PBT collapsed 123% to a NZ$40.2m loss as debt fell NZ$928m

Both growth rates sit well below Annolyse's historical baseline (3-period PBT-growth mean of -11.0%, range -34.0% to 21.9%; NPAT-growth mean -28.1%) and are classified outside the normal range, with the prior comparable having been unusually strong on fair-value movements.

Underneath the headline loss, EBITDAF was NZ$40.1m and management reported its first positive free cash flow in a decade at NZ$56.2m. Operating cash flow nonetheless fell 38.9% to NZ$172.9m.

The balance sheet was reshaped: gross borrowings dropped NZ$928.4m (-35.8%) to NZ$1.66b, with management stating the reset is "now complete". Total assets fell 5.2% to NZ$12.1b.

EBITDAF of NZ$40.1m and the +13.0% revenue lift point to an underlying business that grew. PBT margin of -9.7% sits below the 3-period range of 44.4%-79.2%, but that range is dominated by fair-value gains in retirement-village investment property, which reverses sharply in periods like this one. PBT growth (-123.0%) is the cleaner growth read because the effective tax rate moved from -46.0% to -12.4%.

The balance sheet reset is the structural positive. Gross borrowings fell NZ$928.4m and net debt fell to NZ$1.65b. The work is materially de-risking, but absolute leverage remains elevated against an EBITDAF base of NZ$40.1m for the half.

Cash conversion deteriorated and the maiden FCF leans on working capital. OCF fell 38.9% even as revenue rose. Trade debtors collapsed 86.4% to NZ$23.7m, releasing roughly NZ$152.7m of working capital. Debtor days of 10.4 sit far below the 3-period mean of 331.5, classified as favourable but flagged for sustainability. Without that receivables release, the FCF result would not look like a turning point.

HY25 represented 48.1% of FY25 revenue, but FY25 NPAT of -NZ$436.8m was dominated by an implied second-half fair-value swing of roughly -NZ$531.2m. That makes the FY26 NPAT shape highly contingent on property revaluations rather than trading.

Management cited cost-out tracking ahead of expectations, a refreshed sales strategy, and "significant uplift in average DMF on ORA sales". Those points speak to EBITDAF and cash settlements; none of them resolve the second-half fair-value risk.

Revenue +13.0% and embedded ORA pricing changes support that read.

The cash result is harder to bank. The maiden NZ$56.2m FCF was supported by a NZ$152.7m working-capital release driven by receivables collection that took debtor days from 86.8 to 10.4 - far below Annolyse's 3-period mean of 331.5 days. Capex at NZ$122.1m grew 17.5% and consumes 29.5% of revenue, so underlying capital intensity has not eased. FCF/NPAT of -124.4% reflects the loss but also overstates the cash-versus-earnings divergence because the working-capital release is unlikely to repeat at the same scale. ROE of -1.1% versus +2.2% prior reflects both the loss and a smaller asset base after the reset.

This briefing cannot assess the full-year fair-value outcome or the durability of the receivables compression without additional disclosure.