Lendlease Group Posts FY26 IDC EPS at Top of Guidance and Sees Stronger FY27

Lendlease delivers IDC earnings at top of guidance as FY26 simplification progresses

In its FY26 full year results for the period ended 30 June 2026, Lendlease Group reported earnings from its Investments, Development and Construction (IDC) operations at the top of guidance, delivering 33.7 cents per stapled security. The result was led by a strong operational recovery in Construction and came alongside an improved earnings outlook for FY27.

The Group recorded a statutory loss after tax of $(749)m, driven predominantly by non-cash impairments and provisions associated with the Capital Release Unit (CRU). Operating Profit after Tax came in at $(567)m, comprising $233m from IDC and $(800)m from CRU.

Management reiterated a strategic focus on strengthening the balance sheet, driving growth and improving operational performance. The Group ended the period with strong available liquidity of $4.0b and declared a full year distribution of 15.7 cents per stapled security (Trust distribution only, no company dividend declared). New Group Chief Executive Officer Nick O’Neil is scheduled to commence on 24 August 2026 to take the strategy forward.

FY26 financial results at a glance

The FY26 result reflected a clear divergence between the operating IDC platform and the CRU. IDC generated positive OPAT of $233m, while CRU recorded OPAT of $(800)m, weighed down by non-cash items rather than cash outflows.

The CRU segment EBITDA loss of $(500)m included non-cash impairments of $340m across Communities land, MSG North and other assets, alongside provisions of $92m relating to retained international construction risks. This distinction matters for investors assessing the underlying cash position of the business.

Andrew Nieland, Joint Interim Chief Executive Officer and Group Chief Financial Officer

“FY26 was a year of meaningful progress as we continued to sharpen the Group’s focus and build momentum across our Investments, Development and Construction businesses.

“We delivered IDC earnings of 33.7 cents per security, at the top of our guidance and made solid operational progress. While gearing remains above our target, announced asset sales and an easing capital expenditure cycle provide a clearer pathway to net debt reduction, with ample liquidity available as we execute on our plans.”

Operational momentum builds across the three core businesses

Construction: margin recovery to 4.3%

Construction was the standout operational recovery of the year. Segment EBITDA jumped from $33m to $167m, with an EBITDA margin of 4.3%, above the target range, as challenged projects reached completion. Revenue rose 29% to $3.9b, and the business secured $6.4b of new work, up from $5.0b in FY25.

Backlog revenue closed the year at $8.4b, up 42%, supported by a preferred book of $5.2b and approximately $13b of active bids underway.

New work secured was spread across target sectors:

• Defence: 35%

• Data centres: 24%

• Transport: 22%

• Social infrastructure: 19%

Development: pipeline restocked to $13.2b

Development EBITDA of $78m was lower year-on-year, reflecting the timing of major completions. The prior year had included $250m from apartment settlements at One Sydney Harbour and the divestment of Capella Capital.

The Australian development pipeline expanded from $9.8b at FY25 to $13.2b, with $4.7b of new Sydney projects secured, including Hunter Street West (~$2.2b) and 175 Liverpool St ($2.5b+). Pre-sales of approximately $3.4b are in place, with ~$1.2b of gross proceeds to Lendlease anticipated to support FY27 earnings, with One Circular Quay 79% pre-sold by value.

Investments: performance and liquidity focus

Investments delivered EBITDA of $297m, supported by higher co-investment earnings and transaction profits, including $54m from the partial sale of TRX management rights. Funds under management reduced to $43.9b, reflecting $7.2b of divestments delivered on behalf of investors against $2.0b of new additions.

The Management EBITDA margin was 35.9%, versus 40.6% in FY25, with the reduction attributed to active portfolio recycling and lower FUM.

Understanding the Capital Release Unit — what it means for investors

The Capital Release Unit (CRU) was established at the May 2024 strategy update to accelerate the recycling of capital from international development projects, balancing value realisation against speed of execution. Its primary purpose is capital release, and as such no earnings guidance is provided for it.

The headline CRU loss reads worse than its cash impact suggests. The bulk of the FY26 EBITDA loss comprised non-cash impairments and provisions, and the unit is progressively unwinding to release capital and reduce gearing.

The MSG North sale, which closed at a post-tax operating loss of approximately $175m, illustrates the trade-off embedded in the CRU program: speed of capital release sometimes requires accepting below-book exit prices on commercially challenged international positions.

To date, the Group has recorded $3.4b of contracted or completed CRU transactions, including $1.2b contracted in FY26, with $2.5b of remaining invested capital to release. Cost reductions of more than 20% were achieved, delivering an FY26 exit run-rate for net overheads of approximately $350m. As CRU assets sell down, attributable operating costs are expected to reduce, returning capital to strengthen the balance sheet.

Balance sheet and the path to deleveraging

The Group reported statutory net debt of $3.7b, up $0.4b on HY26. Statutory gearing stood at 30.3% (including a ~7.4% hybrid benefit), with underlying gearing of 37.7%. Available liquidity of $4.0b provides balance sheet flexibility to support operations and orderly capital recycling.

Investment grade credit ratings were maintained by both Moody’s (Baa3, stable outlook) and Fitch (BBB-, stable outlook). The Group continues to target long-term underlying gearing of 15%.

Contracted CRU and IDC transactions of $1.3b reduce pro forma underlying gearing to 30.2%, with $0.5b already received post balance date. Key deleveraging drivers include:

The Keyton divestment, priced at book value and with all $525m in net proceeds directed to Group debt reduction, represents the kind of clean-exit transaction the CRU program needs to offset the losses recorded on more contested asset sales.

1. $1.3b of contracted CRU and IDC transactions ($0.5b received post balance date).

2. Further CRU and IDC capital recycling underway.

3. A high capex cycle now easing.

4. Continued cost reductions ahead of CRU asset sales.

FY27 outlook — a stronger year anticipated for IDC

FY27 is anticipated to be a stronger year for IDC earnings, with guidance of 37 to 41 cents per security, up from 33.7 cents in FY26. Management noted the improvement is expected to be supported by pre-sold apartment revenues in Development and continued growth in Construction.

Investments segment earnings are expected to be impacted by lower co-investment and funds management income arising from portfolio recycling, and the absence of large transactional profits. The IDC guidance also reflects the impact of higher interest costs. Consistent with prior disclosure, no specific FY27 earnings guidance is provided for CRU.

Variables that may impact IDC guidance and CRU earnings include transaction timing, interest rate and foreign exchange movements, capital markets and valuation outcomes. Incoming Group CEO Nick O’Neil is scheduled to carry the strategy forward from 24 August 2026.

Key dates for securityholders

• Security price quoted ex-dividend: 21 August 2026

• Record date: 24 August 2026

• Last day to lodge DRP notice: 25 August 2026

• Final dividend paid: 16 September 2026

• Annual General Meeting: 25 November 2026

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