Leverage climbs to 1.06x EBITDA as PBT grows 19.3% but cash lags

That earnings growth was increasingly debt-supported: net debt/EBITDA rose to 1.06x from 0.87x, gross borrowings jumped 27.1% to $328.6m, and cash fell 23.9% to $32.9m. Operating cash flow grew only 7.9% to $187.4m, well behind earnings growth, because working capital absorbed cash — owned working capital rose $30.8m to $165.9m and receivable days lifted to 40.9 from 39.7. Cash conversion (OCF/EBITDA) softened to 67.4% from 69.9% as a result.

Segment mix shifted toward the dominant Express Package & Business Mail division, which grew to $1.2b (84.4% of group revenue, up from 82.3%), while Information Management & Waste Renewal was broadly flat at $234.0m and lost share (16.0% versus 18.1%).

: net debt/EBITDA moving to 1.06x from 0.87x, alongside a 23.9% cash reduction, means less balance-sheet headroom for further capex or acquisitions without additional funding, and greater exposure to interest costs if rates or trading conditions turn. Tax distortion on NPAT: PBT growth of 19.3% outpaced NPAT growth of 17.3% because the effective tax rate rose to 29.7% from 28.5%, so PBT is the cleaner read of underlying operating momentum rather than the headline NPAT figure. Segment concentration: the Express division's growing share (now 84.4% of revenue) with a broadly stable margin (13.6% versus 13.5% prior) supports margin durability, but increasing reliance on one segment raises sensitivity to freight volume swings.

The half-year period contributed 55.8% of full-year NPAT, 51.6% of EBITDA and 49.1% of revenue, implying a second half that was softer in absolute terms — implied second-half NPAT of $41.4m against a first-half $52.3m, and EBITDA of $134.7m against $143.4m. That second-half deceleration, rather than the full-year growth headline, is the more relevant signal for assessing near-term trajectory in the absence of guidance.

However, softer cash conversion and a $30.8m working-capital build reduce confidence that earnings growth is translating cleanly into cash; free cash flow relative to NPAT was 168.1%, aided by capex intensity holding at 2.0% of revenue even as capex grew 15.1%. On dividends, the final dividend per share fell 17.7% to 24 cents, but the full-year dividend per share actually rose to 45 cents from 40 cents — the two measures should not be conflated — while the payout ratio against NPAT eased to 85.9% from 89.5%.

This briefing cannot assess the specific drivers behind the borrowings increase or confirm management's own explanation for the tax-rate rise, as no reconciling commentary was supplied.