To the Board, Executive and Stakeholders of Landcom:
Landcom commissioned Net Balance Management Group Pty Ltd (Net Balance) to provide independent assurance of the sustainability content of the 2010 Annual Report (the ‘Report’). The Report presents Landcom’s sustainability performance over the period 1 July 2009 to 30 June 2010. Landcom was responsible for the preparation of the Report and this statement represents the assurance provider’s independent opinion. Net Balance’s responsibility in performing its assurance activities is to the Board and Executive of Landcom alone and in accordance with the terms of reference agreed with them. Other stakeholders should perform their own due diligence before taking any action as a result of this statement.

ASSURANCE STANDARD

The assurance was undertaken in accordance with the AA1000 2008 Assurance Standard (AA1000AS). Net Balance provided Type 2 moderate level of assurance in accordance with the AA1000AS (2008). This involved an assessment of the organisation’s adherence to the AA1000 AccountAbility Principles (2008) and an assessment of the accuracy and quality of the sustainability performance related information contained within the report. A full description of the Assurance standard and methodology is available at www.landcom.com.au/annualreport2010.

OUR INDEPENDENCE

Net Balance was not responsible for preparation of any part of the report. During the reporting period, Net Balance was commissioned by Landcom to undertake an internal review of key sustainability issues and the corresponding performance indicators. This work informed a larger project conducted by Landcom to develop new sustainability reporting indicators.
To maintain independence, the indicator review was undertaken by the Melbourne office of Net Balance, whilst the assurance engagement was undertaken by the Sydney office. Net Balance has strict procedures in place to ensure independence and partition of project teams at all times.

OUR COMPETENCE

The Landcom assurance engagement was carried out by an experienced team of professionals led by a Lead Sustainability Assurance Practitioner (Lead CSAP), accredited by the International  Register of Certified Auditors UK (IRCA UK). The project team included personnel with expertise in environmental, social and economic performance measurement across a range of industry sectors. Net Balance is a global leader in the use of Accountability’s AA1000AS, having undertaken over 80 assurance engagements in Australia in the last three years.

FINDING AND CONCLUSIONS

Adherence to AA1000 Principles

Inclusivity:
During the previous reporting year, Landcom undertook an extensive review of its sustainability indicators in consultation with internal and external stakeholders. These stakeholders encompassed project partners, local government representatives from Landcom’s project areas, contractors, the public and Landcom staff. The revised indicators developed as a result of this consultation were reported against by Landcom for the first time in this year’s report. To help ensure continuous improvement, Net Balance would like to see Landcom focus on three key areas: to implement the Five Year Stakeholder Engagement Strategy to help ensure continued engagement with external stakeholders; to develop a reporting procedure for Project Managers to help ensure all projects are reported in a consistent manner and an awareness program to help new staff understand the importance of sustainability to Landcom’s core business.

Materiality:
Net Balance found the report appropriately addresses Landcom’s environmental, social and economic material issues. The development of the Five Year Stakeholder Engagement Strategy is an important improvement by Landcom during the reporting year to help ensure material issues are reviewed regularly and reported in a systematic manner. In addition, the review of sustainability indicators by stakeholders also included a review of material issues to ensure the indicators were relevant. Due to the number of new indicators introduced this year, there were some indicators that were not able to be reported due to the methodology currently being under development. Net Balance would like to see all of these methodologies finalised and each indicator reported against in next year’s report. If appropriate methods of reporting against these indicators cannot be developed, the indicators may need to be refined so that suitable methods of reporting can be put in place to measure progress.

Responsiveness:
Net Balance tested the responsiveness of Landcom to its stakeholders through a review of management systems and policies that govern the way that Landcom responds to stakeholder concerns and interests. Landcom was found to be responsive to stakeholder concerns and expectations during the reporting year with a number of improvements such as the review and implementation of new indicators and the development of indicator management procedures for the sustainability team, which help to ensure consistency in data collection and reporting.

RELIABILITY OF THE PERFORMANCE INFORMATION

Overall, it is Net Balance’s opinion that the information presented within the report is fair and accurate. The report was found to be a reliable account of Landcom’s sustainability performance during the reporting period. Detailed information on the reliability of performance information is available at www.landcom.com.au/annualreport2010.

THE WAY FORWARD

Net Balance found the report appropriately addresses Landcom’s environmental, social and economic material issues. To ensure that Landcom continues toimprove, Net Balance recommends that Landcom:

• Develops data management and reporting protocols beyond the sustainability team for data owners such as Development Managers. The protocols will help define the roles and responsibilities of the data owners and increase the consistency in data collection, particularly between different projects. This will improve the consistency in reporting indicators, reduce aggregation errors and improve the efficiency of reporting.
• Continues to develop and improve methodologies for reporting on its new indicators.
• Provides further discussion on a number of emerging material issues such as managing the potential impact of urban renewal projects on communities and the selection and use of sustainable materials in housing. These recommendations have been outlined in a more detailed report presented to Landcom’s Board and Executive.

On behalf of the assurance team
11th October 2010
Melbourne Australia

Terrence JeyaretnamDirector, Net Balance & Lead CSAP (IRCA UK)