Lendlease Annual Report 2021

1. Includes all Construction projects with backlog greater than $100 million, which represents 85 per cent ($12.7 billion) of secured backlog. 2. Internal revenue not included in the Construction segment financial performance. 3. FY17 - FY19 internal and external backlog presentation derived based on Construction projects with backlog greater than $100 million. The outlook for the Construction segment remains subject to the potential ongoing disruption risk from COVID. Backlog revenue remains solid and increased modestly to $14.9 billion, with $11.3 billion relating to external clients which will generate future revenue and margin. The remaining backlog relates to integrated projects, with the margin reported through the Development segment. The backlog remains diversified by both client type and geography. However, public sector projects have become more important for the business in the near term and now account for more than half of the external backlog. This has also resulted in a shift in the sector mix with the social infrastructure and defence sectors becoming more prominent as a proportion of the backlog. The Group’s development target of greater than $8 billion of production per annum represents a material uplift in the amount of development activity and this is expected to benefit the Construction business. Australia has a strong workbook, with $8.6 billion in backlog revenue. Key projects include Residences One and Two at One Sydney Harbour, Sydney Place, Melbourne Quarter Tower, several defence contracts and the Sydney Metro Martin Place and Sydney Metro Victoria Cross Integrated Station Developments. The established Construction business in the Americas has good market share in its target cities and sectors with backlog revenue of $3.9 billion. Subdued recent new work secured volume has resulted in a decline in backlog. The strong growth in the urbanisation pipeline to $27.8 billion in the region provides substantial opportunities for future construction backlog. Backlog revenue in Europe is $1.7 billion. Recent project wins provide near term certainty of activity while Europe’s $51.8 billion development pipeline is expected to provide a significant amount of construction work in future years. In Asia, backlog revenue is modest relative to other regions as the business focuses on the delivery of The Exchange TRX in Kuala Lumpur and specialist sectors for external clients. Construction outlook The Construction segment delivered a good result, notwithstanding significant COVID disruptions. EBITDA of $173 million was up from $101 million in the prior year. Revenue of $6.4 billion was down 16 per cent,1 with activity still impacted by delays in the commencement of new projects and ongoing productivity impacts across sites. Revenue from Australia and the Americas, which accounts for more than 80 per cent of total Construction revenue, declined by 11 per cent1 and 29 per cent1 respectively. The EBITDA margin rose to 2.7 per cent, the upper end of the target range of 2-3 per cent. Overall performance across the portfolio was solid, despite a weaker outcome in Europe. Margins were aided by contributions from projects that reached completion. In addition, disciplined cost management implemented in response to the pandemic had a positive impact on earnings. Completions included the Crown Sydney Hotel, two residential for rent buildings at Elephant Park, a major defence contract and commercial and residential towers at Melbourne Quarter. New work secured of $8.8 billion was up from $7.5 billion with the Australian and European businesses benefitting from public sector activity. In Australia, new work secured of $4.3 billion was underpinned by several projects in the defence sector, the Caboolture and Tweed Valley Hospitals and Cairns Convention Centre. This was supplemented by private sector projects including the office tower at 555 Collins Street, Melbourne. The European business secured $1.5 billion of new work. This was predominantly from government clients and includes projects for the London Borough of Camden, the Ministry of Justice and Manchester City Council. New work secured of $2.5 billion in the Americas was well below historical averages, reflecting subdued activity in the key markets along with some delays in projects being brought to market. Extensive sector expertise and geographic diversity has been critical for the business to navigate through a difficult operating environment. Construction performance EBITDA Margin EBITDA ($m) FY17 FY19 FY18 FY20 FY21 211 271 296 101 173  1H   2H FY20 FY21 TARGET 2-3% 1.3% 2.7% 2.4% 5 year average Key Financials and Operational metrics New Work Secured by Sector 30% 15% 9% 13% 33% $8.8b  Commercial  Social Infrastructure  Residential  Defence  Other FY20 FY21 Revenue ($m) 7,627 6,398 Operating EBITDA ($m) 101 173 Operating Profit after Tax ($m) 42 100 NewWork Secured ($b) 7.5 8.8 Backlog ($b) 13.9 14.9 Backlog3 ($b) Backlog roll forward2 ($b) FY20 New work secured FX and Other Run-o FY21 13.9 8.8 (7.2) (0.6) 14.9 10.6 11.3 Backlog by Client 4.8 45% 24% 31% Major Project¹ Backlog Revenue Backlog by Sector 7% 32% 18% 18% 25% Major Project¹ Backlog Revenue FY17 FY19 FY18 FY20 FY21 15.7 15.2 15.6 13.9 14.9  Lendlease  Corporate  Government  Commercial  Defence  Residential  Social Infrastructure  Other  External   Internal  External   Internal 1. Comparative period the year ended 30 June 2020. 63 A sense of place 62 Lendlease Annual Report 2021 Performance and Outlook