NPAT up 93.7% on a flat top line, with cash conversion swinging to 87.7%

PBT rose 74.1% to NZ$1.2b, and EBITDA climbed 38.0% to NZ$2.1b. The 19.6 percentage-point gap between NPAT and PBT growth reflects an effective tax rate that fell to 27.4% from 34.7%, so PBT growth is the cleaner read on operating performance.

Operating cash flow jumped to NZ$1.9b from NZ$332.5m, lifting OCF/EBITDA cash conversion to 87.7% — above Annolyse's historical baseline mean of 65.3% (range 21.5%–86.9%). Pre-lease free cash flow swung to NZ$1.2b from negative NZ$394.2m, supported by an unusual NZ$524.2m operating working-capital release that the historical baseline classifies as below normal range, against a prior-period average build of NZ$1.3m.

• EBITDA margin reached 17.5% versus a historical range of 12.6%–15.3%, and PBT margin hit 9.6% against a 5.5%–7.0% baseline. With revenue effectively flat, the earnings step-up came from cost leverage rather than volume, which matters because it suggests the prior-period margin compression (partly attributable to disclosed legal costs of NZ$221,688 defending a shareholder claim) is not recurring at the same scale.

• Cash quality is flattered by working-capital release. The NZ$524.2m working-capital movement is materially outside the historical pattern, where prior periods showed builds rather than releases. This drove FCF/NPAT to 147.1%, well above a sustainable run-rate. Investors should not extrapolate this conversion level; once receivables and inventory normalise, FCF should track closer to NPAT.

• Balance sheet position transformed. Gross borrowings fell 99.2% to NZ$169.6m as lease liabilities reclassified, cash rose to NZ$5.7b, and equity grew 15.6% to NZ$10.7b. ROE expanded to 7.9% from 4.7%, an unprecedented level versus the 4.7%–4.8% historical band, reflecting both higher earnings and the reshaped capital structure.

The HY25-to-FY25 shape shows a second-half-weighted business — HY25 contributed 51.5% of full-year revenue but only 42.7% of NPAT and 20.0% of operating cash flow — so annualising HY26's NZ$849.6m NPAT to roughly NZ$1.7bn would overstate the likely full-year outcome if the historical seasonality holds.

Commentary references a 7.59% decline in total system sales and management's expectation that comparisons against FY24's record delivery-led sales would normalise. That framing supports the modest revenue decline but offers no quantitative FY26 anchor, so the durability of margin gains into the second half cannot be verified from this release.

The absence of legal-cost drag versus HY25 explains part — but not all — of the uplift.

The cash result requires more caution. Of the NZ$1.5b increase in operating cash flow, NZ$524.2m came from the working-capital release that historical context flags as unprecedented in direction. Capex fell 14.7% to NZ$620.2m (5.1% of revenue, below prior 5.9%), and the 27.4% effective tax rate is within the 26.0%–34.7% historical range, so neither investment cuts nor tax distortion drives the headline. The interim dividend of 20.0 cents per share is the announced component; sustainability against a normalised FCF base is not testable from this packet.

This briefing cannot assess the durability of HY26 margins or the sustainability of cash conversion without forward guidance, segment cost detail, or management commentary on working-capital normalisation.