Working capital absorbed NZ$72.0m, driving pre-lease FCF to NZ$-72.7m

That, combined with capex of NZ$172.0m (71.5% of revenue), pushed pre-lease free cash flow to NZ$-72.7m, also unprecedented low versus the historical mean of NZ$-2.8m and prior trough of NZ$-49.4m.

Revenue fell 6.2% to NZ$240.5m. The headline NPAT loss narrowed from NZ$-227.7m to NZ$-2.1m (+99.1%) and PBT swung from NZ$-214.8m to NZ$24.7m (+111.5%), but both growth rates are within the historical range for a portfolio whose result is dominated by valuation movements. Operating profit, which strips revaluations, fell 37.7% to NZ$108.2m.

Gross borrowings rose 5.7% to NZ$1.2b while equity slipped 3.8% to NZ$1.9b, so leverage moved in the wrong direction.

• OCF fell 12.1% to NZ$99.3m while capex of NZ$172.0m and an NZ$72.0m working-capital absorption produced the worst pre-lease FCF on record in the supplied baseline. For a property issuer, that means the development pipeline (inventories appear consistent with build-to-sell residential at Sylvia Park) is being funded by drawing debt rather than by recurring rental cash, which directly pressures distributable earnings cover.
• Gearing is rising into a softer asset base. Total assets at NZ$3.2b sit below the historical range (mean NZ$3.4b, low NZ$3.2b), gross debt is up NZ$64.0m and equity is down NZ$73.5m. The combination signals reduced balance-sheet headroom going into further committed capex, even though debtor days at 12.1 remain at the low end of the historical range.
• Segment mix shifted sharply. Office revenue more than halved from NZ$64.1m to NZ$31.1m (share from 25.0% to 12.9%) and office gross margin compressed from 80.1% to 69.9%, while Mixed-use grew its share from 53.9% to 62.0%. The headline -6.2% revenue figure understates the underlying repositioning of the portfolio toward Mixed-use and away from standalone office, which is the key strategic read.

The HY24 NPAT loss of NZ$36.5m versus the full-year NZ$-2.1m implies a positive H2 NPAT swing of roughly NZ$34.4m, consistent with smaller revaluation losses in the second half rather than an operational acceleration (revenue split was 48.9% / 51.1%, broadly even).

The final dividend held at 1.425 cents per share, matching FY23. With pre-lease FCF deeply negative, that distribution is not covered by free cash flow on the current capex profile and depends on continued debt capacity and any recycling of office assets.

Operating profit, which is the cleaner read on the property platform, fell 37.7%. The current effective tax rate of 108.6% is unprecedented in the supplied baseline (mean 26.0%, range 6.0%–58.6%) and reflects tax on a near-breakeven post-revaluation result, so it tells you little about underlying tax economics.

The cash side is where durability is weakest. Operating cash flow declined faster than revenue, working capital absorbed an outsized NZ$72.0m, and capex stepped up to 71.5% of revenue. This means a meaningful share of FY24's reported result is balance-sheet-funded development activity rather than recurring rental cash, and the dividend at 1.425 cents is being paid alongside a record pre-lease FCF deficit.

This briefing cannot assess like-for-like net rental growth, occupancy, weighted average lease term, cap-rate movements, or covenant headroom, none of which were supplied in the structured data.