LENDLEASE GROUP — Interim / Quarterly Report 2020

Feb 19, 2020

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20 February 2020
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Lendlease Trust 2020 Half Year Consolidated Financial Report

Attached is the Lendlease Trust Half Year Consolidated Financial Report for the half year ended 31 December 2019.

ENDS

For further information, please contact:

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

Authorised for lodgement by the Lendlease Group Disclosure Committee

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

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

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

Lendlease Trust Half Year Consolidated Financial Report December 2019

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Lendlease Trust
Half Year
Consolidated
Financial
Report
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Table of Contents

Directors’ Report	1
Statement of Comprehensive Income	3
Statement of Financial Position	3
Statement of Changes in Equity	4
Statement of Cash Flows	4
Notes to the Consolidated Financial Statements	5

Notes Index

Section A: Performance	Section A: Performance
1.	Distributions	6
2.	Earnings per Unit	6
3.	Revenue and Other Income	6
4.	Finance Revenue and Finance Costs	6
5.	Share of Proft/(Loss) of Equity Accounted Investments	7
6.	Events Subsequent to Balance Date	7
Section B: Investment
7.	Other Financial Assets	7
8.	Equity Accounted Investments	8
Section C: Liquidity and Working Capital
9.	Issued Capital	9
Section D: Other Notes
10.	Fair Value Measurement	10
11.	Contingent Liabilities	10
12.	Consolidated Entities	10
Directors’ Declaration		11

Lendlease Responsible Entity Limited ABN 72 122 883 185 AFSL No. 308983 is the responsible entity of the Lendlease Trust ARSN 128 052 595. Lendlease Trust (LLT or the Trust) is domiciled in Australia. The consolidated financial report of LLT for the half year ended 31 December 2019 comprises LLT including its controlled entities (together referred to as the Consolidated Entity). The Consolidated Entity is a for-profit entity. Further information about the Consolidated Entity’s primary activities is included in the Directors’ Report.

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

The consolidated financial report for the half year ended 31 December 2019 was authorised for issue by the Directors on 20 February 2020.

1 / Directors’ Report / Lendlease Trust Half Year Consolidated Financial Report December 2019

Directors’ Report

The Directors of Lendlease Responsible Entity Limited (ABN 72 122 883 185), the Responsible Entity of Lendlease Trust (the Trust), present their Report together with the Half Year Consolidated Financial Report of the Trust, for the six months ended 31 December 2019 and the Auditor’s Report thereon.

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

1. Governance

a. Board/Directors

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

M J Ullmer, AO	Director since 2011 and Chairman since 16 November 2018
S B McCann	Group Chief Executive Ofcer & Managing Director since 2009
C B Carter, AM	Director since 2012
P M Cofey	Director since 2017
D P Craig	Director since 2016
J S Hemstritch	Director since 2011
E M Proust, AO	Director since 2018
N M Wakefeld Evans	Director since 2013
The names of Directors of the Responsible Entity who retired between 1 July 2019 and the date of this Report are:
S B Dobbs	Director since 2015 (retired 20 November 2019)

2. Review and Results of Operations

For the six months ended 31 December 2019, the Trust reported a profit after tax of $31,511,000 (December 2018: $106,395,000).

Key transactions during the period include:

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

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

• An interim distribution of $44,681,000 (December 2018: $67,662,000) has been approved by the directors and will be paid on 17 March 2020.

3. Events Subsequent to Balance Date

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

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

The Lead Auditor’s Independence Declaration is set out at the end of this report and forms part of the Directors’ Report for the six months ended 31 December 2019.

5. Rounding Off

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

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

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M J Ullmer, AO

Chairman

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S B McCann

Chief Executive Officer and Managing Director

Sydney, 20 February 2020

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

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

I declare that, to the best of my knowledge and belief, in relation to the review for the half-year ended 31 December 2019 there have been:

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

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

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KPMG

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D M McLennan

Partner

Sydney

20 February 2020

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

Liability limited by a scheme approved under Professional Standards Legislation.

