 1.2	1.0
Lend Lease		Retail and
Jem Partners Fund Limited	Core	Commercial	0.5 0.5 0.4	0.4
Total FUM			5.5 4.2 5.3	3.6

1 Represents the Group’s assessment of the market value.

Assets Under Management

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Market Value [2 ] Market Value [2 ] Market Value [2 ] Market Value [2 ]
GLA [1 ] June 2015 June 2014 June 2015 June 2014
Shopping centres Managed on behalf of sqm/000s S$m S$m A$m A$m
ARIF/Lend Lease Jem Partners
Jem, Singapore Fund Limited 108.2 1,880.0 1,864.0 1,807.7 1,593.2
Parkway Parade, Parkway Parade Partnership
Singapore Limited 52.5 1,196.0 1,176.0 1,150.0 1,005.1
313@somerset,
Singapore ARIF/Lend Lease 27.1 1,100.0 1,150.0 1,057.7 982.9
Setia City Mall,
Malaysia ARIF/Lend Lease 107.0 284.3 279.3 273.4 238.7
Total 294.8 4,460.3 4,469.3 4,288.8 3,819.9
----- End of picture text -----

• 1 Represents the net lettable area of the centres.

• 2 Represents the Group’s assessment of the market value.

Europe

Property Development

Project Listing

Project Listing
			Ownership	Estimated	Backlog	Residential	Estimated
			Interest	Completion	Built-Form	Land	Commercial Backlog
Project	Sector	Location	%	Date1	Units2	sqm/000s3	sqm/000s3
Zoned Projects
Elephant and Castle	Communities	London, UK	100	Various	2,760		19
Deptford	Communities	London, UK	100	Various	905		10
The International Quarter	Communities	London, UK	50	Various	333		277
Wandsworth	Communities	London, UK	100	Various	149
Chiswick	Communities	London, UK	100	2017	64
UK residential projects	Communities	Various	Various	Various	585	44	4
Total zoned					4,796	44	310
Unzoned Projects
Deptford	Communities	London, UK	100	Various	217
Chiswick	Communities	London, UK	100	2017	73		1
Hungate	Communities	Regions	50	Various	229
Total unzoned					519		1
Total Development					5,315	44	311

• 1 Estimated completion date for built-form units represents the financial year in which the project construction is expected to be completed.

• 2 Backlog includes the total number of units in Group owned and joint venture projects. The actual number of units for any particular project can vary as planning approvals are obtained.

• 3 Represents net developable land in relation to master-planned urban communities and net developable floor space for other developments. The actual land area and floor space for any particular project can vary as planning approvals are obtained.

Infrastructure Development

					Estimated		Facilities
					Constr-	Percentage of	Management
			Actual	Operat-	uction	Construction	Revenue	Invested	Committed
			Financial	ional Term	Value2	Complete	Backlog3	Equity4	Equity5
Project1	Location	Status	Close Date	Years	£m	%	£m	£m	£m
Healthcare Majadahonda Hospital	Spain	Operational	Apr 05	30	168	100	44.9	3.0
Brescia 2	Italy	Under construction	Mar 11	33	89	80		2.0	0.8
Treviso Hospital	Italy	Preferred bidder	Aug 15	21	99				6.1
Total					356		44.9	5.0	6.9

• 1 The UK Facilities Management business, in addition to the Global Renewables project in Lancashire, were divested during the period. 2 Represents total construction value over the contract duration.

• 3 Facilities management revenue backlog disclosed is for a maximum of 10 years, although PPP contracts typically operate for a period of up to 40 years. 4 Invested equity refers to the contributed equity for each project.

• 5 Committed equity refers to equity and loan stock contributions that the Group has a future commitment to invest.

