Vista Group's 24% EBITDA growth did not convert into cash

That headline strength did not carry through to cash: operating cash flow fell 34.8% to $9.2m from $14.1m, and free cash flow swung to -$6.8m from +$1.0m a year earlier, as contract assets nearly doubled to $21.7m (+100.9%) and net working capital increased by $14.2m.

Leverage moved from a net cash position (net debt/EBITDA of -0.31x) to net debt of 0.47x, above the recent historical range (mean -1.43x), with gross borrowings rising to $49.7m from $18.8m.

Profit before tax moved to -$2.1m (61.5%) and net profit after tax was -$1.5m, with the effective tax rate at 28.6% versus 7.7%. This PBT/NPAT and tax-rate comparison carries a basis discontinuity, so the reported movement should not be read as a clean like-for-like trend against the prior comparable period.

Cash conversion (OCF/EBITDA) fell to 74.2% from 141.0%, but 74.2% still sits within the company's normal historical range (mean 111.6%, 15.6%-248%), meaning the prior half's 141% was itself an unusually strong comparator rather than this half being an outright deterioration. What has changed is that growth capex (up 40% to $12.6m, now 14.6% of revenue) and rising contract assets are consuming cash that used to be generated internally, which means the funding of growth is now leaning more on the balance sheet.

PBT moved 61.5% while NPAT was little changed, apparently driven by the tax-rate swing from 7.7% to 28.6%. However, this PBT/NPAT/tax-rate comparison is subject to a basis discontinuity, so it is not analytically comparable on a clean same-basis footing, and the flat NPAT print should not be treated as confirming that underlying operating performance was stable this half.

Net debt/EBITDA moved to 0.47x from a net cash position, above the historical range, funded by higher gross borrowings, while total assets reached an unprecedented $278.0m largely reflecting the resulting cash build. This matters because balance-sheet strength this half is partly a function of increased borrowing capacity rather than retained cash generation.

The implied second-half revenue of $87.3m is broadly consistent with the company's normal second-half weighting, since the first half typically contributes under half of full-year revenue.

No stated target covers cash conversion, leverage or capex intensity, so the guidance upgrade addresses top-line trajectory only. It does not resolve whether the working-capital build and elevated capex will ease in the second half or continue to pressure free cash flow.

Much of the EBITDA growth looks genuine: the Cinema segment, now 80.8% of revenue, improved its result to $20.5m with margin up to 29% from 28%, and revenue growth of 12.1% sits within the company's normal range. But the cash and balance-sheet evidence suggests the result is partly timing- and balance-sheet-assisted. Rising contract assets and trade debtors, combined with a 40% jump in capex, mean this half's growth consumed cash rather than generating it, and the improved cash balance was achieved alongside a large increase in borrowings rather than through operating surplus. Separately, the PBT/NPAT and tax-rate figures carry a basis discontinuity, so they should not be used as clean evidence of an improving or deteriorating underlying earnings trend.

• FCF bridge: EBITDA $12.4m less higher capex ($12.6m) and working-capital absorption produced free cash flow of -$6.8m, versus +$1.0m a year earlier.

This briefing cannot assess whether the working-capital build reflects timing around large client onboarding or a more structural change in payment terms, since no further breakdown was disclosed.