LENDLEASE GROUP — Governance Information 2019

Aug 18, 2019

Appendix 4G

Key to Disclosures Corporate Governance Council Principles and Recommendations

Rules 4.7.3 and 4.10.3[1]

Appendix 4G

Key to Disclosures Corporate Governance Council Principles and Recommendations

Introduced 01/07/14 Amended 02/11/15

Name of entity

LENDLEASE CORPORATION LIMITED

ABN / ARBN ACN 000 226 228	Financial year ended:
ACN 000 226 228	30 JUNE 2019

Our corporate governance statement[2] for the above period above can be found at:[3]

☐ These pages of our annual report:

þ This URL on our website: https://www.lendlease.com/au/company/governance/

The Corporate Governance Statement is accurate and up to date as at 19 August 2019 and has been approved by the board.

The annexure includes a key to where our corporate governance disclosures can be located.

Date: 19 August 2019

Name of Director or Secretary authorising Wendy Lee, Company Secretary lodgement:

1 Under Listing Rule 4.7.3, an entity must lodge with ASX a completed Appendix 4G at the same time as it lodges its annual report with ASX.

Listing Rule 4.10.3 requires an entity that is included in the official list as an ASX Listing to include in its annual report either a corporate governance statement that meets the requirements of that rule or the URL of the page on its website where such a statement is located. The corporate governance statement must disclose the extent to which the entity has followed the recommendations set by the ASX Corporate Governance Council during the reporting period. If the entity has not followed a recommendation for any part of the reporting period, its corporate governance statement must separately identify that recommendation and the period during which it was not followed and state its reasons for not following the recommendation and what (if any) alternative governance practices it adopted in lieu of the recommendation during that period.

Under Listing Rule 4.7.4, if an entity chooses to include its corporate governance statement on its website rather than in its annual report, it must lodge a copy of the corporate governance statement with ASX at the same time as it lodges its annual report with ASX. The corporate governance statement must be current as at the effective date specified in that statement for the purposes of rule 4.10.3.

2 “Corporate governance statement” is defined in Listing Rule 19.12 to mean the statement referred to in Listing Rule 4.10.3 which discloses the extent to which an entity has followed the recommendations set by the ASX Corporate Governance Council during a particular reporting period.

3 Mark whichever option is correct and then complete the page number(s) of the annual report, or the URL of the web page, where the entity’s corporate governance statement can be found. You can, if you wish, delete the option which is not applicable. Throughout this form, where you are given two or more options to select, you can, if you wish, delete any option which is not applicable and just retain the option that is applicable. If you select an option that includes “OR” at the end of the selection and you delete the other options, you can also, if you wish, delete the “OR” at the end of the selection.

• See chapter 19 for defined terms 2 November 2015

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Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations

ANNEXURE – KEY TO CORPORATE GOVERNANCE DISCLOSURES

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …
	PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
1.1	A listed entity should disclose: (a) the respective roles and responsibilities of its board and management; and (b) those matters expressly reserved to the board and those delegated to management.	… the fact that we follow this recommendation: þ in our Corporate Governance Statement on page 2. … and information about the respective roles and responsibilities of our board and management (including those matters expressly reserved to the board and those delegated to management): þ in our Corporate Governance Statement on page 2.
1.2	A listed entity should: (a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and (b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director.	… the fact that we follow this recommendation: þin our Corporate Governance Statement on page 4.
1.3	A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment.	… the fact that we follow this recommendation: þ in our Corporate Governance Statement on page 2 (senior executive) and on page 4 (director).
1.4	The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board.	… the fact that we follow this recommendation: þin our Corporate Governance Statement on page 4.

• See chapter 19 for defined terms

2 November 2015

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Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations

Corporate Governance Council recommendation	Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …
1.5	A listed entity should: (a) have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them; (b) disclose that policy or a summary of it; and (c) disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them and either: (1) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); or (2) if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act.		… the fact that we have a diversity policy that complies with paragraph (a): þin our Corporate Governance Statement on page 14. … and a copy of our diversity policy or a summary of it: þat https://www.lendlease.com/au/company/governance/ … and the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with our diversity policy and our progress towards achieving them: þin our Corporate Governance Statement on page 14. … and the information referred to in paragraphs (c)(1) or (2): þin the Corporate Governance Statement on page 14.
1.6	A listed entity should: (a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.		… the evaluation process referred to in paragraph (a): þ in our Corporate Governance Statement on page 5. … and the information referred to in paragraph (b): þin our Corporate Governance Statement on page 5.
1.7	A listed entity should: (a) have and disclose a process for periodically evaluating the performance of its senior executives; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.		… the evaluation process referred to in paragraph (a): þin our Corporate Governance Statement on page 2. … and the information referred to in paragraph (b): þin our Corporate Governance Statement on page 2.
		PRINCIPLE 2 - STRUCTURE THE BOARD TO ADD VALUE

• See chapter 19 for defined terms 2 November 2015

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Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …
2.1	The board of a listed entity should: (a) have a nomination committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively.	[If the entity complies with paragraph (a):] … the fact that we have a nomination committee that complies with paragraphs (1) and (2): þin our Corporate Governance Statement on pages 5-7. … and a copy of the charter of the committee: þ at https://www.lendlease.com/au/company/governance/ … and the information referred to in paragraphs (4) and (5): þin our Corporate Governance Statement on pages 5-8.
2.2	A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.	… our board skills matrix: þin the Annual Report of page 79.
2.3	A listed entity should disclose: (a) the names of the directors considered by the board to be independent directors; (b) if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and (c) the length of service of each director.	… the names of the directors considered by the board to be independent directors: þin the Annual Report on pages 80-84. … and, where applicable, the information referred to in paragraph (b): þin our Corporate Governance Statement on page 3. … and the length of service of each director: þ in the Annual Report on pages 80-84.
2.4	A majority of the board of a listed entity should be independent directors.	… the fact that we follow this recommendation: þin our Corporate Governance Statement on page 3.

