PBT up 204% on 19% revenue growth as cash conversion lifted to 89%

Underlying earnings expanded faster than revenue at every line, which means the result is one of operating leverage rather than a pure top-line story.

Operating cash flow doubled to $13.3m from $6.6m, lifting cash conversion (OCF/EBITDA) to 89.3% from 62.3%. Gross borrowings fell to $66.6m from $73.3m and net debt to EBITDA improved to 4.27x from 6.91x. The interim dividend was raised to 1.0cps from 0.65cps (+53.8%).

• Revenue +19.0% produced EBITDA +40.7% and PBT +203.6%, while OCF/EBITDA stepped up from 62.3% to 89.3%. The implication is that incremental aged-care revenue is dropping through to cash, not just to accruals, which is what would be needed to sustain the deleveraging path.

• Tax flattered NPAT; PBT is the cleaner read. The effective tax rate fell to 22.3% from 28.6%, so NPAT grew 215.0% versus PBT growth of 203.6% — a -11.4pp gap that reflects a tax benefit rather than additional operating performance. The release does not explain the rate decline, so investors should anchor on PBT when judging underlying improvement.

• Leverage materially eased. Net debt fell to $63.7m from $73.2m and net debt to EBITDA dropped from 6.91x to 4.27x. That capacity is what enables the dividend to step up while still funding a "capital-light" growth strategy, but a starting point above 4x EBITDA is still elevated for an aged-care operator.

Shape context shows HY25 represented only 48% of FY25 revenue and 28% of FY25 NPAT, so the historical pattern is second-half weighted. On that pattern alone, HY26 NPAT of $6.3m already sits close to the full FY25 NPAT of $7.0m, which sets a high bar for second-half delivery before the comparison can be considered conservative.

The release leans on Underlying EBITDA and EBITDAR-per-bed disclosures, with annualised EBITDAR per bed of $29.9k, but does not separate same-store growth from acquired or reconfigured beds. That gap matters because the durability of the operating leverage thesis depends on which mix is driving it.

FCF pre-lease was $9.6m versus $3.7m in HY25, and FCF to NPAT of 151.7% indicates earnings are converting comfortably to cash even after capex of $3.7m (3.7% of revenue). Working capital was a modest drag of $0.2m and receivable days improved to 22.9 from 26.7, so the cash step-up is not an artefact of debtor compression or capex deferral.

The main quality caveat is the tax line: about 11.4 percentage points of the NPAT growth headline comes from the lower effective rate rather than operations. Beyond that, EBITDA is presented on an underlying basis (the prior period was adjusted for the sale of one care home), and the release flags non-recurring items in the reconciliation, so the like-for-like comparison rests on management's adjustments rather than reported statutory earnings. Dividend cover also improved sharply, with the NPAT payout ratio falling to 44.8% from 94.2%, leaving more retained cash to support deleveraging.

This briefing cannot assess occupancy, bed-level pricing, or wage and government-funding assumptions underpinning the EBITDAR-per-bed disclosure.