dear sir re: stock exchange announcement for personal use only · 10/15/2007 · the cover and...

Lend Lease Corporation Limited Telephone +612 9236 6111 ABN 32 000 226 228 Facsimile +612 9252 2192 Level 4, 30 The Bond www.lendlease.com 30 Hickson Road Millers Point NSW 2000 Australia

15 October 2007 The Manager Companies Section Australian Stock Exchange Limited

The Manager Companies Section New Zealand Exchange Limited

Pages: Two hundred and thirty seven (237) pages Dear Sir Re: Stock Exchange Announcement 2007 Annual Report to Shareholders In accordance with Listing Rule 4.7, enclosed is the 2007 Annual Report to Shareholders and the 2007 Annual Consolidated Financial Report for Lend Lease Corporation Limited to be sent to shareholders. Yours faithfully

S J SHARPE Company Secretary

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Lend Lease

2007 Annual Report to Shareholders

Lend Lease C

orporation

Annual R

eport to Sharehold

ers2007

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Contents

About Lend Lease 1

Operational/Financial highlights 2

Five-year performance 3

Chairman’s letter 4

Chief Executive Offi cer’s report 6

Geographic diversity 8

Business capabilities 10

Overview of businesses 12

Retail report 14

Communities Report 20

Investment Management report 26

Project Management,Construction and PFI report 32

Sustainability report 38

Corporate Governance 44

Concise Financial Report 60

Directors’ report 62

Board of Directors 62

Remuneration report 67

Shareholder information 106

Corporate directory 108

2008 Important dates for shareholders

February* Announcement of Half Year Results

March* Share price quoted ex dividend

March* Interim dividend record date

March* Interim Dividend payable

August * Announcement of Full Year Results

August* Share price quoted ex dividend

August* Final dividend record date

September* Final dividend payable

November* Annual General Meeting

14

26

Lend Lease Corporation LimitedABN 32 000 226 228

Retail and Communities

Investment Management

32Project Management and Construction

Lend Lease is a member of the Dow Jones Sustainability World Index which is used by DJSI licensed asset managers to manage investments worth over US$5 billion each year.

Notes

Front cover image

* Exact dates will be confi rmed on the Lend Lease website investor information section at www.lendlease.com in due course.

All fi nancial amounts in this report are in Australian Dollars, unless otherwise stated.

The cover and pages 1 to 60 of this Report are printed on 9Lives 80, an environmentally responsible paper, containing 80 per cent post consumer fi bre and 20 per cent totally chlorine-free pulp. It is an FSR certifi ed mixed source paper, ensuring all virgin pulp is derived from well-managed forests. It is also manufactured by an ISO 14001 certifi ed mill.

The remainder of this Report is printed on Ozone Offset, an environmentally responsible paper manufactured using Elemental Chlorine-Free (ECF) sourced from sustainable well-managed forests. Ozone Offset is an FSC mixed source certifi ed product, manufactured by an ISO 14001 certifi ed mill.

The Forest Stewardship Council (FSC) is an international not-for-profi t, non-government organisation promoting responsible forest management. FSC certifi cation is recognised as a global standard in forest management practices and the Chain of Custody component ensures that the fi nal product can be traced back to a certifi ed source.

View of the Dock 5 residential apartment tower, one of the recently completed projects within the 2.5 kilometre Victoria Harbour development in Melbourne, Victoria. Victoria Harbour is a prime example of the effi ciencies of the Lend Lease integrated business model with the master plan managed by Lend Lease Communities and Bovis Lend Lease providing the project management and construction services across the development. Lend Lease Investment Management is also considering coinvestment in a number of Victoria Harbour developments. (Lend Lease Development Director, Victoria Harbour, Maurice Cococcia).

Paper specifi cations

Go online to view the Lend Lease 2007 Annual ReportThe Lend Lease website keeps shareholders informed about the Company’s activities and performance. The Annual Report to shareholders, results announcements, webcasts, presentations and news releases are all readily available on the Investor Information section of our website. You can choose to receive your shareholder communications electronically. It saves paper, is good for the environment and reduces costs.To fi nd out more about electing to receive information electronically, visit Lend Lease Investor Information at www.lendlease.com

precinct.com.au

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Annual Report 2007

Lend Lease Corporation

About Lend Lease

-20

0

20

40

60

80

100

120

140

LLC ASX200

Jun 2007Dec 2006Jun 2006Dec 2005Jun 2005Dec 2004Jun 2004

Delivering shareholder value

Source: Bloomberg

Notes

1. Net operating profi t after tax excluding property revaluations, including interest from the ATO of $32.2m.

2. Calculated based on operating profi t and total weighted average shares on issue including treasury shares.

Lend Lease is a leading property group with broad skills across the property value chain.Headquartered in Australia, we operate three core businesses: project management and construction, property investment management and property development. Our development business focuses on three key competencies – retail, communities and privatisation. Our key markets are Asia Pacifi c, Americas, the United Kingdom, Europe and the Middle East. We operate an integrated business model and our earnings are well diversifi ed by both market sector and geography. Lend Lease is committed to delivering the best possible outcomes for all our stakeholders that are consistent with our core values of respect, integrity, innovation, collaboration and excellence. We are passionate about the relationship between people and places and our role in building a legacy for future generations. We aim to do this safely, ethically and sustainably.

Lend Lease delivered a total shareholder return of 104.1% against the ASX200 total shareholder return of 100.3% for the three years to July 2007. 77¢ Franked to 50%

Up 26%

Full year dividend

$497.5MUp 20%

$445.9MUp 26%

2007 performance at a glance

Statutory profi t

Net operating profi t1

111.4¢Up 26%

Earnings per share2

($m)

($m)

(cents)

(cents)

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Consistent shareholder returns

• Earnings per share rose 26 per cent over the year, clearly exceeding our target of an average 10 per cent increase per annum over a fi ve year period.

• Return on equity has steadily increased and this year exceeded management’s target of 15 per cent.

Strong fi nancial position

• As at 30 June, our gross debt to total tangible assets (including other fi nancial liabilities) was 15.6 per cent and our weighted average debt maturity was 12.0 years with 84 per cent at fi xed rates.

• Interest cover was 7.9 times, above management target of 6 times.

• Lend Lease retained its investment grade credit rating.

Development pipeline

• During the year the Group substantially increased its pipeline of development projects to $45 billion. Post balance date, major project wins have seen the value of the pipeline exceed $60 billion.

Construction Backlog Gross Profi t margin

• Global construction backlog gross profi t margin at 30 June was a record $793 million, representing over two years of forward workload.

Funds under management

• Excluding joint venture interests, funds under management grew by 27 per cent.

Operational highlights

Financial highlights

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Annual Report 2007


Five-yearperformance

1. June 2007, 2006 and 2005 refl ect results prepared under Australian Equivalents to International Financial Reporting Standards (AIFRS). The years prior to June 2005 represent Lend Lease’s results under previous Generally Accepted Accounting Principles (GAAP).

2. Operating profi t excludes unrealised property investment revaluations (June 2007: $82.7 million before tax, $51.6 million after tax; June 2006: $99.4 million before tax, $61.0 million after tax).

3. Calculated using the weighted average number of shares on issue including treasury shares.

4. Dividends include interim and fi nal dividends.

69.2%

Dividend payout ratio on operating profi t1, 2, 4

03 04 05 06 07

56.0

%

69.2

%

79.5

%

68.8

%

69.2

%

AGAAP AIFRS

$445.9M

111.4¢

15.7%

Operating profi t after tax1, 2

Earnings per share on operating profi ts1, 3

Return on equity1

03 04 05 06 07

10¢

20¢

18¢

26¢

28¢

29¢

30¢

35¢

31¢ 42

¢

Interim Final

77¢ Franked to 50%

Dividends per share1,4

03 04 05 06 07

$230

M

$256

M

$286

M

$354

M

$445

.9M

AGAAP AIFRS

03 04 05 06 07

52.5

¢

61.8

¢

71.6

¢

88.7

¢

111.

4¢

AGAAP AIFRS

03 04 05 06 07

6.5%

9.0%

11.9

%

14.7

%

15.7

%

AGAAP AIFRS

Statutory profi t after tax to shareholders’ equity (ROE) for the period.

Footnotes

3

($m)

(percentage)

(percentage)

(cents)

(cents)

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Chairman’s letter

Performance scorecard

It is pleasing to report that Lend Lease is tracking well against all fi ve parameters.

1. Earnings per share on operating profi t (cents per share) is up 26 per cent for the year to 111.4 cents per share, clearly exceeding our target of an average 10 per cent increase per annum over a fi ve year period.

2. The dividend pay out ratio was 69.2 per cent, which is in the middle of our targeted range of 60 to 80 per cent. Our objective within that range is to provide shareholders with dividends that grow steadily in line with Group earnings. It is worth noting that over the near term, franking levels are expected to range between 30 to 50 per cent, refl ecting the increasingly international nature of our business.

3. The percentage of annuity earnings represented 23 per cent of total earnings, well above the target of 15 to 20 per cent of earnings before interest, tax, depreciation and amortisation (EBITDA), which supports the Group’s credit rating.

4. The Group’s gearing (ratio of gross debt including other fi nancial liabilities to total tangible assets) was 15.6 per cent as at 30 June 2007 – below the target level of 30 to 40 per cent.

Similarly, interest coverage remained conservative at 7.9 times, well above the target of a minimum 6 times.

5. Return on equity rose to 15.7 per cent compared with the target of greater than 15 per cent per annum.

The Group’s strong balance sheet provides both the capacity to service existing debt and the scope to fund the Group’s considerable pipeline of growth opportunities.

It is pleasing to report another year of solid growth for Lend Lease. Statutory profi t of $497.5 million after tax was up 20 per cent over the year and net operating profi t after tax rose 26 per cent to $445.9 million compared to the previous year.

Those numbers include $32.2 million after tax in interest from the Australian Tax Offi ce following the successful resolution of a long running disputed tax assessment. Excluding the interest payment from the ATO and unrealised revaluation gains on property investments, the Group’s underlying operating earnings were still up a pleasing 17 per cent on the previous year.

This is a good result that exceeded market expectations.

The Board has announced a fi nal dividend of 42 cents per share, franked to 50 per cent. This brings the full year dividend to 77 cents, 26 per cent higher than the previous full year dividend.

This success is testament to the robust nature of the Lend Lease integrated business model and its competitive performance across the regions and sectors in which we operate. The profi t result was achieved despite a $118.8 million after tax provision taken against certain Bovis Lend Lease UK projects in the fi rst half of the year, including the Manchester Joint Hospitals project.

Lend Lease today is an integrated property company that brings together the skills to develop, create, manage and securitise real estate assets, delivering value for our clients while generating multiple earning streams for the Group.

Our geographic reach and sector diversity also mean that we are not overexposed to any one market or sector at varying stages of the business cycle. This means our overall earnings growth should be less susceptible to external infl uences beyond the Group’s control.

Much work has been done over the past three years to put this robust business model and operating strategy in place and this year’s result, in the Board’s view, confi rms that we are headed in the right direction.

In 2006 Lend Lease established fi ve key performance indicators as the measures that the Board uses to judge the progress of the Company.

“Much work has been done over the past three years to put this robust

business model and operating strategy in place and this year’s result, in the

Board’s view, confi rms that we are headed in the right direction.”

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Annual Report 2007


Sustainability

Lend Lease aspires to be a sustainable organisation in social, economic and environmental terms, so it is important to assess our social and environmental performance on an ongoing basis.

Lend Lease has long been conscious of its environmental impact and has a legacy of social responsibility, but until now has not quantifi ed our impacts and efforts to address those responsibilities.

That’s why, for the fi rst time this year, Lend Lease will report on core sustainability metrics relating to energy and waste usage for Lend Lease offi ces around the world.

The global measurement program, which commenced in January 2007, includes data on direct energy use, greenhouse gas emissions, waste avoidance and water effi ciency, along with global employee health and safety data. This level of transparency will provide the framework for the changes we must make and is the fi rst step in Lend Lease reporting our sustainability progress globally.

Outlook

Lend Lease is performing well. The Group has a well defi ned plan, strong balance sheet and an outstanding pipeline of business growth prospects.The Lend Lease Board, senior management team and all employees have the strategy and the commitment to deliver ongoing growth in shareholder value.

Lend Lease in the community

Lend Lease has a long standing culture of running the business to produce an overall net benefi t to society. The Directors, management and employees believe that fi nding the common interest between all stakeholders is the essence of a sustainable organisation.

Part of this ethos is making an active contribution to the communities in which we operate. This year marked the 11th anniversary of Lend Lease Community Days which are held across the business, globally. These initiatives provide Lend Lease employees with the opportunity to give something back to our communities.

Over the past year, more than 3,400 Lend Lease employees volunteered to participate in over 250 Community Day projects globally, across a diverse range of services including education, the environment, aged care and homelessness.

All this adds up to a reputation as an organisation that cares. The values that unite our business – respect, integrity, innovation, collaboration and excellence – are what make Lend Lease a truly great company.

Zero harm

The single greatest challenge for us is health and safety. Not only on construction sites, but everywhere. Excellence equals zero incidents and zero harm.

The Board and management continue to be fully committed to ultimately achieving the Company’s Incident & Injury Free goals. Nine people died on Lend Lease projects in the past fi nancial year. This is unacceptable.

Eliminating workplace injury is an enormous challenge that we are determined to overcome. We will continue to focus Lend Lease Group efforts to provide our people with more tools and support mechanisms to achieve our vision to be Incident & Injury Free.

David CrawfordChairman

David CrawfordChairman

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Chief Executive Offi cer’s report

Diversifi cation and integration benefi ts

The geographic and sector diversifi cation that has been achieved across the Group’s core businesses has made earnings at the Group level less volatile.

This is illustrated by the combined impact of provisions taken in the UK construction business during the year and the continuing slow residential property market in New South Wales in Australia being offset by strong performances from the rest of the Group.

Lend Lease made good progress on extending its integrated operating strategy into each of its core markets during the year. In the US – we are building our communities platform beyond the successful Actus operation – and we are planning to build a scale residential business in much the same way as we did with Delfi n in Australia and Crosby in the UK.

Healthy pipeline of opportunities

We are now well placed to maximise earnings from our strong and growing development pipeline.

During the course of the 2007 calendar year, Lend Lease won three of the UK’s most important large scale urban regeneration projects. In Australia, Delfi n added another 13,000-lot master planned community project in North Queensland to its backlog. The Retail and Communities and Investment Management businesses worked together to secure two new major development projects that will be majority owned by Lend Lease managed funds. Bovis Lend Lease will manage construction.

Taking into account projects added since June 2007, the Group’s development pipeline now exceeds $60 billion.

Our ability to secure such impressive growth in the pipeline is underpinned by the fact that we are seen as a highly credible development, delivery and long term management partner, both by government and private sector landowners seeking holistic solutions for their property holdings.

Over the past three years Lend Lease has outperformed management’s stated earnings objectives.

In the 2007 fi nancial year Actus Lend Lease, Investment Management and Bovis Lend Lease in Asia Pacifi c and the US made stand-out contributions. Our Retail and Communities business signifi cantly expanded its pipeline of projects, which will drive long term earnings across the Group’s Development, Construction and Investment Management businesses.

Lend Lease is performing well and has a clear strategy for ongoing growth.

Shareholder value is a key driver

We have refi ned our business to focus on core competencies in markets where we have strong positions and competitive advantage. This is evidenced by the substantial growth of the Group’s development pipeline, record construction backlog gross profi t margin and increased funds under management.

During the year, the Group invested another $1.3 billion in pipeline projects and realised around $1.1 billion from development proceeds and asset sales. Importantly, the Group’s invested capital base grew from $4.1 billion to $4.4 billion.

In the face of jittery debt markets, the Group’s gearing is low and 84 per cent of our debt is at fi xed rates with an average maturity of 12 years. We are in a secure position to fund future growth.

All of this adds up to steadily increasing shareholder value.

Lend Lease delivered a total shareholder return of 38 per cent for the 12 months to 30 June 2007 compared to the ASX200 total shareholder return of 29 per cent for the same period.

66

“Our proven ability to leverage the full range of earnings

opportunities across the property value chain augurs well for continuing growth over the

short to medium term.”

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Annual Report 2007


Executive offi ce

In May this year, we set up a new executive offi ce to match the evolution of Lend Lease into a fully integrated business. The executive offi ce team comprises Ross Taylor as Chief Operating Offi cer; Steve McCann as Finance Director and CEO Investment Management; and myself.

This structure brings the three most senior executives closer together to ensure that decision making on capital allocation and oversight of synergy opportunities across the core operations is tightly coordinated at the Group level, always with an eye on the long term value drivers for the business.

We have also established two new business initiatives to research and scope longer term growth opportunities relevant to our core competencies and operations. One, Lend Lease Ventures, is looking for sustainable and environmental opportunities. The other is investigating opportunities for our business model in a fi fth geography such as Japan, China or India.

Health and safety

At the heart of our operations is a philosophy that no one should come to harm in our businesses – no matter where we do business around the world. The Group’s Incident & Injury Free objective touches every part of our operations and is a fundamental strategic, cultural and operational priority for each and every Lend Lease director and employee.

To ensure we drive our safety performance to a much higher level, we have taken a number of decisive actions over the year.

As part of his responsibilities as Chief Operating Offi cer, Ross Taylor will oversee the implementation and monitoring of an Incident & Injury Free culture across all Group companies and operations. A senior management team member, Rich Driggs, who has substantial safety management expertise, works full time on this issue.

In addition, each business unit’s performance will be assessed against a consistent operational safety framework that extends beyond Group employees to our supply chain and broader industry initiatives.

Incident & Injury Free operation is a major priority and has been established as one of our key incentive bonus criteria for everyone participating in the short term incentive scheme.

Outlook

Shareholders have good grounds to be confi dent about the outlook for Lend Lease.

Our proven ability to leverage the full range of earnings opportunities across the property value chain augurs well for continuing growth over the short to medium term.

We have a strong balance sheet to fund our quality development pipeline. Construction gross profi t margin is at record levels. Lend Lease managed property funds continue to deliver competitive returns, which in turn is attracting increased equity to those funds.

Lend Lease is indeed an opportunity rich company. We have a lot of work to do to execute our strategy over the next four or fi ve years. Lend Lease is well placed to do just that and we believe we will turn this year’s signifi cantly improved performance into continued superior results for our shareholders.

Greg ClarkeChief Executive Offi cer and Managing Director

7777

mentation e culture ns.h Driggs,expertise,

nce will onal safety mployees nitiatives.

of ne heme.

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Geographic diversity

49,051 9.5%Shareholders Shares providing employee benefi ts

Europe Americas

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9999999999999999999999999999999

Employees by region

Contribution to net profi t

after tax

Americas 32.5% 31.0%

Europe 37.5% 36.0%

Asia Pacifi c 30.0% 33.0%

10,817 $10.5BTotal number of employees Funds under management (including joint ventures)

(from operating businesses)

Asia Pacifi c

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Business capabilities

Product andintellectual

property

Design and delivery capability

Free cash flow and design and delivery capability

Retail andCommunities

InvestmentManagement

Project Management

and Construction

Source of capital

Underpinscredit rating

Underpinscredit rating

The Lend Lease integrated business model Each of the core businesses across the Group plays an integral role in the overall business model and Group strategy.

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Investment ManagementSecures third party capital positions for projects to generate long term annuity style earnings which underpin the Group’s credit rating.

Retail and CommunitiesThis is the business where Lend Lease invests its capital. We are not natural long term owners of assets. Capital is regularly recycled from completed and mature assets to new opportunities, releasing profi ts along the way.

Project Management and ConstructionProvides complex project management and delivery capability, generates free cash fl ow and is a key source of intellectual capital for the Group.

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Overview of businesses

Steve McCannGroup Finance Director, CEO of Investment Management

Greg Clarke Chief Executive Offi cer,Managing Director

Ross TaylorChief Operating Offi cer

Executive Offi ce

In May this year we established a new executive

offi ce to match the evolution of Lend Lease into a fully

integrated business.

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Annual Report 2007


06 07

$167

.5M

$183

.4M

06 07

$129

.5M

$262

.8M

Profi t after tax ($)Profi t after tax ($)Profi t after tax ($)


The Retail and Communities business provides a full spectrum of real estate expertise from development, asset management and facilities management to complex project fi nancing initiatives.

Our operations span the UK, Asia Pacifi c and the US, providing an integrated retail and communities skill base that enables us to identify, secure and deliver large scale projects.

With a long standing background in retail and mixed use development, our retail business develops and operates premier retail assets across Australia, Singapore and the UK, generating multiple earning streams for shareholders.

The communities business has established a solid reputation for high quality, urban regeneration developments that refl ect our distinctive capabilities in creating place and community.

We develop master planned greenfi eld and urban renewal communities in Australia, the UK, and the US with a strong presence in the specialist US military housing privatisation market.


Lend Lease Investment Management is a leading real estate investment manager with $10.5 billion in managed property funds invested primarily in retail, commercial and industrial property assets around the world. It also holds $3.4 billion in direct and indirect real estate investments globally.

With a diverse investment platform drawing on the internal product creation capability of the broader Lend Lease Group, Investment Management is able to deliver a range of real estate products across the risk/return spectrum tailored to the needs of institutional investors worldwide.

Project Management and Construction

Lend Lease is one of the world’s leading project management and construction services companies.

With operations in more than 40 countries, the Project Management, Construction and PFI businesses offer market leading expertise in project and construction management, design-build and private partnerships.

Key sectors include commercial, retail, residential, communications, industrial and pharmaceutical. Utilising industry best practices, Lend Lease works with clients to create high quality, sustainable property assets and is committed to operating Incident & Injury Free.

Contribution to profi t(from operating businesses)

36%


52%


12%

06 07

$134

.6M

$57.

6M

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A vibrant and innovative new shopping experience

Retail Case studyGolden Square Shopping Centre, Warrington UK In February 2005, Lend Lease signed an agreement with the Warrington Retail Limited Partnership to co-invest in and manage the redevelopment of Golden Square shopping centre. The centre is located in the population growth corridor near Manchester, UK.

The 365,000 square foot extension has more than doubled the size of the original centre, creating 60 new stores, increasing the centre’s capacity to 140 retailers and elevating Warrington to a top 40 UK retail destination.

This was the fi rst time Lend Lease in the UK had undertaken the redevelopment of an existing centre while it was still in operation. Lend Lease was the development manager and will continue as the asset and property manager of the centre.

In May 2007, the new extension welcomed its fi rst customers and Golden Square’s sales fi gures tripled during June compared to sales for the same month the previous year.

• Rejuvenating the retail centre of a local community

• Doubling the size of the existing centre

• Revitalising the retail mix to benefi t both the town centre and local residents

• Boosting the centre’s position in overall town rankings to a top 40 retail centre

• Working with local councils to upgrade transport infrastructure

Jeff Peers Lend Lease Retail Development Director, UK

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Annual Report 2007


Sustainable transport facilities via a new bus interchange for the town

Bringing new family dining and food choices to the town

The fashion-led development sees top high street brands opening their fi rst stores in Warrington, alongside the fi rst full-line department store in the town centre – a fl agship 115,000 square foot Debenhams.

Golden Square is another example of Lend Lease Retail taking a leading role in the regeneration of a town centre and revitalising a local community.

Up to 1,200 local jobs have been created as a result of the development

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Year in review

Lend Lease made signifi cant strides in expanding its retail footprint across Australia, Singapore and the UK. This is in line with our strategy to actively pursue retail assets in strong growth areas with expansion and development potential.

Our retail business is distinctive in its ability to manage retail assets across all phases of the development cycle from acquisition, planning, development and construction to the specialist skills of research, leasing, marketing and property management.

The market value of Lend Lease interests in retail centres over the year rose to $3.3 billion, refl ecting the acquisition of ownership interests in a number of centres, net operating income growth and some capitalisation rate compression across the portfolio. In particular, the value of Lend Lease interests in retail assets in Australia grew from $392.9 million to $456.9 million and the value of our 50 per cent interest in the King of Prussia Mall in the US grew from $445.3 million to $483.8 million.

Over the year, Lend Lease acquired direct and/or indirect ownership interests in a further fi ve retail centres along with their related development and property management rights. These were: the Somerset retail project and Paradiz Centre in Singapore, Pakenham Place and Caroline Springs Square in Melbourne and 420 George Street in Sydney through the Group’s investment in APPF Retail. Lend Lease also secured the management rights to the Indooroopilly shopping centre in Queensland.

The UK business secured the right to acquire a 50 per cent interest in the Park Place retail development in Croydon, subject to certain commercial conditions.

The large retail development pipeline represents a gross lettable area of 344,200 square metres and has an estimated development cost of $5.3 billion.

The retail business offers a quality portfolio of assets with recurring earnings streams. Lend Lease focuses on prime, regional and subregional shopping centres with good expansion potential in growing demographic catchment areas.

Asia Pacifi cLend Lease continued its success in the Singapore market, securing the Somerset retail development, one of the last remaining major retail development opportunities along Orchard Road, Singapore’s prime shopping district.

Lend Lease will manage all phases of the project including development, leasing, project management and construction, in addition to the longer term asset and property management rights. Construction has commenced on the site and the project is due for completion in late 2009.

Also in Singapore, the business purchased a 25 per cent co-ownership interest and the property management rights for the Paradiz Centre retail and offi ce building.

In Australia, Lend Lease expanded its portfolio of prime, regional and subregional centres.

In February this year, Lend Lease was awarded development management and property management rights to the Mid City Centre 420 George Street redevelopment located in the heart of Sydney’s prime shopping district.

The redevelopment will include approximately 38,000 square metres of offi ce space over 29 levels and 9,000 square metres of prime retail space. APPF funds acquired a 25 per cent interest in 420 George Street, with joint venture partner, Fortius owning the remaining 75 per cent.

The subregional centre Caroline Springs Square, located in one of the fastest growing areas in Melbourne, was acquired from Communities Asia Pacifi c by APPF and the Lend Lease Core Plus Fund. The acquisition demonstrates the added advantage of the Lend Lease integrated business model in delivering multiple earnings streams for the Group while also securing access to valuable asset opportunities for our client investment funds.

Lend Lease managed regional centres also performed well with Sunshine Plaza, Indooroopilly and Cairns Central being named as Queensland’s top three regional shopping centres in terms of total sales per square metre.

Results highlights

• The number of centres in which Lend Lease has an ownership interest, directly or indirectly via managed funds, increased to 23 (up from 18 in 2006).

• Market value of Lend Lease interests in these centres rose to $3.3 billion, from $3 billion in 2006.

• Assets under management increased to $12 billion. In addition to the increased ownership interest, this asset growth was driven by underlying net operating income growth and some capitalisation rate compression across the portfolio.

• Retail space under management or gross lettable area increased to 926,100 square metres, up from 763,100 square metres in 2006.

• The development pipeline increased to $5.3 billion, up from $4.2 billion in 2006.

• Development pipeline of gross lettable area of 344,200 square metres.

Retail report

1 Caroline Springs Square, Melbourne, Victoria

2 Paradiz Centre, Singapore

2

1

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Annual Report 2007


UKThe completion and May 2007 opening of the Golden Square shopping centre in Warrington was a major milestone for the UK retail business over the year. The redevelopment effectively doubled the size of the centre to 63,600 square metres, creating space for more than 60 new stores and generating 1,200 jobs for the local region. As a result of the redevelopment, the market value of the centre has increased to £265.2 million.

Lend Lease also secured the right, subject to certain commercial conditions, to acquire a 50 per cent interest in Park Place, an 82,700 square metre retail development in Croydon, South London.

There are also expansion opportunities for the strongly performing Meadows retail centre in Chelmsford, Essex, with Lend Lease acquiring two adjoining sites.

The total value of the fi ve UK Lend Lease managed retail centres – Bluewater, Overgate, Touchwood, Golden Square and The Meadows – increased from $6.5 billion to $7.2 billion.

Subsequent to year end, the Group was awarded a number of signifi cant mixed use urban regeneration opportunities in the UK. This includes selection as a joint venture partner with Grosvenor Group Limited, to develop Preston, a £700 million, 148,645 square metre, retail led development.

Our ability to provide retail, residential and construction skills in-house differentiates the Lend Lease value offering when competing for large mixed use projects and has been fundamental in securing our growing project pipeline.

AmericasIn the US, the Lend Lease co-owned, King of Prussia shopping centre continues to perform well with rental growth in line with targets and longer term vacant space leasing up over the year. The mall maintained high occupancy levels.

Business priorities

• Further strengthen rental income and drive the value of our portfolio of retail assets.

• Continue to deliver recurring, multiple earnings streams for the Group through retail development, project management and fund management fees.

• Maintain status as a quality development, asset management and ownership partner with asset owners and funds in each of our markets.

• Continue to grow our business in Australia, the UK, USA and Singapore and explore opportunities in other growth markets such as China, Japan and India.

• Continue to pursue a robust environmental, social and economic sustainability plan to ensure the future success of the business.

Outlook

Market capitalisation rates have fi rmed across major markets. As retail conditions tighten and the downward yield shift comes to an end, the market focus is now turning toward quality assets, active asset management and development activity to drive returns. Lend Lease is well placed in each of these areas with a high quality asset portfolio.

3 Sunshine Plaza, Indooroopilly, Queensland, Australia

4 Golden Square, Warrington, UK

5 Caroline Springs Square, Melbourne, Australia

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Quick Facts

Drawing on its 34 year track record of successfully managing projects throughout Asia, Lend Lease will work across all phases of the project from development, leasing, project management and construction to asset and property management services on completion.

Lend Lease Retail is bringing leading skills in retail management and development as well as retail planning, leasing and property management expertise to the centre development.

The development site has a 95 metre street frontage to Orchard Road and a 70 metre exposure to Somerset Road. It spans eight levels, including three levels below ground.

This project will be the fi rst major fully integrated retail development undertaken by Lend Lease in Asia. On completion, it is estimated that Somerset will increase in value to more than S$1.1 billion (approximately A$920 million).

The Somerset project is a prime example of the Lend Lease Retail strategy of securing quality retail assets that have good catchment demographics and providing an asset pipeline of opportunities for Lend Lease funds.

The Singapore economy is in good shape, further strengthening the prospects of the development. The Singapore Government is forecasting an average GDP growth rate of 4.8 per cent over the next fi ve years.

The Singapore Government has introduced a number of initiatives to consolidate Orchard Road’s position as Singapore’s premium retail destination including developing capital infrastructure and facilities to revitalise the street over the next two years.

In addition, the Singapore tourism board is working to establish Singapore as the shopping capital of Asia.

The centre’s vision is to be a leading destination in the mid to upper-mid level fashion, food and lifestyle offer.

Construction work has commenced and is expected to be completed by December 2009. Somerset will accommodate approximately 200 specialty retailers.

The pedestrian walkway intersecting the site, outdoor dining areas and a powerful street frontage have all been designed to deliver a superior customer experience.

The leasing phase is underway, with a focus on attracting a number of global brands as anchor tenants for major fl agship stores. Lend Lease Retail is also integrating prospective tenant needs into the design of the centre.

In August 2006, Lend Lease secured the highly coveted Somerset site from the Urban Redevelopment Authority of Singapore for S$617.2 million (approximately A$514 million).

Retail assets on Singapore’s Orchard Road are tightly held and this site is one of the last prime retail developments released by the Singapore Government within the city state’s retail hub.

Orchard Road offers 800,000 square metres of retail space and generates more than 20 per cent of all Singapore’s retail sales. The Somerset site is located over the top of the MRT city rail connection, providing a steady stream of pedestrian traffi c through the centre.

$5.3B

Estimated Size of Retail Development Pipeline

Retail

The Somerset projectcase study

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1 Orchard Road, Singapore2 Somerset construction

site, Singapore

1. Via direct and indirect interests

06 07

18 2323

Number of Centres Owned1

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Annual Report 2007


06 07

763,

100

sqm

926,

100

sqm

926,100 sqm

Gross Lettable Area Under Management

In the Somerset project, Lend Lease Retail is seeking to deliver a customer lifestyle experience that combines the best international retail practices with the local Singapore environment to create a prime retail destination.

Asian Retail Investment Fund (ARIF), a wholesale fund managed by Lend Lease Investment Management, has acquired a 75 per cent interest in the Somerset project from Lend Lease. Lend Lease retained the remaining 25 per cent and has a 10.1 per cent co-investment in ARIF.

The institutional interest in Somerset as the seed asset of ARIF refl ects increasing global investor demand for exposure to the region.

Lend Lease Retail is managing the development, and Bovis Lend Lease is providing project management and construction services.

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33 Somerset MRT, Singapore4 Orchard Road, Singapore

$12B

Assets Under Management

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Communities Case studyHickam Community Housing, Hawaii, USActus Lend Lease has been providing and managing privatised military family homes for the United States Air Force Base at Hickam, Hawaii, since February 2005.

The Hickam Community Housing project is keenly focused on sustainability. On completion, it will feature the latest in photovoltaic panelling technology, which will provide a signifi cant amount of Hickam’s electricity needs, demonstrating the Group’s commitment to achieving sustainable development outcomes.

The 50 year contract involves construction, renovation, maintenance and property management for approximately 1,400 homes. In 2007, Actus Lend Lease was selected to oversee the construction, renovation and management of the remaining 1,100 homes to be privatised at Hickam. Together, both phases will make up a community of 2,500 homes and generate aggregate revenues estimated at US$3.9 billion (approximately A$4.62 billion) over the term of the contract.

95 per cent of the project workforce sourced from the local community

• A focus on the well-being of its residents, employees, the environment, small businesses and the local community

• Energy and water effi ciency

• Nurturing quality community life

David Falls Project Director Hickam Community Housing, US

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Annual Report 2007


Solar heating in virtually all homes

Donated excess second hand appliances to local needy families

Awarded the ‘Energy Alliance 2007 Outstanding Achievement Award’ in energy effi ciency for Hawaii

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Communities report

Year in review

Lend Lease Communities remains a strong growth driver for the Group, with profi t up 36 per cent over the year, and an extremely robust estimated sales value of total backlog of $33 billion.

The scale and scope of our development business ensures quality earnings sourced from a diverse range of products and markets.

AustraliaThe Australian business achieved a solid result despite the slow housing market in New South Wales. Trading was in line with market conditions and encompassed a good mix of residential and commercial sales.

The business is seeing encouraging signs in a number of residential markets, particularly the Sydney and Melbourne premium apartment markets, with investor interest returning as rent yields improve.

The gross sales value of units settled increased by $47.6 million to $940.5 million. Settlements from Dock 5 in Victoria Harbour, Melbourne, and settlements in Sydney at Jacksons Landing and St Patrick’s contributed to this growth.

Signifi cant land sales were achieved at Caroline Springs in Melbourne, Springfi eld Lakes in Queensland and Varsity Lakes on the Gold Coast.

Strong commercial sales over the year helped offset relatively fl at levels of land and unit settlements across the Asia Pacifi c Communities business. An upturn in pre-sales, which rose by around 500 units on the year, places the business in a favourable position for the year ahead, with a lower contribution of commercial sales expected in 2008.

The master planned community at Rocky Springs in Northern Queensland represents a signifi cant win for the business. The project builds on a strong track record in Townsville, adding 13,000 units to the pipeline and helping to boost our Asia Pacifi c backlog by 11 per cent.

There was strong investor interest in the quality assets provided by Asia Pacifi c Communities, with the sale of three communities projects to the Lend Lease Communities Fund 1 (LLCF1). These projects were: Woodlands in Queensland, Ropes Crossing in Sydney and Lakeside at Pakenham in Victoria.

Asia Pacifi c Communities continues to manage the development of these projects and retains a co-investment in the fund.

In addition, Caroline Springs Square in Melbourne was sold to the Lend Lease Core Plus Fund (LLCPF) and APPF

Retail Fund. A senior living project in Queensland, Keperra Sanctuary was also sold to LLCPF.

These transactions demonstrate the ongoing value created by the Lend Lease integrated business model.

UK CommunitiesIn the UK, the communities business had a very successful year, with Lend Lease selected as the preferred development partner for the Stratford City Athletes Village. Following the fi nancial year end, Lend Lease was also awarded the £1.5 billion mixed use development at Elephant and Castle.

The Stratford City project involves the development of approximately 4,200 residential dwellings and related accommodation that will become the Athletes Village for the 2012 London Olympic Games.

A second phase will then involve developing the remaining residential and up to 500,000 square metres of commercial space to complete the regeneration. This phase has a potential value of approximately £3.5 billion, to be developed over the period to 2020.

Crosby Lend Lease delivered profi t after tax of $55.3 million, up from $27.8 million in 2006.

An increase in commercial sales including retail, offi ce and a multi-storey car park in Clarence Dock, offset a decline in the number of units settled over the year.

Residential backlog units for Crosby Lend Lease substantially increased by 1,030 units with the acquisition of Monkbridge, Leeds, and the additional phases on the Honduras Wharf and Potato Wharf developments. This represents more than three years’ sales, including a signifi cant commercial backlog of 47,150 square metres.

In July this year, Lend Lease was selected as the master development partner to complete a £1.5 billion mixed use regeneration at Elephant and Castle in central London. A redevelopment of this scale, located within two miles of London’s West End, is one of the most extensive urban regeneration schemes of its type in Europe.

Results highlights

• Global Communities profi t after tax rose 36 per cent to $186.4 million, from $136.6 million in 2006.

• Estimated sales value of Communities backlog reached $33 billion, including residential and commercial opportunities.

• Asia Pacifi c Communities built a substantial backlog of 84,945 lots and apartments in Australia, up 11 per cent on 2006.

• Despite diffi cult trading conditions in Australia, profi t after tax of $90.9 million was broadly in line with 2006.

• Crosby Lend Lease contributed a profi t after tax of $55.3 million, up from $27.8 million in 2006.

• Crosby Lend Lease backlog grew to 4,860 lots in addition to a commercial backlog of 47,150 square metres.

• Actus Lend Lease delivered a profi t after tax of $43 million and established a backlog gross profi t margin of over $500 million.

Americas 23.4%

Asia Pacific 48.8%

Europe 27.8%

Net Profi t After Tax

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Annual Report 2007


Outlook

While there are a few market sector challenges such as residential in NSW, Lend Lease has built a robust and diversifi ed business, with an exceptional development pipeline that should deliver attractive sustainable growth.

1 Artist’s impression: Stratford City project, UK

2 Caroline Springs, Melbourne, Australia

3 Elephant and Castle tube station, London, UK

4 Hickam Family Housing, Hawaii, US

5 Varsity Lakes, Gold Coast, Australia

US CommunitiesThe US operations made great progress in developing its communities business over the year. Lend Lease is continuing to look at ways to build scale across its business both organically and via strategic acquisition, much the same way as it did in Australia and the UK.

During the year the Lend Lease Communities business established an offi ce in Denver, Colorado, to focus on growth in this area.

A new project was secured in the Denver area, Lowry Range, a 1,600 hectare master planned community with an estimated sales value of around US$1.6 billion to be developed over the next 20 years.

This, in addition to the Horizon City project, builds a potential backlog of 15,881 lots and 1.3 million square metres of non-residential, commercial offi ce and retail development. We expect to realise the fi rst sales value from these projects in the 2010 fi nancial year.

Horizon City is a 203 hectare master planned mixed use community that will have a developed land value of approximately US$200 million. The project will be developed over the next decade.

These developments are on track to continue building a large communities platform across the United States of America.

Actus Lend LeaseOver the year Actus Lend Lease continued its growth momentum, delivering a profi t after tax of $43 million more than doubling from $18.1 million the previous year. This result consolidated its position as a major growth driver for the Group.

Working with all branches of the US military through the Military Housing Privatization Initiative, Actus Lend Lease enjoys a market share of over 25 per cent of the US military housing market.

Actus Lend Lease reached fi nancial close on four projects: Camp Lejeune Phase 2, Fort Knox, Fort Campbell Additional Scoring and Fort Hood Stage 2. This increased development gross profi t margin to $27.2 million.

Highlights included winning preferred bidder status on Camp Lejeune Phase 3, the family housing at the US Marine Corps installations in North Carolina and New York. It has an estimated capital spend of around US$200 million over the fi rst fi ve years. Actus Lend Lease also secured the Tri Group project, which involves the development of family housing at three key US Air

Force installations in California and Colorado, with an estimated capital spend of US$250 million.

In a signifi cant win, the US Army awarded Actus Lend Lease the fi rst pilot phase of its Privatization of Army Lodging Program. This is the fi rst of three phases to be awarded. The program has an estimated construction value of US$400 million and consists of the privatisation of 4,100 hotel rooms in 13 locations.

Subsequent to year end, Actus Lend Lease won the fi rst single personnel barracks pilot project at Fort Drum. This is one of several pilot projects that will lead to the privatisation of barracks over the next several years, with a projected value of US$20 billion. In July this year, Actus Lend Lease reached fi nancial close on Phase 2 of the Hickam Air Force Base project in Hawaii, with a projected value of US$415 million.

Actus Lend Lease will continue to explore and develop new markets within the military such as barracks, the redevelopment of closed bases, lodging, schools and hospitals.

Business priorities

• Continue to strengthen our business in Australia, the UK and USA to ensure we have resources to service growth opportunities coming through the pipeline.

• Identify future markets for our lines of business, such as brownfi eld inner urban development, critical worker housing and other privatisation markets.


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Victoria Harbour case study

Quick Facts

06 07

93,4

05

115,

546

115,546

Number of Residential LotsGlobally

Communities

2

1 Dock 5, Melbourne, Australia

2 NAB Building, Melbourne, Australia

1

It is a great privilege to be given the opportunity to play a leading role in one of Australia’s most ambitious urban renewal projects. The Victoria Harbour development in Melbourne’s Docklands represents such an opportunity.

Victoria Harbour is at the centre of Docklands, a 30 hectare extension of the Melbourne central business district (CBD) at the harbour end of Collins Street. In 2001, Lend Lease Development was selected as the developer for Victoria Harbour.

The Victoria Harbour master plan, managed by Lend Lease Communities, encompasses a diverse and vibrant mix of retail, offi ce and residential space, including 2.5 kilometres of water frontage. Bovis Lend Lease has provided the project management and construction services across the development.

Victoria Harbour is a distinctive site on a world scale because of its land size, water frontage and proximity to the Melbourne CBD. By 2009, the area is estimated to accommodate a living and working population of more than 23,000 people.

On completion in 2020, the development will include over 200,000 square metres of commercial space, more than 2,000 apartments and 40,000 square metres of retail, community facilities, parkland and public open space.

The parklands and green public space will differentiate the Victoria Harbour area from the broader Docklands vicinity, as Lend Lease will retain a portion of the area as serviced, undeveloped land for community uses. Lend Lease will place more than $10 million of public art in open spaces throughout the project.

One of the fundamental planning principles was to blend the Victoria Harbour master plan into the broader context of Melbourne’s characteristic streetscape. The focus is on integrating the street, open space and water and retaining a sense of intimacy by refl ecting Melbourne’s typical Hoddle grid of narrow laneways.

Lend Lease Communities has worked closely with the Victorian Government to transform Victoria Harbour into a vibrant urban landscape in the heart of Melbourne and an inspiring place to live, work and visit.

4.5M sqm

Size of Commercial Backlog Globally

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Annual Report 2007


Under the development plan, the premium Melbourne CBD addresses of Collins and Bourke Streets will be extended to the Victoria Harbour precinct. The existing tramway will also be extended along Collins Street, providing a direct connection to the city centre.

The development also includes a component of homes that will be part of Victorian State Government’s affordable housing initiative for key workers.

The fi rst major milestone for the development was the award winning National Australia Bank (NAB) building, owned by General Property Trust. Completed in 2004, the 59,000 square metre NAB building features open fl oor plans and light fi lled atriums, signifi cantly refi ning the concept of what future workplaces should look like.

There are currently around $1.2 billion of projects in Victoria Harbour either completed, under construction or committed to commence in 2008.

Recently completed projects include Dock 5, the fi rst residential apartment tower and the fi rst stage of the marina.

Designed by award winning architect John Wardle the Dock 5 structure has a collection of carefully considered design elements. The building has attracted a healthy level of interest from buyers and 133 Dock 5 units were settled during the reporting year.

Another major residential project, Mosaic Apartments, a nine level boutique building nestled between Docklands Park and Victoria Green – is also currently under construction and due for completion in mid 2008. Pre-sales are going extremely well, with around 80 per cent sold.

Construction on the Ericsson headquarters is nearly complete. The 24,150 square metre offi ce block, which includes 400 square metres of retail offi ce space, is scheduled to open early in 2008.

The Merchant Street retail precinct featuring 50 speciality shops including homewares, fresh food and a Safeway supermarket, is also under construction.

Victoria Harbour is attracting an increasing number of premium commercial tenants.

In August this year, Myer announced it would relocate its head offi ce to 800 Collins Street. Myer will take out a 12 year lease on approximately 26,000 square metres of the building from 2010.

Sustainable ecological design is a central aspect of the Victoria Harbour precinct. Notably, the ANZ Building and 825 Bourke Street developments which are currently under construction, represent the best in high performance and sustainable workplaces.

The ANZ Building, an 84,650 square metre low rise offi ce block located on the new extension of Collins Street and 825 Bourke Street, a 10,300 square metre A grade offi ce block and the new Victorian head offi ce for Lend Lease, will be among the few buildings in Australia registered to seek a green star energy rating.

The ANZ Building will include energy effi cient design aspects such as river cooling, partial solar power, storm water reuse and grey and black water recycling. The 825 Bourke Street building will also feature black water recycling, storm water reuse and energy co-generation.

Importantly, these developments respond to environmental issues, deliver a superior workplace for tenants at competitive rents and, at the same time, meet the performance expectations of institutional investors.

Meeting the institutional investor appetite for the Lend Lease pipeline of development product, 825 Bourke Street has been earmarked for acquisition by the Lend Lease managed Australian Prime Property Fund Commercial Fund.

As the various components of Victoria Harbour come together, its reputation as an up and coming inner hub of Melbourne is increasing and it is rapidly becoming an appealing part of the city’s landscape.

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3 The promenade, Victoria Harbour, Melbourne, Australia

4 Victoria Harbour, Melbourne, Australia

$33B

Estimated Sales Value of Communities Backlog Globally

06 07

$27.

9B

$33.

0B 42,400

Units Under Management Actus Lend Lease

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Case studyThe Asian Retail Investment FundThe Asian Retail Investment Fund (ARIF) is an open ended wholesale fund offering investors the opportunity to participate with Lend Lease in the development, repositioning and long term ownership of predominantly Asian retail assets.

Launched in December 2006, the fund has raised equity commitments of S$700 million, giving ARIF an investment capacity of $2.4 billion. The fund has a mandate to invest in Taiwan, Singapore, Malaysia and Thailand. Lend Lease Corporation has a 10.1 per cent co-investment in the fund.

The fund has made an initial investment in the Somerset retail project in Singapore, acquiring a 75 per cent interest in the development. Construction work on the Somerset project has commenced and is expected to be completed by December 2009.

ARIF is a strong example of Lend Lease’s commitment to its integrated business model and Lend Lease Investment Management’s ability to develop innovative solutions that benefi t both investors in the fund and the broader Lend Lease Group.

Erle Spratt Fund Manager ARIF, Singapore

• Utilising the Lend Lease integrated property skill base to add value through retail planning, development and intensive asset management

• Investment in a highly sought after Singapore based retail development opportunity

• Positioning each asset to capitalise on its unique features and location to underpin retail sales performance

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Annual Report 2007


Access to the Lend Lease retail development pipeline

An innovative and effi cient investment structure

Opportunity to participate in both retail development returns and long term retail investment returns

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Year in review

Investment Management continued the positive momentum generated during the 2006 reporting year, delivering a $133.3 million increase in after tax profi t of $262.8 million. Funds under management increased to $10.5 billion.

Distributions from the Lend Lease Global Fund and the sale of the Generali joint venture contributed to a substantial operating profi t after tax of $207.1 million from the European business. Aside from these gains, the Investment Management business globally delivered strong growth in underlying earnings and funds under management.

An expanded range of investment products attracted a number of new institutional investors across the platform.

Two new funds were launched over the year, the Lend Lease Communities Fund 1 (LLCF1) and the Lend Lease Asian Retail Investment Fund (ARIF).

LLCF1 is Australia’s fi rst wholesale communities fund, giving institutional investors access to the Delfi n Lend Lease residential pipeline of master planned community developments. Lend Lease has a co-investment in this fund of 20.8 per cent.

LLCF1 was launched in July 2006, with $120 million in equity invested in three residential communities managed by Delfi n Lend Lease: Ropes Crossing in Sydney, Woodlands in Queensland and Lakeside at Pakenham in Victoria.

ARIF was launched in December 2006, with S$700 million in equity raised from both Australian and offshore investors. ARIF is a wholesale property fund investing in the development, repositioning and long term ownership of Asian retail assets, predominantly in Singapore.

ARIF has a 75 per cent interest in the Singapore retail asset, Somerset, which was secured from Lend Lease as its seed investment, with Lend Lease retaining the remaining 25 per cent. The fund has $2.4 billion of investment capacity with a mandate to invest in retail and mixed use opportunities in Singapore, Taiwan, Malaysia and Thailand. Lend Lease has a 10.1 per cent co-investment in ARIF.

A major attraction for investors was the opportunity to participate in the development, repositioning and long term ownership of Asian retail assets sourced from within the Lend Lease Group.

These asset creation skills are attractive to domestic and international wholesale investors where there is an increasing appetite to participate in development positions to gain access to longer term core investment product.

Launched in June 2006, the Lend Lease Core Plus Fund (LLCPF) targets niche assets in traditional and non-traditional sectors such as hotels, retirement villages and car parks. Since inception, the fund has acquired 10 assets valued at approximately $270 million, including three sourced from Lend Lease and one jointly acquired with Australian Prime Property Fund (APPF) Retail.

LLCPF has delivered a total return of more than 12 per cent, outperforming its target return of 10 per cent per annum, a great result for the fund in its fi rst year. On the back of this success, the fund is currently seeking additional equity.

In addition, the Real Estate Partners 2 Fund completed the takeover of the listed Sundowner Hotels portfolio, resulting in the fund being almost fully invested at 30 June 2007.

The Real Estate Partners series was established to invest in a portfolio of assets that require active management to realise value with the potential for superior returns.

Results highlights

• Total operating profi t after tax grew to $262.8 million, a substantial increase on the 2006 operating profi t after tax of $129.5 million.

• Funds under management rose to $10.5 billion, up from $9.7 billion the previous year.

• Core funds under management (excluding the Generali Lend Lease and Resolution Capital joint ventures) increased by 27.1 per cent to $8.9 billion. The main growth drivers were:– The launch of two new funds

with added $600 million to funds under management (ARIF and LLCF1).

– New property acquisitions in Australia totalling $700 million.

– Revaluation gains of $700 million across the portfolio.

• Investment income rose to $234.1 million, up by $114.7 million.

• Income from investment assets included distributions from the Global Fund of $136.6 million.

28

Investment Management report

Asia Pacific 11.3%

Americas 9.9%

Europe 78.8%

Net Profi t After Tax

1 Artist’s impression: 420 George Street, Sydney, Australia

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One of the major drivers of growth in funds under management was the continued strong performance of APPF, the fl agship vehicle of Investment Management.

It was an active year for APPF, with acquisitions exceeding $600 million. The APPF funds now have a combined development pipeline of $1.3 billion.

Acquisitions included a 75 per cent interest in Pakenham Place Shopping Centre by APPF Retail. Pakenham Place is a subregional centre located in a high growth corridor in south east Melbourne. Lend Lease acquired the remaining 25 per cent.

The acquisitions completed during the year, combined with good revaluation gains, have increased the combined funds under management in APPF to $4.3 billion.

The UK retail funds delivered above benchmark performance for the one, three, and fi ve year periods. Over the reporting year, the Lend Lease Retail Partnership achieved a pre fee return of 13.5 per cent and the Lend Lease Overgate Partnership achieved a pre fee return of 13.8 per cent against a benchmark return of 8.9 per cent.

Based on this strong track record, the Investment Management team is now working on launching additional funds to crystallise asset opportunities from the Lend Lease pipeline.

The direct and indirect real estate investments held by the Investment Management business continued to perform well. The value of the Group’s 30 per cent interest in Bluewater, a premium UK retail centre, increased to $1.56 billion, representing a 6 per cent increase in local currency. In the US, the Group’s investment in the King of Prussia retail centre was up 9 per cent to $483.8 million.

Business priorities

• Continue to deliver strong returns for our investors across the platform.

• Utilise the Group’s wider asset creation skill base to meet investor demand for new product.

• Build on already strong relationships with major institutions and other capital partners.

• Strengthen platforms across key geographies to facilitate the global investment strategies of our client base.


Outlook

The outlook remains favourable in each of the key markets in which Investment Management operates. The income security offered by prime assets will always be attractive to investors and we see them outperforming secondary assets.However, given compression of capitalisation rates for prime assets, there is increasing investor appetite for development exposure to gain cheaper entry to core product. We are well positioned in this regard.

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Annual Report 2007


2 Woods and Allarabuildings, Canberra, Australia

3 Keparra Senior Living, Queensland

4 The Somerset project construction site, Singapore

5 Delfi n Lakeside, Pakenham, Melbourne, Australia

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Australian Prime Property Fund case study

Quick Facts

As a result, all three funds performed well against their benchmarks and outperformed their targeted returns. The APPF Retail and APPF Commercial Funds outperformed the Mercer Unlisted Property Funds Index, delivering pre-fee returns of 21.2 per cent and 20.6 per cent respectively.

The combined portfolios across the APPF funds grew from 34 properties at June 2006 to 47 properties at June 2007. The retail, commercial and industrial assets are diversifi ed across major Australian property markets.

In identifying and delivering these opportunities, APPF has the unique ability to utilise the capital transaction, asset management, retail development and project management expertise available within the Lend Lease Group. APPF also uses the internal product creation capability of the broader Lend Lease Group.

Acquisitions over the year were valued at over $600 million and included:

• In APPF Retail, the acquisition of a 50 per cent interest in Caroline Springs Square in Victoria for $22.5 million and a 75 per cent interest in Pakenham Place shopping centre in Pakenham, Victoria, for $45.4 million. The Retail Fund also acquired a 25 per cent interest in the Mid City Centre, located in the heart of Sydney’s prime shopping district for $46.2 million.

• In APPF Commercial, the acquisition of land for the development of a commercial building at 825 Bourke Street, Melbourne, with a forecast cost of $54.8 million. APPF Commercial also acquired a 25 per cent interest in the offi ce building adjoining the Mid City Centre at 420 George Street, Sydney, for $27.9 million.

• In APPF Industrial, the acquisition of a portfolio of fi ve distribution centres from Costa Pty Ltd for $70 million, in addition to a property in Glendenning, New South Wales, for $11.8 million and an industrial site in Richlands, Queensland for $18.25 million.

The Australian Prime Property Fund (APPF) is Lend Lease Investment Management’s fl agship institutional Australian real estate fund.

From its beginnings in 1989, APPF has established its position as one of Australia’s leading unlisted institutional real estate investment vehicles.

The fund provides institutional investors with the opportunity to invest in core Australian property showing consistent, secure total returns with low levels of risk, stable income and capital appreciation.

APPF is made up of three sector specifi c core unlisted wholesale property funds that offer scale, diversity and balanced lease expiry profi les across retail, commercial and industrial property.

Over the year management remained focused on actively managing the Fund’s existing properties to generate superior risk adjusted returns for unit holders and growing the portfolios where appropriate.

06 07

$9.7

B

$10.

5B

$1.1B

Amount of Equity Raised

$10.5B

Funds Under Management


1 Sunshine Plaza, Indooroopilly, Queensland, Australia

2 No. 1 O’Connell Street, Sydney, Australia

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The retail and commercial acquisitions all provide substantial development opportunities for strong asset growth potential over the longer term. APPF now has approximately $1.3 billion in expansion potential across the funds over the next fi ve years.

These acquisitions combined with strong gains from revaluations have increased the combined funds under management in APPF to $4.3 billion, up from $3.5 billion as at June 2006, representing a 23 per cent rise over the year.

APPF Retail’s prudent capital management and conservative fi nancial profi le were recognised by ratings agency Standard & Poor’s when it raised APPF Retail’s credit rating from ‘A minus’ to ‘A’ in September 2006. The rating was reaffi rmed in May this year.

APPF Retail’s underlying credit quality remains strong and highly stable, refl ecting a portfolio of high quality and well located retail property assets. The rating upgrade will also allow APPF Retail to raise fi nance at better rates than many of its competitors.

Sustainability remained high on the agenda over the year. Substantial progress was made in developing and implementing sustainability initiatives across all funds to support an environmentally responsible management approach to its properties.

The three APPF funds are well positioned to deliver continued strong investment performance to unit holders.

12

Number of Funds Globally

$1.3B

Size of APPF Development Pipeline

3 Woods Building, Canberra, Australia

4 Distribution Centre, Minchinbury, NSW, Australia

5 Shell House, Melbourne, Australia

4 5

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Project Management Construction and PFI

Central plant provides a more effi cient heating and cooling system

• Greater effi ciencies in energy and water consumption

• Higher standards in air quality

• Encouraging sustainable community living and social activity

Jason Burrell Senior Project Manager Bovis Lend Lease, US

Case studyMacallen Building, Boston, USThe Macallen Building is a distinctive, yet natural addition to the historic South Boston neighbourhood, transforming a city block into a sustainable and environmentally friendly community.

Bovis Lend Lease managed the construction of the 14 storey 354,000 square foot residential

development that features 139 apartment and condominium units. Completed in August 2007, the building is the fi rst residential development in Boston seeking Gold LEED certifi cation (Leadership in Energy and Environmental Design). It is a prime example of our commitment to sustainable design and construction.

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Consumes signifi cantly less electricity than a conventional building

Energy effi cient appliances installed

Use of recycled materials in the development

Shared amenities including a hybrid community car for tenant use F

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Project Management Construction and PFI report

Year in review

The Project Management and Construction business continued to enhance its global platform, with leading positions supported by a strong backlog in all markets in which it operates.

Notwithstanding the provisions taken on the UK operations earlier in the year, the regional construction operations are performing well, with strong profi t and high levels of new work secured.

The Bovis Lend Lease global business has secured a record backlog gross profi t margin of $792.9 million, up 16 per cent (excluding projects in preferred bidder status) on the previous year.

Asia Pacifi c and Americas delivered higher profi tability ratios over the previous year of 44 per cent and 47 per cent respectively, up from 35 per cent and 46 per cent respectively in June 2006, highlighting the quality of earnings across target sectors.

Strong construction markets and the large Lend Lease development pipeline further enhance the growth opportunities for the Project Management and Construction business.

Asia Pacifi cIn Australia, the traditional sectors of retail and commercial continued to perform well. Asia Pacifi c backlog was up 19 per cent on the prior year with Bovis Lend Lease securing new contracts including the $377 million ANZ commercial offi ce development at Victoria Harbour in Melbourne.

The ANZ development adds to the more than $1.2 billion of integrated development projects currently completed or underway at Victoria Harbour. The building is being developed by Lend Lease Development, with project and construction management by Bovis Lend Lease.

The development has a strong sustainability aspect and is seeking a green star energy effi ciency rating. Once completed, the ANZ building will be Australia’s largest single tenant commercial offi ce project in a central business district.

Results highlights

• Project Management, Construction and PFI delivered an overall profi t after tax of $57.6 million.

• Backlog gross profi t margin (GPM) reached a record high of $792.9 million, up 16 per cent (excluding projects in preferred bidder status) on 2006, with 59 per cent of this backlog expected to be realised as profi t in the 2008 fi nancial year.

• Asia Pacifi c profi t after tax of $54.6 million increased by $30.8 million from 2006.

• European profi t after tax decreased by $110.5 million due to provisions taken against certain UK projects. However, the Continental Europe and Middle East operations continued to perform well.

• The Americas profi t after tax of $65.9 million was up by $6.6 million from 2006. Excluding the negative impact of currency movements of $5.3 million, profi t after tax from the Americas was up 20 per cent over the year.

Europe 46.8%

Asia Pacific 15.8%

Americas 37.4%

Backlog Gross Profi t Margin

1 One National Circuit, Canberra, Australia

2 SLAM project, UK

1

2

Bovis Lend Lease increased its share in the transportation sector during the year securing the $287 million expansion of Brisbane International Airport. In addition, new work was secured in the water and industrial sectors with the Sydney desalination pipeline Connect Alliance contract and the $263.4 million Mulwala propellant manufacturing facility.

In Asia the pharmaceuticals sector has provided growth opportunities with secured contracts for project management and construction services on four large scale greenfi eld bio-pharmaceutical projects in Singapore with a combined project value of more than $800 million. The business has also been awarded telecommunications and industrial projects in Japan and Taiwan.

EuropeIn the UK, Bovis Lend Lease is in turnaround, supported by good underlying market fundamentals. Bovis Lend Lease remains one of the top three construction companies in the UK market.

Management is sharply focused on re-establishing profi tability across the UK business, putting in place clear objectives and the right structure, disciplines and skills.

The majority of the underperforming UK projects, with the exception of the Manchester Joint Hospitals project, will be completed by December 2007.

Recent major PFI wins in the waste, education and defence sectors underpin a steady forward workload, providing Bovis Lend Lease with signifi cant construction opportunities.

The business has a strong pipeline of work from its key clients and is well positioned for future growth. New projects include phase two of the Defence Estates Single Living Accommodation Modernisation (SLAM) project for the Ministry of Defence at a construction value of £335 million; the £294 million St David’s retail centre extension and refurbishments in Cardiff; and the £202 million 201 Bishopsgate development for British Land. This is further complemented by the large development pipeline of the Lend Lease Group.F

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The Continental European business delivered a solid performance with continued growth in the Gulf States and Eastern Europe generating increases in fee for service gross profi t margin.

The BP Global Alliance continues to provide a steady workload across Europe.

Americas In the US, Bovis Lend Lease continues to perform strongly and new work secured increased by 45 per cent over the year in US dollars.

Bovis Lend Lease continues to dominate the multifamily residential market in the US with the largest concentration of business in New York, Chicago, Boston and Washington DC.

The US business has added to its growing pipeline of healthcare and pharmaceutical work across the country. The US is currently experiencing the most signifi cant period of healthcare facility construction and expansion in 50 years.

The multi-site group is working with several new clients, including McDonald’s and Citigroup across the US as it continues to leverage the successful partnering model developed through the BP Global Alliance.

The New York business experienced steady growth in 2007, with New York Construction News naming Bovis Lend Lease as the top construction company in the metropolitan area. Growth continues in the residential, healthcare, higher education, mixed use and sports sectors.

Private Finance Initiatives (PFI)

The PFI business delivered a good result for the year. Profi t after tax was $14.3 million which was driven by increased equity returns across the portfolio and the recovery of bid costs on achieving the fi nancial close of the £235 million Lancashire Schools project.

The PFI business had 22 projects on its books at year end, including 13 operational projects with a total construction value of around £3.5 billion.

Projects are spread across the healthcare, education, accommodation, defence and waste sectors.

In March, PFI won its fi rst waste sector project, partnering with Global Renewables on the Lancashire Waste project, and expects to continue to build market share through this alliance. The £236 million Lancashire Waste PFI project will transform Lancashire into the UK’s greenest county in terms of how it treats its household waste.

The PFI business delivers a stream of annuity earnings for Lend Lease. Completed PFI projects are generating equity returns of greater than 10 per cent from invested equity of £51.3 million. We will continue to grow the quantum and value of our equity positions in PFI projects.

Business priorities

• Raising our risk/reward profi le, with good visibility of earnings.

• Delivering repeat business with key clients.

• Positioning the business for longer term growth with a continuing focus on:

– People. Recruiting, retaining and developing the best talent in the industry.

– Performance. Ensuring we achieve operational excellence and instilling a culture of ownership and accountability.

– Sustainability. Developing awareness about sustainability and striving to operate Incident & Injury Free across the business

Outlook

The outlook for the Project Management, Construction and PFI business is very positive. Global construction markets are at strong levels of demand and our business is well secured. Bovis Lend Lease has established sector leadership positions across each of its core markets. The substantial internal pipeline of the Lend Lease Group, supported by a growing backlog, further enhances growth prospects for the business over the medium term.

1 Citigroup multisite, US2 Lancashire Waste, UK,

(photograph courtesy of Global Renewables)

3 Moses H. Cone Memorial Hospital – Heart and Vascular Center, Greensbero, NC

4 201 Bishopsgate development, UK

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Millennium Arts at the Queensland Cultural Centrecase study

Quick Facts

Located along the banks of the Brisbane River, the project included the construction of a new 26,000 square metre GoMA, the refurbishment of the State Library (doubling its size to 28,000 square metres) and site infrastructure works encompassing

40 different external elements.

These elements included construction of new entrances for the existing Queensland Museum and Queensland Art Gallery, pedestrian walkways, viewing corridors, car parking for an additional 71 vehicles and plant and energy services to ensure connectivity between buildings.