• See chapter 19 for defined terms 2 November 2015

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Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …
2.5	The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity.	… the fact that we follow this recommendation: þin our Corporate Governance Statement on page 4.
2.6	A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.	… the fact that we follow this recommendation: þin our Corporate Governance Statement on page 4.
	PRINCIPLE 3 – ACT ETHICALLY AND RESPONSIBLY
3.1	A listed entity should: (a) have a code of conduct for its directors, senior executives and employees; and (b) disclose that code or a summary of it.	… our code of conduct or a summary of it: þin our Corporate Governance Statement on page 12. A copy of the Code of Conduct can be found at https://www.lendlease.com/au/company/governance/
	PRINCIPLE 4 – SAFEGUARD INTEGRITY IN CORPORATE
	REPORTING
4.1	The board of a listed entity should: (a) have an audit committee which: (1) has at least three members, all of whom are non- executive directors and a majority of whom are independent directors; and (2) is chaired by an independent director, who is not the chair of the board, and disclose: (3) the charter of the committee; (4) the relevant qualifications and experience of the members of the committee; and (5) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner.	[If the entity complies with paragraph (a):] … the fact that we have an audit committee that complies with paragraphs (1) and (2): þin our Corporate Governance Statement on pages 5-7. … and a copy of the charter of the committee: þat https://www.lendlease.com/au/company/governance/ … and the information referred to in paragraphs (4) and (5): þ in our Corporate Governance Statement on pages 5-8. For the qualifications and experience of the members of the committee, in the Annual Report.

• See chapter 19 for defined terms

2 November 2015

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Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …
4.2	The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.	… the fact that we follow this recommendation: þ in our Corporate Governance Statement on page 10.
4.3	A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit.	… the fact that we follow this recommendation: þin our Corporate Governance Statement on page 11.
	PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE
5.1	A listed entity should: (a) have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and (b) disclose that policy or a summary of it.	… our continuous disclosure compliance policy or a summary of it: þin our Corporate Governance Statement on page 12. A copy of the policy is available on the Lendlease website at https://www.lendlease.com/au/company/governance/
	PRINCIPLE 6 – RESPECT THE RIGHTS OF SECURITY HOLDERS
6.1	A listed entity should provide information about itself and its governance to investors via its website.	… information about us and our governance on our website: þat https://www.lendlease.com/au/company/governance/
6.2	A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors.	… the fact that we follow this recommendation: þ in our Corporate Governance Statement on page 12.
6.3	A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders.	… our policies and processes for facilitating and encouraging participation at meetings of security holders: þ in our Corporate Governance Statement on page 12.
6.4	A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically.	… the fact that we follow this recommendation: þin our Corporate Governance Statement on page 12.

• See chapter 19 for defined terms 2 November 2015

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Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …
	PRINCIPLE 7 – RECOGNISE AND MANAGE RISK
7.1	The board of a listed entity should: (a) have a committee or committees to oversee risk, each of which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework.	[If the entity complies with paragraph (a):] … the fact that we have a committee or committees to oversee risk that comply with paragraphs (1) and (2): þin our Corporate Governance Statement on pages 5-7. … and a copy of the charter of the committee: þat https://www.lendlease.com/au/company/governance/ … and the information referred to in paragraphs (4) and (5): þin our Corporate Governance Statement on pages 5-8.
7.2	The board or a committee of the board should: (a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and (b) disclose, in relation to each reporting period, whether such a review has taken place.	… the fact that board or a committee of the board reviews the entity’s risk management framework at least annually to satisfy itself that it continues to be sound: þin our Corporate Governance Statement on pages 9-10. … and that such a review has taken place in the reporting period covered by this Appendix 4G: þ in our Corporate Governance Statement on page 9.
7.3	A listed entity should disclose: (a) if it has an internal audit function, how the function is structured and what role it performs; or (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes.	[If the entity complies with paragraph (a):] … how our internal audit function is structured and what role it performs: þin our Corporate Governance Statement on page 11.

• See chapter 19 for defined terms 2 November 2015

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Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …
7.4	A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks.	… whether we have any material exposure to economic, environmental and social sustainability risks and, if we do, how we manage or intend to manage those risks: þin our Corporate Governance Statement on page 10 and in the Annual Report in the Sustainability and Risk sections.
	PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY
8.1	The board of a listed entity should: (a) have a remuneration committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive.	[If the entity complies with paragraph (a):] … the fact that we have a remuneration committee that complies with paragraphs (1) and (2): þin our Corporate Governance Statement on pages 5-7. … and a copy of the charter of the committee: þat https://www.lendlease.com/au/company/governance/ … and the information referred to in paragraphs (4) and (5): þin our Corporate Governance Statement on pages 5-8.
8.2	A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives.	… separately our remuneration policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives: þin the Remuneration Report in the Annual Report
8.3	A listed entity which has an equity-based remuneration scheme should: (a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and (b) disclose that policy or a summary of it.	… our policy on this issue or a summary of it: þ in our Corporate Governance Statement on page 13.

• See chapter 19 for defined terms 2 November 2015

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2019

Lendlease Corporate Governance Statement

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Lendlease / Corporate Governance Statement 2019 / 3

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Corporate Governance Statement

• This statement sets out the principle features of Lendlease’s Corporate Governance Framework and main governance practices.

1.1 Board Responsibilities

• Receiving reports on and

Commitment to governance

• monitoring reputation, brand and community relations

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.

Lendlease is committed to exceptional corporate governance policies and practices that are fundamental to the long-term success and prosperity of Lendlease and its subsidiaries (the Group). Lendlease regularly reviews its governance practices to address its obligations as a responsible corporate entity.

• Reviewing Group governance related policies.

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.

Following the appointment of the new Chairman in November 2018, a comprehensive review of the Board and its committees was undertaken. A range of opportunities was identified to enhance the effectiveness and efficiency of the Board process and the responsibilities reserved specifically for the Board and its committees. Following this review, the main responsibilities specifically reserved for the Board include the following:

Unless indicated otherwise, a reference in this Corporate Governance Statement of the Board is a reference to the Board of Directors of Lendlease Corporation Limited (LLC) and Lendlease Responsible Entity Limited (LLREL), which is the responsible entity of the Lendlease Trust. Australian Securities Exchange (ASX) Listed Entities are required to report on the extent to which the company followed the ASX Corporate Governance Council Principles and Recommendations (Principles) during the reporting period. Throughout the reporting period, the Board considers that the Corporate Governance Framework complied fully with the third edition of the Principles.

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.

• Approval of the business strategy and vision in line with the objective to drive securityholder value creation

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

• Approval of business plans including operating budgets

• Receiving, considering and approving the Group’s financial reports

• Approval of major investments, transactions, acquisitions or divestitures following review and endorsement by the Board Risk Committee

This Corporate Governance Statement transactions, acquisitions or reflects the corporate governance and divestitures following review and other related policies and practices in endorsement by the Board Risk place for the Group as at 19 August 2019 Committee and has been approved by the Lendlease • Determining capital structure and Board. Copies of all the governance distribution policy documents can be found in the corporate governance area of the Lendlease website • Benchmarking the delivery of value at www.lendlease.com. to customers, clients and partners

The management structure of Lendlease consists of the Group CEO and the GLT. The GLT comprises the Group Chief Financial Officer, the Group Chief Commercial and Risk Officer, the Chief People Officer, the Group General Counsel, the Group Head of Corporate Affairs and Marketing, Group Head of Engineering and Building, Chief Digital Officer and the CEOs of Americas, Asia, Europe and Property Australia. 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.

