Revenue fell 29.7%, EBITDA collapsed 81.3% on operating deleverage

The disproportionate hit to earnings versus revenue is the central finding — fixed costs absorbed almost the entire revenue shortfall.

Operating cash flow improved sharply to $7.3m (HY23: $0.0m), driven by an inventory drawdown to $59.9m from $72.0m a year earlier. Capex was scaled back 65.1% to $6.1m, leaving pre-lease free cash flow of $1.2m versus a $17.3m outflow in HY23.

The balance sheet remains in net cash: cash of $17.9m against gross borrowings of $4.5m, with total equity rising to $154.2m. Telecommunications dominated mix at 55.8% of revenue, with Space and Defence at 25.0%.

A 29.7% revenue decline produced an 81.3% EBITDA decline and effectively wiped out PBT. That ratio — roughly 2.7x deleverage on the way down — tells you the cost base is heavily fixed against current volumes. Until revenue stabilises, modest further revenue weakness could push the group into a reported loss.

Cash improvement is working-capital-driven, not earnings-driven. OCF of $7.3m comfortably exceeds EBITDA of $5.3m (139.1% conversion), but the swing came from releasing roughly $12.1m of inventory and cutting capex by $11.3m. Inventory days still sit at 178.1 (up 27.6 days), and receivable days are 136.3, so the working-capital cycle is long. A second leg of inventory release is possible but finite; the cash story is not a structural improvement.

Returns have collapsed. ROE fell to 0.3% from 11.5%, and underlying profitability now sits at break-even. The equity base grew 10.5% while earnings nearly disappeared, so the denominator is working against any rebuild in returns.

The supplied seasonality context shows HY23 was 48.3% of FY23 revenue and 69.0% of FY23 NPAT — meaning the prior year was second-half-weighted on revenue but front-loaded on profit. Annualising the current half at $122.5m would imply a deep step-down from FY23's $180.3m, but the second-half-weighted revenue pattern means a stronger 2H is not unreasonable to expect on shape alone.

What the release does not support is any judgement on whether demand has stabilised, whether inventory destocking by customers is nearing an end, or what unit economics look like at lower volumes. The gap matters because the operating deleverage observed here means small revenue surprises will translate into large earnings swings either way.

PBT (-99.1%) is the cleaner read on operating performance; on that basis, the result is effectively break-even rather than the modest profit that NPAT suggests.

Cash quality is mixed. The headline OCF rebound looks strong, but it is sourced from inventory release and a sharp pull-back in capex, not from earnings. Free cash flow of $1.2m is positive only because investment was cut. The balance sheet is comfortable — net cash of roughly $13.4m and a 10.5% rise in equity — but that strength reflects prior-period earnings and the working-capital wind-down, not the current operating run-rate. If volumes do not recover, the durability of even this break-even result is unclear, because there is limited further inventory to release without compromising service levels.

This briefing cannot assess management's expectations for second-half demand, order-book coverage, or any cost-base actions taken since balance date, because none of those were supplied in the release excerpts.