Revenue up 2.5% but PBT flat as store EBITDA fell 4.1% on record sales

The PBT–NPAT gap of 5.6 percentage points reflects an effective tax rate rising from 23.3% to 27.4%; PBT is the cleaner operating read.

At the store layer, group store sales hit a record $703.2m (+2.3%), but store EBITDA fell 4.1% to $90.7m, indicating margin compression on top of like-for-like sales growth.

Capex was cut 44.9% to $17.6m (2.4% of revenue), pre-lease free cash flow rose to $43.8m from $28.8m, and gross borrowings fell 13.2% to $237.9m. Net debt reduced by roughly $44.0m to $208.0m, and cash climbed to $29.9m. No interim dividend was declared.

A 2.3% lift in store sales paired with a 4.1% decline in store EBITDA points to unit-economics pressure (cost inflation, mix, or pricing not fully recovered). For someone reading the business, the underlying operating engine got slightly worse despite top-line growth, which is the opposite of operating leverage.

Capex cut, not earnings growth, drove deleveraging. Operating cash flow was effectively flat (+0.9% to $61.4m), but capex nearly halved. That is what funded the $44.0m net debt reduction and the lift in FCF/NPAT to 367.2%. The balance sheet is genuinely stronger, but the improvement is investment-led, not earnings-led.

No interim dividend at a payout ratio of 0.0%. Given $43.8m of pre-lease FCF and a deleveraging balance sheet, the absence of a distribution suggests either continued deleveraging priority or caution on second-half earnings shape. ROE drifted from 4.1% to 3.8%, consistent with profit not keeping pace with retained equity.

The shape context shows HY24 was 49.1% of FY24 revenue and 47.4% of FY24 NPAT, implying a modestly second-half-weighted profile; on that pattern, current-period revenue annualises to roughly $1.5b, slightly ahead of FY24's $1.5b.

The release does not offer a forward earnings shape that would resolve whether second-half store EBITDA recovers or whether the capex step-down continues. Management framing in the excerpts emphasises a "challenging retail environment," but the briefing cannot quantify how much of the half-on-half margin compression is structural versus cyclical without further commentary.

Within that flat operating result, store-level margin compression is real: store sales grew but store EBITDA fell, so the underlying operating picture is mildly weaker, not stable.

Cash quality requires care. Pre-lease FCF rose materially, but the cause is a 44.9% capex reduction, not stronger operating cash generation — operating cash flow was only +0.9%. FCF/NPAT of 367.2% therefore overstates the durability of cash generation; if capex normalises toward the prior run rate ($32.0m in HY24), FCF compresses sharply. Working capital was steady (receivable days 6.2 vs 6.0, inventory days 4.4 vs 4.6), so there is no working-capital release flattering the cash result.

The deleveraging is genuine — gross borrowings down 13.2% and net debt down ~$44.0m — but it is funded by lower investment intensity, which has implications for future store growth and refurbishment capacity if sustained.

This briefing cannot assess brand-by-brand performance (KFC, Taco Bell, Pizza Hut, Carl's Jr.) or geographic mix because segment reporting is not supplied in the extraction.