Record NPAT hides cash conversion drop to 79% from 115%

This matters because it means the strongest reported earnings growth in years converted into cash less completely than usual.

Revenue rose 13.5% to $71.9m, EBITDA reached $29.9m, PBT grew 28.7% to $22.9m and NPAT grew 21.1% to $16.1m, driven by bulk cargo (+9.7%), container (+18.5%) and Tiwai smelter volumes (+16.1%).

Net debt fell to $18.5m from $24.9m, taking net debt/EBITDA to 0.62x from 1.21x, while gross borrowings held flat at $31.0m and cash more than doubled to $12.6m.

The effective tax rate rose to 29.7% from 25.1%, pulling NPAT growth to 21.1% versus PBT growth of 28.7%. PBT is the cleaner operating read here, which means underlying trading performance is stronger than the NPAT line alone suggests.

Working capital absorption is the real quality flag. Trade debtors rose 7.7% to $8.1m and operating working capital moved from a $5.1m to a $5.8m balance, a $0.7m build that sits at the upper edge of South Port's own range. This means part of FY26's earnings growth has not yet turned into cash, so the strength of the profit line overstates near-term cash generation.

Leverage strengthened materially. Net debt/EBITDA nearly halved to 0.62x from 1.21x, giving the balance sheet more flexibility to fund the capital programme without external debt. This matters for anyone assessing dividend sustainability and future capex capacity, since the company is self-funding growth from a stronger base.

The second-half shape shows growth decelerating into the back half: the interim period already delivered 48.4% of full-year revenue and 51.2% of full-year EBITDA, meaning the implied second-half EBITDA of $14.6m was slightly below the first-half's $15.3m. Absent a stated target, the release supports continuity of volumes rather than an acceleration, and the softer implied second-half EBITDA raises a question about whether the pace of growth seen in FY26 can be sustained into FY27.

Free cash flow of $18.4m sits well above South Port's historical range (mean $3.3m), aided by capex of $9.4m, up 17.5% and equal to 13.1% of revenue, which was fully funded from operations rather than debt.

However, the gap between EBITDA growth and cash conversion is timing-driven rather than structural: operating cash flow was essentially flat year-on-year (-0.3%) even as EBITDA rose, with the difference explained by the working-capital build described above. The payout ratio against NPAT fell to 47.2% from 55.1%, below South Port's historical range, indicating the company is retaining more of its earnings rather than distributing at the recent historical rate.

This briefing cannot assess future volume durability, contracted forward work, or dividend policy intent beyond what has been disclosed in this release.