LENDLEASE GROUP — Annual Report 2020

Aug 16, 2020

==> picture [524 x 78] intentionally omitted <==

----- Start of picture text -----

17 August 2020
----- End of picture text -----

Lendlease Trust 2020 Full Year Financial Report

Attached is the Lendlease Trust Financial Report for the year ended 30 June 2020.

ENDS

FOR FURTHER INFORMATION, PLEASE CONTACT:

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

Authorised for lodgement by the Lendlease Group Disclosure Committee

==> picture [108 x 77] intentionally omitted <==

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

Level 14, Tower Three, International Towers Sydney Exchange Place, 300 Barangaroo Avenue Barangaroo NSW 2000 Australia

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

==> picture [264 x 299] intentionally omitted <==

----- Start of picture text -----

Lendlease
Trust Consolidated
Financial Report
June 2020
AR S N 128 052 5 9 5
----- End of picture text -----

Table of Contents

Table of Contents
Directors’ Report	1
Lead Auditor’s Independence Declaration under Section 307C
of theCorporations Act 2001	4
Financial Statements
Statement of Comprehensive Income	5
Statement of Financial Position	5
Statement of Changes in Equity	6
Statement of Cash Flows	6
Notes to the Consolidated Financial Statements	7

Notes Index

Section A: Performance

Lendlease Responsible Entity Limited ABN 72 122 883 185 AFSL No. 308983 is the responsible entity of the Lendlease Trust ARSN 128 052 595. Lendlease Trust (LLT) is domiciled in Australia. The consolidated financial report of LLT for the year ended 30 June 2020 comprises LLT including its controlled entities (together referred to as the Consolidated Entity). The Consolidated Entity is a for profit entity. Further information about the Consolidated Entity’s primary activities is included in the Directors’ Report.

Shares in Lendlease Corporation (the Company) and units in LLT are traded as one security under the name of Lendlease Group on the Australian Securities Exchange (ASX).

The consolidated financial report was authorised for issue by the Directors on 17 August 2020.

	1.	Distributions	8
	2.	Earnings Per Unit	8
	3.	Revenue and Other Income	8
	4.	Finance Revenue and Finance Costs	9
	5.	Other Expenses	9
	6.	Events Subsequent to Balance Date	9
	Section B: Investment
	7.	Other Financial Assets	10
	8.	Equity Accounted Investments	11
	Section C: Liquidity and Working Capital
	9.	Cash and Cash Equivalents	13
	10.	Notes to Statement of Cash Flows	13
	11.	Borrowings and Financing Arrangements	14
	12.	Issued Capital	15
	13.	Liquidity Risk Exposure	16
	14.	Commitments	16
	15.	Loans and Receivables	16
	16.	Trade and Other Payables	17
	Section D: Risk Management
	17.	Financial Risk Management	17
	18.	Fair Value Measurement	18
	19.	Contingent Liabilities	18
	Section E: Other Notes
	20.	Related Party Information	19
	21.	Consolidated Entities	19
	22.	Impact of New and Revised Accounting Standards	19
	23.	Other Signifcant Accounting Policies	20
	Directors’ Declaration		21

01

Directors’ Report

The Directors of Lendlease Responsible Entity Limited (ABN 72 122 883 185), the Responsible Entity of Lendlease Trust (the Trust), present their Report together with the Annual Consolidated Financial Report of the Trust, for the year ended 30 June 2020 and the Auditor’s Report thereon.

The Responsible Entity is a wholly owned subsidiary of Lendlease Corporation Limited (the Company) and forms part of the consolidated Lendlease Group (the Group). The registered office and principal place of business of the Responsible Entity is Level 14, Tower Three, International Towers Sydney, Exchange Place, 300 Barangaroo Avenue, Barangaroo NSW 2000.

1. Governance

a. Board/Directors

The name of each person who has been a Director of the Responsible Entity between 1 July 2019 and the date of this Report are:

M J Ullmer, AO	Director since 2011 and Chairman since 2018
S B McCann	Group Chief Executive Ofcer & Managing Director since 2009
C B Carter, AM	Director since 2012
P M Cofey	Director since 2017
D P Craig	Director since 2016
M A Ford, OBE	Director since March 2020
J S Hemstritch	Director since 2011
E M Proust, AO	Director since 2018
N M Wakefeld Evans	Director since 2013
R F Welanetz	Director since March 2020
The names of Directors of the Responsible Entity who retired between 1 July 2019 and the date of this Report are:
S B Dobbs	Director since 2015 (retired 20 November 2019)

b. Company Secretary

W Lee Appointed in January 2010.

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

c. Interests in Capital

The interests of each of the Directors in the stapled securities of the Group at 17 August 2020 is set out below.

		Securities held			Securities held
	Securities held	benefcially/	Total	Securities held	benefcially/	Total
Current Directors	directly 2020	indirectly 20201	2020	directly 2019	indirectly 2019	2019
M J Ullmer	-	110,000	110,000	-	100,000	100,000
S B McCann	547,200	291,527	838,727	481,478	268,540	750,018
C B Carter	-	18,061	18,061	-	15,000	15,000
P M Cofey	-	21,216	21,216	-	9,810	9,810
D P Craig	-	63,061	63,061	-	50,000	50,000
M A Ford	-	4,065	4,065	-	-	-
J S Hemstritch	-	23,061	23,061	-	20,000	20,000
E M Proust	-	53,061	53,061	-	25,000	25,000
N M Wakefeld Evans	-	34,020	34,020	-	30,248	30,248
R F Welanetz	7,000	-	7,000	-	-	-
Former Director
S B Dobbs1	-	12,000	12,000	-	12,000	12,000

1. S B Dobbs ceased to be a Non-Executive Director on 20 November 2019. The balance of securities held at the end of the financial year shown here represents the balance held at that date.