• Reviewing the performance of the Group CEO and Global Leadership Team (GLT) in conjunction with the People and Culture Committee

1. Board and management roles and responsibilities

• Oversight succession planning for the Group CEO and the GLT in conjunction with the People and Culture Committee

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

• Oversighting the management of

• Board Charter social, economic and environmental concerns consistent with the delivery of

• Board Committee Charters sustainability outcomes for stakeholders and the achievement of the Group’s incident and injury free vision

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

Review of Group CEO and Senior Management

The Board sets goals for the Group CEO that are contained in a scorecard. The Group CEO is responsible for setting goals for the GLT in consultation with the People and Culture Committee. The Board has a rigorous process for setting scorecards at the beginning of the year and for the evaluation of scorecards at the end of the year. The goals are set having regard to both financial and non-financial matters, with efforts focused on fewer, more critical objectives. The non financial goals include operational, people and strategic objectives. Short Term Award outcomes for the GLT are assessed against these financial and non-financial targets.

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. Each member of the GLT also conducts an evaluation of their own performance. In addition to the review conducted against the scorecard and goals, the Board assesses the Group CEO and GLT against Lendlease’s defined leadership capabilities, values and leadership behaviours. 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 the People and Culture Committee for 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 Lendlease. Further information is set out in the Remuneration Report on pages 92 to 123 of the Annual Report.

1.3 Meetings

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 seven

scheduled Board meetings each year and 2. Structure and additional meetings are held as required. During the year, 15 meetings of the Board composition of the board were held. Four of these meetings were held in Australia, two in the US and one in Relevant governance the UK. In addition, eight meetings were documents held via teleconference to discuss specific matters, and matters were dealt with (see www.lendlease.com) as required by circular resolution. Nine Board subcommittee meetings were also Lendlease Corporation constituted to deal with specific matters. Limited Constitution Further details on the number of Board Board Charter and committee meetings held during the financial year and the attendance of Policy on Independence Directors at those meetings can be found of Directors in the Directors’ Report on page 92 of the Annual Report.

2. Structure and composition of the board

Relevant governance documents (see www.lendlease.com)

As an international company and having regard to the material scale of individual projects, the Board program is formulated to reflect the geographic spread of the Lendlease businesses with Board meetings scheduled in Australia and the regions where Lendlease operates. The Group’s senior management is invited to attend and present at Board meetings where appropriate. These meetings generally run over two to five days and include a number of activities outside of the formal meeting. These include business briefings, presentations from internal and external sources, project site visits, client meetings and networking events with employees and key stakeholders. These additional activities help to provide the Non Executive Directors a deeper understanding of the operations within each region. Further details of the Lendlease Board regional program can be found on pages 86 to 87 of the Annual Report.

2.1 Composition and Membership

The Board consists of nine Directors of which eight have been assessed as independent. The Group’s Managing Director and Chief Executive Officer, Stephen McCann, is the only executive on the Board. Membership of the Board and 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 on pages 80 to 84 of the Annual Report.

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

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 number of Directors required to constitute a quorum is three.

1.4 Independent Decision Making

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.

Any Director may seek external, independent, professional advice relating to their role as a Lendlease Director at the expense of Lendlease 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 meet at every Board meeting without management present.

The Board evaluates the materiality of any interests or relationships that could be perceived to compromise independence on a case-by-case basis having regard to

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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.

An assessment of the independence of each Director is conducted each year and 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. 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.

The Chairman provides leadership to the Board so 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.

In advance of the former Chairman David Crawford retiring from the Board in November 2018, the Board selected Michael Ullmer to succeed David Crawford. Michael Ullmer was appointed as Chairman on 16 November 2018, following the retirement of David Crawford at the conclusion of the Lendlease Annual General Meeting.

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 85 of the Annual Report.

2.5 Retirement and Re-election of Directors

Under the Constitution of LLC, at each Annual General Meeting one-third of the

Directors, and any other Director who will have been in office for three or more Annual General Meetings since he or she was last elected (excluding the Managing Director), must retire from office and may submit themselves for re-election. Prior to standing for election or re-election, 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 new Director.

New Directors must stand for election at the Annual General Meeting (AGM) immediately following their appointment.

2.6 Selection and Appointment of New Directors

The Nomination Committee is responsible for the recommendations 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 Board skills matrix can be found on page 79 of the Annual Report.

The process of selecting a new Director involves reviewing the experience of current Directors, identifying any gaps in the Board skill sets 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 reference checks.

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

Board succession is reviewed throughout the year. During the reporting period, David Crawford and Phillip Colebatch retired from the Board at the conclusion of the 2018 AGM.

2.7 Induction and Briefing Programs

New Directors are provided with a letter of appointment that sets out their rights, duties and responsibilities as a Director of Lendlease. As part of their induction, new Directors also receive a comprehensive information pack and attend briefings with management in each of the regions where Lendlease operates to enable them to gain an understanding of the Group’s businesses, strategy, key issues and operations. Visits to Lendlease sites are also an integral 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 provided 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 macro issues affecting the Group. Directors are also encouraged to attend externally administered training seminars and programs. In 2019, as part of the refresh of governance practices, the Chairman established a formal director development program with the primary objective being that Directors continuously enhance their knowledge of current and emerging issues of relevance to their role as Lendlease Directors. A formal program was mapped out on an 18 month basis that maintained the flexibility to respond to changing environments as required, including changes in the regulatory landscape, strategic focus and critical company issues.

2.8 Board Performance Assessment

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

External Review

The review process includes interviews with Directors and senior management as well as key stakeholders, and generates recommendations so that the Board can continue to operate effectively with the requisite mix of skills, experience and appropriate procedures. The Miles Group undertook a comprehensive external review of the Board in 2018. The main areas of focus were:

• Role of the Board and committees

• Size, composition, diversity and experience of the Board

• Interface with management

• Board dynamics and culture

• Chairman, CEO and individual Director effectiveness

• Ability to engage in strategic dialogue.

• The findings of the external review were considered by the Board and action plans were put in place to address recommendations contained in the review. Directors were also given feedback on their individual performance and provided with their strengths and areas for development.

