Lendlease Annual Report 2021

Notes to Consolidated Financial Statements continued June 2021 June 2020 Shares/ Securities Excluding Treasury Securities Shares/ Securities on Issue Shares/ Securities Excluding Treasury Securities Shares/ Securities on Issue Basic/Diluted Earnings Per Share (EPS) from Continuing Operations Profit/(Loss) from continuing operations attributable to members of Lendlease Corporation Limited (Company) $m 126 126 (374) (374) Weighted average number of ordinary shares m 683 688 599 603 Basic/Diluted EPS from continuing operations cents 18.4 18.3 (62.4) (62.0) Basic/Diluted Earnings Per Share (EPS) from Discontinued Operations Profit from discontinued operations attributable to members of Lendlease Corporation Limited (Company) $m 2 2 32 32 Weighted average number of ordinary shares m 683 688 599 603 Basic/Diluted EPS from discontinued operations cents 0.3 0.3 5.3 5.3 Basic/Diluted Earnings Per Stapled Security (EPSS) from Continuing Operations Profit/(Loss) from continuing operations attributable to securityholders of Lendlease Group $m 220 220 (342) (342) Weighted average number of stapled securities m 683 688 599 603 Basic/Diluted EPSS from continuing operations cents 32.2 32.0 (57.1) (56.7) Basic/Diluted Earnings Per Stapled Security (EPSS) from Discontinued Operations Profit from discontinued operations attributable to securityholders of Lendlease Group $m 2 2 32 32 Weighted average number of stapled securities m 683 688 599 603 Basic/Diluted EPSS from discontinued operations cents 0.3 0.3 5.3 5.3 The net cash flows for discontinued operations, representing the Engineering business sold, are as follows: Cash Flows from Discontinued Operations 1 July - 9 September 2020 $m 12 months June 2020 $m Net cash (outflow)/inflow from operating activities (39) 156 Net cash outflow from investing activities (1) (59) Net cash outflow from financing activities - - Net (decrease)/increase in cash and cash equivalents (40) 97 The major classes of assets and liabilities held for sale are as follows: Disposal Group Assets/(Liabilities) Held for Sale June 2021 1 $m June 2020 $m Cash and cash equivalents - 451 Loans and receivables - 135 Inventories - 32 Other assets - 223 Total Disposal Group assets held for sale - 841 Trade and other payables - 629 Other liabilities - 41 Total Disposal Group liabilities held for sale - 670 Disposal Group net assets held for sale - 171 1. The Group had no assets or liabilities recorded as held for sale at 30 June 2021 as the sale of the Engineering business completed on 9 September 2020. Refer to ‘Assets/(Liabilities) Sold’ table above for further details. On 25 February 2019, the Group announced that its Engineering and Services businesses are no longer a required part of the Group’s strategy. Management at that time committed to a plan to exit from Non core operations of Engineering and Services. On 19 December 2019, the Group entered into an agreement with Acciona to sell its Engineering business and on 9 September 2020 the Group completed the sale. The agreed purchase price for the sale of the Engineering business was $160 million which was adjusted by $37 million at completion, resulting in total estimated proceeds of $197 million. $150 million has been received by 30 June 2021. Acciona has not made the final deferred payment which was due on 30 June 2021 claiming various amounts should be set off against that payment. This is disputed by Lendlease and legal proceedings have been commenced seeking recovery of payments due by Acciona. The discontinued operations represent the Engineering business sold, excluding the projects retained by the Group. At 30 June 2021, the Services business does not meet the criteria to be held for sale and does not meet the definition of a discontinued operation. Refer to Note 10 ‘Events Subsequent to Balance Date’ for further details. The Group has recorded provisions related to claims on historical Non core segment projects completed prior to the sale of the Engineering business. Refer to the construction projects category in Note 23 ‘Provisions’ for where the amounts have been recorded. The major classes of assets and liabilities of the Engineering business sold as at 9 September 2020 are as follows: Assets/(Liabilities) Sold 9 September 2020 $m Cash and cash equivalents 411 Loans and receivables 187 Inventories 34 Other assets 215 Total assets sold 847 Trade and other payables 610 Other liabilities 50 Total liabilities sold 660 Net assets and liabilities sold 187 Net proceeds from sale of the Engineering business (197) Transaction and other costs 10 Gain/(loss) on sale of the Engineering business - The results of the discontinued operations, representing the Engineering business sold, are as follows: Results from Discontinued Operations 1 July - 9 September 2020 $m 12 months June 2020 $m Revenue from contracts with customers 283 1,437 Cost of sales (272) (1,263) Gross profit 11 174 Other income - 2 Finance revenue 1 6 Impairment on Disposal Group held for sale 1 - (19) Other expenses (13) (109) (Loss)/Profit before tax for discontinued operations (1) 54 Income tax benefit/(expense) 3 (22) Total profit after tax for discontinued operations as presented in the Income Statement 2 32 1. Relates to the impairment of goodwill as a result of the measurement of the Disposal Group at fair value less costs to sell. Section F: Other Notes continued 33. Discontinued Operations Accounting Policies Discontinued operations relate to a component of the Group including its corresponding assets and liabilities that have been classified as held for sale and represent a separate major line of business or geographical area of operation. The group of assets and their corresponding liabilities (together referred to as a Disposal Group), may only be classified as held for sale once the following criteria are met: •  The carrying amount will be recovered principally through a sale transaction rather than through continuing use •  The sale must be highly probable. A Disposal Group is measured at the lower of its carrying amount and fair value less costs to sell. Where fair value is lower than the carrying amount, the difference is recognised as an impairment loss within the Income Statement. The results of discontinued operations are presented separately in the Income Statement and Statement of Comprehensive Income. 181 180 Lendlease Annual Report 2021 Financial Statements