Sky's 7.7% revenue growth reflects an acquisition, not like-for-like trading

That means the growth rate is not a like-for-like comparison with HY25, which pre-dates the deal. Profit before tax swung to $57.7m from a prior-period loss (PBT growth of n/m on the calculation basis), and NPAT rose to $52.2m from a prior-period loss (growth of n/m, figures inflated as much by a low base as by underlying trading. Operating cash flow reached $99.0m, lifting OCF/EBITDA cash conversion to 126.7%, above the historical average of 85.5% (range 76.2%-103.4%).

With the acquisition consolidated only from this period, revenue, EBITDA, total assets ($748.7m, also above Sky's historical range) and margin metrics all reflect a materially different consolidation footprint than HY25. Investors should treat the 7.7% revenue increase as a scale effect rather than organic momentum until Sky discloses underlying, ex-acquisition comparisons.

Tax distortion amplifies the earnings swing. The effective tax rate fell to 9.1% from 28.0% in the prior half, meaning NPAT growth n/m overstates the operating improvement relative to PBT growth n/m, itself already exaggerated by the tiny loss-making prior-period base. PBT is the cleaner read of the operating trajectory, though even that comparison is distorted by the acquisition.

Cash generation looks strong but partly capex-timing driven. Free cash flow before lease of $87.1m is well above Sky's historical average of $21.7m, helped by capex falling to 6.4% of revenue from 10.6% previously, a 35.3% capex decline period-on-period. Working-capital movement of $13.5m sits within Sky's normal historical range, so cash conversion is not being propped up by an unusual working-capital release, but the sharp capex pullback raises the question of whether spending has simply been deferred into the second half.

Management commentary frames the 15.0 cps interim dividend, up 76.5% from 8.5 cps, as roughly half of full-year dividend guidance, implying a broadly similar quantum is expected in the second half, though the full-year guidance figure itself is not disclosed here.

This matters because the acquisition and tax effects mean H2 comparisons will need to be read against a now-larger, consolidated base rather than the pre-acquisition HY25 figures, so a repeat of these growth rates should not be assumed.

However, a large share of the headline improvement is not comparable period-on-period. The acquisition inflates revenue, EBITDA, assets and margins, the tax rate drop (28.0% to 9.1%) inflates NPAT relative to PBT, and the capex pullback (down 35.3% to 6.4% of revenue) supports free cash flow in a way that may reverse if spending resumes in H2. Trade debtors also rose sharply, from near zero to $11.4m, a balance-sheet shift worth monitoring even though the broader working-capital movement remains within normal range.

This briefing cannot assess Sky's true like-for-like organic performance because the extraction data does not separate acquisition-related revenue, EBITDA, or asset contributions from the pre-existing business.