NPAT fell 58.7% on a 2.1% revenue decline despite dividend lift

The bottom line moved far harder: PBT dropped 57.9% to $28.9m and NPAT dropped 58.7% to $20.2m. The effective tax rate was essentially unchanged (27.6% versus 27.5%), so the distortion sits between EBITDA and pre-tax profit, not in the tax line.

Operating cash flow fell 13.7% to $120.2m and cash conversion (OCF/EBITDA) dropped to 80.9% from 90.9%. Post-lease free cash flow was broadly stable at $24.8m versus $23.7m. The full-year dividend was lifted to 22.0 cps from 19.0 cps (+15.8%), and FY26 dividend guidance of at least 30 cps was disclosed. An acquisition was flagged in the release but is not detailed in the supplied materials.

EBITDA fell only 2.6%, but PBT and NPAT fell ~58%. With tax rates stable, the divergence reflects items between EBITDA and pre-tax profit — depreciation/amortisation, impairments, or non-recurring items. The calculation pass flags that non-recurring items were present, and at HY25 management framed similar items as "largely non-cash or expected to be cash neutral" masking a more positive underlying result, but the FY25 detail in the supplied excerpts does not decompose the gap.

Cash conversion deteriorated meaningfully. OCF/EBITDA fell 10 percentage points to 80.9%, with operating cash flow shrinking far more than EBITDA. This means working capital, programming-rights timing, or financing flows are absorbing cash that previously dropped through. It matters because the dividend leans on free cash flow, not reported earnings.

Dividend policy now sits well ahead of the earnings line. The 22.0 cps full-year dividend implies a payout of 149.8% of FY25 NPAT (versus 55.2% prior) and 71.3% of pre-lease FCF. FY26 guidance of at least 30 cps would step that up by ~36% again. With ROE down to 4.6% from 10.9%, sustaining the lifted distribution rests entirely on FCF, which means the deterioration in cash conversion is the key risk to monitor.

No explicit FY26 revenue or EBITDA targets are provided in the materials supplied here; the only forward financial figure is the at-least 30 cps dividend guidance.

Against the HY25 shape, the second half delivered roughly $88m of EBITDA versus $60.7m in H1, broadly consistent with the H2 weighting management flagged at the interim as programming-cost timing reversed. So the within-year cadence tracked the signalled pattern, which means the FY25 print itself was not the surprise — the open question is what FY26 looks like once the acquisition and the lifted dividend run-rate are layered on.

At the FCF level, post-lease free cash flow of $24.8m was essentially flat against $23.7m, with capex steady at around 10.4% of revenue. The cash that the dividend actually draws on did not deteriorate, and FCF covered FY25 NPAT 1.2x — so headline NPAT understates the cash generation.

Two quality signals are negative. First, OCF/EBITDA fell 10 percentage points to 80.9%, so each dollar of EBITDA produced materially less operating cash than a year ago. Second, the gap between EBITDA decline (-2.6%) and NPAT decline (-58.7%) reflects items below EBITDA that the supplied excerpts do not fully reconcile; until those items are decomposed, the durability of the bottom-line read cannot be confirmed.

The revenue mix continues to shift: Sky Box/Pod fell from 65.1% to 62.6% of revenue, while Sky Sport Now (+1.5pp share), Broadband (+1.3pp), and Advertising (+0.6pp) grew. The streaming and broadband transition is continuing but is not yet offsetting linear-TV decline.

This briefing cannot assess the specific composition of items below EBITDA, the acquisition terms, or whether the FY26 dividend guidance is supported by management's expected free cash flow trajectory.