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Investment Management

Construction

Investments

Major Projects[1,2]

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Constr- Constr-
uction uction Compl-
Contract Value [4 ] Value [4 ] Secured etion
Project Location Client Type [3] £m A$m Date [5] Date [6] Sector Description
Ministry of Defence UK Defence GMP 471 889 2003 2016 Defence Construction and upgrade of
Single Living Estates single living accommodation
Accommodation for the military across a
Modernisation Phase 2 number of locations
Kings Gate House and London Land LS 175 329 2013 2016 Mixed-use Demolition of existing office
The Zig Zag Building Securities block and design and
plc construction of a 12 storey
commercial and retail block
and a 14 storey residential
building
Rathbone London Great LS 198 374 2015 2017 Mixed-use Design and construction of
Square Portland mixed residential,
Estates plc commercial, retail and public
realm in London’s West End,
including 162 residential
apartments and 265,000
square feet of commercial
office space.
North Wales Prison Wales Ministry of LS 157 296 2015 2017 Justice Design and construction of
Justice 2010 inmate super prison in
North Wales
Elephant and Castle London Lend Lease LS 115 218 2015 2017 Residential Design and construction of
South Gardens Residential approximately 342 residential
(CG) Plc units
Beacon Barracks Midlands The GMP 97 184 2013 2016 Defence Design and construction of
England Secretary single living accommodation
of State for for the military, regimental
Defence headquarters, mess and
catering facilities and
technical workshops, and the
upgrade of the existing base’s
infrastructure
The International London SCBD LS 88 166 2014 2018 Residential Design and construction of
Quarter - Glasshouse Residential two residential towers (30
Gardens Ltd storey and 18 storey)
comprising 333 units.
Elephant and Castle London Lend Lease LS 79 149 2013 2016 Residential Design and construction of
One The Elephant Residential 284 apartments in a 37 storey
(CG) Plc tower and a 4 storey pavilion
building plus shared
basement, with ground floor
retail and commercial areas.
Ruskin Square London Stanhope LS 48 90 2015 2017 Commercial Design and construction of a
Building 03 plc Offices new commercial office
building.
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Investments
	Lend Lease	Market Value1 Market Value1 Market Value1 Market Value1
	Interest	June 2015 June 2014 June 2015 June 2014
	%	£m £m A$m A$m
Lend Lease Retail Partnership	4.3	35.2 34.6 71.8 62.9
Lend Lease PFI/PPP Infrastructure Fund LP (UKIF)2	1.0	2.1 10.9 4.3 19.9
Lend Lease Global Properties, SICAF and
LL Global Real Estate Advisors3		0.7 1.2
Total		37.3 46.2 76.1 84.0

• 1 Represents the Group’s assessment of the market value.

• 2 The Group sold 90% of its 10% investment in the Infrastructure Fund on 26 September 2014.

• 3 These entities were liquidated during the period.

Funds Under Management

Funds Under Management
Fund	Fund type Asset class Market Value1 June 2015 £b Market Value1 June 2014 £b Market Value1 June 2015 A$b Market Value1 June 2014 A$b
Lend Lease Retail Partnership	Core Retail 0.8 0.8 1.7 1.4
Lend Lease PFI/PPP Infrastructure Fund
LP (UKIF)	Core Infrastructure 0.2 0.2 0.5 0.4
Total FUM	1.0 1.0 2.2 1.8

1 Represents the Group’s assessment of the market value.

Assets Under Management

Assets Under Management
		Market Value2 Market Value2 Market Value2	Market Value2
	Managed on GLA1	June 2015 June 2014 June 2015	June 2014
Shopping centres	behalf of sqm/000s	£m £m A$m	A$m
Touchwood, Solihull	Lend Lease Retail Partnership 60.4	282.8 274.2 577.1	498.5
Queensgate, Peterborough	IREEF Queensgate Peterborough 81.3	212.0 204.0 432.7	370.9
Total	141.7	494.8 478.2 1,009.8	869.4

1 GLA represents the gross lettable area of the centres. 2 Represents the Group’s assessment of the market value.

• 1 Disclosure of major projects is subject to client approval. This could impact the projects available for disclosure.

• 2 Backlog revenue as at 30 June 2015 for the projects listed totals £623.0 million, representing 80% of the total Construction backlog revenue for the region.

• 3 Contract types are Guaranteed Maximum Price (GMP) and Lump Sum (LS).

• 4 Construction value represents the Group’s share of the total construction value of the project.

• 5 Secured date represents the financial year in which the project was secured.

• 6 Completion date represents the financial year in which the project is expected to be completed.