3 / Financial Statements / Lendlease Trust Half Year Consolidated Financial Report December 2019

Consolidated Financial Statements

Statement of Comprehensive Income Half Year Ended 31 December 2019

		6 months	6 months
		December 2019	December 2018
	Note	$’000	$’000
Revenue and other income	3	37,891	106,077
Other expenses		(1,088)	(1,195)
Results from operating activities		36,803	104,882
Share of proft/(loss) of equity accounted investments	5	(9,649)	-
Finance revenue	4	4,357	2,181
Finance costs	4	-	(668)
Net fnance revenue		4,357	1,513
Proft before tax		31,511	106,395
Income tax expense		-	-
Proft after tax		31,511	106,395
Other comprehensive income net of tax		-	-
Items that may be reclassifed subsequently to proft
or loss
Movements in foreign currency translation reserve		(2,877)	-
Total items that may be reclassifed subsequently to
proft or loss		(2,877)	-
Total comprehensive income after tax		28,634	106,395
Basic/diluted earnings per unit (cents)	2	5.58	18.65

Statement of Financial Position as at 31 December 2019

		December 2019	June 2019
	Note	$’000	$’000
Current Assets
Cash and cash equivalents		17,175	14,289
Loans and receivables		233,049	512,629
Other fnancial assets	7	-	87,157
Total current assets		250,224	614,075
Non Current Assets
Equity accounted investments	8	256,261	-
Other fnancial assets	7	705,300	684,965
Total non current assets		961,561	684,965
Total assets		1,211,785	1,299,040
Current Liabilities
Trade and other payables		240	1,593
Distributions payable	1	44,681	115,623
Total current liabilities		44,921	117,216
Non Current Liabilities
Borrowings and fnancing arrangements		-	-
Total non current liabilities		-	-
Total liabilities		44,921	117,216
Net assets		1,166,864	1,181,824
Equity
Issued capital	9	922,315	921,228
Buyback reserve	9	(67,149)	(67,149)
Foreign currency translation reserve		(2,877)	-
Retained Earnings		314,575	327,745
Total equity attributable to unitholders		1,166,864	1,181,824

The accompanying notes form part of these consolidated financial statements.

4 / Financial Statements / Lendlease Trust Half Year Consolidated Financial Report December 2019

Consolidated Financial Statements continued

Statement of Changes in Equity

Half Year Ended 31 December 2019

Statement of Changes in Equity Half Year Ended 31 December 2019
			Foreign
		Buyback	Currency	Retained
	Issued Capital	Reserve1	Translation	Earnings	Total Equity
	$’000	$’000	Reserve $’000	$’000	$’000
Balance as at 1 July 2018	920,441	(33,300)	-	357,397	1,244,538
Total Comprehensive Income
Proft for the period	-	-	-	106,395	106,395
Other comprehensive income (net of tax)	-	-	-	-	-
Total comprehensive income	-	-	-	106,395	106,395
Transactions with Owners of the Trust
On market buyback	-	(33,849)	-	-	(33,849)
Total other movements	-	(33,849)	-	-	(33,849)
Balance as at 31 December 2018	920,441	(67,149)	-	463,792	1,317,084
Balance as at 1 July 2019	921,228	(67,149)	-	327,745	1,181,824
Total Comprehensive Income
Proft for the period	-	-	-	31,511	31,511
Other comprehensive income (net of tax)	-	-	-	-	-
Efect of foreign exchange movement	-	-	(2,877)	-	(2,877)
Total comprehensive income	-	-	(2,877)	31,511	28,634
Transactions with Owners of the Trust
Distribution reinvestment plan (DRP)	1,087	-	-	-	1,087
Distributionprovided for	-	-	-	(44,681)	(44,681)
Total other movements	1,087	-	-	(44,681)	(43,594)
Balance as at 31 December 2019	922,315	(67,149)	(2,877)	314,575	1,166,864

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

Statement of Cash Flows

Half Year Ended 31 December 2019

Statement of Cash Flows Half Year Ended 31 December 2019
	6 months	6 months
	December 2019	December 2018
	$’000	$’000
Cash Flows from Operating Activities
Cash receipts in the course of operations	1,866	1,759
Cash payments in the course of operations	(2,049)	(991)
Interest received	3,936	1,416
Distributions received	17,444	25,233
Net cashprovided by operating activities	21,197	27,417
Cash Flows from Investing Activities
Acquisition of investments	(268,785)	(65,419)
Proceeds from sale of fair value throughproft or loss investments	89,095	210,038
Net cash (used in)/provided by investing activities	(179,690)	144,619
Cash Flows from Financing Activities
Loan repayment by related party	275,915	-
Loan repayment to related party	-	(18,015)
Loan to related party	-	(90,964)
Distributions paid	(114,536)	(24,788)
Payments for on market buyback of stapled securities	-	(33,849)
Payments for buyback of stapled securities - Distribution Reinvestment Plan	-	(2,047)
Net cash used in fnancing activities	161,379	(169,663)
Net increase in cash and cash equivalents	2,886	2,373
Cash and cash equivalents at beginning of fnancialperiod	14,289	6,953
Cash and cash equivalents at end of fnancialperiod	17,175	9,326

The accompanying notes form part of these consolidated financial statements.