02

Directors’ Report continued

2. Operations

a. Principal Activities

The principal activities of the Consolidated Entity include direct and indirect property investments in the Australia region and internationally.

b. Review and Results of Operations

For the year ended 30 June 2020 the Consolidated Entity reported a profit after tax of $31,969,000 (June 2019: $153,633,000).

Key transactions during the year include:

• An equity raise by issuing 97 million and 27 million new stapled securities via an institutional placement and Security Purchase Plan, respectively.

• Investment of $268,785,000 relating to Lendlease Global Commercial REIT which was listed on the Singapore Exchange on 2 October 2019;

• Partial disposal of units in Lendlease International Towers Sydney Trust for $89,095,000; and

• A final distribution of $22,412,000 (June 2019: $115,623,000) has been approved by the Directors and will be paid on 15 September 2020.

c. Distributions

For the year ended 30 June 2020 the Trust declared distributions of $67,093,000 (June 2019: $183,285,000). Distributions of $44,681,000 were paid on 17 March 2020. The remaining distributions of $22,412,000 (June 2019: $115,623,000) were provided for as at 30 June 2020 and will be paid on 15 September 2020.

d. Significant Changes in State of Affairs

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

e. Events Subsequent to Balance Date

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

f. Likely Developments

Details of likely developments in the operations of the Consolidated Entity in subsequent financial years are contained in the Performance and Outlook section of the Directors’ Report in the Lendlease Group Annual Report.

g. Environmental Regulation

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

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

All Lendlease 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.

03

3. Other

a. Security Options

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

b. Indemnification and Insurance of Directors and Officers

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

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

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

In accordance with the Corporations Act 2001 , Rule 12 of the Constitution also permits the Responsible Entity to purchase and maintain insurance or pay or agree to pay a premium for insurance for Officers against any liability incurred as an officer of the Company or of a related body corporate. Due to confidentiality obligations and undertakings for the policy, no further details in respect of the premium or policy can be disclosed.

c. Special Rules for Registered Schemes

Fees and other expenses of $112,000 were paid or are payable to a related party of the Responsible Entity out of the assets of the Trust for the financial year ended 30 June 2020 (June 2019: $313,000).

No units in the Trust were held by the Responsible Entity at the end of the financial year. Associates of the Responsible Entity held 5,798,869 units (June 2019: 5,682,712 units) as at the end of the financial year.

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

Details of the value of the Trust assets as at the end of the financial year and the basis of the valuation are set out in the Statement of Financial Position and Basis of Preparation.

Details of the number of Units in the Trust as at the end of the financial year are set out in Note 12 ‘Issued Capital’.

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

The Lead Auditor’s Independence Declaration is set out on page 4 and forms part of the Directors’ Report for the year ended 30 June 2020.

e. Rounding Off

Lendlease Trust is a Trust of the kind referred to in the ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, and in accordance with the Instrument, amounts in the financial statements and directors’ report have been rounded off to the nearest thousand dollars, or, where the amount is $500 or less, zero, unless specifically stated otherwise.

==> picture [116 x 47] intentionally omitted <==

M J Ullmer, AO Chairman

==> picture [55 x 41] intentionally omitted <==

S B McCann

Group Chief Executive Officer & Managing Director

Sydney, 17 August 2020

==> picture [90 x 67] intentionally omitted <==

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

To the Directors of Lendlease Responsible Entity Limited (the Responsible Entity of Lendlease Trust)

I declare that, to the best of my knowledge and belief, in relation to the audit of Lendlease Trust for the financial year ended 30 June 2020 there have been:

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

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

==> picture [75 x 42] intentionally omitted <==

KPMG

==> picture [140 x 38] intentionally omitted <==

D M McLennan Partner

Sydney 17 August 2020

4

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

Liability limited by a scheme approved under Professional Standards Legislation.

05

Consolidated Financial Statements

Statement of Comprehensive Income

Year ended 30 June 2020

		June 2020	June 20191
	Note	$’000	$’000
Revenue and other income	3	36,179	151,755
Other expenses		(1,774)	(2,898)
Share of loss of equityaccounted investments	8	(9,673)	-
Results from operating activities		24,732	148,857
Finance revenue		7,237	5,444
Finance costs		-	(668)
Net fnance revenue	4	7,237	4,776
Proft before tax		31,969	153,633
Income tax expense		-	-
Proft after tax		31,969	153,633
Other comprehensive income net of tax		-	-
Items that may be reclassifed subsequently to proft or loss
Movements in foreign currencytranslation reserve		(5,021)	-
Total items that may be reclassifed subsequently toproft or loss		(5,021)	-
Total comprehensive income after tax		26,948	153,633
Basic/diluted earnings per unit(cents)	2	5.30	26.14

1. As required under AASB133 Earnings per Share , the 30 June 2019 weighted average number of units has been updated to reflect the new units issued via the institutional placement and Security Purchase Plan during the year. The Basic/Diluted EPU has been restated to reflect this change.

