Lendlease Annual Report 2024

6 Lendlease Annual Report 2024 Chairman’s Report The past year was another period of significant change for Lendlease. Our operating landscape was characterised by continued pressure on property markets – stemming from ongoing interest rate uncertainty, contributing to a difficult macro- economic outlook in the four regions in which Lendlease operates. As a developer of large urban projects, Lendlease’s bottom line performance is reliant on our ability to work in partnership with capital partners in order to create value from our development products. However, the commencement of new developments over the past year was once again impacted by slower markets and the reluctance of capital partners to commit to transactions in an uncertain environment. Even with that challenging backdrop, there were significant achievements across the core business which demonstrated the strength of our people and assets, including the delivery of $8.2b of development completions and the creation of $3.4b of new funds under management (FUM) product. Notwithstanding these achievements and our response to these challenges, including business simplification, cost reduction and reduced headcount, the prolonged property cycle downturn, and its impact on Lendlease’s operating earnings and security price, necessitated a fundamental review of our five-year Reset; Create; Thrive strategy. Strategic refresh Following extensive deliberation over the last year, including with external stakeholders, the Board endorsed a comprehensive update of the Group’s strategy. This was triggered by the structural and prolonged cyclical changes that have impacted the global property sector post pandemic. In summary, the strategy prioritises the liberation and return of capital to securityholders; investing in the high performing Australian business, which has historically demonstrated strong performance through-the-cycle; the exit of international construction operations; and the accelerated release of capital from long dated international development projects. While this is a fundamental change for the business, the decisions taken recognise the need for significant action at an accelerated pace to deliver value for securityholders. These decisions leverage Lendlease’s competitive strengths and simplify the company to become a leading integrated real estate business in Australia with an international investment management platform. Management have already delivered a number of significant milestones that were initiated over the last 12 months as the strategic refresh was under development. These include the simplification of our US operations by realising value from the sale of our Military Housing business and the divestment of our Construction business; the establishment of a real estate investment platform with Warburg Pincus that realises the value we have created in our life sciences, construction and development businesses in Asia; and processes underway for the sale of a further c.$0.9b of assets. Financial outcomes As a result of the costs associated with implementing the strategy, largely relating to impairments and restructuring charges, the Group recorded a substantial Statutory Loss. I recognise this is a disappointing outcome for securityholders. However, it is imperative we make these changes to set Lendlease up for future success. The full year distribution and dividend payment of 16 cents per security was maintained and reflects a payout ratio of 42 per cent of Core Operating Earnings. Securityholder engagement As representatives of the company, it is important to maintain an active program of engagement with securityholders. In my capacity as Chair, I regularly meet with investors, government, customers and other key stakeholders to listen to their views and gather feedback. This year, stakeholder engagement included receiving input as the refreshed strategy was developed, and on Chair succession and executive reward, with more than 30 meetings held. Chair and Board renewal As announced in May, I will retire as Chair following the conclusion of the 2024 Annual General Meeting (AGM). It has been a privilege to serve on the Lendlease Board as a Non Executive Director since 2011 and as Chair since 2018. I am working with my fellow directors on Chair succession which is well underway. A market announcement will be made once we have completed that process. Nicola Wakefield Evans will also be retiring from the Board at the 2024 AGM. On behalf of the Board, I thank Nicola for her contribution to Lendlease since her appointment in September 2013. Nicola has been Chair of the Board Sustainability Committee since 2019 and a member of the Board Audit Committee and Board Risk Committee. The Board has appreciated her counsel and insights on a broad range of matters. We also welcomed Barbara Knoflach as a Non Executive Director. Barbara is an outstanding addition to the Board, and her background in real estate, asset management and investment management supports our objective to grow our international Investments platform. She brings relevant sector insights and her appointment, together with the appointments of Bob Welanetz, Nick Collishaw and Margaret Lui in recent years, reflects a disciplined approach toward Board renewal focussing on Lendlease’s core sectors of real estate and investment management. Nick Collishaw will be standing for re- election at the AGM this year. Nick’s re-election is unanimously supported by the Board; he is an experienced property executive with more than 40 years’ expertise gained across Investments, Development and Construction.