PBT rose 38.4% but operating cash fell 36% as conversion halved

Reported NPAT of $20.9m was up 120.0%, but that headline is amplified by a 3.1% effective tax rate against 34.7% in FY24; PBT growth of 38.4% is the cleaner operating read.

Revenue rose 8.0% to $230.2m and EBITDA grew 17.7% to $27.8m, signalling positive operating leverage at the EBITDA line. The Utility segment delivered $193.4m (84.0% of revenue) at a disclosed 10.5% segment gross margin, with Airport revenue rising to $36.8m. The balance sheet strengthened: cash rose to $84.8m, gross borrowings remained at zero, and equity grew 17.5% to $244.2m. No dividend was declared.

• OCF/EBITDA fell to 79.2% from 145.7%, and operating working capital declined $17.7m year-on-year (from $28.6m to $10.9m), which means the prior-year cash result was lifted by an unusually large working-capital release that did not repeat. For an investor, the implication is that FY24 OCF was not a fair baseline; FY25 conversion of 79.2% is closer to what underlying earnings actually produce in cash, and FCF/NPAT of 97.1% (versus 349.0% in FY24) confirms the same point.

• Tax distortion is masking the operating result. The effective tax rate of 3.1% drove an 81.6 percentage-point gap between NPAT growth (120.0%) and PBT growth (38.4%). The 38.4% PBT lift is real and is supported by EBITDA up 17.7% on revenue up only 8.0%, but the 120.0% NPAT figure is not repeatable at a normalised tax rate and should not be extrapolated.

• Net cash position deepened despite weaker conversion. Cash rose $18.1m to $84.8m with no drawn debt and capex of just 0.8% of revenue, so net cash to EBITDA strengthened to -3.05x from -2.83x. The implication: financial flexibility for R&D, g2.0 platform investment, or M&A is intact, but capital is sitting on the balance sheet rather than being returned, with no dividend declared.

The release notes results are "in line with guidance" and that recurring revenue grew 13%, but a specific quantitative target is not provided, so the briefing cannot test the result against a stated bar.

The HY25 split shows the year was second-half weighted: H1 contributed 48.7% of revenue, 46.6% of EBITDA and only 34.4% of NPAT. That implied H2 NPAT of $13.7m versus H1 of $7.2m is partly mechanical given the year's low effective tax rate, so the H2 acceleration in reported earnings should not be read as evidence of accelerating underlying profitability without further disclosure on the tax outcome.

Revenue grew 8.0% while EBITDA grew 17.7% and PBT grew 38.4%, with capex held to 0.8% of revenue and receivable days improving slightly to 45.3 from 48.0. ROE roughly doubled to 8.6% from 4.6%, though part of that uplift reflects the same tax effect that flattered NPAT.

The cash and tax lines are lower quality. The 36.0% drop in operating cash flow reflects the unwind of a $17.7m working-capital tailwind that boosted FY24 OCF to 145.7% of EBITDA, so the FY24 cash base was overstated relative to underlying earnings. Equally, the 3.1% effective tax rate is not explained in the supplied excerpts and is unlikely to recur at that level. A normalised tax rate applied to the same PBT would produce materially lower NPAT than the $20.9m reported.

This briefing cannot assess the durability of the FY25 tax outcome or management's forward EBITDA, margin, or capital-return intentions because no quantitative targets, tax commentary, or dividend policy statement were provided in the release excerpts.