One of the major logistical challenges was that the existing State Library had to remain operational and functional while the redevelopment work was undertaken. This included the demolition and removal of the eastern wall and lifting the structure to allow an extension to the new Knowledge Walk.

The cantilevered roof section of the GoMA is not only architecturally important but also presented a formidable construction challenge, requiring extensive modelling and testing. The 10,000 square metre roof required over 3,000 tonnes of purpose designed scaffolding, representing the largest scaffold project in Queensland at the time.

To meet the project’s strong practical focus on environmental sustainability, Bovis Lend Lease integrated leading edge initiatives including a chilled beam air conditioning system and a river cooling system. The chilled beam system will reduce energy consumption in the State Library by up to 30 per cent.

The river cooling system works by blending cool water from the Brisbane River with water carrying rejected heat from air conditioning plants. The warmed water is then returned to the river and allowed to cool naturally, saving billions of litres of water and with predicted energy cost savings. The technology also removes the need for the use of toxic chemicals in the cooling process.

Not only is it one of Queensland’s most architecturally and environmentally signifi cant developments, Millennium Arts at the Queensland Cultural Centre is also the state’s largest arts capital works project for three decades.

At a cost of $291.3 million, Millennium Arts represents a major Queensland State Government investment in arts infrastructure. The development combines three complex components: the new Queensland Gallery of Modern Art (GoMA), the redevelopment of the State Library of Queensland and extensive associated site infrastructure works.

The project has been awarded numerous industry accolades, including the 2007 Professional Excellence in Building Award and the Building of the Year Award from Queensland’s Australian Institute for Building.

Bovis Lend Lease was awarded the contract in July 2003 as a result of its global experience in managing large public projects and its demonstrated expertise in leading edge environmental and social sustainability. The project was completed on time and on budget in September 2006.

Bovis Lend Lease managed the entire design and construction process, providing innovative solutions in sustainability, logistics and project management to deliver the world class cultural centre.

06 07

$710

.3M

$792

.9M

$792.9M

Backlog Gross Profi t Margin (GPM) (Including projects in preferred bidder status)

Project Management

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Converting the abandoned demolition site was one of the project’s major challenges. It required the decontamination of the former industrial area including the removal of 24,000 cubic metres of contaminated material from the site.

Bovis Lend Lease also outperformed its target of recycling 60 per cent of construction waste, with data showing an impressive 81 per cent – more than 42,000 cubic metres – of waste was recycled from the project.

Social sustainability was an important aspect of the project. Bovis Lend Lease coordinated ongoing discussions with representatives of the local indigenous and heritage groups when undertaking work around areas of cultural signifi cance. To conserve the rich site history, project managers worked closely with archaeologists during the excavation works and traditional landowners were involved with the management of the site during the early stages of the works.

Through the delivery of this project, which has had an outstanding public response, Bovis Lend Lease has successfully created a world class cultural venue for generations to come.

59%

Backlog GPM Realisation in 2008

$505.8M

New Work Secured 2007

22

Number of PFI Projects

1 State Library, Queensland2 View from Brisbane River3–5 Views of the Queensland

Gallery of Modern Art

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Sustainability Case study Waterless wok stoves, Erina Fair, AustraliaIn response to Australia’s severe drought induced water shortages, Lend Lease is introducing waterless wok stoves at noodle bars and Asian restaurants in the food courts of its owned and managed retail centres.

At Erina Fair, a retail centre an hour north of Sydney, installation of the

waterless wok stoves is saving about 120,000 litres per day or about 57.6 million litres per year, equivalent to the water used in 57 Olympic swimming pools or the annual water use of 243 households. The wok initiative reduces the centre’s water usage by around 15 per cent annually.

Michael Feros Centre Manager Lend Lease Retail, Australia

• Responding to community concerns about water consumption and developing ways to reduce water waste in our retail centres

• Working with local government, the Ethnic Communities Council, and our retail tenants to develop an environmentally friendly approach to an age old cooking technique

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Working with centre management and responding to customer feedback

Doing our part for the local environment

Using a new approach that reduces our business waste and costs

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Reporting our impacts, staying accountable

Lend Lease has spent the past 12 months implementing systems and processes to deliver on the commitment we made to better understand and address the impact of our operations globally.

The diversifi cation and geographic spread of Lend Lease’s operations makes measuring our sustainability performance a complex exercise but we have made a good start this year.

Our vision is to operate Incident & Injury Free wherever we have a presence

Our aspiration to be a sustainable organisation starts and fi nishes with the safety of over 10,000 Lend Lease employees and the millions more who work on our projects, shop in our retail centres and live in our communities.

Many thousands of our own employees and contractors’ workers have undertaken Incident & Injury Free commitment workshops over the past fi ve years and employees recognise the Incident & Injury Free program as core to Lend Lease’s 50 year culture of social responsibility.

Our organisational commitment to Incident & Injury Free has helped deliver a global downward trend in Lost Time Injury Frequency Rates (LTIFR) and a more sophisticated and transparent approach to reporting incidents. However, despite these positives, nine workers died during the year on construction projects where we had a presence.

There is broad consensus across Lend Lease companies that we must embrace a more holistic approach to health and safety, achieving a better balance between behaviours, intentions, processes and systems. A new safety leadership team, headed

by Chief Operating Offi cer Ross Taylor, will implement a Global Safety Management System that sets new standards and processes to achieve consistency and improvements in our safety performance.

The new approach focuses on providing a robust safety management system with clear roles and responsibilities and more individual accountability.

A suite of standards and tools were designed to improve the control of high risk activities. These included a renewed focus on risk assessment, site access control, supply chain management, permits to work and safe work method statements. A new Gateway Process ensures that clients and potential clients are willing to align with our health and safety standards and that health and safety accountability is considered at design and procurement bid stages.

Lost Time Injury Frequency Rates (LTIFRs) by Region and GlobalOur LTIFRs vary signifi cantly across our geographies, but are generally demonstrating a downward trend with the exception of Americas, where the increase is at least in part believed to be due to improved clarifi cation and transparency in incident reporting.

0.00

0.50

1.00

1.50

2.00

2.50

Global LTIFR

Asia Pacific LTIFR

EMEA LTIFR

Americas LTIFR

FY07FY06FY05FY04FY03

Linear (Global LTIFR)

Hou

rs w

orke

d

Flash and High Potential Incidents Involving Falls by Quarter (showing Falls Mandate Rollout)The Lend Lease Falls Mandate, which defi nes the approach for preventing falls of both people and materials across the business, is well into its second year of implementation. The analysis of incident reports over the last three years shows that ‘falls of people’ are declining while ‘falls of materials’ are increasing. The reduction in falls of people is attributed to the improved management of work at heights following the requirements of the Falls Mandate while the increase in falls of materials is due to increased transparency in reporting near miss incidents.

Number of Flash and High Potential Incidents Reports by Quarter Our newly launched Incident Management System, facilitates the reporting of High Potential Incidents (including near misses), and is expected to deliver an increase in the reporting of low consequence but high potential incidents to improve our understanding of the risks the businesses face and disseminate lessons learned globally.

Total Number of Flash and High Potential Incidents Reports

0

10

20

30

40

50

60

70

80

Q4 07Q3 07Q2 07Q1 07Q4 06Q3 06Q2 06Q1 06Q4 05Q3 05

Num

ber

of r

epor

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Fall of Persons

Fall of Materials*

* Includes lifting incidents, resulting in fall of materials

Global SafetyLeadership Team

formed – Focuson Falls

Falls Mandateissued tobusiness units

Business units start rolling out the Falls Mandate

0

5

10

15

20

25

30

35

40

Q4 07Q3 07Q2 07Q1 07Q4 06Q3 06Q2 06Q1 06Q4 05Q3 05Q2 05

Num

ber

of r

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40

Sustainability report

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Reporting our impact – what we take, what we create, what we leave behind

This year, Lend Lease employees around the world participated in a program that aims to build a shared understanding of sustainability at Lend Lease and an urgency to respond to our impacts. Many employees were directly involved in collecting data in this fi rst year of the organisation’s sustainability performance reporting.

While Lend Lease has previously collected employee data regionally and safety data globally, the sustainability performance reporting program, which commenced in January 2007, marks the fi rst time Lend Lease businesses have collected and reported on environmental data including direct energy use, greenhouse gas emissions, waste avoidance and water effi ciency.

This fi rst report provides global greenhouse gas emissions data from our permanent offi ces only as we focus on the responsibility of our immediate impacts in over 130 permanent offi ces in 21 countries. The data collection, subject to varying regulatory environments around the world and inadequate defi nition within the real estate sector, has been a complex exercise.

The fi rst six months of measurement has provided valuable benchmarking that has also informed the work of Lend Lease in the establishment of a Global Reporting Initiative (GRI) Working Group to develop and agree on global real estate and construction sector metrics for sustainability performance reporting. The GRI is the emerging international standard for sustainability reporting.

While the focus for this fi rst reporting period has been the establishment of our environmental data collection process, we will review how we

measure and communicate our social impacts, both in our businesses for our own people and for the communities in which we operate, and we are progressively adding measures to our sustainability performance reporting.

The Lend Lease Board this year established its Sustainability Committee to ensure good governance and transparent reporting of the organisation’s environmental, social and economic impacts.

In an important development, Lend Lease Investment Management introduced a company wide Sustainable Responsible Investment Policy and sustainability fi lters have been increasingly integrated into the investment decision pipeline process. The organisation’s investment fund exposure, long term maintenance contracts (of up to 50 years) and project horizons of up to 30 years require full interrogation of climate impacts and these are now addressed in the evaluation of all investment opportunities.

Total Offi ce Waste Recycled versus Total Offi ce Waste GeneratedGlobally, up to 40 per cent of urban waste to landfi ll is generated by construction or deconstruction activities. All Lend Lease businesses now have waste management plans and reporting systems in place for 2008 waste avoidance performance reporting.

Total Waste GeneratedPercentage of Total Waste Recycled

-25

-20

-15

-10

-5

0

5

10

Cub

ic m

etre

s (h

und

red

s)

Americas

24%

Asia

33%

CEMEA

29%

United Kingdom

31%

Australia

33%

Greenhouse Gas Emissions by Region and Energy Type (offi ces only) The majority of Lend Lease’s greenhouse gas emissions from offi ce energy use occur in the three major markets – Australia, the UK and the US. Natural gas use in the UK is higher than electricity use due to its wide use for winter heating whereas electricity use in Australia and Americas is higher due to its use for cooling in summer.

Natural Gas (RHS)Electricity (LHS)

0

500

1000

1500

2000

2500

3000

AmericasCEMEAUnited KingdomAsiaAustralia0

20

40

60

80

100

120

140

160

180

Em

issi

ons

from

ele

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CO

2)

Em

issi

ons

from

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gas

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(tC

O2)

January – June 2007

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1 Working safely at heights 1

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The legacy we leavein the places we create

• Lend Lease is the master development partner working to create long term sustainable communities in some of the most signifi cant urban regeneration zones in Europe. In addition to the ongoing delivery of Greenwich Peninsula, Lend Lease’s London portfolio now includes the opportunity to develop the 2012 Athletes Village in Stratford City, currently 73 hectares of former railway marshalling yards; and the regeneration of 23 hectares of previously developed land at Elephant and Castle.

• Bovis Lend Lease has partnered with Australian company Global Renewables to deliver one of the world’s largest waste projects in Lancashire, UK. The plants will process up to 600,000 tonnes of household waste for over 1.4 million people annually, focusing on environmental education and community engagement around waste minimisation – resource recovery, increased recycling, reduction of waste to landfi ll and avoiding incineration – all of which reduce greenhouse gas emissions from household waste.

• In the US, BP opened its fi rst green gas station in Los Angeles, delivered by Bovis Lend Lease through the Global Alliance. The US Green Building Council said that while the green building elements of this project were to be applauded, the greatest value was in BP’s approach to community education ‘at the pump’.

• Actus Lend Lease is working in partnership with the US Army and the InterContinental Hotels Group to pilot the fi rst sustainable hotel experience that engages employees and guests by taking care of guest needs environmentally, economically and socially.

• Lend Lease will develop the largest single tenancy CBD commercial offi ce development ever undertaken in Australia for the ANZ Banking Group Ltd. Part of the Lend Lease developed Victoria Harbour precinct in Melbourne, the building will include energy effi cient design elements such as river cooling and partial solar power, as well as storm water reuse and grey and black water recycling. The development aspires to meet new benchmarks in green rated buildings for a project of its size.

Over the next decade, Lend Lease companies will manage some of the largest commercial and community development projects around the world. In the past year alone, Lend Lease has won or completed iconic projects requiring innovative approaches that reduce environmental impacts and leave legacies of social enrichment and economic development.

1

2

1 Greenwich Peninsula, London, UK

2 Helios House, Los Angeles, USA

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Fifty years of social capital

Lend Lease founder Dick Dusseldorp built a sustainable company on the talent of Lend Lease people. Almost 50 years later, the development, retention and attraction of talented people has never been more important.

The global skills shortage is our biggest people challenge and a number of risk management strategies have been employed to address workforce diversity across Lend Lease operations.

Similarly, an Executive Development Program was launched this year in partnership with The Wharton School at the University of Pennsylvania, one of the leading providers of executive education. The program is key to Lend Lease’s succession and development review planning process and 24 senior executives from across the organisation participated in group assignments that tackled key capacity issues in the growth and development of Lend Lease businesses.

We recognise the importance of tracking employee perceptions and benchmarking our people management performance against best practice within the industry and against global high performing companies generally. Results of the fi rst ever Lend Lease global employee engagement survey held this year will identify and prioritise improvement activities to sustain high levels of employee engagement.

Our demonstrated cultural commitment to safety, sustainability and people development plays a key role in retaining and attracting the right people.

A strategic review of the Lend Lease Foundation, which delivers programs for the benefi t and well-being of Lend Lease employees and their families, resulted in a new focus designed to further build on the social capital within Lend Lease companies. This refreshed focus on employee well-being, learning and development and community engagement programs is more aligned with the needs of the business in providing personal and professional development opportunities for employees globally.

Since its establishment in 1983, the Lend Lease Foundation has developed programs enabling employees to nominate projects in their communities that require support and expertise. The annual Lend Lease Foundation Community Day is held across all regions of operation and provides the energy and skills of employees to hundreds of community groups around the world. Additionally, many hundreds of thousands of voluntary hours are spent by employees participating in literacy, homework and mentoring programs with children and young people.

3 Lend Lease employees4 Boundless Playgrounds

provide a family focus in Actus Lend Lease communities

5 Lend Lease Community Day 2006

3

5

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Lend Lease Commitment to Governance

The Directors believe that good corporate governance is fundamental to the long term prosperity of the Lend Lease Group. The Board continually reviews the Group’s governance practices to ensure that they promote sustainable value for shareholders and address the Group’s responsibilities to all of its stakeholders.

As a listed Company, Lend Lease must comply with the ASX Listing Rules, which require the Company to provide a statement in the Annual Report disclosing the extent to which the Company has followed the ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations (ASX Recommendations).

As detailed in this Corporate Governance Statement, Lend Lease considers that the Group’s governance policies and practices comply with the ASX Recommendations. A table summarising the Group’s compliance is provided at the end of this Statement.

In addition to the information set out in this Statement, the corporate governance section of the Lend Lease website at www.lendlease.com contains further information on the Group’s governance practices, including copies of key policies and charters.

A reference in this Corporate Governance Statement to the Board is a reference to the Board of Directors of Lend Lease Corporation Limited unless indicated otherwise.

Date of this Corporate Governance Statement

This Corporate Governance Statement refl ects the corporate governance and other related policies and practices in place for the Lend Lease Group as at 31 August 2007.

Corporate Governance

Contents

1 The Lend Lease Board 45 1.1 Role and Responsibilities 45 1.2 Composition of the Board 46 1.3 Independent Directors 46 1.4 Retirement and Re-election of Directors 47 1.5 Chairman of the Board 47 1.6 Meetings 48 1.7 Board Performance 48 1.8 Shareholdings 48 1.9 Induction and Briefi ng Programmes 48 1.10 Independent Decision-Making 48 1.11 Company Secretary 48

2 Senior Management 49 3 Directors’ and Executives’ Remuneration 49 4 Board Committees 49

4.1 Membership 49 4.2 Nomination Committee 50 4.3 Personnel and Organisation Committee 50 4.4 Risk Management and Audit Committee 51 4.5 Sustainability Committee 52

5 Governance Structure 53 6 Communicating with Shareholders 54 7 Risk Management 55

7.1 Enterprise Risk Management 55 7.2 Integrity in Financial Reporting,

Risk Management and Internal Control 55 8 External Auditor 56

8.1 Performance Management 56 8.2 Appointment and Rotation 56 8.3 Provision of Audit and Other Services 56 8.4 Attendance at Annual General Meeting 56 8.5 Auditor’s Independence 56 8.6 Fees 56

9 Trading in Lend Lease shares 57 10 The Lend Lease Core Values 57

10.1 Core Values 57 10.2 Code of Conduct 58 10.3 Confl icts of Interest 58 10.4 Political Donations 58

11 Corporate Governance – Further Information 58 12 Compliance with ASX Recommendations 59

Lend Lease is committed to continually reviewing all Group corporate governance

policies to ensure the ongoing transparency of the Group’s practices and the

delivery of high standards and quality information to stakeholders.

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1 The Lend Lease Board

1.1 Role and responsibilitiesThe main focus of the Lend Lease Board is the long term success and prosperity of the Group for the benefi t of shareholders. The Board is responsible for leading Lend Lease in the achievement of its objective to continually deliver strong shareholder value.

The Board has adopted a formal Board Charter, which sets out the division of responsibilities between the Board and management. The responsibilities of the Board pursuant to the Charter are set out in the table below. The Board delegates authority for all other matters necessary for the day-to-day management of the Group to the Chief Executive Offi cer (CEO). The Board may alter this division of responsibilities at any time in accordance with the Board Charter, the Constitution and the requirements of any applicable laws.

Limits of authority have been put in place by the Board for the CEO and Senior Management, and the CEO is accountable to the Board for the authority delegated to other levels of management.

The Board has established various Committees to assist it in discharging specifi c responsibilities. Details of the Board Committees and their respective Charters are provided in Section 4 of this Corporate Governance Statement.

As part of the Board’s regular review of corporate governance practices, the Board Charter was revised in November 2006. A copy of the Charter is available at the corporate governance section of the Lend Lease website at www.lendlease.com.

Stakeholders Board Responsibilities

Shareholders – Approval of business strategy and vision in line with efforts to drive shareholder value creation

– Approval of business plans and monitoring of the implementation of strategy

– Approval and monitoring of major investments or divestitures and strategic commitments

– Determination of capital structure and dividend policy

– Approval and monitoring of fi nancial reporting

– Oversight of risk management, internal control and compliance systems

– Appointment or removal of external auditors, and determination of the remuneration and terms of appointment of the auditors

– Oversight of shareholder reporting and communications

Customers – Benchmarking the delivery of value to customers, clients and partners

Employees – Reinforcement of culture, core values and employer of choice

– Approval of employee share ownership, superannuation and pension plans

– Review of CEO and Executive Management Team performance and results

– Review and approval of CEO and Executive Management Team compensation and benefi ts

– Oversight of succession planning for the CEO, Executive Management Team and such other executives as the Board may determine

Community – Oversight of the management of social, economic and environmental concerns consistent with the delivery of sustainable outcomes for stakeholders and achievement of the Group’s Incident & Injury Free vision

– Reinforcement of reputation, brand and community relations

Directors – Review of the size and composition of the Board

– CEO and Executive Director selection and oversight of succession planning

– Non Executive Director nomination, selection and succession planning and compensation

– Review of Board performance

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1.2 Composition of the BoardThe Constitution of Lend Lease sets the minimum number of directors at three. The Board, which is permitted to do so in accordance with the Constitution, has fi xed the maximum number of Directors at eight.

There are currently eight Directors on the Board, two Executive Directors and six Non Executive Directors. Membership of the Board as at the date of this Annual Report is set out in the table on the facing page.

The composition of the Board embraces diversity. The Directors have a range of local and international experience and expertise, and specialised skills to assist with decision making and leading the Group for the benefi t of shareholders.

Assisted by the Nomination Committee, the Board selects Directors having regard to, among other things, an individual’s skills, experience and expertise. For further information on the selection of new Directors, refer to part 4.2 of this Corporate Governance Statement. Biographical details for the Directors are provided in the Directors’ Report on page 62.

1.3 Independent Directors

Current Board Composition

The Board has had a majority of independent Directors since October 2005. This is in accordance with the Board Charter, which requires the Board to have a majority of Non Executive Directors who are considered by the Board to be independent.

The Board considers that all six Non Executive Directors, David Crawford (Chairman), Phillip Colebatch, Gordon Edington, Peter Goldmark, Julie Hill and David Ryan, are independent.

Executive Directors, Greg Clarke (Managing Director and CEO) and Ross Taylor (Global Chief Operating Offi cer), are not considered to be independent Directors due to their integral involvement in the day-to-day management of the Group’s businesses.

Policy on Independence

The Board’s Policy on the Independence of Directors, which sets out the criteria and guidelines for assessing the independence of Directors, assists the Board in determining whether a Director is to be regarded as independent.

The predominant test used by the Board is whether the Director is independent of management and free of any business or other relationship that could materially interfere with – or could reasonably be perceived to materially interfere with – the exercise of their unfettered and independent judgment. This

general test of independence is supplemented by specifi c criteria and thresholds, which encompass the defi nition of independence set out in the ASX Recommendations. A copy of the Policy is available at the corporate governance section of the Lend Lease website at www.lendlease.com.

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 the circumstances of each Director. Where the Board is satisfi ed 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 satisfi ed. Where the Board makes such a determination, it will make an appropriate disclosure to the market and in the Annual Report at the time of the Director’s appointment.

The Board assesses the independence of each Director annually and on disclosure by a Director of any new interests or relationships. Where the Board considers that an independent Director has ceased to be independent, appropriate disclosures will be made to the market.

Circumstances Which May Be Perceived to Affect a Director’s Independence

Having regard to the current composition of the Board, the Board has determined two Directors to be independent notwithstanding the existence of factors which could be perceived to impact on their independence.

The Board does not consider David Crawford’s independence to be compromised by his previous association with KPMG, on the basis that he resigned as a Partner and Australian National Chairman of KPMG in June 2001, prior to his appointment to the Lend Lease Board, and has no fi nancial arrangements with KPMG, including pension arrangements, retainers or advisory fees. Mr Crawford has never been part of KPMG’s audit practice, nor in any way involved in, or able to infl uence, the audit activity associated with the Group.

The Board considers David Ryan independent notwithstanding that, before his appointment to the Board, Mr Ryan (as a principal of Ryvan Pty Limited) provided professional advisory services to Lend Lease in respect of the then proposed merger with General Property Trust. The Board does not consider Mr Ryan’s advisory role to have compromised his independence, given that his role related to a specifi c transaction and was for a limited period in the year leading up to his appointment.


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Director Independent AppointedLast

Elected

Retiring and Seeking

Re-election in 2007

Executive Directors

Greg ClarkeManaging Director and CEO No 2002 n/a1 n/a1

Ross Taylor No 2004 2005 No

Non Executive Directors

David CrawfordChairman Yes 2001 2004 Yes

Phillip Colebatch Yes 2005 2006 No

Gordon Edington Yes 1999 2004 Yes

Peter Goldmark Yes 1999 2006 No

Julie Hill Yes 2006 2006 No

David Ryan Yes 2004 2005 No

1 The Directors have appointed Greg Clarke as Managing Director for a term not exceeding fi ve years in accordance with the Lend Lease Constitution.

1.4 Retirement and Re-election of Directors

Pursuant to the Constitution of Lend Lease, at each Annual General Meeting one-third of the Directors and any other Director who will have been in offi ce for three or more Annual General Meetings since he or she was last elected (excluding the Managing Director) must retire from offi ce and may offer themselves for re-election by the shareholders. Newly appointed Directors must seek election at the fi rst meeting of shareholders following their appointment.

The Board has reviewed the performance of those Directors standing for re-election at the 2007 Annual General Meeting, David Crawford and Gordon Edington, and unanimously endorses their re-election.

1.5 Chairman of the BoardThe Chairman of the Board is elected to the offi ce of Chairman by the Directors. The Directors may, in accordance with the Constitution of the Company, determine the period of offi ce the Chairman will hold.

David Crawford has been Chairman of the Board since May 2003. As noted above, the Board considers that the Chairman is independent.

The Chairman serves as the primary link between the Board and management, and works with the CEO and Company Secretary to set the agenda for Board meetings. It is the Chairman’s responsibility to provide leadership to the Board and ensure that the Board works effectively and discharges its responsibilities as Directors of the Company.

1

1 Chairman David Crawford addressing the 2006 AGM

2 CEO and Managing Director Greg Clarke addressing the 2006 AGM

2

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1.6 Meetings

The number of meetings of the Board and the Committees of the Board held during the fi nancial year, and the attendance of Directors at those meetings, is disclosed in the Directors’ Report. There are nine scheduled meetings each year, and additional meetings are held in between scheduled meetings as required. Members of Senior Management may be invited to attend and present at Board meetings.

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

1.7 Board PerformanceThe Board reviews its performance and the performance of each of the Directors each year. In accordance with the Board Charter, the Board undertakes an external performance review on a biennial basis, and a self-assessment of its performance each alternate year. Matters addressed in performance reviews include an evaluation of the performance of the Board and its Committees against the requirements of their respective Charters, and a review of the performance, contribution and time commitment of the Chairman, Committee Chairmen and individual Directors. The review process includes interviews with the Directors and Senior Management, and generates recommendations to ensure the Board continues to operate effectively and effi ciently with the requisite mix of skills and experience. The Chairman of the Nomination Committee, acting in close consultation with other Board members, is responsible for conducting the annual evaluation of the CEO and the Chairman.

During the fi nancial year, the Board conducted a self-assessment of its performance. The review included the performance of the Board and Board Committees, including an evaluation of the Chairman of the Board, Committee Chairmen and individual Directors.

Further, Non Executive Directors are required pursuant to the Board Charter to consult with the Chairman before accepting new commitments which could impact on their available time.

1.8 ShareholdingsPursuant to the Constitution of the Company, Directors are required to hold a minimum of 1,000 Lend Lease shares. In order to more closely align the interests of shareholders and Directors, it is the Board’s current policy that Non Executive Directors move, over a reasonable period, to hold the equivalent of one year’s Directors’ fees in shares. Details of Directors’ shareholdings in Lend Lease are disclosed in the Directors’ Report.

The Directors are prohibited from trading Lend Lease securities at certain times and under certain circumstances as set out in the Group’s Securities Trading Policy. More information on the Policy is provided in Section 9 of this Statement.

1.9 Induction and Briefi ng ProgrammesNew Directors are provided with a letter of appointment which sets out their rights, duties and responsibilities as a Director of Lend Lease. New Directors participate in an induction programme involving comprehensive briefi ngs from management and site visits.

All Directors have access to Group information, Senior Management and employees as required to enable them to fulfi l their responsibilities. In addition to management briefi ngs at every Board meeting, Directors are regularly briefed on key business and industry developments and matters material to their role as Directors. Directors also have access as required to externally administered training seminars and programmes to assist them in discharging their obligations as Directors of Lend Lease.

1.10 Independent Decision-MakingPursuant to the Board Charter, any Director may seek external, independent, professional advice at the Company’s expense. The policy of the Board is that external advice will be made available to all Directors, unless the Chairman of the Board determines otherwise. It is expected that a Director will consult the Chairman of the Board, Managing Director or Company Secretary before obtaining external advice.

To further facilitate independent decision-making by the Board, a separate session for Non Executive Directors to meet without management present is scheduled as a permanent agenda item at Board meetings.

1.11 Company SecretaryAppointed 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.

During the fi nancial year Sue Sharpe undertook the role of Company Secretary.

In July 2007 the Company’s General Counsel, William Hara, was appointed as an additional Company Secretary.


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2 Senior Management

During the year the Company restructured its management team to consist of the Executive Offi ce, Corporate Offi ce and Executive Management Team.

The Executive Offi ce comprises Managing Director and CEO, Greg Clarke, Global Chief Operating Offi cer, Ross Taylor and Group Finance Director and CEO Investment Management, Steve McCann. The Executive Offi ce is responsible for developing organisational and business strategy and sponsoring innovation and development of best practices across the Group.

The Corporate Offi ce comprises the Executive Offi ce and Group functional heads and is responsible for organisational effectiveness, corporate governance activities, talent and performance management and the development of the Group’s values and culture.

The Executive Management Team comprises the Executive Offi ce, the Corporate Offi ce and business stream CEOs. The Executive Management Team is responsible for managing the Group’s performance and key business issues in line with the Group’s long term strategy.

Both the Corporate Offi ce and the Executive Management Team are chaired by Managing Director and CEO, Greg Clarke. Members meet face-to-face on a regular basis.

3 Directors’ and Executives’ Remuneration

Details of the Group’s Remuneration Policy and the remuneration of Directors and Senior Executives are contained in the Directors’ Report.

Details of the retirement plan for Non Executive Directors are also provided in the Directors’ Report.

Bonus payments to all senior executives are based on performance measured against fi nancial and individual targets. The Personnel and Organisation Committee conducts a detailed review of the performance of Senior Executives against these targets on an annual basis. Information on executive incentive programmes is set out in the Directors’ Report.

4 Board Committees

4.1 Membership The Board has established four permanent Board Committees to assist, advise and make recommendations to the Board on matters falling within their respective responsibilities:

– Nomination Committee;

– Personnel and Organisation Committee;

– Risk Management and Audit Committee; and

– Sustainability Committee.

Each Committee is governed by a formal Charter approved by the Board setting out its objectives, responsibilities, structure and operation. Copies of the Committee Charters are available from the corporate governance section of the Lend Lease website at www.lendlease.com.

The membership of the Board Committees as at the date of this Annual Report is set out in the table below.

Director IndependentNomination Committee

Personnel and

Organisation Committee

Risk Management

and Audit Committee

Sustainability Committee

Executive Directors

Greg ClarkeManaging Director and CEO No

Ross Taylor No Member


David CrawfordChairman Yes Member

Phillip Colebatch Yes Chairman Member

Gordon Edington Yes Member Member

Peter Goldmark Yes Chairman Member

Julie Hill Yes Member Chairman

David Ryan Yes Member Chairman

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4.2 Nomination CommitteeThe principal purpose of the Nomination Committee is to recommend candidates for appointment to the Board who, in combination, bring an appropriate mix of expertise, skills, experience and perspectives to the Board.

Membership of the Nomination Committee changed during the fi nancial year from the Board as a whole to two Non Executive Directors, Peter Goldmark (Chairman) and David Crawford.

During the period 1 July 2006 to 30 June 2007, meetings of the Nomination Committee were held concurrently with full Board meetings, and were generally attended by all Non Executive Directors.

Pursuant to the Nomination Committee Charter, the Committee has the following responsibilities:

– regularly review the size and composition of the Board and the mix of expertise, skills, experience and perspectives desirable to permit the Board to execute its functions;

– identify any competencies not adequately represented and agree the process necessary to be assured that a candidate with those competencies is selected;

– identify and evaluate Board candidates with the assistance of recruitment consultants if required, and recommend individuals for appointment to the Board;

– be assured that individuals recommended for appointment as Non Executive Directors expressly acknowledge, prior to their appointment, their ability to devote the time necessary to carry out their responsibilities as a Director; and

– evaluate the performance of the Board.

The process of selecting a new Director usually involves commissioning an international recruitment fi rm to identify and present appropriate candidates following a briefi ng as to the Board’s requirements. Candidates are interviewed by the Board. In making its selection, the Board considers the ability of candidates to devote the time necessary to fulfi l their duties as a Director.

4.3 Personnel and Organisation Committee

The Personnel and Organisation Committee assists the Board to establish people management and compensation policies which:

– foster exceptional human talent and motivate and support employees to pursue the growth and success of the Group in alignment with the Company’s Core Values (for more information refer to section 10 of this Statement);

– be assured that human capital considerations are central to and integrated into the Group’s strategy and business plans;

– enable the Group to attract and retain employees who can create sustainable value for stakeholders; and

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

Membership of the Personnel and Organisation Committee changed during the fi nancial year. Phillip Colebatch was appointed Chairman and was joined by Julie Hill and David Ryan as members. Membership now comprises three Non Executive Directors.

The Chairman of the Committee liaises with the Group Head of Human Resources and the CEO to be assured that the Committee is appropriately briefed on matters relating to employees.

During the period 1 July 2006 to 30 June 2007, four meetings of the Committee were held, which were attended by all Committee members.

Pursuant to the Personnel and Organisation Committee Charter, the Committee has the following responsibilities:

– review and make recommendations to the Board on:

– the specifi c contractual arrangements for the CEO and Executive Directors; and

– compensation programmes and performance targets for the CEO and Executive Directors, and assess individual performance against those targets;

– review and approve:

– the specifi c contractual arrangements for members of the Executive Management Team; and

– compensation programmes and performance targets for members of the Executive Management Team, and assess individual performance against those targets;


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– monitor and advise the Board on succession planning for the CEO and Executive Directors;

– monitor succession planning for members of the Executive Management Team;

– review and approve strategy and principles for people management, including:

– career development, skills development and continuing education programmes;

– employee compensation and benefi ts programmes to be adopted across the Group;

– employee share ownership, superannuation and pension plans; and

– international assignee policies;

– review and make recommendations to the Board on remuneration and related disclosures required under statutory and regulatory requirements, including the remuneration report in the Annual Report and disclosure of the Committee’s membership, functions and responsibilities; and

– perform other functions referred to the Committee by the Board.

4.4 Risk Management and Audit Committee

The Risk Management and Audit Committee assists the Board in fulfi lling its corporate governance responsibilities and is responsible for overseeing the Group’s risk management and internal control systems, accounting policies and practices, fi nancial reporting, and internal and external audit functions.

The Risk Management and Audit Committee comprises three Non Executive Directors, David Ryan (Chairman), Gordon Edington and Phillip Colebatch. All members of the Committee are independent Directors. The Committee Chairman regularly meets with the Chief Financial Offi cer, the Group Head of Internal Audit and the Group Head of Risk and Insurance to be assured that Committee members are kept regularly informed of key issues. The Committee also meets with the external auditor, without members of management present, as it deems appropriate.

It is a requirement of the Risk Management and Audit Committee’s Charter that all Committee members are fi nancially literate and that at least one member has accounting or relevant fi nancial expertise. Information about the qualifi cations and experience of Committee members can be found in the Directors’ Report.

During the period 1 July 2006 to 30 June 2007, four meetings of the Committee were held, all of which were attended by all members of the Committee at the relevant time.

The Risk Management and Audit Committee Charter defi nes the Committee’s responsibilities as follows:

Audit

– make recommendations to the Board as to the appointment, re-appointment or replacement of the external auditor and rotation of the engagement partner;

– review with the external auditor the scope and terms of the audit and audit fee in accordance with the Board’s Policy on the provision of audit and other services by the external auditor, and make recommendations to the Board in respect of the audit fee;

– review and approve the scope and terms of the internal audit and, where appropriate, the audit fee;

– monitor the coordination between the external audit and internal audit programmes;

– oversee and appraise the quality and effectiveness of the audits conducted by the auditors;

– discuss and resolve any issues arising from audit reports, including any matters the auditors may wish to discuss in the absence of management;

– discuss with the external auditor any relationship that may impact on the auditor’s objectivity or independence, and recommend to the Board any appropriate action to satisfy itself of the auditor’s independence;

– require the external auditor to provide a formal written statement on an annual basis confi rming the auditor’s independence;

– obtain confi rmation that the external auditor is aware that the auditor is responsible to the Board as the representative of shareholders;

– approve non audit assignments that will be undertaken by the external auditor in accordance with the Board’s Policy on the provision of audit and other services by the external auditor, and monitor compliance with the Policy;

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Risk Management

– review the effectiveness of the Enterprise Risk Management system within the Group and be assured that material risks are identifi ed and appropriate risk management processes are in place, including the formulation and subsequent updating of appropriate Group policies;

– review the effectiveness of the Group’s environment, health and safety risk management systems;

– evaluate the adequacy and effectiveness of administrative, operating and accounting controls used by the Group;

– review actual and potential material risk exposures;

– monitor the implementation of business unit and corporate risk management plans;

– review insurance and other risk transfer arrangements, and consider whether appropriate coverage is in place;

– review the business contingency planning process within the Group and be assured that material risks are identifi ed and appropriate contingency plans are in place;

– review the performance of the Group Head of Risk and Insurance and the risk management system, and the Group Head of Internal Audit and the internal audit function;

Financial Reporting

– review fi nancial information presented by management, together with reports and opinions from external auditors;

– assess the appropriateness of accounting policies and methods chosen by management, particularly those relating to signifi cant estimates and judgments;

– consider and make appropriate recommendations to the Board regarding major changes to Group accounting policies and procedures;

– review the reliability and appropriateness of disclosure in the fi nancial statements and fi nancial reporting to stakeholders, particularly with regard to estimates and judgments;

– make appropriate recommendations to the Board as to whether fi nancial statements should be approved;

Compliance

– monitor the effectiveness of Group policies and practices that relate to compliance with laws, regulations and accounting standards;

– consider the impact of changes in accounting standards, listing rules and the Corporations Act;

Related party transactions

– review and monitor related party transactions;

Other matters

– conduct or authorise investigations into any matter within the Committee’s Charter;

– review disclosure in the Annual Report of information regarding the membership, functions and responsibilities of the Committee, including its views on the independence of the external auditor; and

– perform other functions referred to the Committee by the Board.

4.5 Sustainability CommitteeThe Board established a Sustainability Committee in November 2006. The role of the Committee is to assist the Board in monitoring the decisions and actions of management in achieving the Lend Lease Group aspiration to be a sustainable organisation.

Sustainability encompasses how the Lend Lease Group conducts business, now and in the future, through the pursuit of workplace safety, a commitment to corporate social responsibility, environmentally sustainable solutions and employee diversity, development and opportunity. Lend Lease is strategically and culturally committed to achieving commercial success in ways that honour ethical values and respect people, communities and the natural environment.

The Sustainability Committee comprises three Non Executive Directors, Julie Hill (Chairman), Gordon Edington and Peter Goldmark and one Executive Director, Ross Taylor.

The Committee has the following responsibilities:

Health & Safety

– Oversee the Global Health and Safety function of the Group;

– Review the effectiveness of Group policies and initiatives designed to be assured of the well-being of employees and the workforce;

Corporate Social Responsibility

– Review the effectiveness of Group policies on corporate social responsibility, workplace diversity and equal opportunity;

Environment

– Oversee the Global Environment function of the Group;

– Review the effectiveness of Group policies and initiatives designed to deliver best practice environmentally sustainable solutions;


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Foundation

– Monitor the activities and programmes of the Lend Lease Foundation to be assured that its activities are directed towards opportunities for the development and well-being of Lend Lease employees, their families, and the communities in which they work and live;

– Review the performance of the Lend Lease Foundation for consistency with sustainability objectives; and

Compliance

– Assist the Board in its oversight of the Group’s compliance with applicable legal and regulatory requirements in relation to environmental matters, socially responsible initiatives, and health and safety issues.

Information on the Group’s sustainability initiatives during the fi nancial year can be found in the Sustainability section of this Annual Report.

5 Governance structure

Lend LeaseBoard of Directors

Greg ClarkeCEO


RiskManagement

and Audit

Committee

Personnel and

Organisation Committee

Nomination Committee

Executive Offi ce Corporate Offi ce

Executive Management Team

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6 Communicating with Shareholders

Lend Lease recognises the importance of maintaining investor confi dence through full and timely disclosure to shareholders and the market.

The Group has an External Communications and Continuous Disclosure Policy in place, setting out protocols applicable to Directors, executive offi cers and employees. This Policy is designed to ensure that Lend Lease complies with its continuous disclosure obligations.

Pursuant to the terms of the Policy, the Company Secretary and the Corporate Disclosure Manager are responsible for all communications with the Australian and New Zealand Stock Exchanges. The Policy explains the continuous disclosure obligations of Lend Lease, the procedure to be followed when information needs to be disclosed to the market, and the consequences of breaching the Policy. It sets out management accountabilities for ensuring that the market is fully informed, as well as procedures governing analyst briefi ngs and public comment by Group spokespersons. The Policy is included on the Group’s intranet for reference by all employees. A copy of the Policy is also available from the corporate governance section of the Lend Lease website at www.lendlease.com.

In addition to complying with the continuous disclosure obligations imposed by law, Lend Lease is committed to ensuring that information about the Group’s activities reaches the investor community in a timely and readily accessible manner. All Stock Exchange announcements are:

– included on the News Room section of the Lend Lease website at www.lendlease.com as soon as practicable following confi rmation of receipt by the Australian and New Zealand Stock Exchanges. Additionally, interested parties can register for an email alert service which notifi es them of new announcements;

– distributed to major wire services; and

– emailed to major media and investor organisations.

The Lend Lease website is the key information dissemination point to the broader market. In addition to all announcements to the market,

– copies of current and past annual and half-year reports can be downloaded from the website;

– presentations made to analysts or institutional investors are included on the website; and

– market briefi ngs to analysts and institutional investors are webcast live and archived on the website for three months. Presentation material used during a webcast can be viewed simultaneously or accessed from the archive subsequently.

Group executives and the Chairman also meet with investors and their representatives on a regular basis to discuss the Group and its performance.

The Annual General Meeting is the primary opportunity for shareholders to meet face-to-face with the Board and senior executives. All shareholders receive the Notice of Meeting detailing time and venue, and outlining the resolutions to be put to the Meeting. Accompanying the Notice is a proxy form, instructions on completion and lodgement, and a postage paid, addressed return envelope to encourage maximum shareholder participation. The Notice also invites shareholders to submit questions ahead of the Meeting, either by using a question form attached to the Notice or through an online facility. During the Meeting the Chairman will seek to address as many of the more frequently raised topics as possible within the time available.

Shareholders attending the venue are given the opportunity to ask questions during the course of the Meeting. Directors also make themselves available after the formal part of the Meeting to meet with shareholders. Question cards are available for those shareholders who do not wish to raise matters in a public forum. The external auditor attends the Annual General Meeting and is available to answer any questions on the conduct of any audits and the preparation and content of the auditor’s report.

For shareholders who are unable to attend in person, the proceedings of the Annual General Meeting are webcast live on the Lend Lease website and later archived for three months. Access to the archive is via a link from the home page. Presentations made at the Meeting are also included on the website for access by interested stakeholders. In addition, representatives of the media are invited to attend the Meeting to enable a report of the proceedings to reach as wide an audience as possible. As soon as practicable following the Meeting, a summary of the questions and answers taken from the transcript of the meeting is included on the Lend Lease website.


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7 Risk Management

7.1 Enterprise Risk ManagementThe Group uses an Enterprise Risk Management approach to identify, evaluate, address, monitor, quantify and report material risks to the Risk Management and Audit Committee. The objective of this approach is to enhance stakeholder value through continuous improvement in the Group’s management of risk.

The Group’s Corporate Risk Management is led by the Group Head of Risk and Insurance. Corporate Risk Management liaises with business unit CEOs and risk specialists on both business specifi c and enterprise-wide risks.

Corporate Risk Management’s objective is to assist the Group’s businesses to further develop their risk management processes. Its role includes:

– advising on and implementing risk treatment strategies at Group level;

– assisting management to embed Enterprise Risk Management;

– assisting Group businesses to implement and maintain effective risk management practices;

– maintaining effective early warning reporting systems; and

– consolidating information for presentation to the Risk Management and Audit Committee.

Operational businesses are responsible for implementing self-assurance programmes to assess the effectiveness of risk management procedures. Formal internal and external audit procedures are utilised to provide supplementary assurance. The Group uses sensitivity analysis and value at risk modelling to identify the most important assumptions affecting the delivery of the Group’s business plans.

The Group’s approach to risk management is guided by the Australian/New Zealand Standard on Risk Management, AS/NZ4360 and the COSO Enterprise Risk Management framework. A copy of the Group’s Risk Management Policy Statement is available on the corporate governance section of the Lend Lease website at www.lendlease.com.

7.2 Integrity in Financial Reporting, Risk Management and Internal Control

In accordance with the Company’s legal obligations, the Chief Executive Offi cer and the Chief Financial Offi cer have declared in writing to the Board that, for the year ended 30 June 2007:

With regard to the Company’s Financial reports:

– the Company’s fi nancial records have been properly maintained in accordance with section 286 of the Corporations Act;

– the Company’s fi nancial statements present a true and fair view, in all material respects, of the Company’s fi nancial condition and operational results and are in accordance with relevant accounting standards.

With regard to risk management and internal compliance and control systems of the Company:

– the statements made with respect to the integrity of the Company’s Financial Reports are founded on a sound system of risk management and internal compliance and control systems which, in all material respects, implement the policies adopted by the Board of Directors;

– the risk management and internal compliance and control systems, to the extent they relate to fi nancial reporting, are operating effectively and effi ciently in all material respects.

Since 30 June 2007, nothing has come to the attention of the Chief Executive Offi cer and the Chief Financial Offi cer that would indicate any material change to any of the statements made above.

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8 External auditor

KPMG is the external auditor of Lend Lease and its controlled entities. KPMG, or its predecessors, was appointed at the fi rst Annual General Meeting of the Company in 1958.

8.1 Performance ManagementIt is the responsibility of the Risk Management and Audit Committee to oversee and appraise the quality and effectiveness of the audits conducted by the external auditor.

8.2 Appointment and RotationThe Risk Management and Audit Committee is responsible for making recommendations to the Board as to the re-appointment or replacement of the auditor and the rotation of the lead audit engagement partner. The audit engagement partner is rotated every fi ve years. The current audit engagement partner is Chris Hall who was appointed with effect from 1 July 2006.

8.3 Provision of Non Audit and Other Services

In September 2006 the Board renewed its Policy on the provision of audit and other services by the external auditor. Pursuant to the Committee Charter, the Risk Management and Audit Committee must approve the appointment of the external auditor for other service engagements in compliance with this Policy.

Pursuant to 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 fi nancial statements;

– design and implementation of fi nancial information systems or fi nancial controls;

– valuation services, appraisals or fairness opinions, where the results are material to the fi nancial statements or where the external auditor would be required to audit those statements or opinions;

– outsourced internal audit services;

– secondments;

– recruitment and other human resources services, including international assignee services;

– actuarial services;

– management functions;

– legal services;

– taxation advice of a strategic or tax planning nature;

– broker-dealer, investment advisor or investment banking services;

– work that is remunerated through a ‘success fee’ structure;

– expert services unrelated to the audit; and

– work that involves the auditor acting in an advocacy role for the Group.

In respect of the provision of existing international assignee and international taxation services, transitional arrangements have been approved by the Board.

The Chief Financial Offi cer and the auditor are each required to provide a statement that the non audit assignment will not impair the auditor’s independence. As detailed in the Directors’ Report, the Board considers that the provision of non audit services by the auditor during the fi nancial year is consistent with auditor independence requirements.

8.4 Attendance at Annual General Meeting

The external auditor is required to attend the Annual General Meeting, and is available to answer any questions on the conduct of any audits and the preparation and content of the auditor’s report.

8.5 Auditor’s IndependenceIn accordance with section 307C of the Corporations Act and in relation to the audit conducted by the external auditor, the external auditor is required to provide the Company with a written declaration that, to the best of the auditor’s knowledge and belief, there have been no contraventions of the auditor independence requirements set out in the Corporations Act or any applicable code of professional conduct.

A copy of the Lead Auditor’s Independence Declaration as required under section 307C of the Corporations Act has been included in the Directors’ Report.

8.6 FeesFees paid to the auditor during the fi nancial year are detailed in the Directors’ Report.


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Annual Report 2007


9 Trading in Lend Lease Shares

Lend Lease has developed a Securities Trading Policy to assist Directors and employees to comply with their legal obligations while they are in possession of price-sensitive information. This policy reinforces the insider trading provisions of the Corporations Act. A copy of the Policy is available at the corporate governance section of the Lend Lease website at www.lendlease.com.

The Policy contains an explanation and prohibition of insider trading, and sets out restrictions on dealing in Lend Lease securities. Directors and designated executives may only deal in Lend Lease securities during the six-week period commencing on the third business day after:

– the announcement of the annual results;

– the announcement of the half year results; and

– the Annual General Meeting.

Directors and designated executives are also required to notify the General Counsel or Company Secretary prior to any dealing in Lend Lease securities.

The Policy restricts all other employees from dealing in Lend Lease securities between the close of the fi nancial year, or half year, and a day which is at least the next business day after the announcement of the Company’s results.

Notwithstanding any period where trading is permitted in accordance with the Securities Trading Policy, each person covered by the Policy is prohibited from dealing in Lend Lease securities if they are in possession of price-sensitive information that is not generally available to the public.

10 The Lend Lease Core Values

10.1 Core ValuesLend Lease actively subscribes to a set of Core Values. These Core Values underpin how the Group does business, how it interacts with stakeholders and how its people operate in the workplace. The Core Values are promoted across all of the Group’s businesses and are as follows:

Respect Respect for all people – their ideas, their culture, their views, their health and safety, and their knowledge

Integrity Integrity is non-negotiable. We don’t do it if it compromises the individual or the Company’s integrity. In particular, we will not compromise on safety, either within our organisation or in doing business with any of our clients or suppliers

Innovation Challenge and seek to fi nd a better solution, think outside the box and dare to do things differently. Be innovative and creative – don’t just do it because we did it yesterday

Collaboration Redefi ne the way our business works by truly sharing knowledge, building on this and drawing insights. Through teamwork we value the insights of others and build on them – we must truly take the time to help

Excellence We strive for excellence in all we do. It is evident not only in the products and services we deliver, but in how we deliver them. Our employees embody excellence – whether it be in the decisions they make, the products they build, or the service they deliver. On construction sites in particular, but everywhere, excellence equals zero incidents

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10.2 Code of ConductThe Lend Lease Code of Conduct supports the Core Values and provides guidance for employees on the standards that the Company expects in the conduct of its operations. The Code of Conduct has been endorsed by the Board and applies to the Directors and every employee across the Group.

Issues covered by the Code include confl icts of interest, bribes and unauthorised payments, proper use of company assets, equal opportunity for employees, confi dentiality, fair dealing and seeking or providing assistance when faced with behaviour which seems to depart from the Code. The Code is supported by various global, regional and local business unit policies and procedures. Employees are encouraged to report all instances of actual or potential breaches of the Code of Conduct to their manager or a representative from the human resources, legal or compliance teams.

Copies of the Lend Lease Core Values and Code of Conduct are available from the corporate governance section of the Lend Lease website at www.lendlease.com.

10.3 Confl icts of InterestDirectors are required, upon their appointment, to disclose to the Company any interests or directorships which they have with other organisations. Directors are required to update this information with the Company if it changes during the course of the Directorship. Further, Directors and Senior Executives are required to identify any confl icts of interest they may have in dealing with the Group’s affairs and refrain, as appropriate, from participating in any discussion or voting on these matters. In addition to general guidelines in the Code of Conduct, a range of procedures designed to ensure compliance with the Corporations Act, the ASX Listing Rules and the highest standards in relation to managing confl icts of interest have been implemented at a Group and business level. Directors are required to raise any matters that may give rise to a confl ict of interest with the Company Secretary.

10.4 Political DonationsAs a matter of policy, Lend Lease does not use Company funds to make donations to political parties or individuals holding or standing for public offi ce. Lend Lease does, however, participate in public policy debate on issues that may impact the Group’s businesses and the interests of stakeholders. At times, fees are paid for Group employees to attend political functions (such as conferences and lunches) which involve discussion of issues relevant to the Group.

11 Corporate Governance – Further Information

The Corporate Governance section of the Lend Lease website at www.lendlease.com contains further comprehensive information on the Company’s Corporate Governance practices. The following material is available for viewing:

– Company Constitution;

– Board Charter;

– Nomination Committee Charter;

– Personnel and Organisation Committee Charter;

– Risk Management and Audit Committee Charter;

– Sustainability Committee Charter;

– Statement of Core Values;

– Code of Conduct;

– Policy on Independence of Directors;

– External Communications and Continuous Disclosure Policy;

– Securities Trading Policy;

– Risk Management Policy;

– Health and Safety Policy;

– Environment Policy; and

– Political Donations Policy.


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Annual Report 2007


12 Compliance with ASX Recommendations

ASX Recommendations Reference1Comply

[Yes/No]

Principle 1: Lay solid foundations for management and oversight1.1 Formalise and disclose the functions reserved to the board

and those delegated to management1.1 Yes

Principle 2: Structure the board to add value2.1 A majority of the board should be independent directors 1.2, 1.3 Yes

2.2 The chairperson should be an independent director 1.3, 1.5 Yes

2.3 The roles of chairperson and chief executive offi cer should not be exercised by the same individual

1.3 Yes

2.4 The board should establish a nomination committee 4.1, 4.2 Yes

2.5 Provide the information indicated in Guide to reporting on Principle 2

1.2, 1.3, 1.10, 4.1, 4.2 and Directors’ Report

Yes

Principle 3: Promote ethical and responsible decision-making3.1 Establish a code of conduct to guide the directors, the chief

executive offi cer (or equivalent), the chief fi nancial offi cer (or equivalent) and any other key executive as to:

10.1, 10.2 Yes

3.1.1 the practices necessary to maintain confi dence in the company’s integrity

3.1.2 the responsibility and accountability of individuals for reporting and investigating reports of unethical practices

3.2 Disclose the policy concerning trading in company securities by directors, offi cers and employees

9 Yes


9, 10.1, 10.2 Yes

Principle 4: Safeguard integrity in fi nancial reporting4.1 Require the chief executive offi cer (or equivalent) and the

chief fi nancial offi cer (or equivalent) to state in writing to the board that the company’s fi nancial reports present a true and fair view, in all material respects, of the company’s fi nancial condition and operational results and are in accordance with relevant accounting standards

7.2 Yes

4.2 The board should establish an audit committee 4.1, 4.4 Yes

4.3 Structure the audit committee so that it consists of:– only non-executive directors

– a majority of independent directors

– an independent chairperson, who is not chairperson of the board

– at least three members

4.1, 4.4 Yes

4.4 The audit committee should have a formal charter 4.1, 4.4 Yes


4.1, 4.4, 8 and Directors’ Report

Yes

Principle 5: Make timely and balanced disclosure5.1 Establish written policies and procedures designed to

ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance

6 Yes


6 Yes

1 This is a reference to the relevant sections of this Corporate Governance Statement or to the Directors’ Report commencing on page 62.

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ASX Recommendations Reference1Comply

[Yes/No]

Principle 6: Respect the rights of shareholders6.1 Design and disclose a communications strategy to promote

effective communication with shareholders and encourage effective participation at general meetings

6 Yes

6.2 Request the external auditor to attend the annual general meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report

6, 8 Yes

Principle 7: Recognise and manage risk7.1 The board or appropriate board committee should establish

policies on risk oversight and management4.4, 7.1 Yes

7.2 The chief executive offi cer (or equivalent) and the chief fi nancial offi cer (or equivalent) should state to the board in writing that:

7.2 Yes

7.2.1 the statement given in accordance with best practice recommendation 4.1 (the integrity of fi nancial statements) is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board

7.2.2 the company’s risk management and internal compliance and control system is operating effi ciently and effectively in all material respects


4.4, 7.1 Yes

Principle 8: Encourage enhanced performance8.1 Disclose the process for performance evaluation of the board,

its committees and individual directors, and key executives1.7, 3 Yes

Principle 9: Remunerate fairly and responsibly9.1 Provide disclosure in relation to the company’s

remuneration policies to enable investors to understand (i) the costs and benefi ts of those policies and (ii) the link between remuneration paid to directors and key executives and corporate performance

1.8, 3 and Directors’ Report

Yes

9.2 The board should establish a remuneration committee 4.1, 4.3 Yes

9.3 Clearly distinguish the structure of non-executive directors’ remuneration from that of executives

1.8, 3 and Directors’ Report

Yes

9.4 Ensure that payment of equity-based executive remuneration is made in accordance with thresholds set in plans approved by shareholders

3 and Directors’ Report

Yes


1.8, 3, 4.1, 4.3 and Directors’ Report

Yes

Principle 10: Recognise the legitimate interests of stakeholders10.1 Establish and disclose a code of conduct to guide compliance

with legal and other obligations to legitimate stakeholders10.1, 10.2 Yes

1 This is a reference to the relevant sections of this Corporate Governance Statement or to the Directors’ Report commencing on page 62.

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Concise Financial Report30 June 2007

Table of Contents

Directors’ Report 62

1. Governance 62

2. Operations 66

3. Remuneration Report 67

4. Other 86Lead Auditor’s Independence Declaration 88

Five Year Profi le 89

Concise Management Discussion and Analysis of Financial Condition and Results of Operations (Concise MD&A) 90

Concise Financial Statements 92

Income Statement 92

Balance Sheet 93

Statement of Changes in Equity 94

Statement of Cash Flows 96

Notes to the Concise Financial Statements 97

1. Basis of Preparation of Concise Financial Report 97

2. Revenue 98

3. Other Income 98

4. Taxation 98

5. Dividends and Earnings Per Share 99

6. Segment Reporting 100

7. Key Management Personnel Disclosures 102

8. Events Subsequent to Balance Date 103

Directors’ Declaration 104

Independent Auditor’s Report 105

Annual Report 2007


The Concise Financial Statements and specifi c disclosures and Concise Management Discussion and Analysis of Financial Condition and Results of Operations (Concise MD&A) have been derived from the consolidated entity’s full fi nancial report for the fi nancial year. Other information included in the concise fi nancial report is consistent with the consolidated entity’s full fi nancial report. The concise fi nancial report does not, and cannot be expected to, provide as full an understanding of the fi nancial performance, fi nancial position and fi nancing and investing activities of the consolidated entity as the full fi nancial report.

A copy of Lend Lease Corporation Limited Annual Consolidated Financial Report 30 June 2007, including the Independent Auditor’s Report, is available to all shareholders and will be sent to shareholders without charge upon request.

The Annual Consolidated Financial Report 30 June 2007 can be requested by telephone (612) 9236 6065 and by internet at http://www.lendlease.com.au

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Directors’ Report

The Directors present their Report together with the Annual Consolidated Financial Report of the consolidated entity, being the Company and its subsidiaries (‘Lend Lease’) for the fi nancial year ended 30 June 2007 and the Auditor’s Report thereon.

1. Governance

a. Board/DirectorsThe names, qualifi cations, experience and special responsibilities of each person holding the position of Director of the Company at the date of this Report are:

D A Crawford, Chairman

(Non Executive)

Age 63

Mr Crawford joined the Board in July 2001 and was appointed Chairman in May 2003. He is a member of the Nomination Committee.

Experience and Qualifi cationsPreviously Mr Crawford was National Chairman of the Australian fi rm of KPMG. He has extensive accounting and business experience having worked with many large corporations and governments. He holds a Bachelor of Commerce and Bachelor of Laws from the University of Melbourne. He is a Fellow of the Institute of Chartered Accountants.

Other Directorships and PositionsMr Crawford is a Non Executive Director of BHP Billiton Limited (appointed May 1994), Foster’s Group Limited (appointed August 2001) and Westpac Banking Corporation (appointed May 2002). He was formerly a Non Executive Director of National Foods Limited (appointed November 2001, resigned June 2005).

G A Clarke, Managing Director

(Executive)

Age 49

Mr Clarke was appointed Managing Director and Chief Executive Offi cer in December 2002.

Experience and Qualifi cationsMr Clarke brings more than 25 years experience in international business development and operations through career roles including Vice President, Cellular (Paris) for Nortel Communications; Chief Executive Mobile, C&W Mobile plc; and Chief Operating Offi cer and Chief Executive Offi cer, Cable & Wireless Communications plc. He holds a BA (Hons) Business Studies and an MBA.

Other Directorships and PositionsMr Clarke was formerly a Non Executive Director of The British United Provident Association Limited (BUPA), the largest private health provider in the UK (appointed April 2001, resigned March 2007).

P M Colebatch

(Non Executive)

Age 62

Mr Colebatch joined the Board in December 2005 and is Chairman of the Personnel and Organisation Committee and a member of the Risk Management and Audit Committee.

Experience and Qualifi cationsMr Colebatch has a Bachelor of Science and Bachelor of Engineering from the University of Adelaide, a Master of Science from Massachusetts Institute of Technology and a Doctorate in Business Administration from Harvard University. He has held senior management positions in insurance and investment banking, and was formerly on the Executive Board of Swiss Reinsurance Company, Zurich. He was previously on the Executive Board of Credit Suisse Group, Zurich, where he was Chief Financial Offi cer and subsequently Chief Executive Offi cer of Credit Suisse Asset Management.

Other Directorships and PositionsMr Colebatch is a Non Executive Director of Insurance Australia Group Limited (appointed January 2007).

G G Edington CBE

(Non Executive)

Age 61

Mr Edington joined the Board in 1999 and is a member of the Risk Management and Audit Committee and the Sustainability Committee.

Experience and Qualifi cationsQualifi ed as a Chartered Surveyor, Mr Edington brings to the Board extensive UK and international experience in the property sector. Mr Edington was a Director of BAA plc and Chairman of BAA International. He joined BAA plc in 1988, became a member of the Board in 1991 and has been the Chairman of six BAA companies. He is a past President of the British Property Federation, was the Chairman of UK property company Greycoat Estates Limited and was a member of the Bank of England Property Forum. Mr Edington is Chairman of the Council of Trustees of the UK children’s charity, NCH, and was awarded a CBE in the New Year’s Honours List for ‘services to children’.

Other Directorships and PositionsNil.

David Crawford, Chairman Greg Clarke, Managing Director Phillip Colebatch Gordon Edington CBE

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P C Goldmark

(Non Executive)

Age 66

Mr Goldmark joined the Board in 1999 and is Chairman of the Nomination Committee and a member of the Sustainability Committee.

Experience and Qualifi cationsMr Goldmark is Director, Climate and Air Program at Environmental Defense, a US-based non-profi t environmental advocacy organisation. He was the Chairman and Chief Executive Offi cer of The International Herald Tribune in Paris between 1998 and 2003. Prior to this, he was for ten years the President and Chief Executive Offi cer of the Rockefeller Foundation in New York. He has held positions including Senior Vice President of the Times-Mirror Corporation, Executive Director of the Port Authority of New York and New Jersey, and Director of the Budget for the State of New York. A writer and speaker on world affairs, Mr Goldmark graduated with a BA from Harvard College, Government Department, magna cum laude. He brings to Lend Lease his wide experience as a Chief Executive Offi cer and senior executive in the private and public sectors, both in the USA and internationally.


J A Hill

(Non Executive)

Age 61

Ms Hill joined the Board in May 2006. She is Chairman of the Sustainability Committee and a member of the Personnel and Organisation Committee.

Experience and Qualifi cationsMs Hill has held a number of senior executive positions in the land development and housing construction industry in North America. She was formerly the Chairman, President and Chief Executive Offi cer of Costain Homes, Inc. (US) and Vice President and General Manager, Mobil Land (Georgia) Corporation. She has a Bachelor of Arts from the University of California at Los Angeles and a Master of Arts in marketing and management from the University of Georgia.

Other Directorships and PositionsMs Hill is a Non Executive Director of Wellpoint, Inc. (appointed March 1994). She was formerly a Non Executive Director of Resources Connection, Inc. (appointed January 2003, resigned December 2006).

D J Ryan AO

(Non Executive)

Age 55

Mr Ryan was appointed a Director in December 2004. He is Chairman of the Risk Management and Audit Committee and a member of the Personnel and Organisation Committee.

Experience and Qualifi cationsMr Ryan has previously held Managing Director positions in investment banking and industry, as well as being the Chairman or a Non Executive Director of a number of listed public companies. He has a Bachelor of Business from the University of Technology, Sydney and is a Fellow of CPA Australia and the Australian Institute of Company Directors.

Other Directorships and PositionsMr Ryan is the Non Executive Chairman of Transurban Holdings Limited (appointed Director April 2003 and Chairman February 2007) and is a Non Executive Director of ABC Learning Centres Limited (appointed June 2003). He is also the Non Executive Chairman of Tooth & Co Limited (appointed Director September 1999 and Chairman January 2003) and was formerly a Non Executive Director of Virgin Blue Holdings Limited (appointed November 2003, resigned April 2005).

R H Taylor

(Executive)

Age 45

Mr Taylor joined the Board as an Executive Director in December 2004 and is a member of the Sustainability Committee.

Experience and Qualifi cationsMr Taylor joined Lend Lease in 1985 as an engineer and held several positions in Australia and Asia before being appointed Managing Director of the Project Management and Construction business of Lend Lease in 1995. Following the acquisition of the Bovis Group in 1999 he was appointed Global Chief Executive Offi cer of the combined Bovis Lend Lease businesses based in London and in 2001 his responsibilities were expanded to include the development activities of Lend Lease. In 2003 he returned to Australia to take up the role of Chief Executive Offi cer Asia Pacifi c and in July 2005 was appointed Chief Executive Offi cer Retail and Communities. On 21 May 2007 he was appointed to the newly created role of Global Chief Operating Offi cer. Mr Taylor holds a Bachelor of Civil Engineering (Honours) from the University of Queensland.


