NPAT up 98% masks 43% PBT fall and Adelaide flipping to a $16m loss

The NPAT step-up is entirely a tax-rate effect — the effective tax rate normalised to 23.9% from a 78.4% prior-period charge — so the cleaner earnings read is PBT, not NPAT.

Inside the segment mix, SkyCity Adelaide swung from a $2.8m segment profit to a $16.1m segment loss, with derived margin moving from +2.2% to -12.9%. Auckland revenue fell 3.9% while its derived segment margin compressed to 25.2% from 31.6%.

Operating cash flow rose to $56.1m from $1.9m, but cash on hand fell to $72.5m from $88.6m and gross borrowings declined to $562.9m alongside a $269.7m increase in equity, indicating a balance-sheet recapitalisation rather than organic deleveraging.

With PBT down 43.4% and EBITDA down 36.3%, the business is meaningfully less profitable than a year ago; the 98.4% NPAT print exists only because the prior period carried a 78.4% effective tax rate. For investors, this matters because consensus and screening tools that anchor on NPAT growth will misread the half.

Adelaide is now an earnings drag, not a contributor. A $16.1m segment loss on $124.5m of revenue, against a $2.8m profit on similar revenue last year, points to either cost-base deterioration or a step-down in gaming yield rather than a top-line problem — Adelaide revenue actually rose 1.1%. This is the single largest swing factor inside group EBITDA and the most important item for a serious investor to understand.

Leverage rose despite a recapitalised balance sheet. Net debt fell to $490.4m from $589.5m and equity rose $269.7m, yet net debt to EBITDA moved to 6.8x from 5.2x because EBITDA fell faster than debt. The capital raise has bought time, but the leverage ratio is moving the wrong way on the operating denominator.

HY25 represented 51.2% of full-year revenue but just 20.8% of FY25 NPAT, indicating a structurally second-half-weighted earnings profile that the current half does not yet contradict. Annualising current revenue gives $813.1m, broadly in line with FY25's $821.3m, so the top line is not collapsing.

What the release does not support is any read on whether Adelaide's loss is one-off or run-rate, or whether the Auckland margin compression continues. Both are required to size FY26 EBITDA against the FY25 reported $216.1m base.

PBT, EBITDA, and segment results all moved against the company; NPAT improved only because tax normalised. Capex of $69.6m (17.1% of revenue) exceeded operating cash flow on a free-cash basis, leaving FCF pre-lease at -$13.5m and FCF to NPAT at -111.5%. ROE of 0.8% (versus 0.5% prior) remains de minimis on a $1.6b equity base.

The operating cash flow rebound looks largely optical. HY25's $1.9m was anomalously weak — only 4.3% of the FY25 $45.2m total — so the lift to $56.1m and the 77.8% OCF/EBITDA conversion is partly a recovery from a depressed comparable rather than a step-change in cash quality. The half is still consuming cash after capex and is being funded by the strengthened equity base rather than by trading.

This briefing cannot assess regulatory, licensing, or AML-related contingencies that may sit behind the Adelaide result, because no such commentary is supplied in the release excerpts.