Statement of Financial Position

As at 30 June 2020

		June 2020	June 2019
	Note	$’000	$’000
Current Assets
Cash and cash equivalents	9	19,475	14,289
Loans and receivables	15	820,177	512,629
Other fnancial assets	7	-	87,157
Total current assets		839,652	614,075
Non Current Assets
Equity accounted investments	8	250,122	-
Other fnancial assets	7	689,168	684,965
Total non current assets		939,290	684,965
Total assets		1,778,942	1,299,040
Current Liabilities
Trade and other payables	16	65	1,593
Distributionspayable	1	22,412	115,623
Total current liabilities		22,477	117,216
Non Current Liabilities
Borrowings and fnancingarrangements	11	-	-
Total non current liabilities		-	-
Total liabilities		22,477	117,216
Net assets		1,756,465	1,181,824
Equity
Issued capital	12	1,536,014	921,228
Buyback reserve	12	(67,149)	(67,149)
Foreign currency transaction reserve		(5,021)	-
Retained earnings		292,621	327,745
Total equity attributable to unitholders		1,756,465	1,181,824

The accompanying notes form part of these consolidated financial statements.

06

Consolidated Financial Statements continued

Statement of Changes in Equity

Year ended 30 June 2020

Statement of Changes in Equity Year ended 30 June 2020
			Foreign
			Currency
		Buyback	Translation	Retained
	Issued Capital	Reserve3	Reserve	Earnings	Total Equity
	$’000	$’000	$’000	$’000	$’000
Balance as at 1 July 2018	920,441	(33,300)	-	357,397	1,244,538
Total Comprehensive Income
Proft for the year	-	-	-	153,633	153,633
Other comprehensive income(net of tax)	-	-	-	-	-
Total comprehensive income	-	-	-	153,633	153,633
Transactions with Owners of the Trust
On market buyback of securities	-	(33,849)	-	-	(33,849)
Distribution Reinvestment Plan (DRP)	787	-	-	-	787
Distributionspaid andprovided for	-	-	-	(183,285)	(183,285)
Total other movements	787	(33,849)	-	(183,285)	(216,347)
Balance as at 30 June 2019	921,228	(67,149)	-	327,745	1,181,824
Balance as at 1 July 2019	921,228	(67,149)	-	327,745	1,181,824
Total Comprehensive Income
Proft for the year	-	-	-	31,969	31,969
Other comprehensive Income (net of tax)	-	-	-	-	-
Efect of foreign exchange movement	-	-	(5,021)	-	(5,021)
Total comprehensive income	-	-	(5,021)	31,969	26,948
Transactions with Owners of the Trust
Share issue via institutional placement (net of transaction costs)1	478,470	-	-	-	478,470
Share issue via Security Purchase Plan (net of transaction costs)2	134,236	-	-	-	134,236
Distribution Reinvestment Plan (DRP)	2,080	-	-	-	2,080
Distributionspaid andprovided for	-	-	-	(67,093)	(67,093)
Total other movements	614,786	-	-	(67,093)	547,693
Balance as at 30 June 2020	1,536,014	(67,149)	(5,021)	292,621	1,756,465

1. On 4 May 2020 the Consolidated Entity issued 97 million new stapled securities via an institutional placement at an issue price of $9.80.

2. On 4 June 2020 the Consolidated Entity issued 27 million new stapled securities via a Security Purchase Plan at an issue price of $9.80.

3. Stapled securities acquired by the Trust as part of the Group’s on market buyback have been recorded in the Buyback Reserve.

Statement of Cash Flows

Year ended 30 June 2020

Statement of Cash Flows Year ended 30 June 2020
		June 2020	June 2019
	Note	$’000	$’000
Cash Flows from Operating Activities
Cash receipts in the course of operations		3,679	2,299
Cash payments in the course of operations		(2,763)	(1,586)
Interest received		6,585	5,684
Interest paid		-	(749)
Distributions received		34,648	45,939
Net cashprovided by operating activities	10	42,149	51,587
Cash Flows from Investing Activities
Proceeds from sale of fair value through proft or loss investments		89,095	543,636
Acquisition of investments		(271,008)	(65,770)
Net cash(used in)/provided by investing activities		(181,913)	477,866
Cash Flows from Financing Activities
Net proceeds from share issue		612,706	-
Loan made to related party		(811,075)	(501,543)
Loan repayment to related party		-	(18,015)
Loan repayment by related party		501,543	125,000
Distributions paid		(158,224)	(91,663)
Payments for on market buyback of stapled securities		-	(33,849)
Payments for buyback of stapled securities - Distribution Reinvestment Plan(DRP)		-	(2,047)
Net cashprovided by/(used in) fnancing activities		144,950	(522,117)
Net increase in cash and cash equivalents		5,186	7,336
Cash and cash equivalents at beginningof fnancialyear		14,289	6,953
Cash and cash equivalents at end of fnancialyear	9	19,475	14,289

The accompanying notes form part of these consolidated financial statements.

07

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 thousand dollars unless otherwise indicated, in accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191; and

• Is prepared under the historical cost basis except for the following assets, which are stated at their fair value: fair value through profit or loss investments.

Significant accounting policies have been:

• Included in the relevant notes to which the policies relate, and other significant accounting policies are discussed in Note 23 ‘Other Significant Accounting Policies’; and

• Consistently applied to all financial years presented in the financial statements, except as explained in Note 22 ‘Impact of New and Revised Accounting Standards’.

The preparation of a financial report that complies with AASBs requires management to make judgements, estimates and assumptions.

• This can affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

• Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

• The significant accounting policies highlight information about accounting judgements in applying accounting policies that have the most significant effects on reported amounts and further information about estimated uncertainties that have a significant risk of resulting in material adjustments within the next financial year.

• These significant accounting estimates and judgements have been considered in the context of the COVID-19 outbreak and the impact of the current economic conditions.

The Consolidated Entity 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 Consolidated Entity’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 Consolidated Entity’s operating cycle and those liabilities due within one year from the reporting date. All other liabilities are classified as non current liabilities.