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Americas

Property Development

							Estimated
			Ownership	Estimated	Backlog	Backlog	Commercial
			Interest	Completion	Land	Built-Form	Backlog
Project1	Sector	Location	%	Date2	Units3	Units3	sqm/000s4
Zoned Projects
Horizon Uptown	Communities	Colorado	100	2033	3,860		371
Covington Medical	Healthcare	Louisiana	100	2014			5
Arts Pavilion
Bon Secours DePaul	Healthcare	Virginia	100	2015			9
Medical Plaza
Winston-Salem Veterans	Healthcare	North Carolina	Service	2016			33
Afairs Healthcare Center			Agreement5
281 Fifth Avenue	Apartments	New York	40	2019		130	1
Total zoned					3,860	130	419
Unzoned Projects
Clippership Wharf	Apartments	Massachusetts	100	2021		485	3
River South	Urban	Illinois	60	2025		2,915	1
	Regeneration
Total unzoned						3,400	4
Total Development					3,860	3,530	423

• 1 June 14 Portfolio Report included the Providence Little Company of Mary Medical Center (located in California) and Medical Office Building II (located in Arlington, Texas) in the status of preferred bidder. However, during the current year, it was determined by the owner these projects would no longer be pursued.

• 2 Estimated completion date respresents the estimated financial year in which the last unit will be settled for master planned communities and the financial year in which construction will be completed for apartments and healthcare projects.

• 3 The actual number of units for any particular project can vary as planning applications are obtained.

4 Represents expected rentable square meters. The actual floor space for any particular project can vary as planning approvals are obtained.

• 5 The Group provides construction and development services on a fee basis.

Infrastructure Development

Military Housing Project Listing

				Actual	Operat-	Estimated	Percentage of
				Financial	ional	Capital	Construction	Invested	Committed
				Close	Term	Spend1	Completed	Equity2	Equity3	Units Under
Project	Location	Service	Status	Date	Years	US$m	%	US$m	US$m	Management4
Air Combat	Arizona/
Command Group II	New Mexico	Air Force	Operational	Jul 07	50	224.2	100	11.0		2,200
	North
Camp Lejeune	Carolina/	Marine
Phases 1 and 2	New York	Corps	Operational	Oct 05	50	459.8	100	10.0		4,350
	North
Camp Lejeune	Carolina/	Marine
Phase 3	New York	Corps	Operational	Nov 07	50	268.0	88	4.5		2,120
	South	Marine
Tri-Command	Carolina	Corps	Operational	Feb 03	50	140.0	100	3.3		1,500
Fort Campbell	Kentucky	Army	Operational	Dec 03	50	313.1	100	6.0		4,450
Fort Drum	New York	Army	Operational	May 05	50	504.7	100	5.0		4,025
Fort Hood	Texas	Army	Operational	Oct 01	50	296.0	100	6.0		5,900
Fort Hood Stage 3
(Chafee Village 1)	Texas	Army	Operational	May 14	50	65.0	10
Fort Knox Phase 1	Kentucky	Army	Operational	Feb 07	50	195.5	99		3.0	2,350
Fort Knox Phase 2
(Additional Scoring)	Kentucky	Army	Operational	Oct 10	50	15.6	97			35
Hickam	Hawaii	Air Force	Operational	Feb 05	50	662.9	100	19.2		2,500
Island Palm
Communities	Hawaii	Army	Operational	Apr 05	50	2,166.7	82	8.0		7,750
PAL Groups A & B	Various	Army	Operational	Aug 09	50	213.6	100			7,850
PAL Group C	Various	Army	Operational	May 13	50	367.9	26			3,700
	Colorado/
Tri-Group	California	Air Force	Operational	Sep 07	50	235.1	100	11.0		1,525
Wainwright/Greely
Phase 1	Alaska	Army	Operational	Apr 09	50	52.5	100			1,900
Wainwright/Greely
Phase 2	Alaska	Army	Operational	Sep 10	50	218.3	68		2.0
Total Operational						6,398.9		84.0	5.0	52,155
	Virginia/		Preferred
PAL Lee Benning	Georgia	Army	bidder	Sep 15	50					2,050
Total						6,398.9		84.0	5.0	54,205

• 1 Changes in estimated capital spend from prior reports reflect adjustments made to contract values, project scope changes, addition of out-year work after the completion of the IDP and (for certain projects) the impact of contractual shared savings realised during the development period.

• 2 Invested equity refers to the contributed equity for each project.

• 3 Committed equity represents future contributions the Group has a commitment to invest.