Internal Review and Assessment

The Chair of the Nomination Committee, acting in consultation with other Board

members, is responsible for conducting an annual evaluation of Board members standing for re-election at the AGM.

The process of conducting reviews includes an assessment by each of the Directors and may 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 review process generates recommendations to ensure the Board continues to operate effectively with the requisite mix of skills and experience, and appropriate procedures.

In the reporting period, the review was conducted internally with a focus on committee review. Following this review, changes were made to the following committees:

• The establishment of a separate Risk Committee, of which all Directors are members, has allowed the Board agenda to be restructured to focus on strategy, culture, customer outcomes, reputation, performance and succession planning. Drawing all risk elements under a single committee allows for risk management to be considered in an integrated fashion

• Having overseen the implementation of changes to the Executive Reward Strategy, the People and Culture Committee remit now covers the whole range of people issues at Lendlease

• Sustainability Committee remit broadened to include Environmental, Social and Governance reporting in addition to Safety and Sustainability.

2.9 Directors’ Remuneration

Details of the Group’s Remuneration Policy and the remuneration of Directors are contained in the Remuneration Report on pages 92 to 123 of the Annual Report. The structure of Non Executive Director remuneration is clearly distinguished from that of other senior executives. One of the key distinctions is that performancebased 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. The remaining Directors in the plan (being David Crawford and Phillip Colebatch) retired in November 2018 and accordingly, the accrued securities which were preserved were paid to the Directors on retirement. There are no current Non Executive Directors entitled to receive any retirement benefits, other than superannuation.

The five permanent committees of the Board are:

3. Board committees

Audit Committee

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

The role of the Audit Committee is to assist the Board in fulfilling its corporate governance and oversight responsibilities in relation to accounting policies and practices, tax matters, treasury reporting, monitoring of internal financial controls, internal and external audit functions and financial reporting of the Group.

Audit Committee Charter

People and Culture Committee Charter

Risk Committee Charter

Sustainability Committee Charter

People and Culture Committee

The role of the People and Culture Committee is to assist the Board in fulfilling its corporate governance and oversight responsibilities in relation to establishing people management and compensation policies for the Group that:

Nomination Committee Charter

3 ~~.1 Overview of Board Committees~~

The Board recognises the essential role of committees in guiding the Company • Foster exceptional human talent and on specific issues. Following the motivate and support employees to appointment of the new Chairman in pursue the growth and success of the November 2018, a comprehensive review Group in alignment with the Group’s of the Board and its committees was values undertaken. A range of opportunities • Assure that human capital were identified to enhance the considerations are central to and effectiveness and efficiency of the integrated into the Group’s strategy Board process and the responsibilities and business plans reserved specifically for the Board and • Enable the Group to attract and retain its committees. Following this review, employees who can create sustainable there are now five standing Board value for stakeholders committees to assist, advise and make recommendations to the Board on matters • Equitably and responsibly reward falling within their areas of responsibility. employees, having regard to the With the exception of the new Risk performance of the Group, individual Committee (where Stephen McCann is a performance and statutory and member), each of the committees consist regulatory requirements. entirely of independent, Non Executive Directors. The Chair of each committee is Risk Committee not a Chair of other committees, or Chair The role of the Risk Committee is to of the Board.

• Foster exceptional human talent and motivate and support employees to pursue the growth and success of the Group in alignment with the Group’s values

• Enable the Group to attract and retain employees who can create sustainable value for stakeholders

• Equitably and responsibly reward employees, having regard to the performance of the Group, individual performance and statutory and regulatory requirements.

The role of the Risk Committee is to assist the Board in fulfilling its corporate governance and oversight responsibilities in relation to the risk management and internal control systems, risk policies and practices, compliance, and approvals of project transactions of the Group. The Risk Committee also has another important role – to review, and if approved, recommend to the Board for approval major transactions as referred to the committee by the Global Investment Committee. Given that the review of major transactions has now moved to the Risk Committee, all members of the Board, including the Managing Director and CEO, are members of the Risk Committee.

Each committee is governed by a formal charter setting out its objectives, roles and responsibilities, composition, structure, membership requirements and operation. The performance of the committees, its membership and their charters are periodically reviewed. Directors who are not members of the committees have a standing invitation to attend meetings of the committees. During the reporting period and in conjunction with the review of the Board and its committees, a comprehensive review of the accompanying charters and work plans for each of the committees was undertaken.

From time to time special subcommittees are formed to give the Board better guidance and provide oversight concerning specific matters. Details of the number of meetings held by each committee and special subcommittees during the reporting period is set out on page 8. In addition to the specific authorities delegated to each of the committees, areas of focus during the reporting period are set out on pages 88 to 89 of the Annual Report.

Lendlease / Corporate Governance Statement 2019 / 7

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Sustainability Committee

The role of the Sustainability Committee is to assist the Board in monitoring the decisions and actions of management in achieving Lendlease’s aspiration to be a sustainable organisation. Sustainability is viewed as encompassing how the Lendlease Group conducts business through the pursuit of workplace safety, a commitment to corporate social responsibility, environmentally sustainable solutions and employee diversity, development and opportunity. Lendlease is strategically and culturally committed to achieving commercial success in ways that honour ethical values and respect people, communities and the natural environment.

Nomination Committee

The role of the Nomination Committee is to provide advice and support to the Board in fulfilling its responsibilities to securityholders for assurance that the Board is comprised of individuals who, in combination, bring a mix of expertise, skills, experience and perspectives and contribute to the discharge of diligent oversight and effective corporate governance of the Group. The Nomination Committee also oversees activities for Director development and reviews of Board, committee and Director performance.

Membership and composition of the committees is set out in the accompanying table. During the reporting period, a review of the main responsibilities of each committee was conducted in conjunction with a review of the responsibilities outlined in the charters.