08

Notes to the Consolidated Financial Statements continued

Section A: Performance

Profit After Tax (PAT) is the key measure used to assess the Consolidated Entity’s performance. This section of the Consolidated Financial Report focuses on disclosure that enhances a user’s understanding of PAT. The key line items of the Statement of Comprehensive Income along with their components provide detail behind the reported balances. The Consolidated Entity’s performance will also impact the earnings per unit and distribution payout, therefore disclosure on these items have been included in this section. Further information and analysis on performance can be found in the Review and Results of Operations, which forms part of the Directors’ Report.

1. Distributions

1. Distributions
	Cents	June 2020	June 2019
	Per Unit	$’000	$’000
Lendlease Trust Interim Distribution
December 2019 – paid 17 March 2020	7.9	44,681	-
December 2018 –paid 20 March 2019	12.0	-	67,662
		44,681	67,662
Lendlease Trust Final Distribution
June 2020 – provided for (payable 15 September 2020)	3.3	22,412	-
June 2019 –provided for(paid 16 September 2019)	20.5	-	115,623
		22,412	115,623
		67,093	183,285

2. Earnings Per Unit (EPU)

Accounting Policies

The Consolidated Entity presents basic and diluted EPU in the Statement of Comprehensive Income.

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

Diluted EPU is determined by adjusting the profit/(loss) after tax attributable to the unitholders of the Trust, and the weighted average number of ordinary units outstanding for the effects of all dilutive potential ordinary units. The Trust currently does not have any dilutive potential ordinary units.

		June 2020	June 20191
Basic/Diluted Earnings Per Unit (EPU)
Proft after tax	$’000	31,969	153,633
Weighted average number of units	000’s	602,953	587,772
Basic/Diluted EPU	cents	5.30	26.14

1. As required under AASB133 Earnings per Share , the 30 June 2019 weighted average number of units has been updated to reflect the new units issued via the institutional placement and Security Purchase Plan during the year. The Basic/Diluted EPU has been restated to reflect this change.

3. Revenue and Other Income

Accounting Policies

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

Net gains or losses on sale of investments , including equity accounted investments and fair value through profit or loss assets 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 7 ‘Other Financial Assets’.

	June 2020	June 2019
	$’000	$’000
Distribution income	28,582	43,950
Net gain on fair value remeasurement of fair value through proft or loss assets	1,980	85,150
Net gain on sale of fnancial assets at fair value	1,938	20,356
Other income – related parties	3,679	2,299
Total revenue and other income	36,179	151,755

09

4. Finance Revenue and Finance Costs

Accounting Policies

Finance revenue is recognised as it is earned using the effective interest method, which applies the interest rate that discounts estimated future cash receipts over the expected life of the financial instrument. The discount is then recognised as finance revenue over the remaining life of the financial instrument.

Finance costs include interest, amortisation of discounts or premiums relating to borrowings and amortisation of costs incurred in connection with the arrangement of new borrowings facilities. Costs incurred in connection with the arrangement of borrowings are capitalised and amortised over the life of the borrowings. Finance costs are expensed immediately as incurred.

June 2020	June 2019
$’000	$’000
Finance Revenue External parties 121	388
Relatedparties 7,116	5,056
Total fnance revenue 7,237	5,444
Finance Costs Relatedparties -	(668)
Total fnance costs -	(668)
Net fnance revenue 7,237	4,776

5. Other Expenses

Other expenses includes Auditor’s Remuneration as detailed below:

5. Other Expenses Other expenses includes Auditor’s Remuneration as detailed below:
	June 2020	June 2019
	$	$
Auditor’s Remuneration
Amounts received or due and receivable by the auditor of the Consolidated Entity for:
Audit and Other Assurance Services
Audit services	63,000	63,000
Other assurance services	-	-
Total audit and other assurance services	63,000	63,000
Non audit services	-	-
Total audit, other assurance and non audit services	63,000	63,000

6. Events Subsequent to Balance Date

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

10

Notes to the Consolidated Financial Statements continued

Section B: Investment

This section includes disclosures for indirect property assets such as Other Financial Assets and Equity Accounted Investments contained within the Statement of Financial Position.

7. Other Financial Assets

Accounting Policies

Financial Assets at fair value through profit or loss on initial recognition are measured at fair value (generally transaction price) and subsequently stated at fair value. Transaction costs are recorded as expenses when they are incurred. Any gain or loss arising from a change in fair value is recognised in the Statement of Comprehensive Income.

Financial Assets at amortised cost are presented within Note 15 ‘Loans and Receivables’.

	Fair Value	June 2020	June 2019
	Level1	$’000	$’000
Current Measured at Fair Value
Fair Value Through Proft or Loss – Designated at Initial Recognition
Lendlease International Towers Sydney Trust	Level 3	-	87,157
Total current other fnancial assets		-	87,157
Non Current Measured at Fair Value
Fair Value Through Proft or Loss – Designated at Initial Recognition
Lendlease International Towers Sydney Trust	Level 3	153,022	151,465
Lendlease One International Towers Sydney Trust	Level 3	53,372	53,710
Australian Prime Property Fund – Industrial	Level 3	95,637	90,437
Australian Prime Property Fund – Commercial	Level 3	363,425	360,927
Australian Prime Property Fund – Retail	Level 3	21,534	28,049
Carlton Connect Initiative	Level 3	2,178	377
Total non current other fnancial assets		689,168	684,965
Total other fnancial assets		689,168	772,122

