NPAT more than doubled on a 3% tax rate as operating cash fell 36%

What changed

Revenue rose 7.9% to NZ$230.2m and EBITDA rose 17.8% to NZ$27.8m, with recurring revenue up 13% per the release. Profit before tax was 38.4% higher at NZ$20.2m. Statutory NPAT jumped 118.6% to NZ$20.9m, but almost all of the NPAT outperformance versus PBT came from the effective tax rate falling to roughly 3.1% from 34.7%. Operating cash flow moved the other way, falling 36.0% to NZ$22.0m despite higher EBITDA. The balance sheet strengthened: cash rose to NZ$84.8m from NZ$66.7m, borrowings remained nil, and equity rose 17.5% to NZ$244.2m. No dividend was declared. Segment mix was stable, with UTILITY at ~84% of revenue (NZ$193.4m) and the higher-margin AIRPORT segment at ~16% (NZ$36.8m).

What matters

• PBT is the cleaner operating read. The 80.2pp gap between NPAT growth (118.6%) and PBT growth (38.4%) is entirely a tax-line artefact — the ETR collapsed from ~34.7% to ~3.1%. Investors extrapolating from headline NPAT will overstate the underlying earnings trajectory; the true operating acceleration is the 17.8% EBITDA lift on 7.9% revenue growth, indicating operating leverage rather than a doubling of earnings power.
• Cash conversion deteriorated materially. OCF/EBITDA fell from 145.7% in FY24 to 79.2% in FY25, and pre-lease free cash flow dropped to NZ$20.3m from NZ$33.3m. EBITDA rose NZ$4.2m while operating cash fell NZ$12.4m — a NZ$16.6m reversal of direction that the release does not reconcile in the extracted materials.
• Balance sheet is fortress-like. Net cash of NZ$84.8m, zero drawn debt, and ROE improving to 8.6% from 4.6% give the group significant capital flexibility; yet no dividend was declared for the second consecutive year, reinforcing a reinvestment stance (g2.0, Salesforce-embedded platform).

Expectations

No quantified forward target (e.g., forward work or FY26 EBITDA guide) was disclosed in the extracted release, so this result cannot be benchmarked against a stated run-rate. The HY25 commentary that "full-year EBITDA would grow faster than revenue" was delivered — EBITDA +17.8% versus revenue +7.9%. The shape of FY25 was second-half weighted, with H1 contributing only 48.7% of revenue, 46.6% of EBITDA and 34.4% of NPAT, so H2 momentum (implied H2 EBITDA ~NZ$14.9m; implied H2 NPAT ~NZ$13.7m) is the relevant baseline rather than simply annualising H1.

Quality of result

Mixed. The operating story — EBITDA margin expanding on recurring-revenue mix shift — looks durable, and the NZ$27.8m EBITDA is stated to be after fully expensing R&D and g2.0 investment. Two quality concerns offset this. First, the NPAT headline is flattered by a one-off-looking tax outcome (ETR ~3.1%); a normalised tax charge would compress NPAT materially and the read through to FY26 earnings growth is correspondingly weaker. Second, cash conversion deterioration is significant in magnitude — pre-lease FCF-to-NPAT fell from 348.9% to 97.1%. Operating working capital as extracted (receivables plus inventory) rose only NZ$0.7m, so the NZ$12.4m OCF decline is not explained by the disclosed working-capital lines and likely sits in payables, contract liabilities, or other accruals not included in the extraction. A NZ$5.4m FX translation adjustment in cash flows adds further noise.

Unresolved

• What drove the ~3.1% effective tax rate — deferred tax asset recognition, prior-year true-ups, or jurisdictional mix — and is it repeatable?
• Why did operating cash flow fall NZ$12.4m when EBITDA rose NZ$4.2m? The disclosed receivables and inventory movements do not bridge the gap.
• With NZ$84.8m of cash, zero debt and no dividend, what is the stated capital allocation framework — reinvestment into g2.0, M&A, or future return of capital?
• No forward-work, order book, or FY26 guide was extracted; the durability of the 13% recurring-revenue growth into FY26 cannot be tested from this release.
• Customer and geographic concentration were not disclosed.

This briefing cannot assess valuation, management's qualitative commentary on pipeline or competitive positioning, or any detail in the cash flow reconciliation beyond the line items provided in the extraction.

Key metrics

Segment breakdown

Analytical metrics

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.