EBITDA tripled to $18.2m and leverage fell to 1.5x on a softer top line

Annolyse's historical baseline classifies 1.5x as below the company's normal range (4-period mean 5.1x, range 2.1x–10.8x), so the gearing position is the most favourable in the supplied window.

Operating performance also stepped up materially. EBITDA before significant items rose to $18.2m from $5.6m on the comparable basis, operating profit moved to $7.9m from a $5.4m loss, and operating cash flow lifted to $15.7m from $2.1m. Revenue was $208.2m versus $213.9m the prior year, with management attributing softness to weaker construction markets, particularly in New Zealand.

Despite the operating recovery, PBT was still a $0.8m loss (from $16.7m loss) and NPAT a $0.9m loss (from $13.5m loss). The result reached the doorstep of profitability rather than crossing it.

Capital raise adds balance-sheet context, with NZ$23.9m capital raised, but borrowings and gearing are the direct leverage evidence.

Gross borrowings fell to $35.2m from $67.0m and equity rose to $60.0m from $35.6m. The 1.5x net debt/EBITDA reading sits well below the historical mean of 5.1x. This matters because the company moves from a balance sheet dictating strategy to one that can support it; the durability question now sits at the earnings line rather than the funding line.

Cash generation jumped on multiple fronts. OCF rose to $15.7m and pre-lease free cash flow to $12.9m, against a 4-period historical mean of $4.1m and a prior-year reading of $(0.9)m. Working-capital movement of $(0.4)m was within the supplied historical range, so the cash uplift looks earnings-driven rather than balance-sheet-aided. This matters because it argues that the EBITDA rebuild is converting to cash rather than sitting in receivables or inventory.

Tax distorted the bottom line in an unusual direction. The effective tax rate of -17.8% is classified as an unprecedented low against a 4-period mean of 3.9% and range of -10.3% to 19.2%. PBT growth and NPAT growth are flagged with basis discontinuity and not analytically comparable as percentages, but the $0.1m gap between PBT and NPAT (a tax credit) makes clear the tax line did not rescue the result this year — it slightly cushioned an already small loss.

The supplied interim context (HY26) is the only forward shape available: first half revenue of $108.0m, EBITDA $9.4m and NPAT $2.9m, against full-year $208.2m, $18.2m and $(0.9)m. That implies a second-half revenue of $100.1m, EBITDA of $8.8m, and an NPAT swing to roughly $(3.8)m.

The shape matters because the headline EBITDA recovery flatters a second half that was weaker than the first on both revenue and reported profit. The release does not explain the deterioration; investors are left to judge whether construction-market softness, mix or one-off items drove it.

The cash result looks durable: OCF and pre-lease FCF both sit at the upper edge of the historical range, working capital was effectively neutral, capex was contained at 1.4% of revenue, and inventory days improved to 41.5 from 43.5. The historical baseline classifies cash conversion as the upper edge of its range, supporting the read that earnings are converting normally rather than benefitting from a transient working-capital release.

The reported earnings read is softer. EBITDA before significant items is a non-GAAP measure; the $18.2m figure excludes the items reconciled in the financial report, and the audited result still produced a small loss at both PBT and NPAT. The effective tax rate is flagged as unprecedented low and should be treated as period-specific rather than a structural benefit. Until management discloses the composition of significant items and the tax driver, the underlying earnings improvement is best read at the EBITDA-before-significant-items and operating cash flow lines, not at NPAT.

This briefing cannot assess management's views on FY27 demand, the composition of significant items, or the durability of the tax outcome because the supplied excerpts do not address them.