1. Refer to Note 18 ‘Fair Value Measurement’ for details on basis of determining fair value and valuation technique.

a. Fair Value Reconciliation

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

a. Fair Value Reconciliation Reconciliation of the carrying amount for Level 3 fnancial instruments is set out as follows.
	June 2020	June 2019
	Unlisted Equity	Unlisted Equity
	Investments	Investments
	$’000	$’000
Carrying amount at beginning of fnancial year	772,122	1,144,423
Additions	2,223	65,770
Disposals	(87,157)	(543,577)
Gains recognised in Statement of Comprehensive Income – revenue and other income	1,980	105,506
Carrying amount at end of fnancial year	689,168	772,122

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

11

8. Equity Accounted Investments

Accounting Policies

Investments in associates are accounted for using the equity method. The share of profit recognised under the equity method is the Consolidated Entity’s share of the investment’s profit or loss based on ownership interest held. Associates are entities in which the Consolidated Entity, as a result of its voting rights, has significant influence, but not control or joint control, over the financial and operating policies. This applies from the date that significant influence commences until the date that significant influence ceases.

Investments in associates are carried at the lower of the equity accounted carrying amount and the recoverable amount. When the Consolidated Entity’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), the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Consolidated Entity has obligations in respect of the associate.

Dividends from associates represent a return on the Consolidated Entity’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 to the extent of the Consolidated Entity’s interest in the associate. 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’ reserves are recognised directly in the Consolidated Entity’s consolidated reserves.

a. Associates	INTEREST June 2020 % June 2019 %	SHARE OF LOSS	NET BOOK VALUE
			June 2020 $’000 June 2019 $’000
Asia Investments Lendlease Global Commercial REIT			250,122 -
	24.2% -	(9,673) -
Total Asia		(9,673) -	250,122 -
Total Less: Impairment		(9,673) - - -	250,122 - - -
Total associates		(9,673) -	250,122 -

b. Material Associates Summarised Financial Information

Material associates are determined by comparing individual investment carrying value and share of profit with the total equity accounted investment carrying value and share of profit, along with consideration of relevant qualitative factors.

Income Statement	LENDLEASE GLOBAL COMMERCIAL REIT1
	June 2020 $’000 June 2019 $’000
Revenue Cost of sales Unrealised fair value gains/(losses) Interest expense Other expense Income tax expense	59,815 - (16,398) - (21,720) - (1,114) - (29,931) - - -
Loss for the period Other comprehensive income	(9,348) - 17,011 -
Total comprehensive income Consolidated Entity’s ownership interest Consolidated Entity’s total share of: Loss for the period Other adjustments	7,663 - 24.2% - (2,262) - (7,411) -
Total loss for the period Other comprehensive loss	(9,673) - (5,021) -
Total comprehensive loss	(14,694) -

1. The underlying investments in this associate are office and retail investment properties measured at fair value. At 30 June 2020, valuations were undertaken that took into account the impacts of the COVID-19 pandemic. The downward valuation movement was driven by the retail asset due to the impact of the contraction in the local Singapore economy. Additionally, the current market conditions related to the carrying value of the investment were also considered. The carrying value of the investment is considered recoverable as it correlates with the net assets of the associate, which have been valued at 30 June 2020 as noted above.

12

Notes to the Consolidated Financial Statements continued

Section B: Investment continued

8. Equity Accounted Investments continued

b. Material Associates Summarised Financial Information continued

b. Material Associates Summarised Financial Informationcontinued
Statement of Financial Position	LENDLEASE GLOBAL COMMERCIAL REIT
	June 2020 $’000 June 2019 $’000
Current assets Cash and cash equivalents Other current assets	87,309 - 13,968 -
Total current assets	101,277 -
Non current assets Investment properties Other non current assets	1,506,431 - 15,611 -
Total non current assets	1,522,042 -
Current liabilities Other current liabilities	22,197 -
Total current liabilities	22,197 -
Non current liabilities Financial liabilities (excluding trade payables) Other non current liabilities	551,951 - 12,627 -
Total non current liabilities	564,578 -
Net assets	1,036,544 -
Reconciliation to Carrying Amounts Opening net assets 1 July Acquisition/contributions Distributions Total comprehensive income for the year Foreign currency translation for the year	- - 1,076,828 - (16,408) - 7,663 - (31,539) -
Closing net assets	1,036,544 -
% ownership Group’s share of net assets Other adjustments	24.2% - 250,844 - (722) -
Carrying amount at end of period	250,122 -

There were no immaterial associates for the year ended 30 June 2020.

13

Section C: Liquidity and Working Capital

The ability of the Consolidated Entity to fund the continued investment 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 Consolidated Entity’s activities, including existing commitments and the liquidity risk exposure associated with financial liabilities. The section also contains disclosures for the Consolidated Entity’s trading assets, and the trading liabilities incurred as a result of trading activities used to generate the Consolidated Entity’s Performance.

9. 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.

	June 2020	June 2019
	$’000	$’000
Cash and Cash Equivalents
Cash	19,475	14,289
Total cash and cash equivalents	19,475	14,289

10. Notes to Statement of Cash Flows

10. Notes to Statement of Cash Flows
	June 2020	June 2019
	$’000	$’000
Reconciliation of Proft After Tax to Net Cash Provided by Operating Activities
Proft after tax	31,969	153,633
Net (gain) on fair value remeasurement of fair value through proft or loss assets	(1,980)	(85,150)
(Gain) on disposal of fnancial assets	(1,938)	(20,356)
Other income included in investing cash fow	9,673	-
Other	3,971	162
Net cashprovided by operating activities before changes in asset and liabilities	41,695	48,289
Changes in assets and liabilities
Decrease in receivables	1,982	1,837
(Decrease)/ increase inpayables	(1,528)	1,461
Net cashprovided by operating activities	42,149	51,587

14

Notes to the Consolidated Financial Statements continued

Section C: Liquidity and Working Capital continued

11. 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.

