PBT up 58.4% as cash conversion reaches 68.6%, above its historical range

The improvement is explained by operating cash flow rising to $14.0m from $4.3m alongside stronger trading; the OCF/EBITDA ratio is sensitive to denominator swings between periods, so the current level should not be treated as a new steady-state on one half's data.

Revenue rose 12.0% to $88.8m, driven by a 15% increase in hotel revenue as room availability and international demand improved. Hotel Operations' share of group revenue rose to 83.16% from 80.82%, while Residential Land Development's share fell to 12.18% from 15.49% as property-market conditions stayed soft. PBT rose 58.4% to $17.9m and NPAT rose 73.1% to $11.6m.

Gross borrowings fell to zero from $30.0m, and net debt swung from $13.9m to a net cash position, strengthening the balance sheet.

Cash conversion of 68.6% sits above Annolyse's historical range (25.6%-63.3%, mean 40.5%), driven by operating cash flow growth to $14.0m from $4.3m; capex separately fell 93.4% to $2.9m from $44.0m, which supports free cash flow but is a distinct driver from the OCF/EBITDA ratio itself. For an investor, this means the conversion level should be treated cautiously rather than as confirmed structural improvement.

Profit growth is genuinely hotel-led. Hotel Operations' segment result more than doubled to $11.3m from $6.7m, while the smaller Residential Land Development and Residential Property Development segments contributed modestly. PBT growth of 58.4% sits at the upper edge of Annolyse's five-period range (mean 2.1%), so the underlying operating improvement is real but occurs against a historically volatile earnings base.

Balance sheet flexibility has improved materially. Zero gross borrowings and a shift to net cash, alongside ROE strengthening versus Annolyse's historical mean of 1.1%, indicate genuine improvement rather than an accounting artefact, giving the company more room to fund the Revive to Thrive refurbishment programme without added leverage.

Annolyse's supplied second-half shape shows the prior comparable half typically contributed 32.9% to 42.5% of full-year outcomes, implying the business is structurally second-half weighted; this half's strength does not by itself confirm the FY26 full-year trajectory.

Management commentary points to continuing hotel demand and additional Zenith Residences sales, but gives no quantified forward-work pipeline or guidance figure, so the read-through beyond HY26 remains qualitative rather than measurable.

The cash-flow picture is more mixed. Operating cash flow rose to $14.0m from $4.3m, and cash conversion of 68.6% sits above the historical range, but the OCF/EBITDA ratio is denominator-sensitive and should not be read as a clean trend on one period alone. Free cash flow benefited from capex falling 93.4% to $2.9m from $44.0m against an unusually heavy prior-period spend, lifting FCF-to-NPAT conversion to 96.2%; working-capital tailwinds from lower debtor and inventory days also assisted the cash outcome.

• OCF $14.0m vs $4.3m prior
• Capex $2.9m vs $44.0m prior
• FCF-to-NPAT conversion 96.2%

This briefing cannot assess the durability of hotel demand trends or the timing of future property-development sales beyond what management has disclosed qualitatively.