EBITDA up 3.7% but PBT collapsed 80.2% and FY24 swung to a NZ$9m loss

What changed

Revenue rose 4.7% to NZ$1b and EBITDA rose 3.7% to NZ$700.0m, but earnings deteriorated sharply below the EBITDA line. Operating profit slipped 4.0% to NZ$238.0m, PBT fell 80.2% to NZ$21.0m, and NPAT swung to a NZ$9.0m loss from a NZ$64.0m profit. Gross borrowings increased NZ$304.0m to NZ$2.6b, cash fell from NZ$88.0m to NZ$45.0m, and total equity contracted 18.3% to NZ$841.0m. Despite the loss, the final dividend was lifted 35.7% to 28.5 cps.

What matters

• Earnings quality gap between EBITDA and PBT. EBITDA grew NZ$25.0m while PBT fell NZ$85.0m. With operating profit only down NZ$10.0m, the bulk of the PBT decline sits below EBIT — consistent with higher interest costs on a materially larger debt stack. This is the most important read: the top-line and EBITDA growth is being absorbed by depreciation and finance costs, not converted into shareholder earnings.
• Leverage direction. Net debt rose to ~NZ$2.6b from ~NZ$2.2b, lifting net debt/EBITDA from 3.3x to 3.7x. Equity fell NZ$188.0m while total assets rose NZ$166.0m, so the balance sheet is being funded increasingly by debt. ROE turned negative at -1.1% from 6.2%.
• Tax line distortion. With tax expense of NZ$30.0m against PBT of NZ$21.0m, the effective rate was ~143% versus ~40% prior. PBT (-80.2%) is the cleaner operating read than the -114.1% NPAT swing, but the direction of travel is the same.

Expectations

No quantitative FY guidance or forward-work target was provided in the extracted material. Against the HY24 shape, FY24 implies second-half revenue of ~NZ$529.0m and second-half EBITDA of ~NZ$373.0m, so the business was second-half weighted at both the revenue and EBITDA lines. The release references fibre uptake at 71.4% of addresses and data demand growth of ~8%, which supports the EBITDA trajectory but does not address the earnings-to-cash translation or the leverage path. The 28.5 cps final dividend is the announcement component, not a full-period total, and sits above a period in which the company booked a net loss.

Quality of result

The revenue and EBITDA growth looks operationally grounded: receivable days were essentially flat at ~36 days, so there is no signal of working-capital-assisted revenue. Capex fell to NZ$427.0m (42.3% of revenue) from NZ$492.0m (51.0%), which mechanically eases the cash drag but also reflects a post-UFB investment phase rather than a repeatable operating improvement. The critical caveat is that FY24 operating cash flow was not disclosed in the extracted material, so FY24 cash conversion and free cash flow cannot be verified against the FY23 benchmarks (OCF/EBITDA of 84.4% and FCF pre-lease of NZ$78.0m). Given that cash fell NZ$43.0m and gross debt rose NZ$304.0m while the dividend was raised, the cash coverage of distributions is a live question rather than a resolved one.

Unresolved

• What was FY24 operating cash flow, and did cash conversion hold near the ~84% FY23 level or deteriorate?
• What specifically drove the ~143% effective tax rate — deferred tax remeasurement, non-deductible items, or a one-off?
• How much of the NZ$304.0m increase in gross borrowings funded capex versus the dividend, and what is the stated leverage ceiling?
• Is the elevated dividend sustainable at 3.7x net debt/EBITDA if EBITDA growth continues to run only mid-single-digit?

This briefing cannot assess the durability of the dividend, the specific composition of the tax charge, or FY24 free cash flow, because operating cash flow and a tax reconciliation were not included in the supplied extraction.

Key metrics

Analytical metrics

This analysis was generated using Annolyse, an AI-powered tool that analyses NZX company announcements. The analysis is based on available company filings and standard Annolyse calculations. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.