Borrowings and Finance Facilities

The Consolidated Entity has access to the following financial facilities:

	June 2020	June 2019
	$’000	$’000
Related party loan facility
Facility available	300,000	300,000
Amount of facilityused	-	-
Amount of facility unused	300,000	300,000

Consistent with prior years, the Consolidated Entity has not defaulted on any obligations of principal or interest in relation to its borrowings and finance arrangements and other financial liabilities.

Movement in Borrowings and Financing Arrangements

Movement in Borrowings and Financing Arrangements
	June 2020	June 2019
	$’000	$’000
Balance at the beginning of fnancial year	-	18,015
Netproceeds from borrowings/(loan repayments)	-	(18,015)
Balance at the end of fnancial year	-	-

15

12. Issued Capital

Accounting Policies

Issued Capital

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

	June 2020		June 2019
	No of units	June 2020	No of units	June 2019
	’000s	$’000	’000s	$’000
Issued capital at beginning of fnancial year	584,262	921,228	583,983	920,441
Distribution Reinvestment Plan (DRP)	662	2,080	279	787
Share issue via institutional placement (net of transaction costs)1,4	96,939	478,470	-	-
Share issue via Security Purchase Plan (net of transaction costs)2,4	26,536	134,236	-	-
Issued capital at end of fnancial year	708,399	1,536,014	584,262	921,228
Buyback Reserve at beginning of fnancial year	(20,131)	(67,149)	(9,722)	(33,300)
On market buyback of securities3			(10,409)	(33,849)
Buyback Reserve at end of fnancial year	(20,131)	(67,149)	(20,131)	(67,149)
Balance refected in Reserves3		67,149	-	67,149
Issued capital at end of fnancial year	688,268	1,536,014	564,131	921,228

1. On 4 May 2020 the Consolidated Entity issued 97 million new stapled securities via an institutional placement at an issue price of $9.80.

2. On 4 June 2020 the Consolidated Entity issued 27 million new stapled securities via a Security Purchase Plan at an issue price of $9.80.

3. Stapled securities acquired by the Trust as part of the Group’s on market stapled security buyback have been recorded in the Buyback Reserve.

4. During the period the Group raised $1,193 million in equity after costs which was allocated 48.4% to the Company and 51.6% to Lendlease Trust.

a. Issuance of Securities

At 30 June 2020 Lendlease Trust had 688,267,587 units on issue equivalent to the number of Lendlease Corporation shares on issue. The issued units of the Trust and shares on issue by Lendlease Corporation Limited are stapled securities.

b. Security Accumulation Plans

The Distribution Reinvestment Plan (DRP) was reactivated in February 2011. The last date for receipt of an election notice for participation in the DRP is 25 August 2020. The issue price is the arithmetic average of the daily volume weighted average price of Lendlease 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

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

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

16

Notes to the Consolidated Financial Statements continued

Section C: Liquidity and Working Capital continued

13. Liquidity Risk Exposure

Further information on Liquidity Risk is disclosed in Note 17 ‘Financial Risk Management’. As disclosed in Note 19 ‘Contingent Liabilities’ in certain circumstances the Trust guarantees the performance of particular Stapled 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 2020, the Consolidated Entity does not anticipate a significant liquidity risk in relation to these facilities in the next 12 months.

The following are the contractual cash flow maturities of financial liabilities including estimated interest payments.

		Carrying	Contractual	Less than	One to Two	Two to Five	More than
		Amount	Cash Flows	One Year	Years	Years	Five Years
	Note	$’000	$’000	$’000	$’000	$’000	$’000
June 2020
Non Derivative Financial Liabilities
Trade and other payables	16	65	65	65	-	-	-
Borrowings and fnancing arrangements	11	-	-	-	-	-	-
Distributionspayable	1	22,412	22,412	22,412	-	-	-
Total		22,477	22,477	22,477	-	-	-
June 2019
Non Derivative Financial Liabilities
Trade and other payables	16	1,593	1,593	1,593	-	-	-
Borrowings and fnancing arrangements	11	-	-	-	-	-	-
Distributionspayable	1	115,623	115,623	115,623	-	-	-
Total		117,216	117,216	117,216	-	-	-

Other contractually committed cash flows the Consolidated Entity is exposed to are detailed in Note 14 ‘Commitments’.

14. Commitments

14. Commitments
	June 2020	June 2019
	$’000	$’000
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	8,842	4,737
Due between one and fveyears	-	4,408
	8,842	9,145

15. Loans and Receivables

Accounting Policies

Loans and receivables are non derivative financial assets with fixed or determinable payments that are not equity securities. Loans and receivables are carried at amortised cost using the effective interest method, which applies the interest rate that discounts estimated future cash receipts over the term of the loans and receivables. Cash flows relating to short term trade and other receivables are not discounted if the effect of discounting is immaterial. The discount, if material, is then recognised as revenue over the remaining term.

The Consolidated Entity assesses provision for impairment of loans and receivables based on expected loss, if material. The Consolidated Entity considers reasonable and supportable information that is relevant and available. This includes both quantitative and qualitative information and analysis, based on the Consolidated Entity’s historical impairment experience, credit assessment of customers and any relevant forward-looking information. The amount of the provision is recognised in the Income Statement.

