Table of Contents
What changed
Gross rental revenue was essentially flat at $3.2m (down 1.2%). Operating profit, however, jumped from $0.1m to $1.9m as interest costs disappeared following full debt repayment. Despite that, reported PBT and NPAT fell 30.9% to $1.6m because the HY25 comparative included gains related to the November 2024 settlement of 35 Graham Street. Net operating cash flow swung from a $1.2m outflow to a $1.0m inflow. Cash climbed to $10.3m from $2.5m, while gross borrowings moved from $33.0m at the prior balance date to nil. Total assets contracted 38.0% to $118.3m and total liabilities collapsed 98.3% to $0.8m, leaving equity of $117.5m (down 18.1%, reflecting the FY25 special dividend and second-half revaluation losses). With tax nil in both periods, PBT and NPAT move identically.
What matters
- Debt-free balance sheet is now the defining feature. Net debt of $30.5m at the prior date has flipped to net cash of $10.3m. That is the source of the step-up in operating profit (no interest drag) and is the cleanest read on strategy execution post Graham Street.
- The NPAT decline is a comparative artefact, not an operating problem. HY25's $2.3m result was inflated by gains tied to the disposal; stripping that, HY26's $1.6m is the more representative run-rate for a smaller, unlevered portfolio. Management's own FFO¹ metric frames HY26 at a $1.6m profit against a $0.4m FFO deficit in HY25 — the more telling like-for-like.
- Earnings base has been reset smaller. Total assets are down $72.5m versus the prior balance date, and annualised HY26 revenue of $6.4m sits below FY25's $6.8m. The balance sheet is stronger but the earnings engine is materially narrower.
Expectations
No forward earnings guidance, leasing target or dividend policy beyond quarterly review was provided in the supplied excerpts. FY25's shape offers limited read-through: HY25 contributed 47.5% of full-year revenue, but FY25 NPAT was distorted by an $8.0m implied H2 loss (almost certainly revaluation-driven given the asset-base contraction). Annualising HY26 revenue at $6.4m points to a slightly lower top line than FY25, consistent with a smaller portfolio post-disposal. The release does not support a view on re-leasing, acquisition pipeline, or when cash reserves will be redeployed.
Quality of result
Mixed but defensible. The operating-profit improvement is durable because it reflects the permanent removal of interest expense. The operating cash flow swing to +$1.0m is also real, though receivable days rose from 5.9 to 14.5 as trade receivables almost doubled — a small absolute number ($0.3m) but a direction worth monitoring. Capex stepped up to $0.2m (6.4% of revenue vs 2.3%), leaving pre-lease free cash flow of $0.8m versus a $1.3m outflow prior. Against the declared $0.002/share interim dividend, pre-lease FCF cover is roughly 1.1x. The FFO¹/AFFO figures are cited as non-GAAP without a full reconciliation in the supplied text. ROE at 1.4% (from 1.6%) confirms that, on current earnings power, the equity base is under-utilised.
Unresolved
- What is the intended use of the $10.3m cash balance — acquisitions, further capital return, or working capital for redevelopment?
- What drove the $8.0m implied H2 FY25 NPAT loss, and is any further revaluation risk carried into HY26's $118.3m asset base?
- Is the lift in receivable days a one-off timing item or the start of a trend?
- What is the portfolio's tenant concentration and WALE now that Graham Street has exited — neither is disclosed in the supplied excerpts.
- Full FFO¹/AFFO reconciliation and any forward leasing or capex programme remain undisclosed here.
This briefing cannot assess portfolio valuation risk, tenant quality, or management's intended redeployment of the cash balance, because none of those are quantified in the supplied data.
Key metrics
| Metric | HY26 | HY25 | Change |
|---|---|---|---|
| Revenue | $3.2m | $3.2m | -1.2% ↓ |
| Net profit after tax | $1.6m | $2.3m | -30.9% ↓ |
| Net cash inflow from operating activities | $1.0m | −$1.2m | +188.4% ↑ |
| Interim dividend per share | 32.4c | 39.6c | -18.2% ↓ |
| Operating profit | $1.9m | $0.1m | +3339.3% ↑ |
| Profit before tax | $1.6m | $2.3m | -30.9% ↓ |
| Cash and cash equivalents | $10.3m | $2.5m | +316.1% ↑ |
| Total assets | $118.3m | $190.8m | -38.0% ↓ |
Reference: annolyse.ai/briefings/apl-hy26
Analytical metrics
| Metric | HY26 | HY25 | Context |
|---|---|---|---|
| PBT growth | -30.9% | — | — |
| Effective tax rate | 0.0% | 0.0% | — |
| FCF pre-lease | $0.8m | −$1.3m | +$2.1m |
| FCF / NPAT | 52.2% | -54.0% | complementary conversion metric |
| Capex % revenue | 6.4% | 2.3% | — |
| Capex | −$0.2m | −$0.1m | −$0.1m |
| Debtor days | 14.5 | 5.9 | +8.6 days |
| Trade debtors | −$0.3m | −$0.1m | −$0.2m |
| Net debt | −$10.3m | $30.5m | −$40.8m |
| Gross borrowings | — | $33.0m | — |
| Payout ratio vs NPAT | 45.5% | — | — |
| Payout ratio vs FCF pre-lease | 87.0% | — | covered |
| ROE (annualised) | 1.4% | 1.6% | Weakening |
| HY25 share of FY25 revenue | 47.5% | — | Other half was 52.5% |
| HY25 share of FY25 NPAT | -40.8% | — | Other half was 140.8% |
| Profit from continuing operations | $1.6m | $2.3m | −$0.7m |
Reference: annolyse.ai/briefings/apl-hy26
This analysis was generated using Annolyse, an AI-powered tool that analyses NZX company announcements. The analysis is based on available company filings and standard Annolyse calculations. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.