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Nomination People and Culture Audit Sustainability Risk
Members Colin Carter (Chair) Jane Hemstritch (Chair) David Craig (Chair) Nicola Wakefield Evans (Chair) Philip Coffey (Chair)
Philip Coffey Colin Carter Philip Coffey Colin Carter Colin Carter
David Craig Philip Coffey Steve Dobbs Steve Dobbs David Craig
Steve Dobbs David Craig Jane Hemstritch Elizabeth Proust Steve Dobbs
Jane Hemstritch Elizabeth Proust Nicola Wakefield Evans Jane Hemstritch
Elizabeth Proust Steve McCann
Michael Ullmer Elizabeth Proust
Nicola Wakefield Evans Michael Ullmer
Nicola Wakefield Evans
Changes David Crawford and Phillip Following the retirement of Phillip Phillip Colebatch ceased to be a member Nicola Wakefield Evans was appointed A new Risk Committee was established in
Colebatch ceased to be Colebatch, Elizabeth Proust of the committee upon his retirement in Chairman of the committee in January February 2019. All Board members are members
since members of the committee was appointed a member of the November 2018. Michael Ullmer ceased to 2019, following Michael Ullmer’s of the Risk Committee.
Last Report upon their retirement in committee in November 2018. be a member of the committee following appointment as the Board Chairman.
November 2018. his appointment as the Board Chairman.
Composition Minimum of three, Minimum of three Directors. Minimum of three, Non Executive Directors. Minimum of three Directors. Minimum of three, Non Executive Directors.
Non Executive Directors. Majority of the committee All members must be independent. Majority of the committee to be Majority of the committee to be independent.
Chair must be an independent to be independent. Chair must be an independent Director independent. Chair must be an independent Director
director and not the Chair Chair must be an independent and not the Chair of the Board. Chair must be an independent Director and not the Chair of the Board.
of the Board. director and not the Chair of All members must be financially literate and not the Chair of the Board. All requirements were met in the
All requirements were met in the Board. and at least one member has accounting All requirements were met in the reporting period.
the reporting period. All requirements were met in or relevant financial expertise. reporting period.
the reporting period. All requirements were met in the
reporting period.
Main Areas of Reviews size and composition Reviews and makes recommendations Makes recommendations to the Board Oversees the Group’s environment, Reviews the parameters of the Group’s risk
of the Board. to the Board on contractual as to whether financial statements should health and safety functions. strategy and the risk appetite statement for
Responsibility Identifies and evaluates arrangements for the Group CEO be approved. Reviews the effectiveness of recommendation to the Board.
Board candidates. and GLT. Reviews significant corporate reporting Group policies on corporate social Reviews the effectiveness of the Group’s
Assists in the evaluation of Reviews and makes recommendations issues and assesses the appropriateness of responsibility including the Lendlease enterprise risk management system.
the performance of the Board to the Board on remuneration accounting policies and methods chosen Foundation, Modern Slavery and Monitors the adequacy and effectiveness of the
and the performance of any programs and performance targets by management. Indigenous Engagement. internal control environment of Lendlease.
Directors standing for re- for the Group CEO and GLT and Monitors the adequacy of the nature, Assists the Board in its oversight of the Oversees the effectiveness of Group policies,
election at an AGM. assessment of performance against extent and effectiveness of the internal Group’s compliance with applicable procedures, systems and controls established
Establishes processes for the these targets. control processes overseen by the finance regulatory requirements in relation by management to support the compliance
review of Board succession Monitors and advises the Board on teams. to environmental matters, social management framework.
planning. Identifies skills and experience succession planning for the Group CEO and members of the GLT. Monitors the Group’s significant treasury and tax matters. responsibility initiatives and health and safety issues. Reviews insurance arrangements and considers whether appropriate coverage is in place.
gaps in the Board and reviews Reviews and approves the strategies Oversees quality and effectiveness of Reviews the effectiveness of Group Reviews and monitors the Group’s exposure to
the Board skills matrix. and practices for people management internal and external audits. policies and initiatives designed to cyber and data governance risks.
and workplace culture. ensure the wellbeing of employees in
Reviews continuing education and development plan for Non Executive Directors. Reviews and makes recommendations to the Board on the remuneration framework for Non Executive Directors. Monitors the resolution of matters arising from the internal audit reports.Reviews performance of the Internal Audit the workplace.Makes recommendations to the Board on the Sustainability Strategy. Reviews and recommends to the Board for approval major transactions as referred to the committee by the Global Investment Committee.
function.
Reviews and makes recommendations
Makes recommendations to the Board on
to the Board on remuneration and
external auditor appointment and rotation
required disclosures.
of audit partner.
Reviews the effectiveness of Group
polices on workplace diversity and
equal opportunity.
Interaction The committee has The Chairman of the committee The Group CFO and the Group Head of The Chair liaises with the Group Head The Chair liaises with the Group Chief
unrestricted access to senior liaises regularly with the Chief People Internal Audit report to the committee. of Sustainability and Group Head of Commercial and Risk Officer prior to each
with management of the Group. Officer on matters related to the Meetings with these function heads and Safety on at least a quarterly basis or as Risk Committee or more as required.
Management The committee reviews and Committee, so that the committee other finance function heads are held on at required.
recommends, in co-operation is appropriately briefed on matters least a quarterly basis or as required.
with management, a process relating to employees The committee meets with the external
for the induction and auditor without management present every
education of new Directors half year or as required.
and a continuing education
and development plan for all
Non Executive Directors.
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Lendlease / Corporate Governance Statement 2019 / 8

Attendance at Meetings of Directors 1 July 2018 to 30 June 2019

The number of Board and Board Committee meetings held, and the number of meetings attended by each Director during the 2019 financial year, are set out in the tables below.

(MH) Number of meetings held. (MA) Number of meetings attended.

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Board Subcommittee Nomination People and
Board2 Meetings³ Committee Culture Committee
Membership (Chairman M J Ullmer) (Chairman M J Ullmer) (Chairman C B Carter) (Chairman J S Hemstritch)
MH MA MH MA MH MA MH MA
M J Ullmer¹ 15 15 9 9 6 6 4 4
S B McCann¹ 15 15 8 8 6 6 5 5
C B Carter 15 13 - - 6 6 5 5
P M Coffey 15 15 7 7 6 6 5 5
D P Craig 15 15 7 7 6 6 5 5
S B Dobbs 15 15 1 1 6 6 - -
J S Hemstritch 15 14 1 1 6 6 5 5
E M Proust 15 15 - - 6 6 34 34
N M Wakefield Evans 15 15 8 8 6 6 - -
D A Crawford (retired 16 November 2018) 6 6 2 2 3 3 2 2
P M Colebatch (retired 16 November 2018) 6 6 - - 3 3 2 2
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Sustainability
Committee Risk Management and Audit Risk
(Chairman Audit Committee⁵ Committee⁶ Committee7
Membership N M Wakefield Evans) (Chairman D P Craig) (Chairman D P Craig) (Chairman P M Coffey)
MH MA MH MA MH MA MH MA
M J Ullmer¹ 3 3 3 3 1 1 2 2
S B McCann¹ 3 3 3 3 1 1 2 2
C B Carter 3 3 - - - - 2 2
P M Coffey - - 3 3 1 1 2 2
D P Craig - - 3 3 1 1 2 2
S B Dobbs 3 3 3 3 1 1 2 2
J S Hemstritch - - 3 3 1 1 2 2
E M Proust 3 3 - - - - 2 2
N M Wakefield Evans 3 3 3 3 1 1 2 2
D A Crawford (retired 16 November 2018) 1 1 2 2 - - - -
P M Colebatch (retired 16 November 2018) - - 2 2 - - - -
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1. M J Ullmer and S B McCann as Board Chairman and CEO attend every meeting, including those meetings where they are not a member of the Committee.

