EBITDAF up 40% to NZ$303.2m as FCF more than triples to NZ$183.0m

Headline revenue moved lower year-on-year, but commentary from the release flags a basis change affecting comparability, so the revenue line is best treated qualitatively rather than as a clean like-for-like decline.

Underneath the result, operating working capital absorbed NZ$160.7m of cash this half — above Annolyse's historical baseline, where one of the three prior comparable halves built NZ$29.5m and the other two released an average of NZ$392.3m. Inventories drove most of the swing, rising 79.4% to NZ$317.9m, with inventory days at 37.7 versus a 25.9-day historical mean. Net debt eased to NZ$1.4b and net debt / EBITDA fell to 4.6x from 6.6x.

Capital raise adds balance-sheet context, with NZ$100m capital raised, but borrowings and gearing are the direct leverage evidence.

• EBITDAF of NZ$303.2m and PBT of NZ$135.2m sit well above the prior half (PBT margin of 8.8% versus a 1.8% historical mean). Segment data shows the electricity gross margin lifting from 21.0% to 31.3% and gas from 10.8% to 21.7%, indicating that portfolio flexibility and pricing — not volume — drove the uplift. For an integrated gentailer this matters because it suggests hedge book and generation-mix management, rather than a structurally larger customer base, is doing the work.

• Working-capital absorption is the standout balance-sheet pressure. The NZ$160.7m build is NZ$412.4m above the historical mean and is concentrated in inventories (+NZ$140.7m, 19.4 more inventory days than the prior comparable). For a gentailer this is typically fuel and coal stockpiling ahead of winter generation requirements, but the scale is unusual against Annolyse's recent baseline and is the single largest call on cash this half.

• Leverage improved while capex stepped up. Net debt / EBITDA at 4.6x is at the lower edge of the recent 4.4x–6.6x range. At the same time, capex rose 70.4% to NZ$111.6m (7.3% of revenue versus 3.7%), reflecting investment in renewable and firming projects. The combination — stronger earnings funding higher growth capex while leverage falls — is the more durable read on capital allocation than either metric in isolation.

Against historical seasonality, FY25 was second-half-weighted on cash (HY25 represented only 40.5% of full-year operating cash flow) but more evenly split on EBITDAF (HY25 was 47.7% of FY25). HY26 EBITDAF of NZ$303.2m already represents two-thirds of the FY25 EBITDAF total of NZ$454.3m, which sets a high bar for second-half comparability and raises the question of whether the first-half strength reflects portfolio conditions that will normalise.

Management commentary references active gas-position management into Q3 FY26 and winter expectations under the Gen35 strategy, but the supplied excerpts do not quantify a full-year EBITDAF or NPAT outlook.

Pre-lease FCF of NZ$183.0m converts to 192.4% of NPAT, and OCF / EBITDA cash conversion of 87.2% sits inside Annolyse's historical 58.3%–104.3% range and above its 79.3% mean, which argues against the result being a non-cash or accounting artefact. Gross margin expansion in electricity and gas is consistent with the EBITDAF lift, so the operating signal looks genuine rather than one-off.

The qualifications are mix and working capital. Inventory days at 37.7 are above the historical 18.3–37.2 range and debtor days at 29.4 are at the upper edge of the 23.6–29.6 range — both consistent with pre-winter fuel build and seasonal billing, but worth confirming as timing rather than structural. The effective tax rate of 29.7% is above the 25.0% prior comparable and the 27.2% historical mean, so reported NPAT understates the underlying operating improvement visible in PBT and EBITDAF. The Kupe segment also contributed nil revenue this half versus NZ$54m prior, which is the basis change behind the comparability caveats on headline growth metrics.

This briefing cannot assess the durability of hedge-cycle and generation-mix tailwinds into the second half without disclosed forward hedge positions, hydrology assumptions, or quantified FY26 guidance.