Flat revenue, PBT down 12.4% as cash conversion lifts to 79.6%

EBITDA eased 1.8% to NZ$93.4m, but PBT fell 12.4% to NZ$31.9m and NPAT fell 15.1% to NZ$11.8m. The PBT-to-NPAT gap of 2.7 percentage points reflects an effective tax rate that stepped up to 34.3% from 28.8%, outside the supplied historical range of 19.0%–28.3%.

Operating cash flow rose 14.6% to NZ$74.4m, and OCF/EBITDA conversion lifted to 79.6% from 68.2%. That sits well above the company's historical baseline range of -24.6% to 47.6%. Pre-lease free cash flow of NZ$66.9m is also above the historical range (mean NZ$-2.8m), helped by capex easing to NZ$50.1m.

Gross borrowings rose 11.7% to NZ$334.7m and net debt/EBITDA moved to 3.55x from 3.14x, still within the historical 2.52x–4.50x band.

Capital raise adds balance-sheet context, with NZ$438m capital raised, but borrowings and gearing are the direct leverage evidence.

PBT growth of -12.4% is a better operating read than NPAT growth of -15.1%, because the effective tax rate of 34.3% sits 9.3 percentage points above the historical mean of 25.0%. Stripping the tax step-up, the underlying earnings deterioration is real but smaller than the headline NPAT print suggests. The release does not provide a specific reconciliation for why the tax rate moved.

Cash generation strengthened despite weaker reported earnings. OCF/EBITDA at 79.6% is materially above Annolyse's historical baseline range, and pre-lease FCF of NZ$66.9m is roughly NZ$69.7m above the three-year mean. The implication is that reported NPAT understates the cash-earning capacity of the asset base this period, which matters for dividend coverage and balance-sheet flexibility.

Leverage drifted up but remains in-range. Net debt/EBITDA at 3.55x is essentially unchanged from the three-year mean of 3.54x, but the direction is weakening (3.14x prior) and gross borrowings rose NZ$35.0m. With the company broadening its target credit metric range to BBB/BBB+, the read is that headroom is being deployed rather than rebuilt.

Management points to a storage contract extension delivering roughly NZ$50m of incremental revenue and a Z Energy jet storage project tracking for completion in H2 2026. Neither has a quantified FY26 earnings contribution attached in the release excerpts.

The HY25-to-FY25 shape shows H1 carried 50.1% of revenue and 51.9% of EBITDA, so H2 was softer at the EBITDA line (implied NZ$44.9m vs NZ$48.5m). NPAT was almost entirely first-half weighted (98.6%), reflecting the tax step-up landing in H2. Whether the higher effective tax rate persists into FY26 is the most important unanswered shape question.

The 79.6% OCF/EBITDA conversion is durable-looking rather than working-capital-assisted: operating working capital absorbed only NZ$0.5m, which is above Annolyse's historical pattern of releases averaging NZ$5.3m but small in absolute terms. Receivable days lengthened modestly to 37.3 from 35.1, and inventory days fell to 13.1 from 14.2; neither movement is large enough to materially flatter or distort the cash result.

On the earnings side, the 34.3% effective tax rate is the main quality issue. Without a reconciliation, it is unclear whether the rate is one-off (timing, deferred tax true-up) or a new run-rate. Continuing-operations NPAT of NZ$20.9m versus a NZ$9.1m discontinued-operation loss explains the gap between operating earnings and headline NPAT, and the discontinued-operation drag was disclosed in both periods.

Dividend coverage is comfortable on cash but not on accounting earnings: the full-year dividend of 13.0cps versus 11.0cps prior implies a payout of 80.0% of pre-lease FCF, against the new 70-90% framework, but 448.3% of NPAT.

This briefing cannot assess the durability of the elevated tax rate, the specific FY26 earnings uplift from contracted growth projects, or whether the current cash-conversion strength persists once growth capex peaks.