EBITDA down 36% as Adelaide swung to a NZ$16.1m EBIT loss

What changed

Revenue slipped 3.4% to NZ$406.5m, but operating profitability fell much harder: EBITDA dropped 36.3% to NZ$72.1m and PBT fell 43.5% to NZ$15.9m. Reported NPAT rose 99% to NZ$12.1m, but that reflects the effective tax rate normalising to 23.9% from a distorted 78.4% prior — PBT is the cleaner trend read. Segment mix is the story: SkyCity Adelaide swung to a NZ$16.1m EBIT loss from a NZ$2.8m profit, and Auckland's EBIT margin compressed to ~25.2% from ~31.6%. Operating cash flow jumped to NZ$56.1m from NZ$1.9m, but capex of NZ$69.6m kept pre-lease FCF at -NZ$13.5m. Gross borrowings fell to NZ$562.9m (from NZ$678.2m), yet cash also fell to NZ$72.5m, leaving net debt only modestly lower at NZ$490.4m.

What matters

• Adelaide is the dominant profit drag. A ~NZ$18.9m year-on-year swing in Adelaide's result explains the bulk of the EBITDA decline. With Adelaide now at ~30.6% of group revenue and a negative EBIT margin of ~12.9%, the group's earnings profile is increasingly dependent on Auckland holding its margin, which itself eroded ~640bps.
• Leverage has weakened despite a lower gross debt stack. Net debt/EBITDA stepped up to ~6.8x from ~5.2x because the EBITDA base shrank faster than debt was repaid. This matters more than the headline "debt reduced" framing.
• NPAT growth is tax-driven, not operational. The 142.5pp gap between NPAT growth (+99%) and PBT growth (-43.5%) means any read of "profit up" should be treated with caution.

Expectations

No forward guidance, forward-work backlog, or quantified targets were disclosed in the supplied HY26 materials. Against the FY25 anchor — where reported group EBITDA was NZ$216.1m — the HY26 EBITDA of NZ$72.1m implies an unusually low first-half contribution relative to historical seasonality (HY25 represented 52.3% of FY25 EBITDA). On a simple annualisation, the release does not support a path back to FY25's reported earnings unless Adelaide reverses course in 2H. The release neither confirms nor denies such a reversal.

Quality of result

Mixed, and the durable read is weaker than the headline. The operating cash inflow of NZ$56.1m lifted OCF/EBITDA to 77.8%, but that is best understood as a normalisation from an abnormally weak HY25 (OCF/EBITDA of 1.7%) rather than a structural improvement; pre-lease FCF remained negative at -NZ$13.5m. The NPAT uplift is essentially a tax-line story. The EBITDA and PBT declines, Adelaide's swing to loss, and Auckland's margin compression look operational rather than timing-driven. Capex intensity remained high at 17.1% of revenue, keeping free cash flow negative and constraining deleveraging.

Unresolved

• What portion of Adelaide's loss is regulatory, cost-base, or demand-driven, and what trajectory is assumed for 2H?
• Is the Auckland margin compression cyclical, cost-inflation-related, or mix-driven, and has it stabilised?
• With net debt/EBITDA at ~6.8x, what covenant headroom and refinancing profile support the current capex programme, and how are the FY25-announced "balance sheet initiatives" progressing in HY26?
• No interim dividend disclosure was provided in the supplied extraction, leaving capital-return policy unclear.

This briefing cannot assess regulatory developments, covenant terms, management commentary on outlook, or the reconciliation between reported and underlying EBITDA for HY26, none of which were disclosed in the supplied materials.

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.