Peter Goldmark Julie Hill David Ryan AO Ross Taylor

Annual Report 2007

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Directors’ Reportcontinued

1. Governance continued

b. Company Secretaries’ Qualifi cations and Experience

W Hara

Mr Hara was appointed Company Secretary on 3 July 2007. He was General Counsel and Group Company Secretary of Patrick Corporation Limited prior to his appointment as Group General Counsel of Lend Lease in January 2007. Mr Hara has a Bachelor of Commerce and a Bachelor of Laws from the University of New South Wales and is a member of the Law Society of NSW.

S J Sharpe

Ms Sharpe was appointed Deputy Company Secretary in 1995 and Company Secretary in 1997. She has held a number of senior executive positions and subsidiary board directorships in the Lend Lease Group. She has a Bachelor of Business from the University of Technology, Sydney and is an Associate of the Institute of Chartered Accountants and a member of the Australian Institute of Company Directors.

c. Offi cers Who Were Previously Partners of the Audit Firm

Mr Crawford was a Partner and Australian National Chair of KPMG. He resigned from this position on 28 June 2001 prior to his appointment as a Director of the Company on 19 July 2001. KPMG or its predecessors was appointed as the Company’s auditor at its fi rst Annual General Meeting in 1958.

d. Directors’ MeetingsDuring the fi nancial year, 12 Board meetings were held. The Board recognises the essential role of committees in guiding the Company on specifi c issues. Committees address important corporate issues, calling on senior management and external advisers prior to making a fi nal decision or making a recommendation to the full Board.

There are four permanent committees of the Board:


The Nomination Committee consists entirely of Non Executive Directors. This Committee assists the Board by considering nominations to the Board by ensuring that there is an appropriate mix of expertise, skills and experience on the Board. During the fi nancial year 1 July 2006 to 30 June 2007, all meetings of the Nomination Committee were held in conjunction with Board meetings.

Personnel and Organisation Committee

The Personnel and Organisation Committee consists entirely of Non Executive Directors. The Committee’s agenda refl ects the importance of human capital to the Group’s strategic and business planning and it assists the Board in ensuring that appropriate policies are in place for people management and remuneration across Lend Lease businesses worldwide. During the fi nancial year 1 July 2006 to 30 June 2007, four meetings of the Personnel and Organisation Committee were held.

Risk Management and Audit Committee

The Risk Management and Audit Committee consists entirely of Non Executive Directors. This Committee assists the Board by reviewing the risk management and compliance systems in Lend Lease businesses worldwide and by ensuring that assets are protected against fi nancial loss, legal and regulatory obligations are met and proper accounting and auditing practices are maintained. During the fi nancial year 1 July 2006 to 30 June 2007, four meetings of the Risk Management and Audit Committee were held.


The Board established a Sustainability Committee during the year consisting of a majority of Non Executive Directors. The Committee assists the Board in monitoring the decisions and actions of management in achieving the aspiration of Lend Lease to be a sustainable organisation. During the fi nancial year 1 July 2006 to 30 June 2007, two meetings of the Sustainability Committee were held.

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Annual Report 2007


Attendance at Meetings of Directors 1 July 2006 to 30 June 2007

Board Meetings

Risk Management

and Audit Committee Meetings

Personnel and Organisation Committee Meetings

SustainabilityCommittee Meetings

Other2

Committee Meetings

Director Held1 Attended Held1 Attended Held1 Attended Held1 Attended Held1 Attended

D Crawford 12 12

G Clarke 12 12 3 3

P Colebatch 12 12 4 4 3 3 3 3

G Edington 12 12 4 4 2 2 2 2 2 2

P Goldmark 12 12 2 2 2 2

J Hill 12 11 2 2 2 2

D Ryan 12 12 4 4 2 2 1 1

R Taylor 12 12 2 2 2 2

1 Refl ects the number of meetings held during the time the Director held offi ce on the Committee during the year.

2 Committees constituted to address specifi c issues.

In addition, as required, matters were dealt with by circular resolution and ratifi ed at the next meeting of the Board or appropriate committee.

e. Interest in CapitalThe interest of each of the Directors in the issued shares of the Company at 15 August 2007 (16 August 2006) is set out below.

Director

Shares Held

Directly 2007

Shares Held

Benefi cially/Indirectly

20071Total 2007

Shares Held

Directly 2006

Shares Held


20061Total2006

D Crawford 4,395 23,727 28,122 4,395 18,613 23,008

G Clarke 1,000 1,000 1,000 1,000

P Colebatch 2,000 1,689 3,689 2,000 121 2,121

G Edington 15,000 9,521 24,521 15,000 7,866 22,866

P Goldmark 3,000 10,501 13,501 3,000 8,798 11,798

J Hill 2,000 1,031 3,031 2,000 2,000

D Ryan 10,000 3,640 13,640 10,000 1,857 11,857

R Taylor 9,760 94,737 104,497 7,899 94,526 102,425

1 Includes shares benefi cially held by Non Executive Directors in the Retirement Plan.

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Directors’ Report continued

2. Operations

a. Principal ActivitiesThe Group’s lines of business are focused on three geographic regions: Asia Pacifi c, Americas and Europe.

– The Retail business comprises retail property management, asset management and development in Australia, Singapore and the United Kingdom (UK);

– The Communities business is involved in the development of large scale urban regeneration and greenfi eld development projects in Australia, the United States of America (USA) and the UK. This business line includes privatisation services in the USA;

– Investment Management provides real estate investment management services in Asia Pacifi c and the UK. Investment Management includes the Group’s ownership interests in property investments in Asia Pacifi c, the UK and the USA. Ownership interests are held directly or indirectly through investments in Lend Lease managed funds;

– Project Management, Construction and Private Finance Initiatives (PFIs) provides construction, project management and design services across all regions through Bovis Lend Lease and includes the PFI business in Europe.

b. Review and Results of OperationsA full review of operations is included in the Management Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section of the Annual Consolidated Financial Report.

c. DividendsThe 2006 fi nal dividend of A$123.9 million (31 cents per share, fully franked) referred to in the Directors’ Report dated 16 August 2006 was paid on 13 September 2006.

Details of dividends in respect of the current year are as follows:

A$m

Interim dividend of 35 cents per share (50% franked) paid on 27 March 2007 140.0

Final dividend of 42 cents per share (50% franked) declared by Directors to be paid on 12 September 2007 168.5

308.5

d. Signifi cant Changes in State of AffairsLend Lease acquired the remaining 3% of voting shares in The Crosby Group plc (a UK-based urban regeneration specialist) during the year, following its acquisition of 97% of The Crosby Group plc during the previous year.

During the prior year, Lend Lease acquired the fi nal 12.5% minority stake in Actus Lend Lease and sold businesses in the real estate investment market in the USA.

e. Events Subsequent to Balance DateNo matters or circumstances have arisen since the end of the fi nancial year that have signifi cantly affected or may signifi cantly affect the operations of Lend Lease, the results of those operations or state of affairs of Lend Lease in subsequent fi nancial years other than the following:

Sale of Units in Australian Prime Property Fund (APPF)

On 11 July 2007, Lend Lease sold a proportion of its interest in APPF Retail for A$263.8 million. As at 30 June 2007, a cumulative gain of A$32.6 million before tax was recognised in the fair value revaluation reserve relating to this interest.

Withdrawal of Australian Taxation Offi ce (ATO) Appeal to Federal Court on Westpac Warrants Issue

On 10 August 2007 the ATO withdrew its appeal relating to the Federal Court’s decision in December 2006 regarding Lend Lease’s sale of Westpac shares.

Following the withdrawal of its appeal, the ATO will be required to repay to Lend Lease the balance of the payment Lend Lease made under the amended assessment issued in 2002, plus interest. The repayment of the monies by the ATO has no impact on earnings.

f. Likely DevelopmentsDetails of likely developments in the operations of Lend Lease in subsequent fi nancial years are contained in the reports from the Chairman and Managing Director in the Annual Report. In the opinion of the Directors, disclosure of any further information would be likely to result in unreasonable prejudice to the Group.

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Annual Report 2007


g. Environmental RegulationLend Lease is subject to many environmental regulations associated with real estate development, project and construction management and asset management. These regulations typically relate to emissions to air and water, waste management and protection of biodiversity.

Lend Lease businesses report quarterly on environmental regulation compliance matters, including breaches and legal or potential legal action.

The Sustainability Committee receives reports on a quarterly basis regarding any signifi cant environmental risks and non conformance with the Environment Policy of Lend Lease. The Directors are not aware of any material non compliance issues during the period covered by this Report.

Further details are contained in the Sustainability section of the Annual Report.

3. Remuneration Report

The information provided under headings 3a. to 3f. includes remuneration disclosures that are required under Accounting Standard AASB 124 ‘Related Party Disclosures’. These disclosures have been transferred from the Consolidated Financial Statements and have been audited. The term ‘remuneration’ has been used in the Remuneration Report. This term has the same meaning as the alternative term ‘compensation’, as defi ned in AASB 124.

a. Details of Key Management Personnel and Other Executives – Audited

Key Management Personnel

Key management personnel, including Directors of the Company and executives, have authority and responsibility for planning, directing and controlling the activities of the Company and the consolidated entity.

The key management personnel of Lend Lease are the ‘Executive Offi ce’, consisting of the Executive Directors, together with the Group Finance Director and Chief Executive Offi cer Investment Management. The former Chief Executive Offi cer Project Management, Construction and PFI and former Chief Financial Offi cer are also regarded as key management personnel.

Directors

Non Executive DirectorsD Crawford Chairman

P Colebatch

G Edington

P Goldmark

J Hill

D Ryan

Executive DirectorsG Clarke Managing Director and Chief Executive Offi cer

R Taylor Global Chief Operating Offi cer – Appointed 21 May 2007 and Chief Executive Offi cer Retail and Communities

ExecutivesS McCann Group Finance Director – Appointed 21 March 2007 and Chief Executive Offi cer


R Burrows Chief Financial Offi cer – Relinquished position 21 March 2007

R Johnston Chief Executive Offi cer Project Management, Construction and PFI – Resigned 31 July 2007

Other Executives1

R Butler Chief Executive Offi cer Lend Lease Retail and Communities UK

N Hugill Chairman Lend Lease Europe

R Lourey Group Head of Human Resources – Resigned 31 July 2007

P Marchetto Chief Executive Offi cer Bovis Lend Lease Americas

N Martin Group Head of Risk

B Soller Deputy Chief Financial Offi cer

1 ‘Other Executives’ represents employees in the category of fi ve highest paid Group or Company executives that are not key management personnel.

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3. Remuneration Report continued

b. Remuneration Policy – Audited

Directors and Executives

Remuneration Philosophy

The Remuneration Policy of Lend Lease is determined by the Board on the recommendation of the Personnel and Organisation Committee. The Board recognises that Lend Lease operates in an international marketplace and as such aims to recruit, motivate and retain highly skilled employees who can operate in this environment. The policy of Lend Lease is to reward senior executives with market competitive remuneration and benefi ts, taking account of both Company and individual performance. In assessing these benchmarks, Lend Lease takes account of expert advice and the relevant external comparators in the real estate and related sectors and of companies of similar size, complexity and international scope. The remuneration of the Non Executive Directors is not linked to the performance of the Group in order to maintain their independence and impartiality.

Remuneration paid by Lend Lease is designed to be appropriate and competitive in each of its business locations, having regard to local practice on issues such as incentives, pensions, superannuation and other benefi ts. Lend Lease also recognises the need to take account of differing costs of living, especially in relation to expatriates, and this is refl ected in remuneration for expatriate executives.

In determining the remuneration structure outlined in this Report, the remuneration philosophy of the Board is focused on ensuring:

– The structure is the best fi t with the needs of the organisation and its strategy;

– Remuneration levels are commensurate with appropriate external comparators;

– Alignment of remuneration incentives with the interests of shareholders, demonstrating a clear link between reward and performance;

– Alignment of short and long term performance targets to ensure consistent behaviour;

– A mix of cash and share based remuneration to align the interests of executives with those of shareholders.

The approach of Lend Lease is to provide a balance of fi xed and performance based remuneration with an emphasis on increasing ‘at risk’ remuneration. This approach is refl ected in the structure of the Short Term Incentive Plan in particular for the June 2007 fi nancial year.

The Board sets salaries at competitive levels for the relevant role, targeted around the median against comparator companies in Australia and overseas, and takes into account market conditions and personal performance over the year under review.

Market data is used to benchmark salary levels on a global scale, adjusted for local conditions. The Personnel and Organisation Committee benchmarks information available in published job matched surveys of similar companies and, if appropriate, also commissions surveys to supplement the published information. To ensure proper process is followed for all senior executives, all proposed packages for direct reports of Executive Offi ce members and other key managers require prior approval from the Chief Executive Offi cer. In addition, all internal appointments with a base salary in excess of A$300,000 in Australia, US$220,000 in the USA and £120,000 in the UK, or for whom a base salary increase of 10% or above is proposed, require prior approval from the Chief Executive Offi cer.

Elements of RemunerationThe remuneration framework consists of three principal elements:

– Fixed remuneration (base salary, superannuation and other benefi ts);

– Short Term Incentive (annual cash and an equity related deferral) – ‘at risk’;

– Long Term Incentive (cash or share based performance rights) – ‘at risk’.

Fixed RemunerationThe salaries of the Chief Executive Offi cer, the Global Chief Operating Offi cer and the Chief Executive Offi cers of the core businesses and corporate functional heads are set by the Personnel and Organisation Committee subject to approval by the Board. Salary changes usually take effect from September of each year except in the case of a new appointment. In the case of the Executive Offi ce members and their direct reports, the Committee is assisted in this review by the Chief Executive Offi cer.

The other elements of fi xed remuneration include those typically enjoyed in the geography where the key person or executive is employed. These may include car, medical cover, employee share plan subscriptions, superannuation and pension contributions, life and/or disability cover and, in the case of international assignees, housing, schooling and tax return preparation. The value of these other benefi ts provided to key personnel is set out in Section 3c. of this Report. Executives are not automatically entitled to all of these benefi ts.

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Short Term Incentives (STIs)The STI plan is an annual bonus plan which complements the overall Remuneration Policy of Lend Lease by:

– Rewarding individuals on meeting or exceeding pre-set key performance criteria;

– Establishing key performance criteria to contribute to overall shareholder value.

Under the STI arrangement, executives receive benefi ts dependent on the achievement of both Lend Lease fi nancial targets and individual personal targets. The total value of the potential benefi t (target opportunity) varies by executive, but is generally linked to salary and/or related benefi ts.

Arrangements for the June 2007 Financial YearThe following table sets out the criteria required to be achieved for the current year STI.

Financial Element (75%) Personal Performance Element (25%)

– Represents 75% of target opportunity.

– Measured against the current fi nancial year operating profi t after tax, excluding certain non recurring items (A$413.7 million). This is measured either entirely at corporation level or a mix of corporation (40%) and business unit (60%) level depending on the role.

– Upside opportunity can be increased to +25% of target opportunity for +10% of target performance achievement.


– Measured against targets specifi c to each executive’s business unit and function.

Depending on the level of performance achieved, the benefi t is delivered to executives as follows:

STI Cash Element

– Proportion of STI received as cash is determined specifi cally for each executive (see table below);

– Cash payment in September following year end.

STI Deferred Element

– Lend Lease shares or equivalent share value in cash based on share price at the date of determination of the bonuses;

– The shares (or share value if shares are not practicable) are then held in trust on behalf of the executive for the deferral period;

– For executives to receive the full deferral they must be employed by the Group at the date of vesting of the deferral element. The usual deferral period will be one year from the date of the grant.1

1 This period may be shortened if an executive is a ‘good leaver’, that is, an executive who leaves employment by reason of death, total and permanent disability, redundancy or other reason as outlined by the Personnel and Organisation Committee.

The split of the cash and the deferred elements for Executive Directors and executives for the June 2007 fi nancial year is as follows:

June 2007 STI

Cash Element – Maximum

Opportunity %

June 2007 STI

Deferred Element – Maximum

Opportunity %

Calculated Based On

G Clarke 119 59 Base salary

R Taylor 83 59 Total package value

Other key personnel and executives

30–107 18–36 Australia: Total package valueUK and USA: Base salary

Total package value equates to base salary and other benefi ts plus superannuation.

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b. Remuneration Policy – Audited continued

Directors and Executives continued

Elements of Remuneration continued

Short Term Incentives (STIs) continuedFuture ArrangementsFor the forthcoming year, the Personnel and Organisation Committee has further aligned the criteria for the STI to the performance of the executive. The changes to the 2007 STI arrangements are:

– Financial element – for business unit heads, the fi nancial element is split between the operating profi t after tax (adjusted for signifi cant one-off, non recurring items) of the executive’s business unit (two-thirds of fi nancial element) and other value drivers for each executive’s business unit (one-third of fi nancial element);

– Qualitative bonus qualifi ers – for any part of the bonus to be paid, each executive must demonstrate achievement of either the corporate or business unit specifi c annual plan relating to both Incident and Injury Free and Sustainability.

Long Term Incentives (LTIs)The current LTIs of Lend Lease were introduced and approved by the Board in 1999 and updated and extended for awards from 2001 onwards. The objectives of the LTIs are essentially twofold:

– Aligning executives with the long term interests of Lend Lease and its shareholders;

– Attracting and retaining executives of high calibre by providing competitive rewards that relate to the performance of both the individual executive and the Lend Lease share price.

LTI grants are normally made in July each year and are based on competitive remuneration practice. LTIs are settled in cash or Lend Lease shares, with settlement occurring upon vesting if performance hurdles are met. Grants depend on personal contribution and potential and are designed to retain and motivate high performing key executives. The LTIs are in the form of an Australian dollar fi gure ‘grant’, which is notionally ‘invested’ in performance shares (PS) over time to deliver value depending on:

– Whether the executive remains with the Group – if the executive resigns before vesting, the grant will lapse;

– The performance of the Group.

The Personnel and Organisation Committee approved one change to the rules of the LTIs for the 2005 awards onwards. The rules now allow that, in the event of a change in control of Lend Lease, all awards will vest upon change in control, to the extent that performance conditions have been met. Senior executives would then be entitled to a pro rata settlement, with the Board having discretion to allow the entitlement to exceed this pro rata amount.

Arrangements for LTIs Granted in the Financial Years 2005 and 2006For awards granted on 1 July 2004 and 1 July 2005, the performance hurdles are based on the Total Shareholder Return (TSR) against a basket of international comparator companies. Under these awards, the performance hurdle required TSR to achieve at least median against several comparator companies of Lend Lease. The comparator companies for these awards were: Amec, Atkins WS, Balfour Beatty, British Land, Centex, Hochtief, Jacobs Engineering, Jarvis, Jones Lang LaSalle, Land Securities, Lennar, Leighton Holdings, Liberty International, Mowlem, Skanska, Taylor Woodrow, United Group and Westfi eld Group.

A full list of the specifi c criteria that apply to LTIs granted is detailed in Section 3d. of this Report.

There is no retesting permitted under the LTI.

Arrangements for the June 2007 Financial Year – Additional Performance HurdleFor the June 2007 fi nancial year awards, the Personnel and Organisation Committee set new performance hurdles to align interests between the participant and shareholders and for consistency with the new STI structure.

For awards granted in 2006 onwards, the performance hurdle is based on two equal measures: long term profi tability as measured by Earnings Per Share (EPS) and external TSR compared to the TSR of the individual ASX100 listed companies as at the commencement of the performance period. The change in the TSR comparator group better refl ects those companies against which Lend Lease competes for capital.

The performance measures are:

– TSR measured against the ASX100 companies (with 50% vesting at median performance, rising proportionately to 100% on reaching top quartile performance);

– EPS on operating profi t after tax reported in the fi nancial statements adjusted for treasury shares (with 100% vesting if a minimum compound annual growth rate of 10% is achieved over the three year performance period).

Each of the two performance hurdles is measured and can vest independently. The executive must ordinarily remain with the Company until the vesting date for the award to vest.

For the 2006 award, it is intended that these awards will vest in Company shares rather than cash, other than for executives specifi cally identifi ed or in circumstances where share settlement is not practicable.

There continues to be no retesting under the LTI.For

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Details of the terms of the awards on issue during the 2007 fi nancial year are summarised below.

Plan LTI – June 2004 LTI – June 2005 LTI – June 2006

Grant date 18 August 2004 17 August 2005 16 August 2006

Service period1 1 July 2004 – 30 June 2007 (3 years)

1 July 2005 – 30 June 2008 (3 years)

1 July 2006 – 30 June 2009 (3 years)

Performance condition(s):

1. TSR of Lend Lease against the TSR of several comparator companies of Lend Lease.

Performance measured over the three year performance period.

1. TSR of Lend Lease against the TSR of the individual ASX100 listed companies (comprised as at the beginning of the performance period) (50% award).

Performance assessed over the three year performance period.

Vesting Schedule – Rank 1 to 5 inclusive – 100% vesting

– Rank 6 to 10 inclusive – progressive decrease in vesting from 85% to 25%

– Rank 11 to 19 inclusive – 0% vesting

Vesting Schedule – Upper quartile or better –

100% vesting

– Median upper quartile – straight line increase from 50% to 100% vesting

– Median – 50% vesting

– Below median – 0% vesting

2. EPS growth of Lend Lease over performance period (50% award).

Vesting Schedule – At least 10% compounded

EPS growth (based on operating profi t after tax) over three years – 100% vesting

– Less than 10% EPS growth – 0% vesting

Each of the two performance conditions may vest independently.

Method of award settlement

Cash Cash or shares Shares, except for pre specifi ed executives

Award status Vested – 55% Not yet vested Not yet vested

1 This period may be shortened if an executive is a ‘good leaver’, that is, an executive who leaves employment by reason of death, total and permanent disability, redundancy or other reason as determined by the Personnel and Organisation Committee.

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AIFRS Previous GAAP

2007 2006 2005 2004 2003

Statutory profi t/(loss) after tax1 A$m 497.5 415.2 210.7 333.5 (714.8)

Operating profi t after tax1 A$m 413.7 354.2 310.42 255.93 230.24

Earnings per share5 cents 120.5 96.1 n/a n/a n/a

Dividends paid and declared A$m 308.5 243.7 227.2 177.4 129.4

Increase/(decrease) in closing share price6 A$ 4.55 1.03 2.68 1.93 (2.19)

1 Statutory profi t/(loss) after tax represents profi t attributable to the equity holders of the parent. Operating profi t after tax excludes unrealised property investment revaluations of A$51.6 million after tax for the June 2007 fi nancial year (A$61.0 million after tax for the June 2006 fi nancial year) and excludes certain non recurring items (June 2007: ATO interest of A$32.2 million after tax).

2 June 2005 is based on operating results excluding gains on exiting the REI businesses (A$11.6 million after tax), cost savings implementation expenses (A$47.7 million after tax), Lend Lease/GPT merger and net separation costs (A$19.4 million after tax) and write-off of GPT and Homemaker management agreements (A$44.2 million after tax).

3 Consistent with June 2005, June 2004 operating results have been restated to also exclude the impact of Group restructuring and merger costs (A$18.5 million after tax). June 2004 was based on operating results excluding the profi t from the sale of IBMGSA (A$79.7 million after tax), impact of exiting the REI businesses (A$2.3 million loss after tax) and capital loss tax benefi ts arising from Australian tax consolidations (A$18.7 million after tax) and including capital loss tax benefi ts (A$13.0 million recouped against the capital gain on sale of IBMGSA).

4 June 2003 excludes the write-down of REI businesses of A$945.0 million after tax.

5 For 2006 LTI awards, one vesting condition is EPS, as defi ned in this fi nancial report (excluding treasury shares) adjusted for unrealised property investment revaluations (unless assets have been sold).

6 For LTI awards, the starting and ending share prices are based on the average daily closing price over the award period (fi ve consecutive trading days for the 2004 LTI and three months for the 2005 and 2006 LTIs). The table above represents the movement in the closing share price on 30 June of each fi nancial year.





Long Term Incentives (LTIs) continuedHedging in Relation to LTI AwardsThe Company prohibits executives from entering into pre vesting hedging arrangements in relation to LTI awards. For awards made in the June 2007 fi nancial year onwards, it is an explicit condition for awards to vest that executives declare that they have not entered into any such arrangement.

Retention Awards When the Board believes an employee is an outstanding performer and the Company and its shareholders will gain from further incentivising him or her to remain with Lend Lease, a retention award may be made. As an incentive to remain with the Company requires a degree of certainty of value delivered to the individual at the end of the

retention period, performance conditions are not generally applied to the ultimate payment of such an award. Details of the current awards for each specifi ed executive are included in LTIs as part of the remuneration details disclosed in this Report.

Superannuation/Pension Plans Pension plan arrangements are in place in most international locations. In the past, executives (and other employees) joined either a defi ned benefi t or a defi ned contribution plan. Entry into all defi ned benefi t plans has now ceased across the Group. All new Executive Directors and executives have the opportunity to join defi ned contribution plans.

Relationship of Remuneration to Company PerformanceIn considering the Group’s performance and benefi ts for shareholder wealth, the Personnel and Organisation Committee, when setting the criteria for STI and LTI awards, has regard to the fi nancial performance of the Group. The performance in respect of these measures for the current fi nancial year and previous four fi nancial years is summarised in the following table.

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Operating profi t after tax is considered in setting the STI targets while dividends, changes in share price and return of capital are included in the TSR calculation, which is one of the performance hurdles assessed for the LTI.

The Personnel and Organisation Committee considers that the aforementioned external performance-linked remuneration structure is appropriate because it:

– Represents shareholders’ ‘bottom line’ and provides an objective measure of value created for shareholders;

– Is independent of accounting policies and accepted by institutional investors;

– Is simple to benchmark externally.


Directors’ fees have been set at A$140,000 per annum with a fee of A$15,000 for service on each Board Committee other than the Nomination Committee. Fee levels are in line with international benchmarks for a company the size of Lend Lease. Current Chairman’s fees are A$500,000, the Chairman of the Risk Management and Audit Committee receives an additional A$35,000 per annum and the Chairmen of each of the Nomination, Personnel and Organisation and Sustainability Committees receive an additional A$25,000.

In addition, Non Executive Directors are compensated for time spent travelling to overseas Board and Board Committee meetings. This additional time is compensated as follows:

– Travel less than four hours Nil;

– Travel between four and 12 hours A$2,000 each way;

– Travel over 12 hours A$5,000 each way.

To allow Directors to receive some of their annual remuneration in shares rather than cash, and thus align their interests with those of shareholders, a Non Executive Directors’ Share Ownership Plan was approved at the 2000 Annual General Meeting and subsequently renewed at the 2003 Annual General Meeting. This plan allows Directors to acquire Lend Lease shares by forgoing an amount of Directors’ fees equivalent to the value of the shares acquired. Subscriptions are made at the same price, at the same time and otherwise on the same terms as the Share Purchase Plan available to Australian and New Zealand registered shareholders and only while the Share Purchase Plan is operative. A Director is restricted from dealing with these shares until retirement. However, a Director may deal with shares at an earlier time to the extent necessary to meet an earlier tax liability in respect of the shares. This Plan has not been operative during the suspension of the Share Purchase Plan (since September 2003).

Retirement PlanThe Retirement Plan is designed to provide retirement benefi ts for Directors based on fees for Board service. Benefi ts are accrued in Lend Lease shares and will fl uctuate in line with the value of Lend Lease shares. Under the plan, the Company will issue to, or acquire for, or for the benefi t of, each Non Executive Director a number of Lend Lease shares equal in value to 0.2 times the Directors’ fees (being fees for attending and chairing Board and Board Committee meetings), but not additional fees.

Allocations are made in arrears on 1 January each year. For this purpose, the value of the shares on acquisition will be the weighted average price of Lend Lease shares traded on the Australian Securities Exchange during the fi ve business days prior to 1 January each year. The shares will be accessible only on retirement. Directors will be exposed to share price risk until this time. However, shares may be sold at an earlier time to the extent necessary to meet an earlier tax liability in respect of the shares.

Retirement Plan Changeover ArrangementsA defi ned benefi t Retirement Benefi t Plan (‘previous plan’) was approved by shareholders at the 1990 Annual General Meeting. Changeover arrangements which were approved by shareholders at the 2000 Annual General Meeting have been effected to transition from the previous plan to the current plan for Directors who were on the Board on 31 December 2000. Under these arrangements, retiring Non Executive Directors will receive a multiple applied to the average of their annual emoluments (i.e. Directors’ fees and amounts for additional services) over the previous three years. The multiple is 0.6 for each of the fi rst fi ve years of service as a Non Executive Director and 0.2 for each year over fi ve years to 15 years. This multiple for each Director was frozen at the multiple that would have applied if the Director had retired on 31 December 2000.

The following table sets out the accrued retirement benefi ts under the previous plan as at 30 June 2007 (based on the multiple being frozen on 31 December 2000). The Board has resolved to cap the entitlements under the previous plan at the lower of the accrued retirement benefi t as at 30 June 2003 (with interest payable at the 60 day bank bill rate) and the retirement benefi t calculated at the actual date of retirement.

Non Executive DirectorsYears of Service

at 31 December 2000

Accrued Retirement Benefi t

at 30 June 2007 A$


at 30 June 2006 A$

G Edington 1 111,249 92,467

P Goldmark 1 123,452 104,832

Non Executive Directors appointed since 1 January 2001 are not eligible to participate in the previous plan.

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c. Remuneration Details – AuditedDetails of the total remuneration of the Directors of Lend Lease Corporation Limited are set out on the following tables. In accordance with the requirements of AASB 124, the remuneration disclosures in the remuneration tables are calculated on an accruals basis and only include remuneration relating to the portion of the relevant periods that each individual was a Director.

2007 – Current Year Short Term

Directors

Salary and Fees

A$000s

STI

Non Monetary2

A$000s

Incentive Bonus1

A$000s

Other Bonuses

A$000s

Executive DirectorsG Clarke 1,798 1,882 514

R Taylor 976 879 57

Total Executive Directors 2,774 2,761 – 571

Non Executive DirectorsD Crawford 547

P Colebatch 219

G Edington 218

P Goldmark 232

J Hill 217

D Ryan 228

Total Non Executive Directors 1,661 – – –

Total Directors 4,435 2,761 – 571

1 The cash element of all STI bonuses has been accrued and paid and is based on the performance criteria as outlined in Section 3b. of this Report.

2 ‘Non Monetary’ includes relocation benefi ts (such as housing, home leave travel and tax return advice) and motor vehicle costs.

2006 – Comparative Year Short Term

Salary and Fees

A$000s

STI

Non Monetary3

A$000sDirectors

Incentive Bonus1

A$000s

Other Bonuses2

A$000s

Executive DirectorsG Clarke 1,783 1,967 2,211 450

R Taylor 841 713 793 30

A Chamberlain8 252

Total Executive Directors 2,876 2,680 3,004 480


P Colebatch9 98

G Edington 161

P Goldmark 180

J Hill10 35

R Longes11 48

D Ryan 169


Total Directors 4,036 2,680 3,004 480


2 ‘Other Bonuses’ represent additional payments payable to employees who participated in the 2003 LTI grant and were employed on 30 June 2006 (the original vesting date of the grant). The 2003 LTI award did not vest and lapsed in accordance with the rules of the LTI program. The Lend Lease Corporation Board has awarded the additional payment in recognition of the performance achieved. Refer to Section 3b. of this Report.


4 Accrued value of LTI benefi t for the year as determined by actuarial analysis. The 2004 and 2005 LTIs are expected to be settled in cash. Negative amounts represent an accrual reversal for the 2003 LTI which did not vest. Refer to Section 3d. of this Report.

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Post Employment Share Based PaymentOther

Long Term

Super-annuation

A$000s

Life Insurance

A$000s

End of Service A$000s

LTIs3

Cash Settled A$000s

Equity Settled A$000s A$000s

Total A$000s

Proportion of RemunerationPerformance

Related %

631 92 7,363 12,280 58.7

202 4 1,082 2,2924 5,492 35.7

833 96 – 8,445 2,292 – 17,772

13 100 660

13 34 266

13 34 265

13 35 280

13 33 263

13 36 277

78 – – – 2725 – 2,011

911 96 – 8,445 2,564 – 19,783

3 Accrued value of LTI benefi t for the year as determined by actuarial analysis. The 2004 and 2005 LTIs are expected to be settled in cash and the 2006 LTIs in shares, except for pre specifi ed executives.

4 Equity remuneration is in respect of Mr Taylor’s retention incentive and participation in the Employee Share Acquisition Plan (ESAP).

5 Comprises entitlements under the Non Executive Directors Retirement Benefi t Plan.


Long Term7

Super-annuation

A$000s

Life Insurance

A$000s


LTIs4

Cash Settled A$000s


Total A$000s


Related %

491 41 1,280 8,223 54.8

134 3 (157) 345 378 2,769 48.7

365 11 1,353 540 397 2,918 18.5

990 55 1,353 1,663 34 775 13,910

12 85 566

9 14 121

12 24 197

12 28 220

3 4 42

4 8 60

12 28 209

64 – – – 1916 – 1,415

1,054 55 1,353 1,663 225 775 15,325

5 Equity remuneration is in respect of Mr Taylor’s participation in the ESAP.

6 Comprises entitlements under the Non Executive Directors’ Retirement Benefi t Plan.

7 ‘Other Long Term’ represents cash retentions. Amounts due are expensed over the period of the retention.

8 Mr Chamberlain resigned as an Executive Director on 30 September 2005.

9 Mr Colebatch was appointed as a Non Executive Director on 1 December 2005.

10 Ms Hill was appointed as a Non Executive Director on 8 May 2006.

11 Mr Longes resigned as Deputy Chairman and a Non Executive Director on 17 November 2005.

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c. Remuneration Details – Audited continuedDetails of the total remuneration of the executives of the Lend Lease Group are set out below and on the following page. In accordance with the requirements of AASB 124, the remuneration disclosures in the remuneration tables are calculated on an accruals basis and only include remuneration relating to the portion of the relevant periods that each individual was a key management person. As set out in Section 3a. of this Report, there has been a change in the assessment of key management personnel in the current year.

2007 – Current YearFive Most Highly

Remunerated Short Term

Executives Group Company

Salary and Fees

A$000s

STI

Non Monetary2

A$000s

Incentive Bonus1

A$000s

Other Bonuses

A$000s

S McCann6 ✓ ✓ 855 1,026 1

FormerR Johnston7 575 424 773

R Burrows8 ✓ ✓ 653 730 206

Total executives 2,083 2,180 – 980

Other Executives in the Category of Five Highest PaidR Butler9 ✓ 1,742 362 8

N Hugill ✓ 1,725 484 233

R Lourey10 ✓ 539 519 29

P Marchetto ✓ 697 498 35

N Martin ✓ 349 167 202

B Soller ✓ 526 336 333

Total other executives 5,578 2,366 – 840




4 ‘Hybrids’ represents retention incentives that can be settled in cash or shares at the option of the executive.

5 ‘Other Long Term’ primarily represents cash retentions and accrual of statutory employee entitlements. Amounts due are expensed over the period of the retention.


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Long Term5

Super-annuation

A$000s

Life Insurance

A$000s


LTIs3

Cash Settled A$000s

Equity Settled A$000s

Hybrids4 A$000s A$000s

Total A$000s

Proportion of Remuneration Performance

Related %

79 2 758 15 2,736 65.2

286 3 32 2,093 21.8

328 2 2,231 475 16 608 5,249 23.0

693 7 2,231 1,265 31 – 608 10,078

154 11 285 294 2,856 22.6

180 11 388 294 3,315 26.3

13 558 10 1,668 64.6

9 5 308 860 2,412 33.4

71 229 1,018 38.9

13 3 345 129 1,685 40.4

440 30 – 2,113 598 860 129 12,954

6 Mr McCann commenced as Chief Executive Offi cer Investment Management on 5 September 2005 and was appointed Group Finance Director on 21 March 2007.

7 Mr Johnston resigned on 31 July 2007.

8 Mr Burrows relinquished his position of Chief Financial Offi cer on 21 March 2007. His post employment benefi t refl ects payments related to the notice period and discretionary payments to ensure transitional arrangements suitable to Lend Lease.

9 Mr Butler commenced as Chief Executive Offi cer Lend Lease Retail and Communities UK in March 2007.

10 Mr Lourey resigned as Group Head of Human Resources on 31 July 2007.

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c. Remuneration Details – Audited continued

2006 – Comparative YearFive Most Highly



Salary and Fees

A$000s

STI

Non Monetary3

A$000s

Incentive Bonus1

A$000s

Other Bonuses2

A$000s

S McCann7 ✓ 638 850 3

R Johnston ✓ 456 595 380 668

R Burrows ✓ 596 482 155 8

M Bellaman8 342 173 134 445

P Crewes ✓ ✓ 387 339 496

J Daniel 252 76 56

R Fehring 390 222 193 4

N Hugill9 ✓ 645 368 1,006 17

P Koziol10 117 3

R Lourey 475 250 15

P Marchetto ✓ 692 523 522 445

J Spanswick 519 140 357 42

Total executives 5,509 4,018 2,747 2,202

Other Executives in the Category of Five Highest PaidR Butler11 ✓ 653 363 1,006 1

C Cree12 ✓ 339 114 43

B Soller ✓ 503 283 351 258

Total other executives 1,495 760 1,357 302


2 ‘Other Bonuses’ represents additional payments payable to employees who participated in the 2003 LTI grant and were employed on 30 June 2006 (the original vesting date of the grant). The 2003 LTI award did not vest and lapsed in accordance with the rules of the LTI program. The Lend Lease Corporation Board has awarded the additional payment in recognition of the performance achieved. Refer to Section 3b. of this Report.


4 Accrued value of LTI benefi t for the year as determined by actuarial analysis. The 2004 and 2005 LTIs are expected to be settled in cash.


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Long Term6

Super-annuation

A$000s

Life Insurance

A$000s


LTIs4

Cash Settled A$000s



Total A$000s


Related %

57 1 172 6 1,727 59.2

214 2 (64) 2,251 40.5

286 1 22 24 1,574 41.9

6 2 (58) 10 1,054 23.6

66 5 1,658 (258) 16 2,709 3.0

46 30 460 23.0

35 2 (18) 17 845 47.0

126 5 77 2,244 19.8

(38) 82 (46.3)

12 95 6 853 40.4

9 5 (167) 486 2,515 34.9

(203) 855 34.4

857 23 1,658 (410) 69 486 10 17,169

125 4 48 2,200 18.7

144 3 318 (51) 910 6.9

12 4 (150) 126 1,387 34.9

281 11 318 (153) – – 126 4,497

6 ‘Other Long Term’ primarily represents cash retentions. Amounts due are expensed over the period of the retention.

7 Mr McCann commenced as Chief Executive Offi cer Investment Management on 5 September 2005.

8 Mr Bellaman commenced as Chief Executive Offi cer Lend Lease Communities and Retail Americas on 1 October 2005.

9 Mr Hugill commenced as Chief Executive Offi cer Lend Lease Communities Europe, Middle East and Africa on 15 August 2005.

10 Mr Koziol transferred from the role of Chief Executive Offi cer Lend Lease Communities on 1 October 2005.

11 Mr Butler commenced as Development Director Lend Lease Crosby Group on 15 August 2005.

12 Ms Cree resigned as Group Head of Risk on 15 April 2006.

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d. Long Term Incentives and Retentions – AuditedThe following criteria apply to all parts of Section 3d. of this Report.

Criterion 1:The ability to achieve the LTI is dependent upon the executive remaining with Lend Lease. If the executive resigns before vesting, the grant will lapse.

Criterion 2:The award is dependent upon service to vesting date; however, an early redemption date due to cessation of service may result in a pro rata payout.

Criterion 3:Progressive percentage monthly vesting of award over the respective award service life. (Refer to Section 3e. of this Report for details of Mr Clarke’s retention.)

Criterion 4:Forfeiture on resignation. Pro rata on other service cessation.

DirectorsGrant Date

Vesting Date1

Granted Number

Award Value at Grant Date2

A$

Award Value at June 2007

A$

Current Award Expensed

20073

A$

G Clarke Dec 2002 Dec 2007 279,728 2,797,281 5,091,050 2,038,611

Dec 2002 Jun 2007 210,604 2,112,676 2,167,115 2,093,326

Jul 2004 Jun 2007 212,939 2,199,340 2,191,142 1,421,722

Jul 2005 Jun 2008 194,845 2,434,783 1,736,069 828,739

Jul 2006 Jun 2009 198,620 2,784,652 2,941,562 980,521

R Taylor Jul 2004 Jun 2007 63,959 660,601 658,138 427,033

Jul 2005 Jun 2008 60,819 759,994 541,897 258,685

Jul 2006 Jun 2009 80,243 1,125,007 1,188,399 396,133

Oct 2006 Sep 2007 84,407 1,374,992 1,564,906 1,115,636

Oct 2006 Sep 2008 84,407 1,374,992 1,564,906 532,318

Oct 2006 Sep 2009 84,408 1,375,008 1,564,924 349,884

Oct 2006 Sep 2010 84,408 1,375,008 1,564,924 260,578

Total Directors 22,775,032 10,703,186

1 Performance shares are paid out at the share price at vesting date if cash settled.

2 Award value represents the number of shares granted at the share price on grant date.

3 Current award expensed represents the 2007 year accrued value of the LTI or retentions determined by actuarial analysis. The aggregate for each key person’s grant is shown in Section 3c. of this Report under ‘LTIs Cash Settled’ or ‘Equity Settled’.

4 The percentage forfeited during the year represents a reduction in the number of performance shares available to vest due to the highest level performance criteria not being achieved.

5 The minimum value of grants yet to vest is A$nil as the performance and service criteria may not be met and consequently the grant may not vest.

6 The maximum value of grants yet to vest is not determinable as it is dependent on the market price of shares of the Company on the Australian Securities Exchange at the date the grant vests.

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Criterion 5:The TSR of Lend Lease is greater than the median TSR of 18 comparator companies (with 25% vesting at median performance rising to 100% on reaching top quartile performance).

Criterion 6:The TSR of Lend Lease measured against the ASX100 companies (with 50% vesting at median performance, rising to 100% on reaching top quartile performance).

Criterion 7:The EPS of Lend Lease as reported in the fi nancial statements adjusted for treasury shares and unrealised gains or loses (with 100% vesting if a minimum compound annual growth rate of 10% is achieved over the three year performance period).

% Vested in the Year

% Forfeited in the Year4

Value Yet to Vest Minimum5

Value Yet to Vest Maximum6

Service Criteria

Performance Criteria

PS/ Retention

20.0 0.0 nil n/a Criterion 3 none Retention

55.0 45.0 nil n/a Criterion 2 Criterion 5 PS



0.0 0.0 nil n/a Criterion 4 Criteria 6,7 PS








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d. Long Term Incentives and Retentions – Audited continued

ExecutivesGrant Date

Vesting Date1

Granted Number


A$


A$


20073

A$

S McCann Jul 2005 Jun 2008 102,033 1,275,004 909,114 433,979

Jul 2006 Jun 2009 65,621 920,006 971,847 323,949

FormerR Johnston Jul 2004 Jun 2007 16,266 168,003 167,377 108,603

Jul 2005 Jun 2008 45,134 563,994 402,144 (76,127)

Jul 2006 Jun 2009 54,208 759,996 802,820

R Burrows Jul 2004 Jun 2007 12,766 131,854 131,362 85,234

Jul 2005 Jun 2008 43,278 540,802 385,607 184,075

Jul 2006 Jun 2009 41,655 584,003 616,911 205,637

Total executives 4,387,182 1,265,350



3 Current award expensed represents the 2007 year accrued value of the LTI or retention, determined by actuarial analysis. The aggregate for each key person or other executive is shown in Section 3c. of this Report under ‘LTIs Cash Settled’.

4 The percentage forfeited during the year represents a reduction in the number of performance shares available to vest due to the highest level performance criteria not being achieved or service conditions not being met.



Others in the Category of Five Highest Paid

Grant Date

Vesting Date1

Granted Number


A$


A$


20073

A$

R Butler Jul 2005 Jun 2008 28,238 352,862 251,601 120,107

Jul 2006 Jun 2009 33,368 467,819 494,180 164,727

N Hugill Jul 2005 Jun 2008 45,810 572,442 408,167 194,845

Jul 2006 Jun 2009 39,062 547,649 578,508 192,836

R Lourey Jul 2004 Jun 2007 38,728 400,002 398,511 258,584

Jul 2005 Jun 2008 32,010 399,997 285,209 136,150

Jul 2006 Jun 2009 33,096 464,006 490,152 163,384

P Marchetto Jul 2004 Jun 2007 46,200 477,177 475,398 308,462

Jul 2005 Jul 2008 110,664 1,453,834 2,051,711 859,938

N Martin Jul 2004 Jun 2007 15,401 159,069 158,476 102,827

Jul 2005 Jun 2008 12,205 152,514 108,747 51,910

Jul 2006 Jun 2009 15,157 212,501 224,475 74,825

B Soller Jul 2004 Jun 2007 21,499 222,052 221,225 143,542

Jul 2005 Jun 2008 22,608 282,510 201,437 96,160

Jul 2006 Jun 2009 21,398 300,000 316,904 105,635

Total other executives 6,664,701 2,973,932



3 Current award expensed represents the 2007 year accrued value of the LTI or retention, determined by actuarial analysis. The aggregate for each key person or other executive is shown in Section 3c. of this Report under ‘LTIs Cash Settled’, ‘Equity Settled’ and ‘Hybrids’.




7 Retention incentives that can be settled in cash or shares at the option of the executive.For

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Service Criteria


PS/ Retention













Service Criteria


PS/ Retention









0.0 0.0 nil n/a Criterion 2 none Retention7







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e. Service Agreements – AuditedExecutive Directors and Executives

Remuneration and other terms of employment for the key management personnel and other executives in the category of fi ve highest paid are formalised in service agreements. All of the employment contracts contain the conditions below:

Length of contract – No fi xed term.

Remuneration review period

– Annually by the Personnel and Organisation Committee.

Benefi ts – Australian resident executives are entitled to participate in the Lend Lease Employee Share Acquisition Plan;

– Other benefi ts vary; however typically include health insurance, life insurance, car allowances or motor vehicle leases and benefi ts provided by the Lend Lease Foundation;

– Executives who are relocated receive relocation packages. Benefi ts provided vary but typically include accommodation, transfer allowances, visas, shipping costs, school fees, home leave travel and tax advisory services.

STI participation – Executives are eligible for an award of STI remuneration. Refer to Section 3b. of this Report for further details and conditions.

LTI participation – Executives are eligible for an award of LTI remuneration. Refer to Section 3b. of this Report for further details and conditions.

Non compete and non solicitation clauses

– Non compete and non solicitation terms vary in each individual’s employment contract.

Termination of employment – Unless otherwise stated below, termination payments include base salary for the remainder of the notice period not served (up to 12 months), pro rata STI entitlements and LTI entitlements in accordance with the LTI program rules;

– All contracts with executives may be terminated early by either party;

– Immediate termination for misconduct or a serious breach of any of the terms of employment.

Other major provisions of the agreements relating to remuneration are set out below.

G Clarke– Term of agreement: No fi xed term, however

under the Lend Lease Corporation Constitution Mr Clarke was appointed as Managing Director for a term of fi ve years effective 16 November 2006. Furthermore, his international assignment was extended to 30 September 2009 on the existing terms with the exception of the extension of home leave trips each term for children attending UK universities. If still employed by the Company as at 1 July 2009, Mr Clarke’s expatriate arrangements will cease and he will be subject to local terms and conditions, including the following:

– Tax return preparation;

– Home leave trips under existing terms;

– Storage and insurance of items in the UK;

– Existing pension and life cover provisions.

– Notice period: 12 months.

– Termination payments provided for under the contract: Base salary for the remainder of any notice period not served, cash value of pro rata benefi ts, pro rata STI entitlements (based on 60% achievement of objectives), LTI entitlements in accordance with the LTI program rules and the value of the retention award.

– Retention award:

– Award date: 9 December 2002.

– Vest date: 9 December 2007.

– Grant number and value: 279,728 Lend Lease shares, valued at A$2,797,281 at grant date. The end payment is referable to the market value of 279,728 shares at vest date. Refer to Section 3d. of this Report for further details.

– Vesting conditions: Mr Clarke must remain in employment with Lend Lease until 9 December 2007. Payment is due if the Company terminates his employment without cause prior to that date.

– Forfeiture: The retention award is forfeited if Mr Clarke resigns prior to 9 December 2007, or if Lend Lease terminates Mr Clarke’s employment for cause.

– Early vesting conditions: A pro rata amount will be payable if the Company determines that Mr Clarke’s employment should be terminated for poor performance.

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– Long term incentive:


– Vest date: 30 June 2007.

– Grant number and value: 210,604 Lend Lease shares, valued at A$2,112,676 at award date. The end payment is referable to the value of the award at vest date, A$10.29, which takes into account that 55% of the award vested.

– Vesting conditions: The TSR of Lend Lease must be greater than the median TSR of 18 comparator companies (with 25% vesting at median performance, rising to 100% on reaching top quartile performance). Mr Clarke was also required to remain in employment until the vest date.

– Forfeiture: 45% of the award was forfeited as Lend Lease did not achieve top quartile TSR.

– Non compete period post termination: Six months.

– Non solicitation period post termination: 12 months.

– Additional benefi ts: Golf club membership (which is transferable within the Group if Mr Clarke resigns).

R Taylor– Retention award:

– Award date: 3 October 2006.

– Vest date: Four equal tranches on each of:

– 1 September 2007;



– 1 September 2010.

– Grant number and value: 337,630 Lend Lease shares, valued at A$5,500,000 at award date. Refer to Section 3d. of this Report for further details.

– Vesting conditions: Mr Taylor must remain in employment with Lend Lease or the vesting date must fall within a period of notice of termination in order for each tranche to vest.

– Forfeiture: The retention award is forfeited if Mr Taylor resigns and the vesting conditions set out above are not met.


– Non solicitation period post termination: Two years.

– Notice period: Six months (if instigated by the employee) or 18 months (if instigated by the Company).

– Termination on or after 1 September 2010: If Mr Taylor resigns or is terminated by the Company other than for cause on or after 1 September 2010:

– LTI awards will vest as if employment had not been terminated;

– Any deferred component of an STI award not yet vested will vest in accordance with the rules as if employment had not been terminated.

S McCann– Retention award:

– Award date: 22 August 2007.


– Grant number and value: Lend Lease shares to the value of A$2,500,000 at award date, based on the fi ve day weighted average closing share price up to and including the award date.

– Vesting conditions: Mr McCann must remain in employment with Lend Lease to the vesting date. If Mr McCann’s employment is terminated without cause by the Company prior to the vesting date, the award will vest on a pro rata basis.

– Forfeiture: The retention award is forfeited if Mr McCann resigns or is terminated for cause, and the vesting conditions set out above are not met.

– Notice period: Three months (if instigated by the employee) or 12 months (if instigated by the Company).

– Termination payments provided for under the contract: If Lend Lease terminates Mr McCann’s employment, Mr McCann’s most recent LTI award will be extended by 12 months from the date on which the Company provided him with notice of termination.

R Johnston– Notice period: Six months.

– Termination payments provided for under the contract: The Company will relocate Mr Johnston back to Australia consistent with the Group’s policy for international assignments.

N Hugill– Notice period: 12 months.

– Additional benefi ts:

– The cost of annual subscriptions in respect of Mr Hugill’s membership of two relevant professional institutions.

– Non compete period post termination: 12 months.


P Marchetto– Notice period: Six months.

– Termination payments provided for under the contract: If the Company terminates Mr Marchetto’s service agreement without cause, or Mr Marchetto terminates the service agreement for ‘good reason’ (as defi ned by Mr Marchetto’s service agreement), Mr Marchetto is entitled to all accrued obligations as well as a severance payment that is:

– 1.5 times Mr Marchetto’s annual base salary as of the termination date;

– 1.5 times the greater of: (a) the STI paid to Mr Marchetto during his last full year of employment by the Company; or (b) the average of the STI paid to Mr Marchetto during each of the last three full years Mr Marchetto has been paid an STI by the Company;

– A pro rata share of Mr Marchetto’s STI and LTI as calculated on the termination date at the sole discretion of the Company;

– All other benefi ts that have accrued as of the termination date;

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e. Service Agreements – Audited continuedExecutive Directors and Executives continued

P Marchetto continued – Payments are made less applicable taxes,

withholdings and deductions;

– In addition to the severance payment, Mr Marchetto is entitled to a release benefi t equal to six months of base salary as of the termination date if the Company terminates Mr Marchetto’s service agreement without cause. The release benefi t will be reduced by any applicable taxes, withholdings and deductions.

– Loans payable: Mr Marchetto had a loan of US$300,000, payable at call. The loan was forgiven on 1 November 2005. In the event that prior to 31 July 2009 Mr Marchetto resigns from employment for other than ‘good reason’ (as defi ned in Mr Marchetto’s employment contract) or the Company terminates Mr Marchetto’s employment for cause, Mr Marchetto must pay to the Company as liquidated damages an amount equal to the forgiven principal plus interest accruing from 1 November 2005. The principal amount required to be repaid is reduced by US$6,250 each month from August 2005 to July 2009 while Mr Marchetto is employed by the Company.


– Mr Marchetto will be reimbursed up to US$8,500 per annum for membership dues at a club of Mr Marchetto’s choosing that is suitable for business entertaining.



R Butler– Notice period: 12 months.


– The cost of annual subscriptions in respect of Mr Butler’s membership of two relevant professional institutions.



B Soller– Notice period: Six months (if instigated by the

employee) or 12 months (if instigated by the Company).


– Non solicitation period post termination: Six months.


– Relocation benefi ts as part of permanent relocation to Australia;

– Assignment bonus of A$188,225, payable on a pro rata basis to Mr Soller up to 12 October 2007.

R Burrows– Notice period: Not specifi ed in employment

contract. It is expected that the required notice would be in the range of that given to other executives having regard to seniority and length of service.

– Mr Burrows and the Company entered into a Deed of Release following Mr Burrows’ relinquishment of his position on 21 March 2007. His cessation of employment will be no later than 1 November 2007. The terms of this Deed of Release have been refl ected in the remuneration table in Section 3c. of this Report.

N Martin– Notice period: Six months.

– Termination payments provided for under the contract: The Company will relocate Mr Martin back to the UK consistent with the Group’s policy for international assignments.

R Lourey– Notice period: Six months (if instigated by

the employee) or 12 months (if instigated by the Company).


Under the Company’s constitution, at each Annual General Meeting, one-third of the Directors and any other Director who will have been in offi ce for three or more Annual General Meetings since he or she was elected (excluding the Managing Director) must retire from offi ce and may submit themselves for re-election. Newly appointed Directors must seek election at the fi rst meeting of shareholders following their appointment.

It is the Board’s current policy that Non Executive Directors appointed from February 2002 will be limited to a maximum of three terms of three years. This policy may only be varied by the Board in exceptional circumstances.

f. Additional Information – AuditedAdditional information in relation to key management personnel’s equity holdings and transactions, loans and other transactions is contained in Note 7 of the Concise Financial Statements.

4. Other

a. Share OptionsNo share options were issued during the year by the Company or any of its controlled entities, and there are no such options on issue.

b. Indemnifi cation and Insurance of Directors and Offi cers

The Company’s Constitution provides for indemnifi cation in favour of each of the Directors named on pages 1 to 3 of this Report, the Company Secretaries, Mr W Hara and Ms S J Sharpe, and offi cers of the Company or of wholly owned subsidiaries or related entities of the Company (‘Offi cers’) to the extent permitted by the Corporations Act 2001.

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For related entities, the indemnifi cation is provided unless the Directors determine otherwise. For unrelated entities in which Lend Lease has an interest, deeds of indemnity may be entered into between Lend Lease Corporation Limited and the Director or Offi cer. Since the date of the last report, the Company has not entered into any separate deeds of indemnity.

In accordance with the Corporations Act 2001, the Constitution also permits the Company to purchase and maintain insurance or pay or agree to pay a premium for insurance for Offi cers against any liability incurred as an offi cer of the Company or of a related body corporate. This may include a liability for reasonable costs and expenses incurred in defending proceedings, whether civil or criminal, and whatever their outcome. During the year, Lend Lease paid insurance premiums of A$564,323 in respect of its Directors’ and Offi cers’ liability policies. Due to confi dentiality obligations and undertakings of the policy, no further details in respect of the premium or policy can be disclosed.

c. Non Audit ServicesDuring the year KPMG, the Company’s auditor, performed certain other services in addition to its statutory duties.

The Board has considered the non audit services provided during the year by the auditor and, in accordance with written advice provided by

resolution of the Risk Management and Audit Committee, is satisfi ed that the provision of those non audit 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 non audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by the Risk Management and Audit Committee to ensure they do not impact the integrity and objectivity of the auditor;

– The non audit 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 Company, acting as an advocate for the Company or jointly sharing risks and rewards.

A copy of the Lead Auditor’s Independence Declaration as required under Section 307C of the Corporations Act 2001 is included at the end of this Report.

Details of the amounts paid to the auditor of the Company, KPMG, and its related practices for audit and non audit services provided during the year are set out below.

Consolidated

June 2007 A$000s

June 2006 A$000s

Audit and Review of Financial Reports 6,798 5,872

Other Services

KPMG

International assignees tax services 202 1,508

Tax services 456 1,052

Accounting advice 82 417

Other services 260 272

Total other services 1,000 3,249

Total audit and other services 7,798 9,121

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4. Other continued

d. Rounding OffLend Lease Corporation Limited is a company of the kind referred to in the Australian Securities and Investments Commission Class Order 98/100 dated 10 July 1998 and, in accordance with that Class Order, amounts in the fi nancial statements and this Report have been rounded off to the nearest tenth of a million dollars or, where the amount is A$50,000 or less, zero, unless specifi cally stated to be otherwise.

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

D A Crawford G A ClarkeChairman Managing Director

Sydney, 15 August 2007

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

To: The Directors of Lend Lease Corporation Limited

I declare that, to the best of my knowledge and belief, in relation to the audit for the fi nancial year ended 30 June 2007 there have been:

– No contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

– No contraventions of any applicable code of professional conduct in relation to the audit.

KPMG

C HallPartner


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AIFRS1 Previous GAAP1

June 2007 June 2006 June 2005 June 2004 June 2003

Profi tability

Revenue A$m 14,282 12,127 9,435 9,726 10,114

Statutory profi t/(loss) before tax A$m 628 573 350 466 (567)

Operating profi t before tax2 A$m 545 473 393 385 315

Statutory profi t/(loss) after tax A$m 498 415 226 334 (715)

Operating profi t after tax2 A$m 446 354 286 256 230

Operating EBITDA2 A$m 551 527 411 430 474

Earnings per share on statutory profi t cents 124.3 104.0 56.5 80.6 (163.1)

Earnings per share on operating profi t2,3 cents 111.4 88.7 71.6 61.8 52.5

Statutory profi t after tax to shareholders’ equity (ROE) for the period % 15.7 14.7 11.9 9.0 6.5

Dividend per share4 cents 77 61 57 44 30

Dividend payout ratio on operating profi t2,4 % 69.2 68.8 79.5 69.2 56.0

Corporate Strength

Total assets A$m 9,336 8,166 6,925 7,131 7,409

Cash A$m 550 560 570 1,380 867

Borrowings A$m 1,076 846 500 862 885

Current assets A$m 4,514 3,379 2,612 3,455 3,703

Current liabilities A$m 3,869 3,179 3,384 3,328 2,993

Shareholders’ equity A$m 3,243 3,011 2,710 2,836 3,008

Cash fl ows from operations A$m 357 660 (55) 443 191

Net asset backing per share A$ 8.09 7.53 6.80 7.08 6.86

Ratio of current assets to current liabilities times 1.17 1.06 0.77 1.04 1.24

Borrowings to shareholders’ equity % 33.2 28.1 18.4 30.4 29.4

Borrowings to shareholders’ equity plus borrowings % 24.9 21.9 15.6 23.3 22.7

Net debt to shareholders’ equity % 16.2 9.5 (2.6) (18.3) 0.6

Borrowings to total market capitalisation % 14.5 15.1 9.7 20.9 24.2

Shares on issue m 401 400 399 400 439

Number of shareholders no. 49,051 50,179 52,878 63,143 74,878

Number of equivalent full-time employees no. 10,817 9,652 8,791 9,060 9,992

Shareholders’ Returns and Statistics

Proportion of shares on issue to top 20 shareholders % 76.9 76.4 75.6 69.8 61.5

Shareholdings relating to employees5 % 9.5 9.6 10.8 11.9 13.5

Total dividends paid or declared A$m 309 244 227 177 129

Share price as at 30 June as quoted on the Australian Securities Exchange A$ 18.54 13.99 12.96 10.28 8.35

1 June 2007, 2006 and 2005 refl ect results prepared under Australian Equivalents to International Financial Reporting Standards (AIFRS). The years prior to June 2005 represent Lend Lease’s results under previous Generally Accepted Accounting Principles (GAAP).

2 Operating profi t excludes unrealised property investment revaluations (June 2007: A$82.7 million before tax, A$51.6 million after tax; June 2006: A$99.4 million before tax, A$61.0 million after tax).

3 Calculated using the weighted average number of shares on issue including treasury shares.

4 Dividends include interim and fi nal dividends.

5 Shares held through employee benefi t vehicles.

Five Year Profi le

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All currency amounts in the MD&A are expressed in Australian dollars unless otherwise specifi ed.

The following discussion and analysis is based on the Group’s consolidated fi nancial statements for the year ended 30 June 2007 and should be read in conjunction with those fi nancial statements.

Overview

IntroductionThe Group’s lines of business are focused on three geographic regions: Asia Pacifi c, Americas and Europe.

− The Retail business comprises retail property management, asset management and development in Australia, Singapore and the United Kingdom (UK);

− The Communities business is involved in the development of large scale urban regeneration and greenfi eld development projects in Australia, the United States of America (USA) and the UK. This business line includes privatisation services in the USA;

− Investment Management provides real estate investment management services in Asia Pacifi c and the UK. Investment Management includes the Group’s ownership interests in property investments in Asia Pacifi c, the UK and the USA. Ownership interests are held directly or indirectly through investments in Lend Lease managed funds;

− Project Management, Construction and Private Finance Initiatives (PFIs) provides construction, project management and design services across all regions through Bovis Lend Lease and includes the PFI business in Europe.

Results SummaryRevenue EBITDA Profi t/(Loss) After Tax1

June 2007A$m

June 2006A$m

June 2007A$m

June 2006A$m

June 2007A$m

June 2006A$m

Retail and Communities 1,857.0 2,384.9 258.1 245.3 183.4 167.5

Investment Management 171.0 134.8 310.6 174.8 262.8 129.5

Project Management, Construction and PFIs 12,167.9 9,576.6 57.1 187.0 57.6 134.6

Total operating businesses 14,195.9 12,096.3 625.8 607.1 503.8 431.6

Group Services 8.3 8.1 (80.6) (85.3) (60.0) (52.0)

Group Treasury 77.7 22.4 5.9 4.7 5.1 (22.4)

Group Amortisation (3.0) (3.0)

Total corporate 86.0 30.5 (74.7) (80.6) (57.9) (77.4)

Total operating 14,281.9 12,126.8 551.1 526.5 445.9 354.2

Property investments revaluations2 82.7 99.4 51.6 61.0

Total 14,281.9 12,126.8 633.8 625.9 497.5 415.2

1 Profi t after tax is after deducting the amount attributable to minority interests of A$2.7 million (June 2006: A$7.4 million).

2 Represents the unrealised valuation increases on property investments that are consolidated or accounted for using the equity method in the fi nancial statements.

Profi t After TaxThe Group’s statutory profi t after tax increased by 20% to A$497.5 million. The Group recognised revaluation uplifts on its retail investments through the income statement of A$51.6 million after tax (June 2006: A$61.0 million).

The Retail business continued to consolidate its position with the successful opening of the Golden Square Shopping Centre in Warrington, UK and the commencement of construction of the Somerset Central development in Singapore. The Retail business profi t after tax declined as no retail developments were sold in the current year whereas the prior year included a profi t from the sale of the Chapelfi eld retail centre.

The Communities business profi t after tax increased with the higher contributions from Crosby Lend Lease (Crosby) and Actus Lend Lease (Actus). Actus reached fi nancial close on four projects and was named preferred bidder on another three projects in the year. In addition, the US Communities business signed a binding development agreement on the Lowry Range project in Denver, Colorado.