1. Eight of the 15 Board meetings were called at short notice to deal with specific matters. C B Carter was not available for two of these teleconferences and J S Hemstritch was not available for one of these teleconferences as they were called at short notice.

2. Board Subcommittees are constituted to consider specific issues. Members are appointed during the year as required.

3. E M Proust was appointed to the People and Culture Committee with effect from 1 January 2019 and attended all meetings of the People and Culture Committee since her appointment.

4. Following a comprehensive review, the Risk Management and Audit Committees were separated into two committees.

5. The first meeting of the inaugural Audit Committee was held in June 2019.

6. The first meeting of the inaugural Risk Committee was held in April 2019.

Lendlease / Corporate Governance Statement 2019 / 10

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4.1 Enterprise Risk Management

• Providing an understanding of risk limits

4. Risk management, internal control and integrity in financial reporting

Risk management is a critical oversight responsibility of the Board. Lendlease has a multi layered approach to the identification, management and mitigation of external, corporate and operational risk. The approach to risk management recognises the nature and level of risk Lendlease is willing to accept to achieve our strategic goals and key performance targets to create securityholder value. It focuses on:

• Providing context to identify, report and manage risks

• Creating a culture of risk awareness and accountability.

Relevant governance documents (see www.lendlease.com) Audit Committee Charter Risk Committee Charter Risk Management Policy

Accountability and responsibility for risk governance and management is held at various levels across the business including the Board and Board committees, Group leadership, regional leadership, business operations and specialist functions such as corporate risk and insurance, operational assurance and internal audit.

• Aligning Board and management to drive informed and consistent decisions

• Achieving effective and efficient allocation of capital and resources

Our approach recognises the nature and level of risk we are willing to accept to achieve our strategic goals and key performance targets to create securityholder value.

External audit

assess and approve potential projects/ commitments.

Structure

Formal independent regular reviews.

Board Risk and Audit Committees

Limits of Authority

Review the effectiveness of the Group’s enterprise risk management system and seek assurances that material risks are identified and appropriate risk management processes in place.

Policy and procedure

Limits of Authority are in place to outline matters that are specifically

Board approval process

reserved for determination by the Board and those matters that are delegated to management.

The Board has matters that are reserved for its determination under the risk appetite of Lendlease, and further, under the Limits of Authority. The Board approval process is set up so decisions and commitments of a predetermined magnitude require express Board approval, thereby supporting sound governance and continued alignment with strategy.

Group risk function

Risk tools

Liaises with regional CEOs and risk specialists on business-specific and enterprise-wide risks in order to assist the Group’s businesses to further develop their risk management processes.

Risk management platform

Lendlease uses a risk management platform throughout all our regions to allow consistent risk identification and assessment.

Internal audit

Investment committees

Formal processes provide supplementary assurance to operational businesses.

Investment committees are in place at regional and Group levels in order to

basis to satisfy itself that it continues to be sound and a review was conducted in the reporting period.

4.2 Risk Management Reporting

In addition, during the reporting period, each region of Lendlease has a directly appointed ‘Voice of Risk’ executive who forms part of each Regional Leadership Team. Importantly, these individuals do not have P&L accountability, nor are they in the risk function. They are independent and are mandated to challenge both the business and the risk function on genuine matters of strategic, tactical and operational risk.

The Group Corporate Assurance Function is responsible for keeping the Board’s Risk Committee informed on a regular basis of material business risks. In the reporting period, the committee has received regular reports on material risks facing Lendlease businesses worldwide and management has reported to the Board as to the effectiveness of Lendlease’s management of its known material business risks.

Further information on the Group’s approach to risk management can be found on pages 58 to 61 of the Annual Report.

4.3 Key Risk Management Practices

Risk awareness, improvement and governance are key elements of the Lendlease approach, which has evolved with the business and external market. Specific examples of how this has evolved in the reporting period, include the implementation of granular risk appetite principles and tolerances on areas of risk where value is known to erode. These areas focus on areas such as latent conditions, contamination and existing structure risk. Further developments of risk appetite will continue to evolve in other granular areas of our enterprise risks.

The Risk Framework at Lendlease Involves Three Lines of Defence:

Lendlease has identified and described its key risks and their mitigants on pages 60 to 61 of the Annual Report.

First line of defence – responsibilities

Underlying business units are the first line of defence responsible for identifying, managing and owning their risks. These business units have the appropriate tools and interaction with the various Group functions to execute business responsibilities effectively.

The Risk Management Framework defines the risk tolerance of Lendlease by setting thresholds for impact and likelihood and defining the material business risks required to be reported to the Board. The Board reviews the Company’s risk management framework on a regular

Second line of defence – assurance measures

Group functions involved in the second line of defence include corporate risk and insurance, operational assurance and performance, safety, legal, information technology, sustainability, people and culture and finance. Function specific policies outline the assurance measures to enable each business to identify and manage risks appropriately.

Third line of defence – independent processes

Internal and external audit make up the third line of defence, acting independently from the first and second lines of defence and reporting directly to the Board and the Risk and Audit Committees.

4.4 Environmental and

Social Sustainability Risks

There are a number of risks, both specific to Lendlease and more generally to the sectors and regions the Group operates in that could have an adverse effect on achieving our objectives. The following provides an overview of environmental, social and sustainability governance risks and how the Group currently seeks to mitigate or manage them.

Strategic Approach to Environmental Risks

In FY18, Lendlease committed to implementing the recommendations of the Taskforce on Climate-related Financial Disclosure (TCFD) and commenced analysis into the impact of different climate scenarios on our business strategy. This work will also contribute to establishing new sustainability metrics and targets that go beyond the current near-term focus associated with the Group’s 2020 performance targets for energy, water and waste. In 2014, we set 20% by 2020 targets for energy, water and waste on an intensity basis. In FY20, Lendlease will embark on a process to co-design the new beyond 2020 metrics and targets with each of our businesses. The targets will relate to our new Sustainability Framework and be informed by the Group’s TCFD scenario planning activities.

