PBT up 21.9% but NPAT fell 49.4% on a tax-rate flip

NPAT fell 49.4% to $94.4m as the effective tax rate flipped from +30.2% to -46.0%, opening a 71.3pp gap between PBT and NPAT growth. Revenue grew 13.4% to $366.3m, within the historical range (mean 13.8%). Pre-lease free cash flow improved to -$52.5m from -$158.4m but remained below the historical baseline (mean +$104.9m, range +$51.8m to +$206.7m). Operating cash flow fell 16.3% to $282.8m while capex rose 138.8% to $313.3m, taking capex intensity to 85.6% of revenue. Total equity declined 11.6% to $4.3b, gross borrowings rose 3.2% to $2.6b, and ROE compressed to 2.2% from 3.8%. No interim dividend was declared.

PBT growth of 21.9% is the cleaner operating read; the 49.4% NPAT decline reflects the tax flip, not operating deterioration. The release also discloses an "IFRS profit before tax and fair-value movements" (PBTF) of -$79.8m versus -$17.8m prior, which suggests the underlying result excluding fair-value gains actually worsened. The reported PBT improvement therefore relies materially on fair-value movements rather than trading performance.

Cash quality is weak in absolute terms. Pre-lease FCF of -$52.5m is below Annolyse's historical range (mean +$104.9m). OCF fell 16.3% while capex more than doubled to consume 85.6% of revenue. The headline improvement against the -$158.4m prior comparable is real, but the absolute level signals that development spending is outpacing internal cash generation by a wider margin than recent baseline periods.

The balance sheet is absorbing the gap. Equity fell 11.6% to $4.3b as gross borrowings rose to $2.6b. ROE almost halved to 2.2% from 3.8%. With dividends held at zero, capital is being directed to the development pipeline at the expense of shareholder return metrics, which matters because rising leverage and falling returns together compress headroom for any further fair-value impairments.

Annolyse's second-half shape data shows HY24 represented 46.8% of FY24 revenue, indicating modest second-half topline weighting. NPAT seasonality is unreliable: HY24 contributed 3,909% of FY24 NPAT because H2 FY24 was deeply loss-making, so the prior shape is not a usable run-rate. Annualised current revenue of $732.5m would imply mid-single-digit full-year revenue growth from the FY24 base of $689.9m. The release does not support a firm view on full-year NPAT given the dependency on fair-value movements and the step-up in capex commitment.

The PBT growth above the historical baseline range is genuine, but the disclosed PBTF deterioration (-$79.8m versus -$17.8m) indicates fair-value movements are doing meaningful work in the headline. The effective tax rate sits below Annolyse's historical range, making NPAT a poor proxy for operating progress this period.

Cash quality is the clearer concern. With OCF down 16.3% and capex up 138.8%, pre-lease FCF of -$52.5m sits below the historical range despite improving on prior comparable. The receivable days movement to 10.6 days is at the lower edge of historical range, so the debtor side is benign, but operating working capital still absorbed $14.8m and inventory days fell to 0.9 from 4.7. With zero dividend and equity declining 11.6%, the development pipeline is being funded by drawing on the balance sheet rather than internal cash flow, which limits durability if fair-value tailwinds reverse.

This briefing cannot assess the underlying property-level fair-value assumptions or the project-level economics driving the development capex step-up.