	June 2020	June 2019
	$’000	$’000
Current
Other receivables – external parties	8,305	10,941
Loan to relatedparty	811,872	501,688
Total loans and receivables	820,177	512,629

The interest bearing loan facility is due within 12 months. 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 Consolidated Entity considers how economic and market conditions will affect the creditworthiness of certain entities. There were no past due or impaired receivables for 30 June 2020 (June 2019: $nil past due and $nil impaired).

17

16. Trade and Other Payables

Accounting Policies

Trade Creditors

Liabilities are recognised for amounts to be paid in the future for goods or services received, whether or not billed to the Consolidated Entity. Trade and other payables are settled in the normal course of business. Trade and other payables are carried at amortised cost using the effective interest method, which applies the interest rate that discounts estimated future cash outflows over the term of the trade and other payables. Cash flows relating to short term trade and other payables are not discounted if the effect of discounting is immaterial. The discount, if material, is then recognised as an expense over the remaining term.

	June 2020	June 2019
	$’000	$’000
Current
Otherpayables	65	1,593
Total trade and otherpayables	65	1,593

Section D: Risk Management

The Consolidated Entity’s activities expose it to a variety of financial risks. The Consolidated Entity’s overall risk management strategy focuses on the unpredictability of financial markets and seeks to minimise adverse effects on the Consolidated Entity’s performance. Treasury policies have been approved by the Board for managing this risk. This section contains disclosures of financial risks the Consolidated Entity is exposed to and how the Consolidated Entity manages these risks. The impact of contingent liabilities is also considered in this section.

17. Financial Risk Management

The Lendlease Asset and Liability Committee oversees the management of the Consolidated Entity’s financial risks, within the parameters of a Board approved Treasury Policy, and maintains a Group-wide framework for financial risk management and reviews issues of material risk exposure within the scope of the Treasury Policy. A summary of key risks identified, exposures and management of exposures is detailed in the table below.

Risks Identifed	Defnition	Exposures	Management of Exposures
Credit	The risk that a counterparty will not	• Recoverability of loans and	• Policies in place so that customers
	be able to meet its obligations in	receivables	and suppliers are appropriately credit
	respect of a fnancial instrument, resulting in a fnancial loss to the Consolidated Entity	• Recoverability of other fnancial assets and cash deposits • Further information on exposures is detailed in Note 17a ‘Credit Risk	assessed • Treasury Policy sets out credit limits for each counterparty based on minimum investment grade ratings
		Exposure’
Liquidity	The risk of having insufcient funds	• Insufcient levels of committed	• Maintaining sufcient levels of cash
	to settle fnancial liabilities as and	credit facilities	and committed credit facilities to
	when they fall due	• Settlement of fnancial liabilities • Further information on exposures is detailed in Note 13 ‘Liquidity Risk Exposure’	meet fnancial commitments and working capital requirements • Managing to funding portfolio benchmarks as outlined in the Treasury Policy
			• Timely review and renewal of credit
			facilities
Interest Rate	The risk that the value of a fnancial	• Financial assets, mainly cash at	• Physical fnancial instruments
	instrument or cash fow associated with the instrument will fuctuate due to changes in market interest	bank • Financial liabilities, mainly borrowings and fnancing	• Speculative trading is not permitted
	rates	arrangements
		• Further information on exposures
		is detailed in Note 17b ‘Interest
		Rate Risk Exposure’
Equity Price	The risk that the fair value of either	• All traded and/or non traded	• Material investments within the
	a traded or non traded equity	fnancial instruments measured at	portfolio are managed on an
	investment, derivative equity	fair value	individual basis. The Consolidated
	instrument, or a portfolio of such		Entity’s portfolio is monitored closely
	fnancial instruments, increases or		as part of capital recycling initiatives
	decreases in the future

18

Notes to the Consolidated Financial Statements continued

Section D: Risk Management continued

17. Financial Risk Management continued

a. 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 Trust) equals the carrying amount.

Refer to Note 15 ‘Loans and Receivables’ for information relating to impairment on loans and receivables. No provision for doubtful debts has been raised as no impairment has been identified.

b. Interest Rate Risk Exposure

The Consolidated Entity’s exposure to interest rate risk on its financial assets and liabilities is set out as follows, the Consolidated Entity has no fixed rate instruments.

no fxed rate instruments.
		CARRYING AMOUNT
		June 2020	June 2019
	Note $’000		$’000
Variable Rate Instruments
Cash and cash equivalents	9	19,475	14,289
Loan to relatedparty	15	811,872	501,543
Total Variable Rate Instruments		831,347	515,832

Sensitivity Analysis

At 30 June 2020 it is estimated that an increase of one percentage point in interest rates would have increased the Consolidated Entity’s equity and profit after tax by $8,313,470 (June 2019: $5,158,320). A one percentage point decrease in interest rates would have an equal opposite effect on equity and profit after tax. The increase or decrease in interest income/expense is proportional to the increase or decrease in interest rates.

18. Fair Value Measurement

Accounting Policies

The accounting policies for financial instruments held at fair value are included in Note 7 ‘Other Financial Assets’. Management considers 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.

a. Basis of Determining Fair Value

The fair value of unlisted equity investments, including investments in property funds, is determined based on an assessment of the underlying net assets which may include periodic independent and directors’ valuations, future maintainable earnings, and any special circumstances pertaining to the particular investment. Fair value of unlisted equity instruments has also taken the COVID-19 pandemic into consideration to determine fair value at 30 June 2020. This has included more frequent independent valuations of underlying investment properties to account for current market conditions.

b. Fair Value Measurements

The different levels of valuation method have been defined as follows:

• Level 1: The fair value is determined using the unadjusted quoted price for an identical asset or liability in an active market for identical assets or liabilities;

• Level 2: The fair value is calculated using predominantly observable market data other than unadjusted quoted prices for an identical asset or liability; and

• Level 3: The fair value is calculated using inputs that are not based on observable market data.

