Lendlease Annual Report 2024

Performance and Outlook 55 Financial position and cash flow movements Financial position ($m) FY23 FY24 Var. Investment assets Other financial assets 1,124 972 (14%) Equity accounted investments 2,611 2,567 (2%) Investment properties 223 77 (65%) Disposal Group net assets held for sale - 304 NM Development assets Inventories 3,649 2,358 (35%) Equity accounted investments 3,031 3,289 9% Investment properties 316 341 8% Disposal Group net assets held for sale - 989 NM Other assets and liabilities (including financial) Cash and cash equivalents 900 1,000 11% Borrowing and financing arrangements (3,281) (4,176) (27%) Other net assets and liabilities (1,929) (2,844) (47%) Net assets 6,644 4,877 (27%) Investment Assets Investment assets decreased 1 per cent overall with negative revaluation movements, particularly across workplace and residential for rent sectors, and the sale of Darling Square retail, partially offset by $150m of capital deployed into APPF Retail. Development Assets Development assets were flat on the prior year. Key movements included a reduction of Inventories from the reclassification of the 12 Communities projects held for sale, partially offset by increased production costs capitalised on Watermans Residences, One Sydney Harbour. The increase in Equity accounted investment assets predominantly relate to equity contributions to development projects including One Sydney Harbour, The Exchange TRX, Habitat in Los Angeles, and Victoria Cross Over Station development, partially offset by settlements received from Residences One, One Sydney Harbour following completion. Other assets and liabilities The movement in Other assets and liabilities includes impairment of goodwill, deferred tax balances and other charges required to implement the revised strategy, alongside timing differences in receivables and payables across Development and Construction activities. Cash flow and treasury management The Group commenced the financial year with cash and cash equivalents of $0.9b. Movements during the year comprised Operating cash outflow of $0.1b, Investing cash outflow of $0.6b and Financing cash inflow of $0.7b. The Group closed the year with cash and cash equivalents of $1.0b. Core operating cash outflows included production spend on development projects on balance sheet including Watermans Residences at One Sydney Harbour, and Communities. Investing cash outflows during the year included production spend on key development joint venture projects including Residences Two, One Sydney Harbour, The Exchange TRX, Habitat and Victoria Cross Over Station development, along with further equity contributions to APPF Retail. The Group remains in a strong position with $2.2b of committed liquidity comprising $1.0b of cash and cash equivalents and $1.2b in available undrawn debt. Average debt maturity of 3.4 years has reduced following the further buy-back of longer dated Sterling bonds in 1H24. Gearing of 21 per cent at year end was modestly above the target range of 10-20 per cent, however, includes a 1 per cent impact as a consequence of the impairments and charges recorded following the May 2024 strategy update. Following a year of peak development capex, there is a clear pathway to deleveraging, with $2.4b of contracted and anticipated cash flows expected to be received following the sale of 12 Communities projects, the sale of life sciences interests in Asia to establish a new Asia Pacific joint venture, the sale of the US Military Housing business and expected settlements at One Sydney Harbour. Treasury management FY23 FY24 Var. Net debt $m 2,381 3,176 33% Gearing 1 % 14.8 21.1 43% Interest cover 2 times 3.0 2.7 (10%) Average cost of debt % 4.3 5.4 26% Average drawn debt maturity years 4.4 3.4 (23%) Available liquidity $m 2,581 2,159 (16%) Average debt mix fixed:floating $m 64:36 43:57 NM 1. Net debt to total tangible assets, less cash. 2. EBITDA has been adjusted to exclude Non Operating Items. Credit Ratings 1 Moody's Baa3 stable outlook Fitch BBB- stable outlook 1. Credit ratings have been issued by a credit rating agency which holds an Australian Financial Services Licence with an authorisation to issue credit ratings to wholesale clients only and are for the benefit of the Group’s debt providers.