5 / Financial Statements / Lendlease Trust Half Year Consolidated Financial Report December 2019

Notes to the Financial Statements

Basis of Preparation

The half year consolidated financial report is a general purpose financial report, which:

• Has been prepared in accordance with AASB 134 Interim Financial Reporting , and the Corporations Act 2001 ;

• Complies with the recognition and measurement requirements of the International Financial Reporting Standards (IFRSs) and Interpretations adopted by the International Accounting Standards Board;

• Should be read in conjunction with the 30 June 2019 annual financial report and any public announcements by the Trust during the half year in accordance with continuous disclosure obligations arising under the Corporations Act 2001 . The half year consolidated financial report does not contain all the information required for a full financial report;

• Is presented in Australian dollars, with all values rounded off to the nearest thousand dollars unless otherwise indicated, in accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191; and

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

The preparation of an interim report that complies with AASB 134 requires management to make judgements, estimates and assumptions.

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

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

• The accounting policies have been consistently applied by the Trust and are consistent with those applied in the 30 June 2019 annual financial statements other than as stated below.

Impact of New and Revised Accounting Standards

New and Revised Accounting Standards Adopted 1 July 2019

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

New Accounting Standards and Interpretations Not Yet Adopted

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

6 / Financial Statements / Lendlease Trust Half Year Consolidated Financial Report December 2019

Notes to the Financial Statements continued

Section A: Performance

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

1. Distributions

1. Distributions
		6 months	6 months
	Cents	December 2019	December 2018
Lendlease Trust Interim Distribution	Per Unit	$’000	$’000
December 2019 – provided for and payable 17 March 2020	7.9	44,681	-
December 2018 – paid 20 March 2019	12.0	-	67,662
		44,681	67,662
		6 months	6 months
	Cents	June 2019	June 2018
Lendlease Trust Final Distribution	Per Unit	$’000	$’000
June 2019 – paid 16 September 2019	20.5	115,623	-
June 2018 – paid 21 September 2018	4.7	-	26,835
		115,623	26,835
2. Earnings per Unit
		6 months	6 months
Basic/Diluted Earnings Per Unit (EPU)		December 2019	December 2018
Proft after tax	$’000	31,511	106,395
Weighted average number of units	’000	564,331	570,490
Basic/Diluted EPU	cents	5.58	18.65
3. Revenue and Other Income
		6 months	6 months
		December 2019	December 2018
		$’000	$’000
Distribution income		13,752	23,906
Net gain on fair value remeasurement of fair value through proft or loss assets		20,335	67,551
Net gain on sale of fnancial assets at fair value		1,938	12,861
Other income – related parties		1,866	1,759
Total revenue and other income		37,891	106,077

4. Finance Revenue and Finance Costs

4. Finance Revenue and Finance Costs
	6 months	6 months
	December 2019	December 2018
Finance Revenue	$’000	$’000
Finance revenue – external parties Finance revenue – related parties	86 4,271	247 1,934
Total fnance revenue	4,357	2,181

7 / Financial Statements / Lendlease Trust Half Year Consolidated Financial Report December 2019

Notes to the Financial Statements continued

Section A: Performance continued

4. Finance Revenue and Finance Costs continued

	6 months	6 months
	December 2019	December 2018
Finance Costs	$’000	$’000
Finance Costs – related parties	-	(668)
Total fnance costs	-	(668)
Net fnance revenue	4,357	1,513

5. Share of Profit/(Loss) of Equity Accounted Investments

		6 months	6 months
		December 2019	December 2018
	Note	$’000	$’000
Associates1
Share of proft/(loss)	8	(9,649)	-
Total share of proft/(loss) of equity accounted investments		(9,649)	-

1. Reflects the contribution to the Consolidated Entity’s profit, and is after tax paid by the equity accounted investment vehicles themselves, where relevant.

6. Events Subsequent to Balance Date

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

Section B: Investment

This section includes disclosures for indirect property assets such as Equity Accounted Investments in associates and Other Financial Assets contained within the Statement of Financial Position. The measurement basis of Other Financial Assets is fair value. Refer to Note 10 ‘Fair Value Measurement’ for details on basis of determining fair value and valuation technique.

