PBT fell 44.6% as tax normalisation flattered NPAT to +33.3%

Profit before tax actually fell 44.6% to NZ$5.1m on revenue down 17.2% to NZ$13.8m, and the only reason after-tax profit moved the other way is that the effective tax rate normalised from 70.2% in HY24 (lifted by a one-off NZ$3.9m deferred tax adjustment on commercial-building depreciation, per the FY24 commentary) to 29.4% this period.

EBITDA fell 37.4% to NZ$5.1m and operating profit fell 38.8% to NZ$4.8m, both consistent with the PBT decline. Operating cash outflow widened to NZ$12.2m from NZ$6.5m a year earlier, while trade debtors shrank to NZ$3.8m from NZ$6.9m. Cash held was little changed at NZ$10.4m and total liabilities rose 58.5% to NZ$10.2m off a small base.

• PBT growth of -44.6% sits at the lower edge of CDI's recent range, and PBT margin of 37.1% is well below the supplied 3-period mean of 60.4% (range 55.4%-66.8%). For a residential land developer this matters because the quality of the period's profit has fallen even if the bottom-line print rose.
• Demand did not respond to lower rates as management expected. The Directors' commentary explicitly notes that falling interest rates did not generate the anticipated lift in property-market activity, and revenue and profit could not be grown in the half. ROE of 1.1% versus a 3-period mean of 3.7% confirms that asset productivity is running below the company's own recent norm despite a stable equity base of NZ$313.7m.
• The cash outflow nearly doubled even as receivables released NZ$3.1m. OCF of -NZ$12.2m against EBITDA of NZ$5.1m means the working-capital release on debtors was more than absorbed by other movements — most plausibly continued land and section development spend ahead of settlements. That widens the gap between accounting profit and cash, and it is the more important balance-sheet signal in the half.

The supplied seasonality shape for FY24 had HY revenue at 33.9% of full year and HY NPAT at only 17.8%, implying a heavily second-half-weighted business in residential settlements. Annualising HY25 revenue gives NZ$27.5m, well below the FY24 NZ$49.1m base, so a flat full-year outcome would require a stronger second half than HY24 produced.

Management flags first sales from Iona Stage 1 in Havelock North with Stage 2 expected to commence early next year, and notes disappointment with the Future Development Strategy (FDS) process. Both point to project-timing risk around H2 settlement volumes that the release does not quantify.

It is the mechanical consequence of a normalised tax rate (29.4%, within the historical range, versus a one-off 70.2% in HY24) applied to a smaller pre-tax profit. The PBT decline of 44.6% and the PBT-to-NPAT growth gap of -77.9 percentage points are the operating signal.

Cash quality also weakened. Operating cash conversion of -239.5% of EBITDA versus -79.9% prior is partly inherent to a land developer's working-capital cycle, but the deterioration is real: a NZ$3.1m reduction in trade debtors should have helped OCF, and the fact that operating outflow nonetheless doubled implies a meaningful step-up in development-related cash deployment. Capex on investment property of NZ$0.4m is small and not the driver. Total assets grew to NZ$323.9m, above the supplied historical baseline of NZ$306.5m-NZ$313.5m, consistent with that capital being put into inventory rather than returned.

This briefing cannot assess section sell-through pace, settlement timing, or land valuations because the release does not disclose forward-work, contracted-but-unsettled volumes, or independent valuation inputs.