Table of Contents
What changed
Revenue fell 12.0% to NZ$178.6m, with Operating EBITDA down 17.6% to NZ$61.6m and operating profit down 52.8% to NZ$26.4m. The operating deleverage carried through to a 62.6% drop in PBT to NZ$17.4m and a 62.7% drop in NPAT to NZ$12.5m. Segment revenue was weaker in the largest markets: US –18.7% to NZ$90.1m, Europe –20.6% to NZ$48.8m, and the Delegat Limited segment –13.2% to NZ$191.2m, with inferred margin in that dominant segment compressing to about 6.6% from 12.1%. Operating cash flow more than doubled to NZ$75.6m (HY24: NZ$35.8m), capex eased to NZ$37.4m from NZ$44.8m, and gross borrowings were broadly flat at NZ$353.8m. Net debt/EBITDA nonetheless worsened to about 5.6x from 4.7x because EBITDA fell faster than debt.
What matters
- Operating deleverage is the dominant story. A 12.0% revenue decline produced a 62.6% PBT decline, with the effective tax rate essentially unchanged at ~28%. This is a margin problem, not a tax or one-off artefact, and it is concentrated in the Delegat Limited segment where inferred margin nearly halved.
- Leverage direction is unfavourable despite lower gross debt. Cash rose modestly to NZ$8.2m and gross borrowings eased by NZ$3.8m, but the EBITDA contraction pushed net debt/EBITDA to ~5.6x. ROE roughly a third of last year (4.5% vs 12.1%) reinforces that balance-sheet efficiency has weakened.
- Cash generation is the single bright spot. OCF/EBITDA of ~123% (vs ~48% in HY24) and pre-lease FCF of +NZ$38.2m (vs –NZ$9.1m) is a material swing, but it rests heavily on a working-capital release (receivable days –6.6 to 70.5) and lower capex intensity rather than higher earnings.
Expectations
No quantitative guidance, forward-work backlog, or stated target was disclosed in the supplied excerpt, so the result can only be judged against the FY24 shape. Against that shape, HY24 already represented ~34.5% of FY24 revenue and ~450% of FY24 NPAT (implying a negative second half of approximately –NZ$26.0m in FY24). Annualising HY25 revenue gives NZ$357.3m, ~39% below the FY24 base of NZ$588.9m, so the current run rate does not support a return to the FY24 top line absent a meaningfully larger 2H. There is no basis in the release to judge whether the 2H mix will repeat the FY24 loss or recover.
Quality of result
The earnings line is low quality in the sense that it reflects operating margin compression rather than one-offs: there is no disclosed non-recurring item, tax rates were stable, and segment margins deteriorated across the larger markets. The cash result, by contrast, is partly timing- and working-capital-assisted: receivables fell NZ$16.9m and inventories fell NZ$13.5m versus HY24, which explains most of the NZ$39.8m OCF uplift. Capex also ran about NZ$7.4m below HY24, helping pre-lease FCF. None of these drivers are structural margin improvements, so the cash strength should not be read as a leading indicator of recovering profitability. Non-GAAP Operating EBITDA and Operating NPAT are used in the announcement without a full bridge to statutory figures in the supplied excerpt.
Unresolved
- What drove the sharp margin compression in the Delegat Limited segment — price, cost of goods, inventory write-downs, or mix — is not disclosed in the supplied excerpt.
- Whether the FY25 second half will repeat the FY24 loss-making shape, and whether inventory at NZ$137.7m is being carried at realisable value, is not addressed.
- Quantified FX sensitivity is not disclosed, despite material US, European and Australian exposure and an FX effect on cash in the period.
- Trade payables were not provided, so the full working-capital bridge and the sustainability of the cash release cannot be fully verified.
- The interim dividend of 5.39 cps is disclosed, but no prior-period comparator or full-period dividend total is supplied, so payout trend and cash coverage cannot be assessed.
This briefing cannot assess whether management has issued or reaffirmed any internal FY25 profit or volume guidance, as none was provided in the supplied materials.
Key metrics
| Metric | HY25 | HY24 | Change |
|---|---|---|---|
| Revenue | $178.6m | $203.1m | -12.0% ↓ |
| EBITDA | $61.6m | $74.8m | -17.6% ↓ |
| Net profit after tax | $12.5m | $33.4m | -62.7% ↓ |
| Net cash inflow from operating activities | $75.6m | $35.8m | +111.3% ↑ |
| Interim dividend per share | 539.0c | — | — |
| Operating profit | $26.4m | $56.0m | -52.8% ↓ |
| Profit before tax | $17.4m | $46.4m | -62.6% ↓ |
| Cash and cash equivalents | $8.2m | $5.3m | +54.1% ↑ |
| Total assets | $1.1b | $1.1b | +1.8% ↑ |
Segment breakdown
| Segment | Current revenue | Prior revenue | Current result | Mix shift |
|---|---|---|---|---|
| Delegat Limited | $191.2m | $220.4m | $12.6m | -1.5pp |
| Delegat Australia Pty Ltd | $30.2m | $34.7m | $0.4m | -0.2pp |
| Delegat Europe Limited | $48.8m | $61.5m | $1.3m | -3.0pp |
| Delegat USA, Inc. | $90.1m | $110.8m | $1.0m | -4.1pp |
| Other Segments | $10.6m | $7.4m | $1.7m | +2.3pp |
Analytical metrics
| Metric | HY25 | HY24 | Context |
|---|---|---|---|
| PBT growth | -62.6% | — | — |
| Effective tax rate | 28.2% | 27.9% | — |
| OCF / EBITDA (cash conversion) | 122.6% | 47.8% | stable |
| FCF pre-lease | $38.2m | −$9.1m | +$47.2m |
| FCF / NPAT | 305.9% | -27.1% | complementary conversion metric |
| Capex % revenue | 20.9% | 22.1% | — |
| Capex | $37.4m | $44.8m | −$7.4m |
| Debtor days | 70.5 | 77.0 | -6.6 days |
| Inventory days | 140.3 | 135.6 | +4.7 days |
| Trade debtors | $69.1m | $86.0m | −$16.9m |
| Net debt | $345.6m | $352.3m | −$6.6m |
| Net debt / EBITDA | 5.61x | 4.71x | Weakening |
| Gross borrowings | $353.8m | $357.6m | −$3.8m |
| ROE (annualised) | 4.5% | 12.1% | Weakening |
| HY24 share of FY24 revenue | 34.5% | — | Other half was 65.5% |
| HY24 share of FY24 NPAT | 450.3% | — | Other half was -350.3% |
| Profit from continuing operations | $12.5m | — | — |
This analysis was generated using Annolyse, an AI-powered tool that analyses NZX company announcements. The analysis is based on available company filings and standard Annolyse calculations. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.