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

19. Contingent Liabilities

The Consolidated Entity has identified the following contingent liabilities, being liabilities in respect of which there is the potential for a cash outflow in excess of any provision where the likelihood of payment is not considered probable or cannot be measured reliably at this time:

• In certain circumstances, the Trust, as part of the Group, guarantees the performance of particular Group entities in respect of their obligations. This includes bonding and bank guarantee facilities used primarily by the construction business. These guarantees are provided in respect of activities that occur in the ordinary course of business and any known losses in respect of the relevant contracts have been brought to account.

19

Section E: Other Notes

20. Related Party Information

Key Management Personnel Disclosures

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

Responsible Entity’s Remuneration

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

As at 30 June 2020, $112,000 (June 2019: $313,000 ) was charged to the Trust. The amount charged was paid to a related party of the Responsible Entity. The amount owed to the Responsible Entity at 30 June 2020 was $nil (June 2019: $nil).

Other Related Party Transactions

Transactions and outstanding balances with related parties have been disclosed in Note 3 ‘Revenue and Other Income’, Note 4 ‘Finance Revenue and Finance Costs’, Note 11 ‘Borrowings and Financing Arrangements’ and Note 15 ‘Loans and Receivables’

21. Consolidated Entities

The material entities of the Consolidated Entity listed below were wholly owned during the current period.

PARENT ENTITY	AUSTRALIA
Lendlease Trust	Lendlease LLT Holdings Sub Trust1
	Lendlease SREIT Sub Trust1

1. Incorporated in the current period and 100% owned by the Trust.

During the current period, there were no acquisitions or disposals of material consolidated entities.

22. Impact of New and Revised Accounting Standards

Impact of New and Revised Accounting Standards

New and Revised Accounting Standards Adopted 1 July 2019

From 1 July 2019 the Consolidated Entity adopted AASB 16 Leases and consequential amendments. AASB 16 did not have a material impact on the Consolidated Entity.

New Accounting Standards and Interpretations Not Yet Adopted

Accounting Standard	Requirement	Impact on Financial Statements
AASB 2014-10	AASB 2014-10 amends AASB 10 and AASB	Based on preliminary analysis performed,
Amendments to Australian Accounting	128 to clarify the requirements for recording	the amendments are not expected to have a
Standards – Sale or Contribution of Assets	the sale or contribution of assets between an	material impact on the Consolidated Entity.
between an Investor and its Associate or	investor and its associate or joint venture.
_Joint Venture_and consequential amendments	The amendment becomes mandatory for the June 2023 fnancial year and will be applied
	prospectively.

20

Notes to the Consolidated Financial Statements continued

Section E: Other Notes continued

23. Other Significant Accounting Policies

a. Income Tax

Under current Australian income tax legislation the Consolidated Entity is not liable for income tax, including capital gains tax, to the extent that unitholders are attributed the taxable income of the Consolidated Entity.

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.

21

Director’s Declaration

In the opinion of the Directors of Lendlease Responsible Entity Limited, the responsible entity for the Lendlease Trust (the Trust):

1. The consolidated financial statements and notes are in accordance with the Corporations Act 2001 , including:

2. a. Giving a true and fair view of the financial position of the Consolidated Entity as at 30 June 2020 and of its 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 consolidated 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 Trust 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 2020.

Signed in accordance with a resolution of the Directors:

==> picture [116 x 47] intentionally omitted <==

M J Ullmer, AO

Chairman

==> picture [54 x 41] intentionally omitted <==

S B McCann

Group Chief Executive Officer & Managing Director

Sydney, 17 August 2020

==> picture [80 x 33] intentionally omitted <==

Independent Auditor’s Report

To the unitholders of Lendlease Trust

Opinion

We have audited the Financial Report of Lendlease Trust (the Trust).

In our opinion, the accompanying Financial Report of the Trust is in accordance with the Corporations Act 2001 , including:

• giving a true and fair view of the Consolidated Entity ’s financial position as at 30 June 2020 and of its financial performance for the year ended on that date; and

• complying with Australian Accounting Standards to the extent described in Note 1 and the Corporations Regulations 2001 .

The Financial Report comprises

• Statement of financial position as at 30 June 2020;

• Statement of comprehensive income, Statement of changes in equity and Statement of cash flows for the year then ended;

• Notes including a summary of significant accounting policies; and

• Directors’ Declaration.

The Consolidated Entity consists of the Trust and the entities it controlled at the year-end or from time to time during the year.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards . We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report.

We are independent of the Consolidated Entity and Lendlease Responsible Entity Limited (the Responsible Entity) in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.

Other Information

Other Information is financial and non-financial information in Lendlease Trust’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors of the Responsible Entity are responsible for the Other Information.

Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

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

Liability limited by a scheme approved under Professional Standards Legislation.

==> picture [80 x 33] intentionally omitted <==

We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report.

Responsibilities of the Directors for the Financial Report

The Directors of the Responsible Entity are responsible for:

• preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and Corporations Act 2001 ;

• implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error; and

• assessing the Trust and the Consolidated Entity’s ability to continue as a going concern. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Trust and the Consolidated Entity or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the Financial Report

Our objective is:

• to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error; and

• to issue an Auditor’s Report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Report.

A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar3.pdf. This description forms part of our Auditor’s Report.

==> picture [76 x 41] intentionally omitted <==

KPMG

==> picture [140 x 38] intentionally omitted <==

D M McLennan Partner

Sydney 17 August 2020