Recapitalisation cut net debt to $27.4m, leverage from 6.0x to 2.9x

A $23.9m equity raise and roughly $33.9m of debt repayment took net debt from $60.5m at March 2025 to $27.4m, dropping net debt/EBITDA to 2.9x against Annolyse's three-period historical range of 3.20x–6.00x and a 4.37x mean. Total equity rose 42.8% to $62.0m while gross borrowings fell 48.1% to $33.5m.

Trading was softer. Revenue fell 5.3% to $108.0m, within the historical range (-12.4% to +18.2%). EBITDA edged up 2.4% to $9.4m, but margin compressed to 8.8% – the lower edge of the three-period historical range that averages 10.6%. PBT swung 167.1% to $4.5m and NPAT 157.2% to $2.9m, both flattered by reductions in interest expense, the absence of prior-period significant items, and a tax credit producing an effective tax rate of -36.7% (against +25.7% in HY25).

Net debt has been cut more than in half through the recapitalisation, and 2.9x net debt/EBITDA is below the supplied historical baseline. This matters because MPG's prior-period commentary repeatedly described debt as too high for the cycle; the constraint has been materially loosened, which means future earnings flow more cleanly to equity holders even at a depressed EBITDA level.

Margins remain weak despite the headline profit swing. EBITDA margin of 8.8% is below the historical mean of 10.6%, gross margin slipped 115bps to 38.2%, and underlying EBITDA growth of 2.4% on a 5.3% revenue decline reflects cost discipline rather than demand recovery. The implication is that the swing from a $5.0m loss to a $2.9m profit is driven below the operating line, not at it.

Tax distortion inflates the bottom line. The -36.7% effective tax rate is classified as an unprecedented low against a four-period mean of 10.9%. PBT growth of 167.1% is the cleaner operating read; the 9.9pp gap between PBT and NPAT growth reflects the tax credit, which is unlikely to repeat and should not be extrapolated.

Annolyse's second-half shape context shows HY25 carried 164.7% of FY25 EBITDA and 53.3% of FY25 revenue, implying an FY25 second half with negative EBITDA of -$3.6m and an NPAT loss of -$8.5m. That makes the half-on-half compare flattering and raises the question of whether the operating run-rate has genuinely stepped up or whether the second half will again drag.

The current annualised revenue run-rate of $216.0m is broadly consistent with FY25's $213.9m, so investors cannot yet read a top-line recovery from this print – only stabilisation alongside a much lighter capital structure.

Operating cash flow rose to $5.8m from $3.4m, capex held at 1.4% of revenue, and FCF pre-lease of $4.2m converted to 147.6% of NPAT. Cash conversion at 61.1% sits at the upper edge of the historical range (mean 43.2%), with debtor days (51.5) and inventory days (44.3) both within their historical ranges, so the cash result is not being lent by working capital.

Less durable are the bottom-line drivers. The PBT/NPAT swing is leaning on three transitory effects: a tax credit, lower interest expense (only partly structural now that debt is lower), and the non-repeat of prior-period significant items. Stripping the tax credit, NPAT would be materially smaller. The headline turnaround is real in direction but smaller in magnitude than the 157.2% NPAT growth suggests.

This briefing cannot assess whether the demand environment in MPG's end markets has stabilised or continues to deteriorate, as no forward order-book or guidance disclosures are supplied.