Table of Contents
What changed
Revenue fell 60.0% to $32.4m as residential unit settlements collapsed to 14 from 90. Segment mix inverted: commercial portfolio revenue rose to $17.4m (53.7% of revenue, from 12.8%) and delivered a $4.0m result at roughly a 23.2% EBITDA margin, while residential development revenue fell to $14.7m and swung to a $1.0m loss. Group EBITDA moved modestly positive to $0.8m from -$0.1m, but the operating loss widened to $2.6m and PBT worsened 34.8% to -$3.3m. NPAT improved to -$0.9m from -$2.0m purely on tax, not operations. Operating cash flow swung to -$9.9m from +$27.1m, a $37.0m reversal. Gross borrowings rose $40.0m to $119.4m, cash fell to $14.5m, and net debt climbed to $104.9m from $53.3m. No dividend was declared.
What matters
- Mix shift from residential to commercial. Commercial is now the dominant and only clearly profitable segment (23.2% EBITDA margin); residential, historically the cash engine, is loss-making at the segment level. This changes the earnings profile from lumpy settlement-driven gains to recurring rental income, but at a much lower absolute scale so far.
- Leverage direction is materially weaker. Gross borrowings up 50.4% to $119.4m while cash fell 44.5%. With EBITDA of only $0.8m, reported net debt/EBITDA is not analytically meaningful (~133x), but the $51.6m increase in net debt against broadly flat equity of $531.2m is the cleanest read.
- PBT is the operating signal, not NPAT. The NPAT improvement is entirely a tax benefit of $2.4m (effective benefit rate ~72.7%, versus ~17.4% in HY25). PBT deteriorated, so the headline NPAT narrowing is not an operating improvement.
Expectations
No FY26 guidance, forward-work book, or numeric targets were disclosed. FY25 revenue was slightly first-half weighted (HY25 was 52.1% of FY25), so there is no implied second-half catch-up pattern to lean on. Annualising HY26 revenue gives approximately $64.8m, or 41.7% of the FY25 base of $155.4m — the run-rate is materially below the FY25 anchor, and the release does not support a view that this recovers mechanically in 2H. The commercial portfolio growth is the one supportive element, but it is too small to offset a residential settlement rate that has dropped roughly six-fold.
Quality of result
Low. The small positive EBITDA was built on a mix shift, not operating strength: residential segment result went from +$6.2m to -$1.0m, and group operating loss widened. Operating cash flow of -$9.9m versus a $0.8m EBITDA (OCF conversion deeply negative) indicates cash was absorbed by working capital, primarily inventories, which rose $31.0m to $249.8m. On a crude revenue basis, inventory days ballooned to about 1,403 from 491 — this is a balance-sheet-heavy build, not a durable earnings improvement. Pre-lease free cash flow was -$20.1m, similar in magnitude to HY25's -$19.9m but achieved via lower operating cash offsetting lower capex of $10.2m (vs $46.9m). The NPAT-PBT gap is a tax benefit, with no discontinued operations disclosed, so there is no non-recurring item to strip out to get a cleaner picture — PBT of -$3.3m is the cleaner read.
Unresolved
- What is the pre-sale / contracted unit pipeline going into 2H FY26, and does it support a settlement pace closer to the FY25 level?
- What drove the 72.7% effective tax benefit this half, and is it repeatable or a one-off recognition?
- How is the $249.8m inventory balance split between active-stage and long-dated holdings, and what are the settlement timing assumptions?
- With gross borrowings at $119.4m and cash at $14.5m, what are the facility headroom and covenant positions?
- Why does the retirement villages segment remain an EBITDA drag with only $0.3m of revenue, and what is the investment path there?
This briefing cannot assess forward settlement timing, covenant headroom, or the valuation of the inventory position because the extracted release does not disclose forward-work, facility terms, or project-level cost-to-complete data.
Key metrics
| Metric | HY26 | HY25 | Change |
|---|---|---|---|
| Revenue | $32.4m | $81.1m | -60.0% ↓ |
| EBITDA | $0.79m | −$0.06m | +1508.9% ↑ |
| Net profit after tax | −$0.89m | −$2m | +55.5% ↑ |
| Net cash inflow from operating activities | −$9.9m | $27.1m | -136.6% ↓ |
| Declared dividend per share | 0.0c | — | — |
| Operating profit | −$2.6m | −$2.3m | -13.4% ↓ |
| Profit before tax | −$3.3m | −$2.4m | -34.8% ↓ |
| Cash and cash equivalents | $14.5m | $26.1m | -44.5% ↓ |
| Total assets | $719.5m | $663.3m | +8.5% ↑ |
Segment breakdown
| Segment | Current revenue | Prior revenue | Current result | Mix shift |
|---|---|---|---|---|
| Residential development | $14.7m | $70.6m | −$1m | -41.7pp |
| Retirement villages | $0.29m | $0.02m | −$0.52m | +0.9pp |
| Commercial portfolio | $17.4m | $10.4m | $4m | +40.9pp |
Analytical metrics
| Metric | HY26 | HY25 | Context |
|---|---|---|---|
| OCF / EBITDA (cash conversion) | n/m | n/m | deteriorated |
| FCF pre-lease | −$20.1m | −$19.9m | −$0.23m |
| FCF / NPAT | n/m | 992.3% | complementary conversion metric |
| Capex % revenue | 31.4% | 57.9% | — |
| Capex | $10.2m | $46.9m | −$36.7m |
| Inventory days | 1403.4 | 491.3 | +912.1 days |
| Net debt | $104.9m | $53.3m | +$51.6m |
| Net debt / EBITDA | 133.00x | -951.80x | Weakening |
| Gross borrowings | $119.4m | $79.4m | +$40m |
| Payout ratio vs NPAT | 0.0% | — | — |
| Payout ratio vs FCF pre-lease | 0.0% | — | covered |
| ROE (annualised) | -0.2% | -0.4% | Strengthening |
| HY25 share of FY25 revenue | 52.1% | — | Other half was 47.9% |
| HY25 share of FY25 EBITDA | -0.3% | — | Other half was 100.3% |
| HY25 share of FY25 NPAT | -19.4% | — | Other half was 119.4% |
| Profit from continuing operations | −$0.89m | −$2m | +$1.1m |
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.