Dividend lifted to 7c while pre-lease FCF fell to just NZ$6.8m

Headline performance was solid: revenue rose 3.7% to NZ$392.7m, EBITDA rose 10.9% to NZ$81.7m, PBT rose 8.9% to NZ$40.4m, and NPAT rose 10.3% to NZ$28.8m. Operating cash flow rose 12.1% to NZ$62.9m. Capex of NZ$41.4m (10.5% of revenue) was effectively flat in dollar terms and as a revenue ratio.

The balance sheet remains in a net cash position of roughly NZ$46.8m, though cash on hand fell 16.3% to NZ$47.4m versus HY23.

Group EBITDA margin reached 20.8%, above Annolyse's historical baseline (mean 18.0%, range 15.8%–19.5%), with revenue growth in Sky Sport Now and Advertising cited in the release. Because PBT growth (+8.9%) and NPAT growth (+10.3%) are both within Sky's normal range and the effective tax rate moved only modestly (29.4% → 28.4%), the earnings improvement is being driven by operating leverage rather than tax or one-off items.

Pre-lease FCF is below normal range and does not cover the declared dividend. At NZ$6.8m, pre-lease FCF is just inside the historical range minimum and represents only 23.6% of NPAT. The implied payout ratio versus pre-lease FCF is 147.8%, against an NPAT-based payout of 34.9%. This matters because dividend growth is being funded out of the existing cash buffer rather than from the cash generated this half, and the FY24 guidance lift to 17.5c hardens that commitment.

Inventory remains elevated. Inventory days of 55.7 sit at the upper edge of Annolyse's historical baseline (mean 44.3, range 31.6–63.6), even after a NZ$12.1m drawdown to NZ$120.1m. That is consistent with content rights timing but is a working-capital line to watch alongside FCF.

If the HY23 seasonal pattern repeats off the current run rate, FY24 revenue annualises around NZ$785m and EBITDA could outpace FY23's NZ$156.4m given the 280bp margin uplift. There is no explicit FY24 EBITDA target supplied; the only stated forward number is the 17.5c dividend guidance, which implies roughly 10.5c in the second half.

The gap that matters is between this richer dividend commitment and FCF generation that is currently running at the low end of Sky's recent history. Whether Sky can rebuild FCF in 2H — through working-capital normalisation, lower content cash outflows, or capex phasing — is the central read on the result.

OCF/EBITDA cash conversion of 77.0% is essentially unchanged from 76.1% in HY23, so cash conversion has not deteriorated against the prior comparable. However, that level still sits at the lower edge of Annolyse's three-period historical baseline (mean 102.1%, range 76.2%–126.7%), so the cash-quality comparison flatters this half only because HY23 was similarly weak.

The pinch is below OCF. Capex held at roughly 10.5% of revenue and absorbed nearly two-thirds of operating cash flow, leaving pre-lease FCF at NZ$6.8m versus a historical mean of NZ$41.7m. ROE of 6.4% (prior 6.1%) is within normal range and is consistent with steady, not accelerating, capital efficiency. Net debt-to-EBITDA remains negative at -0.57x (prior -0.75x), so leverage has weakened slightly but Sky still operates from a net cash base that is funding the dividend uplift.

This briefing cannot assess subscriber, ARPU, or segment-level economics because no segment reporting was supplied in the materials.