SkyCity operating cash flow fell 77.8% as conversion dropped to 20.9%

That is the dominant movement in the result, because it severs the link between the headline earnings recovery and the cash actually generated by the business.

Reported EBITDA rose 56.4% to $216.1m, but the company's own commentary frames underlying EBITDA at $233.7m — 15.9% below the prior period — once $17.6m of "Building a Better Business" (B3) programme costs and prior-period non-recurring items are normalised. Revenue fell 4.6% to $821.3m. Reported NPAT swung to $29.2m from a $143.3m loss, but PBT growth of 126.6% on a much smaller base is the cleaner read because the prior year carried large impairments.

Gross borrowings rose 9.3% to $666.5m and net debt rose to $615.0m, while capex moderated to $161.6m from $303.7m.

EBITDA grew on the reported line, but only one-fifth of it reached operating cash flow versus a prior period where OCF actually exceeded EBITDA. This matters because SkyCity remains in a heavy capex cycle: even with capex nearly halved, free cash flow before leases stayed deeply negative at -$116.4m. The reported earnings improvement does not yet translate into self-funding capacity.

Underlying EBITDA fell 15.9%. Stripped of B3 costs and the prior-year impairment base, operating earnings went backwards on a 4.6% revenue decline, implying negative operating leverage. Auckland (62.3% of revenue, 40.8% segment margin) is still carrying the group, while Adelaide's result dropped to $28.5m from $39.6m at a thin 13.4% margin and Online lost $1.8m on $4.1m of revenue. The mix is becoming more concentrated on a single property.

Balance sheet under active management. Net debt rose by $66m, but net debt/EBITDA improved to 2.8x from 4.0x because reported EBITDA recovered. The release flags new "balance sheet initiatives" and the prior-period commentary references suspension of dividends, indicating the board is treating leverage as a constraint despite the improved ratio.

HY25 produced only $1.9m of operating cash flow and $6.1m of NPAT, meaning the second half delivered roughly $43.2m of OCF and $23.2m of NPAT — a meaningful sequential improvement, but off a very weak first half rather than a sustained run-rate.

The release excerpts indicate dividends remain suspended at least through the current period and that capital initiatives are being launched to bolster resilience. That is consistent with a company that does not yet expect operating cash to fund both capex and distributions, and the gap between underlying EBITDA decline and reported EBITDA growth is what matters here.

PBT growth of 126.6% is the cleaner operating read, and even that is on a $30.1m comparable that itself was depressed.

The cash side is where durability is weakest. OCF/EBITDA at 20.9% means only $0.21 of every reported EBITDA dollar reached cash, and FCF pre-lease was -$116.4m versus -$100.1m prior. Working capital was a modest tailwind (operating working capital fell $4.0m, debtor days dropped to 2.0 from 3.5), so the cash gap is not a receivables build — it sits in items below EBITDA such as interest, tax, and other operating outflows. The capex step-down to 19.7% of revenue is real, but the business still consumed cash at the free-cash-flow line.

This briefing cannot assess regulatory and licensing risk, the timing of New Zealand International Convention Centre (NZICC) earnings contribution, or the terms of the announced balance sheet initiatives.