Net debt/EBITDA hits 2.2x as EBITDA margin falls below historical range

That increase came alongside EBITDA margin of 16.8%, which is below the historical range of 17.7%–21.2% (three-period mean 19.1%), indicating the earnings base underpinning the debt load is softer than it has been. Revenue of NZ$68.2m grew 7.9% versus FY25 and management describe it as the highest in five years, driven by rising average sales prices and continued Brazil momentum (sales up 14% in local currency, contributing 44% of group revenue). US sales were in line with the prior year. PBT improved to NZ$-3.4m from NZ$-22.5m, though the basis of the prior-period PBT comparison is not analytically comparable as a clean trend given denominator and period-basis discontinuities in the historical PBT growth series; the business nonetheless remained loss-making before tax.

Net debt rose to NZ$25.1m from NZ$20.5m while reported EBITDA margin fell below the historical floor. A weaker earnings base combined with higher absolute debt is a compounding dynamic; the 2.2x ratio leaves less headroom than in any prior period in the baseline.

Cash conversion is weak, sitting at the lower edge of the historical range. OCF/EBITDA of 32.2% is 21.6 percentage points below the three-period historical mean of 53.8%. Working capital built by NZ$5.6m — trade debtors rose 20% and inventories grew 9.4% on 7.9% revenue growth — which means the revenue gain did not translate proportionally into cash. Pre-lease FCF was NZ$-0.4m, below the historical mean of NZ$2.6m, so the business consumed rather than generated free cash.

The tax line distorts the NPAT comparison. The effective tax rate was -120.6% in FY26 versus 4.4% in FY25, creating a 19.8 percentage-point gap between the PBT and NPAT improvement rates. Because the historical PBT growth series carries a basis discontinuity and is not analytically comparable as a trend, PBT is used here only as the cleaner period-on-period operating read relative to NPAT; the tax line does not reflect a normalised rate and should not be read as a quality signal.

Management noted the result was ahead of February 2026 guidance, which is a positive signal, but without the original guidance figure the degree of beat cannot be assessed. The business is structurally second-half weighted: HY26 contributed only 20.8% of full-year revenue (NZ$14.2m of NZ$68.2m), with the implied second half of approximately NZ$54.0m doing the majority of work. That concentration means the full-year result depends heavily on a single selling season executing cleanly.

The 7.9% revenue improvement and Brazil growth trajectory are constructive, but the absence of stated targets and the deteriorating margin and leverage picture mean the release does not yet signal a path to consistent positive PBT or FCF generation.

OCF of NZ$3.7m against capex of NZ$4.1m produced negative pre-lease FCF, and the 32.2% OCF/EBITDA conversion is at the lower edge of the historical range. Capex fell 47.4% versus FY25 (NZ$4.1m versus NZ$7.8m), which supported OCF but may reflect timing rather than a structural reduction in investment requirements; this warrants monitoring.

• OCF NZ$3.7m less capex NZ$4.1m = pre-lease FCF NZ$-0.4m
• Working capital build of NZ$5.6m absorbed cash that would otherwise have improved conversion
• Total assets of NZ$174.4m are below the historical range (four-period mean NZ$191.2m), consistent with a shrinking asset base alongside growing debt

The NPAT loss of NZ$-7.5m overstates the operating deterioration versus PBT because of the abnormal tax rate; but even the PBT result remains a loss, and equity fell NZ$5.8m to NZ$118.8m.

This briefing cannot assess the sustainability of the Brazil growth rate, the competitive dynamics of the US market reset, or the underlying biological yield assumptions that determine future revenue timing.