PBT fell 29.8% as property cycle offset record hotel revenue

What changed

Revenue rose 6.0% to NZ$186.7m, a five-year high, but earnings quality went backwards. EBITDA fell 12.0% to NZ$45.0m, operating profit dropped 27.9% to NZ$30.6m, and PBT fell 29.8% to NZ$33.0m. The reported NPAT figure of NZ$20.2m versus NZ$2.8m (up 632%) is almost entirely a tax-base artefact: the effective tax rate normalised to ~25% from an apparent ~81% in FY24, which had included a one-off, non-cash deferred tax adjustment flagged by management. PBT growth is the cleaner operating read and is clearly negative.

Segment mix shifted materially. Hotel Operations revenue rose to NZ$130.9m (70.1% of group revenue, up from 62.1%), while Residential Land Development revenue fell to NZ$35.0m (18.7%, down from 26.3%) as CDL Investments faced cyclical property headwinds. Operating cash flow rose 88.2% to NZ$25.7m, but capex nearly doubled to NZ$52.3m (28.0% of revenue, versus 16.1%), taking pre-lease free cash flow to roughly –NZ$26.5m. Cash fell 48.7% to NZ$20.4m while gross borrowings increased to NZ$20.0m from NZ$3.0m, compressing the net cash position from NZ$36.7m to effectively zero. A 3.0 cent final dividend was declared.

What matters

• Operating earnings deteriorated, despite revenue growth. Gross margin compressed ~258bps to 53.0%, and every line from operating profit down is worse year on year. The apparent bottom-line windfall is tax-driven, not operational.
• The mix is now more hotel-dependent. Hotels are carrying the group while CDI cycles down. That improves recurrence in theory, but hotel segment result disclosure has moved to an after-tax basis this year, making margin trajectory harder to verify directly from the release.
• Balance-sheet cushion narrowed sharply. Net cash effectively went from NZ$36.7m to roughly flat, with borrowings up almost seven-fold. Combined with capex at 28% of revenue and negative FCF, this is the clearest directional change in financial posture.

Expectations

No quantitative guidance or forward-work target was disclosed. Seasonality context from HY25 shows the year was heavily second-half weighted: HY25 produced only 42.5% of full-year revenue, 37.7% of EBITDA and 32.9% of NPAT. That tilt is useful for anyone modelling the shape going forward, but the release itself does not commit to a repeat of the H2 lift and does not quantify pipeline or booking trends. The release supports a view that hotel revenue momentum continued through H2; it does not support any specific forward profit trajectory.

Quality of result

Mixed, leaning lower quality on the earnings line and better on cash.

• The NPAT headline is not a durable operating improvement; stripping the FY24 deferred tax charge, PBT is the honest comparator and it is down ~30%.
• Operating cash conversion improved, with OCF/EBITDA rising to 57.2% from 26.8%, and working capital was broadly unchanged (receivable days steady at ~20; inventory days down to 4.3 from 8.3). So the cash improvement does not look working-capital-assisted.
• However, pre-lease FCF is negative NZ$26.5m because capex stepped up sharply. The dividend is not covered by FCF on a pre-lease basis. The year-end cash drawdown and increase in borrowings show the investment cycle is being funded from the balance sheet rather than from current-year earnings.

Unresolved

• Management has not quantified how much of the CDI weakness is cyclical versus structural, nor given a timing view on property-cycle recovery.
• The segment result basis appears to have changed (after-tax result in FY25 versus EBITDA-style result in FY24), so underlying hotel margin progression is not cleanly verifiable from the release alone.
• The NZ$52.3m capex program is not broken down by asset or project, so the earnings payback profile on the doubled investment is unclear.
• There is no disclosure of forward bookings, RevPAR, occupancy, or residential section inventory remaining, which would be needed to judge FY26 shape.

This briefing cannot assess the commercial quality of the capex program or the underlying RevPAR/occupancy trajectory driving hotel revenue, because neither is disclosed in the extracted material.

Key metrics

Segment breakdown

Analytical metrics

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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.