Capex nearly doubled to 10.8% of revenue as PBT fell 3.1%

The gap between rising EBITDA and falling PBT/NPAT matters because it signals that depreciation and finance charges below the EBITDA line are now eating into the operating story, not a tax effect: the effective tax rate actually improved slightly, from 28.2% to 27.5%.

The driver is capital intensity. Capex nearly doubled to $82.9m from $42.0m, lifting capex-to-revenue from 5.6% to 10.8%. Operating cash flow grew 18.9% to $139.1m and cash conversion improved to 90.9% of EBITDA (from 78.7%), but higher spend and dividends still pulled the cash balance down 32.6% to $37.8m.

EBITDA growth of 2.9% did not flow through to PBT or NPAT because investment spend nearly doubled; this means the reported bottom line understates operating momentum but also masks a real step-up in ongoing capital needs that investors should track against future free cash flow.

Dividend payout has risen faster than earnings. The payout ratio against NPAT climbed to 55.2% from 27.8%, with the full-year dividend up to 19 cents from 15 cents and next-year guidance of at least 21 cents; the final dividend component alone rose to 12 cents from 9 cents. Sky's own disclosed payout ratio is 71% on a free-cash-flow basis, so the distribution is being funded from a free cash flow base ($23.7m, up from $16.5m) that itself absorbed the capex increase, leaving less buffer if capex intensity persists.

Return on equity is weakening even as the balance sheet strengthens. ROE fell to 10.9% from 11.5% while total equity rose 1.9% to $448.9m and total liabilities fell 7.2% to $232m. This matters because a stronger balance sheet is being asked to support a lower return, which raises the bar for the capex program to convert into future earnings growth rather than just asset replacement.

The release characterises the year as "solid" and "within guidance" in a "challenging market," which is consistent with modest revenue growth but does not explain why PBT and NPAT declined despite EBITDA growth.

The result supports a read of stable top-line demand and improved cash generation, but it does not support a clean growth narrative at the earnings level, given the capex-driven divergence between EBITDA and PBT/NPAT.

Trade debtors rose 11.5% to $37.3m, a modest increase consistent with revenue growth rather than a collection problem.

The weaker part of the result sits below the operating line. The near-doubling of capex to $82.9m is the primary reason PBT and NPAT declined despite higher EBITDA, and it is this investment step-up, combined with a materially higher dividend payout ratio, that drove the cash balance down 32.6% to $37.8m. That combination means part of the year's shareholder return was funded by running down cash rather than by underlying earnings growth.

This briefing cannot assess segment-level margin trends, net debt position, or forward capital commitments, since granular segment profitability, a current gross borrowings figure, and forward-work disclosures were not available in the supplied data.