Enprise swings to profit on 21.2% revenue growth but FCF turns negative

Revenue grew 21.2% to NZD 12.5m, driven primarily by Kilimanjaro Consulting (93% of group revenue, up 21.1% to NZD 11.7m), while iSell contributed NZD 0.8m. The group swung from a PBT loss of NZD 1.2m to a profit of NZD 0.1m, and NPAT of NZD 0.2m was aided by a negative effective tax rate of -12.4%, making PBT the cleaner operating read.

Working capital expanded: trade debtors rose 25.2% to NZD 3.2m, and operating working capital increased by NZD 0.7m to NZD 2.2m — outpacing revenue growth and absorbing cash from the P&L improvement.

Operating cash flow of NZD 0.3m is materially below NPAT of NZD 0.2m on a headline basis, but the deeper issue is that receivables grew faster than revenue (debtor days edged up to 47.3 from 45.8) and working capital absorbed NZD 0.7m, meaning the reported earnings improvement did not translate into cash. This matters because the business has cash of only NZD 1.4m, and the seasonal pattern of FY24 saw the second half generate two-thirds of full-year operating cash flow — so the weak first-half cash position is not unusual, but it provides little buffer if the second-half recovery does not materialise.

The tax distortion inflates NPAT versus the operating read. A -12.4% effective tax rate in HY25 versus 26.3% in HY24 lifted NPAT (NZD 0.2m) above PBT (NZD 0.1m). The underlying operating recovery is better represented by the PBT swing from -NZD 1.2m to +NZD 0.1m. Without that tax benefit, the margin of profitability is thin.

The Kilimanjaro / Recipe Marketing acquisition is an early-stage contributor. Kilimanjaro's acquisition of Recipe Marketing (a HubSpot partner) is disclosed as being in the early stages of delivering synergies. The acquisition is reflected in the balance sheet expansion — total assets rose NZD 2.9m to NZD 14.5m — but its revenue and cost contribution to the 21.2% growth rate is not separately quantified in the release, making it impossible to judge the organic component of the result.

Management states the group is currently trading ahead of budget with continued profitability and revenue growth forecast. The FY24 full-year shape provides useful context: HY24 contributed only 47.2% of full-year revenue and the second half generated approximately two-thirds of annual operating cash flow, suggesting the business is structurally second-half weighted. On an annualised basis, HY25 revenue of NZD 12.5m implies a run-rate of approximately NZD 25.0m against FY24's NZD 21.9m.

The key test for the second half is whether the working-capital build reverses into cash and whether the operating leverage achieved at Kilimanjaro is sustained, given the prior year's second half delivered NZD 0.8m of NPAT after a NZD 0.8m first-half loss.

PBT of NZD 0.1m on NZD 12.5m of revenue leaves very limited operating margin, and the FCF-to-NPAT ratio of -15.2% confirms cash generation has not kept pace with reported profit. The working-capital build — NZD 0.7m increase in operating working capital and NZD 0.6m increase in trade debtors — is the principal drag. If the second half follows the FY24 pattern and collections improve, the working-capital build could partially reverse; if it does not, the annual cash result will disappoint.

Capex of NZD 0.3m (2.2% of revenue) versus near-zero in HY24 represents a step-up in investment intensity, potentially associated with the Recipe Marketing integration or infrastructure for growth, but the nature of this expenditure is not disclosed in detail.

This briefing cannot assess the organic revenue growth rate, the durability of the tax benefit, or the timeline for Recipe Marketing synergies to materialise without further disclosure from management.