Dividend +42% as payout reaches 134.9% of pre-lease free cash flow

Revenue rose 0.5% to $70.2m and EBITDA edged up 0.7% to $48.5m. Operating profit fell 10.0% on higher depreciation, taking PBT down 6.6% to $18.4m. Reported NPAT fell 30.1% to $11.6m, but most of that gap is below-the-line: the effective tax rate moved to 28.8% from a -35.0% prior-period benefit (a 23.5 pp PBT-to-NPAT growth gap), and discontinued operations swung from a $3.8m gain to a $1.5m loss.

Cash flow improved: operating cash inflow lifted 7.9% to $39.7m on capex 12.0% lower at $20.5m. Total assets rose 37.8% to $1.3b and equity grew 64.9% to $801.7m, while gross borrowings fell 8.2%. Net debt/EBITDA improved to 6.2x from 6.8x.

The 6.25 cps interim represents 134.9% of pre-lease FCF and 223.2% of NPAT, well above Annolyse's historical baseline (56.6% of pre-lease FCF and 80.0% of NPAT on average) and classified above the normal range. Pre-lease FCF of $19.2m is within the historical range, but lifting the dividend 42% on a flat operating result is a deliberate capital-return signal, not a step funded by incremental cash generation.

The headline NPAT decline is mostly accounting. Continuing-operations profit was $13.1m versus $12.8m — broadly flat. The -30.1% NPAT fall is explained by tax normalisation and the disclosed $5.3m swing in discontinued operations. PBT growth of -6.6% is the cleaner operating read, and even that is outside the historical baseline (mean +131.1%).

Balance sheet stepped up materially. Total assets rose $366m and equity rose $316m year on year, while liabilities added only $51m. Total assets are flagged above the historical normal range. The supplied disclosures do not explain the driver (revaluation, capital action, or reserves movement). This matters because it changes the denominator for return measures and likely accounts for the depreciation lift dragging operating profit.

Management does confirm the Z Energy jet storage project has been pulled forward to H2 2026 from Q1 2027, bringing contracted step-up revenue closer, and reiterates that jet fuel demand tracks the company's prior outlook.

The HY24/FY24 shape supplied indicates the first half delivered ~50% of full-year revenue and 50.6% of EBITDA, but 119.6% of full-year NPAT — meaning the prior-year second half was structurally weaker below the EBITDA line. Annualising HY25 implies ~$140m revenue, broadly in line with FY24. Without a stated target, the FY25 read rests on cost discipline rather than visible volume growth, and the implied second-half NPAT shape carries the same below-EBITDA risks that depressed FY24.

OCF/EBITDA reached 81.9%, above Annolyse's historical mean of 16.6% and classified above the normal range. A modest $1.6m working-capital release helped: debtor days fell to 37.5 (within the historical range) and inventory days dropped to 13.4 (below the historical range). Capex 12% lower at $20.5m, equal to 29.1% of revenue, left pre-lease FCF of $19.2m — within the historical normal range and only just above the recent mean.

But the durability of earnings is weaker than the cash line suggests. EBITDA was essentially flat; operating profit fell 10.0% on higher depreciation tied to the larger asset base; continuing-ops profit barely advanced. Leverage moved in the right direction at 6.2x, but improvement was driven partly by the equity expansion rather than EBITDA growth. The lifted dividend then absorbs more than the entire pre-lease FCF cushion, so the better cash-conversion read is being recycled out rather than retained.

This briefing cannot assess the underlying composition of the equity build or the funding plan for future dividends from the supplied disclosures alone.