Investment Management launched two new funds in the year. In Australia, the Lend Lease Communities Fund 1 (LLCF1) was launched in July 2006 and the Lend Lease Asian Retail Investment Fund (ARIF) was launched in Singapore in December 2006, with fi nal close for this fund completed in May 2007. In Europe, profi t after tax increased due to the signifi cant profi t distributions received from the Group’s investment in Lend Lease Global Properties, SICAF (Global Fund) and the sale of the Group’s interest in Generali Lend Lease (GLL).

Project Management, Construction and PFIs’ profi t after tax decreased in the year as a result of the A$118.8 million after tax provision reported at December 2006, which was taken against certain UK projects including the Manchester Joint Hospitals project. Bovis Lend Lease increased profi t after tax in both Asia Pacifi c and the Americas.

Concise Management Discussion and Analysis of Financial Condition and Resultsof Operations (Concise MD&A)

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PFIs’ profi t after tax refl ects increased equity returns from investments and the recovery of bid costs. However, profi t after tax decreased as the prior year included profi t arising from the Lend Lease and Bank of Scotland PFI joint venture where the parties equalised their investment in 11 PFI projects.

Corporate costs before tax decreased, however corporate costs after tax increased due to the prior year including the reversal of a tax provision.

Group Treasury profi t after tax increased due to the recognition of interest income following a favourable judgement in the Federal Court on a tax dispute with the Australian Taxation Offi ce (ATO).

Property investment revaluation gains of A$51.6 million after tax were recognised through the income statement. In addition, revaluation gains of A$44.9 million after tax are not included in statutory profi t but are recognised in the Fair Value Revaluation Reserve in the fi nancial statements. The value of Lend Lease’s interest in Bluewater also increased, however as Bluewater is held as inventory, the asset is recorded at historical cost in the fi nancial statements.

Shareholder ReturnsJune 2007 June 2006

Earnings per share (EPS) on operating profi t1 cents 111.4 88.7

EPS on total profi t1 cents 124.3 104.0

Return on equity (ROE) on total profi t2 % 15.7 14.7

1 EPS is calculated using the weighted average shares on issue including treasury shares. Under the Australian Equivalents to International Financial Reporting Standards (AIFRS), shares held in employee benefi t vehicles including employee share plans, which Lend Lease sponsors, are treated as treasury stock and are excluded from the calculation. This would have the effect of increasing the EPS calculations above if applied.

2 ROE is calculated based on total profi t after tax (excluding minority interests) and average equity.

DividendsA fi nal 50% franked dividend of 42 cents per share will be paid on 12 September 2007 (June 2006: 31 cents per share fully franked). On a full year basis, this equates to a total dividend of 77 cents which is a payout ratio of 69.2% of operating profi t after tax.

Credit StrengthJune 2007 June 2006

Net debt1 A$m 526.1 286.5

Net debt to total tangible assets % 6.2 3.9

Net debt to shareholders’ equity plus net debt % 14.0 8.7

Interest coverage2 times 7.9 7.8

Credit rating (Standard & Poor’s/Moody’s) rating BBB-/Baa3 BBB-/Baa3

1 Net debt is borrowings less cash.

2 Calculated as operating EBITDA plus interest revenue divided by gross borrowing costs, including capitalised borrowing costs.

The Group’s gearing remained low throughout the year and interest coverage at 7.9 times is above the Group’s internal targets. The Group continues to maintain an investment-grade credit rating.

Cash FlowJune 2007

A$mJune 2006

A$m

Net cash provided by operating activities 357.2 660.3

Net cash used in investing activities (382.7) (910.1)

Net cash provided by fi nancing activities 57.1 233.8

Effect of exchange rate changes on cash and cash equivalents (41.0) 5.9

Net decrease in cash and cash equivalents (9.4) (10.1)

Operating cash fl ows of A$357.2 million refl ect the strong underlying cash fl ows from the Group’s operating businesses net of continued investment in property developments. The decrease from the prior year is primarily attributable to June 2006 including the proceeds on the sale of the Chapelfi eld retail centre of A$532.0 million.

Investing cash outfl ows of A$382.7 million refl ects the Group’s recycling of capital including co-investments in new investment management funds launched in the year (LLCF1 and ARIF) offset by capital redemptions from the Global Fund. The prior year included the acquisition of Crosby for A$619.3 million.

Net cash provided by fi nancing activities of A$57.1 million includes £300.0 million borrowings raised from the issue of the 6.125% annual coupon guaranteed notes in the UK public bond market in October 2006, offset by the net repayment of £185.0 million in respect of the £350.0 million syndicated bank facility in the UK and dividend payments of A$237.2 million.

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Concise Financial Statements

Income Statement

Year ended 30 June 2007

Consolidated

NoteJune 2007

A$mJune 2006

A$m

Revenue Revenue from the sale of development properties 1,036.3 1,773.4

Revenue from the provision of services 12,948.2 10,129.9

Finance revenue 101.8 33.5

Other revenue 195.6 190.0

Total revenue 2 14,281.9 12,126.8

Other Income 3 173.3 92.7

Expenses Project Management, Construction and Private Finance Initiatives (PFIs) activities

Cost of inventories sold (11,767.8) (9,103.7)

Other expenses (369.8) (323.2)

Retail and Communities activities

Cost of properties sold (1,350.1) (1,831.4)


Investment Management activities (48.5) (31.1)

Corporate and administrative activities expenses (88.8) (94.9)

Finance costs (81.7) (61.8)

Total expenses (14,016.8) (11,833.8)

Share of profi t of associates accounted for using the equity method 141.1 150.5

Share of profi t of joint venture entities accounted for using the equity method 48.5 36.5

Profi t before tax 628.0 572.7

Income tax expense 4 (127.8) (150.1)

Profi t after tax 500.2 422.6

Profi t after tax attributable to:

Members of Lend Lease Corporation Limited 497.5 415.2

Minority interests 2.7 7.4


Basic Earnings Per ShareShares excluding treasury shares (cents) 5b 134.5 112.7

Shares on issue (cents) 5b 124.3 104.0

Diluted Earnings Per Share Shares excluding treasury shares (cents) 5c 134.4 112.7

Shares on issue (cents) 5c 124.2 104.0

The income statement is to be read in conjunction with the concise MD&A on pages 90 to 91 and the notes to the concise fi nancial statements set out on pages 97 to 103.

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Annual Report 2007


Balance Sheet

As at 30 June 2007

Consolidated

June 2007 A$m

June 2006 A$m

Current AssetsCash and cash equivalents 550.1 559.5

Loans and receivables 2,209.7 1,662.6

Inventories 911.2 940.8

Current tax assets 7.1 3.1

Other fi nancial assets 646.5 24.2

Other assets 189.6 188.3

Total current assets 4,514.2 3,378.5

Non Current AssetsLoans and receivables 293.6 193.4

Inventories 1,326.1 1,213.1

Investments accounted for using the equity method 1,139.6 999.8

Investment properties 256.6 287.0

Other fi nancial assets 424.7 723.8

Deferred tax assets 415.9 389.3

Property, plant and equipment 116.9 110.1

Intangible assets 788.1 809.7

Defi ned benefi t plan asset 23.1 21.7


Total non current assets 4,822.0 4,787.8

Total assets 9,336.2 8,166.3

Current LiabilitiesTrade and other payables 3,612.0 2,898.6

Provisions 250.7 277.5

Other fi nancial liabilities 5.6

Other non fi nancial liabilities 0.5 3.0

Total current liabilities 3,868.8 3,179.1

Non Current LiabilitiesTrade and other payables 217.0 209.9

Borrowings and fi nancing arrangements 1,076.2 846.0

Provisions 13.4 26.1

Deferred tax liabilities 504.5 415.9

Other fi nancial liabilities 249.3 211.2

Other non fi nancial liabilities 7.6 92.2

Defi ned benefi t plan liability 156.4 174.6

Total non current liabilities 2,224.4 1,975.9

Total liabilities 6,093.2 5,155.0

Net assets 3,243.0 3,011.3

EquityIssued capital 854.4 834.7

Treasury shares (67.4) (64.5)

Reserves 97.7 149.7

Retained earnings 2,276.8 2,018.2

Total equity attributable to equity holders of the parent 3,161.5 2,938.1


Total equity 3,243.0 3,011.3

The balance sheet is to be read in conjunction with the concise MD&A on pages 90 to 91 and the notes to the concise fi nancial statements set out on pages 97 to 103.

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Statement of Changes in Equity


Consolidated

June 2007 A$m

June 2006 A$m

Issued Capital and Treasury Shares

Issued Capital

Opening balance at beginning of fi nancial year 834.7 834.6

Ordinary share issues 19.7 0.1

Closing balance at end of fi nancial year 854.4 834.7

Treasury SharesOpening balance at beginning of fi nancial year (64.5) (68.1)

Treasury shares acquired (6.7)

Treasury shares vested 3.8 3.6

Closing balance at end of fi nancial year (67.4) (64.5)

Total issued capital and treasury shares 787.0 770.2

ReservesFair Value Revaluation ReserveOpening balance at beginning of fi nancial year 101.7

Adjustment on adoption of Financial Instruments Standards AASB 132 and AASB 139 (net of tax) 113.9

Revaluation gain taken to equity (net of tax) 162.1 30.7

Transfer of fair value revaluation reserve to income statement on asset disposal (net of tax) (133.4) (43.1)

Effect of foreign exchange rate movements (0.2) 0.2


Hedging ReserveOpening balance at beginning of fi nancial year (14.4)

Adjustment on adoption of Financial Instruments Standards AASB 132 and AASB 139 (net of tax) (3.4)

Movements attributable to effective cash fl ow hedges taken to equity (net of tax) (20.8) (10.6)

Transfer of hedge reserve to income statement (1.1)

Effect of foreign exchange rate movements 7.2 (0.4)


Foreign Currency Translation ReserveOpening balance at beginning of fi nancial year 4.4 (13.5)

Movements attributable to translation and hedging of foreign operations (55.3) 17.9

Closing balance at end of fi nancial year (50.9) 4.4

Equity Compensation ReserveOpening balance at beginning of fi nancial year 7.6 6.0

Movements attributable to unallocated treasury shares 4.7 1.6


Other Compensation ReserveOpening balance at beginning of fi nancial year 55.3 67.9

Movements attributable to allocated treasury shares (12.6)


Concise Financial Statementscontinued

The statement of changes in equity is to be read in conjunction with the concise MD&A on pages 90 to 91 and the notes to the concise fi nancial statements set out on pages 97 to 103.

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Annual Report 2007


Consolidated

June 2007 A$m

June 2006 A$m

Capital ReserveOpening balance at beginning of fi nancial year 104.6 104.6


Minority Interest Acquisition ReserveOpening balance at beginning of fi nancial year (109.5) (22.4)

Movements attributable to acquisition1 (20.0) (92.7)

Effect of foreign exchange rate movements 4.8 5.6


Total reserves 97.7 149.7

Retained EarningsOpening balance at beginning of fi nancial year 2,018.2 1,782.5

Profi t attributable to members of Lend Lease Corporation Limited 497.5 415.2

Dividends forgone pursuant to Share Election Plan 6.5 13.6

Dividends paid (263.9) (235.4)

Less: Dividends on treasury shares 20.2 18.6

Gain on utilisation of treasury shares recognised directly in retained earnings 0.8 23.9

Other (2.5) (0.2)

Closing balance at end of fi nancial year 2,276.8 2,018.2

Minority InterestsOpening balance at beginning of fi nancial year 73.2 18.8

Share of movement in profi t for fi nancial year 2.7 7.4

Movements attributable to acquisition 14.9 52.4

Movements attributable to disposal (5.1) (0.5)

Effect of foreign exchange rate/other movements (4.2) (4.9)


Total equity 3,243.0 3,011.3

Total Recognised Income and Expense for Financial YearNon profi t items recognised directly in equity 88.5 45.4

Profi t after tax for fi nancial year 497.5 415.2

586.0 460.6

Total income and expense for fi nancial year attributable to:

Members of Lend Lease Corporation Limited 583.3 453.2


586.0 460.6

1 The June 2007 movement represents the acquisition of an additional 3% interest in Crosby Lend Lease (June 2006: 12.5% Actus Lend Lease).

The statement of changes in equity is to be read in conjunction with the concise MD&A on pages 90 to 91 and the notes to the concise fi nancial statements set out on pages 97 to 103.

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Concise Financial Statementscontinued

Statement of Cash Flows


Consolidated

June 2007 A$m

June 2006 A$m

Cash Flows from Operating ActivitiesCash receipts in the course of operations 12,526.2 9,853.0

Cash payments in the course of operations (12,388.5) (9,623.6)

Property development receipts 1,169.5 1,704.7

Property development expenditure (1,007.7) (1,169.5)

Interest received 52.1 30.3

Interest paid (48.3) (60.8)

Dividends/distributions received 134.7 64.6

Income tax paid in respect of operations (80.8) (138.4)


Cash Flows from Investing ActivitiesSale/redemption of investments 567.6 260.3

Acquisition of investments (843.4) (274.9)

Acquisition of investment properties (55.0)

Acquisition of other assets (0.5)

Loans to associates/related parties (15.8) (26.7)

Acquisition of consolidated entities (762.1)

Acquisition of minority interest (1.4) (92.5)

Disposal of consolidated entities (net of cash disposed) 26.4 1.9

Sale of property, plant and equipment 509.0 10.4

Acquisition of property, plant and equipment (567.4) (26.5)

Acquisition of intangible assets (2.2)


Cash Flows from Financing ActivitiesProceeds from borrowings 1,567.2 2,549.2

Repayment of borrowings (1,287.8) (2,111.9)

Dividends paid (237.2) (203.2)

Increase/(decrease) in capital of minority interest 14.9 (0.3)


Other Cash Flow ItemsEffect of foreign exchange rate movements on cash and cash equivalents (41.0) 5.9


Cash and cash equivalents at beginning of fi nancial year 559.5 569.6

Cash and cash equivalents at end of fi nancial year 550.1 559.5

The statement of cash fl ows is to be read in conjunction with the concise MD&A on pages 90 to 91 and the notes to the concise fi nancial statements set out on pages 97 to 103.

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Annual Report 2007


1. Basis of Preparation of Concise Financial Report

The concise fi nancial report has been prepared in accordance with the Corporations Act 2001 and Accounting Standard AASB 1039 ‘Concise Financial Reports’. The fi nancial statements and specifi c disclosures have been derived from the consolidated entity’s (‘the Group’s’) full fi nancial report for the fi nancial year. Other information included in the concise fi nancial report is consistent with the consolidated entity’s full fi nancial report. The concise fi nancial report does not, and cannot be expected to, provide as full an understanding of the fi nancial performance, fi nancial position and fi nancing and investing activities of the consolidated entity as the full fi nancial report. It has been prepared under the historical cost convention except for the following assets and liabilities which are stated at their fair value: derivative fi nancial instruments, investments held for trading, investments available for sale and investment property. Recognised assets and liabilities that are hedged are stated at fair value in respect of the risk that is hedged.

A full description of the accounting policies adopted by the consolidated entity may be found in the consolidated entity’s full fi nancial report.

These accounting policies have been consistently applied by all entities in the consolidated entity.

The presentation currency is Australian dollars.

Accounting Estimates and JudgementsThe estimates and judgements that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year are discussed below.

Key Sources of Estimation UncertaintyThe consolidated entity’s full fi nancial report contains information about the assumptions and their risk factors relating to goodwill impairment, as well as detailed analysis of the foreign exchange exposure of the consolidated entity and risks in relation to foreign exchange movements.

Impairment of GoodwillThe Group assesses at least annually whether goodwill is impaired. These calculations involve an estimation of the recoverable amount of the cash generating units to which the goodwill is allocated.

Valuation of Assets and Recoverable AmountsThe Group assesses the fair value of certain assets by use of estimation techniques where there is no available market price. The Group assesses the recoverability of the carrying value of certain assets using estimations of their recoverable amount.

Defi ned Benefi t Superannuation Fund ObligationsVarious actuarial assumptions are utilised in determining the Group’s defi ned benefi t superannuation/pension fund obligations.

Critical Accounting Judgements in Applying the Group’s Accounting PoliciesIn the process of applying the Group’s accounting policies, the Group makes various judgements, apart from those involving estimations, that can signifi cantly affect the amounts recognised in the consolidated fi nancial statements. These include:

− When substantially all the signifi cant risks and rewards of ownership of development properties are transferred to the purchaser;

− The percentage completion on construction work performed;

− Whether the substance of the relationship between the Group and a special purpose entity indicates that the special purpose entity is consolidated by the Group.

Notes to the Concise Financial Statements

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Notes to the Concise Financial Statementscontinued

Consolidated

June 2007 A$m

June 2006 A$m

2. Revenue

Revenue from the Sale of Development Properties 1,036.3 1,773.4

Revenue from the Provision of Services 12,948.2 10,129.9

Finance Revenue 101.8 33.5

Other RevenueDividend income 0.6 3.5

Other 195.0 186.5

Total other revenue 195.6 190.0

Total revenue 14,281.9 12,126.8

3. Other Income

Net gain on disposal/redemption of available for sale fi nancial assets 135.1 40.7

Net gain on disposal of consolidated entities 22.6

Net gain on disposal of investments using the equity method 12.6 16.3

Net gain on disposal of investment properties 14.5

Fair value gain on remeasurement of investment properties 2.8 14.8

Other 0.2 6.4

Total other income 173.3 92.7

4. Taxation

Income Tax ExpenseRecognised in the Income Statement

Current Tax ExpenseCurrent year 100.8 91.2

Adjustments for prior years (15.6) (17.9)

Benefi ts of tax losses recognised (3.2) (1.2)

82.0 72.1

Deferred Tax ExpenseOrigination and reversal of temporary differences 43.8 78.0

Reduction in tax rate 2.0

Total income tax expense 127.8 150.1

Reconciliation of Tax ExpenseProfi t before tax 628.0 572.7

Income tax using the domestic corporation tax rate (30.0%) 188.4 171.8

Tax effect of amounts which are not taxable (45.0) (3.8)

Over provided in prior years (15.6) (17.9)

127.8 150.1

A more detailed analysis of revenue is included within the Concise MD&A.

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Annual Report 2007


Cents Per Share

Franked Amount

Per Share %

CompanyJune 2007

A$mJune 2006

A$m

5. Dividends and Earnings Per Share

a. Dividends1

Interim DividendDecember 2006 – paid 27 March 2007 35 50 140.0

December 2005 – paid 14 March 2006 30 100 119.8

Final DividendJune 2007 – declared subsequent to reporting date (payable 12 September 2007) 42 50 168.5

June 2006 – paid 13 September 2006 31 100 123.9

308.5 243.7

1 ‘Dividends’ includes dividends paid on treasury shares.

Dividend FrankingThe fi nal dividend of 42 cents per share declared since 30 June 2007 will be 50% franked. The interim dividend paid on 27 March 2007 (35 cents per share) was 50% franked.

The dividend franking account balance at 30 June 2007 is A$56.2 million based on a 30% tax rate (30 June 2006: A$94.6 million). This is calculated after adjusting for franking credits which will arise from the payment of income tax provided in the accounts, tax losses utilised in the current fi nancial year and expected franking debits arising from refunds of tax in dispute. It excludes the A$36.1 million (June 2006: A$53.1 million) franking debit impact of the proposed dividend of A$168.5 million (June 2006: A$123.9 million) and the franking credits which arose from the payment of tax in dispute in relation to the sale of Westpac shares in 1996.

ConsolidatedJune 2007 June 2006

Shares Excluding Treasury

SharesShares

on Issue


SharesShares

on Issue

b. Earnings Per Share (EPS)

Weighted average number of ordinary shares m 369.9 400.4 368.5 399.1

Earnings per share cents 134.5 124.3 112.7 104.0

c. Diluted Earnings Per Share (DEPS)

Weighted average number of ordinary shares m 369.9 400.4 368.5 399.1

Adjustment for dilutive effect of potential share issue1 m 0.2 0.2

Weighted average number of ordinary shares for DEPS m 370.1 400.6 368.5 399.1

Diluted earnings per share cents 134.4 124.2 112.7 104.0

1 Relates to the Lend Lease Corporation shares issued during the period as part consideration for the minority interest shareholdings in Crosby Lend Lease Group Limited.

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6. Segment Reporting

The segment results are discussed and analysed in the concise MD&A included with this report.

Business Segment Summary

Segment Revenue1, 2

Group Operating Revenue

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

SegmentRetail and Communities 1,850.8 2,382.1 1,857.0 2,384.9

Investment Management 165.3 128.6 171.0 134.8

Project Management, Construction and PFIs 12,160.2 9,572.2 12,167.9 9,576.6

Total segment 14,176.3 12,082.9 14,195.9 12,096.3

Unallocated 86.0 30.5

Total Group 14,281.9 12,126.8

Segment Assets6

Total Group Assets7

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

SegmentRetail and Communities 2,396.7 2,322.0 2,597.2 2,547.2

Investment Management 1,655.3 1,569.9 2,680.0 2,429.2

Project Management, Construction and PFIs 3,137.8 2,770.4 3,319.6 2,934.2

Total segment 7,189.8 6,662.3 8,596.8 7,910.6

Unallocated 739.4 255.7

Total Group 9,336.2 8,166.3

1 AASB 114 ‘Segment Reporting’ does not permit certain items of revenue and expenses to be attributed to particular segments for the purposes of determining segment revenues and segment results. These include corporate expenses, interest and dividend revenue, proceeds on the sale of investments (unless the segment’s operations are primarily of a fi nancial nature) and income tax expenses. June 2007 includes A$133.4 million unallocated income relating to the Group’s investment in Lend Lease Global Properties, SICAF.

2 Segment revenues, expenses and results do not include intersegment transfers between business segments. Intersegment transfers are priced on an arm’s length basis.

3 Includes A$5.7 million reversal of impairment for Retail and Communities (June 2006: impairment losses: A$6.0 million) in relation to Jacksons Landing.

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Annual Report 2007


Segment Result

Before Tax1, 2, 3

Group Operating Profi t/(Loss) Before Tax

Group Operating Profi t/(Loss)

After Tax4


After Tax5

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

191.1 207.0 257.8 243.8 183.4 174.5 183.4 167.5

119.2 129.7 398.4 274.3 316.6 190.7 314.4 190.5

22.8 165.2 54.3 180.8 58.1 134.8 57.6 134.6

333.1 501.9 710.5 698.9 558.1 500.0 555.4 492.6

(82.5) (126.2) (57.9) (77.4) (57.9) (77.4)

628.0 572.7 500.2 422.6 497.5 415.2

Segment Liabilities6

Total Group Liabilities7

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

582.2 743.6 846.5 959.6

426.0 288.5 661.4 467.3

3,146.7 2,507.9 3,261.0 2,729.8

4,154.9 3,540.0 4,768.9 4,156.7

1,324.3 998.3

6,093.2 5,155.0

4 Represents Group profi t/(loss) after tax including minority interests.

5 Represents profi t/(loss) after tax attributable to members of Lend Lease Corporation Limited.

6 AASB 114 does not permit certain assets and liabilities to be attributed to particular segments for the purposes of determining segment assets and segment liabilities. These include income tax assets and liabilities, borrowings and liabilities related to assets that are the subject of fi nance lease liabilities.

7 Presentation and classifi cation is consistent with the Concise MD&A.

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7. Key Management Personnel Disclosures

Key Management Personnel compensation details are set out in Section 3 of the Directors’ Report.

Equity Holdings and TransactionsShareholdings Financial Year Ended 30 June 2007

Year

Shares Held at Beginning of Financial

Year

Shares Received

During the Year1,2

Other Net Change

to Shares

Shares Held at End of Financial

Year


D Crawford 2007 23,008 5,114 28,122

2006 17,468 5,540 23,008

P Colebatch – Appointed 1 December 2005 2007 2,121 1,568 3,689

2006 121 2,000 2,121

G Edington 2007 22,866 1,655 24,521

2006 21,373 1,493 22,866

P Goldmark 2007 11,798 1,703 13,501

2006 9,998 1,800 11,798

J Hill – Appointed 8 May 2006 2007 1,031 2,000 3,031

2006

R Longes – Resigned 17 November 2005 2007

2006 57,304 1,280 (58,584)3

D Ryan 2007 11,857 1,783 13,640

2006 10,096 1,761 11,857

Executive Directors

G Clarke 2007 1,000 1,000

2006 1,000 1,000

R Taylor 2007 102,425 1,920 104,345

2006 91,845 10,580 102,425

A Chamberlain – Resigned 30 September 2005 2007

2006 1,000 (1,000)3

Executives

S McCann 2007 458 875 1,333

2006 458 458

FormerR Johnston 2007 58,933 58,933

2006 58,933 58,933

R Burrows 2007 37,972 955 38,927

2006 36,231 1,741 37,972

R Lourey4 2007

2006 64 409 473

J Daniel4 2007

2006 230 230

P Crewes – Resigned 30 June 20064 2007

2006 41,020 1,242 (42,262)3

R Fehring4 2007

2006 20,149 1,164 (12,500) 8,813

M Bellaman4 2007

2006

P Koziol4 2007

2006

N Hugill4 2007

2006

J Spanswick4 2007

2006 1,130 1,130

P Marchetto4 2007

2006 5,555 5,555

Total 2007 272,438 16,604 2,000 291,042

Total 2006 373,396 27,589 (112,346) 288,639

1 Non Executive Directors’ share allocations relating to retirement benefi ts are made in arrears on 1 January each year. Refer to Section 3b. of the Directors’ Report for further details.

2 For Executive Directors and executives, relates to share entitlements under employee benefi t vehicles.

3 Balance at retirement/resignation.

4 From 1 July 2006 the executive ceased to be key management personnel.

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Annual Report 2007


Key Management Personnel Compensation

The key management personnel compensation included in ‘Employee Benefi t Expenses’ is as follows:

Consolidated Company

June 2007 A$000s

June 2006 A$000s

June 2007 A$000s

June 2006 A$000s

Short term employee benefi ts 13,010 24,676 9,512 12,649

Post employment benefi ts 3,937 5,000 3,442 2,728

Share based payments 12,306 2,033 8,899 1,568

Other long term benefi ts 608 785 608

29,861 32,494 22,461 16,945

Loans to Key Management PersonnelNo loans were made to key management personnel or other related parties during the current year or prior year.

Other Transactions with Key Management PersonnelFrom time to time Directors and executives of the Company or its consolidated entities, or parties related to them, may purchase goods from the consolidated entity. These purchases are on terms and conditions no more favourable than those entered into by unrelated customers and are trivial or domestic in nature.

8. Events Subsequent to Balance Date

Sale of Units in Australian Prime Property Fund (APPF)On 11 July 2007, Lend Lease sold a proportion of its interest in APPF Retail for A$263.8 million. As at 30 June 2007, a cumulative gain of A$32.6 million before tax was recognised in the fair value revaluation reserve relating to this interest.

Withdrawal of Australian Taxation Offi ce (ATO) Appeal to Federal Court on Westpac Warrants IssueOn 10 August 2007 the ATO withdrew its appeal relating to the Federal Court’s decision in December 2006 regarding Lend Lease’s sale of Westpac shares.


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In the opinion of the Directors of Lend Lease Corporation Limited (the ‘Company’), the accompanying concise fi nancial report of the Group, comprising Lend Lease Corporation Limited and its consolidated entities, for the fi nancial year ended 30 June 2007, set out on pages 90 to 103:

a. Has been derived from or is consistent with the full fi nancial report for the fi nancial year; and

b. Complies with Australian Accounting Standard AASB 1039 ‘Concise Financial Reports’.

Signed in accordance with a resolution of the Directors:



Directors’ Declaration

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Annual Report 2007


Report on the Concise Financial ReportThe accompanying concise fi nancial report of Lend Lease Corporation Limited (‘the Company’) and its controlled entities comprises the balance sheet as at 30 June 2007, the income statement, statement of changes in equity and cash fl ow statement for the year then ended and related Notes 1 to 8 derived from the audited fi nancial report of Lend Lease Corporation Limited for the year ended 30 June 2007 and the concise management discussion and analysis of fi nancial condition and results of operations (discussion and analysis). The concise fi nancial report does not contain all the disclosures required by Australian Accounting Standards.

Directors’ Responsibility for the Concise Financial ReportThe directors of the Company are responsible for the preparation and presentation of the concise fi nancial report in accordance with Australian Accounting Standard AASB 1039 ‘Concise Financial Reports’ and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation of the concise fi nancial report; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s ResponsibilityOur responsibility is to express an opinion on the concise fi nancial report based on our audit procedures. We have conducted an independent audit, in accordance with Australian Auditing Standards, of the fi nancial report of Lend Lease Corporation Limited for the year ended 30 June 2007. Our audit report on the fi nancial report for the year was signed on 15 August 2007 and was not subject to any modifi cation. The Australian Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the fi nancial report for the year is free of material misstatement.

Our procedures in respect of the concise fi nancial report include testing that the information in the concise fi nancial report is derived from, and is consistent with, the fi nancial report for the year, and examination on a test basis of evidence supporting the amounts, discussion and analysis, and other disclosures which were not directly derived from the fi nancial report for the year. These procedures have been undertaken to form an opinion whether, in all material respects, the concise fi nancial report complies with Australian Accounting Standard AASB 1039 ‘Concise Financial Reports’ and whether the discussion and analysis complies with the requirements laid down in Australian Accounting Standard AASB 1039 ‘Concise Financial Reports’. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Auditor’s OpinionIn our opinion, the concise fi nancial report, including the discussion and analysis, of Lend Lease Corporation Limited and its controlled entities for the year ended 30 June 2007 complies with Australian Accounting Standard AASB 1039 ‘Concise Financial Reports’.

KPMG

C HallPartner


Independent Auditor’s Report to the Members of Lend Lease Corporation Limited

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Shareholder information

Stock Exchange Listings and Code

Lend Lease Corporation Limited is listed on the Australian and New Zealand Stock Exchanges and trades under the code LLC.

American Depositary Receipts

In the US, Lend Lease shares are traded in the form of sponsored American Depositary Receipts (ADRs) on the over the counter market under the symbol ‘LLESY’. Each ADR represents one ordinary share. Information about ADRs is available from the depositary, The Bank of New York (www.adrbny.com).

Share Accumulation Plan

The Share Accumulation Plan comprising the Dividend Reinvestment, Share Election and Share Purchase Plans is currently suspended.

Annual Report

This Annual Report can be found on our website. Shareholders may elect to receive their Annual Report electronically by logging onto the Share Registry’s website www.linkmarketservices.com.au and following the instructions. Shareholders who do not wish to receive future reports may also record this election via the Share Registry’s website or may alternatively contact the Share Registry. Shareholders electing not to receive Annual Reports will continue to receive all other shareholder information, including Notices of Annual General Meetings.

Privacy Legislation

Under Chapter 2C of the Corporations Act 2001, a shareholder’s information (including the name, address and details of shares held) is required to be included in Lend Lease’s public register. This information must continue to be included in Lend Lease’s public register for seven years after a person ceases to be a shareholder. These statutory obligations are not altered by the Privacy Amendment (Private Sector) Act 2000. Information is collected to administer the shareholder’s holding and if some or all of the information is not collected, then it might not be possible to administer the holding. Lend Lease’s privacy policy is available on our website. The Share Registry’s privacy policy is available on its website (www.linkmarketservices.com.au).

Dividend and Share Accumulation Plan Issue Price History

Payment Date DividendDividend per

share Franking RateDRP price

A$SEP price

A$SPP price

A$

12 September 2007 Final* 42 cents 50% suspended suspended suspended

27 March 2007 Interim* 35 cents 50% suspended suspended suspended

13 September 2006 Final* 31 cents 100% suspended 15.50 suspended

14 March 2006 Interim* 30 cents 100% suspended 13.32 suspended

14 September 2005 Final* 29 cents 100% suspended 13.14 suspended

8 March 2005 Interim* 28 cents Nil suspended suspended suspended

15 September 2004 Final* 26 cents Nil suspended suspended suspended

17 March 2004 Interim* 18 cents Nil suspended suspended suspended

18 September 2003 Final* 20 cents Nil 10.64 suspended suspended

19 March 2003 Interim* 10 cents 100% 8.71 8.71 8.71

19 September 2002 Final* 9 cents 100% 11.02 11.02 11.02


13 September 2001 Final* 8 cents 100% 10.97 suspended 10.97

14 March 2001 Interim* 13 cents Nil 14.85 suspended 14.85

14 September 2000 Final* 32 cents 100% 19.82 19.82 suspended


16 September 1999 Final* 31 cents 100% 19.66 19.66 19.66


17 September 1998 Final 54 cents 100% 34.12 34.12 34.12

18 March 1998 Interim 53 cents 100% 35.06 35.06 35.06

18 September 1997 Final 50 cents 100% 30.48 30.48 30.48

19 March 1997 Interim 48 cents 100% 23.41 23.41 23.41

1 November 1996 Final 47 cents 100% 20.71 20.71 20.71

29 March 1996 Interim 43 cents 100% 17.47 17.47 N/A

3 November 1995 Final 38 cents 100% 16.89 16.89 N/A

28 June 1995 2nd Interim 11 cents 100% 16.84 16.84 N/A

31 March 1995 Interim 36 cents 100% 15.08 15.08 N/A

28 October 1994 Final 36 cents 100% 15.18 15.18 N/A

27 June 1994 2nd Interim 10 cents 100% 15.10 15.10 N/A

13 April 1994 Interim 34 cents 100% 16.10 16.10 N/A

22 October 1993 Final 33 cents 100% suspended suspended N/A

15 July 1993 Special 10 cents Nil 12.79 12.79 N/A

29 March 1993 Interim 33 cents 100% suspended suspended N/A

* 1:1 bonus share issue was implemented in December 1998.

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Annual Report 2007


Share Information at a Glance at 31 August 2007 (31 August 2006)

2007 2006

Number of shareholders 49,879 50,181

Shares issued 401 million 400 million

Percentage owned by 20 largest shareholders 76.28% 76.10%

Interim dividend 35 cents per share(50% franked)

30 cents per share(100% franked)

Final dividend 42 cents per share (50% franked)

31 cents per share(100% franked)

Total dividend 77 cents per share 61 cents per share

Dividend payout ratio 69.2% 68.8%

Spread of Shareholdings

Details of the spread of shareholdings at 31 August 2007 (31 August 2006) are as follows:

2007 2006

1 to 1,000 shares 29,744 29,877

1,001 to 5,000 shares 17,191 17,264

5,001 to 10,000 shares 1,864 1,913

10,001 to 100,000 shares 978 1,033

100,001 shares and over 102 94

Total number of shareholders 49,879 50,181

Shareholders with less than a marketable parcel 1,241(representing 12,680 shares)

1,473(representing 18,162 shares)

Twenty Largest Shareholders at 31 August 2007

NameNo.

of Shares%

of Issued Capital

HSBC Custody Nominees (Australia) Limited 71,618,317 17.85

National Nominees Limited 53,141,798 13.25

JP Morgan Nominees Australia Limited 47,638,533 11.88

LL Employee Holdings Custodian Pty Limited 37,794,740 9.42

Citicorp Nominees Pty Limited 33,455,711 8.34

Cogent Nominees Pty Limited 15,818,364 3.94

ANZ Nominees Limited 14,132,217 3.52

RBC Dexia Investor Services Australia Nominees Pty Limited 6,974,420 1.74

AMP Life Limited 6,583,444 1.64

Tasman Asset Management Limited 5,155,783 1.29

Australian Reward Investment Alliance 3,130,500 0.78

Queensland Investment Corporation 2,636,143 0.66

Argo Investments Limited 1,698,069 0.42

UBS Nominees Pty Limited 1,147,204 0.29

Promina Equities Limited 1,097,998 0.27

Merrill Lynch (Australia) Nominees Pty Limited 1,000,304 0.25

IAG Nominees Pty Limited 955,691 0.24

Overseas Property Pty Limited 674,372 0.17

Bond Street Custodians Limited 667,085 0.17

UBS Wealth Management 652,802 0.16

76.28

Substantial Shareholders as shown in the Company’s Register at 31 August 2007

Name Date of Last Notice ReceivedNo.

of Shares

% of Issued

Capital

Balanced Equity Management Pty Ltd 16 November 2004 27,761,041 6.96

Commonwealth Bank of Australia 19 April 2007 20,998,030 5.25

LL Employee Holdings Custodian Pty Limited1 21 November 2005 38,903,525 9.75

1 This is a Lend Lease employee benefi t vehicle.For

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Corporate Directory

Lend Lease Corporation Limited

ABN 32 000 226 228Incorporated in New South Wales, Australia

Registered Offi ce

Level 4, 30 The Bond30 Hickson RoadMillers Point NSW 2000

Telephone: 61 (2) 9236 6111Facsimile: 61 (2) 9252 2192

Directors


G A Clarke, Managing Director and Chief Executive Offi cer

P M ColebatchG G EdingtonP C GoldmarkJ A HillD J RyanR H Taylor

Secretaries

W HaraS J Sharpe

Stock Exchange Listings

AustraliaNew Zealand

Auditors

KPMG10 Shelley StreetSydney NSW 2000

Share Registry and Shareholder Queries

Principal RegisterLink Market Services LimitedLevel 12, 680 George StreetSydney NSW 2000Locked Bag A14Sydney South NSW 1235

Telephone: 1800 230 300 (within Australia) or 61 (2) 8280 7123 (outside Australia)

Facsimile: 61 (2) 9287 0303Email: [email protected]

Website: www.linkmarketservices.com.au

UK RegisterB Davis & CoPark House158–160 Arthur RoadWimbledon ParkLondon SW19 8AQ

Telephone: 44 (20) 8947 3361Facsimile: 44 (20) 8944 1039

USA AgentThe Bank of New YorkInvestor ServicesPO Box 11258Church Street StationNew York NY 10286-1258

Telephone: 1 (212) 815 3700US Toll Free: 1 888 269 2377Email: [email protected]: www.adrbny.com

Investor InformationLend Lease’s Annual Report, fi nancial statements and other information on the Lend Lease Group can be obtained from Investor Relations.

Telephone: 61 (2) 9236 6065Facsimile: 61 (2) 9252 2192Email: lend.lease.investor.relations@

lendlease.com.auWebsite: www.lendlease.com

The 2007 Annual General Meeting of Lend Lease Corporation Limited will be held at 10.00am on Thursday, 15 November 2007 at Dockside, The Balcony Level, Cockle Bay Wharf at Darling Park, Sydney NSW 2000. Full details of the Meeting are contained in the Notice of Annual General Meeting sent with this Report.

Annual General Meeting

Announcement of Half Year Results February

Interim Dividend Payable March

Announcement of Full Year Results August

Final Dividend Payable September

Annual General Meeting November

2008 Financial Calendar

108

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Contents

About Lend Lease 1

Operational/Financial highlights 2

Five-year performance 3

Chairman’s letter 4

Chief Executive Offi cer’s report 6

Geographic diversity 8

Business capabilities 10

Overview of businesses 12

Retail report 14

Communities Report 20

Investment Management report 26

Project Management,Construction and PFI report 32

Sustainability report 38

Corporate Governance 44

Concise Financial Report 60

Directors’ report 62

Board of Directors 62

Remuneration report 67

Shareholder information 106

Corporate directory 108











14

26




32Project Management and Construction


Notes

Front cover image



The cover and pages 1 to 60 of this Report are printed on 9Lives 80, an environmentally responsible paper, containing 80 per cent post consumer fi bre and 20 per cent totally chlorine-free pulp. It is an FSR certifi ed mixed source paper, ensuring all virgin pulp is derived from well-managed forests. It is also manufactured by an ISO 14001 certifi ed mill.



View of the Dock 5 residential apartment tower, one of the recently completed projects within the 2.5 kilometre Victoria Harbour development in Melbourne, Victoria. Victoria Harbour is a prime example of the effi ciencies of the Lend Lease integrated business model with the master plan managed by Lend Lease Communities and Bovis Lend Lease providing the project management and construction services across the development. Lend Lease Investment Management is also considering coinvestment in a number of Victoria Harbour developments. (Lend Lease Development Director, Victoria Harbour, Maurice Cococcia).



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Lend Lease

2007 Annual Report to Shareholders

Lend Lease C

orporation

Annual R

eport to Sharehold

ers2007

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2007 Annual Consolidated Financial Report

Lend Lease C

orporation

2007A

nnual Consolid

ated Financial R

eport

Lend LeaseF

or p

erso

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nly

The cover of this Report is printed on 9Lives 80, an environmentally responsible paper, containing 80 per cent post consumer fi bre and 20 per cent totally chlorine-free pulp. It is an FSR certifi ed mixed source paper, ensuring all virgin pulp is derived from well-managed forests. It is also manufactured by an ISO 14001 certifi ed mill.





precinct.com.au


Contents

Directors’ Report 1Governance 2

Operations 6

Remuneration Report 7

Other 27

Lead Auditor’s Independence Declaration 29

Five Year Profi le 30Management Discussion and Analysis of Financial Condition and Results of Operations (MD&A) 31Overview 32

Retail and Communities 34

Investment Management 41

Project Management, Construction and Private Finance Initiatives (PFIs) 43

Corporate 45

Appendix 1: Results Detail 46

Consolidated Financials 47Consolidated Financial Statements 48

Notes to the Consolidated Financial Statements 53





The 2007 Annual General Meeting of Lend Lease Corporation Limited will be held at Dockside, The Balcony Level, Cockle Bay Wharf at Darling Park, Sydney NSW 2000 at 10.00am on Thursday 15 November 2007.

Full details of the meeting are contained in the Notice of Annual General Meeting sent with this Report.












Notes

Front cover image



View of the Dock 5 residential apartment tower, one of the recently completed projects within the 2.5 kilometre Victoria Harbour development in Melbourne, Victoria. Victoria Harbour is a prime example of the effi ciencies of the Lend Lease integrated business model with the master plan managed by Lend Lease Communities and Bovis Lend Lease providing the project management and construction services across the development. Lend Lease Investment Management is also considering coinvestment in a number of Victoria Harbour developments.

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Directors’ Report30 June 2007

Table of Contents

1. Governance 2

a. Board/Directors 2

b. Company Secretaries’ Qualifi cations and Experience 4

c. Offi cers Who Were Previously Partners of the Audit Firm 4

d. Directors’ Meetings 4

e. Interest in Capital 5

2. Operations 6

a. Principal Activities 6

b. Review and Results of Operations 6

c. Dividends 6

d. Signifi cant Changes in State of Affairs 6

e. Events Subsequent to Balance Date 6

f. Likely Developments 6

g. Environmental Regulation 7

3. Remuneration Report 7

a. Details of Key Management Personnel and Other Executives – Audited 7

b. Remuneration Policy – Audited 8

c. Remuneration Details – Audited 14

d. Long Term Incentives and Retentions – Audited 20

e. Service Agreements – Audited 24

f. Additional Information – Audited 27

4. Other 27

a. Share Options 27

b. Indemnifi cation and Insurance of Directors and Offi cers 27

c. Non Audit Services 27

d. Rounding Off 28

Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 29

Annual Consolidated Financial Report 2007

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Directors’ Report

The Directors present their Report together with the Annual Consolidated Financial Report of the consolidated entity, being the Company and its subsidiaries (‘Lend Lease’) for the fi nancial year ended 30 June 2007 and the Auditor’s Report thereon.

1. Governance

a. Board/DirectorsThe names, qualifi cations, experience and special responsibilities of each person holding the position of Director of the Company at the date of this Report are:


(Non Executive)

Age 63

Mr Crawford joined the Board in July 2001 and was appointed Chairman in May 2003. He is a member of the Nomination Committee.

Experience and Qualifi cations

Previously Mr Crawford was National Chairman of the Australian fi rm of KPMG. He has extensive accounting and business experience having worked with many large corporations and governments. He holds a Bachelor of Commerce and Bachelor of Laws from the University of Melbourne. He is a Fellow of the Institute of Chartered Accountants.

Other Directorships and Positions

Mr Crawford is a Non Executive Director of BHP Billiton Limited (appointed May 1994), Foster’s Group Limited (appointed August 2001) and Westpac Banking Corporation (appointed May 2002). He was formerly a Non Executive Director of National Foods Limited (appointed November 2001, resigned June 2005).

G A Clarke, Managing Director

(Executive)

Age 49

Mr Clarke was appointed Managing Director and Chief Executive Offi cer in December 2002.


Mr Clarke brings more than 25 years experience in international business development and operations through career roles including Vice President, Cellular (Paris) for Nortel Communications; Chief Executive Mobile, C&W Mobile plc; and Chief Operating Offi cer and Chief Executive Offi cer, Cable & Wireless Communications plc. He holds a BA (Hons) Business Studies and an MBA.


Mr Clarke was formerly a Non Executive Director of The British United Provident Association Limited (BUPA), the largest private health provider in the UK (appointed April 2001, resigned March 2007).

P M Colebatch

(Non Executive)

Age 62

Mr Colebatch joined the Board in December 2005 and is Chairman of the Personnel and Organisation Committee and a member of the Risk Management and Audit Committee.


Mr Colebatch has a Bachelor of Science and Bachelor of Engineering from the University of Adelaide, a Master of Science from Massachusetts Institute of Technology and a Doctorate in Business Administration from Harvard University. He has held senior management positions in insurance and investment banking, and was formerly on the Executive Board of Swiss Reinsurance Company, Zurich. He was previously on the Executive Board of Credit Suisse Group, Zurich, where he was Chief Financial Offi cer and subsequently Chief Executive Offi cer of Credit Suisse Asset Management.


Mr Colebatch is a Non Executive Director of Insurance Australia Group Limited (appointed January 2007).

G G Edington CBE

(Non Executive)

Age 61

Mr Edington joined the Board in 1999 and is a member of the Risk Management and Audit Committee and the Sustainability Committee.


Qualifi ed as a Chartered Surveyor, Mr Edington brings to the Board extensive UK and international experience in the property sector. Mr Edington was a Director of BAA plc and Chairman of BAA International. He joined BAA plc in 1988, became a member of the Board in 1991 and has been the Chairman of six BAA companies. He is a past President of the British Property Federation, was the Chairman of UK property company Greycoat Estates Limited and was a member of the Bank of England Property Forum. Mr Edington is Chairman of the Council of Trustees of the UK children’s charity, NCH, and was awarded a CBE in the New Year’s Honours List for ‘services to children’.


Nil.

David Crawford, Chairman Greg Clarke, Managing Director Phillip Colebatch Gordon Edington CBE

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P C Goldmark

(Non Executive)

Age 66

Mr Goldmark joined the Board in 1999 and is Chairman of the Nomination Committee and a member of the Sustainability Committee.


Mr Goldmark is Director, Climate and Air Program at Environmental Defense, a US-based non-profi t environmental advocacy organisation. He was the Chairman and Chief Executive Offi cer of The International Herald Tribune in Paris between 1998 and 2003. Prior to this, he was for ten years the President and Chief Executive Offi cer of the Rockefeller Foundation in New York. He has held positions including Senior Vice President of the Times-Mirror Corporation, Executive Director of the Port Authority of New York and New Jersey, and Director of the Budget for the State of New York. A writer and speaker on world affairs, Mr Goldmark graduated with a BA from Harvard College, Government Department, magna cum laude. He brings to Lend Lease his wide experience as a Chief Executive Offi cer and senior executive in the private and public sectors, both in the USA and internationally.


Nil.

J A Hill

(Non Executive)

Age 61

Ms Hill joined the Board in May 2006. She is Chairman of the Sustainability Committee and a member of the Personnel and Organisation Committee.


Ms Hill has held a number of senior executive positions in the land development and housing construction industry in North America. She was formerly the Chairman, President and Chief Executive Offi cer of Costain Homes, Inc. (US) and Vice President and General Manager, Mobil Land (Georgia) Corporation. She has a Bachelor of Arts from the University of California at Los Angeles and a Master of Arts in marketing and management from the University of Georgia.


Ms Hill is a Non Executive Director of Wellpoint, Inc. (appointed March 1994). She was formerly a Non Executive Director of Resources Connection, Inc. (appointed January 2003, resigned December 2006).

D J Ryan AO

(Non Executive)

Age 55

Mr Ryan was appointed a Director in December 2004. He is Chairman of the Risk Management and Audit Committee and a member of the Personnel and Organisation Committee.


Mr Ryan has previously held Managing Director positions in investment banking and industry, as well as being the Chairman or a Non Executive Director of a number of listed public companies. He has a Bachelor of Business from the University of Technology, Sydney and is a Fellow of CPA Australia and the Australian Institute of Company Directors.


Mr Ryan is the Non Executive Chairman of Transurban Holdings Limited (appointed Director April 2003 and Chairman February 2007) and is a Non Executive Director of ABC Learning Centres Limited (appointed June 2003). He is also the Non Executive Chairman of Tooth & Co Limited (appointed Director September 1999 and Chairman January 2003) and was formerly a Non Executive Director of Virgin Blue Holdings Limited (appointed November 2003, resigned April 2005).

R H Taylor

(Executive)

Age 45

Mr Taylor joined the Board as an Executive Director in December 2004 and is a member of the Sustainability Committee.


Mr Taylor joined Lend Lease in 1985 as an engineer and held several positions in Australia and Asia before being appointed Managing Director of the Project Management and Construction business of Lend Lease in 1995. Following the acquisition of the Bovis Group in 1999 he was appointed Global Chief Executive Offi cer of the combined Bovis Lend Lease businesses based in London and in 2001 his responsibilities were expanded to include the development activities of Lend Lease. In 2003 he returned to Australia to take up the role of Chief Executive Offi cer Asia Pacifi c and in July 2005 was appointed Chief Executive Offi cer Retail and Communities. On 21 May 2007 he was appointed to the newly created role of Global Chief Operating Offi cer. Mr Taylor holds a Bachelor of Civil Engineering (Honours) from the University of Queensland.


Nil.



Peter Goldmark Julie Hill David Ryan AO Ross Taylor

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1. Governance continued

b. Company Secretaries’ Qualifi cations and Experience

W Hara

Mr Hara was appointed Company Secretary on 3 July 2007. He was General Counsel and Group Company Secretary of Patrick Corporation Limited prior to his appointment as Group General Counsel of Lend Lease in January 2007. Mr Hara has a Bachelor of Commerce and a Bachelor of Laws from the University of New South Wales and is a member of the Law Society of NSW.

S J Sharpe

Ms Sharpe was appointed Deputy Company Secretary in 1995 and Company Secretary in 1997. She has held a number of senior executive positions and subsidiary board directorships in the Lend Lease Group. She has a Bachelor of Business from the University of Technology, Sydney and is an Associate of the Institute of Chartered Accountants and a member of the Australian Institute of Company Directors.

c. Offi cers Who Were Previously Partners of the Audit Firm

Mr Crawford was a Partner and Australian National Chair of KPMG. He resigned from this position on 28 June 2001 prior to his appointment as a Director of the Company on 19 July 2001. KPMG or its predecessors was appointed as the Company’s auditor at its fi rst Annual General Meeting in 1958.

d. Directors’ MeetingsDuring the fi nancial year, 12 Board meetings were held. The Board recognises the essential role of committees in guiding the Company on specifi c issues. Committees address important corporate issues, calling on senior management and external advisers prior to making a fi nal decision or making a recommendation to the full Board.

There are four permanent committees of the Board:


The Nomination Committee consists entirely of Non Executive Directors. This Committee assists the Board by considering nominations to the Board by ensuring that there is an appropriate mix of expertise, skills and experience on the Board. During the fi nancial year 1 July 2006 to 30 June 2007, all meetings of the Nomination Committee were held in conjunction with Board meetings.

Personnel and Organisation Committee

The Personnel and Organisation Committee consists entirely of Non Executive Directors. The Committee’s agenda refl ects the importance of human capital to the Group’s strategic and business planning and it assists the Board in ensuring that appropriate policies are in place for people management and remuneration across Lend Lease businesses worldwide. During the fi nancial year 1 July 2006 to 30 June 2007, four meetings of the Personnel and Organisation Committee were held.

Risk Management and Audit Committee

The Risk Management and Audit Committee consists entirely of Non Executive Directors. This Committee assists the Board by reviewing the risk management and compliance systems in Lend Lease businesses worldwide and by ensuring that assets are protected against fi nancial loss, legal and regulatory obligations are met and proper accounting and auditing practices are maintained. During the fi nancial year 1 July 2006 to 30 June 2007, four meetings of the Risk Management and Audit Committee were held.


The Board established a Sustainability Committee during the year consisting of a majority of Non Executive Directors. The Committee assists the Board in monitoring the decisions and actions of management in achieving the aspiration of Lend Lease to be a sustainable organisation. During the fi nancial year 1 July 2006 to 30 June 2007, two meetings of the Sustainability Committee were held.

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Attendance at Meetings of Directors 1 July 2006 to 30 June 2007

Board Meetings

Risk Management

and Audit Committee Meetings

Personnel and Organisation Committee Meetings

SustainabilityCommittee Meetings

Other2

Committee Meetings

Director Held1 Attended Held1 Attended Held1 Attended Held1 Attended Held1 Attended

D Crawford 12 12

G Clarke 12 12 3 3

P Colebatch 12 12 4 4 3 3 3 3

G Edington 12 12 4 4 2 2 2 2 2 2

P Goldmark 12 12 2 2 2 2

J Hill 12 11 2 2 2 2

D Ryan 12 12 4 4 2 2 1 1

R Taylor 12 12 2 2 2 2

1 Refl ects the number of meetings held during the time the Director held offi ce on the Committee during the year.

2 Committees constituted to address specifi c issues.

In addition, as required, matters were dealt with by circular resolution and ratifi ed at the next meeting of the Board or appropriate committee.

e. Interest in CapitalThe interest of each of the Directors in the issued shares of the Company at 15 August 2007 (16 August 2006) is set out below.

Director

Shares Held

Directly 2007

Shares Held


20071Total 2007

Shares Held

Directly 2006

Shares Held


20061Total2006

D Crawford 4,395 23,727 28,122 4,395 18,613 23,008

G Clarke 1,000 1,000 1,000 1,000

P Colebatch 2,000 1,689 3,689 2,000 121 2,121

G Edington 15,000 9,521 24,521 15,000 7,866 22,866

P Goldmark 3,000 10,501 13,501 3,000 8,798 11,798

J Hill 2,000 1,031 3,031 2,000 2,000

D Ryan 10,000 3,640 13,640 10,000 1,857 11,857

R Taylor 9,760 94,737 104,497 7,899 94,526 102,425

1 Includes shares benefi cially held by Non Executive Directors in the Retirement Plan.

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2. Operations

a. Principal ActivitiesThe Group’s lines of business are focused on three geographic regions: Asia Pacifi c, Americas and Europe.

– The Retail business comprises retail property management, asset management and development in Australia, Singapore and the United Kingdom (UK);

– The Communities business is involved in the development of large scale urban regeneration and greenfi eld development projects in Australia, the United States of America (USA) and the UK. This business line includes privatisation services in the USA;

– Investment Management provides real estate investment management services in Asia Pacifi c and the UK. Investment Management includes the Group’s ownership interests in property investments in Asia Pacifi c, the UK and the USA. Ownership interests are held directly or indirectly through investments in Lend Lease managed funds;

– Project Management, Construction and Private Finance Initiatives (PFIs) provides construction, project management and design services across all regions through Bovis Lend Lease and includes the PFI business in Europe.

b. Review and Results of OperationsA full review of operations is included in the Management Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section of the Annual Consolidated Financial Report.

c. DividendsThe 2006 fi nal dividend of A$123.9 million (31 cents per share, fully franked) referred to in the Directors’ Report dated 16 August 2006 was paid on 13 September 2006.

Details of dividends in respect of the current year are as follows:

A$m

Interim dividend of 35 cents per share (50% franked) paid on 27 March 2007 140.0

Final dividend of 42 cents per share (50% franked) declared by Directors to be paid on 12 September 2007 168.5

308.5

d. Signifi cant Changes in State of AffairsLend Lease acquired the remaining 3% of voting shares in The Crosby Group plc (a UK-based urban regeneration specialist) during the year, following its acquisition of 97% of The Crosby Group plc during the previous year.

During the prior year, Lend Lease acquired the fi nal 12.5% minority stake in Actus Lend Lease and sold businesses in the real estate investment market in the USA.

e. Events Subsequent to Balance DateNo matters or circumstances have arisen since the end of the fi nancial year that have signifi cantly affected or may signifi cantly affect the operations of Lend Lease, the results of those operations or state of affairs of Lend Lease in subsequent fi nancial years other than the following:

Sale of Units in Australian Prime Property Fund (APPF)

On 11 July 2007, Lend Lease sold a proportion of its interest in APPF Retail for A$263.8 million. As at 30 June 2007, a cumulative gain of A$32.6 million before tax was recognised in the fair value revaluation reserve relating to this interest.

Withdrawal of Australian Taxation Offi ce (ATO) Appeal to Federal Court on Westpac Warrants Issue

On 10 August 2007 the ATO withdrew its appeal relating to the Federal Court’s decision in December 2006 regarding Lend Lease’s sale of Westpac shares.


f. Likely DevelopmentsDetails of likely developments in the operations of Lend Lease in subsequent fi nancial years are contained in the reports from the Chairman and Managing Director in the Annual Report. In the opinion of the Directors, disclosure of any further information would be likely to result in unreasonable prejudice to the Group.

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g. Environmental RegulationLend Lease is subject to many environmental regulations associated with real estate development, project and construction management and asset management. These regulations typically relate to emissions to air and water, waste management and protection of biodiversity.

Lend Lease businesses report quarterly on environmental regulation compliance matters, including breaches and legal or potential legal action.

The Sustainability Committee receives reports on a quarterly basis regarding any signifi cant environmental risks and non conformance with the Environment Policy of Lend Lease. The Directors are not aware of any material non compliance issues during the period covered by this Report.

Further details are contained in the Sustainability section of the Annual Report.

3. Remuneration Report

The information provided under headings 3a. to 3f. includes remuneration disclosures that are required under Accounting Standard AASB 124 ‘Related Party Disclosures’. These disclosures have been transferred from the Consolidated Financial Statements and have been audited. The term ‘remuneration’ has been used in the Remuneration Report. This term has the same meaning as the alternative term ‘compensation’, as defi ned in AASB 124.

a. Details of Key Management Personnel and Other Executives – Audited

Key Management Personnel

Key management personnel, including Directors of the Company and executives, have authority and responsibility for planning, directing and controlling the activities of the Company and the consolidated entity.

The key management personnel of Lend Lease are the ‘Executive Offi ce’, consisting of the Executive Directors, together with the Group Finance Director and Chief Executive Offi cer Investment Management. The former Chief Executive Offi cer Project Management, Construction and PFI and former Chief Financial Offi cer are also regarded as key management personnel.

Directors

Non Executive DirectorsD Crawford Chairman

P Colebatch

G Edington

P Goldmark

J Hill

D Ryan

Executive DirectorsG Clarke Managing Director and Chief Executive Offi cer

R Taylor Global Chief Operating Offi cer – Appointed 21 May 2007 and Chief Executive Offi cer Retail and Communities

Executives

S McCann Group Finance Director – Appointed 21 March 2007 and Chief Executive Offi cer Investment Management

R Burrows Chief Financial Offi cer – Relinquished position 21 March 2007

R Johnston Chief Executive Offi cer Project Management, Construction and PFI – Resigned 31 July 2007

Other Executives1

R Butler Chief Executive Offi cer Lend Lease Retail and Communities UK

N Hugill Chairman Lend Lease Europe

R Lourey Group Head of Human Resources – Resigned 31 July 2007

P Marchetto Chief Executive Offi cer Bovis Lend Lease Americas

N Martin Group Head of Risk

B Soller Deputy Chief Financial Offi cer

1 ‘Other Executives’ represents employees in the category of fi ve highest paid Group or Company executives that are not key management personnel.

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b. Remuneration Policy – AuditedDirectors and Executives

Remuneration Philosophy

The Remuneration Policy of Lend Lease is determined by the Board on the recommendation of the Personnel and Organisation Committee. The Board recognises that Lend Lease operates in an international marketplace and as such aims to recruit, motivate and retain highly skilled employees who can operate in this environment. The policy of Lend Lease is to reward senior executives with market competitive remuneration and benefi ts, taking account of both Company and individual performance. In assessing these benchmarks, Lend Lease takes account of expert advice and the relevant external comparators in the real estate and related sectors and of companies of similar size, complexity and international scope. The remuneration of the Non Executive Directors is not linked to the performance of the Group in order to maintain their independence and impartiality.

Remuneration paid by Lend Lease is designed to be appropriate and competitive in each of its business locations, having regard to local practice on issues such as incentives, pensions, superannuation and other benefi ts. Lend Lease also recognises the need to take account of differing costs of living, especially in relation to expatriates, and this is refl ected in remuneration for expatriate executives.

In determining the remuneration structure outlined in this Report, the remuneration philosophy of the Board is focused on ensuring:

– The structure is the best fi t with the needs of the organisation and its strategy;

– Remuneration levels are commensurate with appropriate external comparators;

– Alignment of remuneration incentives with the interests of shareholders, demonstrating a clear link between reward and performance;

– Alignment of short and long term performance targets to ensure consistent behaviour;

– A mix of cash and share based remuneration to align the interests of executives with those of shareholders.

The approach of Lend Lease is to provide a balance of fi xed and performance based remuneration with an emphasis on increasing ‘at risk’ remuneration. This approach is refl ected in the structure of the Short Term Incentive Plan in particular for the June 2007 fi nancial year.

The Board sets salaries at competitive levels for the relevant role, targeted around the median against comparator companies in Australia and overseas, and takes into account market conditions and personal performance over the year under review.

Market data is used to benchmark salary levels on a global scale, adjusted for local conditions. The Personnel and Organisation Committee benchmarks information available in published job matched surveys of similar companies and, if appropriate, also commissions surveys to supplement the published information. To ensure proper process is followed for all senior executives, all proposed packages for direct reports of Executive Offi ce members and other key managers require prior approval from the Chief Executive Offi cer. In addition, all internal appointments with a base salary in excess of A$300,000 in Australia, US$220,000 in the USA and £120,000 in the UK, or for whom a base salary increase of 10% or above is proposed, require prior approval from the Chief Executive Offi cer.

Elements of Remuneration

The remuneration framework consists of three principal elements:

– Fixed remuneration (base salary, superannuation and other benefi ts);

– Short Term Incentive (annual cash and an equity related deferral) – ‘at risk’;

– Long Term Incentive (cash or share based performance rights) – ‘at risk’.

Fixed RemunerationThe salaries of the Chief Executive Offi cer, the Global Chief Operating Offi cer and the Chief Executive Offi cers of the core businesses and corporate functional heads are set by the Personnel and Organisation Committee subject to approval by the Board. Salary changes usually take effect from September of each year except in the case of a new appointment. In the case of the Executive Offi ce members and their direct reports, the Committee is assisted in this review by the Chief Executive Offi cer.

The other elements of fi xed remuneration include those typically enjoyed in the geography where the key person or executive is employed. These may include car, medical cover, employee share plan subscriptions, superannuation and pension contributions, life and/or disability cover and, in the case of international assignees, housing, schooling and tax return preparation. The value of these other benefi ts provided to key personnel is set out in Section 3c. of this Report. Executives are not automatically entitled to all of these benefi ts.

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Short Term Incentives (STIs)The STI plan is an annual bonus plan which complements the overall Remuneration Policy of Lend Lease by:

– Rewarding individuals on meeting or exceeding pre-set key performance criteria;

– Establishing key performance criteria to contribute to overall shareholder value.

Under the STI arrangement, executives receive benefi ts dependent on the achievement of both Lend Lease fi nancial targets and individual personal targets. The total value of the potential benefi t (target opportunity) varies by executive, but is generally linked to salary and/or related benefi ts.

Arrangements for the June 2007 Financial YearThe following table sets out the criteria required to be achieved for the current year STI.

Financial Element (75%) Personal Performance Element (25%)


– Measured against the current fi nancial year operating profi t after tax, excluding certain non recurring items (A$413.7 million). This is measured either entirely at corporation level or a mix of corporation (40%) and business unit (60%) level depending on the role.

– Upside opportunity can be increased to +25% of target opportunity for +10% of target performance achievement.


– Measured against targets specifi c to each executive’s business unit and function.

Depending on the level of performance achieved, the benefi t is delivered to executives as follows:

STI Cash Element

– Proportion of STI received as cash is determined specifi cally for each executive (see table below);

– Cash payment in September following year end.

STI Deferred Element

– Lend Lease shares or equivalent share value in cash based on share price at the date of determination of the bonuses;

– The shares (or share value if shares are not practicable) are then held in trust on behalf of the executive for the deferral period;

– For executives to receive the full deferral they must be employed by the Group at the date of vesting of the deferral element. The usual deferral period will be one year from the date of the grant.1

1 This period may be shortened if an executive is a ‘good leaver’, that is, an executive who leaves employment by reason of death, total and permanent disability, redundancy or other reason as outlined by the Personnel and Organisation Committee.

