PBT up 166.7% on Horticulture recovery as capex surge lifts leverage to 1.33x

EBITDA more than doubled to $61.5m. Annolyse's historical baseline classifies PBT growth, NPAT growth and ROE (14.0% versus a 6.4% three-period mean) as above their normal range, while EBITDA margin (19.3%) and PBT margin (15.3%) sit within range.

The earnings rebound came almost entirely from the Horticulture segment, which swung from a -$2.1m result to +$22.3m as the prior comparable was depressed by Cyclone Gabrielle. Logistics revenue rose 60.0% to $56.3m on higher volumes. Global Proteins, the largest segment, declined: revenue fell 6.2% to $141.7m and segment result eased to $28.1m from $30.3m.

Capex jumped from $4.8m to $44.5m (+828.2%), gross borrowings rose 80.3% to $121.8m, and net debt/EBITDA moved to 1.33x from 0.98x — above the supplied historical range (mean 0.60x).

Horticulture's $24.4m year-on-year swing accounts for most of the EBITDA uplift, and the 1H23 base was explicitly cyclone-impacted. Global Proteins, the dominant segment by revenue share (44.6%), went backwards on both revenue and result. Strip the Horticulture normalisation and the underlying group trajectory is materially less impressive than the headline +166.7% PBT and +620.5% NPAT suggest.

Capital intensity has stepped up sharply. Capex/revenue moved from 1.5% to 14.0%, taking pre-lease free cash flow to -$47.1m versus a three-period mean of -$27.8m — below the historical range. This matters because reported profit growth is being absorbed back into PP&E rather than converting to distributable cash, and the timing and return profile of that spend has not been reconciled in the supplied excerpts.

Leverage and balance-sheet expansion go together. Gross borrowings rose $54.2m and net debt rose to $81.9m from $29.8m, lifting net debt/EBITDA to 1.33x — above the supplied historical range. Total assets sit at the upper edge of their three-period range at $739.8m. The combination of a heavier capex year and a weaker Global Proteins read leaves less margin for further operational disappointment.

Seasonality context shows HY23 was 56.8% of FY23 EBITDA and 74.4% of FY23 NPAT, so the historical pattern is first-half-weighted. Current-period EBITDA of $61.5m already exceeds the entire FY23 figure of $53.7m, so on the face of it the full year will sit comfortably above FY23 — but FY23 itself was a cyclone-affected low base, not a normalised reference point.

The relevant unanswered question for the second half is whether capex remains elevated, whether Horticulture's recovery sustains into harvest seasonality, and whether Global Proteins stabilises. The release does not provide a full-year capex envelope or segment outlook in detail.

The effective tax rate was unchanged at 22.0%, so the gap is not tax-driven; minority-interest attribution explains why the reported NPAT figures cited in the media release ($38.1m vs $14.3m) differ from attributable NPAT.

Cash conversion at -4.2% (OCF/EBITDA) is classified above its normal range only because Scales' first-half cash flow is structurally negative (three-period mean -47.7%); it is a seasonal improvement, not positive cash generation. Working-capital movement contributed: inventory fell $6.8m and operating working capital reduced by $4.9m. The durability question rests on Horticulture sustainability, Global Proteins recovery, and whether the capex programme produces incremental EBITDA in proportion to the cash absorbed.

This briefing cannot assess the durability of Horticulture pricing and yields, the strategic rationale or expected returns on the capex programme, or any non-public covenant headroom on the expanded borrowing facilities.