Adelaide swung to NZ$30.5m EBIT loss as net debt/EBITDA climbed to 3.8x

What changed

Group revenue rose only 0.8% to NZ$440.4m, while EBITDA fell 5.0% to NZ$101.0m. PBT grew 6.7% to NZ$48.0m, but NPAT slipped 1.3% to NZ$22.5m as the effective tax rate lifted to ~53.1% from ~49.3%. The segment mix shifted materially: SkyCity Auckland lifted revenue to NZ$284.2m with EBIT margin expanding to ~33.3% from ~18.7%, while SkyCity Adelaide revenue fell to NZ$117.0m and its result swung to a NZ$30.5m EBIT loss from a NZ$5.8m profit. Other NZ Operations and Online both shrank on a smaller base. Operating cash flow collapsed 45.3% to NZ$87.5m, cash rose to NZ$188.2m, but gross borrowings climbed 29.0% to NZ$569.7m, taking net debt to ~NZ$381.5m and net debt/EBITDA to ~3.8x from ~2.9x. Equity fell 5.0% to NZ$1.5b. An interim dividend of 5.25 cents per share was declared.

What matters

• Adelaide is now the swing factor. A NZ$36.3m year-on-year EBIT deterioration at Adelaide wiped out a NZ$43.0m lift in Auckland's result. Without a turnaround in Adelaide, Auckland is carrying the group's margin story alone.
• Leverage direction is adverse. Net debt/EBITDA moved from ~2.9x to ~3.8x, with gross borrowings up NZ$128.1m while EBITDA fell. The balance sheet is moving the wrong way at the same time as a segment has turned loss-making.
• Cash conversion deteriorated sharply. OCF/EBITDA fell to ~86.6% from ~150.3%, and pre-lease free cash flow compressed to ~NZ$10.1m from ~NZ$78.2m. The declared dividend implies a ~70% payout of NPAT, well above pre-lease FCF cover on a first-half basis.

Expectations

No quantified targets, guidance or forward-work book were disclosed in the supplied material. On shape, HY23 represented ~64.1% of FY23 EBITDA and ~51.1% of FY23 revenue, so the prior year was heavily first-half weighted on earnings (FY23 NPAT was only NZ$8.0m, implying an implied H2 NPAT loss of ~NZ$14.9m). HY24 revenue annualises to ~NZ$880.9m, modestly above FY23's NZ$855.8m, but HY24 EBITDA of NZ$101.0m is already 5% below HY23's H1-heavy base — meaning repeating last year's second-half trajectory on the current run-rate would produce a weaker full year than FY23 on reported earnings.

Quality of result

The result is lower quality than the modest revenue growth and positive PBT print suggest. EBITDA contracted despite revenue growth, cash conversion halved, and Adelaide's segment loss is a structural, not timing, event. The PBT–NPAT divergence is fully explained by the higher effective tax rate (~53.1%) rather than by below-the-line one-offs, so PBT growth of 6.7% is the cleaner operating read — but even that is flattered by a NZ$43.0m Auckland uplift that may not repeat at the same cadence. The drop in OCF against broadly steady capex (NZ$77.3m vs NZ$81.7m) is the single clearest quality flag, given it coincided with a NZ$128.1m step-up in gross borrowings.

Unresolved

• What is driving the Adelaide collapse — revenue mix, regulatory or AML-related costs, impairments, or operating deleverage — and over what horizon is a recovery expected?
• Why did operating cash flow fall NZ$72.4m when EBITDA fell only NZ$5.4m? The working-capital bridge is not visible in the supplied data.
• Is the 5.25 cps interim dividend sustainable given pre-lease FCF of ~NZ$10.1m and rising leverage, and what is the full-period dividend intent?
• What are banking-covenant headroom thresholds at ~3.8x net debt/EBITDA, and is any capital management or asset-level response contemplated?

This briefing cannot assess segment-level commentary, regulatory or AML cost exposure, covenant headroom specifics, or forward earnings guidance, none of which were provided in the supplied excerpts.

Key metrics

Segment breakdown

Analytical metrics

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.