Capex of $430.6m drives pre-lease FCF to -$245.2m as leverage hits 6.2x

Aeronautical segment result lifted from $185.9m to $202.4m and segment margins improved across the board.

Reported NPAT fell 5.5% to $177.0m and PBT fell 6.1% to $244.2m. The release flags that underlying NPAT, which excludes revaluation movements, rose 6% to $157.1m, and that operating EBITDAFI rose 6% to $371.3m on a like-for-like basis with the prior period's $403.1m EBITDA being a broader measure that included fair-value and associate items.

Operating cash flow was essentially flat at $185.4m. Capex of $430.6m absorbed it twice over, leaving pre-lease free cash flow of -$245.2m. Net debt climbed to $2.3b and net debt to EBITDA stepped up from 5.0x to 6.2x. Total assets reached an unprecedented $14.3b on Annolyse's historical baseline, against a four-period mean of $11.3b. The interim dividend was lifted 4% to 6.5 cps.

Segment results were stronger across aeronautical, retail and property, and management's underlying NPAT was up 6%. The decline in reported NPAT and PBT is driven by lower non-operating revaluation movements rather than weaker trading, so the 5.5% headline drop is not the right number for judging operating performance.

Payout ratio versus pre-lease FCF is suppressed because the source-backed cash-dividend bridge is unavailable.

Leverage has stepped up materially. Net debt rose by roughly $293m year on year, and leverage moved from 5.0x to 6.2x EBITDA. While 6.2x is at the lower edge of the supplied four-period range (mean 10.92x, distorted by post-COVID earnings recovery), the direction of travel is clearly weakening as the capex programme runs ahead of operating cash generation.

The available shape context shows HY25 contributed 49.8% of FY25 revenue and 44.5% of FY25 NPAT, indicating a modestly second-half-weighted year, while EBITDAF was first-half weighted at 57.5%. Annualising the current period at $1b suggests revenue can grow on FY25's $1b if H2 holds the H1 run-rate, though the supplied pattern implies a higher absolute H2 contribution to NPAT.

The bigger expectation question is not the P&L but the cash and leverage trajectory: at current capex intensity, the FCF deficit and rising net debt will continue regardless of the operating result, and that frames how shareholders should read the lifted dividend.

The result therefore is not flagged as a deterioration in cash conversion versus its own history, but the absolute level remains low and operating cash flow did not grow despite revenue growth and segment margin expansion.

Working capital was a modest $8.2m use, with debtor days at 31.7 sitting at the upper edge of the supplied historical range (mean 26.5 days, range 18.0 to 36.6 days). Two qualifications matter for the read on durability:

• Pre-lease FCF of -$245.2m is below the historical four-period mean of -$179.4m, and at -138.6% of NPAT means reported earnings are not currently being matched by distributable cash.
• ROE of 3.4% is unprecedented high in the supplied four-period baseline (mean 1.2%, range 0.1% to 1.9%), but is down slightly from 3.6% in the prior comparable, suggesting the asset base is now growing faster than earnings on it.

The operating result looks durable; the cash and balance-sheet quality is being assisted by debt funding while the build continues.

This briefing cannot assess the regulatory or pricing path for aeronautical charges, the project-level returns embedded in the current capex programme, or any covenant headroom on the rising debt stack.