The split of the cash and the deferred elements for Executive Directors and executives for the June 2007 fi nancial year is as follows:

June 2007 STI

Cash Element – Maximum

Opportunity %

June 2007 STI

Deferred Element – Maximum

Opportunity %

Calculated Based On

G Clarke 119 59 Base salary

R Taylor 83 59 Total package value

Other key personnel and executives

30–107 18–36 Australia: Total package valueUK and USA: Base salary

Total package value equates to base salary and other benefi ts plus superannuation.

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Short Term Incentives (STIs) continuedFuture ArrangementsFor the forthcoming year, the Personnel and Organisation Committee has further aligned the criteria for the STI to the performance of the executive. The changes to the 2007 STI arrangements are:

– Financial element – for business unit heads, the fi nancial element is split between the operating profi t after tax (adjusted for signifi cant one-off, non recurring items) of the executive’s business unit (two-thirds of fi nancial element) and other value drivers for each executive’s business unit (one-third of fi nancial element);

– Qualitative bonus qualifi ers – for any part of the bonus to be paid, each executive must demonstrate achievement of either the corporate or business unit specifi c annual plan relating to both Incident and Injury Free and Sustainability.

Long Term Incentives (LTIs)The current LTIs of Lend Lease were introduced and approved by the Board in 1999 and updated and extended for awards from 2001 onwards. The objectives of the LTIs are essentially twofold:

– Aligning executives with the long term interests of Lend Lease and its shareholders;

– Attracting and retaining executives of high calibre by providing competitive rewards that relate to the performance of both the individual executive and the Lend Lease share price.

LTI grants are normally made in July each year and are based on competitive remuneration practice. LTIs are settled in cash or Lend Lease shares, with settlement occurring upon vesting if performance hurdles are met. Grants depend on personal contribution and potential and are designed to retain and motivate high performing key executives. The LTIs are in the form of an Australian dollar fi gure ‘grant’, which is notionally ‘invested’ in performance shares (PS) over time to deliver value depending on:



The Personnel and Organisation Committee approved one change to the rules of the LTIs for the 2005 awards onwards. The rules now allow that, in the event of a change in control of Lend Lease, all awards will vest upon change in control, to the extent that performance conditions have been met. Senior executives would then be entitled to a pro rata settlement, with the Board having discretion to allow the entitlement to exceed this pro rata amount.

Arrangements for LTIs Granted in the Financial Years 2005 and 2006For awards granted on 1 July 2004 and 1 July 2005, the performance hurdles are based on the Total Shareholder Return (TSR) against a basket of international comparator companies. Under these awards, the performance hurdle required TSR to achieve at least median against several comparator companies of Lend Lease. The comparator companies for these awards were: Amec, Atkins WS, Balfour Beatty, British Land, Centex, Hochtief, Jacobs Engineering, Jarvis, Jones Lang LaSalle, Land Securities, Lennar, Leighton Holdings, Liberty International, Mowlem, Skanska, Taylor Woodrow, United Group and Westfi eld Group.

A full list of the specifi c criteria that apply to LTIs granted is detailed in Section 3d. of this Report.

There is no retesting permitted under the LTI.

Arrangements for the June 2007 Financial Year – Additional Performance HurdleFor the June 2007 fi nancial year awards, the Personnel and Organisation Committee set new performance hurdles to align interests between the participant and shareholders and for consistency with the new STI structure.

For awards granted in 2006 onwards, the performance hurdle is based on two equal measures: long term profi tability as measured by Earnings Per Share (EPS) and external TSR compared to the TSR of the individual ASX100 listed companies as at the commencement of the performance period. The change in the TSR comparator group better refl ects those companies against which Lend Lease competes for capital.

The performance measures are:



Each of the two performance hurdles is measured and can vest independently. The executive must ordinarily remain with the Company until the vesting date for the award to vest.

For the 2006 award, it is intended that these awards will vest in Company shares rather than cash, other than for executives specifi cally identifi ed or in circumstances where share settlement is not practicable.

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Details of the terms of the awards on issue during the 2007 fi nancial year are summarised below.

Plan LTI – June 2004 LTI – June 2005 LTI – June 2006

Grant date 18 August 2004 17 August 2005 16 August 2006

Service period1 1 July 2004 – 30 June 2007 (3 years)

1 July 2005 – 30 June 2008 (3 years)

1 July 2006 – 30 June 2009 (3 years)

Performance condition(s):

1. TSR of Lend Lease against the TSR of several comparator companies of Lend Lease.

Performance measured over the three year performance period.

1. TSR of Lend Lease against the TSR of the individual ASX100 listed companies (comprised as at the beginning of the performance period) (50% award).

Performance assessed over the three year performance period.

Vesting Schedule – Rank 1 to 5 inclusive – 100% vesting

– Rank 6 to 10 inclusive – progressive decrease in vesting from 85% to 25%

– Rank 11 to 19 inclusive – 0% vesting

Vesting Schedule – Upper quartile or better –

100% vesting

– Median upper quartile – straight line increase from 50% to 100% vesting

– Median – 50% vesting

– Below median – 0% vesting

2. EPS growth of Lend Lease over performance period (50% award).

Vesting Schedule – At least 10% compounded

EPS growth (based on operating profi t after tax) over three years – 100% vesting

– Less than 10% EPS growth – 0% vesting

Each of the two performance conditions may vest independently.

Method of award settlement

Cash Cash or shares Shares, except for pre specifi ed executives

Award status Vested – 55% Not yet vested Not yet vested

1 This period may be shortened if an executive is a ‘good leaver’, that is, an executive who leaves employment by reason of death, total and permanent disability, redundancy or other reason as determined by the Personnel and Organisation Committee.

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AIFRS Previous GAAP

2007 2006 2005 2004 2003

Statutory profi t/(loss) after tax1 A$m 497.5 415.2 210.7 333.5 (714.8)

Operating profi t after tax1 A$m 413.7 354.2 310.42 255.93 230.24

Earnings per share5 cents 120.5 96.1 n/a n/a n/a

Dividends paid and declared A$m 308.5 243.7 227.2 177.4 129.4

Increase/(decrease) in closing share price6 A$ 4.55 1.03 2.68 1.93 (2.19)

1 Statutory profi t/(loss) after tax represents profi t attributable to the equity holders of the parent. Operating profi t after tax excludes unrealised property investment revaluations of A$51.6 million after tax for the June 2007 fi nancial year (A$61.0 million after tax for the June 2006 fi nancial year) and excludes certain non recurring items (June 2007: ATO interest of A$32.2 million after tax).

2 June 2005 is based on operating results excluding gains on exiting the REI businesses (A$11.6 million after tax), cost savings implementation expenses (A$47.7 million after tax), Lend Lease/GPT merger and net separation costs (A$19.4 million after tax) and write-off of GPT and Homemaker management agreements (A$44.2 million after tax).

3 Consistent with June 2005, June 2004 operating results have been restated to also exclude the impact of Group restructuring and merger costs (A$18.5 million after tax). June 2004 was based on operating results excluding the profi t from the sale of IBMGSA (A$79.7 million after tax), impact of exiting the REI businesses (A$2.3 million loss after tax) and capital loss tax benefi ts arising from Australian tax consolidations (A$18.7 million after tax) and including capital loss tax benefi ts (A$13.0 million recouped against the capital gain on sale of IBMGSA).

4 June 2003 excludes the write-down of REI businesses of A$945.0 million after tax.

5 For 2006 LTI awards, one vesting condition is EPS, as defi ned in this fi nancial report (excluding treasury shares) adjusted for unrealised property investment revaluations (unless assets have been sold).

6 For LTI awards, the starting and ending share prices are based on the average daily closing price over the award period (fi ve consecutive trading days for the 2004 LTI and three months for the 2005 and 2006 LTIs). The table above represents the movement in the closing share price on 30 June of each fi nancial year.





Long Term Incentives (LTIs) continuedHedging in Relation to LTI AwardsThe Company prohibits executives from entering into pre vesting hedging arrangements in relation to LTI awards. For awards made in the June 2007 fi nancial year onwards, it is an explicit condition for awards to vest that executives declare that they have not entered into any such arrangement.

Retention Awards When the Board believes an employee is an outstanding performer and the Company and its shareholders will gain from further incentivising him or her to remain with Lend Lease, a retention award may be made. As an incentive to remain with the Company requires a degree of certainty of value delivered to the individual at the end of the retention period, performance conditions are not

generally applied to the ultimate payment of such an award. Details of the current awards for each specifi ed executive are included in LTIs as part of the remuneration details disclosed in this Report.

Superannuation/Pension Plans Pension plan arrangements are in place in most international locations. In the past, executives (and other employees) joined either a defi ned benefi t or a defi ned contribution plan. Entry into all defi ned benefi t plans has now ceased across the Group. All new Executive Directors and executives have the opportunity to join defi ned contribution plans.

Relationship of Remuneration to Company PerformanceIn considering the Group’s performance and benefi ts for shareholder wealth, the Personnel and Organisation Committee, when setting the criteria for STI and LTI awards, has regard to the fi nancial performance of the Group. The performance in respect of these measures for the current fi nancial year and previous four fi nancial years is summarised in the following table.

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Operating profi t after tax is considered in setting the STI targets while dividends, changes in share price and return of capital are included in the TSR calculation, which is one of the performance hurdles assessed for the LTI.

The Personnel and Organisation Committee considers that the aforementioned external performance-linked remuneration structure is appropriate because it:

– Represents shareholders’ ‘bottom line’ and provides an objective measure of value created for shareholders;

– Is independent of accounting policies and accepted by institutional investors;

– Is simple to benchmark externally.


Directors’ fees have been set at A$140,000 per annum with a fee of A$15,000 for service on each Board Committee other than the Nomination Committee. Fee levels are in line with international benchmarks for a company the size of Lend Lease. Current Chairman’s fees are A$500,000, the Chairman of the Risk Management and Audit Committee receives an additional A$35,000 per annum and the Chairmen of each of the Nomination, Personnel and Organisation and Sustainability Committees receive an additional A$25,000.

In addition, Non Executive Directors are compensated for time spent travelling to overseas Board and Board Committee meetings. This additional time is compensated as follows:

– Travel less than four hours Nil;

– Travel between four and 12 hours A$2,000 each way;

– Travel over 12 hours A$5,000 each way.

To allow Directors to receive some of their annual remuneration in shares rather than cash, and thus align their interests with those of shareholders, a Non Executive Directors’ Share Ownership Plan was approved at the 2000 Annual General Meeting and subsequently renewed at the 2003 Annual General Meeting. This plan allows Directors to acquire Lend Lease shares by forgoing an amount of Directors’ fees equivalent to the value of the shares acquired. Subscriptions are made at the same price, at the same time and otherwise on the same terms as the Share Purchase Plan available to Australian and New Zealand registered shareholders and only while the Share Purchase Plan is operative. A Director is restricted from dealing with these shares until retirement. However, a Director may deal with shares at an earlier time to the extent necessary to meet an earlier tax liability in respect of the shares. This Plan has not been operative during the suspension of the Share Purchase Plan (since September 2003).

Retirement Plan

The Retirement Plan is designed to provide retirement benefi ts for Directors based on fees for Board service. Benefi ts are accrued in Lend Lease shares and will fl uctuate in line with the value of Lend Lease shares. Under the plan, the Company will issue to, or acquire for, or for the benefi t of, each Non Executive Director a number of Lend Lease shares equal in value to 0.2 times the Directors’ fees (being fees for attending and chairing Board and Board Committee meetings), but not additional fees.

Allocations are made in arrears on 1 January each year. For this purpose, the value of the shares on acquisition will be the weighted average price of Lend Lease shares traded on the Australian Securities Exchange during the fi ve business days prior to 1 January each year. The shares will be accessible only on retirement. Directors will be exposed to share price risk until this time. However, shares may be sold at an earlier time to the extent necessary to meet an earlier tax liability in respect of the shares.

Retirement Plan Changeover Arrangements

A defi ned benefi t Retirement Benefi t Plan (‘previous plan’) was approved by shareholders at the 1990 Annual General Meeting. Changeover arrangements which were approved by shareholders at the 2000 Annual General Meeting have been effected to transition from the previous plan to the current plan for Directors who were on the Board on 31 December 2000. Under these arrangements, retiring Non Executive Directors will receive a multiple applied to the average of their annual emoluments (i.e. Directors’ fees and amounts for additional services) over the previous three years. The multiple is 0.6 for each of the fi rst fi ve years of service as a Non Executive Director and 0.2 for each year over fi ve years to 15 years. This multiple for each Director was frozen at the multiple that would have applied if the Director had retired on 31 December 2000.

The following table sets out the accrued retirement benefi ts under the previous plan as at 30 June 2007 (based on the multiple being frozen on 31 December 2000). The Board has resolved to cap the entitlements under the previous plan at the lower of the accrued retirement benefi t as at 30 June 2003 (with interest payable at the 60 day bank bill rate) and the retirement benefi t calculated at the actual date of retirement.

Non Executive DirectorsYears of Service

at 31 December 2000


at 30 June 2007 A$


at 30 June 2006 A$

G Edington 1 111,249 92,467

P Goldmark 1 123,452 104,832

Non Executive Directors appointed since 1 January 2001 are not eligible to participate in the previous plan.

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c. Remuneration Details – AuditedDetails of the total remuneration of the Directors of Lend Lease Corporation Limited are set out on the following tables. In accordance with the requirements of AASB 124, the remuneration disclosures in the remuneration tables are calculated on an accruals basis and only include remuneration relating to the portion of the relevant periods that each individual was a Director.

2007 – Current Year Short Term

Salary and Fees

A$000s

Non Monetary2

A$000sDirectors

Incentive Bonus1

A$000s

Other Bonuses

A$000s

Executive DirectorsG Clarke 1,798 1,882 514

R Taylor 976 879 57

Total Executive Directors 2,774 2,761 – 571


P Colebatch 219

G Edington 218

P Goldmark 232

J Hill 217

D Ryan 228


Total Directors 4,435 2,761 – 571



2006 – Comparative Year Short Term

Salary and Fees

A$000s

Non Monetary3

A$000sDirectors

Incentive Bonus1

A$000s

Other Bonuses2

A$000s

Executive DirectorsG Clarke 1,783 1,967 2,211 450

R Taylor 841 713 793 30

A Chamberlain8 252

Total Executive Directors 2,876 2,680 3,004 480


P Colebatch9 98

G Edington 161

P Goldmark 180

J Hill10 35

R Longes11 48

D Ryan 169


Total Directors 4,036 2,680 3,004 480


2 ‘Other Bonuses’ represent additional payments payable to employees who participated in the 2003 LTI grant and were employed on 30 June 2006 (the original vesting date of the grant). The 2003 LTI award did not vest and lapsed in accordance with the rules of the LTI program. The Lend Lease Corporation Board has awarded the additional payment in recognition of the performance achieved. Refer to Section 3b. of this Report.


4 Accrued value of LTI benefi t for the year as determined by actuarial analysis. The 2004 and 2005 LTIs are expected to be settled in cash. Negative amounts represent an accrual reversal for the 2003 LTI which did not vest. Refer to Section 3d. of this Report.

STI

STI

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Long Term

Super-annuation

A$000s

Life Insurance

A$000s


LTIs3

CashSettledA$000s


Total A$000s


Related %

631 92 7,363 12,280 58.7

202 4 1,082 2,2924 5,492 35.7

833 96 – 8,445 2,292 – 17,772

13 100 660

13 34 266

13 34 265

13 35 280

13 33 263

13 36 277

78 – – – 2725 – 2,011

911 96 – 8,445 2,564 – 19,783


4 Equity remuneration is in respect of Mr Taylor’s retention incentive and participation in the Employee Share Acquisition Plan (ESAP).



Long Term7

Super-annuation

A$000s

Life Insurance

A$000s


LTIs4

CashSettledA$000s


Total A$000s


Related %

491 41 1,280 8,223 54.8

134 3 (157) 345 378 2,769 48.7

365 11 1,353 540 397 2,918 18.5

990 55 1,353 1,663 34 775 13,910

12 85 566

9 14 121

12 24 197

12 28 220

3 4 42

4 8 60

12 28 209

64 – – – 1916 – 1,415

1,054 55 1,353 1,663 225 775 15,325

5 Equity remuneration is in respect of Mr Taylor’s participation in the ESAP.


7 ‘Other Long Term’ represents cash retentions. Amounts due are expensed over the period of the retention.

8 Mr Chamberlain resigned as an Executive Director on 30 September 2005.

9 Mr Colebatch was appointed as a Non Executive Director on 1 December 2005.

10 Ms Hill was appointed as a Non Executive Director on 8 May 2006.

11 Mr Longes resigned as Deputy Chairman and a Non Executive Director on 17 November 2005.

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c. Remuneration Details – Audited continuedDetails of the total remuneration of the executives of the Lend Lease Group are set out below and on the following page. In accordance with the requirements of AASB 124, the remuneration disclosures in the remuneration tables are calculated on an accruals basis and only include remuneration relating to the portion of the relevant periods that each individual was a key management person. As set out in Section 3a. of this Report, there has been a change in the assessment of key management personnel in the current year.

2007 – Current YearFive Most Highly



Salary and Fees

A$000s

Non Monetary2

A$000s

Incentive Bonus1

A$000s

Other Bonuses

A$000s

S McCann6 ✓ ✓ 855 1,026 1

FormerR Johnston7 575 424 773

R Burrows8 ✓ ✓ 653 730 206

Total executives 2,083 2,180 – 980

Other Executives in the Category of Five Highest PaidR Butler9 ✓ 1,742 362 8

N Hugill ✓ 1,725 484 233

R Lourey10 ✓ 539 519 29

P Marchetto ✓ 697 498 35

N Martin ✓ 349 167 202

B Soller ✓ 526 336 333

Total other executives 5,578 2,366 – 840





5 ‘Other Long Term’ primarily represents cash retentions and accrual of statutory employee entitlements. Amounts due are expensed over the period of the retention.

STI

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Long Term5

Super-annuation

A$000s

Life Insurance

A$000s


LTIs3

CashSettledA$000s



Total A$000s


Related %

79 2 758 15 2,736 65.2

286 3 32 2,093 21.8

328 2 2,231 475 16 608 5,249 23.0

693 7 2,231 1,265 31 – 608 10,078

154 11 285 294 2,856 22.6

180 11 388 294 3,315 26.3

13 558 10 1,668 64.6

9 5 308 860 2,412 33.4

71 229 1,018 38.9

13 3 345 129 1,685 40.4

440 30 – 2,113 598 860 129 12,954

6 Mr McCann commenced as Chief Executive Offi cer Investment Management on 5 September 2005 and was appointed Group Finance Director on 21 March 2007.

7 Mr Johnston resigned on 31 July 2007.

8 Mr Burrows relinquished his position of Chief Financial Offi cer on 21 March 2007. His post employment benefi t refl ects payments related to the notice period and discretionary payments to ensure transitional arrangements suitable to Lend Lease.

9 Mr Butler commenced as Chief Executive Offi cer Lend Lease Retail and Communities UK in March 2007.

10 Mr Lourey resigned as Group Head of Human Resources on 31 July 2007.

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c. Remuneration Details – Audited continued

2006 – Comparative YearFive Most Highly



Salary and Fees

A$000s

Non Monetary3

A$000s

Incentive Bonus1

A$000s

Other Bonuses2

A$000s

S McCann7 ✓ 638 850 3

R Johnston ✓ 456 595 380 668

R Burrows ✓ 596 482 155 8

M Bellaman8 342 173 134 445

P Crewes ✓ ✓ 387 339 496

J Daniel 252 76 56

R Fehring 390 222 193 4

N Hugill9 ✓ 645 368 1,006 17

P Koziol10 117 3

R Lourey 475 250 15

P Marchetto ✓ 692 523 522 445

J Spanswick 519 140 357 42

Total executives 5,509 4,018 2,747 2,202

Other Executives in the Category of Five Highest Paid

R Butler11 ✓ 653 363 1,006 1

C Cree12 ✓ 339 114 43

B Soller ✓ 503 283 351 258

Total other executives 1,495 760 1,357 302


2 ‘Other Bonuses’ represents additional payments payable to employees who participated in the 2003 LTI grant and were employed on 30 June 2006 (the original vesting date of the grant). The 2003 LTI award did not vest and lapsed in accordance with the rules of the LTI program. The Lend Lease Corporation Board has awarded the additional payment in recognition of the performance achieved. Refer to Section 3b. of this Report.


4 Accrued value of LTI benefi t for the year as determined by actuarial analysis. The 2004 and 2005 LTIs are expected to be settled in cash.


STI

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Long Term6

Super-annuation

A$000s

Life Insurance

A$000s


LTIs4

CashSettledA$000s


Hybrids5

A$000s A$000sTotal

A$000s


Related %

57 1 172 6 1,727 59.2

214 2 (64) 2,251 40.5

286 1 22 24 1,574 41.9

6 2 (58) 10 1,054 23.6

66 5 1,658 (258) 16 2,709 3.0

46 30 460 23.0

35 2 (18) 17 845 47.0

126 5 77 2,244 19.8

(38) 82 (46.3)

12 95 6 853 40.4

9 5 (167) 486 2,515 34.9

(203) 855 34.4

857 23 1,658 (410) 69 486 10 17,169

125 4 48 2,200 18.7

144 3 318 (51) 910 6.9

12 4 (150) 126 1,387 34.9

281 11 318 (153) – – 126 4,497

6 ‘Other Long Term’ primarily represents cash retentions. Amounts due are expensed over the period of the retention.

7 Mr McCann commenced as Chief Executive Offi cer Investment Management on 5 September 2005.

8 Mr Bellaman commenced as Chief Executive Offi cer Lend Lease Communities and Retail Americas on 1 October 2005.

9 Mr Hugill commenced as Chief Executive Offi cer Lend Lease Communities Europe, Middle East and Africa on 15 August 2005.

10 Mr Koziol transferred from the role of Chief Executive Offi cer Lend Lease Communities on 1 October 2005.

11 Mr Butler commenced as Development Director Lend Lease Crosby Group on 15 August 2005.

12 Ms Cree resigned as Group Head of Risk on 15 April 2006.

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d. Long Term Incentives and Retentions – AuditedThe following criteria apply to all parts of Section 3d. of this Report.

Criterion 1:The ability to achieve the LTI is dependent upon the executive remaining with Lend Lease. If the executive resigns before vesting, the grant will lapse.

Criterion 2:The award is dependent upon service to vesting date, however, an early redemption date due to cessation of service may result in a pro rata payout.

Criterion 3:Progressive percentage monthly vesting of award over the respective award service life. (Refer to Section 3e. of this Report for details of Mr Clarke’s retention.)

Criterion 4:Forfeiture on resignation. Pro rata on other service cessation.

DirectorsGrant Date

Vesting Date1

Granted Number


A$


A$


20073

A$

G Clarke Dec 2002 Dec 2007 279,728 2,797,281 5,091,050 2,038,611

Dec 2002 Jun 2007 210,604 2,112,676 2,167,115 2,093,326

Jul 2004 Jun 2007 212,939 2,199,340 2,191,142 1,421,722

Jul 2005 Jun 2008 194,845 2,434,783 1,736,069 828,739

Jul 2006 Jun 2009 198,620 2,784,652 2,941,562 980,521

R Taylor Jul 2004 Jun 2007 63,959 660,601 658,138 427,033

Jul 2005 Jun 2008 60,819 759,994 541,897 258,685

Jul 2006 Jun 2009 80,243 1,125,007 1,188,399 396,133

Oct 2006 Sep 2007 84,407 1,374,992 1,564,906 1,115,636

Oct 2006 Sep 2008 84,407 1,374,992 1,564,906 532,318

Oct 2006 Sep 2009 84,408 1,375,008 1,564,924 349,884

Oct 2006 Sep 2010 84,408 1,375,008 1,564,924 260,578

Total Directors 22,775,032 10,703,186



3 Current award expensed represents the 2007 year accrued value of the LTI or retentions determined by actuarial analysis. The aggregate for each key person’s grant is shown in Section 3c. of this Report under ‘LTIs Cash Settled’ or ‘Equity Settled’.




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Criterion 5:The TSR of Lend Lease is greater than the median TSR of 18 comparator companies (with 25% vesting at median performance rising to 100% on reaching top quartile performance).

Criterion 6:The TSR of Lend Lease measured against the ASX100 companies (with 50% vesting at median performance, rising to 100% on reaching top quartile performance).

Criterion 7:The EPS of Lend Lease as reported in the fi nancial statements adjusted for treasury shares and unrealised gains or loses (with 100% vesting if a minimum compound annual growth rate of 10% over the three year performance period).





Service Criteria


PS/ Retention













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d. Long Term Incentives and Retentions – Audited continued

ExecutivesGrant Date

Vesting Date1

Granted Number


A$


A$


20073

A$

S McCann Jul 2005 Jun 2008 102,033 1,275,004 909,114 433,979

Jul 2006 Jun 2009 65,621 920,006 971,847 323,949

FormerR Johnston Jul 2004 Jun 2007 16,266 168,003 167,377 108,603

Jul 2005 Jun 2008 45,134 563,994 402,144 (76,127)

Jul 2006 Jun 2009 54,208 759,996 802,820

R Burrows Jul 2004 Jun 2007 12,766 131,854 131,362 85,234

Jul 2005 Jun 2008 43,278 540,802 385,607 184,075

Jul 2006 Jun 2009 41,655 584,003 616,911 205,637

Total executives 4,387,182 1,265,350



3 Current award expensed represents the 2007 year accrued value of the LTI or retention, determined by actuarial analysis. The aggregate for each key person or other executive is shown in Section 3c. of this Report under ‘LTIs Cash Settled’.

4 The percentage forfeited during the year represents a reduction in the number of performance shares available to vest due to the highest level performance criteria not being achieved or service conditions not being met.



Others in the Category of Five Highest Paid

Grant Date

Vesting Date1

Granted Number


A$


A$


20073

A$

R Butler Jul 2005 Jun 2008 28,238 352,862 251,601 120,107

Jul 2006 Jun 2009 33,368 467,819 494,180 164,727

N Hugill Jul 2005 Jun 2008 45,810 572,442 408,167 194,845

Jul 2006 Jun 2009 39,062 547,649 578,508 192,836

R Lourey Jul 2004 Jun 2007 38,728 400,002 398,511 258,584

Jul 2005 Jun 2008 32,010 399,997 285,209 136,150

Jul 2006 Jun 2009 33,096 464,006 490,152 163,384

P Marchetto Jul 2004 Jun 2007 46,200 477,177 475,398 308,462

Jul 2005 Jul 2008 110,664 1,453,834 2,051,711 859,938

N Martin Jul 2004 Jun 2007 15,401 159,069 158,476 102,827

Jul 2005 Jun 2008 12,205 152,514 108,747 51,910

Jul 2006 Jun 2009 15,157 212,501 224,475 74,825

B Soller Jul 2004 Jun 2007 21,499 222,052 221,225 143,542

Jul 2005 Jun 2008 22,608 282,510 201,437 96,160

Jul 2006 Jun 2009 21,398 300,000 316,904 105,635

Total other executives 6,664,701 2,973,932



3 Current award expensed represents the 2007 year accrued value of the LTI or retention, determined by actuarial analysis. The aggregate for each key person or other executive is shown in Section 3c. of this Report under ‘LTIs Cash Settled’, ‘Equity Settled’ and ‘Hybrids’.




7 Retention incentives that can be settled in cash or shares at the option of the executive.For

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Service Criteria


PS/ Retention













Service Criteria


PS/ Retention









0.0 0.0 nil n/a Criterion 2 none Retention7







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e. Service Agreements – AuditedExecutive Directors and Executives

Remuneration and other terms of employment for the key management personnel and other executives in the category of fi ve highest paid are formalised in service agreements. All of the employment contracts contain the conditions below:

Length of contract – No fi xed term.

Remuneration review period

– Annually by the Personnel and Organisation Committee.

Benefi ts – Australian resident executives are entitled to participate in the Lend Lease Employee Share Acquisition Plan;

– Other benefi ts vary; however typically include health insurance, life insurance, car allowances or motor vehicle leases and benefi ts provided by the Lend Lease Foundation;

– Executives who are relocated receive relocation packages. Benefi ts provided vary but typically include accommodation, transfer allowances, visas, shipping costs, school fees, home leave travel and tax advisory services.

STI participation – Executives are eligible for an award of STI remuneration. Refer to Section 3b. of this Report for further details and conditions.

LTI participation – Executives are eligible for an award of LTI remuneration. Refer to Section 3b. of this Report for further details and conditions.

Non compete and non solicitation clauses

– Non compete and non solicitation terms vary in each individual’s employment contract.

Termination of employment – Unless otherwise stated below, termination payments include base salary for the remainder of the notice period not served (up to 12 months), pro rata STI entitlements and LTI entitlements in accordance with the LTI program rules;

– All contracts with executives may be terminated early by either party;

– Immediate termination for misconduct or a serious breach of any of the terms of employment.

Other major provisions of the agreements relating to remuneration are set out below.

G Clarke– Term of agreement: No fi xed term, however

under the Lend Lease Corporation Constitution Mr Clarke was appointed as Managing Director for a term of fi ve years effective 16 November 2006. Furthermore, his international assignment was extended to 30 September 2009 on the existing terms with the exception of the extension of home leave trips each term for children attending UK universities. If still employed by the Company as at 1 July 2009, Mr Clarke’s expatriate arrangements will cease and he will be subject to local terms and conditions, including the following:

– Tax return preparation;

– Home leave trips under existing terms;

– Storage and insurance of items in the UK;

– Existing pension and life cover provisions.

– Notice period: 12 months.

– Termination payments provided for under the contract: Base salary for the remainder of any notice period not served, cash value of pro rata benefi ts, pro rata STI entitlements (based on 60% achievement of objectives), LTI entitlements in accordance with the LTI program rules and the value of the retention award.

– Retention award:


– Vest date: 9 December 2007.

– Grant number and value: 279,728 Lend Lease shares, valued at A$2,797,281 at grant date. The end payment is referable to the market value of 279,728 shares at vest date. Refer to Section 3d. of this Report for further details.

– Vesting conditions: Mr Clarke must remain in employment with Lend Lease until 9 December 2007. Payment is due if the Company terminates his employment without cause prior to that date.

– Forfeiture: The retention award is forfeited if Mr Clarke resigns prior to 9 December 2007, or if Lend Lease terminates Mr Clarke’s employment for cause.

– Early vesting conditions: A pro rata amount will be payable if the Company determines that Mr Clarke’s employment should be terminated for poor performance.

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– Long term incentive:



– Grant number and value: 210,604 Lend Lease shares, valued at A$2,112,676 at award date. The end payment is referable to the value of the award at vest date, A$10.29, which takes into account that 55% of the award vested.

– Vesting conditions: The TSR of Lend Lease must be greater than the median TSR of 18 comparator companies (with 25% vesting at median performance, rising to 100% on reaching top quartile performance). Mr Clarke was also required to remain in employment until the vest date.

– Forfeiture: 45% of the award was forfeited as Lend Lease did not achieve top quartile TSR.



– Additional benefi ts: Golf club membership (which is transferable within the Group if Mr Clarke resigns).

R Taylor– Retention award:

– Award date: 3 October 2006.

– Vest date: Four equal tranches on each of:




– 1 September 2010.

– Grant number and value: 337,630 Lend Lease shares, valued at A$5,500,000 at award date. Refer to Section 3d. of this Report for further details.

– Vesting conditions: Mr Taylor must remain in employment with Lend Lease or the vesting date must fall within a period of notice of termination in order for each tranche to vest.

– Forfeiture: The retention award is forfeited if Mr Taylor resigns and the vesting conditions set out above are not met.


– Non solicitation period post termination: Two years.

– Notice period: Six months (if instigated by the employee) or 18 months (if instigated by the Company).

– Termination on or after 1 September 2010: If Mr Taylor resigns or is terminated by the Company other than for cause on or after 1 September 2010:

– LTI awards will vest as if employment had not been terminated;

– Any deferred component of an STI award not yet vested will vest in accordance with the rules as if employment had not been terminated.

S McCann– Retention award:

– Award date: 22 August 2007.


– Grant number and value: Lend Lease shares to the value of A$2,500,000 at award date, based on the fi ve day weighted average closing share price up to and including the award date.

– Vesting conditions: Mr McCann must remain in employment with Lend Lease to the vesting date. If Mr McCann’s employment is terminated without cause by the Company prior to the vesting date, the award will vest on a pro rata basis.

– Forfeiture: The retention award is forfeited if Mr McCann resigns or is terminated for cause, and the vesting conditions set out above are not met.

– Notice period: Three months (if instigated by the employee) or 12 months (if instigated by the Company).

– Termination payments provided for under the contract: If Lend Lease terminates Mr McCann’s employment, Mr McCann’s most recent LTI award will be extended by 12 months from the date on which the Company provided him with notice of termination.

R Johnston– Notice period: Six months.

– Termination payments provided for under the contract: The Company will relocate Mr Johnston back to Australia consistent with the Group’s policy for international assignments.

N Hugill– Notice period: 12 months.


– The cost of annual subscriptions in respect of Mr Hugill’s membership of two relevant professional institutions.


– Non solicitation period post termination: 12 months.F

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e. Service Agreements – Audited continued

Executive Directors and Executives continued

P Marchetto– Notice period: Six months.

– Termination payments provided for under the contract: If the Company terminates Mr Marchetto’s service agreement without cause, or Mr Marchetto terminates the service agreement for ‘good reason’ (as defi ned by Mr Marchetto’s service agreement), Mr Marchetto is entitled to all accrued obligations as well as a severance payment that is:

– 1.5 times Mr Marchetto’s annual base salary as of the termination date;

– 1.5 times the greater of: (a) the STI paid to Mr Marchetto during his last full year of employment by the Company; or (b) the average of the STI paid to Mr Marchetto during each of the last three full years Mr Marchetto has been paid an STI by the Company;

– A pro rata share of Mr Marchetto’s STI and LTI as calculated on the termination date at the sole discretion of the Company;

– All other benefi ts that have accrued as of the termination date;

– Payments are made less applicable taxes, withholdings and deductions;

– In addition to the severance payment, Mr Marchetto is entitled to a release benefi t equal to six months of base salary as of the termination date if the Company terminates Mr Marchetto’s service agreement without cause. The release benefi t will be reduced by any applicable taxes, withholdings and deductions.

– Loans payable: Mr Marchetto had a loan of US$300,000, payable at call. The loan was forgiven on 1 November 2005. In the event that prior to 31 July 2009 Mr Marchetto resigns from employment for other than ‘good reason’ (as defi ned in Mr Marchetto’s employment contract) or the Company terminates Mr Marchetto’s employment for cause, Mr Marchetto must pay to the Company as liquidated damages an amount equal to the forgiven principal plus interest accruing from 1 November 2005. The principal amount required to be repaid is reduced by US$6,250 each month from August 2005 to July 2009 while Mr Marchetto is employed by the Company.


– Mr Marchetto will be reimbursed up to US$8,500 per annum for membership dues at a club of Mr Marchetto’s choosing that is suitable for business entertaining.



R Butler– Notice period: 12 months.


– The cost of annual subscriptions in respect of Mr Butler’s membership of two relevant professional institutions.



B Soller– Notice period: Six months (if instigated by the

employee) or 12 months (if instigated by the Company).


– Non solicitation period post termination: Six months.


– Relocation benefi ts as part of permanent relocation to Australia;

– Assignment bonus of A$188,225, payable on a pro rata basis to Mr Soller up to 12 October 2007.

R Burrows– Notice period: Not specifi ed in employment

contract. It is expected that the required notice would be in the range of that given to other executives having regard to seniority and length of service.

– Mr Burrows and the Company entered into a Deed of Release following Mr Burrows’ relinquishment of his position on 21 March 2007. His cessation of employment will be no later than 1 November 2007. The terms of this Deed of Release have been refl ected in the remuneration table in Section 3c. of this Report.

N Martin– Notice period: Six months.

– Termination payments provided for under the contract: The Company will relocate Mr Martin back to the UK consistent with the Group’s policy for international assignments.

R Lourey– Notice period: Six months (if instigated by

the employee) or 12 months (if instigated by the Company).

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Under the Company’s constitution, at each Annual General Meeting, one-third of the Directors and any other Director who will have been in offi ce for three or more Annual General Meetings since he or she was elected (excluding the Managing Director) must retire from offi ce and may submit themselves for re-election. Newly appointed Directors must seek election at the fi rst meeting of shareholders following their appointment.

It is the Board’s current policy that Non Executive Directors appointed from February 2002 will be limited to a maximum of three terms of three years. This policy may only be varied by the Board in exceptional circumstances.

f. Additional Information – AuditedAdditional information in relation to key management personnel’s equity holdings and transactions, loans and other transactions is contained in Note 35 of the Consolidated Financial Statements.

4. Other

a. Share OptionsNo share options were issued during the year by the Company or any of its controlled entities, and there are no such options on issue.

b. Indemnifi cation and Insurance of Directors and Offi cers

The Company’s Constitution provides for indemnifi cation in favour of each of the Directors named on pages 1 to 3 of this Report, the Company Secretaries, Mr W Hara and Ms S J Sharpe, and offi cers of the Company or of wholly owned subsidiaries or related entities of the Company (‘Offi cers’) to the extent permitted by the Corporations Act 2001.

For related entities, the indemnifi cation is provided unless the Directors determine otherwise. For unrelated entities in which Lend Lease has an interest, deeds of indemnity may be entered into between Lend Lease Corporation Limited and the Director or Offi cer. Since the date of the last report, the Company has not entered into any separate deeds of indemnity.

In accordance with the Corporations Act 2001, the Constitution also permits the Company to

purchase and maintain insurance or pay or agree to pay a premium for insurance for Offi cers against any liability incurred as an offi cer of the Company or of a related body corporate. This may include a liability for reasonable costs and expenses incurred in defending proceedings, whether civil or criminal, and whatever their outcome. During the year, Lend Lease paid insurance premiums of A$564,323 in respect of its Directors’ and Offi cers’ liability policies. Due to confi dentiality obligations and undertakings of the policy, no further details in respect of the premium or policy can be disclosed.

c. Non Audit ServicesDuring the year KPMG, the Company’s auditor, performed certain other services in addition to its statutory duties.

The Board has considered the non audit services provided during the year by the auditor and, in accordance with written advice provided by resolution of the Risk Management and Audit Committee, is satisfi ed that the provision of those non audit 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 non audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by the Risk Management and Audit Committee to ensure they do not impact the integrity and objectivity of the auditor;

– The non audit 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 Company, acting as an advocate for the Company or jointly sharing risks and rewards.

A copy of the Lead Auditor’s Independence Declaration as required under Section 307C of the Corporations Act 2001 is included at the end of this Report.

Details of the amounts paid to the auditor of the Company, KPMG, and its related practices for audit and non audit services provided during the year are set out below.

Consolidated

June 2007 A$000s

June 2006 A$000s

Audit and Review of Financial Reports 6,798 5,872

Other Services

KPMG

International assignees tax services 202 1,508

Tax services 456 1,052

Accounting advice 82 417


Total other services 1,000 3,249

Total audit and other services 7,798 9,121

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4. Other continued

d. Rounding OffLend Lease Corporation Limited is a company of the kind referred to in the Australian Securities and Investments Commission Class Order 98/100 dated 10 July 1998 and, in accordance with that Class Order, amounts in the fi nancial statements and this Report have been rounded off to the nearest tenth of a million dollars or, where the amount is A$50,000 or less, zero, unless specifi cally stated to be otherwise.

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



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

To: The Directors of Lend Lease Corporation Limited

I declare that, to the best of my knowledge and belief, in relation to the audit for the fi nancial year ended 30 June 2007 there have been:

– No contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

– No contraventions of any applicable code of professional conduct in relation to the audit.

KPMG

C HallPartner


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AIFRS1 Previous GAAP1

June 2007 June 2006 June 2005 June 2004 June 2003

Profi tability

Revenue A$m 14,282 12,127 9,435 9,726 10,114

Statutory profi t/(loss) before tax A$m 628 573 350 466 (567)

Operating profi t before tax2 A$m 545 473 393 385 315

Statutory profi t/(loss) after tax A$m 498 415 226 334 (715)

Operating profi t after tax2 A$m 446 354 286 256 230

Operating EBITDA2 A$m 551 527 411 430 474

Earnings per share on statutory profi t cents 124.3 104.0 56.5 80.6 (163.1)

Earnings per share on operating profi t2,3 cents 111.4 88.7 71.6 61.8 52.5

Statutory profi t after tax to shareholders’ equity (ROE) for the period % 15.7 14.7 11.9 9.0 6.5

Dividend per share4 cents 77 61 57 44 30

Dividend payout ratio on operating profi t2,4 % 69.2 68.8 79.5 69.2 56.0

Corporate Strength

Total assets A$m 9,336 8,166 6,925 7,131 7,409

Cash A$m 550 560 570 1,380 867

Borrowings A$m 1,076 846 500 862 885

Current assets A$m 4,514 3,379 2,612 3,455 3,703

Current liabilities A$m 3,869 3,179 3,384 3,328 2,993

Shareholders’ equity A$m 3,243 3,011 2,710 2,836 3,008

Cash fl ows from operations A$m 357 660 (55) 443 191

Net asset backing per share A$ 8.09 7.53 6.80 7.08 6.86

Ratio of current assets to current liabilities times 1.17 1.06 0.77 1.04 1.24

Borrowings to shareholders’ equity % 33.2 28.1 18.4 30.4 29.4

Borrowings to shareholders’ equity plus borrowings % 24.9 21.9 15.6 23.3 22.7

Net debt to shareholders’ equity % 16.2 9.5 (2.6) (18.3) 0.6

Borrowings to total market capitalisation % 14.5 15.1 9.7 20.9 24.2

Shares on issue m 401 400 399 400 439

Number of shareholders no. 49,051 50,179 52,878 63,143 74,878

Number of equivalent full-time employees no. 10,817 9,652 8,791 9,060 9,992

Shareholders’ Returns and Statistics

Proportion of shares on issue to top 20 shareholders % 76.9 76.4 75.6 69.8 61.5

Shareholdings relating to employees5 % 9.5 9.6 10.8 11.9 13.5

Total dividends paid or declared A$m 309 244 227 177 129

Share price as at 30 June as quoted on the Australian Securities Exchange A$ 18.54 13.99 12.96 10.28 8.35

1 June 2007, 2006 and 2005 refl ect results prepared under Australian Equivalents to International Financial Reporting Standards (AIFRS). The years prior to June 2005 represent Lend Lease’s results under previous Generally Accepted Accounting Principles (GAAP).

2 Operating profi t excludes unrealised property investment revaluations (June 2007: A$82.7 million before tax, A$51.6 million after tax; June 2006: A$99.4 million before tax, A$61.0 million after tax).

3 Calculated using the weighted average number of shares on issue including treasury shares.

4 Dividends include interim and fi nal dividends.

5 Shares held through employee benefi t vehicles.

Five Year Profi le

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Table of Contents

Overview 32Introduction 32

Results Summary 32

Profi t After Tax 32

Shareholder Returns 33

Dividends 33

Credit Strength 33

Cash Flow 33

Retail and Communities 34Key Financial Results 34

Retail 34

Overview of Business 34

Retail – Asia Pacifi c 35

Retail – Europe 35

Communities 36

Overview of Business 36

Communities – Asia Pacifi c 36

Communities – Europe 38

Crosby Lend Lease 38

Other Communities – United Kingdom 39

Communities – Americas 39

Actus Lend Lease 39

Other Communities – Americas 40

Investment Management 41Overview of Business 41

Key Financial Results 41

Funds Under Management 42

Investments 42

Property Investment Revaluations 43

Project Management, Construction and Private Finance Initiatives (PFIs) 43Key Financial Results 43

Bovis Lend Lease 44

Private Finance Initiatives (PFIs) 45

Corporate 45Group Services 45

Group Treasury 45

Appendix 1 – Results Detail 46

Management Discussion and Analysis of Financial Condition and Resultsof Operations (MD&A)

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MD&Acontinued

All currency amounts in the MD&A are expressed in Australian dollars unless otherwise specifi ed.

The following discussion and analysis is based on the Group’s consolidated fi nancial statements for the year ended 30 June 2007 and should be read in conjunction with those fi nancial statements.

Overview

IntroductionThe Group’s lines of business are focused on three geographic regions: Asia Pacifi c, Americas and Europe.

− The Retail business comprises retail property management, asset management and development in Australia, Singapore and the United Kingdom (UK);

− The Communities business is involved in the development of large scale urban regeneration and greenfi eld development projects in Australia, the United States of America (USA) and the UK. This business line includes privatisation services in the USA;

− Investment Management provides real estate investment management services in Asia Pacifi c and the UK. Investment Management includes the Group’s ownership interests in property investments in Asia Pacifi c, the UK and the USA. Ownership interests are held directly or indirectly through investments in Lend Lease managed funds;

− Project Management, Construction and Private Finance Initiatives (PFIs) provides construction, project management and design services across all regions through Bovis Lend Lease and includes the PFI business in Europe.

Results SummaryRevenue EBITDA Profi t/(Loss) After Tax1

June 2007A$m

June 2006A$m

June 2007A$m

June 2006A$m

June 2007A$m

June 2006A$m

Retail and Communities 1,857.0 2,384.9 258.1 245.3 183.4 167.5

Investment Management 171.0 134.8 310.6 174.8 262.8 129.5

Project Management, Construction and PFIs 12,167.9 9,576.6 57.1 187.0 57.6 134.6

Total operating businesses 14,195.9 12,096.3 625.8 607.1 503.8 431.6

Group Services 8.3 8.1 (80.6) (85.3) (60.0) (52.0)

Group Treasury 77.7 22.4 5.9 4.7 5.1 (22.4)


Total corporate 86.0 30.5 (74.7) (80.6) (57.9) (77.4)

Total operating 14,281.9 12,126.8 551.1 526.5 445.9 354.2

Property investments revaluations2 82.7 99.4 51.6 61.0

Total statutory 14,281.9 12,126.8 633.8 625.9 497.5 415.2



Profi t After TaxThe Group’s statutory profi t after tax increased by 20% to A$497.5 million. The Group recognised revaluation uplifts on its retail investments through the income statement of A$51.6 million after tax (June 2006: A$61.0 million).

The Retail business continued to consolidate its position with the successful opening of the Golden Square Shopping Centre in Warrington, UK and the commencement of construction of the Somerset Central development in Singapore. The Retail business profi t after tax declined as no retail developments were sold in the current year whereas the prior year included a profi t from the sale of the Chapelfi eld retail centre.

The Communities business profi t after tax increased with the higher contributions from Crosby Lend Lease (Crosby) and Actus Lend Lease (Actus). Actus reached fi nancial close on four projects and was named preferred bidder on another three projects in the year. In addition, the US Communities business signed a binding development agreement on the Lowry Range project in Denver, Colorado.

Investment Management launched two new funds in the year. In Australia, the Lend Lease Communities Fund 1 (LLCF1) was launched in July 2006 and the Lend Lease Asian Retail Investment Fund (ARIF) was launched in Singapore in December 2006, with fi nal close for this fund completed in May 2007. In Europe, profi t after tax increased due to the signifi cant profi t distributions received from the Group’s investment in Lend Lease Global Properties, SICAF (Global Fund) and the sale of the Group’s interest in Generali Lend Lease (GLL).

Project Management, Construction and PFIs’ profi t after tax decreased in the year as a result of the A$118.8 million after tax provision reported at December 2006, which was taken against certain UK projects including the Manchester Joint Hospitals project. Bovis Lend Lease increased profi t after tax in both Asia Pacifi c and the Americas.

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PFIs’ profi t after tax refl ects increased equity returns from investments and the recovery of bid costs. However, profi t after tax decreased as the prior year included profi t arising from the Lend Lease and Bank of Scotland PFI joint venture where the parties equalised their investment in 11 PFI projects.

Corporate costs before tax decreased, however corporate costs after tax increased due to the prior year including the reversal of a tax provision.

Group Treasury profi t after tax increased due to the recognition of interest income following a favourable judgement in the Federal Court on a tax dispute with the Australian Taxation Offi ce (ATO).

Property investment revaluation gains of A$51.6 million after tax were recognised through the income statement. In addition, revaluation gains of A$44.9 million after tax are not included in statutory profi t but are recognised in the Fair Value Revaluation Reserve in the fi nancial statements. The value of Lend Lease’s interest in Bluewater also increased, however as Bluewater is held as inventory, the asset is recorded at historical cost in the fi nancial statements.

Shareholder ReturnsJune 2007 June 2006

Earnings per share (EPS) on operating profi t1 cents 111.4 88.7

EPS on statutory profi t1 cents 124.3 104.0

Return on equity (ROE) on statutory profi t2 % 15.7 14.7

1 EPS is calculated using the weighted average shares on issue including treasury shares. Under the Australian Equivalents to International Financial Reporting Standards (AIFRS), shares held in employee benefi t vehicles including employee share plans, which Lend Lease sponsors, are treated as treasury stock and are excluded from the calculation. This would have the effect of increasing the EPS calculations above if applied.

2 ROE is calculated based on statutory profi t after tax and average equity.

DividendsA fi nal 50% franked dividend of 42 cents per share will be paid on 12 September 2007 (June 2006: 31 cents per share fully franked). On a full year basis, this equates to a total dividend of 77 cents which is a payout ratio of 69.2% of operating profi t after tax.

Credit StrengthJune 2007 June 2006

Net debt1 A$m 526.1 286.5

Net debt to total tangible assets % 6.2 3.9

Net debt to shareholders’ equity plus net debt % 14.0 8.7

Interest coverage2 times 7.9 7.8

Credit rating (Standard & Poor’s/Moody’s) rating BBB-/Baa3 BBB-/Baa3

1 Net debt is borrowings less cash.

2 Calculated as operating EBITDA plus interest revenue divided by gross borrowing costs, including capitalised borrowing costs.

The Group’s gearing remained low throughout the year and interest coverage at 7.9 times is above the Group’s internal targets. The Group continues to maintain an investment-grade credit rating.

Cash FlowJune 2007

A$mJune 2006

A$m




Effect of exchange rate changes on cash and cash equivalents (41.0) 5.9


Operating cash fl ows of A$357.2 million refl ect the strong underlying cash fl ows from the Group’s operating businesses net of continued investment in property developments. The decrease from the prior year is primarily attributable to June 2006 including the proceeds on the sale of the Chapelfi eld retail centre of A$532.0 million.

Investing cash outfl ows of A$382.7 million refl ects the Group’s recycling of capital including co-investments in new investment management funds launched in the year (LLCF1 and ARIF) offset by capital redemptions from the Global Fund. The prior year included the acquisition of Crosby of A$619.3 million.

Net cash provided by fi nancing activities of A$57.1 million includes £300.0 million borrowings raised from the issue of the 6.125% annual coupon guaranteed notes in the UK public bond market in October 2006, offset by the net repayment of £185.0 million in respect of the £350.0 million syndicated bank facility in the UK and dividend payments of A$237.2 million.

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MD&Acontinued


Key Financial ResultsThe key fi nancial results for the Retail and Communities business are summarised below.

Revenue EBITDA Profi t/(Loss) After Tax

June 2007A$m

June 2006A$m

June 2007A$m

June 2006A$m

June 2007A$m

June 2006A$m

Retail 48.6 724.1 (2.3) 44.6 (3.0) 30.9

Communities 1,808.4 1,660.8 260.4 200.7 186.4 136.6

Total Retail and Communities 1,857.0 2,384.9 258.1 245.3 183.4 167.5

RetailOverview of Business

Lend Lease focuses on shopping centres with expansion potential in growing catchment areas. This business strategy is to secure integrated positions, which play to the Group’s core skills and involve all components of the property value chain (ownership, development, construction and management). The Retail business is focused on three markets: Australia, Singapore and the UK.

During the year the business continued to grow its operations through:

− Acquiring an ownership interest in a further fi ve retail centres together with their related development and property management rights. A direct ownership interest was acquired in Somerset Central, Singapore; Paradiz Centre, Singapore and Pakenham Place, Melbourne while an indirect ownership interest was obtained in Pakenham Place, Melbourne; Caroline Springs Square, Melbourne and 420 George Street, Sydney via the Group’s investment in APPF Retail;

− Securing the right to acquire a 50% interest in the Park Place retail development in Croydon, UK, subject to certain commercial conditions;

− Increasing Gross Lettable Area (GLA) under management to 926,100 square metres (sqm) (June 2006: 763,100 sqm);

− Increasing the development pipeline to A$5.3 billion (June 2006: A$4.2 billion).

The Group’s retail interests are summarised below.

June 2007 June 2006

Ownership1

Number of centres 23 18

Market value of Lend Lease Interest2 ($b) 3.3 3.0

Total GLA (sqm – thousands) 1,407.7 1,330.9

Asset ManagementNumber of centres 16 12

Assets under management ($b) 12.0 9.8

GLA under management (sqm – thousands) 926.1 763.1

Development PipelineNumber of centres 11 12

Gross estimated development cost ($b) 5.3 4.2

Estimated additional GLA (sqm – thousands) 344.2 321.7

1 Lend Lease’s ownership interests are held directly or indirectly via managed funds.

2 Market value is based on independent valuations and is net of project-specifi c debt.

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The key fi nancial results for the Retail business are summarised below.


June 2007A$m

June 2006A$m

June 2007A$m

June 2006A$m

June 2007A$m

June 2006A$m

Asia Pacifi c 23.0 25.3 (1.3) 1.7 (1.0) 1.0

Europe 25.6 698.8 (1.0) 42.9 (2.0) 29.9

Total Retail 48.6 724.1 (2.3) 44.6 (3.0) 30.9

The Retail business comprises Lend Lease’s retail development and asset management activities. Income and property revaluations from ownership of retail investments are reported as part of Investment Management and income from the construction of retail centres is reported as part of Project Management, Construction and PFIs.

Profi t after tax in Asia Pacifi c declined by A$2.0 million from the prior year as the business continued to invest for growth.

Profi t after tax in Europe declined by A$31.9 million as the prior year included a profi t after tax of A$33.3 million relating to the sale of the Chapelfi eld retail centre.

Retail – Asia Pacifi c

In Asia Pacifi c, Lend Lease’s retail interests include an ownership interest in 15 retail centres in operation or under development (June 2006: 10 retail centres). The business is currently undertaking master planning of development opportunities for six centres in Australia and one in Asia with an estimated development cost of A$2.1 billion. In addition, the business carries out the asset management of nine centres in Australia and two in Asia with a total gross lettable area of 599,700 sqm.

Performance highlights for the year included:

− Securing the Somerset Central retail development, one of the last remaining major retail development opportunities along Orchard Road in Singapore. Work on the site has commenced, with completion expected by 2010. Lend Lease will manage all phases of the project including development, leasing, project management and construction and, on completion, asset and property management;

− Acquiring Pakenham Place shopping centre, a sub-regional centre located in a high growth corridor in South East Melbourne. Lend Lease has a 25% direct interest in the centre with the remaining 75% owned by APPF Retail, a Lend Lease managed fund;

− Acquiring a 25% interest in the Paradiz Centre, a retail and offi ce building in Singapore, together with the asset and development management rights for this centre;

− Securing the asset management and development rights for Caroline Springs Square in Melbourne and 420 George Street in the Sydney central business district (CBD). Lend Lease has an indirect interest in these centres via its investment in APPF Retail;

− Securing the asset and development management rights for Indooroopilly shopping centre in Queensland.

Retail – Europe

In Europe, Lend Lease’s retail business includes an ownership interest in seven retail centres in the UK (June 2006: seven retail centres). The business has development opportunities at four centres (June 2006: seven centres) which are expected to deliver an additional 201,800 sqm of retail space at an estimated cost of A$3.2 billion. The business carries out the asset management of fi ve centres (June 2006: fi ve centres) which have a total retail space of 326,400 sqm.


− Securing the right to acquire a 50% interest in Park Place, an 82,700 sqm retail development in Croydon, South London, subject to certain commercial conditions. Dependent on meeting these conditions, Lend Lease will invest £92.5 million to acquire a 50% interest in the project;

− Completing the development of the Golden Square Shopping Centre, Warrington, which opened in May 2007.

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MD&Acontinued

Retail and Communities continued

CommunitiesOverview of Business

The Communities business targets large scale urban regeneration and greenfi eld development projects in locations with projected population growth. The Lend Lease business model includes land sourcing, master planning and design, product development, marketing and fi nancing.

The scale and scope of the Communities development positions ensures earnings are derived from a diverse range of products. This diversity enhances the yield on projects and generates product for both the Investment Management and Construction businesses.

The key fi nancial results of the Communities business are summarised below.


June 2007A$m

June 2006A$m

June 2007A$m

June 2006A$m

June 2007A$m

June 2006A$m

Asia Pacifi c 733.5 724.2 135.6 144.3 90.9 92.6

Europe 430.9 508.4 73.0 19.1 51.8 12.9

Americas 644.0 428.2 51.8 37.3 43.7 31.1

Total Communities 1,808.4 1,660.8 260.4 200.7 186.4 136.6

Profi t after tax for the year increased by A$49.8 million to A$186.4 million. The estimated sales value of the Communities backlog is more than A$30 billion while the Actus backlog GPM exceeds A$0.5 billion.

Communities – Asia Pacifi c

The key fi nancial results for Communities – Asia Pacifi c are detailed below.

June 2007 June 2006

Profi t after tax (A$m) 90.9 92.6

Number of units settled 2,795 2,892

Gross sales value of units settled (A$m)1 940.5 892.9

Gross sales value of pre-sales (A$m)2 366.8 394.3

Number of projects 46 44

Backlog3 (number of lots and apartments)

− Zoned (with planning approval) 31,055 36,000

− Unzoned (awaiting planning approvals) 53,890 40,400

Backlog – Residential (lots and apartments) 84,945 76,400

Backlog – Commercial (sqm – thousands)4 2,751.1 2,223.1

Estimated sales value of total backlog (A$b)5 17.7 17.5

1 Gross sales value of units settled refl ects residential and non-residential revenue from projects, including revenue earned from joint venture projects and the sale of deferred management fees.

2 Pre-sales represent contracts entered into prior to 30 June 2007, including contracts from joint venture projects which have not settled and therefore do not form part of profi t after tax in the current year. These sales are expected to settle in future years. The gross sales value of pre-sales refers to the gross revenue from these pre-sales, including revenue earned from joint venture projects.

3 Backlog includes the total number of units in both company-owned and joint venture projects. The actual number of units for any particular project can vary as planning applications are obtained.

4 Includes approximately 85,000 sqm of retail backlog.

5 The estimated sales value of total backlog includes both company-owned and joint venture projects.

Communities – Asia Pacifi c has 46 active projects predominately on Australia’s eastern seaboard. The key product lines of the Communities business are: residential land lots; residential built-form (including houses, terraces and apartments); commercial (including retail, offi ce, light industrial and social infrastructure) and senior living (including retirement villages and village operations).

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The key fi nancial results of the Communities – Asia Pacifi c business by product line for the year are detailed below.

Residential Land Lots

Residential Built-Form Commercial4 Senior Living Total

June 2007

June 2006

June 2007

June 2006

June 2007

June 2006

June 2007

June 2006

June 2007

June 2006

Settlements1,2

Number of units 2,435 2,699 330 165 30 28 2,795 2,892

Gross sales value (A$m) 364.6 401.8 340.2 128.7 191.2 330.0 44.5 32.4 940.5 892.9

Pre-sales3

Number of units 1,220 605 144 246 3 6 1,367 857

Gross sales value (A$m) 200.6 72.1 128.9 250.7 35.9 69.4 1.4 2.1 366.8 394.3

1 The number of units settled during the year for Senior Living refers to primary sales (new development sites) and excludes any resales.

2 Gross sales value of units settled refl ects revenue from projects, including revenue earned from joint venture projects and the sale of deferred management fees.

3 Pre-sales number of units represents contracts entered into prior to 30 June 2007 including contracts from joint venture projects, which have not settled and therefore do not form part of profi t after tax in the current year. These sales are expected to settle in future years. The gross sales value of pre-sales refers to the gross revenue from pre-sales, including revenue earned from joint venture projects.

4 The number of units settled and pre-sales number of units are not relevant measures for commercial.


− Despite diffi cult trading conditions, profi t after tax of A$90.9 million is broadly in line with the prior year;

− The total gross sales value of units settled increased by A$47.6 million to A$940.5 million primarily due to an increase in residential built-form revenue due to settlement of 133 units at Dock 5, the fi rst residential apartment tower at Victoria Harbour and settlement of 40 residential built-form units at St Patricks, Sydney. Commercial revenue reduced by A$138.8 million due to the prior year including revenue of A$220.0 million from the sale of the Darling Park Stage III commercial development;

− The total number of lots settled declined by 3% to 2,795 units. The decrease was driven by a decline in the number of residential land lots settled, partially offset by an increase in settlements from residential built-form, primarily Dock 5 at Victoria Harbour and St Patricks, Sydney;

− The average sale price per residential land lot increased marginally from A$148,900 to A$149,700;

− The number of residential land lots pre-sold at 30 June 2007 was 1,220 units, a 100% increase on June 2006;

− The sale of three Communities projects (Woodlands, Ropes Crossing and Lakeside) to LLCF1. Lend Lease has a 20.8% co-investment in the fund and will earn ongoing management fees from these projects;

− The sale of the Group’s interest in a development site in Surfers Paradise to a third party. Concurrent with this transaction, a joint venture agreement between Lend Lease and ORIX Australia Corporation Limited to develop the site and adjacent properties was concluded;

− The sale of Caroline Springs Square in Melbourne to LLCPF and APPF Retail;

− The sale of the deferred management fees on a retirement village to LLCPF. The Senior Living business will continue to operate the village and receive management fees from LLCPF;

− The Yarrabilba project was included in the Urban Footprint in the Queensland Government’s amended Regional Plan. This is a signifi cant milestone towards rezoning;

− A binding Heads of Agreement has been signed to create a new 1,594 hectare master planned community at Rocky Springs, a major growth corridor in Townsville, adding 13,000 units to unzoned backlog;

− Executing a development agreement with Australia and New Zealand Banking Group Limited (ANZ) to develop, on behalf of ANZ, an 84,650 sqm commercial development at Victoria Harbour. Once completed the building will be the largest single tenancy commercial offi ce development ever undertaken in a CBD area in Australia.

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MD&Acontinued


Communities continuedCommunities – Europe

In Europe, the Communities business comprises Crosby, the Greenwich Peninsula project and First Base.

The key fi nancial results of the Communities – Europe business are detailed below.

Crosby Other Communities Total

June 2007 June 2006 June 2007 June 2006 June 2007 June 2006

Profi t/(Loss) after tax (A$m) 55.3 27.8 (3.5) (14.9) 51.8 12.9

Number of units settled 708 1,193 708 1,193

Gross sales value of units settled (A$m)1 523.2 550.0 523.2 550.0

Gross sales value of pre-sales (A$m)2 301.6 452.9 69.7 371.3 452.9

Number of projects 19 20 2 2 21 22


− Zoned (with planning approval) 3,745 3,550 9,860 10,150 13,605 13,700

− Unzoned (awaiting planning approvals) 1,115 280 1,115 280

Backlog – Residential (lots and apartments) 4,860 3,830 9,860 10,150 14,720 13,980

Backlog – Commercial (sqm – thousands)4 47.2 50.4 387.8 377.4 435.0 427.8

Estimated sales value of total backlog (A$b)5 2.1 1.6 10.9 8.4 13.0 10.0

1 Gross sales value of units settled refl ects revenue from projects, including revenue earned from joint venture projects.

2 Pre-sales represent contracts entered into prior to 30 June 2007, including contracts from joint venture projects which have not settled and therefore do not form part of profi t after tax in the current year. These sales are expected to settle in future years. The gross sales value of pre-sales refers to the gross revenue from pre-sales, including revenue earned from joint venture projects.

3 Backlog includes the total number of units in both company-owned and joint venture projects. The actual number of units for any particular project can vary as planning applications are obtained.



Crosby Lend Lease

Lend Lease acquired a 97% interest in The Crosby Group in July 2005. During the year, Lend Lease acquired the remaining 3% minority interest. Crosby is an urban regeneration specialist operating in major northern UK cities such as Manchester, Leeds and Birmingham. The majority of Crosby’s earnings are derived from mid to high rise apartment developments on brownfi eld urban regeneration sites.

Crosby performance highlights for the year included:

− A contribution to profi t after tax of A$55.3 million. The reported profi t after tax has been reduced by A$8.1 million after tax due to a fair value adjustment recognised on acquisition (June 2006: $46.3 million after tax);

− The gross sales value of units settled decreased by 5% primarily due to the timing of projects coming to market. The average sales price per residential unit also decreased from £178,500 to £175,100, driven mainly by changes in product mix across existing projects;

− An increase in the contribution from commercial revenue following the sale of the casino, multi-storey car park and offi ce space at Clarence Dock, Leeds, the sale of retail space at Navigation Street, Birmingham and the sale of offi ce and commercial space in Manchester;

− Increasing backlog by 1,030 units through the acquisition of Monkbridge, Leeds and additional phases on the Honduras Wharf and Potato Wharf developments. The closing backlog of 4,860 represents more than three years sales. Crosby is expected to replenish and build its backlog through a combination of site acquisitions and leveraging mixed-use development opportunities from within Lend Lease.F

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Other Communities – United Kingdom (UK)

Other Communities – UK operating loss after tax of A$3.5 million primarily relates to costs incurred in bidding for new projects. This business’s major project is Greenwich Peninsula. In addition, it has a 45% investment in First Base, a company specialising in affordable housing and community projects in London.

