PBT fell 41.8% as EBITDA dropped 16.7% on flat revenue

EBITDA fell 16.7% to NZD 138.2m, operating profit dropped 38.7% to NZD 46.1m, and PBT — the cleaner earnings measure given a severely distorted tax line — fell 41.8% to NZD 30.1m. The statutory NPAT swung to a loss of NZD 143.3m, driven by NZD 94.3m of asset impairments disclosed in the period and an effective tax rate that reached 575.6% versus 84.6% in FY23; both factors render NPAT uninformative as an operating metric.

Operating cash flow fell 27.3% to NZD 203.6m, while capex rose 19.2% to NZD 303.7m, producing pre-lease free cash flow of negative NZD 100.1m versus positive NZD 25.4m in FY23. Cash on hand fell from NZD 245.0m to NZD 60.5m and net debt more than doubled to NZD 549.0m, pushing net debt/EBITDA to approximately 4.0x from 2.0x.

Capital raise adds balance-sheet context, with NZ$100m capital raised, but borrowings and gearing are the direct leverage evidence.

Capital raise adds balance-sheet context, with NZ$150m capital raised, but borrowings and gearing are the direct leverage evidence.

Capital raise adds balance-sheet context, with NZ$252.5m capital raised, but borrowings and gearing are the direct leverage evidence.

Capital raise adds balance-sheet context, with NZ$465m capital raised, but borrowings and gearing are the direct leverage evidence.

The NZD 94.3m asset impairment charge is the primary mechanical driver of the statutory loss and the distorted tax rate, but even stripping impairments the underlying EBITDA margin compressed materially on near-flat revenue. The New Zealand operations segment result declined to NZD 271.9m from NZD 290.4m, while the Adelaide segment improved to NZD 39.6m from NZD 36.1m — suggesting the cost pressure is concentrated domestically.

Leverage has moved to a structurally more constrained level. Net debt/EBITDA of approximately 4.0x versus 2.0x a year earlier materially reduces financial flexibility. Gross borrowings rose to NZD 609.5m and equity contracted NZD 226.3m (14.8%), the latter partly reflecting the impairment charge feeding through. Debt refinancing activity has addressed near-term maturity risk but does not reduce the absolute debt load.

The second-half EBITDA profile raises a durability question. HY24 EBITDA was NZD 101.0m, implying a second half of only NZD 37.2m — a pattern inconsistent with normal seasonality and suggesting the impairment or other one-off charges are concentrated in 2H24. Without a clean separation of recurring costs from one-offs in the second half, the underlying run-rate is difficult to establish.

The release disclosed pre-opening costs for the NZICC convention centre and AML/CFT compliance costs as contributing headwinds, which may partially normalise in future periods. However, with net debt/EBITDA at approximately 4.0x and free cash flow negative, the pace of any earnings recovery will directly determine how quickly financial flexibility is restored.

The full-year dividend totalled NZD 0.1125 per share on a full-year basis versus NZD 0.06 on the same basis in FY23. Given that pre-lease free cash flow is negative and NPAT is a statutory loss, the sustainability of distributions at the current level is a question the result itself does not resolve.

The reported result is heavily impacted by non-recurring items. The NZD 94.3m impairment is non-cash and management's normalised disclosures exclude it, along with a gain on sale of shares. On a normalised basis, the operating picture is better than statutory figures suggest, but PBT still fell 41.8% on a comparable basis — indicating genuine operating deterioration, not purely an accounting effect.

Cash conversion (OCF/EBITDA) fell from 168.8% to 147.3%, which remains a high absolute ratio given the impairment is non-cash and does not reduce operating cash generation. The more significant quality concern is that capex at 35.3% of revenue absorbed all operating cash flow and more, making the business a net cash consumer at the free-cash-flow level. Until the major capex programme moderates, reported earnings quality is partly offset by the cash outflow required to sustain it.

This briefing cannot assess the underlying normalised earnings trajectory without a full reconciliation of one-off items by segment and half-year period.