Headline FY26 growth outpaces flat underlying trading performance

This matters because the headline growth rate is not a clean trading signal: all three periods carry a discontinued-operation reclassification, so reported and adjusted lines are moving in opposite directions.

Profit before tax grew 65.4% to $574.0m and net profit after tax grew 91.9% to $499.0m, a period in which Annolyse's historical baseline shows PBT growth this strong is unprecedented against a three-period mean of -10.5%. Gross borrowings fell to $1.1b from $1.5b and net debt/EBITDA improved to 0.7x from 1.37x, at the low end of the company's four-period range.

data centre business sale adds balance-sheet context, with NZ$500m disclosed value, but borrowings and gearing are the direct leverage evidence.

The effective tax rate fell to 15.3% from 27.4%, adding roughly 26.5 percentage points to NPAT growth versus PBT growth (91.9% versus 65.4%). PBT is the cleaner read of operating performance because it is not affected by the tax-rate swing, and even PBT growth sits well above the company's recent normal range, which means some of the improvement likely reflects non-recurring items rather than a durable step-change in trading.

Reported growth is not organic. With adjusted revenue flat and adjusted EBITDAI down 2.4% while reported figures rose double digits, anyone assessing the core telecommunications business should treat the adjusted numbers, not the headline percentages, as the base case for forward performance.

Balance sheet and payout settings loosened. Net debt/EBITDA at 0.7x and equity up to $1.6b from $1.5b give more financial flexibility, while the full-year dividend fell to 16 cents per share from 25 cents and the payout ratio against NPAT dropped to 60.6% from 178.6%, both at the low end of the historical range. This means the dividend is now better covered by earnings, but shareholders are receiving a smaller cash return this year.

The first half contributed only 12.8% of full-year NPAT ($64.0m of $499.0m), implying a second half of roughly $435.0m, a heavily back-half-weighted profile consistent with the release's commentary on mobile momentum and cost discipline building through the year.

Because there is no disclosed target to test that second-half weighting against, the durability of the acceleration cannot be confirmed from this release alone; it depends on whether the adjusted EBITDAI decline seen in FY26 reverses or continues into FY27.

data centre business sale is explicitly linked in the filing to cash-flow profile, with NZ$462m disclosed value and NZ$462m capital raised.

data centre business sale adds cash-flow context, with NZ$1b disclosed value, but the filing does not separately reconcile the transaction to the financial movement.

Cash conversion of 80.6% is above the company's normal historical range (mean 65.2%), which on its face looks like a quality improvement, but pre-lease free cash flow of $308.0m sits at the low edge of the four-period range (mean $361.3m) and below the prior year's $330.0m. The release separately describes FCF as increasing 18.5% to $308.0m, an apparent inconsistency with the $330.0m prior-year figure in the financial statements that is not reconciled in the disclosed material, so the free-cash-flow trend should be treated cautiously rather than read as a clean improvement.

Working capital was broadly stable, with debtor days at 39.0 and inventory days at 8.7, both within normal range, so the cash-conversion strength is not primarily a working-capital story. Combined with the tax-rate driven gap between PBT and NPAT growth, and the divergence between reported and adjusted revenue/EBITDAI, a meaningful share of this year's headline improvement looks like a mix of favourable tax outcomes and non-recurring items rather than a durable uplift in underlying trading economics.

This briefing cannot assess the specific asset-disposal and financing transactions referenced in the FY26 accounts, which are addressed separately.