The Greenwich Peninsula project is a mixed-use development on 59 hectares of land on the Greenwich Peninsula in London. The project will be developed through a combination of land sales to third party developers and direct development with joint venture partners. The fi rst sale of residential lots was completed in September 2006 with settlement expected in 2008.

As a preferred partner of English Partnerships’ London-Wide Initiative, First Base has secured a backlog of 1,600 units. In addition to its equity stake in First Base, Lend Lease has directly invested in the company’s fi rst project, Adelaide Wharf, which comprises 150 apartments, 60 of which have been sold at 30 June 2007.

During the year, Lend Lease and its partners, First Base and East Thames, were selected by the Olympic Delivery Authority and London & Continental Railways Ltd as preferred Development Partner for Stratford City, site of the London 2012 Olympic Village. Lend Lease has commenced exclusive negotiations with the intention of entering into a Regeneration Agreement to develop the site.

Communities – Americas

In the USA, the Communities business consists of the Actus privatisation business and Lend Lease Communities, a newly formed business unit focusing on large scale urban greenfi eld and regeneration projects.

Actus Lend Lease

The primary focus of Actus is the Military Housing Privatization Initiative (MHPI) for all branches of the USA Military. The programme includes family housing, lodging and barracks and has a value of over US$40 billion, of which to date approximately US$17.0 billion of housing projects and the initial US$0.4 billion lodging project have been released. Under the MHPI, Actus Lend Lease is selected to own, fi nance, construct and operate projects for a period of 50 years. Actus has been awarded over 25% of the housing projects released and is preferred bidder on the initial lodging project.

The key fi nancial results for Actus are detailed below.

June 2007 June 2006


Construction gross profi t margin (GPM) (A$m) 47.3 25.8

Development GPM (A$m) 27.2 20.8

Asset management GPM (A$m) 8.0 5.3

Equity returns (A$m) 2.4 1.6

Number of projects1 16 11

Backlog (number of units under management)

Projects in operational status (secured) 31,500 27,700

Projects in preferred bidder status (awarded) 10,900 6,500

Total backlog 42,400 34,200

1 Number of projects includes extensions of existing projects and projects where Lend Lease is preferred bidder.


− Construction on secured projects progressing in accordance with contract obligations. Construction GPM increased from the previous year in line with the volume of construction work being undertaken;

− Development fee income increased as four projects reached fi nancial close in the year namely Camp Lejeune Phase 2, Fort Knox, Fort Campbell Additional Scoring and Fort Hood Stage 2. Development fees represent a fee for service and are not at risk for project performance;

− Selection as preferred bidder on the privatisation contracts for Tri Group in Colorado and California and Camp Lejeune Phase 3 in North Carolina and New York. The combined estimated construction value of these two projects is US$450 million;

− Selection as preferred bidder of the Privatized Army Lodging (PAL) project, which has an estimated construction value of US$400 million;

− Units under management increased by 8,200 to 42,400 units. Occupancy levels across the portfolio continued to meet project expectations, despite ongoing deployment of military personnel, ensuring that asset management fees were earned as planned.

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MD&Acontinued


Communities continuedActus Lend Lease continued

New Work Secured and Backlog GPM

New Work Secured

GPM June 2007

A$m

New Work Secured

GPM June 2006

A$m

Closing Backlog GPM at

June 20071

A$m

Closing Backlog GPM at

June 20061 A$m

Projects in operational status (secured) 63.6 75.2 351.4 337.0

Projects in preferred bidder status (awarded) 115.5 100.8 185.6 139.3

Total backlog GPM 179.1 176.0 537.0 476.3

1 Backlog GPM disclosed includes 10 years backlog from facilities management even though the contracts run for up to 50 years.

Backlog GPM Run Off

Year Ending June 2008

%


%

Post June 2009

%Total

%

Projects in operational status (secured) 17 16 67 100

Projects in preferred bidder status (awarded) 22 20 58 100

Total backlog GPM run off 19 17 64 100

Other Communities – Americas

This newly formed business focuses on large scale urban greenfi eld development and regeneration in the USA. The business has three projects: the San Francisco Piers development project, Horizon City Center, Denver and Lowry Range, Denver.

The key fi nancial results for the business are detailed below.

June 2007 June 2006


Number of units settled 74 61

Gross sales value of units settled (A$m)1 96.4 88.1

Gross sales value of pre-sales (A$m)2 36.5

Number of projects 3 2


− Zoned (with planning approval) 2,951 3,025

− Unzoned (awaiting planning approvals) 12,930

Backlog – Residential (lots and apartments) 15,881 3,025

Commercial (sqm – thousands)4 1,317.1 418.9

Estimated sales value of total backlog (A$b)5 2.3 0.4

1 Gross sales value of units settled refl ects revenue from projects, including revenue earned from joint venture projects.

2 Pre-sales represent contracts entered into prior to 30 June 2007, including contracts from joint venture projects which have not settled and therefore do not form part of profi t after tax in the current year. These sales are expected to settle in future years. The gross sales value of pre-sales refers to the gross revenue from pre-sales, including revenue earned from joint venture projects.

3 The actual number of backlog units for any particular project can vary as planning applications are obtained.




− The business signed a binding development agreement with the Colorado State Land Board on a 1,600 hectare development parcel known as Lowry Range in Denver, Colorado. A mixed-use housing, retail and commercial community proposed for the site is expected to commence construction next fi nancial year, with the fi rst settlements expected in 2010;

− Settlement of 74 condominiums at San Francisco Pier developed in joint venture with the San Francisco Cruise Terminal.F

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Overview of BusinessThe Investment Management business has A$10.5 billion of funds under management (FUM) (June 2006: A$9.7 billion). Lend Lease also holds investments directly and indirectly in property assets with a market value of A$3.4 billion (June 2006: A$3.2 billion). The Group’s interest in these property investments generated investment income EBITDA (excluding profi t distributions from Global Fund) of A$140.6 million during the year.

Key Financial ResultsThe key fi nancial results of the Investment Management business are summarised below.

Revenue1 EBITDA Profi t/(Loss) After Tax

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

Funds ManagementAsia Pacifi c 52.7 34.6 15.6 8.7 14.4 6.5

Europe 5.1 3.8 7.9 0.8 9.3 0.5

Americas 0.4 8.6 4.9 5.0 3.1

Total 57.8 38.8 32.1 14.4 28.7 10.1

Investment Income2

Asia Pacifi c 25.7 29.2 23.2 24.3 15.4 16.1

Europe 86.0 66.4 226.4 94.9 197.8 70.4

Americas 1.5 0.4 28.9 41.2 20.9 32.9

Total 113.2 96.0 278.5 160.4 234.1 119.4

Total OperatingAsia Pacifi c 78.4 63.8 38.8 33.0 29.8 22.6

Europe 91.1 70.2 234.3 95.7 207.1 70.9

Americas 1.5 0.8 37.5 46.1 25.9 36.0

Total 171.0 134.8 310.6 174.8 262.8 129.5

Property Investment Revaluations3

Asia Pacifi c 13.6 10.8

Europe 6.8 25.3 4.4 17.7

Americas 62.3 74.1 36.4 43.3

Total 82.7 99.4 51.6 61.0

1 Revenue excludes proceeds received from the sale of investments and joint venture interests, redemptions of available for sale fi nancial assets and Lend Lease’s share of profi ts from associates and joint ventures accounted for using the equity method.

2 Represents Lend Lease’s share of income from investments net of direct expenses and allocated overhead, excluding property investment revaluations. June 2006 EBITDA and profi t after tax includes gains from the sale of investments of A$27.0 million and A$24.6 million respectively. There are no gains on the sale of investments included in investment income in the current fi nancial year.



Asia Pacifi c

− The Funds Management business has performed strongly with continued support from its wholesale investor base. Two new funds were launched in the year, LLCF1 in Australia in July 2006 and ARIF in Singapore in December 2006, with the fi nal close for this fund completed in May 2007. Funds Management profi t after tax increased to A$14.4 million due to the strong underlying performance from the Australian business combined with transaction fees associated with the launch of ARIF in Singapore;

− Profi t after tax from investment income decreased by A$0.7 million to A$15.4 million primarily due to a decline in the carrying value of the Group’s investment in the International Distressed Debt Fund (IDDF). The Group’s investment in IDDF is a legacy position related to the former REI business which is currently being wound up.F

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MD&Acontinued

Investment Management continued

Key Financial Results continuedEurope

− The Group sold its interest in GLL to its joint venture partner following a strategic review of its position. This contributed profi t after tax of A$12.6 million;

− Profi t after tax from investment income increased to A$197.8 million principally due to profi t distributions, including foreign exchange gains, from the Group’s investment in the Global Fund of A$136.6 million after tax (June 2006: A$11.8 million).

Americas

− Total operating profi t after tax decreased to A$25.9 million due to the prior year including the sale of Value Enhancement Funds III, IV and V for a profi t after tax of A$7.5 million. The investment income of A$20.9 million after tax primarily relates to the Group’s investment in King of Prussia.

Funds Under Management (FUM)

Asia Pacifi c A$b

Europe A$b

Total June 2007

A$b

Total June 2006

A$b

FUM at beginning of fi nancial year 4.5 2.5 7.0 6.0

Additions 1.3 1.3 0.6

Reductions (0.1) (0.1) (0.1)

Net revaluations 0.4 0.3 0.7 0.5

FUM at end of fi nancial year (excluding joint ventures)1 6.1 2.8 8.9 7.0

FUM from joint venture interests2 1.6 1.6 2.7

FUM at end of fi nancial year (including joint ventures)1 7.7 2.8 10.5 9.7

1 FUM represents the gross market value of real estate and other related assets managed on behalf of investors.

2 Joint venture FUM includes Lend Lease’s proportional share of the FUM.

FUM (excluding joint ventures) increased by A$1.9 billion during the year. Key reasons for the increase are property acquisitions by APPF and LLCPF in Australia of A$0.7 billion and revaluation gains in existing managed assets of A$0.7 billion. In addition, the Group launched LLCF1 in July 2006, adding A$0.2 billion of FUM and ARIF in December 2006, adding A$0.4 billion of FUM.

FUM from joint venture interests declined by A$1.1 billion due to the sale of the Group’s interest in GLL. In July 2007, the Group also sold its interest in the Resolution Capital joint venture.

Investments

Region

Lend Lease Share of

Income1,2 June 2007

A$m

Lend Lease Share of Income1,2

June 2006 A$m

Market Value3

June 2007 A$m

Market Value3

June 2006 A$m

Bluewater UK 67.1 64.5 1,560.0 1,482.8

King of Prussia USA 28.2 25.1 483.8 445.3

Other retail investments Various 55.1 42.8 1,226.3 1,029.6

Other investments Various 128.1 28.0 150.9 210.9

Total direct and indirect investments 278.5 160.4 3,421.0 3,168.6

1 Represents Lend Lease’s share of income before tax from investments net of direct expenses and allocated overhead, excluding property investment revaluations.

2 Lend Lease’s share of income for June 2007 includes profi t distributions of A$137.9 million in relation to the Group’s investment in the Global Fund. June 2006 includes gains on the sale of investments of A$27.0 million. There are no gains on the sale of investments included in investment income in the current fi nancial year.

3 Market value is based on independent valuations and is net of project-specifi c debt.

Lend Lease held property investments, directly or indirectly, with a market value of A$3.4 billion at 30 June 2007.

− Lend Lease maintains a 30% direct interest in Bluewater. The independent market value at 30 June 2007 of 100% of Bluewater increased 6% to £2,158.0 million (A$5,200.0 million). The value of the Group’s 30% direct interest in Bluewater increased by A$77.2 million to A$1,560.0 million. However, the revaluation gains on Bluewater are not recognised in the fi nancial statements as the asset is treated as inventory and therefore is refl ected at cost, which at 30 June 2007 was A$596.1 million;

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− During the year Lend Lease reached agreement with Lafarge (formerly Blue Circle Industries) to provide certainty on the profi t sharing arrangement on Bluewater. Lafarge will receive £25.0 million when Lend Lease sells its 30% interest in Bluewater. The amount will be discounted if a sale occurs prior to 31 December 2011 and indexed if a sale occurs post 31 December 2011. Lafarge are able to conclude the agreement at any time by calling for a £15.0 million payment indexed from 1 January 2007. The cost base of Lend Lease’s interest in Bluewater includes £15.3 million at 30 June 2007 to refl ect this agreement;

− The value of Lend Lease’s 50% investment in King of Prussia increased by 9% to A$483.8 million;

− Other retail investments increased by A$196.7 million primarily due to the acquisition of the Somerset Central retail development in Singapore (June 2007 market value: A$53.4 million) and revaluation increases across the portfolio;

− As at 30 June 2007, Lend Lease owned 25% of the Somerset Central retail development directly with the remaining 75% held by ARIF. The Group completed the second and fi nal equity close for ARIF in May 2007 and, following this, Lend Lease’s interest in ARIF was reduced to 10.1%;

− Other investments decreased by A$60.0 million due to capital returns from the Global Fund which were partially offset by the investment in LLCF1 in the year (June 2007 market value: A$23.5 million) and revaluation increases across the portfolio.

Property Investment Revaluations1

Region

Unrealised Revaluations

Before Tax June 2007

A$m

Unrealised Revaluations

Before Tax June 2006

A$m

APIC II2 Asia 13.6

Lend Lease Overgate Partnership UK 3.8 16.1

Performance Retail Limited Partnership (acquired August 2005) UK 0.7 9.2

Chelmsford Meadows Shopping Centre (acquired March 2006) UK 2.3

King of Prussia USA 62.3 74.1

Total property investment revaluations 82.7 99.4


2 Lend Lease increased its interest in APIC II to 21.1% in April 2006. Prior to this date the investment was classifi ed as Other Financial Assets – Available for Sale and any revaluation movements were recognised in the Fair Value Revaluation Reserve.

The statutory profi t includes unrealised property investment revaluations of A$82.7 million before tax (A$51.6 million after tax) in the year. Further revaluation gains of A$44.9 million after tax are not included in statutory profi t but are recognised in the Fair Value Revaluation Reserve in the fi nancial statements.

Project Management, Construction and Private Finance Initiatives (PFIs)

Key Financial Results

RevenueRealised Gross Profi t Margin EBITDA Profi t/(Loss) After Tax

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

Bovis Lend Lease

Asia Pacifi c 2,374.9 1,718.6 142.8 123.5 63.5 43.1 54.6 23.8

Americas 6,063.8 4,587.6 189.1 190.3 89.7 87.3 65.9 59.3

Europe 3,618.0 3,193.5 33.2 154.8 (103.0) 48.0 (77.2) 33.3

Total Bovis Lend Lease 12,056.7 9,499.7 365.1 468.6 50.2 178.4 43.3 116.4

PFIs 111.2 76.9 13.0 9.1 6.9 8.6 14.3 18.2

Total Project Management, Construction and PFIs 12,167.9 9,576.6 378.1 477.7 57.1 187.0 57.6 134.6

Project Management, Construction and PFIs profi t after tax was A$57.6 million. As reported at December 2006, the decrease from the prior year is primarily a result of the recognition of an A$118.8 million after tax provision taken against certain UK projects including the Manchester Joint Hospitals project.

Profi t after tax for the year was negatively impacted by foreign exchange movements of A$4.2 million.

Total revenue increased by A$2.6 billion due to higher volumes in Asia Pacifi c, Europe and the Americas along with an increase in the weighting of construction services relative to fee service contracts in the Americas and the UK.

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MD&Acontinued

Project Management, Construction and PFIs continued

Bovis Lend LeaseAsia Pacifi c

Profi t after tax for the Asia Pacifi c business increased by A$30.8 million. Key contributions to gross profi t in Australia were multi-site projects for the Commonwealth, ANZ and National Australia banks, the Rouse Hill Town Centre retail project in Sydney, the Australian Taxation Offi ce building in Canberra, the Queensland Government Preparatory Schools Rollout and the Correctional Facilities projects in Queensland. In Asia, Japan and Taiwan continued to perform strongly off the back of telecommunication and technology projects. The effective tax rate was positively impacted by an A$12.1 million R&D tax credit received.

Americas

Profi t after tax for the Americas business of A$65.9 million is a A$6.6 million increase over the prior year. Profi t after tax was negatively impacted by foreign exchange movements of A$5.3 million. Excluding currency movements, profi t after tax increased by 20%. GPM was negatively impacted by foreign exchange movements of A$15.3 million, resulting in a decrease of A$1.2 million. Excluding the impact of foreign exchange movements, GPM increased by 7.4% due to higher volumes of work primarily in New York, Chicago and Washington. Contributions to GPM included the BP Retail Alliance, 340 E. Randolph in Chicago and One Rincon Hill in San Francisco.

Europe

Operating profi t after tax for the European business decreased by A$110.5 million due to the provision taken against certain UK projects including the Manchester Joint Hospitals project. The Manchester Joint Hospitals project is a highly complex project involving 13 new buildings, a number of building refurbishments and a complex demolition and decanting sequence. The provision of A$118.8 million after tax takes into account both cost overruns and delays in the expected completion date.

Outside of the UK, the European business had a solid performance with continued growth in the Gulf States, Continental and Eastern Europe, generating increases in fee service GPM.

Profi tability Ratio

The strong performances in the Asia Pacifi c and Americas regions resulted in improved profi tability ratios (defi ned as EBITDA divided by realised GPM) of 44% and 47% respectively (June 2006: 35% and 46% respectively).

New Work Secured and Backlog GPM

New Work Secured

GPM June 2007

A$m

New Work Secured

GPM June 2006

A$m

BacklogGPM at

June 20071 A$m

Backlog GPM at

June 20061 A$m

Asia Pacifi c 163.2 144.2 125.4 105.2

Americas 285.5 213.4 296.6 219.7

Europe 32.0 139.0 295.2 300.1

Total Bovis Lend Lease 480.7 496.6 717.2 625.0

Facilities Management2 25.1 10.8 75.7 60.5

Total operational projects 505.8 507.4 792.9 685.5

Projects in preferred bidder status (awarded)3 4.2 24.8

Total including projects in preferred bidder status 505.8 511.6 792.9 710.3

1 Although backlog GPM is run off over several years, the average rate for the current year has been applied to the closing backlog GPM balance in its entirety as the exchange rates for later years cannot be predicted accurately. In local currency, the Americas backlog GPM was US$234.0 million (June 2006: US$160.4 million) and the European backlog GPM was £119.8 million (June 2006: £120.0 million).

2 Backlog GPM disclosed includes only 10 years backlog from facilities management even though PFIs contracts run for longer periods of up to 35 years. Facilities management GPM is reported in PFIs.

3 Backlog GPM for projects in preferred bidder status in 2006 related to the Lancashire Schools and Lancashire Waste projects, which reached fi nancial close in December 2006 and March 2007 respectively.

New work secured is the total project GPM to be earned from projects secured during the year, net of margin movements. Total new work secured was impacted by a negative movement in foreign exchange of A$23.6 million. In Europe, new work secured was impacted by the provision on UK projects taken in the fi rst half of the fi nancial year.

Backlog GPM is the expected GPM to be realised in future fi nancial years from contracts committed at the end of the year. Backlog GPM was negatively impacted by foreign exchange movements of A$28.4 million. However, even after adjusting for the impact of foreign exchange movements and the margin deterioration on UK projects Backlog GPM has increased to A$792.9 million.

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Backlog GPM Realisation as at June 2007Year Ending June 2008

%


%

Post June 2009

%Total

%

Asia Pacifi c 68 22 10 100

Americas 60 30 10 100

Europe 55 27 18 100

Total Bovis Lend Lease 59 27 14 100

As at 30 June 2007, 59% of Bovis Lend Lease backlog GPM is projected to be realised as profi t in the year to June 2008. The proportion of Bovis Lend Lease secured backlog GPM to be realised beyond 12 months marginally decreased to 41% (June 2006: 44%).

Private Finance Initiatives (PFIs)The PFIs result includes net bid costs, facilities management GPM and returns on equity and loan stock. The PFIs result does not include construction GPM, which is included in Bovis Lend Lease. The profi t after tax from PFIs was A$14.3 million as a result of increased equity returns across the portfolio and the recovery of bid costs principally on achieving fi nancial close of the Lancashire Schools project. The June 2006 result included a A$19.6 million after tax profi t arising from the Lend Lease and Bank of Scotland PFI joint venture where the parties equalised their investment in 11 PFI projects.

Corporate


June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

Group Services 8.3 8.1 (80.6) (85.3) (60.0) (52.0)

Group Treasury 77.7 22.4 5.9 4.7 5.1 (22.4)


Total corporate 86.0 30.5 (74.7) (80.6) (57.9) (77.4)

Group ServicesCorporate costs before tax have decreased however corporate costs after tax have increased due to the prior year including the reversal of a tax provision.

Group TreasuryGroup Treasury manages the Group’s liquidity, foreign exchange, interest rate risk and debt. The result for the year is detailed in the table below.

Profi t/(Loss) Before Tax Profi t/(Loss) After Tax

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

Interest revenue 77.6 22.8 54.6 15.3

Interest expense and borrowing costs (78.1) (63.6) (52.9) (42.5)

Net hedge benefi t 4.9 6.8 3.4 4.8

Total Group Treasury 4.4 (34.0) 5.1 (22.4)

Interest Revenue and Expenses

− Interest revenue increased by A$54.8 million before tax due to the recognition of interest from the ATO of A$46.0 million. This interest has been recognised following a Federal Court judgement in favour of Lend Lease on an outstanding tax dispute;

− The interest rate on invested cash averaged 5.3% per annum for the year (June 2006: 4.2% per annum);

− Interest expense and borrowing costs increased by A$14.5 million before tax largely due to an increase in Group borrowings in the UK following the issue of the £300.0 million 6.125% annual coupon guaranteed notes due 12 October 2021 in the UK public bond market in October 2006;

− At 30 June 2007 the mix of borrowings, including the Bluewater lease, was 84% at fi xed rates and 16% at fl oating rates.

Hedging and Foreign Exchange Exposure

− Lend Lease hedges material foreign currency cash fl ows. Any foreign exchange gains or losses arising on the underlying cash fl ow or the hedging of business unit cash fl ows are allocated to the business unit’s operating profi t;

− Lend Lease uses natural hedging, where possible, to minimise its exposure to foreign denominated net assets. The remaining net assets are hedged at the discretion of management. The impact of foreign exchange movements on the Group’s net assets is accounted for in the Foreign Currency Translation Reserve (FCTR). In the year, the FCTR decreased by A$55.3 million, primarily due to changes in UK and USA exchange rates.

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MD&Acontinued

Appendix 1: Results Detail

Revenue EBITDAProfi t/(Loss) Before Tax1

Profi t/(Loss) After Tax2

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

Retail and CommunitiesRetail – Asia Pacifi c 23.0 25.3 (1.3) 1.7 (1.5) 1.5 (1.0) 1.0

Retail – Europe 25.6 698.8 (1.0) 42.9 (2.7) 42.8 (2.0) 29.9

Total Retail 48.6 724.1 (2.3) 44.6 (4.2) 44.3 (3.0) 30.9

Communities – Asia Pacifi c 733.5 724.2 135.6 144.3 133.7 140.9 90.9 92.6

Asia Pacifi c 733.5 724.2 135.6 144.3 133.7 140.9 90.9 92.6

Crosby 426.0 502.6 82.0 42.5 80.7 41.6 55.3 27.8

Other Communities – UK 4.9 5.8 (9.0) (23.4) (4.1) (20.6) (3.5) (14.9)

Europe 430.9 508.4 73.0 19.1 76.6 21.0 51.8 12.9

Actus Lend Lease 643.9 426.6 51.7 20.9 51.5 21.2 43.0 18.1

Other Communities – Americas 0.1 1.6 0.1 16.4 0.2 16.4 0.7 13.0

Americas 644.0 428.2 51.8 37.3 51.7 37.6 43.7 31.1

Total Communities 1,808.4 1,660.8 260.4 200.7 262.0 199.5 186.4 136.6

Total Retail and Communities 1,857.0 2,384.9 258.1 245.3 257.8 243.8 183.4 167.5

Investment ManagementAsia Pacifi c 78.4 63.8 38.8 33.0 43.9 33.0 29.8 22.6

Europe 91.1 70.2 234.3 95.7 234.3 95.7 207.1 70.9

Americas 1.5 0.8 37.5 46.1 37.5 46.1 25.9 36.0

Total Investment Management 171.0 134.8 310.6 174.8 315.7 174.8 262.8 129.5

Project Management, Construction and PFIsAsia Pacifi c 2,374.9 1,718.6 63.5 43.1 61.5 41.0 54.6 23.8

Americas 6,063.8 4,587.6 89.7 87.3 85.7 81.9 65.9 59.3

Europe 3,618.0 3,193.5 (103.0) 48.0 (106.9) 45.0 (77.2) 33.3

PFIs 111.2 76.9 6.9 8.6 14.0 12.9 14.3 18.2

Total Project Management, Construction and PFIs 12,167.9 9,576.6 57.1 187.0 54.3 180.8 57.6 134.6

Total operating businesses 14,195.9 12,096.3 625.8 607.1 627.8 599.4 503.8 431.6

Group Services 8.3 8.1 (80.6) (85.3) (83.8) (89.1) (60.0) (52.0)

Group Treasury 77.7 22.4 5.9 4.7 4.4 (34.0) 5.1 (22.4)

Group Amortisation (3.1) (3.0) (3.0) (3.0)

Total corporate 86.0 30.5 (74.7) (80.6) (82.5) (126.1) (57.9) (77.4)

Total operating 14,281.9 12,126.8 551.1 526.5 545.3 473.3 445.9 354.2

Property investment revaluations3 82.7 99.4 82.7 99.4 51.6 61.0

Total statutory 14,281.9 12,126.8 633.8 625.9 628.0 572.7 497.5 415.2

1 Profi t before tax is before deducting the amount attributable to minority interest.



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Consolidated Financials

Table of Contents

Consolidated Financial Statements 48Income Statements 48

Balance Sheets 49

Statements of Changes in Equity 50

Statements of Cash Flows 52

Notes to the Consolidated Financial Statements 531. Signifi cant Accounting Policies 53

2. Revenue 64

3. Other Income 65

4. Other Operating (Income) and Expenses 65

5. Taxation 67

6. Dividends and Earnings Per Share 71

7. Cash and Cash Equivalents 72

8. Loans and Receivables 73

9. Inventories 74

10. Investments Accounted for Using the Equity Method 75

11. Investment Properties 79

12. Other Financial Assets 80

13. Property, Plant and Equipment 81

14. Intangible Assets 82

15. Defi ned Benefi t Plan Asset 84

16. Other Assets 86

17. Trade and Other Payables 86

18. Borrowings and Financing Arrangements 87

19. Provisions 88

20. Other Financial Liabilities 89

21. Other Non Financial Liabilities 89

22. Defi ned Benefi t Plan Liability 90

23. Issued Capital and Treasury Shares 92

24. Reserves 93

25. Retained Earnings 94

26. Minority Interests 94

27. Contingent Liabilities 94

28. International Currency Management and Financial Instruments 95

29. Interest in Joint Venture Operations 100

30. Consolidated Entities 101

31. Segment Reporting 104

32. Commitments 106

33. Notes to the Statements of Cash Flows 108

34. Employee Benefi ts 109

35. Key Management Personnel Disclosures 114

36. Non Director Related Party Information 115

37. Events Subsequent to Balance Date 116


Independent Auditor’s Report 118For

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Consolidated Financial Statements

Income StatementsYear ended 30 June 2007


NoteJune 2007

A$mJune 2006

A$mJune 2007

A$mJune 2006

A$m

Revenue Revenue from the sale of development properties 2a 1,036.3 1,773.4

Revenue from the provision of services 2b 12,948.2 10,129.9

Finance revenue 2c 101.8 33.5 14.7 19.8

Other revenue 2d 195.6 190.0 319.1 237.9

Total revenue 14,281.9 12,126.8 333.8 257.7

Other Income 3 173.3 92.7 3.2 0.6

Expenses Project Management, Construction and Private Finance Initiatives (PFIs) activities

Cost of inventories sold (11,767.8) (9,103.7)


Retail and Communities activities

Cost of properties sold (1,350.1) (1,831.4)


Investment Management activities (48.5) (31.1)

Corporate and administrative activities expenses (88.8) (94.9) 61.8 (58.7)

Finance costs 4 (81.7) (61.8) (10.5) (16.2)

Total expenses (14,016.8) (11,833.8) 51.3 (74.9)

Share of profi t of associates accounted for using the equity method 10a 141.1 150.5

Share of profi t of joint venture entities accounted for using the equity method 10b 48.5 36.5

Profi t before tax 628.0 572.7 388.3 183.4

Income tax (expense)/revenue 5a (127.8) (150.1) 2.7 18.4

Profi t after tax 500.2 422.6 391.0 201.8

Profi t after tax attributable to:

Members of Lend Lease Corporation Limited 25 497.5 415.2 391.0 201.8


Profi t after tax 500.2 422.6 391.0 201.8

Basic Earnings Per Share

Shares excluding treasury shares (cents) 6b 134.5 112.7

Shares on issue (cents) 6b 124.3 104.0

Diluted Earnings Per Share

Shares excluding treasury shares (cents) 6c 134.4 112.7

Shares on issue (cents) 6c 124.2 104.0

The accompanying notes form part of these consolidated fi nancial statements.

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Balance SheetsAs at 30 June 2007


NoteJune 2007

A$mJune 2006

A$mJune 2007

A$mJune 2006

A$m

Current AssetsCash and cash equivalents 7 550.1 559.5 2.0 1.5

Loans and receivables 8 2,209.7 1,662.6 2,484.5 2,288.1

Inventories 9 911.2 940.8

Current tax assets 5b 7.1 3.1 3.5

Other fi nancial assets 12 646.5 24.2 1.8 1.2

Other assets 16 189.6 188.3

Total current assets 4,514.2 3,378.5 2,488.3 2,294.3

Non Current AssetsLoans and receivables 8 293.6 193.4 112.5 52.0

Inventories 9 1,326.1 1,213.1

Investments accounted for using the equity method 10 1,139.6 999.8

Investment properties 11 256.6 287.0

Other fi nancial assets 12 424.7 723.8 1,558.6 1,502.0

Deferred tax assets 5c 415.9 389.3 32.0 36.8

Property, plant and equipment 13 116.9 110.1 0.2 0.4

Intangible assets 14 788.1 809.7

Defi ned benefi t plan asset 15 23.1 21.7 23.1 21.7

Other assets 16 37.4 39.9

Total non current assets 4,822.0 4,787.8 1,726.4 1,612.9

Total assets 9,336.2 8,166.3 4,214.7 3,907.2

Current LiabilitiesTrade and other payables 17 3,612.0 2,898.6 1,431.2 1,344.7

Provisions 19 250.7 277.5 45.7 54.8

Current tax liabilities 5b 27.6

Other fi nancial liabilities 20 5.6 11.1 4.6

Other non fi nancial liabilities 21 0.5 3.0

Total current liabilities 3,868.8 3,179.1 1,515.6 1,404.1

Non Current LiabilitiesTrade and other payables 17 217.0 209.9 1.1

Borrowings and fi nancing arrangements 18 1,076.2 846.0

Provisions 19 13.4 26.1 0.4 0.3

Deferred tax liabilities 5c 504.5 415.9 8.7 7.0

Other fi nancial liabilities 20 249.3 211.2 69.8 31.3

Other non fi nancial liabilities 21 7.6 92.2

Defi ned benefi t plan liability 22 156.4 174.6

Total non current liabilities 2,224.4 1,975.9 78.9 39.7

Total liabilities 6,093.2 5,155.0 1,594.5 1,443.8

Net assets 3,243.0 3,011.3 2,620.2 2,463.4

EquityIssued capital 23 854.4 834.7 854.4 834.7

Treasury shares 23 (67.4) (64.5) (92.5) (89.6)

Reserves 24 97.7 149.7 173.5 168.3

Retained earnings 25 2,276.8 2,018.2 1,684.8 1,550.0

Total equity attributable to equity holders of the parent 3,161.5 2,938.1 2,620.2 2,463.4

Minority interests 26 81.5 73.2

Total equity 3,243.0 3,011.3 2,620.2 2,463.4


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Statements of Changes in EquityYear ended 30 June 2007


NoteJune 2007

A$mJune 2006

A$mJune 2007

A$mJune 2006

A$m

Issued Capital and Treasury SharesIssued Capital

Opening balance at beginning of fi nancial year 834.7 834.6 834.7 834.6

Ordinary share issues 19.7 0.1 19.7 0.1

Closing balance at end of fi nancial year 23 854.4 834.7 854.4 834.7

Treasury Shares

Opening balance at beginning of fi nancial year (64.5) (68.1) (89.6) (94.2)

Treasury shares acquired (6.7) (6.7) (0.1)

Treasury shares vested 3.8 3.6 3.8 4.7

Closing balance at end of fi nancial year 23 (67.4) (64.5) (92.5) (89.6)

Total issued capital and treasury shares 787.0 770.2 761.9 745.1

ReservesFair Value Revaluation Reserve

Opening balance at beginning of fi nancial year 101.7 0.8

Adjustment on adoption of Financial Instruments Standards AASB 132 and AASB 139 (net of tax) 113.9 0.8

Revaluation gain taken to equity (net of tax) 162.1 30.7 0.5

Transfer of fair value revaluation reserve to income statement on asset disposal (net of tax) (133.4) (43.1)


Closing balance at end of fi nancial year 24a 130.2 101.7 1.3 0.8

Hedging Reserve

Opening balance at beginning of fi nancial year (14.4)

Adjustment on adoption of Financial Instruments Standards AASB 132 and AASB 139 (net of tax) (3.4)

Movements attributable to effective cash fl ow hedges taken to equity (net of tax) (20.8) (10.6)

Transfer of hedge reserve to income statement (1.1)

Effect of foreign exchange rate movements 7.2 (0.4)

Closing balance at end of fi nancial year 24b (29.1) (14.4) – –

Foreign Currency Translation Reserve

Opening balance at beginning of fi nancial year 4.4 (13.5)

Movements attributable to translation and hedging of foreign operations (55.3) 17.9

Closing balance at end of fi nancial year 24c (50.9) 4.4 – –

Equity Compensation Reserve


Movements attributable to unallocated treasury shares 4.7 1.6 4.7 1.6

Closing balance at end of fi nancial year 24d 12.3 7.6 12.3 7.6

Other Compensation Reserve


Movements attributable to allocated treasury shares (12.6) (12.6)

Closing balance at end of fi nancial year 24e 55.3 55.3 55.3 55.3

Consolidated Financial Statementscontinued


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NoteJune 2007

A$mJune 2006

A$mJune 2007

A$mJune 2006

A$m

Capital Reserve


Closing balance at end of fi nancial year 24f 104.6 104.6 104.6 104.6

Minority Interest Acquisition Reserve

Opening balance at beginning of fi nancial year (109.5) (22.4)

Movements attributable to acquisition1 (20.0) (92.7)

Effect of foreign exchange rate movements 4.8 5.6

Closing balance at end of fi nancial year 24g (124.7) (109.5) – –

Total reserves 97.7 149.7 173.5 168.3

Retained EarningsOpening balance at beginning of fi nancial year 2,018.2 1,782.5 1,550.0 1,556.4

Profi t attributable to members of Lend Lease Corporation Limited 497.5 415.2 391.0 201.8

Dividends forgone pursuant to Share Election Plan 6.5 13.6 6.5 13.6

Dividends paid (263.9) (235.4) (263.9) (235.4)


Gain on utilisation of treasury shares recognised directly in retained earnings 0.8 23.9 1.2 13.6

Other (2.5) (0.2)

Closing balance at end of fi nancial year 25 2,276.8 2,018.2 1,684.8 1,550.0

Minority InterestsOpening balance at beginning of fi nancial year 73.2 18.8

Share of movement in profi t for fi nancial year 2.7 7.4

Movements attributable to acquisition 14.9 52.4

Movements attributable to disposal (5.1) (0.5)

Effect of foreign exchange rate/other movements (4.2) (4.9)

Closing balance at end of fi nancial year 26 81.5 73.2 – –

Total equity 3,243.0 3,011.3 2,620.2 2,463.4

Total Recognised Income and Expense for Financial YearNon profi t items recognised directly in equity 88.5 45.4 0.5

Profi t after tax for fi nancial year 497.5 415.2 391.0 201.8

586.0 460.6 391.5 201.8

Total income and expense for fi nancial year attributable to:

Members of Lend Lease Corporation Limited 583.3 453.2 391.5 201.8


586.0 460.6 391.5 201.8

1 The June 2007 movement represents the acquisition of an additional 3% interest in Crosby Lend Lease (June 2006: 12.5% Actus Lend Lease).


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Consolidated Financial Statementscontinued

Statements of Cash FlowsYear ended 30 June 2007


NoteJune 2007

A$mJune 2006

A$mJune 2007

A$mJune 2006

A$m

Cash Flows from Operating ActivitiesCash receipts in the course of operations 12,526.2 9,853.0 60.9 53.5

Cash payments in the course of operations (12,388.5) (9,623.6) (85.4) (80.4)

Property development receipts 33b 1,169.5 1,704.7

Property development expenditure 33b (1,007.7) (1,169.5)

Interest received 52.1 30.3 14.9 24.0

Interest paid (48.3) (60.8) (10.6) (16.3)

Dividends/distributions received 134.7 64.6 255.9 168.7

Income tax (paid)/received in respect of operations (80.8) (138.4) 7.8 (27.4)

Net cash provided by operating activities 33a 357.2 660.3 243.5 122.1

Cash Flows from Investing ActivitiesSale/redemption of investments 567.6 260.3

Acquisition of investments (843.4) (274.9)

Acquisition of investment properties (55.0)

Acquisition of other assets (0.5)

Loans to associates/related parties (15.8) (26.7)

Acquisition of consolidated entities (762.1)

Acquisition of minority interest (1.4) (92.5)

Disposal of consolidated entities (net of cash disposed) 30c 26.4 1.9

Sale of property, plant and equipment 509.0 10.4

Acquisition of property, plant and equipment (567.4) (26.5) (0.1)

Acquisition of intangible assets (2.2)

Net cash used in investing activities (382.7) (910.1) (0.1) –

Cash Flows from Financing ActivitiesProceeds from borrowings 1,567.2 2,549.2

Repayment of borrowings (1,287.8) (2,111.9)

Dividends paid (237.2) (203.2) (257.4) (221.8)

Decrease in fi nancing of consolidated entities 14.5 99.3

Increase/(decrease) in capital of minority interest 14.9 (0.3)

Net cash provided by/(used in) fi nancing activities 57.1 233.8 (242.9) (122.5)

Other Cash Flow ItemsEffect of foreign exchange rate movements on cash and cash equivalents (41.0) 5.9

Net (decrease)/increase in cash and cash equivalents (9.4) (10.1) 0.5 (0.4)

Cash and cash equivalents at beginning of fi nancial year 559.5 569.6 1.5 1.9

Cash and cash equivalents at end of fi nancial year 7 550.1 559.5 2.0 1.5


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1. Signifi cant Accounting Policies

Lend Lease Corporation Limited (‘the Company’) is domiciled in Australia. The consolidated fi nancial report of the Company for the fi nancial year ended 30 June 2007 comprises the Company and its subsidiaries (together referred to as ‘the consolidated entity’ or ‘the Group’) and the consolidated entity’s interest in associates and jointly controlled entities.

The fi nancial report was authorised for issue by the Directors on 15 August 2007.

a. Statement of ComplianceThe consolidated fi nancial report is a general purpose fi nancial report which has been prepared in accordance with Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian Accounting Standards Board and the Corporations Act 2001. The consolidated fi nancial report of the Group also complies with International Financial Reporting Standards (IFRS) and Interpretations adopted by the International Accounting Standards Board.

b. Basis of PreparationThe fi nancial report is presented in Australian dollars and is prepared under the historical cost basis except for the following assets and liabilities which are stated at their fair value: derivative fi nancial instruments, investments held for trading, investments available for sale, investment property and liabilities for cash settled share based compensation plans. Recognised assets and liabilities that are hedged are stated at fair value in respect of the risk that is hedged.

The preparation of a fi nancial report that complies with Australian Accounting Standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.

These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Information about critical accounting judgements in applying the Group’s accounting policies is set out in Accounting Policy Note 1ad.

The accounting policies set out below have been applied consistently to all fi nancial years presented in the consolidated fi nancial statements and by all entities in the consolidated entity. The Group has elected to early adopt revised AASB 101 ‘Presentation of Financial Statements’ (October 2006).

Certain comparative amounts have been reclassifi ed to conform with the current year’s presentation.

Basis of Consolidation

The Group consolidation comprises all entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the fi nancial and operating policies of an entity so as to obtain benefi ts from its activities. In assessing control, potential voting rights that are presently exercisable or convertible are taken into account. The fi nancial statements of subsidiaries are included in the consolidated fi nancial statements from the date that control commences until the date that control ceases.

Intragroup balances and transactions, and any unrealised gains or losses arising from intragroup transactions, are eliminated in preparing the consolidated fi nancial statements. Investments in subsidiaries are carried at their cost of acquisition in the Company’s fi nancial statements. The Company sponsors a number of employee benefi t vehicles, including employee share plans. Under AASBs, these vehicles, while not legally controlled, are required to be consolidated for accounting purposes.

c. New Accounting StandardsCertain new accounting standards and interpretations have been published that are not mandatory for the fi nancial year ended 30 June 2007 but are available for early adoption. The Group has not applied the following standards in preparing this fi nancial report. The Group’s assessment of these new standards and interpretations is set out below:

– AASB 7 ‘Financial Instruments: Disclosures’ and AASB 2005-10 ‘Amendments to Australian Accounting Standards’. AASB7 and AASB 2005-10 are applicable to annual reporting periods beginning on or after 1 January 2007. Application of these standards will not affect any of the amounts recognised in the fi nancial statements, but will impact the type of information disclosed, particularly in relation to the Group’s fi nancial instruments.

– AASB 8 ‘Operating Segments’ and AASB 2007-3 ‘Amendments to Australian Accounting Standards arising from AASB 8’. AASB 8 and AASB 2007-3 are applicable to annual reporting periods beginning on or after 1 January 2009. These standards replace the presentation requirements of segment reporting in AASB 114 ‘Segment Reporting’. The standards are only concerned with disclosure information and application will not affect the fi nancial results of the Group.

– AASB 2007-4 ‘Amendments to Australian Accounting Standards Arising From ED151 and Other Amendments’. AASB 2007-4 is applicable to annual reporting periods beginning on or after 1 July 2007 and must therefore be applied to the Group’s June 2008 fi nancial report. This standard allows all options available under IFRS to be available under Australian Accounting Standards. This standard makes amendments to a number of Australian Accounting Standards to introduce various accounting policy options, delete various disclosures presently required and to make a number of editorial amendments.

Notes to the Consolidated Financial Statements

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Notes to the Consolidated Financial Statementscontinued

1. Signifi cant Accounting Policies continued

c. New Accounting Standards continued While a large number of Australian Accounting

Standards are amended by AASB 2007-4, the key accounting policy options it introduces relate to the accounting for jointly controlled entities using the proportionate consolidation method and the presentation of the cash fl ow statement.

At the date of preparation of this fi nancial report, the Directors of the Company have not decided on which optional accounting treatments will be adopted on the initial application of AASB 2007-4. Accordingly, the potential fi nancial impact of AASB 2007-4 on the fi nancial statements is yet to be evaluated. It is expected that in the Group’s June 2008 fi nancial report, certain information may no longer be disclosed, or may be disclosed in an alternative manner.

– AASB Interpretation 10 ‘Interim Financial Reporting and Impairment’. Interpretation 10 will be mandatory for the Group’s June 2008 fi nancial report. The interpretation prohibits the reversal of an impairment loss recognised in a previous interim period in respect of goodwill, an investment in an equity instrument or a fi nancial asset carried at cost. The interpretation is not expected to impact the Group or Company’s fi nancial statements.

– AASB Interpretation 11 AASB 2 ‘Share Based Payment – Group and Treasury Share Transactions’ and AASB 2007-1 ‘Amendments to Australian Standards arising from AASB Interpretation 11’ (AASB 2). AASB Interpretation 11 and AASB 2007-1 are mandatory for the Group’s June 2008 fi nancial report. They address the classifi cation of a share based payment transaction (as equity or cash settled) in the fi nancial statements of the entity receiving the services. The interpretation is not expected to impact the Group or Company’s fi nancial statements.

– AASB Interpretation 12 ‘Service Concession Arrangements’ and AASB 2007-2 ‘Amendments to Australian Accounting Standards arising from AASB Interpretation 12’. AASB Interpretation 12 and AASB 2007-2 are applicable to annual reporting periods beginning on or after 1 January 2008. They address the accounting for service concession operators, but not grantors, for public to private service concession arrangements. The potential effect of Interpretation 12 and AASB 2007-2 on the Group’s fi nancial statements is yet to be determined.

d. Revenue, Other Income and Profi tsRevenue and Profi ts from the Sale of Development Properties

Revenue and profi ts from the sale of development properties are recognised are the income statement when:

– The signifi cant risks and rewards have been transferred to the buyer;

– The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the development properties sold;

– The revenue can be measured reliably and it is probable that the Group will receive the consideration due; and

– The Group can measure reliably the costs incurred or to be incurred.

Revenue from the Provision of Services

Revenue from the provision of services is recognised in the income statement in proportion to the stage of completion of the transactions at the balance sheet date:

– For property construction: the value of work performed using the percentage complete method, which is measured by reference to actual costs to date as a percentage of total forecast costs for each contract;

– For property and funds management: property development and management fee entitlements for services rendered; and

– For management of retirement villages: deferred management fees are recognised on an accruals basis based on a present value (or discounted) assessment of revenue earned from the management agreements on retirement villages at current sales values.

Dividends

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

Rental Income

Rental income is recognised in the income statement on a straight line basis over the term of the lease unless another systematic basis is more appropriate. Lease incentives granted are recognised as an integral part of the total rental income.

Net Gains or Losses on Sale of Investments

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

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Interest Income

Interest income is recognised on a time proportion basis using the effective interest method. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash fl ow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised either as cash is collected or on a cost recovery basis as conditions warrant.

e. Income TaxesIncome tax on the profi t or loss for the fi nancial year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the fi nancial year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous fi nancial years.

Deferred tax is measured using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for fi nancial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither accounting nor taxable profi t, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. Measurement of deferred tax is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profi ts will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefi t will be realised.

The Company is the head entity in the Australian Tax Consolidated Group comprising all the Australian wholly owned subsidiaries. The Company entered the Australian Tax Consolidation Regime effective 1 July 2002.

In addition to its own current and deferred tax amounts, the Company also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from the Australian wholly owned subsidiaries of the Australian Tax Consolidated Group (after elimination of intragroup transactions).

The Australian Tax Consolidated Group has entered into a tax funding arrangement that requires wholly owned Australian subsidiaries to make contributions to the Company for tax liabilities and deferred tax balances arising from external transactions occurring after the implementation of tax consolidation. The contributions are broadly calculated as if each entity paid tax on a stand alone basis.

The assets and liabilities arising under the Australian tax funding arrangement are recognised as intercompany assets and liabilities (at call) with a consequential adjustment to income tax expense/revenue.

f. ImpairmentThe carrying amounts of the Group’s assets, investment properties (see Accounting Policy Note 1h.), inventories (see Accounting Policy Note 1n.) and deferred tax assets (see Accounting Policy Note 1e.) are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. For goodwill and intangible assets with an indefi nite useful life, the recoverable amount is estimated annually. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement unless an asset has been previously revalued through reserves.

Impairment losses recognised in respect of cash generating units are allocated fi rst to reduce the carrying amount of any goodwill allocated to the cash generating unit (or group of units) and then to reduce the carrying amount of other assets in the unit (or group of units) on a pro rata basis.

Calculation of Recoverable Amount

The recoverable amount of the Group’s investments in held to maturity securities and receivables is calculated as the present value of expected future cash fl ows, discounted at the original effective interest rate inherent in the asset. Cashfl ows relating to short term receivables are not discounted if the effect of discounting is immaterial (see Accounting Policy Note 1l.).

The recoverable amount of other assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the assets. For assets that do not generate largely independent cash infl ows, the recoverable amount is determined for the cash generating unit to which each asset belongs.

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f. Impairment continuedReversals of Impairment

An impairment loss in respect of a held to maturity security or receivable is reversed if a subsequent increase in the recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, an impairment loss is reversed when there is an indication that the impairment loss may no longer exist and there has been a change in estimates used to determine the recoverable amount.

An impairment loss is reversed (other than goodwill) only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

g. InvestmentsThe Group classifi es its investments in debt and equity securities in the following categories: fi nancial assets at fair value through profi t or loss, loans and receivables, held to maturity investments, and available for sale fi nancial assets. The classifi cation depends on the purpose for which the investments were acquired.

Financial Assets at Fair Value through Profi t or Loss

This category has two subcategories: fi nancial assets held for trading, and those designated at fair value through profi t or loss at inception. A fi nancial asset is classifi ed in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classifi ed as current assets if they are either held for trading or are expected to be realised within 12 months of the balance sheet date.

Loans and Receivables

Loans and receivables are non derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except for maturities greater than 12 months after the balance sheet date.

Held to Maturity Investments

Held to maturity investments are non derivative fi nancial assets with fi xed or determinable payments and fi xed maturities that the Group’s management has the positive intent and ability to hold to maturity.

Available for Sale Financial Assets

Available for sale fi nancial assets are non derivatives that are either designated in this category or not classifi ed in any other category. They are included in non current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

Recognition and Measurement Criteria

Purchases and sales of investments are recognised on trade date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all fi nancial assets not carried at fair value through profi t or loss. Investments are de-recognised when the rights to receive cash fl ows from the investments have expired or been transferred and the Group has transferred substantially all the risks and rewards of ownership. Available for sale fi nancial assets and fi nancial assets at fair value through profi t or loss are subsequently carried at fair value. Loans and receivables and held to maturity investments are carried at amortised cost using the effective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the ‘fi nancial assets at fair value through profi t or loss’ category are included in the income statement in the fi nancial year in which they arise. Unrealised gains and losses arising from changes in the fair value of non monetary securities classifi ed as available for sale are recognised in equity. When securities classifi ed as available for sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains or losses from investment securities.

The fair values of quoted investments are based on current bid prices. If the market for a fi nancial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, and discounted cash fl ow analysis.

At each balance sheet date the Group assesses whether there is objective evidence that a fi nancial asset or a group of fi nancial assets is impaired. In the case of equity securities classifi ed as available for sale, a signifi cant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available for sale fi nancial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that fi nancial asset previously recognised in profi t or loss – is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.F

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h. Investment PropertiesInvestment properties are stated at fair value based on periodic, but at least triennial valuations by external independent valuers. It is the policy of the Group to review the carrying value of each property every six months. Fair value is based on current prices in an active market for similar properties in the same location and condition. If this information is not available, the Group uses alternative calculation methods such as discounted cash fl ow projections or recent prices on less active markets. Any gain or loss arising from a change in fair value is recognised in the income statement. Rental income from investment properties is accounted for as described in Accounting Policy Note 1d.

When an item of owner occupied property, plant and equipment (see Accounting Policy Note 1o.) becomes an investment property following a change in its use, any difference arising at the date of transfer between the carrying amount of the item and its fair value is recognised directly in equity if it is a gain. Upon disposal of the item, the gain is transferred to retained earnings. Any loss is recognised in the income statement immediately.

When an item of self constructed property, plant and equipment becomes an investment property following a change in its use, any difference between the fair value of the property at that date and its previous carrying amount is recognised in the income statement.

Expenses capitalised to properties may include the cost of acquisition, additions, refurbishments, redevelopments, borrowing costs and fees incurred.

i. AssociatesAssociates (including partnerships) are entities in which the Group has signifi cant infl uence, but not control, over fi nancial and operating policies. The consolidated fi nancial statements include the Group’s share of the total recognised gains and losses of associates on an equity accounted basis, from the date that signifi cant infl uence commences until the date that signifi cant infl uence ceases. Investments in associates are carried at the lower of the equity accounted carrying amount and the recoverable amount. When the Group’s share of losses exceeds the carrying amount of the associate, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred obligations in respect of the associate.

Dividends from associates represent a return on the Group’s investment and as such are applied as a reduction to the carrying value of the investment.

Unrealised gains arising from transactions with associates are eliminated against the investment in the associate to the extent of the Group’s interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

j. Joint Venture EntitiesA joint venture entity is an entity which has a contractual arrangement whereby two or more parties undertake an economic activity which is subject to joint control.

Investments in joint venture entities are accounted for using the equity method. Investments in joint venture entities are carried at the lower of the equity accounted carrying amount and recoverable amount.

Lend Lease’s share of joint venture entities’ profi t or loss after tax is recognised in the income statement from the date joint control commences until the date joint control ceases. Other movements in joint venture entities’ reserves are recognised directly in consolidated reserves.

Unrealised gains arising from transactions with joint venture entities are eliminated against the investment in the joint venture to the extent of the Group’s interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

k. Joint Venture OperationsA joint venture operation is a joint venture that is not in the form of an entity. The Group’s interest in an unincorporated joint venture is brought to account by including its interest in the following amounts in the appropriate categories in the balance sheet and income statement:

– Each of the individual assets employed in the joint venture;

– Liabilities incurred by the consolidated entity in relation to the joint venture and the liabilities for which it is jointly and/or severally liable;

– Expenses incurred in relation to the joint venture;

– Revenue earned in relation to the joint venture.

l. Trade and Other ReceivablesTrade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Cash fl ows relating to short term receivables are not discounted if the effect of discounting is immaterial.

A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and fair value, which is estimated as the present value of estimated future cash fl ows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement.F

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m. Pre Contract and Project Bidding Costs

The Group expenses all pre contract and project bidding costs, unless there is a high degree of certainty that a contract will be entered into (at least preferred bidder status) and that the costs will be fully recoverable from contract revenues. Costs previously expensed are not subsequently reinstated when a contract award is achieved.

n. InventoriesProperty Held for Sale

Property acquired for development and sale in the ordinary course of business is carried at the lower of cost and net realisable value. The net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The cost of property held for sale is based on the weighted average principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition, including borrowing costs incurred. Property expected to be sold within 12 months of the end of the fi nancial year is classifi ed as current inventory.

The net realisable value of each holding is assessed at each fi nancial year and a provision for diminution in value is raised by the Directors where cost (including costs to complete) exceeds net realisable value. In determining net realisable value, the Directors have regard to independent valuations obtained in accordance with Accounting Policy Note 1h.

Construction and Development Work in Progress

The gross amount of construction and development work in progress consists of costs attributable to work performed together with emerging profi t and after providing for any foreseeable losses.

o. Property, Plant and EquipmentOwned Assets

Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation and impairment losses (see Accounting Policy Note 1f.). The cost of self-constructed assets includes the cost of materials, direct labour and an appropriate proportion of production overheads.

Property that is being constructed or developed for future use as investment property is classifi ed as property, plant and equipment and stated at cost until construction or development is complete, at which time it is reclassifi ed as investment property.

Where an item of property, plant and equipment comprises components having different useful lives, they are accounted for as separate items of property, plant and equipment.

The residual value, useful life and depreciation method applied to an asset are reassessed at least annually.

Leased Assets

Leases in which the Group assumes substantially all the risks and rewards of ownership are classifi ed as fi nance leases. Plant and equipment acquired by way of fi nance lease is stated at an amount equal to the lower of its fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation and impairment losses (see Accounting Policy Note 1f.).

Leases in which a signifi cant portion of the risks and rewards of ownership are retained by the lessor are classifi ed as operating leases.

Subsequent Expenditure

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefi ts associated with the item will fl ow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the fi nancial year in which they are incurred.

Depreciation

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of items of property, plant and equipment, and major components that are accounted for separately. Amortisation is provided on leasehold improvements over the remaining term of the lease. Most plant is depreciated over a period not exceeding 10 years, furniture and fi ttings over 15 years, motor vehicles over eight years and computer equipment over three years. Land is not depreciated.

p. IT Software SystemsAcquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specifi c software. These costs are amortised over their estimated useful lives (three to fi ve years).

Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Costs directly associated with producing of identifi able and unique software products consolidated by the Group, and that will probably generate economic benefi ts exceeding costs beyond one year, are recognised as intangible assets. Direct costs include software development, employee costs and an appropriate portion of relevant overheads.

Computer software development costs recognised as assets are amortised over their estimated useful lives (not exceeding three years).

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q. Intangible Assets Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifi able assets and contingent liabilities of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisition of subsidiaries is included in intangible assets as goodwill. Goodwill on acquisitions of associates is included in the carrying value of investments in associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Goodwill is not amortised. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

For the purposes of impairment testing, goodwill is allocated to cash generating units (or groups of cash generating units) that are expected to benefi t from the synergies of the combinations, irrespective of whether other assets or liabilities of the acquiree are assigned to those units or groups of units.

Management Agreements and Other Intangible Assets

Management agreements and other intangible assets acquired by the Group are stated at cost less accumulated amortisation and impairment losses (see Accounting Policy Note 1f.). Amortisation is charged to the income statement on a straight line basis over the estimated useful lives of the intangible assets, which is 10 years for management rights.

r. Employee Benefi tsSuperannuation/Pension Obligations

Group companies operate various superannuation and pension schemes. The schemes are generally funded through payments to insurance companies or trustee-administered funds, determined by periodic actuarial calculations. The Group has both defi ned benefi t and defi ned contribution plans. A defi ned benefi t plan is a pension plan that defi nes the amount of pension benefi t an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. A defi ned contribution plan is a pension plan under which the Group pays fi xed contributions into a separate entity.

The asset and liability recognised in the balance sheet in respect of defi ned benefi t pension plans is the present value of the defi ned benefi t obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. The defi ned benefi t obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defi ned benefi t obligation is determined by discounting the estimated future cash outfl ows using interest rates of high quality corporate or government bonds that are denominated in the currency in which the benefi ts will be paid, and that have terms to maturity approximating the terms of the related pension liability.

All actuarial gains and losses as at 1 July 2004, the date of transition to Australian International Financial Reporting Standards (AIFRS), were recognised. In respect of actuarial gains and losses that arise subsequent to 1 July 2004 in calculating the consolidated entity’s obligation in respect of a plan, to the extent that any cumulative unrecognised actuarial gain or loss exceeds 10% of the greater of the present value of the defi ned benefi t obligation and the fair value of plan assets, that portion is recognised in the income statement over the expected average remaining working lives of the employees participating in the plan. Otherwise, the actuarial gain or loss is not recognised in the income statement: it is recognised in the balance sheet against the defi ned benefi t plan asset or liability.

Past service costs are recognised immediately in the income statement, unless the changes to the pension plan are conditional on the employees remaining in service for a specifi ed period of time (the vesting period). In this case, past service costs are amortised on a straight line basis over the vesting period.

For defi ned contribution plans, the Group pays contributions to publicly or privately administered superannuation/pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as an employee benefi t expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

Current Employee Entitlements

The provisions for employee entitlements to wages, salaries, annual leave and sick leave represent present obligations resulting from employees’ services provided up to the balance date, calculated at undiscounted amounts based on remuneration wage and salary rates that the Group expects to pay at each balance date, including related on-costs. Non accumulating non monetary benefi ts, such as medical care, housing, cars and free or subsidised goods and services, are expensed based on the net marginal cost to the consolidated entity as the benefi ts are taken by the employees.

Non Current Employee Entitlements

The provision for employee entitlements to long service leave represents the present value of the estimated future cash outfl ows to be made resulting from employees’ services provided up to balance date. Consideration is given to expected future increases in wage and salary rates, including related on-costs and expected settlement dates based on turnover history.

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r. Employee Benefi ts continuedShare Based Compensation

The Group operates cash settled and equity settled share based compensation plans that are referable to Lend Lease’s share price. The fair value of the employee services received in exchange for the grant is recognised as an expense and a corresponding liability (if cash settled) or a corresponding increase in equity (if equity settled). The total amount to be expensed over the vesting period is determined by reference to the fair value of the services granted. At each balance sheet date, the entity revises its estimates of the entitlement due. It recognises the impact of revision of original estimates, if any, in the income statement, and a corresponding adjustment to a liability (in the case of cash settled) or equity (in the case of equity settled) over the remaining vesting period. Changes in entitlement for equity settled plans are not recognised if they fail to vest due to market conditions not being met.

Termination Benefi ts

Termination benefi ts are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefi ts. The Group recognises termination benefi ts when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefi ts as a result of an offer made to encourage voluntary redundancy. Benefi ts falling due more than 12 months after balance date are discounted to present value.

Profi t Sharing and Bonus Plans

The Group recognises a liability and an expense for bonuses and profi t sharing, based on a formula that takes into consideration the profi t attributable to the Company’s shareholders after certain adjustments. The Group recognises a provision when contractually obliged or when there is a past practice that has created a constructive obligation.

s. Trade and Other PayablesTrade Creditors

Liabilities are recognised for amounts to be paid in the future for goods or services received, whether or not billed to the Group. Trade accounts payable are normally settled within 60 days. Trade and other payables are stated at amortised cost or cost when the impact of discounting would be immaterial.

Insurance Claims

A liability for outstanding claims is recognised in respect of Lend Lease’s wholly owned special purpose captive insurance subsidiary. The liability covers claims incurred but not yet paid, claims incurred but not reported and the anticipated direct and indirect costs of settling those claims. The liability for outstanding claims is measured at the present value of the expected future payments, refl ecting the fact that all the claims do not have to be paid out in the immediate future. The discount rates used are risk free rates.

Financial Guarantee Contracts

Financial guarantee contracts, including the Company guarantees of Group entities’ borrowings, are recognised when issued as a fi nancial liability. The liability is measured initially at fair value and subsequently at the higher of the best estimate to settle the obligation (see Accounting Policy Note 1w.) and the initial fair value less accumulated amortisation. Fair value is determined using a probability weighted discounted cash fl ow approach.

Change in Accounting Policy

The policy of recognising fi nancial guarantee contracts as fi nancial liabilities was adopted in the current fi nancial year. Previously, such contracts were only recognised as a liability if settlement was considered probable.

The change in accounting policy was necessary following the change to AASB 139 ‘Financial Instruments: Recognition and Measurement’ made by AASB 2005-9 ‘Amendments to Australian Accounting Standards’. The new policy has been applied retrospectively and comparative information has been restated.

The change in accounting policy increased the Company’s related party receivables by A$80.9 million (2006: A$37.9 million), other fi nancial liabilities by A$80.9 million (2006: A$35.9 million) and retained earnings by A$2.0 million.

The Company’s current year profi t decreased by A$2.0 million (2006: A$2.0 million income), refl ecting the amortisation of the fi nancial guarantees and changes in the value of the receivable.

The change has no impact on the Group’s net profi t or earnings per share.

t. BorrowingsBorrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost and any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Preference shares, which are mandatorily redeemable on a specifi c date, are classifi ed as liabilities. The dividends on preference shares are recognised in the income statement as interest expense.

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The fair value of the liability portion of a convertible bond is determined using a market interest rate for an equivalent non convertible bond. The amount is recognised as a liability on an amortised cost basis until extinguished on conversion or maturity of the bond. The remainder of the proceeds is allocated to the conversion option. This is recognised in equity, net of income tax.

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

u. Foreign Currency TranslationFunctional and Presentation Currency

Items included in the fi nancial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated fi nancial report is presented in Australian dollars, which is the Company’s functional and presentation currency.

Transactions and Balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains or losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity as qualifying cash fl ow hedges and qualifying net investment hedges in foreign operations.

Translation differences on non monetary items, such as equities held at fair value through profi t or loss, are reported as part of the fair value gain or loss. Translation differences on non monetary items, such as equities classifi ed as available for sale fi nancial assets, are included in the fair value reserve in equity.

Group Companies

The results and balance sheet of all Group entities (none of which has the currency of a hyperinfl ationary economy) that have a functional currency different from the presentation currency (A$) are translated into the presentation currency as follows:

– Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

– Income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions);

– All resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments, are taken to the Foreign Currency Translation Reserve. When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

The Group uses derivative fi nancial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operating, fi nancing and investing activities. In accordance with its Treasury policy, the Group does not hold or issue derivative fi nancial instruments for trading purposes.

Derivative fi nancial instruments are recognised initially at fair value on the date a derivative contract is entered into and subsequently remeasured at their fair value. Recognition of any resultant gain or loss depends on the nature of the item being hedged.

