Intelligent Monitoring Group (ASX:IMB) reported what management described as a “solid” first-half FY2026 result, highlighting improved operating cash flow, underlying earnings growth and a sharply higher forward work pipeline. Executives also addressed a weaker-than-expected first quarter in New Zealand, while reiterating full-year guidance and discussing the pending acquisition of Tyco New Zealand (described on the call as Wormald New Zealand).
First-half financial performance
For the half, IMG reported underlying EBITDA of AUD 19.2 million, representing 20% margin and 9.7% growth versus the prior corresponding half, according to CFO Jason. Management also cited underlying earnings growth of 9.3%, noting contributions from acquisitions (BNP and Western Advance) as well as organic growth in Australia of 8.3%.
- AUD 4.6 million in abnormal costs, including Tyco New Zealand acquisition costs, historical share-based payments and impairment of receivables;
- AUD 2.0 million of business acquisition and integration costs (including some restructuring, partly in New Zealand); and
- Share-based expenses and interest items discussed in the reconciliation.
Jason also detailed depreciation and amortization, with total depreciation and amortization in statutory reporting of AUD 11 million for the half. This included depreciation (business and lease-related) and amortization of subscriber assets and customer contract-based intangibles.
Cash flow and balance sheet
Management emphasized that operating cash flow continued to improve, noting that the first quarter tends to be the weakest seasonally for IMG due to the annual cycle of customer projects and workbooks. The second quarter was described as “very strong cash” and more closely aligned with EBITDA as project delivery ramps.
For the half, IMG generated underlying operating cash flow of AUD 9.4 million before non-recurring costs, which was up on the prior-year half, according to Jason. The company incurred approximately AUD 1.5 million in acquisition and equity raise costs and about AUD 0.5 million of restructuring costs. Investing cash flow included AUD 9.1 million of cash acquisitions (Western Advance and BNP Securities) and a payment to acquire the remaining non-controlling interest in Mammoth Security, making it wholly owned.
Jason also noted a one-off cash receipt associated with moving bank guarantees from a cash-backed position to a NAB-based facility, recorded in investing cash flow.
On the balance sheet, IMG said it remained “stable” and “strong,” with net debt to adjusted EBITDA at 1.3x. Core working capital increased by AUD 2.2 million from June, which management attributed to seasonal investment, including inventory to support second-half project activity.
Pipeline expansion and seasonality
CEO Dennison said the company’s pipeline growth was a key highlight, particularly following IMG’s acquisition of ADT 2.5 years earlier. IMG reported its pipeline increased from AUD 36.6 million at the end of the first quarter to AUD 49.8 million at the end of the second quarter, which management described as up 30% (and up 6% on the quarter).
Management clarified that the pipeline figure represents work already won that is expected to convert to revenue over the next 12 months, rather than a broader “hoped-for” pipeline. Dennison said the work is “highly probable,” with timing of commencement a key variable, and noted many contracts are multi-year in nature, with only the next 12 months’ P&L impact reflected in the disclosed number.
On seasonality, Dennison said IMG’s installation volumes tend to skew toward the second half of the fiscal year, with customers often working to June deadlines. He said the typical pattern is approximately 43%/57% across the halves, and management said it was comfortable with current positioning given the size of the pipeline.
New Zealand headwinds and reset
New Zealand contributed a “very poor” first-half result, which management attributed largely to timing and utilization issues following the wind-down of a large government upgrade program. Dennison said a multi-year program for MSD (New Zealand’s largest government department) rolled off as expected, but new work started more slowly than anticipated, creating a timing mismatch that left the team underutilized for a period.
He cited Auckland Airport as one significant project that experienced delayed start-up. Dennison said conditions in New Zealand remained slower in terms of final decision-making and project sign-off, although he said utilization had normalized and that work was “tracking back to plan” into the second half. In response to an analyst question, Dennison said he was comfortable using the January performance level as a run rate for the remainder of FY2026.
Management also discussed a review of the ADT Care medical-related business in New Zealand. Dennison said IMG had achieved a significant price rise for new volume from its main counterparty, the New Zealand Government, and was working on tightening operating structures and optimizing distributor relationships. He said IMG had explored potential external interest in the business but had elected to continue operating it, aiming to improve returns through tighter execution.
On the 3G transition in New Zealand, Dennison said the main financial impact had been elevated subscriber equipment capital expenditure over 18 months to two years. He said the company had effectively made its last payment for updated equipment, and management expects the distraction to fade as network shutdowns proceed, with the issue “definitely” resolved by the end of the financial year.
Tyco New Zealand acquisition and FY2026 guidance
IMG reiterated expectations for the acquisition of Tyco New Zealand (Wormald New Zealand), describing it as a “fantastic addition” spanning fire services and monitoring. Dennison said settlement timing depends on the seller’s legal and structural processes, and IMG had not yet received a final settlement date, though the company still expects completion in the current financial year.
Management reiterated guidance provided at the AGM for AUD 43 million to AUD 47 million underlying EBITDA, and said the pending Tyco New Zealand acquisition is expected to contribute AUD 10 million of EBITDA, taking pro forma EBITDA to AUD 53 million to AUD 57 million. Dennison and Jason said this corresponds to approximately AUD 26 million to AUD 29 million NPAT and AUD 0.062 to AUD 0.07 pro forma EPS. Management said the headline result will be influenced by the timing of Tyco New Zealand’s settlement and consolidation.
Tax was also discussed during Q&A. Jason said the first-half tax outcome equated to roughly 21%, but he expects the effective rate to trend toward 25% to 28% as profitability increases. Dennison added that auditors applied a 60% probability to the availability of tax losses, consistent with prior reporting, though management said it believed the losses were fully available and expected the issue to become less relevant as the company becomes increasingly tax-paying.
On video monitoring growth, Dennison said the ADT Guard offering remains a small portion of the base (approaching 1% of customers/lines), but is accelerating. He said IMG has worked with police to arrest 44 perpetrators since the initiative began and is deterring more than 15 likely burglary attempts per month. Management said it is still prioritizing conversion of inbound demand and focusing on commercial and enterprise deployments while building capacity and partner channels, noting a newly signed partnership agreement with Jim’s Group to resell the video guarding product.
About Intelligent Monitoring Group (ASX:IMB)
Intelligent Monitoring Group Limited provides security, monitoring, and risk management services for business and individual use in Australia. It also offers high net worth family security solutions, including the development of personal and family safety procedures, ongoing review and assessment to the penetrability of existing residences, evacuation and emergency planning, residential and commercial security systems, phone based duress and location services, customized electronic dashboards, personal safety and travel awareness training services, incident management and response services, close personal protection/personal security drivers, and supplier selection and vetting services.