• 4 Units under management are the expected number of units at the end of the initial project development period

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Construction

Major Projects[1,2]

Major Projects1,	2
				Constr-	Constr-
				uction	uction		Comp-
			Contract	Value4	Value4	Secured	letion
Project	Location	Client	Type3	US$m	A$m	Date5	Date6	Sector	Description
432 Park	New York	CIM Group	GMP	674	813	2012	2016	Mixed-use	Construction manager for a
Avenue									73,000 square metre, 89 storey
									condominium and retail project
56 Leonard	New York	56 Leonard LLC	GMP	380	457	2012	2017	Residential	Construction manager for a
Avenue									42,000 square metre, 60 storey
									residential building with 146 units
LUMINA	San	Tishman Speyer	GMP	364	438	2013	2016	Residential	Construction manager for 655
	Francisco								condominium units in two towers
									(37 and 42 storeys, respectively)
									and two nine storey residential
									buildings
252 East	New York	World Wide	GMP	357	430	2014	2016	Mixed-use	Construction manager for a
57th Street		Holdings							55,000 square metre, 57 storey
									apartment, condominium and
									retail project
520 Park	New York	Zeckendorf	GMP	292	352	2014	2018	Residential	Construction manager for a 51
Avenue		Development							storey high rise luxury
		LLC							condominium tower, consisting of
									31 condominium units and 8 staf
									quarters
Riverpoint	Chicago	Riverpoint LLC	GMP	240	289	2015	2017	Ofce	Construction of 125,000 square
		(Hines)							metres, 53 storey ofce tower and
									garage built over an existing
									podium
400 Park	New York	ET 500 PAS LLC	GMP	213	257	2012	2016	Residential	Construction manager for a 43
Avenue South		(JV)							storey residential project, split
									between condominiums and
									apartments
50 UN	New York	Zeckendorf	GMP	203	244	2012	2015	Residential	Construction manager for a 44
Plaza		Development							storey condominium tower with 88
		LLC							units
Biological	Boston	Bristol Myers	GMP	184	222	2014	2016	Pharma-	Construction manager for a
development		Squibb						ceutical	22,300 square metre biological
and clinical									development building and a 12,100
manufacturing									square metre clinical
buildings									manufacturing building
9 W Walton	Chicago	9 West Walton	GMP	135	163	2015	2018	Residential	Construction of 35 storey
		Condominium							condominium building
		Developer LLC
Brodsky	New York	The Brodsky	CM	134	161	2014	2016	Residential	Construction manager for a 33
City Point		Organization							storey reinforced concrete
Tower 2									residential tower
22 Water	Boston	Wood Partners	GMP	129	156	2014	2016	Residential	Construction manager for a
Street									50,000 square metre apartment
									development with 392 units

• 1 Disclosure of major projects is subject to client approval. This could impact the projects available for disclosure.

• 2 Backlog revenue as at 30 June 2015 for the projects listed totals US$1, 200 million, representing 26% of the total Construction backlog revenue for the region.

CORPORATE DIRECTORY

Annual General Meeting 2015

The Annual General Meeting of shareholders of Lend Lease Corporation Limited and the general meeting of unit holders of Lend Lease Trust (together, Lend Lease Group) will be held at 10am on Friday 13 November 2015 in the Grand Ballroom, Four Seasons Hotel, 199 George Street, Sydney, NSW.

Full details will be provided in the Notice of Meetings.

2016 Financial Calendar

February Announcement of Half Year Results March Security price quoted ex distribution Interim distribution record date Interim distribution payable August Announcement of Full Year Results September Security price quoted ex distribution Final distribution record date Final distribution payable November Annual General Meeting

Please note that the timing of events can be subject to change. A current calendar is available online at www.lendlease.com

Entity Details

Lend Lease Corporation Limited ABN 32 000 226 228 Incorporated in NSW Australia

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

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 3000 Australia

T: 1800 230 300 (within Australia)

T: +61 3 9946 4460 (outside Australia)

W: www.computershare.com.au

International Towers Sydney (Tower One), Barangaroo South, Sydney

• 3 Contract types are Guaranteed Maximum Price (GMP) and Construction Management (CM).

• 4 Construction value represents the Group’s share of the total construction value of the project.

5 Secured date represents the financial year in which the project was secured.

• 6 Completion date represents the financial year in which the project is expected to be completed.

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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