The fair value of interest rate swaps is the estimated amount the Group would receive or pay to terminate the swap at the balance sheet date, taking into account current interest rates and the current creditworthiness of the swap counterparties. The fair value of forward exchange contracts is their value at the current quoted forward price at the balance sheet date.

v. Derivative Financial Instruments and Hedging Activities

Hedging Derivatives

Fair Value Hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

Cash Flow Hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash fl ow hedges are recognised in equity. The gain or loss relating to the ineffective portion is recognised immediately in the income statement.

Amounts accumulated in equity are recycled to the income statement in the years when the hedged item will affect profi t or loss (for instance, when the forecast sale that is hedged takes place). However, when the forecast transaction that is hedged results in the recognition of a non fi nancial asset (for example, inventory) or a liability, the gains or losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset or liability.F

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v. Derivative Financial Instruments and Hedging Activities continued

Hedging Derivatives continued

Cash Flow Hedge continued

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.

Net Investment Hedge

Hedges of net investments in foreign operations are accounted for similarly to cash fl ow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity; the gain or loss relating to the ineffective portion is recognised immediately in the income statement.

Gains or losses accumulated in equity are included in the income statement on disposal of the foreign operation.

Held for Trading Derivatives

Certain derivative instruments do not qualify for hedge accounting or hedge accounting treatment is not sought. These instruments are classed as held for trading and changes in their fair value are recognised immediately in the income statement.

w. ProvisionsA provision is recognised on the balance sheet when the Group has a legal or constructive obligation as a result of a past event, and it is probable that an outfl ow of economic benefi ts will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash fl ows at a pre tax rate that refl ects current market assessments of the time value of money and, when appropriate, the risks specifi c to the liability.

A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced publicly. Future operating costs are not provided for.

A provision for onerous contracts is recognised when the expected benefi ts to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract.

x. Borrowing CostsBorrowing costs include interest, amortisation of discounts or premiums relating to borrowings, amortisation of ancillary costs incurred in connection with arrangement of borrowings and foreign exchange differences net of hedged amounts on borrowings.

Ancillary costs incurred in connection with the arrangement of borrowings are capitalised and amortised over the life of the borrowings.

Borrowing costs are expensed as incurred unless they relate to qualifying assets. Qualifying assets are assets that take more than six months to prepare for their intended use or sale. In these circumstances, borrowing costs are capitalised to the costs of the assets. When funds are borrowed specifi cally for the acquisition or construction of a qualifying asset, the amount of borrowing costs capitalised are those incurred in relation to that borrowing. To the extent that funds are borrowed generally, the amount of borrowing costs capitalised is calculated by applying a capitalisation rate to the expenditures on that asset.

y. Earnings Per ShareBasic earnings per share (EPS) is determined by dividing profi t after income tax attributable to members of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares (adjusted for treasury shares) outstanding during the fi nancial year, adjusted for bonus elements in ordinary shares issued during the fi nancial year.

Diluted EPS is determined by adjusting the profi t after tax attributable to members of the Company and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

z. Cash and Cash EquivalentsCash and cash equivalents includes cash on hand, deposits held at call with banks, bank overdrafts and other short term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignifi cant risk of changes in value.

Bank overdrafts (if applicable) are shown as a current liability on the balance sheet and are shown as a reduction to the cash balance in the statement of cash fl ows.

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aa. Share CapitalOrdinary shares are classifi ed as equity. Preference share capital is classifi ed as equity if it is non redeemable and any dividends are discretionary, or is redeemable but only at the Company’s option. Dividends on preference share capital classifi ed as equity are recognised as distributions within equity.

Preference share capital is classifi ed as a liability if it is redeemable on a specifi c date or at the option of the shareholders or if dividend payments are not discretionary. Dividends thereon are recognised in the income statement as interest expense.

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a change in equity.

Dividends on redeemable preference shares are recognised as a liability on an accrual basis. Other dividends are recognised as a liability in the fi nancial year in which they are declared.

ab. Goods and Services TaxRevenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the Australian Taxation Offi ce (ATO) is included as a current asset or liability in the balance sheet. Cash fl ows are included in the statement of cash fl ows on a gross basis. The GST components of cash fl ows arising from investing and fi nancing activities which are recoverable from, or payable to, the ATO are classifi ed as operating cash fl ows.

ac. Service Concession Arrangements (Private Financing Initiatives and Public Private Partnerships)

Contract obligations and related rights are recognised and measured in accordance with AASB 111 ‘Construction Contracts’ and AASB 118 ‘Revenue’. Obligations are recognised when consideration is received in advance of performance. Consideration receivable in respect of construction or other services is accounted for in accordance with AASB 139 ‘Financial Instruments: Recognition and Measurement’ as a ‘loan or receivable’ and is measured at amortised cost. Borrowing costs are capitalised in accordance with Accounting Policy Note 1x. Pre contract and project bidding costs are capitalised in accordance with Accounting Policy Note 1m.

ad. Accounting Estimates and Judgements

The estimates and judgements that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year are discussed below.

Key Sources of Estimation Uncertainty

Note 14a. ‘Goodwill’ contains information about the assumptions and their risk factors relating to goodwill impairment. Note 28a. ‘Foreign Currency’ provides detailed analysis of the foreign exchange exposure of the consolidated entity and risks in relation to foreign exchange movements.

Impairment of Goodwill

The Group assesses whether goodwill is impaired at least annually in accordance with Accounting Policy Note 1f. These calculations involve an estimation of the recoverable amount of the cash generating units to which the goodwill is allocated.

Valuation of Assets and Recoverable Amounts

The Group assesses the fair value of certain assets by using estimation techniques where there is no available market price. The Group assesses the recoverability of the carrying value of certain assets using estimations of their recoverable amount.

Defi ned Benefi t Superannuation Fund Obligations

Various actuarial assumptions are utilised in determining the Group’s defi ned benefi t superannuation/pension fund obligations. These assumptions are discussed in Notes 15g. and 22g. ‘Principal Actuarial Assumptions’.

Critical Accounting Judgements in Applying the Group’s Accounting Policies

In the process of applying the Group’s accounting policies, the Group makes various judgements, apart from those involving estimations, that can signifi cantly affect the amounts recognised in the consolidated fi nancial statements. These include:

– When substantially all the signifi cant risks and rewards of ownership of development properties are transferred to the purchaser;

– The percentage completion on construction work performed;

– Whether the substance of the relationship between the Group and a special purpose entity indicates that the special purpose entity is consolidated by the Group.

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June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

2. Revenue

Total comprising:

a. Revenue from the Sale of Development Properties 1,036.3 1,773.4 – –

b. Revenue from the Provision of ServicesProject Management, Construction and PFIs 12,159.2 9,571.3

Retail and Communities 736.8 519.8

Investment Management 52.2 38.8

Total revenue from the provision of services 12,948.2 10,129.9 – –

c. Finance RevenueInterest Income

Consolidated entities 12.9 18.7

Related parties 14.5 8.7

Other corporations1 83.8 21.6 1.8 1.1

98.3 30.3 14.7 19.8

Financial Asset Discounting

Non current receivable 3.5 3.2

Total fi nance revenue 101.8 33.5 14.7 19.8

d. Other RevenueDividend Income


Related parties 2.7

Other corporations 0.6 0.8

0.6 3.5 240.2 168.2

Other

Rental income and sub-lease rents 85.5 69.5

Hotel revenue 49.1 72.1

Distributions received 28.4 22.2 18.6 15.7

Corporate management fee 47.7 41.9

Guarantee fees 12.6 12.0

Other 32.0 22.7 0.1

195.0 186.5 78.9 69.7

Total other revenue 195.6 190.0 319.1 237.9

Total revenue 14,281.9 12,126.8 333.8 257.7

1 Includes interest from the Australian Taxation Offi ce (ATO) following a favourable judgement in the Federal Court on a tax dispute with the ATO (refer to Note 16. ‘Other Assets’).

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June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

3. Other Income

Net Gain on Disposal/Redemption of Available for Sale Financial Assets

Lend Lease Global Properties, SICAF 133.4 12.6

Other 1.7 28.1

135.1 40.7 – –

Net Gain on Disposal of Consolidated Entities 22.6

Net Gain on Disposal of Investments Using the Equity Method 12.6 16.3

Net Gain on Disposal of Investment Properties 14.5

Fair Value Gain on Remeasurement of Investment Properties 2.8 14.8

Amortisation of Financial Guarantee Contract Liabilities 3.2 0.6

Other 0.2 6.4

Total other income 173.3 92.7 3.2 0.6

4. Other Operating (Income) and Expenses

(Profi t) before income tax has been determined after:

Depreciation and amortisation

Depreciation of property, plant and equipment 24.1 23.1 0.3 0.3

Less: Capitalised depreciation (2.1) (1.9)

Amortisation of management agreements 2.9 2.9

Amortisation of other intangibles 1.0 0.8

Total depreciation and amortisation 25.9 24.9 0.3 0.3

Finance costs

Non interest fi nance costs 4.1 10.2

Less: Capitalised non interest fi nance costs1 (1.3)

4.1 8.9 – –

Interest fi nance costs


Related parties 1.5 1.7

Other corporations 77.1 59.5

Less: Capitalised interest fi nance costs1 (1.1) (8.3)

77.5 52.9 10.5 16.2

Interest discounting

Other fi nancial liabilities 0.1

Total fi nance costs 81.7 61.8 10.5 16.2

Net loss on sale of property, plant and equipment 1.2 0.5 – –

1 The capitalisation rate used to determine the amount of borrowing costs capitalised is 8.0% (June 2006: 6.4%).

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4. Other Operating (Income) and Expenses continued


NoteJune 2007

A$mJune 2006

A$mJune 2007

A$mJune 2006

A$m

Operating lease expense

Operating lease rental expense 55.0 53.9

Operating lease equipment expense 5.8 6.2

Total operating lease expense 60.8 60.1 – –

Employee benefi t expenses1 804.6 775.5 38.1 26.2

Superannuation accumulation plan expense 17.0 12.7 0.6 0.2

Net defi ned benefi t plan expense impacting all business segments is as follows:

Current service cost 45.9 42.0 6.5 7.3

Interest on obligation 44.5 36.8 5.3 4.5

Expected return on plan assets (49.3) (40.6) (7.9) (7.3)

Past service cost 0.4 0.2 0.4 0.2

Loss on curtailments 0.5 0.7

Actuarial gain recognised (0.2) (0.2)

Total net defi ned benefi t plan expense 15d, 22d 41.8 39.1 4.1 4.7

Net foreign exchange gain (12.0) (12.8) (0.1) (0.2)

Bad and doubtful debts impairment loss net of provisions (written back)/raised (5.2) 2.1 (80.0) –

Net impairment/provisions raised/(written back) relating to:

Property inventories 1.1 18.3

Investments accounted for using the equity method2 (5.8) 6.6

Impairment of investments held at cost (56.6) (16.0)

Employee benefi ts 31.2 35.7 1.9 1.8

Construction risks 10.0 7.6

Restructuring (3.6) (4.8)

Other provisions 15.5 45.4 10.3 23.5

1 Excludes provisions for employee benefi ts, superannuation accumulation and defi ned benefi t plan expenses, which are disclosed as separate items.

2 The impairment reversal of A$5.8 million includes A$5.7 million relating to the Jacksons Landing project in Pyrmont, Australia.


June 2007 A$000s

June 2006 A$000s

June 2007 A$000s

June 2006 A$000s

Auditors’ RemunerationAmounts received or due and receivable by the auditors of Lend Lease Corporation for:

Audit and Review of Financial Reports 6,798 5,872 1,390 936

Other Services

KPMG

International assignees tax services 202 1,508 100

Tax services 456 1,052 69 163

Accounting advice 82 417 80 316


1,000 3,249 149 579

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June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

5. Taxation

a. Income Tax ExpenseRecognised in the Income Statement

Current Tax Expense

Current year 100.8 91.2 (3.8) (3.3)

Adjustments for prior years (15.6) (17.9) (4.1) (15.3)

Benefi ts of tax losses recognised (3.2) (1.2)

82.0 72.1 (7.9) (18.6)

Deferred Tax Expense

Origination and reversal of temporary differences 43.8 78.0 5.2 0.2

Reduction in tax rate 2.0

Total income tax expense/(revenue) 127.8 150.1 (2.7) (18.4)

Reconciliation of Tax Expense/(Revenue)

Profi t before tax 628.0 572.7 388.3 183.4

Income tax using the domestic corporation tax rate (30.0%) 188.4 171.8 116.5 55.0

Non assessable dividends (0.7) (0.9) (77.6) (55.1)

Non assessable income (44.6) (7.2)

Profi ts accounted for using the equity method (6.4) (3.2)

Amortisation expense 0.9 0.8

Non allowable expenses 14.0 7.9 1.2 0.8

Expenses allowable for tax but not for accounting (2.3) (4.1)

Non deductible provisions 0.2 1.4 (41.0) (4.8)

Recovery of tax losses (31.3) (20.8)

(Recovery)/write-off of tax temporary differences (0.1) 3.2

Variation in tax rates 20.3 20.9

Income tax expense relating to wholly owned Australian subsidiaries 73.7 53.0

Recovery of income tax expense from wholly owned Australian subsidiaries (73.7) (53.0)

Other 5.0 (1.8) 2.3 1.0

Over-provided in prior years (15.6) (17.9) (4.1) (15.3)

127.8 150.1 (2.7) (18.4)

Deferred Tax Recognised Directly in Equity

Relating to:

Unrealised gain on available for sale fi nancial assets 18.3 21.0 0.1 0.4

Net gain on hedge of investments accounted for using the equity method 2.4

20.7 21.0 0.1 0.4

b. Current Tax Assets/(Liabilities) 7.1 3.1 (27.6) 3.5

Current tax assets/(liabilities) represents the amount of income taxes refundable/(payable) in respect of current and prior fi nancial years where payments exceed income taxes payable/(income taxes payable exceeds payments). At 30 June 2007, payments exceeded income taxes payable for the Group.

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5.

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s74.9

(0.1

)69.7

18.2

19.2

Pro

vis

ions

63.1

70.4

13.8

16.5

Oth

er fi n

ancia

l and n

on fi n

ancia

l lia

bilities

17.2

(12.4

)28.9

Defi n

ed b

enefi t

pla

n li

ab

ility

43.9

52.4

Unused reve

nue tax lo

sses recognis

ed

72.1

52.6

Item

s w

ith a

tax b

ase b

ut no c

arr

yin

g v

alu

e47.1

(15.0

)65.6

(0.1

)(1

.1)

Defe

rred tax a

ssets

and li

ab

ilities tra

nsfe

rred to the C

om

pany

from

wholly

ow

ned

A

ustr

alia

n s

ub

sid

iaries in

the A

ustr

alia

n T

ax C

onsolid

ate

d G

roup d

ue to tax

consolid

ation

1.1

Tota

l def

erre

d ta

x as

sets

/(lia

bilit

ies)

415.9

(504.5

)389.3

(415.9

)32.0

(8.7

)36.8

(7.0

)

For

per

sona

l use

onl

y

X69



Co

nso

lid

ate

d1

July

200

6 A

$m

Rec

og

nise

d

in In

com

e A

$m

Rec

og

nise

d

in E

qui

ty

A$m

FX

/Oth

er

A$m

30 J

une

2007

A

$m

1 Ju

ly

2005

A

$m

Rec

og

nise

d in

Inco

me

A$m

Rec

og

nise

d

in E

qui

ty

A$m

FX

/Oth

er1

A$m

30 J

une

2006

A

$m

Re

co

gn

ise

d D

efe

rre

d T

ax A

sse

ts a

nd

L

iab

ilit

ies c

on

tin

ue

d

Move

ment in

tem

pora

ry d

iffe

rences d

uring the

fi nancia

l year:

Loans a

nd receiv

ab

les

0.2

(4.5

)(4

.3)

20.0

(19.9

)0.1

0.2

Inve

nto

ries

(110.7

)(1

6.9

)5.1

(122.5

)(4

8.5

)(3

8.3

)(2

3.9

)(1

10.7

)

Oth

er fi n

ancia

l assets

(45.0

)15.2

(18.3

)0.6

(47.5

)(1

0.0

)(1

3.8

)(2

1.0

)(0

.2)

(45.0

)

Oth

er assets

(19.7

)(8

.2)

0.8

(27.1

)(2

8.7

)8.7

0.3

(19.7

)

Inve

stm

ents

accounte

d for usin

g the e

quity

meth

od

(170.4

)(2

4.5

)(2

.4)

12.3

(185.0

)(1

29.3

)(3

9.6

)(1

.5)

(170.4

)

Inve

stm

ent p

rop

ert

ies

(27.4

)24.5

(2.9

)(2

4.9

)(2

.5)

(27.4

)

Pro

pert

y, p

lant and e

quip

ment

13.4

4.0

(0.6

)16.8

11.3

1.8

0.3

13.4

Defi n

ed b

enefi t

pla

n a

sset

(6.5

)(0

.4)

(6.9

)(6

.0)

(0.5

)(6

.5)

Tra

de a

nd o

ther p

aya

ble

s69.7

(0.1

)5.2

74.8

45.3

24.4

69.7

Pro

vis

ions

70.4

2.2

(9.5

)63.1

62.7

7.8

(0.1

)70.4

Oth

er fi n

ancia

l and n

on fi n

ancia

l lia

bilities

28.9

(23.8

)(0

.3)

4.8

30.7

(1.8

)28.9

Defi n

ed b

enefi t

pla

n li

ab

ility

52.4

(8.0

)(0

.5)

43.9

58.3

(6.6

)0.7

52.4

Unused reve

nue tax lo

sses recognis

ed

252.6

24.2

(4.7

)72.1

34.9

17.0

0.7

52.6

Item

s w

ith a

tax b

ase b

ut no c

arr

yin

g v

alu

e65.5

(29.5

)(3

.9)

32.1

79.2

(14.7

)1.0

65.5

Tota

l def

erre

d ta

x as

sets

/(lia

bilit

ies)

(26.6

)(4

5.8

)(2

0.7

)4.5

(88.6

)95.0

(78.0

)(2

1.0

)(2

2.6

)(2

6.6

)

1

Inclu

des the d

efe

rred tax b

ala

nces o

n a

cq

uis

itio

n o

f T

he C

rosby

Gro

up, in

clu

siv

e o

f th

e tax e

ffect on fair v

alu

e a

dju

stm

ents

.

2

Prim

arily

rela

tes to the r

eco

gnitio

n o

f unused r

evenue tax lo

sses in

the U

SA

.

For

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sona

l use

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5.

Ta

xa

tio

n c

on

tin

ue

d

c.

Def

erre

d Ta

x A

sset

s an

d Li

abili

ties

cont

inue

d

Co

mp

an

y1

July

200

6 A

$m

Rec

og

nise

d

in In

com

e A

$m

Rec

og

nise

d

in E

qui

ty

A$m

FX

/Oth

er

A$m

30 J

une

2007

A

$m

1 Ju

ly

2005

A

$m

Rec

og

nise

d

in In

com

e A

$m

Rec

og

nise

d

in E

qui

ty

A$m

FX

/Oth

er

A$m

30 J

une

2006

A

$m

Re

co

gn

ise

d D

efe

rre

d T

ax A

sse

ts a

nd

L

iab

ilit

ies c

on

tin

ue

d

Move

ment in

tem

pora

ry d

iffe

rences d

uring the

fi nancia

l year:

Loans a

nd receiv

ab

les

(0.1

)(0

.1)

(0.2

)(0

.8)

0.7

(0.1

)

Oth

er fi n

ancia

l assets

(0.4

)(0

.1)

(0.5

)0.3

(0.3

)(0

.4)

(0.4

)

Defi n

ed b

enefi t

pla

n a

sset

(6.5

)(0

.4)

(6.9

)(6

.0)

(0.5

)(6

.5)

Tra

de a

nd o

ther p

aya

ble

s19.2

(1.0

)18.2

24.5

(5.4

)0.1

19.2

Pro

vis

ions

16.5

(2.7

)13.8

11.0

5.3

0.2

16.5

Item

s w

ith a

tax b

ase b

ut no c

arr

yin

g v

alu

e(1

.1)

(1.1

)

Defe

rred tax a

ssets

and li

ab

ilities tra

nsfe

rred to the

Com

pany

from

wholly

ow

ned A

ustr

alia

n s

ub

sid

iaries

in the A

ustr

alia

n T

ax C

onsolid

ate

d G

roup d

ue to tax

consolid

ation

1.1

(1.1

)(2

4.9

)26.0

1.1

Tota

l def

erre

d ta

x as

sets

/(lia

bilit

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29.8

(5.2

)(0

.1)

(1.2

)23.3

4.1

(0.2

)(0

.4)

26.3

29.8

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l use

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5. Taxation continued

c. Deferred Tax Assets and Liabilities continuedConsolidated Company

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

Unrecognised Deferred Tax Assets

Deferred tax assets have not been recognised in respect of the following items:

Capital losses 99.2 83.9 15.4 15.4

Revenue losses 122.3 187.2

Deductible temporary differences 35.8 16.6

Total unrecognised deferred tax assets 257.3 287.7 15.4 15.4

Temporary differences associated with investments in subsidiaries have not been recognised. The unrecognised deferred tax asset of A$257.3 million includes A$118.6 million that will expire in 2024.

Cents Per Share

Franked Amount

Per Share %

Company

June 2007 A$m

June 2006 A$m

6. Dividends and Earnings Per Share

a. Dividends1

Interim Dividend



Final Dividend

June 2007 – declared subsequent to reporting date (payable 12 September 2007) 42 50 168.5

June 2006 – paid 13 September 2006 31 100 123.9

308.5 243.7

1 Dividends includes dividends paid on treasury shares. Refer to Note 25. ‘Retained Earnings’ for further details regarding the impact of treasury shares on dividend payments and retained earnings.

Dividend FrankingThe fi nal dividend of 42 cents per share declared since 30 June 2007 will be 50% franked. The interim dividend paid on 27 March 2007 (35 cents per share) was 50% franked.

The dividend franking account balance at 30 June 2007 is A$56.2 million based on a 30% tax rate (30 June 2006: A$94.6 million). This is calculated after adjusting for franking credits which will arise from the payment of income tax provided in the accounts, tax losses utilised in the current fi nancial year and expected franking debits arising from refunds of tax in dispute. It excludes the A$36.1 million (June 2006: A$53.1 million) franking debit impact of the proposed dividend of A$168.5 million (June 2006: A$123.9 million) and the franking credits which arose from the payment of tax in dispute in relation to the sale of Westpac shares in 1996 (refer to Note 16. ‘Other Assets’).

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6. Dividends and Earnings Per Share continued

ConsolidatedJune 2007 June 2006


SharesShares

on Issue


SharesShares

on Issue

b. Earnings Per Share (EPS)Weighted average number of ordinary shares m 369.9 400.4 368.5 399.1

Earnings per share cents 134.5 124.3 112.7 104.0

c. Diluted Earnings Per Share (DEPS)Weighted average number of ordinary shares m 369.9 400.4 368.5 399.1

Adjustment for dilutive effect of potential share issue1 m 0.2 0.2

Weighted average number of ordinary shares for diluted earnings per share m 370.1 400.6 368.5 399.1

Diluted earnings per share cents 134.4 124.2 112.7 104.0

1 Relates to the Lend Lease Corporation shares issued during the period as part consideration for the minority interest shareholdings in Crosby Lend Lease Group Limited.


June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

7. Cash and Cash Equivalents

Cash 271.8 278.5 2.0 1.5

Short term investments 278.3 281.0

Total cash and cash equivalents 550.1 559.5 2.0 1.5

Short term investments earn variable rates of interest which averaged 5.3% per annum during the fi nancial year ended 30 June 2007 (30 June 2006: 4.2%).

Short term investments with a maturity greater than three months (A$361.5 million) (June 2006: A$11.4 million) are classifi ed as ‘Available for Sale Financial Assets’ and ‘Held to Maturity Financial Assets’ (refer to Note 12. ‘Other Financial Assets’). These short term investments have an average maturity of four months.

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June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

8. Loans and Receivables

CurrentTrade debtors 1,900.9 1,428.2

Less: Impairment (8.5) (16.8)

1,892.4 1,411.4 – –

Related party loans and receivables

Consolidated entities 2,481.7 2,367.8

Less: Impairment (80.0)

Managed property funds 20.0 14.5

Associate entities 71.9 72.5

Other receivables 229.7 169.1 2.8 0.3


2,209.7 1,662.6 2,484.5 2,288.1

Non CurrentLoans to employees 0.8 0.8

Related party loans and receivables


Associate entities 236.9 149.8


Other receivables 73.5 60.3 4.3 4.1

293.6 193.4 112.5 52.0

Total loans and receivables 2,503.3 1,856.0 2,597.0 2,340.1

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NoteJune 2007

A$mJune 2006

A$mJune 2007

A$mJune 2006

A$m

9. Inventories

CurrentConstruction work in progress 242.4 212.9 – –

Property held for sale at cost 669.9 729.5

Less: Provision for diminution in value (1.1) (1.6)

668.8 727.9 – –

Total current 911.2 940.8 – –

Non CurrentProperty held for sale at cost 1,346.7 1,232.2


Total non current 1,326.1 1,213.1 – –

Total inventories 2,237.3 2,153.9 – –

Property Held for SaleTotal property held for sale comprises:

Bluewater, Kent 596.1 559.2

Urban Communities, Australia 553.3 573.9

Urban Communities (Crosby), UK 481.2 437.3

Victoria Harbour, Melbourne 80.2 133.2

Hyatt Coolum Resort, Sunshine Coast 56.2 47.9

First Base Adelaide Wharf, UK 53.2 14.4

St Patricks, Sydney 50.6 46.3

Other 145.8 149.5

2,016.6 1,961.7 – –


Total property held for sale 1,994.9 1,941.0 – –

CurrentConstruction work in progress comprises:

Contract costs incurred to date 46,074.8 41,200.3

Profi t recognised to date 1,949.7 2,093.9

48,024.5 43,294.2 – –

Less: Progress billings received and receivable on completed contracts (48,959.5) (43,979.4)

Net construction work in progress (935.0) (685.2) – –

Amounts due from customers – inventories1 242.4 212.9

Amounts due to customers – trade and other payables2 17 (1,177.4) (898.1)

(935.0) (685.2) – –

Advances on construction projects in progress included in trade and other payables 1,035.4 759.9 – –

Retentions on construction projects included in progress billings 531.2 374.7 – –

1 Represents the net of construction costs incurred less recognised losses and progress billings on projects which exceeds progress billings to clients (CIE).

2 Represents the net of progress billings to clients and recognised losses less construction costs incurred on projects which exceeds project costs incurred (BIE).F

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NoteJune 2007

A$mJune 2006

A$mJune 2007

A$mJune 2006

A$m

10. Investments Accounted for Using the Equity Method

Non CurrentAssociates

Investment in associates 930.0 792.8


10a 924.4 787.0 – –

Joint Venture Entities

Investment in joint venture entities 229.3 233.4


10b 215.2 212.8 – –

Total investments accounted for using the equity method 1,139.6 999.8 – –

Interest

Consolidated Share of Profi t/(Loss)

After Tax

Consolidated Net

Book Value

Country of Incorporation

Balance Date

June 2007 %

June 2006 %

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

a. AssociatesProject Management, Construction and PFIs1

Lancashire Waste Share Capital UK 31 Mar 50.0 9.0

Catalyst Investment Holdings Limited UK 31 Dec 50.0 50.0 11.2 1.2 6.7 6.8

Catalyst Healthcare (Manchester) UK 30 Sep 50.0 50.0 2.5 1.5

Networks Alliance Partnership Australia 30 Jun 42.0 42.0 2.8 0.7 0.3 0.1

Other 1.2 8.3 4.1 0.5

17.7 10.2 21.6 7.4


Other 0.1 1.7 4.8 5.8


King of Prussia USA 31 Dec 50.0 50.0 92.4 100.0 483.8 445.3

Lend Lease Overgate Partnership UK 31 Dec 30.7 30.7 10.0 22.4 143.0 136.7

Performance Retail Limited Partnership UK 31 Dec 33.3 33.3 6.0 13.6 104.8 103.3

Asia Pacifi c Investment Company 2 Singapore 30 Apr 21.1 21.1 18.2 87.3 77.9

Lend Lease Asian Retail Investment Fund Mauritius 30 Jun 32.5 53.4

Lend Lease Communities Fund 1 Australia 30 Jun 20.8 (0.5) 17.3

Lend Lease International Distressed Debt Fund Bermuda 31 Dec 28.0 28.0 (2.8) 1.4 7.5 13.6

Other 1.2 6.5 2.8

123.3 138.6 903.6 779.6


141.1 150.5 924.4 787.0

1 Lend Lease provides service concession arrangements, originating through PFIs, in the areas of healthcare, education and government facilities. These arrangements provide facilities management and maintenance services for a fi xed payment per annum (subject to infl ationary increases per year) with terms generally 25 to 30 years. They also incorporate contractual obligations to make available the individual assets for their prescribed use and, where necessary, overhaul or replace major items of plant and equipment related to the assets with payment obtained through periodic draw-downs from the relevant government authorities.F

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Consolidated

June 2007 A$m

June 2006 A$m

10. Investments Accounted for Using the Equity Method continued

a. Associates continuedLend Lease’s Share of the Results of Associates

Revenue 167.1 176.5

Fair value revaluations1 80.4 99.4

Expenses (99.5) (131.9)


Income tax expense2 (6.5) (0.6)


Adjustment arising from accounting using the equity method (0.4) 7.1

Share of associates’ profi t – accounted for using the equity method 141.1 150.5

Movements in Carrying Amounts of Associates

Carrying amount at beginning of fi nancial year 787.0 517.4

Investment in associates acquired during fi nancial year 96.6 118.9

Share of associates’ profi t 141.1 150.5

Contributions to associates 3.9

Capital redemptions by associates (4.2) (16.1)

Distributions received from associates (37.3) (29.6)

Disposal of associates (0.7) (30.4)

Other adjustments (including effect of foreign exchange rate movements)3 (62.0) 76.3

Carrying amount at end of fi nancial year 924.4 787.0

Lend Lease’s Share of Balance Sheet of Associates

Current assets 212.2 339.7

Non current assets 1,986.7 1,179.9

Total assets 2,198.9 1,519.6

Current liabilities 72.3 64.4

Non current liabilities 1,650.5 1,175.8

Total liabilities 1,722.8 1,240.2

Net assets 476.1 279.4

Other adjustments

Goodwill 6.0 7.9

Impairment (5.6) (5.8)

Adjustment due to differences in accounting policies4 453.4 452.3

Other (5.5) 53.2

Net assets – adjusted using the equity method 924.4 787.0

Commitments

Share of associates’ capital expenditure and lease commitments contracted but not provided for and payable

Due within one year 39.6 300.8

Due between one and fi ve years 106.3 422.1

145.9 722.9

1 Refl ects fair value revaluations for King of Prussia of A$62.3 million (June 2006: A$74.1 million), Lend Lease Overgate Partnership of A$3.8 million (June 2006: A$16.1 million), Performance Retail Limited Partnership of A$0.7 million (June 2006: A$9.2 million) and Asia Pacifi c Investment Company 2 A$13.6 million (June 2006: A$nil).

2 Lend Lease’s share of tax relating to the majority of associates is refl ected in the Lend Lease Group’s current tax expense (refer to Note 5a. ‘Income Tax Expense’).

3 Primarily relates to foreign exchange movements (A$46.6 million). June 2006 primarily related to the reclassifi cation of Asia Pacifi c Investment Company 2 to Other Financial Assets.

4 Primarily includes adjustments to King of Prussia to align the investment accounting policies with Australian Accounting Standards.For

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Interest

Consolidated Share of Profi t/(Loss)

After Tax

Consolidated Net

Book Value


Balance Date

June 2007%

June 2006%

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

b. Joint Venture EntitiesProject Management, Construction and PFIs1

Majadahonda Hospital Spain 31 Dec 25.0 25.0 2.3 9.5 9.0

Other 4.5 0.7 9.3 2.9

6.8 0.7 18.8 11.9


Pyrmont Trust (Jacksons Landing)2 Australia 30 Jun 50.0 50.0 (2.2) 4.3 21.8 22.9

Mawson Lakes Economic Development Project Australia 30 Jun 50.0 50.0 10.2 7.7 18.7 21.8

Forde Development (ACT) Australia 30 Jun 50.0 50.0 0.7 0.3 0.7 15.1

Caroline Springs Joint Venture Australia 30 Jun 50.0 50.0 13.0 2.5 23.6 23.9

Mirvac Lend Lease Village Consortium (Newington Precincts 1 and 3) Australia 30 Jun 50.0 50.0 3.3 3.5 7.8 14.5

Crosby Ask Limited UK 30 Jun 50.0 50.0 4.7 4.6

Ician Developments Limited UK 30 Jun 50.0 50.0 3.2 2.3 2.8 9.1

Piers Project, San Francisco3 USA 30 Jun 55.0 55.0 5.5 7.2 0.9 28.0

Other 5.2 14.2 16.8

38.4 33.0 95.1 152.1


Warrington Retail Limited Partnership UK 31 Dec 50.0 50.0 2.1 1.8 112.4 67.5

Other 1.2 1.0 3.0 1.9

3.3 2.8 115.4 69.4

Less: Impairment2 (14.1) (20.6)

Total 48.5 36.5 215.2 212.8

1 Lend Lease provides service concession arrangements, originating through PFIs, in the areas of healthcare, education and government facilities. These arrangements provide facilities management and maintenance services for a fi xed payment per annum (subject to infl ationary increases per year) with terms generally 25 to 30 years. They also incorporate contractual obligations to make available the individual assets for their prescribed use and, where necessary, overhaul or replace major items of plant and equipment related to the assets, with payment obtained through periodic draw-downs from the relevant government authorities.

2 An impairment reversal of A$5.7 million relating to Pyrmont Trust (Jacksons Landing) has been recognised during the period (June 2006: impairment loss A$6.0 million). This refl ects the achievement of several milestones for the project during the period, which contributed to the de-risking of the project and resulted in a lower discount rate applied in an external valuation.

3 Under the Joint Venture Agreement all operating decisions are made jointly. Lend Lease therefore does not have control.

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Consolidated

June 2007 A$m

June 2006 A$m

10. Investments Accounted for Using the Equity Method continued

b. Joint Venture Entities continuedLend Lease’s Share of the Results of Joint Venture Entities

Revenue 293.0 214.9

Expenses (241.8) (175.8)


Income tax expense1 (1.1) (0.3)


Other adjustments

Amortisation of fair value adjustments (1.1) (2.3)

Other (0.5)

Share of joint ventures’ profi t – accounted for using the equity method 48.5 36.5

Movements in Carrying Amount of Joint Venture Entities


Investment in joint ventures acquired during fi nancial year 13.4

Share of joint venture entities’ profi t 48.5 36.5

Contributions to the joint venture entities 47.2 37.5

Capital redemptions by joint venture entities (20.4) (1.5)

Distributions received from the joint venture entities (66.9) (26.9)

Other adjustments (including effect of foreign exchange rate movement) (6.0) (2.1)

Carrying amount at end of fi nancial year 215.2 212.8

Lend Lease’s Share of Balance Sheet of Joint Venture Entities

Current assets 327.4 255.9

Non current assets 349.9 296.6

Total assets 677.3 552.5

Current liabilities 177.9 70.8

Non current liabilities 281.5 256.3

Total liabilities 459.4 327.1


Other adjustments

Fair value adjustments on acquisition 3.5 4.6

Impairment (14.1) (20.6)

Adjustments due to differences in accounting policies 4.3

Other 3.6 3.4

Net assets – adjusted using the equity method 215.2 212.8

Commitments

Share of joint ventures’ capital expenditure and lease commitments contracted but not provided for and payable



Due later than fi ve years 0.2

3.9 15.5

1 Lend Lease’s share of tax relating to the majority of the joint ventures is refl ected in the Lend Lease Group’s current tax expense (refer to Note 5a. Income Tax Expense).

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June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

11. Investment Properties

Senior Living Properties1

Forest Hills Serviced Apartments 7.1 6.9

Trinity Green 0.3

Keperra Retirement Village 84.6

7.4 91.5 – –

Retail PropertiesChelmsford Meadow Shopping Centre 233.0 195.5

Pakenham Place Shopping Centre 16.2

Total investment properties 256.6 287.0 – –

ReconciliationsReconciliations of the carrying amount for investment properties are set out below:


Acquisitions 54.7 190.3

Additions 0.3

Disposals (84.6) (6.4)

Fair value adjustments 2.8 14.8

Effect of foreign exchange rate movement (3.6) 5.2

Carrying amount at end of fi nancial year 256.6 287.0 – –

1 Relates to retirement villages held under leasehold arrangements that do not satisfy the revenue recognition criteria under AASB 118. There is an offsetting non fi nancial liability in Note 21. ‘Other Non Financial Liabilities’ and therefore no profi t and loss impact.

Valuation BasisThe basis of the valuation of investment properties is the amounts for which the properties could be exchanged between willing parties in an arm’s length transaction, based on current prices in an active market for similar properties in the same location and condition. If this information is not available, Lend Lease uses alternative calculation methods such as discounted cash fl ow projections or recent prices on less active markets.

The 2007 valuations for the Senior Living properties are supported by actuarial assessments performed by Lend Lease based on its detailed knowledge and recent experience in the location and category of the property being valued. The Chelmsford Meadows Shopping Centre’s valuation is based on an independent valuation performed by an industry specialist in valuing these types of investment properties. Pakenham Place Shopping Centre’s carrying value refl ects market value based on Lend Lease’s recent acquisition of the centre.


June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

Amounts Recognised in Income Statement for Investment Properties1

Rental income 16.5 5.1

Direct operating expenses from properties that generated rental income (4.8) (3.4)

11.7 1.7 – –

Leases as LessorThe future minimum lease payments receivable under non cancellable leases are as follows:

Less than one year 10.7 8.8

Between one and fi ve years 35.1 26.8

Later than fi ve years 42.8 32.0

88.6 67.6 – –

1 Excludes profi t and loss impact of fair value adjustments and the offsetting non fi nancial liability recognition.

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June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

12. Other Financial Assets

CurrentAvailable for Sale

Negotiable instruments 335.7

Australian Prime Property Fund 256.6

Lend Lease Global Properties, SICAF 26.5

Other 1.8 1.2 1.8 1.2

620.6 1.2 1.8 1.2

Held to Maturity

Negotiable instruments 25.8 11.4 – –

Derivatives

Forward foreign exchange contracts – held for trading 0.1 8.8

Forward foreign exchange contracts – fair value hedges 1.6

Interest rate swaps 1.2

0.1 11.6 – –

Total current 646.5 24.2 1.8 1.2

Non Current Available for Sale

Australian Prime Property Fund 184.1 392.9

Lend Lease Global Properties, SICAF 130.4

Lend Lease Retail Partnership 82.1 76.4

Cohen & Steers, SICAV 47.6 35.8

Lend Lease Core Plus Fund 24.3 11.3

Asia Pacifi c Investment Company 17.7 15.6

Other 62.3 55.4

418.1 717.8 – –

Held to Maturity

Negotiable instruments 6.6 5.6 – –

Derivatives

Forward foreign exchange contracts – held for trading – 0.4 – –

Investments Held at Cost

Shares in consolidated entities 2,215.3 2,215.3


– – 1,558.6 1,502.0

Total non current 424.7 723.8 1,558.6 1,502.0

Total other fi nancial assets 1,071.2 748.0 1,560.4 1,503.2

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June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

13. Property, Plant and Equipment

Land 9.8 8.5 – –

Buildings and leasehold improvements at cost 81.5 76.4

Accumulated depreciation (26.0) (23.8)

55.5 52.6 – –

Plant and equipment at cost 135.2 146.2 0.7 0.9

Accumulated depreciation (83.7) (97.3) (0.5) (0.5)

51.5 48.9 0.2 0.4

Leased plant and equipment at cost 0.3 0.3

Accumulated amortisation (0.2) (0.2)

0.1 0.1 – –

Total property, plant and equipment 116.9 110.1 0.2 0.4

ReconciliationsReconciliations of the carrying amounts for each class of property, plant and equipment are set out below:

Land

Carrying amount at beginning of fi nancial year1 8.5 8.4

Additions (Somerset Central, Singapore) 533.4

Disposals (Somerset Central, Singapore) (508.6)

Effect of foreign exchange rate movements/other (23.5) 0.1


Buildings and Leasehold Improvements


Additions 15.2 5.6

Additions from acquisition of consolidated entities 13.0


Disposals of consolidated entities (3.7)

Depreciation (6.1) (4.6)

Effect of foreign exchange rate movements/other (2.0) 1.7


Plant and Equipment

Carrying amount at beginning of fi nancial year3 48.9 49.0 0.4 0.7

Additions 22.7 20.9 0.1

Additions from acquisition of consolidated entities 1.2


Disposals of consolidated entities (0.8)

Depreciation (18.0) (18.4) (0.3) (0.3)

Effect of foreign exchange rate movements/other 0.1 (0.8)

Carrying amount at end of fi nancial year 51.5 48.9 0.2 0.4

Leased Plant and Equipment


Amortisation (0.1)


Total carrying amount 116.9 110.1 0.2 0.4

1 The carrying amount at 1 July 2005 of A$8.4 million represents costs only.

2 The carrying amount at 1 July 2005 of A$44.8 million represents A$63.8 million of costs and A$19.0 million of accumulated depreciation.



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NoteJune 2007

A$mJune 2006

A$mJune 2007

A$mJune 2006

A$m

14. Intangible AssetsGoodwill 14a 764.7 784.5

Management agreements 14b 18.3 21.2

Other intangibles 14c 5.1 4.0

Total intangible assets 788.1 809.7 – –

a. GoodwillBovis Lend Lease Group 506.7 524.3

Crosby Lend Lease Group 177.5 179.7

Delfi n Lend Lease Group 64.7 64.7

Lend Lease Development Group 15.8 15.8

764.7 784.5 – –

Accumulated impairment – – – –

Total goodwill 764.7 784.5 – –

ReconciliationsReconciliations of the carrying amounts for each category of goodwill are set out below.

Bovis Lend Lease Group




Crosby Lend Lease Group

Carrying amount at beginning of fi nancial year 179.7

Goodwill recognised on acquisition 30b 173.0



Delfi n Lend Lease Group



Lend Lease Development Group



Total goodwill 764.7 784.5 – –

Impairment Tests for GoodwillGoodwill is allocated to the Group’s Cash Generating Units (CGUs) identifi ed according to region and business segment.

A summary of the goodwill allocation to CGUs is set out below:

June 2007Asia Pacifi c

A$mAmericas

A$mEurope

A$mTotal A$m

Project Management, Construction and PFIs 27.4 171.6 307.7 506.7

Retail and Communities 80.5 177.5 258.0

107.9 171.6 485.2 764.7

June 2006

Project Management, Construction and PFIs 27.4 185.1 311.8 524.3

Retail and Communities 80.5 179.7 260.2

107.9 185.1 491.5 784.5


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Key Assumptions Used for Value in Use CalculationsThe recoverable amount of a CGU is determined based on value in use calculations. These calculations use post tax cash fl ow projections based on fi nancial budgets approved by management covering a fi ve year period. Cash fl ows beyond the fi ve year period are extrapolated using conservative growth rates. The growth rate does not exceed the long term average growth rate for the business in which the CGU operates.

The Group’s weighted average cost of capital is used as a start point for determining the discount rate with appropriate adjustments for the risk profi le relating to the relevant segments and the countries in which they operate. The discount rates used are post tax.

The recoverable amount of CGUs exceeds their carrying value as at June 2007. Management believes that any reasonable possible change in the key assumptions on which the estimates are based would not cause the aggregate carrying amount to exceed the recoverable amount of these CGUs.


June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

b. Management AgreementsManagement agreements 29.4 29.4

Accumulated amortisation and impairment (11.1) (8.2)

Total management agreements 18.3 21.2 – –

ReconciliationReconciliation of the carrying amounts of management agreements are set out below:


Amortisation (2.9) (2.9)


c. Other IntangiblesOther intangibles 8.0 5.9

Accumulated amortisation (2.9) (1.9)

Total other intangibles 5.1 4.0 – –

ReconciliationReconciliation of the carrying amounts of other intangibles are set out below:


Additions 2.2 2.7

Amortisation (1.0) (0.8)

Effect of foreign exchange rate movements (0.1)


1 The carrying amount at 1 July 2005 of A$24.1 million represents A$29.4 million of costs and A$5.3 million of accumulated amortisation.

2 The carrying amount at 1 July 2005 of A$2.1 million represents A$3.2 million of costs and A$1.1 million of accumulated amortisation.

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June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

15. Defi ned Benefi t Plan Asset1

a. Balance Sheet AmountsThe amounts recognised in the balance sheet are determined as follows:

Fair value of plan assets 167.3 147.4 167.3 147.4

Present value of funded obligations (116.1) (110.8) (116.1) (110.8)

Unrecognised actuarial gains (28.7) (15.9) (28.7) (15.9)

Unrecognised past service cost 0.6 1.0 0.6 1.0

Recognised asset for defi ned benefi t obligations2 23.1 21.7 23.1 21.7

b. Reconciliation of the Fair Value of Plan Assets

Fair value of plan assets at beginning of fi nancial year 147.4 139.8 147.4 139.8

Expected return on plan assets 7.9 7.3 7.9 7.3

Actuarial gains 17.2 9.4 17.2 9.4

Contributions by Group companies 5.5 6.5 5.5 6.5

Contributions by plan participants 2.8 1.7 2.8 1.7

Taxes and premiums paid (1.4) (1.5) (1.4) (1.5)

Transfers in 0.5 0.5 0.5 0.5

Contributions to accumulation fund (1.3) (0.9) (1.3) (0.9)

Benefi ts paid (11.3) (15.4) (11.3) (15.4)

Fair value of plan assets at end of fi nancial year 167.3 147.4 167.3 147.4

c. Reconciliation of the Present Value of Funded Obligations

Present value of funded obligations at beginning of fi nancial year 110.8 111.3 110.8 111.3


Interest cost on benefi t obligation 5.3 4.5 5.3 4.5

Contributions by plan participants 2.8 1.7 2.8 1.7

Actuarial losses 4.2 2.1 4.2 2.1

Benefi ts paid (12.6) (16.3) (12.6) (16.3)

Taxes and premiums paid (1.4) (1.5) (1.4) (1.5)

Transfers in 0.5 0.5 0.5 0.5

Past service cost 1.2 1.2

Present value of funded obligations at end of fi nancial year 116.1 110.8 116.1 110.8

d. Expense Recognised in the Income Statement


Interest cost on benefi t obligation 5.3 4.5 5.3 4.5

Expected return on plan assets (7.9) (7.3) (7.9) (7.3)

Actuarial gain recognised in fi nancial year (0.2) (0.2)

Past service cost 0.4 0.2 0.4 0.2

Net defi ned benefi t plan expense 4.1 4.7 4.1 4.7

e. Actual Return on Plan Assets 25.1 16.7 25.1 16.7

1 Relates to the Lend Lease Superannuation Fund (Australia) (‘the Fund’).

2 If a surplus exists in the Fund at any particular point in time, Lend Lease may be able to take advantage of it in the form of a reduction in the required contribution rate, depending on the advice of the Fund’s actuary. Lend Lease may at any time by notice to the Trustee terminate its contributions. Lend Lease has a liability to pay the contributions due prior to the effective date of the notice, but there is no requirement for Lend Lease to pay any further contributions, irrespective of the fi nancial condition of the Fund.


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June 2007 %

June 2006 %

June 2007 %

June 2006 %

f. Categories of Plan AssetsCash 4.0 4.0 4.0 4.0

Equity instruments1 53.0 61.0 53.0 61.0

Fixed interest securities 39.0 31.0 39.0 31.0

Property 4.0 4.0 4.0 4.0

100.0 100.0 100.0 100.0

g. Principal Actuarial AssumptionsDiscount rate (net) 5.4 4.9 5.4 4.9

Expected rate of return on assets2 5.8 5.8 5.8 5.8

Expected salary increase rate 4.0 4.0 4.0 4.0

h. Employer ContributionsThe current contribution recommendations, as set out in the report of the most recent actuarial valuation of the Lend Lease Superannuation Fund as at 1 January 2006, are 14.4% of base pay (or ordinary time earnings if applicable) for Defi ned Benefi t Plan members. Lend Lease is currently contributing at these rates.

The method used to determine the employer contribution recommendations at the last actuarial review was the Attained Age Normal method. The method adopted affects the timing of the cost to Lend Lease. Under the Attained Age Normal method, a ‘normal’ cost is calculated which is the estimated employer contribution rate required to provide benefi ts in respect of future service after the review date. The normal cost is then adjusted to take into account any surplus (or defi ciency) of assets over the value of liabilities in respect of service prior to the review date. Any surplus or defi ciency can be used to reduce or increase the normal employer contribution rate over a suitable period of time.

For the fi nancial year ending 30 June 2008, total employer contributions to the plan are expected to be A$6.0 million.

The long term economic assumptions adopted for the last actuarial review of the Fund were:

As at 1 January 2006 %

Expected rate of return on assets (discount rate) after investment expense and tax 7.0

Expected salary increase rate 5.0

i. Net Financial Position of PlanThe following is a summary of the most recent fi nancial position of the Lend Lease Superannuation Fund calculated in accordance with AAS 25 ‘Financial Reporting by Superannuation Plans’. Note that the fi gures below relate to the Fund as a whole, including the accumulation section.

As at 1 January 2006 A$m

Net market value of fund assets 227.9

Accrued benefi ts (194.9)

Net surplus 33.0

Consolidated

June 2007 A$m

June 2006 A$m

June 2005 A$m

j. Historical Summary3

Plan assets 167.3 147.4 139.8

Defi ned benefi t plan obligation (116.1) (110.8) (111.3)

Surplus 51.2 36.6 28.5

Experience adjustments arising on plan assets 17.2 9.4 11.3

Experience adjustments arising on plan liabilities (6.8) (4.4) 0.1

1 The fair value of plan assets includes Lend Lease shares to the value of A$0.4 million (June 2006: A$0.3 million).

2 The expected return on assets assumption is determined by weighting the expected long term return for each asset class by the target allocation of assets to each asset class. In addition, correlations of the investment returns between asset classes are allowed. The returns used for each asset class are net of investment tax and investment fees. An allowance for administration expenses has been deducted from the expected return.

3 Lend Lease has taken the exemption provided under AASB 1 ‘First-time Adoption of Australian Equivalents to International Reporting Standards’ paragraph 20A. and only disclosed June 2005 and June 2006 comparative information, rather than the previous four annual reporting periods as required under AASB 119 ‘Employee Benefi ts’ paragraph 120A.(p).

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June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

16. Other Assets

CurrentPrepayments 47.6 64.0

Deferred bid costs on projects at preferred bidder status 28.2 20.2

Deferred management fee receivable – Retirement by Design 1.8 4.9

Other1 112.0 99.2

189.6 188.3 – –

Non CurrentPrepayments 17.5 17.4

Deferred management fee receivable – Retirement by Design 18.9 20.1

Other 1.0 2.4

37.4 39.9 – –

Total other assets 227.0 228.2 – –

17. Trade and Other Payables

CurrentTrade creditors 2,300.1 1,874.6 56.3 62.3

Construction revenue and recognised project losses in excess of costs (BIE) 1,177.4 898.1

Deposits received in advance 22.6 37.5

Unearned income 5.0 14.7

Unearned premium reserve2 3.6 4.7

Insurance claim reserve2 6.3 5.9

Related party payables

Consolidated entities 1,371.4 1,279.0

Other 8.8 9.1

Deferred land payments 53.6 14.5

Other 34.6 39.5 3.5 3.4

3,612.0 2,898.6 1,431.2 1,344.7

Non CurrentInsurance claim reserve2 21.4 22.0

Deposits received in advance 0.5

Unearned income 1.3 0.4

Related party payables

Consolidated entities 1.1

Other 35.1 29.5

Deferred land payments 110.0 144.1

Other 49.2 13.4

217.0 209.9 – 1.1

Total trade and other payables 3,829.0 3,108.5 1,431.2 1,345.8

1 ‘Other’ totalling A$112.0 million includes A$109.5 million in relation to an amended assessment issued by the ATO in November 2002. The amended assessment related to the forward sale of 100 million Westpac shares with County NatWest Securities Australia Limited. Lend Lease disputed the assessment and had an appeal before the Federal Court. During September 2006, the ATO refunded A$25.5 million along with interest. In December 2006 the Federal Court found in favour of Lend Lease, with the ATO being required to repay the balance in dispute plus interest. The ATO appealed the ruling, however on 10 August 2007 the appeal was withdrawn.

2 Unearned premium and insurance claim reserves relate to Lend Lease’s wholly owned special purpose captive insurance subsidiary.


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June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

18. Borrowings and Financing Arrangements

a. BorrowingsNon Current

Bank credit facilities 451.2

Commercial notes 1,076.2 394.8

Total borrowings 1,076.2 846.0 – –

b. Finance FacilitiesLend Lease operating businesses have access to the following lines of credit:

Bank Overdrafts

Facility available 20.0 32.2 20.0 20.0

Amount of facility used

Amount of facility unused 20.0 32.2 20.0 20.0

Bank Credit Facilities

Facility available 968.6 993.4

Amount of facility used (451.2)

Amount of facility unused 968.6 542.2 – –

Commercial Notes

Facility available 1,076.2 394.8

Amount of facility used (1,076.2) (394.8)

Amount of facility unused – – – –

The bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice.

Bank credit facilities include a committed syndicated bank facility maturing November in 2010 of £350.0 million (A$843.4 million) in the UK, of which £nil was drawn at 30 June 2007 (June 2006: £185.0 million).

Commercial Notes include £300.0 million 6.125% annual coupon guaranteed notes due 12 October 2021 that were issued in October 2006 in the UK public bond market and US$300.0 million of guaranteed senior notes issued into the US Private Placement debt market maturing in October of 2012, 2015 and 2017.

Lend Lease has a A$500.0 million Australian Commercial Paper programme and a A$1,500.0 million Multi Issuer Debt programme. The amount drawn under these facilities was A$nil and the availability of these facilities is subject to market conditions.

The following schedule profi les the 30 June 2007 borrowings by currency and interest exposure.

Interest Exposure Currency

Fixed A$m

Floating A$m

Total A$m

US$ A$m

£ A$m

Total A$m

Less than one year

Between one and fi ve years

More than fi ve years 1,076.2 1,076.2 365.8 710.4 1,076.2

Total 1,076.2 – 1,076.2 365.8 710.4 1,076.2

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June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

19. Provisions

CurrentEmployee benefi ts 91.9 82.1 3.8 3.0

Construction risks1 79.8 101.8

Restructure provisions2 5.2 15.4

Employee terminations3 3.9 3.4

Other4 69.9 74.8 41.9 51.8

250.7 277.5 45.7 54.8

Non CurrentEmployee benefi ts 9.1 20.5 0.4 0.3

Other4 4.3 5.6

13.4 26.1 0.4 0.3

Total provisions 264.1 303.6 46.1 55.1

ReconciliationsReconciliations of the carrying amounts of each class of provision, except for employee benefi ts, are set out below:

CurrentConstruction Risks

Carrying amounts at beginning of fi nancial year 101.8 92.6

Provisions raised during fi nancial year 10.0 7.6

Payments made during fi nancial year (16.6) (9.5)

Other (13.4) 9.9



Restructuring


Provisions written back during fi nancial year (3.6) (4.8)




Employee Terminations


Provisions raised/(written back) during the year 0.9 (2.9)



Other

Carrying amounts at beginning of fi nancial year 74.8 49.6 51.8 36.7

Provisions raised during fi nancial year 14.5 44.1 10.3 23.5

Payments made during fi nancial year (22.4) (19.2) (20.0) (8.6)

Other 3.4 (0.5)

Effect of foreign exchange rate movements (0.4) 0.8 (0.2) 0.2

Carrying amount at end of fi nancial year 69.9 74.8 41.9 51.8

1 Represents maintenance, warranty and construction risk provisions to cover specifi c or estimated claims that arise due to defects or legal disputes in relation to completed projects. The timing of the utilisation of these provisions varies across each completed project.

2 Primarily relates to the Investment Management restructuring provision established to cover expenses relating to the restructuring and rationalisation of the Investment Management business. The majority of costs are expected to be incurred in the next fi nancial year.

3 Relates to provisions established to cover terminations arising from the Group’s restructuring and cost saving initiatives. The majority of costs are expected to be incurred in the next fi nancial year.

4 Primarily represents future obligations on funding received for Lend Lease Foundation programs, PFI Service Concession arrangements and various legal provisions. The timing of the utilisation of these provisions is dependent on litigation outcomes and service requests received by Lend Lease.


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June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

Non CurrentOther


Provisions raised during fi nancial year 0.1 4.2


Other (0.7)

Effect of foreign exchange rate movements (0.3) (0.1)


20. Other Financial Liabilities

CurrentDerivatives

Forward foreign exchange contracts – held for trading 2.2

Forward foreign exchange contracts – cash fl ow hedges 0.4

Forward foreign exchange contracts – fair value hedges 0.1

2.7 – – –

Other 2.9 – 11.1 4.6

5.6 – 11.1 4.6

Non CurrentBluewater lease liability 197.9 200.4

Other 51.4 10.8 69.8 31.3

249.3 211.2 69.8 31.3

Total other fi nancial liabilities 254.9 211.2 80.9 35.9

21. Other Non Financial Liabilities

CurrentDeferred gain on foreign currency hedges 0.4 2.9

Other 0.1 0.1

0.5 3.0 – –

Non CurrentDeferred payments – senior living properties 7.4 91.5

Deferred gain on foreign currency hedges 0.4

Other 0.2 0.3

7.6 92.2 – –

Total other non fi nancial liabilities 8.1 95.2 – –

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June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

22. Defi ned Benefi t Plan Liability1

a. Balance Sheet AmountsThe amounts recognised in the balance sheet are determined as follows:

Present value of defi ned benefi t obligations 778.3 722.4

Fair value of plan assets (661.0) (572.2)

Unrecognised actuarial gains 39.1 24.4

Recognised liability for defi ned benefi t obligations2 156.4 174.6 – –

b. Reconciliation of the Present Value of Defi ned Benefi t Obligations

Present value of defi ned benefi t obligations at beginning of fi nancial year 722.4 640.2

Current service cost 39.4 34.7

Interest cost on benefi t obligation 39.2 32.3

Contributions by plan participants 0.5 0.2

Actuarial losses 3.2 21.1

Benefi ts paid (16.7) (16.6)

Curtailments 0.5 0.7


Present value of defi ned benefi t obligations at end of fi nancial year 778.3 722.4 – –

c. Reconciliation of the Fair Value of Plan Assets

Fair value of plan assets at beginning of fi nancial year 572.2 454.2

Expected return on plan assets 41.4 33.3

Actuarial gains 18.5 36.8

Contributions by Group companies 54.2 55.8

Contributions by plan participants 0.5 0.2

Benefi ts paid (16.7) (16.6)


Fair value of plan assets at end of fi nancial year 661.0 572.2 – –

d. Expense Recognised in the Income Statement

Current service cost 39.4 34.7

Interest cost on benefi t obligation 39.2 32.3

Expected return on plan assets (41.4) (33.3)

Curtailment cost 0.5 0.7

Net defi ned benefi t plan expense 37.7 34.4 – –

e. Actual Return on Plan Assets 59.9 70.1 – –


June 2007 %

June 2006 %

June 2007 %

June 2006 %

f. Categories of Plan AssetsEquity instruments 66.0 79.0

Debt instruments 28.0 15.0

Fixed interest securities 5.0


100.0 100.0 – –

1 Relates to the Bovis UK Pension Scheme (‘the Fund’).

2 If a surplus exists in the Fund at any particular point in time, Lend Lease may be able to take advantage of it in the form of a reduction in the required contribution rate, depending on the advice of the Fund’s actuary and agreement from the Trustee. Regulations in place in the UK effective 23 September 2005 have increased the regulator’s powers over the sponsoring company in relation to the fi nancing of any defi cit. The sponsor company (Bovis Lend Lease Holdings Limited) is obliged to fi nance the defi cit, the funding of which is through a commitment to a rolling defi cit reduction plan. During the year the Company made additional contributions of A$14.8 million (£6.0 million) to the Fund. The review date for the current defi cit recovery plan is March 2008.


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June 2007 %

June 2006 %

June 2007 %

June 2006 %

g. Principal Actuarial AssumptionsDiscount rate (net) 5.5 5.3

Expected rate of return on assets1 7.5 7.4

Expected salary increase rate 4.7 4.5

Expected infl ation rate 3.2 3.0

Expected rate of pension increases:

Post April 2005 2.7 2.6

April 1997 to April 2005 3.2 3.0

Pre April 1997 2.7 2.6

h. Employer ContributionsThe current contribution recommendations, as set out in the report of the most recent actuarial valuation of the Bovis UK Pension Scheme as at 31 March 2005, are 20% of pensionable salary for the fi nal salary section and 16% of pensionable salary for the index-linked section. Lend Lease is currently contributing at these rates. In addition, Lend Lease contributes top up contributions from time to time, of which A$14.8 million (£6.0 million) was contributed during the year (June 2006: A$21.4 million (£9.0 million)).

The method used to determine the employer contribution recommendations at the last actuarial review was the Projected Unit Credit method. This method sees each period of service as giving rise to an additional unit of benefi t entitlement and measures each unit separately to build up the fi nal obligation.

For the fi nancial year ending 30 June 2008, total employer contributions to the plan are expected to be A$53.0 million (£22.0 million). Further employer contributions may be paid if there are any redundancies or augmentations during the year.

The long term economic assumptions adopted for the last actuarial review of the Fund were:

As at 31 March 2005 %

Expected rate of return on assets (discount rate) after investment expense and tax 7.4

Expected salary increase rate 4.5

i. Net Financial Position of PlanThe following is a summary of the most recent fi nancial position of the Bovis UK Pension Scheme calculated in accordance with AAS 25 ‘Financial Reporting by Superannuation Plans’.

As at 31 March 2005 A$m

Net market value of fund assets 443.4

Accrued benefi ts (618.3)

Net (defi cit) (174.9)

Consolidated

June 2007 A$m

June 2006 A$m

June 2005 A$m

j. Historical Summary2

Plan assets 661.0 572.2 454.2

Defi ned benefi t plan obligation (778.3) (722.4) (640.2)

(Defi cit) (117.3) (150.2) (186.0)

Experience adjustments arising on plan assets 18.5 36.8 32.3

Experience adjustments arising on plan liabilities (7.1) (21.1) (23.9)

1 The expected return on assets assumption is determined by weighting the expected long term return for each asset class by the target allocation of assets to each asset class and allowing for the correlations of the investment returns between asset classes. The returns used for each asset class are net of the Pension Protection Fund levy payable for the 2008 fi nancial year. An allowance for administration expenses has been deducted from the expected return.

2 Lend Lease has taken the exemption provided under AASB 1 paragraph 20A. and only disclosed June 2005 and June 2006 comparative information, rather than the previous four annual reporting years as required under AASB 119 paragraph 120A.(p).

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June 2007 June 2006 June 2007 June 2006

No. of Shares

m A$m

No. of Shares

m A$m

No. of Shares

m A$m

No. of Shares

m A$m

23. Issued Capital and Treasury Shares

Issued Capital – Ordinary Shares Fully PaidOrdinary shares issued at beginning of fi nancial year 399.7 834.7 398.6 834.6 399.7 834.7 398.6 834.6

Movements during fi nancial year

Issues for:

Share Election Plan (SEP)1 0.4 1.1 0.4 1.1

Other2 1.0 19.7 0.1 1.0 19.7 0.1

Ordinary shares issued at end of fi nancial year 401.1 854.4 399.7 834.7 401.1 854.4 399.7 834.7

On 12 February 2007, the Company announced the suspension of the SEP with effect from 1 March 2007. In addition, the Dividend Reinvestment Plan and Share Purchase Plan remain suspended.

Holders of ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share at shareholders’ meetings. Ordinary shareholders rank after all creditors in repayment of capital.

Effective 1 July 1998, the corporations legislation in place abolished the concepts of authorised capital and par value shares. Accordingly, Lend Lease does not have authorised capital or par value in respect of its issued shares.


June 2007 June 2006 June 2007 June 2006

No. of Shares

m A$m

No. of Shares

m A$m

No. of Shares

m A$m

No. of Shares

m A$m

Treasury Shares3

Treasury shares at beginning of fi nancial year 30.4 64.5 30.8 68.1 30.4 89.6 30.8 94.2

Movements during fi nancial year

Treasury shares acquired 0.4 6.7 0.1 0.4 6.7 0.1 0.1

Treasury shares vested (0.3) (3.8) (0.5) (3.6) (0.3) (3.8) (0.5) (4.7)

Treasury shares at end of fi nancial year 30.5 67.4 30.4 64.5 30.5 92.5 30.4 89.6

1 The shares issued under the SEP represent dividends forgone by SEP participants and reinvested in shares. These shares are issued directly from share capital with the number of shares issued based on the share price at the date the dividend payments are forgone.

