Table of Contents
What changed
Revenue grew 3.8% to $85.4m, the second consecutive half of top-line momentum after HY25's 1.9% decline. However, profit before tax fell 13.2% to $3.6m, with NPAT only down 3.2% to $2.9m because the effective tax rate dropped to 19.8% from 28.1%. Operating cash flow eased to $5.8m from $6.3m, and closing cash collapsed to $0.1m from $1.8m as the company used cash to halve gross borrowings to $5.6m (from $11.5m). Net debt improved to $5.5m from $9.7m, and equity grew to $70.1m. The declared interim dividend rose 15.4% to 0.75 cents per share.
What matters
- PBT decline is the cleaner operating read. Revenue is up 3.8% but PBT is down 13.2%, implying meaningful margin compression at the operating line. NPAT's more modest 3.2% decline is tax-driven and should not be read as operational resilience.
- Balance sheet strengthened, but cash is now very thin. Gross borrowings were nearly halved and net debt fell by $4.2m, yet cash closed at just $0.1m. Liquidity headroom now sits almost entirely in undrawn facilities rather than on-hand cash.
- Working capital absorbed cash. Trade debtors jumped to $4.6m from $0.6m (receivable days up to 9.8 from 1.3) and inventory doubled to $0.7m. Capex eased to $1.4m from $1.8m, which is the main reason pre-lease FCF held roughly flat at $4.4m despite lower OCF.
Expectations
No forward guidance, forward-work metric, or quantitative target was disclosed. Against FY25 shape, HY25 represented 50.7% of full-year revenue and 46.5% of full-year NPAT, so the business is not materially second-half weighted. HY26 revenue annualises to $170.8m, about 5.3% above FY25's $162.1m, which directionally supports top-line growth into FY26. The release does not, however, support a read on full-year profitability: PBT is tracking below last year's first half, and HY26 EBITDA was not visible in the extracted material, so margin trajectory into H2 is unclear.
Quality of result
The result is lower quality than the NPAT headline suggests. The 10 percentage point gap between PBT growth (-13.2%) and NPAT growth (-3.2%) is tax-driven and unlikely to recur at the same rate. Cash conversion deteriorated: OCF fell despite revenue growth, while receivables rose by ~$4.0m and inventory by $0.4m, indicating working capital tied up at period end. The dividend increase (to 0.75 cps) lifts the implied payout on NPAT to roughly 75% and on pre-lease FCF to 49.1%, higher than HY25's 65% and 43.1% respectively — covered, but with less cushion. Capex at 1.7% of revenue (versus 2.2%) flatters near-term FCF but bears watching if sustained.
Unresolved
- What was HY26 EBITDA, and how does the margin compare to HY25's $7.8m? The release references EBITDA but the figure and full reconciliation were not visible in the extraction.
- What drove the jump in trade debtors from $0.6m to $4.6m — timing, channel mix, or a change in collection terms?
- Why is closing cash at $0.1m acceptable operationally, and what is the undrawn facility headroom supporting the tight balance?
- Was the lower effective tax rate a one-off (e.g. a prior-period true-up) or a sustainable rate?
- What is the H2 outlook given active customer growth commentary but a weaker PBT trajectory in H1?
This briefing cannot assess EBITDA margin trajectory, gross margin year-on-year, or full liquidity headroom because those figures were not available in the extracted material.
Key metrics
| Metric | HY26 | HY25 | Change |
|---|---|---|---|
| Revenue | $85.4m | $82.2m | +3.8% ↑ |
| Net profit after tax | $2.9m | $3.0m | -3.2% ↓ |
| Net cash inflow from operating activities | $5.8m | $6.3m | -7.3% ↓ |
| Interim dividend per share | 0.8c | 0.7c | +15.4% ↑ |
| Profit before tax | $3.6m | $4.1m | -13.2% ↓ |
| Cash and cash equivalents | $0.1m | $1.8m | -94.0% ↓ |
| Total assets | $105.5m | $105.5m | flat |
Analytical metrics
| Metric | HY26 | HY25 | Context |
|---|---|---|---|
| PBT growth | -13.2% | — | cleaner earnings measure |
| Effective tax rate | 19.8% | 28.1% | — |
| FCF pre-lease | $4.4m | $4.5m | −$0.1m |
| FCF / NPAT | 152.9% | 150.9% | complementary conversion metric |
| Capex % revenue | 1.7% | 2.2% | — |
| Capex | −$1.4m | $1.8m | −$3.2m |
| Debtor days | 9.8 | 1.3 | +8.5 days |
| Inventory days | 1.4 | 0.7 | +0.7 days |
| Trade debtors | $4.6m | $0.6m | +$4.0m |
| Net debt | $5.5m | $9.7m | −$4.2m |
| Gross borrowings | $5.6m | $11.5m | −$5.8m |
| Payout ratio vs NPAT | 75.0% | — | — |
| Payout ratio vs FCF pre-lease | 49.1% | — | covered |
| ROE (annualised) | 4.1% | 4.4% | Weakening |
| HY25 share of FY25 revenue | 50.7% | — | Other half was 49.3% |
| HY25 share of FY25 EBITDA | 48.4% | — | Other half was 51.6% |
| HY25 share of FY25 NPAT | 46.5% | — | Other half was 53.5% |
| Profit from continuing operations | $2.9m | $3.0m | −$0.1m |
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.