PBT up 75% but reported EBITDA fell 8.1% on a care home sale

Despite the EBITDA decline, profit before tax grew 75.0% to $2.8m and net profit after tax rose 42.9% to $2.0m, helped by lower interest costs as gross borrowings were cut 25.0% from $97.7m to $73.3m.

Operating cash flow improved 18.0% to $6.6m and cash conversion (OCF/EBITDA) lifted from 53.3% to 68.5%. Capex stepped up to $2.9m (+54.8%), so free cash flow pre-lease was essentially flat at $3.7m. The cash balance ran down to $0.07m from $0.9m, and a fully imputed 0.65 cents per share interim dividend was declared, equating to a 94.2% payout against NPAT.

Reported EBITDA declined despite revenue growth because the prior comparable included a care home that has since been sold. Management's underlying EBITDA of $10.6m, adjusted for the disposal, is cited as up 14% — a more useful read on operating performance than either the statutory EBITDA decline or the headline NPAT growth.

The NPAT headline overstates underlying earnings improvement. PBT growth of 75.0% is the cleaner operating read because the effective tax rate jumped from 13.6% to 28.6%, dragging NPAT growth down to 42.9%. The 32.1pp gap between PBT and NPAT growth is the most material accounting distortion in this result and means the announcement-headline 39% NPAT growth flatters the operating step-up less than it appears.

Deleveraging is the real balance sheet story. Gross borrowings fell from $97.7m to $73.3m and net debt fell from $96.8m to $73.2m. Net debt to reported EBITDA improved from 9.2x to 7.6x — still elevated for an aged-care operator but moving in the right direction, and the main reason interest costs no longer fully consume EBITDA growth.

The HY24 comparable was 50.2% of FY24 EBITDA, suggesting the business is roughly evenly split across halves rather than second-half weighted. Annualising current revenue gives roughly $170.8m, modestly above the $168.7m FY24 base.

The FY24 statutory loss of $8.5m, contrasted with the $1.4m HY24 profit, indicates a materially weaker FY24 second half that is not characteristic of underlying operations and should not be treated as a recurring shape. The release does not explain that prior second-half drag, so the trajectory beyond this half remains an open question.

The operating cash flow improvement is genuine — receivable days fell from 30.1 to 26.4 and operating working capital released $1.5m — so the $6.6m OCF is not balance-sheet assisted in a concerning way. Free cash flow pre-lease at $3.7m exceeded NPAT, giving FCF/NPAT of 188.6%, which supports the durability of reported profit.

However, two factors temper the quality read. First, the EBITDA improvement language relies on an underlying adjustment for the divested care home; the statutory line moved the other way. Second, the 94.2% payout against NPAT, combined with a $0.07m cash balance and capex stepping up 54.8% to 3.4% of revenue, leaves little internal buffer. The dividend is funded out of FCF pre-lease rather than NPAT, but the cash cushion is thin and lease-related cash outflows are not isolated in the supplied data.

This briefing cannot assess occupancy, bed-mix, or per-bed economics beyond the disclosed EBITDAR per bed of $13.4k, because segment margins and operational KPIs are not supplied at the level needed for a like-for-like operating comparison.