Net debt at 6.0x EBITDA as EBITDA fell 44% on a 12.4% revenue decline

Net debt rose modestly to NZ$55.2m from NZ$53.0m, but the leverage ratio jumped because EBITDA collapsed to NZ$9.2m from NZ$16.5m, a 44.1% decline. Management has previously flagged that the group "carries too much debt for this stage of the economic cycle."

Revenue fell 12.4% to NZ$114.1m, a result the supplied historical baseline classifies as below normal range against a four-period mean of +1.8%. Gross margin compressed 274 bps to 39.4%. The decline was concentrated in New Zealand, where revenue fell to NZ$70.8m from NZ$87.0m (–18.6%), while Australia held flat at NZ$43.2m and lifted its group revenue share by 4.8 percentage points to 37.9%.

The reported NPAT loss narrowed to NZ$5.0m from NZ$9.2m, but the prior-period figure was depressed by a NZ$9.1m intangible impairment. PBT growth was 0.0% on the canonical basis, and PBT margin of –6.0% is classified as an unprecedented low against a four-period range of 0.0%–4.2%.

Leverage of 5.99x is roughly 2.7 turns above the historical mean, equity has fallen 34.7% to NZ$43.5m, and ROE of –23.1% is classified as an unprecedented low against a –11.8%–4.6% historical range. Management has flagged capital raising and other alternatives as part of the prior-year debt response, so this result extends rather than resolves that pressure.

Australia is now carrying the group economics. Australian segment result rose to NZ$5.6m from NZ$4.6m on flat revenue, with derived gross margin lifting to 12.9% from 10.7%. New Zealand segment result improved to NZ$3.8m from NZ$3.2m on much lower revenue, but the country mix shift means group earnings now depend disproportionately on a market the parent does not dominate.

Cash generation thinned even though working capital helped. OCF fell 74.8% to NZ$3.4m, and FCF pre-lease of NZ$1.9m equates to FCF/NPAT of –36.8% — the result is loss-making but cash positive only because capex was held to 1.3% of revenue. Trade debtors and inventories both fell, consistent with the lower activity base, so the cash result is not balance-sheet assisted in a flattering way; it reflects underlying contraction.

The supplied second-half shape context shows HY24 represented 54.4% of FY24 revenue and 134.1% of FY24 EBITDA, meaning the implied 2H24 EBITDA was negative NZ$4.2m. If a similar back-half pattern repeats, current-period EBITDA of NZ$9.2m would not annualise cleanly, and the group could face a materially weaker 2H25 against the same NZ$55.2m net debt load.

Management commentary describes the revenue outcome as "in line with what we presented at the AGM" and attributes the fall to broad-based demand weakness rather than market-share loss. The release does not provide explicit FY25 EBITDA, leverage, or capital-structure targets, so the gap between the implied annualised revenue of NZ$228m and the FY24 outcome of NZ$239m is the most concrete forward marker available.

PBT growth of 0.0% and a PBT margin of –6.0% are the cleaner read on the operating result, and both are weak. The effective tax rate of 25.7% (above the historical baseline range of –36.7%–25.2%) reflects a tax expense on a pre-tax loss, which limits its usefulness as forward signal.

Cash conversion at 36.6% is within Annolyse's historical range, but only because the prior comparable's 81.2% was at the top of that range; the absolute OCF decline of NZ$10.0m is the relevant figure. Capex at NZ$1.5m, or 1.3% of revenue, is low for a manufacturing footprint and is partly what allowed FCF to remain marginally positive at NZ$1.9m. Sustained capex restraint at this level would risk asset quality if the demand environment lengthens.

This briefing cannot assess covenant terms, refinancing options actually available to the group, or any non-public discussions on capital structure.