In addition to the Group’s commitment to TCFD, work has been undertaken over the past 12 months to review and reposition our sustainability approach. In FY19, a new Lendlease Sustainability Framework for 2020 and beyond was developed after extensive consultation with customers, investors, employees and other stakeholders to address the environmental and social issues. The new framework responds to the need to plan for future generations and integrates sustainability into every part of the Lendlease business.

Further information can be found on of operation and minimal impact on page 54 of the Annual Report. the environment. The environmental performance of any supplier and the Social sustainability of products and services Lendlease has always had a powerful is considered in the Group’s selection social ethos. The concepts of good process. corporate citizenship and inclusive In terms of Board oversight, the growth are now a key requirement of Sustainability team engages with project customers and strong focus the Board through the Sustainability for investors, across our Development, Committee at least four times a year. Construction and Investments segments. The reports received are a subset of To manage the risk associated with not management reporting from the internal attaining these, we have integrated them Quarterly Business Review processes and into the new Sustainability Framework. working committees such as the TCFD Key areas of focus remain skilling, Steering Committee. training and education, and health and wellbeing. Further information on sustainability

In terms of Board oversight, the Sustainability team engages with the Board through the Sustainability Committee at least four times a year. The reports received are a subset of management reporting from the internal Quarterly Business Review processes and working committees such as the TCFD Steering Committee.

Further information on sustainability risks and opportunities and how risks are managed by the Group, can be found at www.lendlease.com in the sustainability section on pages 40, 54, and 60 to 61 in the Annual Report

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. Lendlease has a number of leading examples of skilling and education programs which develop skilled trades and labour, as well as leadership and development programs for our people, all of which contribute to the economic inclusion of the places we create and the communities in which we operate.

4.5 Key Policies

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

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.

4.6 Integrity in Corporate 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.

We have also recognised the importance of investing in the health and wellbeing of our people and ensuring we create places that support the health and wellbeing of the community. Supporting the wellbeing of our people helps to attract and retain the best people, in addition to improving productivity and morale. We now also apply these concepts to the design and delivery of the places we create, to contribute to positive community outcomes and legacies.

For the year ended 30 June 2019, the Group CEO and Group CFO have declared in writing to the Board that in their opinion:

• The financial records of the consolidated entity have been properly maintained

• That the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity

Further information can be found on pages 48 to 49 of the Annual Report.

Governance

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

• That this opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

We work closely with suppliers so they are able to demonstrate compliance with environmental, social and human rights considerations. Suppliers are expected to have human rights policies and records consistent with the requirements of Lendlease’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

Since 30 June 2019, nothing has come to the attention of the Group CEO or the Group CFO that would indicate any material change to any of the statements made above.

Lendlease / Corporate Governance Statement 2019 / 12

11 /

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 2019 and this has been reviewed by the Risk Committee and the Board.

4.7 Internal Audit Function

The Group has an Internal Audit function to provide the Board and senior management with assurance around internal controls through the conduct of advisory audits and business integrity reviews. 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 Audit Committee. The role of Internal Audit is to provide objective assurance to the Audit Committee and the 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 the Audit Committee meeting on audits and reviews conducted during each quarter. The Group Head of Internal Audit meets with the Chair of the Audit Committee on at least a quarterly basis.

4.8 External Auditor

KPMG is the external auditor of Lendlease and its controlled entities. KPMG is the external auditor of Lendlease and its controlled entities. In retaining KPMG to undertake the external audit, the Board satisfied itself as to the objectivity and independence the firm brought to the role. 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 Lendlease obtained by KPMG over many years positions the firm to provide valuable insights that assist the Audit Committee in its deliberations.

Performance Management

The 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 twice a year, 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 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. Duncan McLennan was appointed by KPMG as the lead audit partner with effect from 1 July 2016.

Provision of Non Audit and Other Services

Lendlease 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 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 that have 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

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

The Group Chief Financial Officer and the auditor are each required to provide a statement that the non audit assignment will not impair 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 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 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

• The other services were limited in nature and confined to areas where KPMG was uniquely qualified to undertake the work.

Auditor’s Independence

The external auditor is required to provide to Lendlease 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 2001 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 2001 has been included in the Directors’ Report on page 126 of the Annual Report.

Fees

Fees paid to the auditor during the financial year are detailed in the Financial Statements.

Attendance at Annual General Meeting The external auditor is required to attend the AGM and will be available to answer any questions on the conduct of any audits and the preparation and content of the auditor’s report. Duncan McLennan will be in attendance at the 2019 AGM.

5. Governance policies

Relevant governance documents (see www.lendlease.com)

External Communications and Continuous Disclosure Policy Securities Trading Policy Code of Conduct

5.1 Securityholder Communications and Continuous Disclosure

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

The policy explains the continuous disclosure obligations of Lendlease, 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 Lendlease 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 Lendlease, maintaining records of information released to the market and ensuring that information on the Lendlease website is up to date.

Communications with Securityholders Lendlease also recognises that while 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 so that information that is important to a securityholder, such as information about the Group’s activities, is available to investors in a timely and readily accessible manner.

Any announcements made on the ASX are posted on the Lendlease website as soon as practicable following confirmation of receipt by the ASX.

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.

The Lendlease 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. In 2017, the Investor Relations team enhanced its approach to facilitate more effective communication with investors by:

5.2 Lendlease Values and Code of Conduct

Values

The Values of Lendlease underpin how the Group does business, how it interacts with stakeholders, and how its people operate in the workplace. The Values are promoted across all of the Group’s businesses and can be found on page 6 of the Annual Report.

• Introducing a webcast only format briefing for full and half year results

• Scheduling formal site visits with investors as required

• Introducing market briefing sessions with regional CEOs.

• Lendlease continues to release an Integrated Annual Report to more clearly communicate how we create value for our securityholders.

Code of Conduct

communicate how we create value for The Lendlease Code of Conduct our securityholders. endorsed by the Board, sets out the standards of conduct expected of our Throughout the year, Investor Relations businesses and people, regardless of engages in domestic and international location. It applies to all Directors and roadshows to meet with existing and employees of Lendlease and operates potential securityholders. The investor in conjunction with our Values and the communication program has been put Employee Conduct Guide. A copy of the in place to facilitate and encourage Code of Conduct can be found on the effective two-way communication with Lendlease website. investors. In addition, securityholders are provided with the option to receive Employees are encouraged to apply the communications from, and send following ‘Lendlease Test’ when in doubt communications to, the Investor Relations as to whether any action might breach team and the share registry electronically. the Code of Conduct: Contact details are available on the “Would I be willing to see what I’m doing Group’s website and all communications or about to do described in detail on the sent to securityholders from the share front page of a national newspaper to be registry. read by family and friends?”

