Revenue down 32% pushes underlying EBITDA to a NZ$7.3m loss

What changed

Revenue fell 32.0% to NZ$41.7m from NZ$61.3m, with management attributing the decline to "significantly lower demand in Telecommunications and Positioning". Underlying EBITDA swung to a NZ$7.3m loss from a NZ$5.3m profit, and PBT moved from a NZ$0.2m profit to a NZ$15.1m loss. NPAT printed at a NZ$10.4m loss after a NZ$4.7m tax credit (effective rate 31.2%), versus a NZ$0.5m profit in HY24.

Despite the P&L deterioration, operating cash flow rose to NZ$8.3m from NZ$7.3m, helped by a NZ$10.2m fall in trade debtors and a NZ$8.5m drop in inventories. Capex eased to NZ$5.5m from NZ$6.0m, taking pre-lease free cash flow to NZ$2.9m (HY24: NZ$1.3m). Cash, however, slipped to NZ$15.8m from NZ$17.9m and gross borrowings rose to NZ$5.6m, so net cash narrowed to NZ$10.2m from NZ$13.4m. Equity declined NZ$5.9m to NZ$148.3m. Segment mix tightened around two equal pillars: Telecommunications and Aerospace & defence at 40.3% each, with Positioning down to 13.2%.

What matters

• The earnings break is real, not a tax artefact. PBT was -NZ$15.1m versus +NZ$0.2m, and underlying EBITDA dropped by roughly NZ$12.6m year on year. The NZ$4.7m tax credit cushions the headline NPAT but does not change the operating read; PBT is the cleaner measure here.
• Cash flow improvement is balance-sheet-driven. OCF of NZ$8.3m coincided with a combined NZ$18.7m release from receivables and inventories. That is consistent with the lower revenue base rather than improving conversion from earnings; underlying EBITDA was negative.
• Mix is rebalancing toward Aerospace & defence. Management flagged "strong performance in Aerospace and defence segment, delivering revenue growth", which now matches Telecommunications in size. This is the stated strategic pivot toward Space and AI & Cloud Infrastructure, but at current volumes it is not enough to offset the Telco/Positioning shortfall.

Expectations

No quantitative target or forward-work disclosure was provided. FY24 was second-half weighted (HY24 was only 47.9% of FY revenue and 11.1% of FY NPAT), so a stronger H2 is the historical pattern, but the starting point is materially weaker. Annualising HY25 revenue gives NZ$83.3m, about 65% of FY24's NZ$128.0m; even matching first-half revenue in H2 leaves the full year well below the FY24 anchor. Management commentary on Space and AI & Cloud Infrastructure demand is qualitative and offers no sized recovery path in the extracted material.

Quality of result

Low underlying quality. The reported NPAT loss is flattered by a 31.2% tax credit, while the operating loss at PBT is far larger. The headline cash improvement is timing- and balance-sheet-driven: receivable days actually worsened to 155.7 from 136.2, so the NZ$10.2m debtor reduction reflects the lower revenue base rather than faster collections. Inventory drawdown of NZ$8.5m is similar in character. FX further reduced cash by NZ$1.7m (HY24: NZ$0.4m). Capex at 13.1% of revenue (up from 9.8%) and gross borrowings rising 25.1% to NZ$5.6m point to a balance sheet that is absorbing, not generating, value at this run-rate. The company remains in net cash, which is the principal mitigant.

Unresolved

• HY25 cost of sales and gross margin were not disclosed in the extracted material, so it is not possible to separate volume drop-through from pricing or fixed-cost absorption.
• No reconciliation was provided between Underlying EBITDA (-NZ$7.3m) and statutory operating loss (-NZ$15.8m), an NZ$8.5m gap that matters to durability.
• Segment-level results (margin or EBIT) and prior-period segment splits were not disclosed, so the Aerospace & defence growth rate and profitability cannot be sized.
• No customer concentration, forward-work figure, or quantified guidance was provided to anchor an H2 recovery.
• No interim dividend was indicated in the supplied extract.

This briefing cannot assess underlying segment profitability, the durability of the Aerospace & defence pivot, or the trajectory of gross margin without the missing cost-of-sales and segment-result disclosures.

Key metrics

Segment breakdown

Analytical metrics

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.