2 Primarily relates to shares issued as part of the consideration for the purchase of the minority interest shareholdings in Crosby Lend Lease Group Limited.

3 Represents unallocated Lend Lease shares which are held by employee benefi t vehicles, including employee share plans, which Lend Lease sponsors. The value refl ects the original historical cost to the Lend Lease Group. The value of the treasury shares for the Company is different to the value of the treasury shares for the Lend Lease Group due to the elimination of the profi t impact of transactions between consolidated employee benefi t vehicles.


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NoteJune 2007

A$mJune 2006

A$mJune 2007

A$mJune 2006

A$m

24. ReservesFair value revaluation reserve 24a 130.2 101.7 1.3 0.8

Hedging reserve 24b (29.1) (14.4)

Foreign currency translation reserve 24c (50.9) 4.4

Equity compensation reserve 24d 12.3 7.6 12.3 7.6

Other compensation reserve 24e 55.3 55.3 55.3 55.3

Capital reserve 24f 104.6 104.6 104.6 104.6

Minority interest acquisition reserve 24g (124.7) (109.5)

Total reserves 97.7 149.7 173.5 168.3

Nature and Purpose of Reservesa. Fair Value Revaluation Reserve

Unrealised gains or losses arising from changes in the fair value and foreign exchange rate differences on translation of non monetary securities classifi ed as available for sale are recognised in the fair value revaluation reserve. Amounts are recognised in the income statement when the associated securities are sold or impaired.

b. Hedging Reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash fl ow hedging instruments relating to hedged transactions that have not occurred.

c. Foreign Currency Translation Reserve

The foreign currency translation reserve records the foreign currency differences net of income tax arising from the translation of foreign operations, the translation of transactions that hedge the Company’s net investment in a foreign operation or the translation of foreign currency monetary items forming part of the net investment in a foreign operation.

d. Equity Compensation Reserve

The fair value of equity settled share based compensation is recognised in the income statement and equity compensation reserve over the vesting period of the underlying grant. Additionally, unallocated Lend Lease shares held by consolidated employee benefi t vehicles which are used to meet equity related employee arrangements are recognised in the equity compensation reserve at their original historic cost to the Group.

e. Other Compensation Reserve

Unallocated Lend Lease shares held by consolidated employee benefi t vehicles that are used to cash settle certain share based payment arrangements are recognised in the other compensation reserve at their original historic cost to the Group. On allocation, the shares are revalued to their current market value against the income statement. Following the distribution of the proceeds to the benefi ciary, the difference between the original cost of the shares and the market value is recognised in retained earnings as a ‘gain/(loss) on utilisation of treasury shares’.

f. Capital Reserve

The capital reserve comprises realised capital profi ts on the disposal of assets which did not attract capital gains tax.

g. Minority Interest Acquisition Reserve

The minority interest acquisition reserve arises from additional acquisition of minority interests, subsequent to obtaining control of the entity. The reserve represents the premium on the cost of acquisition over the fair value of the Group’s share of the net identifi able assets of the acquired entity.

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June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

25. Retained EarningsRetained earnings at beginning of fi nancial year 2,018.2 1,782.5 1,550.0 1,556.4

Profi t attributable to members of Lend Lease Corporation Limited 497.5 415.2 391.0 201.8

Dividends forgone pursuant to SEP 6.5 13.6 6.5 13.6

Gain on utilisation of treasury shares recognised directly in retained earnings1 0.8 23.9 1.2 13.6

Other (2.5) (0.2)

2,520.5 2,235.0 1,948.7 1,785.4

Dividends paid (263.9) (235.4) (263.9) (235.4)


Total retained earnings at end of fi nancial year 2,276.8 2,018.2 1,684.8 1,550.0

26. Minority Interests Minority interests comprise:

Chelmsford Meadows (25%) 58.3 49.0

Lend Lease Twin Waters (49%) 12.9 13.5

Lend Lease Rouse Hill (49%) 9.4 4.2

Crosby Lend Lease Group (June 2006: 3%) 6.0

Other 0.9 0.5

81.5 73.2 – –

Represented by:

Interest in retained profi t at end of fi nancial year 9.4 10.3

Interest in share capital 72.1 62.9

Total minority interests 81.5 73.2 – –

1 Difference between the cost of the treasury shares to the Group and the fair value expensed to the income statement on settlement.

27. Contingent Liabilities

Lend Lease has the following contingent liabilities:

There are a number of legal claims and exposures which arise from the normal course of business. There is signifi cant uncertainty as to whether a future liability will arise in respect of these items. The amount of liability, if any, which may arise cannot be measured reliably at this time. The Directors are of the opinion that all known liabilities have been brought to account and that adequate provision has been made for any anticipated losses.

In certain circumstances, Lend Lease guarantees the performance of particular Group entities in respect of their obligations. This includes bonding and bank guarantee facilities used primarily by the Project Construction Management businesses. 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.

Certain contingent liabilities exist in relation to the Lend Lease Retirement Benefi t Fund. This is disclosed in detail in Note 34a. Lend Lease Employee Share Plans.

In September 2004, a class action was fi led against a number of parties who responded to the World Trade Center emergency and debris removal following the events of 9/11. The action was brought against more than 50 defendants including the City of New York and Bovis Lend Lease LMB Inc (‘Bovis Lend Lease’) (a subsidiary of Lend Lease). Judge Alvin K Hellerstein of the United States Federal Court for the Southern District of New York refused to certify the class action and as such the litigation proceeds as a consolidated action by individual claimants.


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In June 2006, Bovis Lend Lease and the other defendants brought an immunity motion in relation to the claims. The motion was brought on the basis that the defendants responded to a civic emergency and in that context should be immune from liability under applicable US laws. Judge Hellerstein handed down his judgment on 17 October 2006 and held that the “Defendants are benefi ted by limited immunity, limited according to time and activity”. However, the Court denied the defendants’ motion, concluding that such issues are “fact-intensive” questions which are “unsuitable for resolution by motion”. Judge Hellerstein stated that the Court would need to assess further evidence before it could determine the extent to which the immunity laws are applicable to the claims.

Although the defendants were pleased that the 17 October 2006 decision recognised that the state and federal laws that provide immunity do protect the defendants against suit (to a presently undetermined extent) and while Judge Hellerstein’s decision made no fi nding of liability in relation to Bovis Lend Lease or any of the defendants, the defendants have appealed against the motion on the basis that the Court should have granted the motion as presented. The appeal is scheduled to be heard by the United States Court of Appeals for the Second Circuit the week of 1 October 2007, but this date could change. The litigation is still in the preliminary stages. Should the litigation proceed beyond this stage, Bovis Lend Lease is one of the benefi ciaries of the approximately US$1.0 billion captive insurance policy established by the US Congress to protect the City of New York and its contractors against liabilities that may arise from the clean up. Bovis Lend Lease also has other project specifi c insurance.

In addition, to establish any liability on the part of Bovis Lend Lease, the claimants must prove that Bovis Lend Lease owed them a duty of care, breached that duty and that their injuries were caused by the conduct of Bovis Lend Lease. The litigation will therefore need to proceed through a number of stages before any liability can attach to Bovis Lend Lease. As with all litigation, to the extent that the claimants are able to establish liability against Bovis Lend Lease, it is not possible at this stage to quantify what that liability may or may not be or whether or not that liability will be entirely covered by insurance.

28. International Currency Management and Financial Instruments

a. Foreign CurrencyForeign Currency Risk

Lend Lease policy is to manage currency risk so as to minimise any adverse impact of this risk and associated costs on the Lend Lease Group’s consolidated result. A Financial Markets Risk Committee oversees the management of the Group’s foreign currency exposures within the parameters of the Board approved currency risk management policy. Speculative trading is not undertaken.

Lend Lease uses both physical and derivative (mainly forward foreign exchange contracts) fi nancial instruments to hedge its foreign currency exposures.

The majority of forward exchange contracts hedge specifi c foreign currency exposures including receivables, payables, revenues, expenses and intercompany transactions and loans. The contracts are converted using forward rates at balance date with unrealised gains and losses recorded in the income statement or the hedge reserve when the derivative is used in a hedging relationship that satisfi es AASB 139 ‘Financial Instruments: Recognition and Measurement’ criteria. Exchange gains and losses on these contracts are accounted for in accordance with Lend Lease’s accounting policy for foreign currency (refer to Accounting Policy Note 1v.).

Certain derivative transactions qualifi ed as cash fl ow or fair value hedges, in meeting the appropriate strict hedge accounting criteria outlined in Accounting Policy Note 1v.

It is estimated that an increase of one cent/pence in the average rate in the value of AUD against foreign currencies in which Lend Lease derives its foreign income would have decreased the consolidated entity’s profi t before tax at 30 June 2007 by approximately A$4.4 million (2006: A$6.0 million). No forward exchange contracts have been included in this calculation.

Fair Value Hedges

Lend Lease’s fair value hedges consist of foreign exchange forward contracts used to protect against changes in the fair value of particular foreign denominated available for sale fi nancial assets due to movements in market foreign exchange rates. As at 30 June 2007 the fair value of the outstanding derivatives held by Lend Lease and designated as fair value hedges are recognised as Other Financial Liabilities of A$0.1 million.

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28. International Currency Management and Financial Instruments continued

a. Foreign Currency continuedCash Flow Hedges

Lend Lease’s cash fl ow hedges protect against foreign exchange rate fl uctuations on highly probable forecast transactions using foreign exchange forward contracts. As at June 2007 the fair value of these outstanding designated derivatives is recognised in equity as an out of the money position of A$0.4 million. It is expected that the current hedged forecast transactions will occur during the fi nancial year ending June 2008.

Weighted Average Exchange Rate

Receivable/(Payable) Under Contracts

June 2007 (A$1=)

June 2006 (A$1=)

June 2007 A$m

June 2006 A$m

Contracts to buy pounds sterling at an agreed exchange rate

Not later than one year 0.42 0.42 (51.8) (52.4)

Later than one year but not later than two years 0.41 (19.1)

Contracts to sell pounds sterling at an agreed exchange rate

Not later than one year 0.42 0.40 574.9 451.1

Later than one year but not later than two years 0.41 19.2

Contracts to buy US dollars at an agreed exchange rate


Later than one year but not later than two years 0.75 (15.8)

Contracts to sell US dollars at an agreed exchange rate


Later than one year but not later than two years 0.74 16.0

Contracts to buy euros at an agreed exchange rate


Contracts to sell euros at an agreed exchange rate


Contracts to buy Singapore dollars at an agreed exchange rate


Contracts to sell Singapore dollars at an agreed exchange rate


Total A$ 331.6 459.9


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b. Credit Risk ExposuresCredit risk represents the loss that would be recognised if counterparties failed to perform as contracted. The Lend Lease Risk Management and Audit Committee maintains a Group-wide framework for risk management and reviews issues of material risk exposure, including credit risk.

On Balance Sheet Financial Instruments

The credit risk on fi nancial assets recognised in the balance sheet (excluding investments of Lend Lease) equals the carrying amount, net of any impairment.

Lend Lease has no signifi cant concentrations of credit risk and has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history.

Credit risk on fi nancial instruments is managed through a Board approved credit policy for determining acceptable counterparties. The counterparties are recognised fi nancial intermediaries with acceptable credit ratings determined by a recognised rating agency. The policy sets out credit limits for each counterparty. The use of any counterparty outside the policy specifi cations requires Board approval.

Off Balance Sheet Financial Instruments

Credit risk for off balance sheet derivative contracts such as interest rate swaps and forward exchange contracts is minimised as dealing is principally undertaken with counterparties that are recognised fi nancial intermediaries with acceptable credit ratings determined by a recognised rating agency.

Foreign exchange contracts are subject to credit risk in relation to the counterparty failing to deliver the contracted amount of currency at settlement date. The full amount of the exposure is disclosed in Note 28a. ‘Foreign Currency’.

c. Interest Rate Risk Lend Lease’s policy is to manage interest rate risk that impacts directly on the Group’s assets and liabilities. A Financial Markets Risk Committee oversees the management of the Group’s interest rate exposures within the parameters of the Board approved policy.

Lend Lease uses physical and derivative (mainly interest rate swaps) fi nancial instruments to assist in managing its interest rate exposure. Speculative trading is not undertaken.

At 30 June 2007 it is estimated that an increase of one percentage point in interest rates would have increased the consolidated entity’s profi t before tax by approximately A$3.5 million (2006: A$5.0 million decrease). Interest rate swaps have been included in this calculation.

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28. International Currency Management and Financial Instruments continued

c. Interest Rate Risk continuedLend Lease’s exposure to interest rate risk and the effective weighted average interest rate for classes of fi nancial assets and fi nancial liabilities are set out below.

Consolidated Note

Weighted Average Interest

Rate1 %

Floating Interest

Rate A$m

Fixed Interest Maturing In Non InterestBearing

A$mTotal A$m

One Year or Less

A$m

One to Five Years

A$m

More than Five Years

A$m

June 2007

Financial Assets

Cash and cash equivalents 7 4.8 422.7 127.4 550.1

Loans and receivables 8 7.1 90.9 50.5 25.3 38.6 2,298.0 2,503.3

Other fi nancial assets (investments) 12 6.3 361.5 6.6 703.0 1,071.1

Other fi nancial assets (derivatives) 12 0.1 0.1

513.6 539.4 31.9 38.6 3,001.1 4,124.6

Financial Liabilities

Trade and other payables 17 5.3 17.0 2,634.6 2,651.6

Borrowings 18 6.0 1,076.2 1,076.2

Other fi nancial liabilities2 20 7.0 224.6 24.7 2.9 252.2

Other fi nancial liabilities (derivatives) 20 2.7 2.7

224.6 – 41.7 1,076.2 2,640.2 3,982.7

Net fi nancial assets and liabilities 289.0 539.4 (9.8) (1,037.6) 360.9 141.9

June 2006

Financial Assets

Cash and cash equivalents 7 4.8 509.7 49.8 559.5

Loans and receivables 8 3.5 4.0 0.8 0.1 57.3 1,793.8 1,856.0

Other fi nancial assets (investments) 12 5.4 11.4 5.6 719.0 736.0

Other fi nancial assets (derivatives) 12 12.0 12.0

513.7 62.0 5.7 57.3 2,524.8 3,163.5


Trade and other payables 17 2,210.4 2,210.4

Borrowings 18 5.4 390.2 394.8 785.0

Interest rate swaps3 18 4.6 61.0 61.0

Other fi nancial liabilities 20 5.6 200.4 8.0 2.8 211.2

590.6 – 69.0 397.6 2,210.4 3,267.6

Net fi nancial assets and liabilities (76.9) 62.0 (63.3) (340.3) 314.4 (104.1)

1 Does not include non interest bearing fi nancial instruments.

2 Other fi nancial liabilities includes Bluewater lease of A$197.9 million which matures in 2013.

3 Notional principal amount.


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Company Note

Weighted Average Interest

Rate1 %

Floating Interest

Rate A$m

Fixed Interest Maturing In Non Interest Bearing

A$mTotal A$m

One Year or Less

A$m

One to Five Years

A$m

More than Five Years

A$m

June 2007

Financial Assets

Cash and cash equivalents 7 5.9 2.0 2.0

Loans and receivables 8 5.0 16.8 2,580.2 2,597.0

Other fi nancial assets (investments) 12 1,560.4 1,560.4

2.0 – 16.8 – 4,140.6 4,159.4



Other fi nancial liabilities 20 80.9 80.9

– – – – 1,512.1 1,512.1

Net fi nancial assets and liabilities 2.0 – 16.8 – 2,628.5 2,647.3

June 2006

Financial Assets

Cash and cash equivalents 7 5.5 1.5 1.5

Loans and receivables 8 2,340.1 2,340.1

Other fi nancial assets (investments) 12 1,503.2 1,503.2

1.5 – – – 3,843.3 3,844.8



Other fi nancial liabilities 20 35.9 35.9

– – – – 1,381.7 1,381.7

Net fi nancial assets and liabilities 1.5 – – – 2,461.6 2,463.1

1 Does not include non interest bearing fi nancial instruments.

d. Liquidity RiskThe Group’s objective is to maintain effi cient use of cash and debt facilities to minimise the cost of borrowing to the Group. A Financial Markets Risk Committee oversees the management of the Group’s liquidity risk within the parameters of the Board approved policy.

e. Net Fair Values of Financial Assets and LiabilitiesOn Balance Sheet Financial Instruments

Equity investments traded on organised markets have been valued by reference to market prices prevailing at balance date. For non-traded equity investments, the net fair value is an assessment by the Directors based on the underlying net assets, future maintainable earnings and any special circumstances pertaining to a particular investment (refer to Note 10. ‘Investments Accounted for Using the Equity Method’ and Note 12. ‘Other Financial Assets’).

All assets and liabilities recognised in the balance sheet, whether carried at cost or at fair value, are recognised at amounts that represent a reasonable approximation of fair value.

Off Balance Sheet Financial Instruments

The gross liabilities relating to forward foreign exchange contracts are not recognised on the balance sheets at 30 June 2007. The balances relating to these contracts are included in ‘Other Financial Assets’ and ‘Other Financial Liabilities’ (refer to Note 12. ‘Other Financial Assets’ and Note 20. ‘Other Financial Liabilities’) and are held at fair value. They represent the net unrealised gain or loss resulting from converting the forward foreign exchange contracts to forward rates at balance date.

The net fair value of fi nancial assets or fi nancial liabilities arising from interest rate swap agreements has been determined as the marked to market value.

Lend Lease Corporation and some of its consolidated entities have potential fi nancial liabilities, which may arise from certain contingencies disclosed in Note 27. ‘Contingent Liabilities’.F

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InterestConsolidated

Share of Profi t After TaxConsolidated Book Value

June 2007 %

June 2006 %

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

29. Interest in Joint Venture Operations

Project Management, Construction and PFIsManukau Wastewater Services (NZ) 20.0 20.0 0.9 12.8 12.8

Seaview Project Limited 50.0 50.0 2.2 4.0

– 0.9 15.0 16.8

Consolidated

June 2007 A$m

June 2006 A$m

Included in the assets and liabilities within these consolidated fi nancial statements are the following items which represent Lend Lease’s interest in the assets and liabilities employed in joint venture operations:

Cash 0.3 0.9

Receivables 9.6 16.2

Inventories – properties held for sale 5.1

Total assets 15.0 17.1

Payable and borrowings 0.3

Total liabilities – 0.3



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Foreign Country of

Business Operation

Year End 30 June 2007

Ownership Interest

%

Year End 30 June 2006

Ownership Interest

%

30. Consolidated Entities

a. Investments in Consolidated EntitiesThe material consolidated entities of the Group are:

Parent Entity

Lend Lease Corporation Limited Australia

Project Management, Construction and PFIs

Australia

Bovis Lend Lease Pty Limited Australia 100 100

International

Bovis Lend Lease Holdings Limited UK UK 100 100

Bovis Lend Lease Limited UK UK 100 100

Bovis Lend Lease Overseas Holdings Limited UK UK 100 100

Bovis Lend Lease Group Limited UK UK 100 100

Bovis Lend Lease Investments Limited (Jersey) UK UK 100 100

Bovis Lend Lease Holdings, Inc. USA USA 100 100

Bovis Lend Lease, Inc. USA USA 100 100

Bovis Lend Lease LMB, Inc. USA USA 100 100


Australia

ComLand Limited Australia 100 100

Delfi n GC Pty Limited Australia 100 100

Delfi n Lend Lease Limited Australia 100 100

Lend Lease Development Pty Limited Australia 100 100

International

Blueco Limited UK UK 100 100

Lend Lease Europe Finance plc UK UK 100 100

Lend Lease Europe Holdings Limited UK UK 100 100

Lend Lease Europe Limited UK UK 100 100

Lend Lease Global Investments plc UK UK 100 100

The Beaufort Homes Development Group Limited UK UK 100 100

Crosby Lend Lease Group Limited UK UK 100 100

The Crosby Group plc UK UK 100 97

Actus Lend Lease, LLC USA USA 100 100

LL Capital and Real Estate Services, Inc USA USA 100 100


Australia

Lend Lease Funds Management Limited (formerly GPT Management Limited) Australia 100 100

Lend Lease Real Estate Investments Limited Australia 100 100

International

Lend Lease Real Estate Investments Pte Limited Singapore Singapore 100 100

Lend Lease (US) Holdings, Inc. USA USA 100 100

Lend Lease (US), Inc. USA USA 100 100

Lend Lease (US) Services, Inc. USA USA 100 100

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Ownership Interest

Acquired %

Date Acquired

Consideration Paid A$m

Contribution to

Consolidated Revenue

A$m

Contribution to

Consolidated Profi t

After Tax A$m

30. Consolidated Entities continued

b. AcquisitionsDuring the June 2006 fi nancial year, the consolidated entity purchased the following entities and has included the operating results of these entities in consolidated operating profi t from the date of acquisition.

June 2006


InternationalThe Crosby Group plc1 97 8 Jul 05 618.9 503.4 30.6

First Base Adelaide Wharf Limited2 45 6 Dec 05


InternationalChelmsford Meadows Limited Partnership3 75 20 Mar 06 142.8 2.0 1.4

Chelmsford Meadows GP Limited 75 20 Mar 06

The identifi able assets and liabilities of the acquisition are as follows:

Consolidated

June 2007 June 2006

Acquiree’s Carrying

Value A$m

Total Fair Value on

Acquisition A$m

Acquiree’s Carrying

Value A$m

Total FairValue on

Acquisition A$m

Acquisition of Consolidated EntitiesAcquisition Cost

Cash paid for acquisition 754.9

Cash paid for acquisition costs 6.8

Total acquisition cost – 761.7

Cash consideration 761.7

Overdraft 0.4

Net outfl ow of cash – 762.1

Net Assets of Entities Acquired

Cash and cash equivalents (0.4) (0.4)

Inventories 504.5 579.5


Other investments 5.6 5.6

Investment properties 190.3 190.3

Property, plant and equipment 14.1 14.1

Deferred tax assets 0.3 0.3

Deferred tax liabilities (22.5)

Payables and borrowings (97.0) (97.0)

Provisions (16.0) (16.0)

Other non interest bearing liabilities (30.1) (30.1)

Minority interest (47.5) (47.5)

Net assets acquired – – 536.2 588.7

Goodwill on acquisition 173.0

Total acquisition cost – 761.7

Footnotes on following page.


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Goodwill on acquisition at 30 June 2006 represents the fi nal goodwill recognised from the acquisition of the Crosby Group following the fi nalisation of the Crosby Group completion accounts as at the date of acquisition. The goodwill recognised on the acquisition was attributable to the skills and experience of the management team and the track record of the business. No other intangibles that had a value were identifi ed on acquisition.

1 The Crosby Group plc is a UK-based urban regeneration specialist. The acquisition was 100% debt funded and represented 97% of the voting shares, with management co-investing so as to own the remaining 3%. The revenue and profi t of the Crosby Group since the beginning of the June 2006 fi nancial year is not materially different to that since 8 July 2005, the date of acquisition. Subsequently, Lend Lease has acquired the remaining 3% interest in the Crosby Group plc.

2 First Base Adelaide Wharf Limited is involved in the development of Adelaide Wharf in Hackney, East London. Lend Lease is deemed to have control based on its share of the risk and rewards of the project.

3 Chelmsford Meadows Limited Partnership owns the Meadows Centre in Chelmsford, Essex.

Ownership Interest

Disposed %

Date Disposed

Consideration Received

A$m

c. DisposalsJune 2007

During the year, the consolidated entity disposed of its interest in the following entities. The operating results to that date have been included in consolidated operating profi t.


Playbill Venue Management Pty Limited 50 9 Oct 06 0.9

RBD QLD Pty Ltd1 100 21 Dec 06 32.0


Lend Lease Asian Retail Investment Fund 100 8 Jun 07

June 2006


NS Management Services Pty Ltd 100 28 Jun 06 2.0

The Chapelfi eld Partnership 100 5 Oct 05

The Chapelfi eld GP Limited 100 5 Oct 05


June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

Details of the disposals of consolidated entities are as follows:

Sale Proceeds

Cash received 31.2 2.0

Deferred proceeds 1.7

Carrying amount on disposal (10.3)

Disposal costs (0.1)

Profi t on disposal 22.6 1.9 – –

Carrying Value of Net Assets of Entities Disposed

Cash and cash equivalents 4.5


Other investments 84.6

Other assets 11.2

Payables and provisions (91.2) (25.8)

Net assets disposed 10.3 – – –

Cash Flows Resulting from Sale

Cash consideration 31.2 2.0

Disposal costs (0.1)

Cash disposed (4.8)

Net infl ows of cash 26.4 1.9 – –

1 RBD QLD Pty Ltd held the Keperra Retirement Village and Hostel.

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31. Segment Reporting

The segment results are discussed and analysed in the Management Discussion and Analysis of Financial Condition and Results of Operations (MD&A) included with this Report.

Business Segment Summary

Segment Revenue1, 2

Other Unallocated

Revenue1


Segment Result

Before Tax1, 2, 3

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

Segment

Retail and Communities 1,850.8 2,382.1 6.2 2.8 1,857.0 2,384.9 191.1 207.0

Investment Management 165.3 128.6 5.7 6.2 171.0 134.8 119.2 129.7

Project Management, Construction and PFIs 12,160.2 9,572.2 7.7 4.4 12,167.9 9,576.6 22.8 165.2

Total segment 14,176.3 12,082.9 19.6 13.4 14,195.9 12,096.3 333.1 501.9

Unallocated 86.0 30.5 86.0 30.5

Total Group 105.6 43.9 14,281.9 12,126.8

1 AASB 114 ‘Segment Reporting’ does not permit certain items of revenue and expenses to be attributed to particular segments for the purposes of determining segment revenues and segment results. These include corporate expenses, interest and dividend revenue, proceeds on the sale of investments (unless the segment’s operations are primarily of a fi nancial nature) and income tax expenses. June 2007 includes A$133.4 million unallocated income relating to the Group’s investment in Lend Lease Global Properties, SICAF.

2 Segment revenues, expenses and results do not include intersegment transfers between business segments. Intersegment transfers are priced on an arm’s length basis.

Depreciation and Amortisation1

Non Cash Expenses Other than Depreciation

and Amortisation2Segment Assets3

Investments Accounted for Using the

Equity Method

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

Segment

Retail and Communities 9.3 7.0 10.0 76.3 2,396.7 2,322.0 85.8 137.3

Investment Management 3.0 3.0 (2.7) (5.9) 1,655.3 1,569.9 1,013.4 843.2

Project Management, Construction and PFIs 10.0 11.3 217.7 57.3 3,137.8 2,770.4 40.4 19.3

Total segment 22.3 21.3 225.0 127.7 7,189.8 6,662.3 1,139.6 999.8

UnallocatedTotal Group

1 Represents segment amortisation and depreciation.

2 Non cash expense represents those non cash items included in the reconciliation of profi t from ordinary activities after income tax to net cash provided by operating activities.

Geographical Segment Summary

Segment Revenue


Group Profi t/(Loss) Before Tax


After Tax

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007A$m

June 2006 A$m

Asia Pacifi c 3,203.4 2,526.4 3,209.8 2,531.9 251.2 216.5 185.1 140.0

Americas 6,709.2 5,016.6 6,709.3 5,016.6 237.2 239.4 171.9 169.7

Europe 4,263.7 4,539.9 4,276.8 4,547.8 222.1 243.0 198.4 182.9

Total segment 14,176.3 12,082.9 14,195.9 12,096.3 710.5 698.9 555.4 492.6

Unallocated corporate 86.0 30.5 (82.5) (126.2) (57.9) (77.4)

Total Group 14,281.9 12,126.8 628.0 572.7 497.5 415.2


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Share of Profi t of Investments Accounted

for Using the Equity Method

Other Unallocated Revenues,

Other Income and Expenses1

Group Operating Profi t/(Loss) Before Tax


After Tax4


After Tax5

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

38.5 34.7 28.2 2.1 257.8 243.8 183.4 174.5 183.4 167.5

126.6 141.4 152.6 3.2 398.4 274.3 316.6 190.7 314.4 190.5

24.5 10.9 7.0 4.7 54.3 180.8 58.1 134.8 57.6 134.6

189.6 187.0 187.8 10.0 710.5 698.9 558.1 500.0 555.4 492.6

(82.5) (126.2) (82.5) (126.2) (57.9) (77.4) (57.9) (77.4)

105.3 (116.2) 628.0 572.7 500.2 422.6 497.5 415.2

3 Includes A$5.7 million reversal of impairment for Retail and Communities (June 2006 impairment losses: A$6.0 million) in relation to Jacksons Landing. Refer to Note 4. ‘Other Operating (Income) and Expenses’.

4 Represents Group profi t/(loss) after tax including minority interests.

5 Represents profi t/(loss) after tax attributable to members of Lend Lease Corporation Limited.

Unallocated Corporate

Assets3Total

Group Assets

Acquisition of Non Current

Assets4Segment Liabilities3

Unallocated Corporate Liabilities3

Total Group Liabilities

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

114.7 87.9 2,597.2 2,547.2 26.7 11.2 582.2 743.6 264.3 216.0 846.5 959.6

11.3 16.1 2,680.0 2,429.2 0.1 0.2 426.0 288.5 235.4 178.8 661.4 467.3

141.4 144.5 3,319.6 2,934.2 12.3 13.9 3,146.7 2,507.9 114.3 221.9 3,261.0 2,729.8

267.4 248.5 8,596.8 7,910.6 39.1 25.3 4,154.9 3,540.0 614.0 616.7 4,768.9 4,156.7

739.4 255.7 739.4 255.7 1,324.3 998.3 1,324.3 998.3

1,006.8 504.2 9,336.2 8,166.3 1,938.3 1,615.0 6,093.2 5,155.0

3 AASB 114 does not permit certain assets and liabilities to be attributed to particular segments for the purposes of determining segment assets and segment liabilities. These include income tax assets and liabilities, borrowings and liabilities related to assets that are the subject of fi nance lease liabilities.

4 The acquisition of segment assets that are expected to be used more than one year later. These assets represent capital expenditure and include assets acquired under fi nance leases but exclude investments accounted for using the equity method, investment properties and other fi nancial assets.

Segment Assets

Acquisition of Non Current

Assets

June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

2,197.6 2,087.8 10.3 9.6

1,927.1 1,654.1 8.0 6.5

3,065.1 2,920.4 20.8 9.2

7,189.8 6,662.3 39.1 25.3For

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31. Segment Reporting continued

Business Segments The consolidated entity comprises the following main business segments, based on the consolidated entity’s management reporting system:


Retail relates to property development from concept through to design, planning, construction, fi nancing, leasing, property management and the eventual sale. Communities relates to urban community development including military housing. This includes all aspects from acquisition, design, development and management to eventual sale.


Investment Management relates to the management of real estate investment funds and real estate associated debt on behalf of clients. This also includes all investments in real estate and other investments.

Project Management, Construction and PFIs

This business segment relates to project management, design services, construction management and engineering. In addition, this business segment is responsible for PFIs.

Unallocated Business SegmentsCorporate

Corporate includes Group Treasury, amortisation and corporate administration services. All fi nancing costs that are not directly related to real estate development projects or investments are reported in unallocated corporate.

Geographic SegmentsThe Group’s businesses operate on a global basis. Segment revenue is based on the geographic location of customers and segment assets are based on the geographic location of the assets. The Group’s business segments operate across the following regions: Asia Pacifi c, Americas and Europe.

32. Commitments1


June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

a. Operating Lease CommitmentsEstimated aggregate amount of non cancellable operating lease expenditure agreed or contracted but not provided for in the fi nancial statements:

Land and buildings – self occupied 197.5 228.0 0.1

Plant and equipment 17.5 14.7

215.0 242.7 – 0.1

At balance date commitments in relation to non cancellable operating leases are payable as follows:

Due within one year 49.1 58.5 0.1


Due later than fi ve years 40.9 55.7

215.0 242.7 – 0.1

1 The commitments outlined in this note do not include commitments relating to investments accounted for using the equity method (refer to Note 10. ‘Investments Accounted for Using the Equity Method’).

The Group leases various land and buildings and plant and equipment under non cancellable operating leases. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.

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June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

b. Finance Lease Commitments1

At balance date commitments in relation to the fi nance leases are payable as follows:



Due later than fi ve years 197.9 200.4

Recognised as a liability 198.5 200.8 – –

Lease liabilities provided for in the fi nancial statements:

Current 0.2 0.1

Non Current 198.3 200.7

198.5 200.8 – –

c. Capital ExpenditureAt balance date the aggregate amount of capital expenditure contracted but not provided for in the fi nancial statements:

Property, Plant and Equipment

Due within one year 1.0

– 1.0 – –

d. InvestmentsAt balance date capital commitments existed in respect of interests in partnerships, investments or joint ventures contracted but not provided for in the fi nancial statements:

Due within one year

PFIs 35.8 29.8

Actus Lend Lease – Military housing 7.9

Other 7.1 4.8

Due between one and fi ve years

Warrington Limited Retail Partnership 27.4

PFIs 36.2

Actus Lend Lease – Military housing 13.3 17.7

Lend Lease Real Estate Partners II 4.8

Other 10.4

Due later than fi ve years

Lend Lease Overgate Partnership 1.1 4.3

Actus Lend Lease – Military housing 3.7 4.0

Other 1.5

62.5 147.3 – –

1 Primarily relates to Bluewater lease liability. Finance charges, to be based on future variable interest rates, are excluded.

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June 2007 A$m

June 2006 A$m

June 2007 A$m

June 2006 A$m

33. Notes to the Statements of Cash Flows

a. Reconciliation of Profi t After Tax to Net Cash Provided by Operating Activities

Profi t After Tax (Including Minority Interest) 500.2 422.6 391.0 201.8

Amortisation and depreciation 25.9 24.9 0.3 0.3

Net gain on sale of investments and property, plant and equipment (169.3) (71.0)

Net unrealised foreign exchange (gain)/loss and currency hedging costs (0.7) (12.8) (0.1) 0.2

Profi t accounted for using the equity method (189.6) (187.0)

Dividends/distributions from investments accounted for using the equity method 104.2 56.5

Net bad and doubtful debts impairment loss net of provisions (written back)/raised (5.2) 2.1 (80.0)

Other (2.4) (8.2) 2.8 (5.6)

Net cash provided by operating activities before changes in assets and liabilities 263.1 227.1 314.0 196.7

Changes in Assets and Liabilities Adjusted for Effects of Purchase and Disposal of Subsidiaries and Operations During the Financial Year

Increase in receivables (579.7) (469.9) (35.0) (36.0)

(Increase)/decrease in inventories (83.4) 563.3

Increase in other assets (11.6) (59.0)

(Decrease)/increase in defi ned benefi t plan assets/liabilities (19.6) (21.3) (1.4) 1.7

Increase/(decrease) in payables 689.2 342.0 (8.3) (34.0)

Increase/(decrease) in other liabilities 77.4 (36.5) 2.1 (2.0)

Increase in deferred tax items 61.4 144.0 6.5 0.6

(Increase)/decrease in current tax asset (3.9) (72.5) 31.1 (7.0)

(Decrease)/increase in other provisions (39.4) 44.0 (65.5) 2.1

Decrease/(increase) in other intangibles 3.7 (0.9)

Net cash provided by operating activities 357.2 660.3 243.5 122.1

Consolidated

June 2007 June 2006

Receipt A$m

ExpenditureA$m

Receipt A$m

Expenditure A$m

b. Supplementary InformationProperty Development Receipts and Expenditure

Retail

Chapelfi eld, Norwich (12.4) 532.0 (108.0)

Property Development

Darling Park, Sydney 4.3 (0.5) 116.1 (97.6)

Urban Communities, Australia 737.6 (578.4) 575.4 (667.2)

Urban Communities, UK 402.1 (344.8) 451.8 (254.7)

Other 25.5 (71.6) 29.4 (42.0)

1,169.5 (1,007.7) 1,704.7 (1,169.5)

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34. Employee Benefi ts

a. Lend Lease Employee Share Plans Lend Lease has as a core value the concept of ‘partnering’ capital and labour. This concept has, over decades, been advanced in many practical ways at Lend Lease through philosophies such as employee ownership and profi t sharing.

Currently employees own approximately 9.5% of the issued capital of Lend Lease.

In October 1988, shareholders approved an annual allotment of 0.5% of the issued capital of Lend Lease Corporation at 50 cents per share to be used for the benefi t of Lend Lease Group employees. This programme was suspended by the Board in May 2003.

Australia: Employee Share Acquisition Plan (ESAP)

– In accordance with the 1988 shareholder approval, ESAP was established in December 1988 for the purpose of employees acquiring shares in Lend Lease Corporation. This plan replaced previous employee ownership facilities in place over the previous decades.

– ESAP is funded by Lend Lease subscriptions. Those subscriptions have been used to acquire shares in Lend Lease Corporation at market value on behalf of employees, who may be nominated as members of ESAP.

– Employees may also be allocated shares by way of bonus arrangements on the basis of individual and departmental performance.

– At balance date, approximately 1,934 employees (June 2006: 2,072) were eligible to participate in the plan.

US: Employee Share Plan

– The US Internal Revenue Service approved share plan arrangements previously in place were closed during the June 2005 fi nancial year due to the change to Lend Lease making all profi t share payments in cash.

UK/Europe/Asia: Employee Share Plan

– Two employee share plans (‘the Plans’) were established in 1998, being the UK-based Inland Revenue Approved Plan (‘the Approved Plan’) and the European (Guernsey-based) Restricted Share Plan (‘the Restricted Share Plan’). The Plans jointly are similar in operation to the Australia-based ESAP; however, the 1998 Approved Plan (closed in March 2002) was only available to UK employees.

– In 2002, two new UK-based Inland Revenue approved Share Incentive Plans (SIP) were established for the acceptance of employee profi t share contributions used to acquire Lend Lease Corporation shares for UK-based Lend Lease Group employees. These plans are currently not accepting new contributions due to the change to Lend Lease making all profi t share payments in cash.

– At balance date approximately 2,261 employees (June 2006: 2,220) were eligible to participate in the SIP, should it recommence accepting contributions.

– Shares in the Restricted Share Plan may be allocated to employees in the UK, Europe and Singapore based on individual and departmental performance. The Restricted Share Plan can acquire Lend Lease Corporation shares at market value on behalf of employees. The value of allocations to employees is ultimately based on a combination of the Lend Lease Corporation share price and the respective currencies and Australian dollar exchange rates.

– At balance date, approximately 3,995 UK and European employees (June 2006: 3,664) were eligible to participate in the plan.

Eligibility

The rules for eligibility for particular plans are determined by reference to the regulatory, legal and tax rules of each country in which the Group operates.

Dividends and/or Voting Rights

Generally, employees in the various operating share plans are entitled to dividends and voting rights for allocated shares. The plans refl ect this intention subject to regulatory, legal and tax constraints. Voting and dividend rights on any unallocated shares reside with the trustees of the relevant share plan trusts. The trustee may exercise these rights in accordance with any fi duciary or governance rules pertaining to the deed or trust laws in the legal/tax jurisdiction the trust operates within.F

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34. Employee Benefi ts continued

b. Lend Lease Employee Benefi t VehiclesIn addition to the plans discussed in Note 34a., Lend Lease has over the years established a range of employee share ownership vehicles. The Lend Lease Retirement Benefi t Fund (RBF) was established in 1984 with shareholder approval for the benefi t of employees through the allotment at par value of 5.0 million Lend Lease Corporation shares. The balance of the assets of RBF at 30 June 2007 was 14.1 million Lend Lease shares (June 2006: 14.1 million Lend Lease shares). The fund was originally intended to provide excess superannuation benefi ts but this purpose has now become defunct due to changes in the law. For some years, earnings have been used to fund the programs of the Lend Lease Foundation. The Lend Lease shares in RBF are not available for allocation to employees other than in the event of a change of control of Lend Lease Corporation and, in accordance with the Trust Deed, the capital of the Trust is not available to Lend Lease Corporation. The RBF Trustees are independent of Lend Lease Corporation. In the event of a change of control, the RBF Trustees may distribute RBF funds to employees who cease to be employees during the 12 months after a change of control. The RBF Trustees have discretion as to how RBF funds are distributed following a change of control. Under AIFRS, RBF, while not legally controlled, is now required to be consolidated for accounting purposes and payments from it on a change of control are therefore now relevant to the Company’s fi nancial statements. Any payments that the RBF Trustees may make as a result of a change of control of Lend Lease Corporation are an obligation of RBF and not the Company. Any payments made will need to be funded by the Trust and therefore cannot exceed the value of the assets of RBF which was A$284.6 million at 30 June 2007. However, as RBF is consolidated by the Company, this potential obligation is disclosed as a contingent liability. Further, given the timing and basis on which the Trust purchased its Lend Lease shares, it should be noted that any capital gains tax payable on the Lend Lease shares sold by the Trust as a result of a change of control (or otherwise) may be recorded from an accounting viewpoint as a tax expense of the consolidated entity.

In October 1985, the Lend Lease Employee Investment Trust (EIT) was established to enable employees to invest in the company. At that time, shareholders approved a one for ten renounceable rights issue and the allotment at the same price of an equivalent number of shares to EIT. EIT acquired these shares with debt funds raised through an external fi nancier. Over the years, strong growth in Lend Lease dividend fl ows enabled EIT to pay down its external debt. In the following years, EIT acquired shares through on-market purchases, participation in bonus issues and dividend reinvestment. Between 1984 and 1988 it also accumulated shares through the prior shareholders’ resolution to allot 0.5% of issued capital to employee benefi t vehicles. At 30 June 2007, there were 11.7 million (June 2006: 11.7 million) Lend Lease Corporation shares held by EIT, of which 11.3 million shares were available for allocation to employees. For some time the Trustee of EIT has directed surplus dividends to help fund the Lend Lease Foundation’s programs. In accordance with the Trust Deed, the capital of the Trust is not available to Lend Lease Corporation. As with RBF, AIFRS now requires consolidation of EIT for accounting purposes, regardless of the control of EIT by independent trustees. Payments from EIT have therefore become relevant to the Company’s fi nancial statements. On a change of control, the EIT Trustees may (but are not required to) terminate the Trust and distribute allocated proceeds to employees and unallocated proceeds to the Lend Lease Superannuation Fund or to RBF. Any payments are an obligation of EIT and not the Company, and cannot exceed the assets of the Trust (A$225.3 million as at 30 June 2007). No contingency is recorded in these fi nancial statements as the potential for such payments is remote, with any termination of EIT in such circumstances, and any subsequent distribution to other funds, entirely at the discretion of the EIT Trustees. Given the timing and basis on which the Trust purchased its Lend Lease shares, it should be noted that any capital gains tax payable on the Lend Lease shares sold by EIT as a result of a change of control (or otherwise) may be recognised from an accounting viewpoint as a tax expense of the consolidated entity.

The consolidation of EIT and RBF under AIFRS creates certain anomalies for the Group’s reported profi t or loss where distributions from those trusts are used to fund employee programs under the Lend Lease Foundation (as they have been doing for some time). In particular, the consolidation requires dividends on Lend Lease shares which are distributed by the trusts to the Foundation be eliminated from the income of the Group. On 30 June 1992, Lend Lease agreed that if it were to receive distributions from EIT or RBF, it would apply an equal amount for Foundation programs. The effect is that the Group immediately accrues for this obligation, but is now no longer entitled to recognise the matching income that creates the obligation. This results in a net expense to the income statement, which does not refl ect the cash position. In the year to 30 June 2007, the net impact was an after tax expense of A$10.1 million. In future years, it would be anticipated that there would be similar impacts on reported profi ts.

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In 1988, Lend Lease established ESAP as an employee reward scheme. ESAP was established to prospectively replace EIT as the principal employee share plan of the Group in Australia. Other similar plans have subsequently been established (refer to earlier share plan comments). The details of the employee share plans, including ESAP, are set out in Note 34a.

Access to the Lend Lease Foundation is another important employee benefi t, providing learning, personal development, community and other activities. Established in 1983, the Foundation’s programs are administered by employee representatives.

c. Share Based PaymentsLong Term Incentives (LTIs)

The current LTIs of Lend Lease were introduced and approved by the Board in 1999 and updated and extended for awards from 2001 onwards. The objectives of the LTIs are essentially twofold:

– Align executives with the long term interests of Lend Lease and its shareholders;

– Attract and retain high calibre executives by providing competitive rewards that relate to the performance of both the individual executive and the Lend Lease share price.

LTI grants are normally made in July each year and are based on competitive remuneration practice. LTIs are settled in cash or Lend Lease shares, with settlement occurring upon vesting if performance hurdles are met. Grants depend on personal contribution and potential, and are designed to retain and motivate high performing and key executives. The LTIs are in the form of an Australian dollar fi gure ‘grant’, which is notionally ‘invested’ in performance shares (PS) over time to deliver value depending on:



The Personnel and Organisation Committee approved one change to the rules of the LTI for the 2005 awards onwards. The rules now allow that in the event of a change in control of Lend Lease, all awards will vest upon change in control, to the extent that performance conditions have been met. Senior executives would then be entitled to a pro rata settlement, with the Board having discretion to allow the entitlement to exceed this pro rata amount.

Arrangements for LTIs granted in the Financial Years 2005 and 2006

For awards granted on 1 July 2004 and 1 July 2005, the performance hurdles are based on the Total Shareholder Return (TSR) of Lend Lease against a basket of international comparator companies. Under these awards, the performance hurdle required TSR to achieve at least median against several comparator companies of Lend Lease.

Arrangements for the June 2007 Financial Year – Additional Performance Hurdles

For the June 2007 fi nancial year awards, the Personnel and Organisation Committee set new performance hurdles to align interests between the participant and shareholders and for consistency with a new Short Term Incentive structure.

For awards granted in 2006 onwards the performance hurdle is based on two equal measures: long term profi tability as measured by Earnings Per Share (EPS) and external TSR compared to the TSR of the individual ASX100 listed companies as at the commencement of the performance period. The change in the TSR comparator group better refl ects those companies against which Lend Lease competes for capital. The performance measures are:



Each of the two performance hurdles is measured and can vest independently. The executive must remain with the Company until vesting date for the award to vest.

For the 2006 award, the Personnel and Organisation Committee intends that these awards will vest in Company shares rather than cash, other than for executives specifi cally identifi ed by the Personnel and Organisation Committee or in circumstances where share settlement is not practicable.F

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34. Employee Benefi ts continued

c. Share Based Payments continuedRetention Awards

When the Board believes an employee is an outstanding performer and Lend Lease and its shareholders will gain from incentivising him or her to remain with Lend Lease, a retention award may be made. As an incentive to remain with the Company requires a degree of certainty of value delivered to the individual at the end of the retention period, performance conditions are not generally applied to the ultimate payment of such an award. Refer to the table below for details of the vesting conditions of retention awards.

Summary of LTIs and Retention Awards

2007 Number of Lend Lease Corporation Share Equivalents

Grant Date Vesting DateOpening Balance Granted Lapsed Exercised

Closing Balance

LTIs Dec 2002 Jun 2007 210,604 (94,772) (115,832)

Jul 2004 Jun 2007 891,028 (439,121) (451,907)

Jul 2005 Jun 2008 1,202,250 (153,467) (9,015) 1,039,768

Jul 2006 Jun 2009 1,277,059 (57,763) (1,775) 1,217,521

Total LTIs 2,303,882 1,277,059 (745,123) (578,529) 2,257,289

Retention AwardsDec 2002 Dec 2007 87,357 (56,038) 31,3191

Jul 2005 Jul 2008 110,664 110,6642

Sep 2005 Jun 2007 197,218 (197,218) 2

Sep 2005 Jul 2008 197,218 197,2182

Oct 2006 Sep 2007 84,407 84,4073

Oct 2006 Sep 2008 84,407 84,4073

Oct 2006 Sep 2009 84,408 84,4083

Oct 2006 Sep 2010 84,408 84,4083

Total retention awards 592,457 337,630 – (253,256) 676,831

Total 2,896,339 1,614,689 (745,123) (831,785) 2,934,120

2006 Number of Lend Lease Corporation Share Equivalents

Grant Date Vesting DateOpening Balance Granted Lapsed Exercised

Closing Balance

LTIs Dec 2002 Jun 2006 210,604 (210,604)

Dec 2002 Jun 2007 210,604 210,604

Jul 2003 Jun 2006 2,611,153 (2,380,700) (230,453)

Jul 2004 Jun 2007 1,266,376 (123,270) (252,078) 891,028

Jul 2005 Jun 2008 1,225,946 (20,532) (3,164) 1,202,250

Total LTIs 4,298,737 1,225,946 (2,735,106) (485,695) 2,303,882

Retention AwardsDec 2002 Dec 2007 143,395 (56,038) 87,357

Jul 2005 Jul 2008 110,664 110,664

Sep 2005 Jun 2007 197,218 197,218

Sep 2005 Jul 2008 197,218 197,218

Total retention awards 648,495 – – (56,038) 592,457

Total 4,947,232 1,225,946 (2,735,106) (541,733) 2,896,339

1 Award settled in cash and vests on a progressive monthly basis over the award service life.

2 Award settled in cash or shares at the option of the executive and is dependent upon service to vesting date. A ‘good leaver’, that is, an executive who leaves employment by reason of death, total and permanent disability, redundancy or other reason as determined by the Personnel and Organisation Committee, will be entitled to pro rata vesting.

3 Award settled in shares and is dependent upon service to vesting date. A good leaver will be entitled to pro rata vesting.For

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Amounts Recognised in the Financial Statements

LTIs are valued using a Monte-Carlo simulation methodology where the share price can be projected based on the assumptions underlying the Black-Scholes formula. Retention awards are valued by discounting the share price by the expected dividends assumed to be paid from the valuation date until the vesting date (if applicable). The model inputs include the Lend Lease share price, a risk free interest rate, expected volatility and dividend yield.

Details of the amounts recognised in the fi nancial statements and the fair values relating to LTIs and retention awards for the years ended 30 June 2007 and 2006 are set out below.

2007

Grant Date Vesting Date

Fair Value at Grant Date

A$

Fair Value June 2007

A$


A$

Expense 2007

A$

Liability at June 2007

A$

LTIsDec 2002 Jun 2007 838,204 10.29 2,167,115 2,093,326 2,167,115

Jul 2004 Jun 2007 6,990,396 10.29 8,341,589 5,122,007 8,341,589

Jul 2005 Jun 2008 8,066,725 8.91 9,264,333 4,148,427 6,176,222

Jul 2006 Jun 2009 13,153,708 14.81 18,031,486 6,010,495 6,010,495

Total LTIs 29,049,033 37,804,523 17,374,255 22,695,421

Retention AwardsDec 2002 Dec 2007 2,486,782 18.20 5,091,050 2,038,611 4,666,795

Jul 2005 Jul 2008 1,453,834 18.54 2,051,711 859,938 1,346,014

Sep 2005 Jun 2007 2,630,888 18.54 3,656,422 2,404,923 3,656,422

Sep 2005 Jul 2008 2,630,888 18.54 3,656,422 1,553,664 2,362,176

Oct 2006 Sep 2007 1,374,992 18.54 1,564,906 1,115,636 1

Oct 2006 Sep 2008 1,374,992 18.54 1,564,906 532,318 1

Oct 2006 Sep 2009 1,375,008 18.54 1,564,924 349,884 1

Oct 2006 Sep 2010 1,375,008 18.54 1,564,924 260,578 1

Total retention awards 14,702,392 20,715,265 9,115,552 12,031,407

Total 43,751,425 58,519,788 26,489,807 34,726,828

1 Awards to be settled in shares and accordingly the obligation recognised in equity compensation reserve.

During the fi nancial year ended 30 June 2007, the total expense recognised in the income statement in relation to LTIs and retention awards is A$26.5million. A$2.3 million of this total expense arises from equity settled share based payment awards.

2006

Grant Date Vesting Date

Fair Value at Grant Date

A$

Fair Value June 2006

A$


A$

Expense 2006

A$

Liability at June 2006

A$

LTIs Dec 2002 Jun 2006 833,992 (93,267)

Dec 2002 Jun 2007 838,204 0.44 92,666 (131,745) 73,789

Jul 2003 Jun 2006 9,165,147 (11,332,404)

Jul 2004 Jun 2007 6,990,396 5.42 4,829,372 944,490 3,219,581

Jul 2005 Jun 2008 8,066,725 5.06 6,203,287 2,027,795 2,027,795

Total LTIs 25,894,464 11,125,325 (8,585,131) 5,321,165

Retention AwardsDec 2002 Dec 2007 2,486,782 13.11 3,667,234 950,236 2,628,184

Jul 2005 Jul 2008 1,453,834 13.99 1,434,205 486,076 486,076

Sep 2005 Jun 2007 2,630,888 13.99 2,759,080 1,251,499 1,251,499

Sep 2005 Jul 2008 2,630,888 13.99 2,759,080 808,512 808,512

Total retention awards 9,202,392 10,619,599 3,496,323 5,174,271

Total 35,096,856 21,744,924 (5,088,808) 10,495,436

During the fi nancial year ended 30 June 2006, a net A$5.1 million credit was recognised in the income statement in relation to LTIs and retention awards. The credit to the income statement was due to an accrual release as the LTI granted in July 2004 did not vest. There were no equity settled share based payment awards.

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35. Key Management Personnel Disclosures

Key Management Personnel compensation details are set out in Section 3 of the Directors’ Report.

Equity Holdings and Transactions

Shareholdings Financial Year Ended 30 June 2007

Year

Shares Held at Beginning of Financial

Year

Shares Received

During the Year1,2

Other Net Change

to Shares

Shares Held at End of Financial

Year


D Crawford 2007 23,008 5,114 28,122

2006 17,468 5,540 23,008

P Colebatch – Appointed 1 December 2005 2007 2,121 1,568 3,689

2006 121 2,000 2,121

G Edington 2007 22,866 1,655 24,521

2006 21,373 1,493 22,866

P Goldmark 2007 11,798 1,703 13,501

2006 9,998 1,800 11,798

J Hill – Appointed 8 May 2006 2007 1,031 2,000 3,031

2006

R Longes – Resigned 17 November 2005 2007

2006 57,304 1,280 (58,584)3

D Ryan 2007 11,857 1,783 13,640

2006 10,096 1,761 11,857

Executive Directors

G Clarke 2007 1,000 1,000

2006 1,000 1,000

R Taylor 2007 102,425 1,920 104,345

2006 91,845 10,580 102,425

A Chamberlain – Resigned 30 September 2005 2007

2006 1,000 (1,000)3

Executives

S McCann 2007 458 875 1,333

2006 458 458

FormerR Johnston 2007 58,933 58,933

2006 58,933 58,933

R Burrows 2007 37,972 955 38,927

2006 36,231 1,741 37,972

R Lourey4 2007

2006 64 409 473

J Daniel4 2007

2006 230 230

P Crewes – Resigned 30 June 20064 2007

2006 41,020 1,242 (42,262)3

R Fehring4 2007

2006 20,149 1,164 (12,500) 8,813

M Bellaman4 2007

2006

P Koziol4 2007

2006

N Hugill4 2007

2006

J Spanswick4 2007

2006 1,130 1,130

P Marchetto4 2007

2006 5,555 5,555

Total 2007 272,438 16,604 2,000 291,042

Total 2006 373,396 27,589 (112,346) 288,639

1 Non Executive Directors’ share allocations relating to retirement benefi ts are made in arrears on 1 January each year. Refer to Section 3b. of the Directors’ Report for further details.

2 For Executive Directors and executives, relates to share entitlements under employee benefi t vehicles.

3 Balance at retirement/resignation.

4 From 1 July 2006 the executive ceased to be key management personnel.

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Key Management Personnel CompensationThe key management personnel compensation included in ‘Employee Benefi t Expenses’ (refer to Note 4. ‘Other Operating (Income) and Expenses’) is as follows:


June 2007 A$000s

June 2006 A$000s

June 2007 A$000s

June 2006 A$000s

Short term employee benefi ts 13,010 24,676 9,512 12,649

Post employment benefi ts 3,937 5,000 3,442 2,728

Share based payments 12,306 2,033 8,899 1,568

Other long term benefi ts 608 785 608

29,861 32,494 22,461 16,945

Loans to Key Management PersonnelNo loans were made to key management personnel or other related parties during the current year or prior year.

Other Transactions with Key Management PersonnelFrom time to time Directors and executives of the Company or its consolidated entities, or parties related to them, may purchase goods from the consolidated entity. These purchases are on terms and conditions no more favourable than those entered into by unrelated customers and are trivial or domestic in nature.

36. Non Director Related Party Information

Ownership Interests in Related Parties and Transactions with Consolidated EntitiesInterests held in consolidated entities and associated companies, joint ventures, partnerships and trusts by Lend Lease Corporation Limited, are set out in Notes 30, 10a, 10b, and 12 to the fi nancial statements.

Lend Lease Corporation provides a wide range of corporate services to its consolidated entities, including administrative, advertising, accounting, employee services such as the administration of salaries and superannuation, fi nance, insurance, legal, public relations, company secretarial and treasury. Costs incurred in providing such services are recovered accordingly from the entities concerned.

Transactions that occurred during the fi nancial year between entities in the Lend Lease consolidated Group were:

– Provision of project management, design services, construction management and engineering services to development projects;

– Provision of payroll, transaction and management services;

– Receipt and payment of superannuation contributions;

– Reimbursements of expenses made on behalf of subsidiaries;

– Loan advances and repayments between subsidiaries;

– Premium payments and receipts for the Group’s insurance policies.

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36. Non Director Related Party Information continued

Managed FundsAll transactions between managed property trusts and Lend Lease are determined at an arm’s length commercial basis and are subject to independent assessment where appropriate and approval by an independent trustee or board.

Property Trusts and Funds

Lend Lease is the fund manager for several property trusts and funds. As fund manager, Lend Lease is responsible for all management activities arising from the trust and fund’s ownership of properties. The manager is also responsible for implementing policies, monitoring the performance of each property, maximising returns for the trusts and funds and managing the liquid funds of the trusts and funds. For these services, Lend Lease is paid a fee in accordance with the respective deeds of the trusts and funds.

Managed Funds

June 2007 A$m

June 2006 A$m

Services provided by Lend Lease

Management of trusts 94.1 79.9

Construction and development 2.2 48.0

Expense reimbursements to Lend Lease

Administrative and property rental expenses 10.2 14.2

Services provided by Lend Lease are:

– Investment management: strategic investment advice, total asset management and investment portfolio management;

– Asset management: property management services, property portfolio advisory services, maintenance and insurances, strategic advice and management supervision services, administration, marketing and risk management services;

– Communities businesses: property capital works, design and construction services, development and refurbishment.

37. Events Subsequent to Balance Date

Sale of Units in Australian Prime Property Fund (APPF)On 11 July 2007, Lend Lease sold a proportion of its interest in APPF Retail for A$263.8 million. As at 30 June 2007, a cumulative gain of A$32.6 million before tax was recognised in the fair value revaluation reserve relating to this interest.

Withdrawal of Australian Taxation Offi ce (ATO) Appeal to Federal Court on Westpac Warrants IssueOn 10 August 2007 the ATO withdrew its appeal relating to the Federal Court’s decision in December 2006 regarding Lend Lease’s sale of Westpac shares.

Following the withdrawal of its appeal, the ATO will be required to repay to Lend Lease the balance of the payment Lend Lease made under the amended assessment issued in 2002, plus interest (refer to Note 16. ‘Other Assets’). The repayment of the monies by the ATO has no impact on earnings.

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Directors’ Declaration

In the opinion of the Directors of Lend Lease Corporation Limited (‘the Company’):

1. The fi nancial statements and notes set out on pages 48 to 116 and the remuneration disclosures contained in the Remuneration Report in the Directors’ Report are in accordance with the Corporations Act 2001, including:

a. Giving a true and fair view of the fi nancial position of the Company and consolidated entity as at 30 June 2007 and of their performance, as represented by the results of their operations and cash fl ows for the fi nancial year ended on that date; and

b. Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.

2. The fi nancial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1(a).

3. The remuneration disclosures contained in the Remuneration Report in Section 3 of the Directors’ Report comply with Australian Accounting Standard AASB 124 ‘Related Party Disclosures’.

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

5. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Offi cer and Group Finance Director for the fi nancial year ended 30 June 2007.

Signed in accordance with a resolution of the Directors:



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Report on the Financial Report and AASB 124 Remuneration Disclosures Contained in the Directors’ Report

We have audited the accompanying fi nancial report of Lend Lease Corporation Limited (‘the Company’), which comprises the balance sheets as at 30 June 2007, and the income statements, statements of changes in equity and cash fl ow statements for the year ended on that date, a description of signifi cant accounting policies and other explanatory Notes 1 to 37 and the Directors’ Declaration of the Group comprising the Company and the entities it controlled at the year’s end or from time to time during the fi nancial year.

We have also audited the remuneration report contained in Section 3 of the Directors’ Report. As permitted by the Corporations Regulations 2001, the Company has disclosed information about the remuneration of Directors and, including those required by Australian Accounting Standard AASB 124 ‘Related Party Disclosures’, under the heading “Remuneration Report” in Section 3 of the Directors’ Report and not in the fi nancial report.

Directors’ Responsibility for the Financial Report and the AASB 124 Disclosures Contained in the Directors’ ReportThe Directors of the company are responsible for the preparation and fair presentation of the fi nancial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the fi nancial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the Directors also state, in accordance with Australian Accounting Standard AASB 101 ‘Presentation of Financial Statements’, that the fi nancial report, comprising the fi nancial statements and notes, complies with International Financial Reporting Standards.

The Directors of the Company are also responsible for the Remuneration Report contained in the Directors’ Report.

Auditor’s ResponsibilityOur responsibility is to express an opinion on the fi nancial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the fi nancial report is free from material misstatement. Our responsibility is also to express an opinion on the Remuneration Report contained in the Directors’ Report based on our audit.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial report and the remuneration disclosures contained in the Directors’ Report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the fi nancial report and the Remuneration Report contained in the Directors’ Report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the fi nancial report and the Remuneration Report contained in the Directors’ Report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the fi nancial report and the Remuneration Report contained in the Directors’ Report.

We performed the procedures to assess whether in all material respects the fi nancial report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards (including the Australian Accounting Interpretations), a view which is consistent with our understanding of the Company’s and the Group’s fi nancial position and of their performance and whether the Remuneration Report is in accordance with Australian Accounting Standard AASB 124.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Independent Auditor’s Report to the Members of Lend Lease Corporation Limited

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Auditor’s Opinion on the Financial ReportIn our opinion:

(a) The fi nancial report of Lend Lease Corporation Limited is in accordance with the Corporations Act 2001, including:

(i) Giving a true and fair view of the Company’s and the Group’s fi nancial position as at 30 June 2007 and of their performance for the year ended on that date; and

(ii) Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.

(b) The fi nancial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Auditor’s Opinion on the Remuneration Report Contained in the Directors’ ReportIn our opinion the remuneration report in Section 3 of the Directors’ Report complies with Australian Accounting Standard AASB 124 ‘Related Party Disclosures’.

KPMG

C HallPartner


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This page has been left blank intentionally.

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The cover of this Report is printed on 9Lives 80, an environmentally responsible paper, containing 80 per cent post consumer fi bre and 20 per cent totally chlorine-free pulp. It is an FSR certifi ed mixed source paper, ensuring all virgin pulp is derived from well-managed forests. It is also manufactured by an ISO 14001 certifi ed mill.





precinct.com.au


Contents

Directors’ Report 1Governance 2

Operations 6

Remuneration Report 7

Other 27

Lead Auditor’s Independence Declaration 29

Five Year Profi le 30Management Discussion and Analysis of Financial Condition and Results of Operations (MD&A) 31Overview 32

Retail and Communities 34

Investment Management 41

Project Management, Construction and Private Finance Initiatives (PFIs) 43

Corporate 45

Appendix 1: Results Detail 46

Consolidated Financials 47Consolidated Financial Statements 48

Notes to the Consolidated Financial Statements 53





The 2007 Annual General Meeting of Lend Lease Corporation Limited will be held at Dockside, The Balcony Level, Cockle Bay Wharf at Darling Park, Sydney NSW 2000 at 10.00am on Thursday 15 November 2007.

Full details of the meeting are contained in the Notice of Annual General Meeting sent with this Report.












Notes

Front cover image



View of the Dock 5 residential apartment tower, one of the recently completed projects within the 2.5 kilometre Victoria Harbour development in Melbourne, Victoria. Victoria Harbour is a prime example of the effi ciencies of the Lend Lease integrated business model with the master plan managed by Lend Lease Communities and Bovis Lend Lease providing the project management and construction services across the development. Lend Lease Investment Management is also considering coinvestment in a number of Victoria Harbour developments.

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Lend Lease C

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2007A

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Lend LeaseF

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dear sir re: stock exchange announcement for personal use only · 10/15/2007 · the cover and...

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