7. Other Financial Assets

7. Other Financial Assets
	Fair Value	December 2019	June 2019
	Level1	$’000	$’000
Current Measured at Fair Value
Fair Value Through Proft or Loss – Designated at Initial Recognition
Lendlease International Towers Sydney Trust	Level 3	-	87,157
Total current other fnancial assets		-	87,157
Non Current Measured at Fair Value
Fair Value Through Proft or Loss – Designated at Initial Recognition
Lendlease International Towers Sydney Trust	Level 3	156,612	151,465
Lendlease One International Towers Sydney Trust	Level 3	55,781	53,710
Australian Prime Property Fund – Industrial	Level 3	94,018	90,437
Australian Prime Property Fund – Commercial	Level 3	373,467	360,927
Australian Prime Property Fund – Retail	Level 3	25,236	28,049
Carlton Connect Initiative	Level 3	186	377
Total non current other fnancial assets		705,300	684,965
Total other fnancial assets		705,300	772,122

1. Refer to Note 10 Fair Value Measurement for details on basis of determining fair value and valuation technique.

8 / Financial Statements / Lendlease Trust Half Year Consolidated Financial Report December 2019

Notes to the Financial Statements continued

Section B: Investment continued

7. Other Financial Assets continued

a. Fair Value Reconciliation

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

Reconciliation of the carrying amount for Level 3 fnancial instruments is set out as	follows.
	December 2019	June 2019
	Unlisted Equity	Unlisted Equity
	Investments	Investments
	$’000	$’000
Carrying amount at beginning of fnancial period	772,122	1,144,423
Additions	-	65,770
Disposals	(87,157)	(543,577)
Gains recognised in Statement of Comprehensive Income – revenue and other
income	20,335	105,506
Carrying amount at end of fnancial period	705,300	772,122

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

8. Equity Accounted Investments

8. Equity Accounted Investments
	INTEREST December 2019 % June 2019 %	SHARE OF PROFIT December 2019 $’000 December 2018 $’000	NET BOOK VALUE
			December 2019 $’000 June 2019 $’000
a. Associates Asia Investments Lendlease Global Commercial REIT1			256,261 -
	24.3 -	(9,649) -
Total Asia		(9,649) -	256,261 -
Total		(9,649) -	256,261 -
Less: Impairment		- -	- -
Total associates		(9,649) -	256,261 -

1. Lendlease Global Commercial REIT was listed on the Singapore Exchange on 2 October 2019.

b. Material Associates Summarised Financial Information

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

Income Statement	LENDLEASE GLOBAL COMMERCIAL REIT
	6 months December 2019 $’000 6 months December 2018 $’000
Revenue and other income Other expenses Income tax expense	22,792 - (57,557) - - -
Loss for the period	(34,765) -
Other comprehensive loss	(5,356) -
Total comprehensive loss	(40,121) -
Trust’s ownership interest Trust’s total share of: Loss for the period	24.3% - (8,455) -
Other adjustments	(1,194) -
Total loss for the period	(9,649) -
Other comprehensive loss	(2,877) -
Total comprehensive loss	(12,526) -

9 / Financial Statements / Lendlease Trust Half Year Consolidated Financial Report December 2019

Notes to the Financial Statements continued

Section B: Investment continued

8. Equity Accounted Investments continued

• b. Material Associates Summarised Financial Information continued

b. Material Associates Summarised Financial Informationcontinued
Statement of Financial Position	LENDLEASE GLOBAL COMMERCIAL REIT December 2019 $’000 June 2019 $’000
Current assets Cash and cash equivalents Other current assets	94,206 - 14,098 -
Total current assets	108,304 -
Non current assets Investment properties Other non current assets	1,488,495 - 19,298 -
Total non current assets	1,507,793 -
Current liabilities Other current liabilities	47,945 -
Total current liabilities	47,945 -
Non current liabilities Financial liabilities (excluding trade payables) Other non current liabilities	543,734 - 1,740 -
Total non current liabilities	545,474 -
Net assets	1,022,678 -
Reconciliation to Carrying Amounts Opening net assets 1 July Acquisition/contributions Total comprehensive loss for the period Foreign currency translation for the period	1,074,629 - (40,121) - (11,830) -
Closing net assets	1,022,678 -
% ownership	24.3% -
Group’s share of net assets	248,511 -
Other adjustments	7,750 -
Carrying amount at end of period	256,261 -

There were no immaterial associates for the period ended 31 December 2019.

Section C: Liquidity and Working Capital

The ability of the Trust to fund the continued investment in new opportunities and meet current commitments is dependent on available cash and access to third party capital. This section contains disclosure on the financial assets, financial liabilities, cash flows and equity that are required to finance the Trust’s activities, including existing commitments and the liquidity risk exposure associated with financial liabilities. The section also contains disclosures for the Trust’s trading assets, and the trading liabilities incurred as a result of trading activities used to generate the Trust’s performance.

