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2 December 1999
Lend Lease Corporation Limited Report to the Australian Stock Exchange Potential Exposure to Year 2000 Problems
Attached is an additional report on behalf of the Lend Lease Group.
Lend Lease Corporation Limited
Report to the Australian Stock Exchange
Potential Exposure to Year 2000 Problems
as at 30 November 1999
As this document is a public announcement by Lend Lease Corporation Limited in fulfilling its obligations under the ASX Listing Rules, it may nevertheless be read by persons or organisations other than the ASX. In that context, we therefore advise that this statement is a Year 2000 disclosure statement for the purposes of the Year 2000 Information Disclosure Act 1999 (Australia and New Zealand and any similar legislation in any other nation state or jurisdiction). A company may be protected by those Acts from liability for this statement in certain circumstances. This statement is authorised by Lend Lease Corporation Limited on behalf of the Lend Lease Group of Companies
This is a Year 2000 Readiness Disclosure for the purposes of the United States Information and Readiness Disclosure Act.
Further to the detailed response to the ASX questionnaire as at 30 September 1999 regarding Potential Exposure to Year 2000 Problems, Lend Lease has made a number of new acquisitions. These include:
Bovis
On 29 October 1999, Lend Lease announced the completion of the transaction for the purchase of The Peninsular and Oriental Steam Navigation Company's ("P&O") (London Stock Exchange: PO/) project management and construction services subsidiary, Bovis Group plc ("Bovis").
Bovis is one of the world's leading construction services and project management companies. With 5,600 employees, it operates in 38 countries and has a strong presence in Europe and the US, as well as interests in the Asia Pacific region, including Australia.
CEF Life
On 21 October 1999, Lend Lease announced that its subsidiary, MLC Limited ("MLC"), had acquired a 55% interest in Hong Kong based Canadian Eastern Life Assurance Limited ("CEF Life") and will now be known as CEF Lend Lease Life.
CEF Life has operated for five years and is ranked seventh in Hong Kong in terms of new business generation with representation of over 1500 agents selling its products throughout Hong Kong.
CEF Life's other major shareholders are CEF Holdings and its parents Cheung Kong and CIBC Asia. Cheung Kong is a major Hong Kong based property developer and conglomerate. It is a major shareholder in telecommunications giant Hutchison Whampoa. CIBC Asia is a subsidiary of the Canadian Imperial Bank of Commerce (CIBC), the second largest bank in Canada.
Boston Financial Group
On 9 October 1999, Lend Lease announced that its subsidiary, Lend Lease Real Estate Investments, Inc., signed agreements to acquire The Boston Financial Group, Limited Partnership ("Boston Financial"). This acquisition was completed on 4 November 1999.
Boston Financial is a privately owned institutional funds manager and real estate services company, and is one of the largest apartment (multi-family) investment managers in the U.S. It has funds under management of US$6.8 billion.
Boston Financial's operations include multifamily portfolio management, asset management, capital markets, development, low income housing tax-credit financing, residential property management, senior housing and property management.
Status
In line with our policy to undertake due diligence activities for all new acquisitions, Lend Lease has undertaken risk assessments on all three acquisitions. Lend Lease reports the following findings:
Bovis
The Bovis Group is aware of the potential problems that may occur as a result of the Year 2000 issue and has been committed to resolving all Year 2000 issues that could have a material impact on its business. Separate projects were established to manage the Year 2000 issue in each of its regions - Europe (including UK), Americas and Asia Pacific. The Bovis Group Year 2000 programme was started in 1997 in Europe and Americas, and in 1998 in Asia Pacific.
The Bovis Group has completed the process of examining their areas of risk, completing the remediation (or replacement) and testing of business-critical IT systems in all regions.
The Year 2000 project encompassed IT-related issues and non-IT issues, with the following aspects of their business operations being addressed:
- Internal IT Systems including accounting, project management and intranet systems;
- IT infrastructure such as PCs, laptops, servers and networks;
- Regional building premises. Both the buildings in which Bovis is a tenant and the equipment to support the business functions (PABX etc.);
- Trade contractors, suppliers and vendors associated with both construction projects and general business activity;
- Clients.
In all of the above, business-critical issues have been addressed.
Europe and Americas regions are currently finalising and testing transition plans.
Asia Pacific is finalising its transition plans and trade contractor verifications.
The Bovis Group's Year 2000 project is currently being incorporated into the Lend Lease Year 2000 programme, including transition planning and reporting (both Management and Board).
CEF Life
CEF Life completed testing of all their business critical systems in early 1999. They have undergone an independent audit of their Year 2000 project and obtained a certificate of compliance from the auditors. The Year 2000 project included the following elements, all have been addressed and are Year 2000 ready:
- AS400 hardware and software;
- Desk top Hardware and Software;
- Office equipment;
- Network Infrastructure Hardware; and
- Third party supplied software.
CEF Life has developed and implemented a clean management process for managing change to its environment, minimising the risk of introducing non-compliant items, and maintaining a Year 2000 clean environment.
Key suppliers have been contacted and confirmed their Year 2000 readiness.
Building managers have also confirmed the Year 2000 readiness of the premises in which CEF conducts its business.
All critical software and hardware including that provided by third parties have been tested.
Contingency and Transition Plans have been developed and are being finalised.
Boston Financial Group
The Boston Financial Group has remediated the critical building systems of all high priority properties, and is nearing the completion of contingency plans for these properties.
Medium and low priority properties have been surveyed, and their vendors have been contacted for further information. Contingency plans are underway.
The IT programme has remediated critical applications and systems.
Third party suppliers have been contacted and their responses reviewed for Year 2000 readiness. The Boston Financial Group does not expect that any third party Year 2000 issues will impact operations.
The initial due diligence process has identified that the following areas require further investigation regarding their Year 2000 status:
- The extent to which desktop applications have been addressed;
- The completeness of clean environment management.
Lend Lease is providing Year 2000 project management and Year 2000 engineering assistance to the Boston Financial team to expedite progress and mitigate risk. A Project Control Group (PCG) has been established with key executives from both Lend Lease and the Boston Financial Group, responsible for overseeing the completion of the Year 2000 Programme.
For all business critical units Business Contingency Plans and have been developed.
Amresco Inc.
In addition to these three acquisitions, Lend Lease is in negotiations with Amresco Inc.
On 13 October 1999, Lend Lease Real Estate Investments, Inc., the U.S. subsidiary of Lend Lease Corporation announced negotiations were moving forward with Amresco, regarding a possible purchase of Amresco's asset management, commercial mortgage banking and servicing, and real estate structured finance businesses.
Amresco is a diversified financial services company specialising in commercial and residential real estate lending, asset management and commercial finance. Headquartered in Dallas, Texas, Amresco has offices nationwide and internationally in Canada, the United Kingdom, Mexico and Asia.
Amresco acquires, manages and liquidates non-performing, distressed loan portfolios and real estate properties for its own account in conjunction with institutional investors, and for third-party owners.
Amresco's Commercial Finance Group provides traditional and special situation financing to small businesses and to the commercial real estate, communications and residential construction industries. In addition to term business loans, products include bridge, mezzanine, permanent and construction loans.
Status
During the due diligence process, Amresco has provided Lend Lease with information regarding its Year 2000 Programme. A review of this documentation and confirmation of Amresco's Year 2000 status is currently underway.
Contact
Paul McDonald
General Manager
Year 2000 Projects
Lend Lease Corporation
Level 15, Australia Square
Sydney NSW 2000
Telephone: 02 9236 6390
Fax: 02 9237 5279
Internet: paul_g_mcdonald@lendlease.com.austock exchange
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