Employees are encouraged to apply the following ‘Lendlease 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 ‘Lendlease Test’ even if it is not expressly prohibited by the Code of Conduct.

Annual General Meeting

The Annual General Meeting (AGM) is the primary opportunity for securityholders to meet face-to-face with the Board and senior executives. 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. Lendlease 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. Senior executives of the Group attend the meeting and are available to answer questions that securityholders may have.

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 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.

Employees of the Group are required to re-certify their Employee Conduct Guide training on a regular basis.

For securityholders who are unable to attend in person, the proceedings of the AGM are webcast live on the Lendlease website and later archived for three

Lendlease / Corporate Governance Statement 2019 / 14

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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 Lendlease 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

Lendlease 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 Lendlease 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 has been implemented at a Group and business level.

5.4 Trading in Lendlease Securities

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

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

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

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

• 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

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

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

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.

The policy reinforces the insider trading provisions of the Corporations Act 2001 . 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.

Directors and senior executives must not enter into transactions or arrangements that operate to limit the economic risk of unvested entitlements to Lendlease securities. No Director or senior executive may enter into a margin loan arrangement in respect of Lendlease securities.

Deferred Long Term Award and Short and Long Term Incentive awards are subject to the Securities Trading Policy which prohibits executives from entering into any type of ‘protection arrangements’ (including hedging, derivatives and warrants) in respect of those awards before vesting.

5.5 Political Donations

The Lendlease 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. Lendlease views engagement between business and government, when underpinned by shared values and clear guidelines, as a healthy and important part of our democratic process. As part

of that engagement, Lendlease invites politicians to visit our sites and offices and we participate in appropriate political events and policy discussions. It is, however, an area that requires appropriate governance and oversight, to protect Lendlease’s reputation as an ethical and responsible organisation and to ensure employees are fully aware of their responsibilities in this area. This is particularly relevant in consideration of practices governing the making of political donations.

In 2019, a review of the Group’s Political Donations Policy was conducted. In summary, Lendlease does not make party or campaign political donations, whether in cash or kind, to political parties or individuals holding or standing for elective office (political entities), other than as approved in line with the process outlined in the policy. This includes:

• No attendance at political fundraisers, including where third parties offer to pay, other than as permitted in the policy

• No loans, payments of subscriptions or membership fees

• No gifts or commercial benefits (in cash or kind)

• No hosting of fundraising events (including through the use of Lendlease premises for free or at discounted rates)

• No making or soliciting of payments to non profit or other organisations that predominantly act as conduits for political entities, other than as permitted below.

Approved senior leaders of Lendlease (provided it is not a breach of law in the relevant jurisdiction) are permitted to:

• Engage with political party-aligned policy institutions and think tanks on an as required basis to work on policy areas of mutual interest. This work is managed by the Group and/or Regional Corporate Affairs team

• Participate in a limited number of paid political fundraisers and other political relationship building events. Attendance at such events is done on a non partisan basis and where practical proportional balance in funding support is maintained

• Participation is subject to obtaining prior written approval in accordance with the policy

• All political donations are recorded and tabled to the Lendlease Board on a regular basis.

Breaches of the Political Donations Policy are regarded as serious misconduct.

5.6 Employee Transactions Policy

The Lendlease Group Employee Transactions Policy was approved by the Board in November 2016 and has been developed to permit Directors and employees of Lendlease to purchase product developed and sold by Lendlease, while endeavouring to maintain a framework that allows objectively fair access to Lendlease product as between Lendlease customers and employees. There is one policy across the whole Group covering transactions whereby a Lendlease employee acquires Lendlease product anywhere in the world. The policy sets out a formal process applying to employee transactions, in order to ensure conflicts are appropriately and objectively managed.

The key tenets of the policy are as follows:

• No priority of release of product to employees before the public

• Favourable provisions for employees which are reversed if they cease to be an employee:

• Up to 50 per cent of the standard deposit rate

• Up to an extra one month settlement time

• A discount up to the amount of any agent’s deposit otherwise payable, on the basis it is tax neutral to Lendlease

• Employee purchases within a particular category of product and within each stage release to be limited to 20 per cent by number

• No more than two purchases by an individual employee in any one calendar year

• Employee to hold any property purchased from Lendlease for 24 months post completion of acquisition.

• Importantly, the policy sets out a formal process applying to employee transactions in order to ensure conflicts are appropriately and objectively managed.

6. Diversity and inclusion governance

Relevant governance documents (see www.lendlease.com) Diversity and Inclusion Policy

Sustainability Committee Charter

People and Culture Committee Charter

Nomination Committee Charter

6.1 Diversity at Lendlease

Lendlease 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. Our global inclusion strategy is focused on gender equity, flexibility at work and inclusive leadership.

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

• Three out of nine Board Directors are women

• At a senior management level, three women are on the Global Leadership Team

• For the year ended 30 June 2019, 31.9 per cent of our employees are women and 26.1 per cent of senior executive positions are held by women.

We define a senior executive to be an employee who holds a position at executive level according to the Lendlease Career Job Framework. This generally includes Regional Business Unit Heads, Regional Function Heads and in some cases, direct reports to Group Function Heads.

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, Lendlease continues to develop initiatives targeting an improvement in gender diversity including refinement in recruitment processes, expansion in career and leadership development and mentoring. These are regularly reported on and monitored by the Lendlease Board.

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

In Australia, Lendlease is also committed to reconciliation and this is demonstrated and guided by our Reconciliation Action Plan (RAP) – a framework for Lendlease to realise our vision for reconciliation, certified by Reconciliation Australia. Lendlease operates at Reconciliation Australia’s highest level, RAP Elevate, which recognises companies with a proven track record and that want to lead. During National Reconciliation Week 2019, Lendlease joined some of Australia’s largest companies that have Elevate RAPs to support the Uluru Statement from the Heart and its call to establish a First Nations voice in the Australian Constitution.

While our second and current RAP is dated 2016 – 2018, we continue to deliver on the plan and its goals. We are now working with Reconciliation Australia to review and measure our progress and develop our next plan.

6.3 Diversity Governance

In each region, a series of Employee Resource Groups represent different diversity groups, such as gender and sexual orientation and gender identity. Each group has an executive sponsor. The groups progress diversity and inclusion initiatives and report their activities to the GLT and Board.

Further information on diversity and inclusion at Lendlease can be found on pages 48 to 49 of the Annual Report.

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www.lendlease.com
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