Lendlease Annual Report 2022

150 Lendlease Annual Report 2022 Notes to Consolidated Financial Statements continued 23. Provisions Accounting Policies Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). Management considers this is an area of estimation uncertainty as these calculations involve a number of key assumptions including the expected future cash outflow and the timing of the outflow to determine the provision. Employee Benefits Includes amounts for employee annual leave and long service leave entitlements. Development Projects Includes amounts for costs to close out development projects, including defects and residual guarantees. The timing of any expected outflows of economic benefits is dependent on market factors, such as lease up rates in specific markets, and negotiations with customers. Construction Projects Includes amounts for claims and litigation related to legacy construction projects. The timing of any expected outflows of economic benefits is dependent on the progression of negotiations and litigation with claimants, which are ongoing at period end. Other Includes amounts related to various litigation and commercial matters. Employee Benefits Development Projects 1 Construction Projects Other Total $m $m $m $m $m Balance as at 1 July 2021 194 143 266 52 655 Provisions made during the year 54 59 208 75 396 Provisions used during the year (81) (42) (64) (1) (188) Provisions reversed during the year (3) (30) (26) (16) (75) Balance as at 30 June 2022 164 130 384 110 788 Current provisions 147 86 377 110 720 Non current provisions 17 44 7 - 68 Total provisions 164 130 384 110 788 1. The Development impairment expense of $289 million (30 June 2021: $nil) and Property inventories impairment expense of $12 million (30 June 2021: $13 million reversal) as disclosed in Note 7 'Other Expenses', have been recorded net against the inventories balance. Refer to Note 7 ‘Other Expenses’ for further detail. Section C. Liquidity and Working Capital continued