Cash conversion fell to 70.1% as working capital absorbed $9.0m

Profit before tax grew 9.7% to $74.3m. Reported NPAT rose 16.2% to $54.5m, but the effective tax rate fell from 30.8% to 26.5%, so PBT is the cleaner read on operating performance.

Operating cash flow fell 6.1% to $66.5m as working capital absorbed roughly $9.0m, driven by an $6.3m inventory build (+8.7%) and a $2.7m rise in trade debtors. Cash conversion (OCF/EBITDA) fell from 80.0% to 70.1%.

Net debt finished at $12.4m (0.13x EBITDA, from 0.17x), and the board declared a final dividend of 16.5 cps, taking the FY25 total to 25.5 cps versus 24.0 cps in FY24.

PBT grew 9.7% but NPAT grew 16.2%, a 6.5pp gap driven by the effective tax rate falling from 30.8% to 26.5%. The underlying earnings step-up is real but materially smaller than the headline NPAT figure suggests, which matters because the company is presenting this as a "record" NPAT result.

Cash conversion deteriorated by roughly 10 percentage points. OCF/EBITDA fell from 80.0% to 70.1% because earnings growth was partly reinvested in inventory, with inventory days rising to 80.4 from 79.0. In a project-based industrials business, deliberate inventory positioning ahead of customer demand can be rational, but it pushes cash recognition into future periods and lifts the bar for next-year demand follow-through.

Segment mix is moving favourably in Agri. Agri division revenue rose 8.1% with disclosed gross margin expanding from 29.2% to 31.1%, while the larger Industrial division saw margin compress from 20.7% to 20.1%. Agri contributed disproportionately to result growth, which raises the read-through risk if rubberware demand patterns normalise from the strong H1 run.

HY25 contributed 46.8% of full-year revenue, 45.5% of EBITDA and 44.3% of NPAT, implying a second-half weighted year on every line. Implied H2 EBITDA of roughly $51.7m and H2 NPAT of $30.4m mean the second half carried the result.

Operating cash flow was more evenly split (HY25 took 48.5%), so the H2 EBITDA step-up did not convert proportionately into cash. That matters because the company will lap a stronger H2 base in FY26, and any continued working-capital investment would compound the cash-conversion gap rather than close it.

PBT growth of 9.7% on revenue growth of 6.9% implies modest operating leverage, and ROE strengthened to 22.7% from 20.4%. Capex was light at 2.3% of revenue ($8.3m, down from $9.4m), and free cash flow before lease payments of $58.2m still covered NPAT at 106.7% (prior 130.9%) and the full-year dividend at an 85.9% payout. Net debt fell to 0.13x EBITDA, leaving meaningful balance-sheet flexibility.

The qualifications are concentrated in two places. First, the NPAT growth rate is flattered by a 4.3pp drop in the effective tax rate that has not been explained in the supplied excerpts. Second, the cash result depends on a working-capital build that the company at HY25 described as "risk mitigation" rather than demand-pull; whether that inventory unwinds into revenue or sits as excess stock is the key durability question.

This briefing cannot assess forward order book, customer-specific demand visibility, or the sustainability of the lower tax rate without management commentary on those items.