9. Issued Capital

December 2019	December 2019	June 2019	June 2019
No of units ’000s	$’000	No of units ’000s	$’000
Issued capital at beginning of fnancial period 584,262	921,228	583,983	920,441
Distribution Reinvestment Plan (DRP) 347	1,087	279	787
Issued capital at end of fnancial period 584,609	922,315	584,262	921,228
Buyback Reserve at beginning of fnancial period (20,131)	(67,149)	(9,722)	(33,300)
On market buyback of securities1 -	-	(10,409)	(33,849)
Buyback Reserve at end of fnancial period (20,131)	(67,149)	(20,131)	(67,149)
Balance refected in Reserves1 -	67,149	-	67,149
Issued capital at end of fnancial period 564,478	922,315	564,131	921,228

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

10 / Financial Statements / Lendlease Trust Half Year Consolidated Financial Report December 2019

Notes to the Financial Statements continued

Section C: Liquidity and Working Capital continued

9. Issued Capital continued

a. Issuance of Securities

As at 31 December 2019, Lendlease Trust had 564,478,476 units on issue, equivalent to the number of Lendlease Corporation shares on issue. The issued units of the Trust and shares on issue by Lendlease Corporation Limited are stapled securities.

b. Security Accumulation Plans

The Distribution Reinvestment Plan (DRP) was reactivated in February 2011. The last date for receipt of an election notice for participation in the DRP is 2 March 2020. The issue price is the arithmetic average of the daily volume weighted average price of Lendlease Group stapled securities traded (on the Australian Securities Exchange) for the period of five consecutive business days immediately following the record date for determining entitlements to distribution. If that price is less than 50 cents, the issue price will be 50 cents. Stapled securities issued under the DRP rank equally with all other stapled securities on issue.

c. Terms and Conditions

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

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

Section D: Other Notes

10. Fair Value Measurement

• a. Basis of Determining Fair Value

The fair value of unlisted equity investments, including investments in property funds, is determined based on an assessment of the underlying net assets which may include periodic independent and Directors’ valuations, future maintainable earnings, and any special circumstances pertaining to the particular investment.

b. Fair Value Measurements

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

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

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

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

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

11. Contingent Liabilities

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

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

12. Consolidated Entities

The material consolidated entities of the Group listed below were wholly owned during the current period.

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

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

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

11 / Financial Statements / Lendlease Trust Half Year Consolidated Financial Report December 2019

Directors’ Declaration

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

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

2. a. Giving a true and fair view of the financial position of the Consolidated Entity as at 31 December 2019 and of its performance for the half year ended on that date; and

3. b. Complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

4. There are reasonable grounds to believe that the Trust will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the Directors:

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M J Ullmer, AO Chairman

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S B McCann

Chief Executive Officer and Managing Director

Sydney, 20 February 2020

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Independent Auditor’s Review Report

To the unitholders of Lendlease Trust

Report on the Half-year Financial Report

Conclusion

We have reviewed the accompanying Half-year Financial Report of Lendlease Trust (the Trust).

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the Half-year Financial Report of Lendlease Trust is not in accordance with the Corporations Act 2001, including:

• giving a true and fair view of the Trust’s financial position as at 31 December 2019 and of its performance for the Half-year ended on that date; and

The Half-year Financial Report comprises:

• Consolidated statement of financial position as at 31 December 2019;

• Consolidated statement of comprehensive income, Consolidated statement of changes in equity and Consolidated statement of cash flows for the Halfyear ended on that date;

• Notes 1 to 12 comprising a summary of significant accounting policies and other explanatory information; and

• The Directors’ Declaration.

• complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

Responsibilities of the Directors for the Half-year Financial Report

The Directors of the Lendlease Responsible Entity Limited, the Responsible Entity for Lendlease Trust, are responsible for:

• the preparation of the Half-year Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 ; and

• for such internal control as the Directors determine is necessary to enable the preparation of the Half-year Financial Report that is free from material misstatement, whether due to fraud or error.

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

Liability limited by a scheme approved under Professional Standards Legislation.

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Auditor’s responsibility for the review of the Half-year Financial Report

Our responsibility is to express a conclusion on the Half-year Financial Report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the Half-year Financial Report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Trust’s financial position as at 31 December 2019 and its performance for the half-year ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As auditor of Lendlease Trust, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a Half-year Financial Report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 .

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KPMG

D M McLennan

Partner

Sydney

20 February 2020