Revaluations drove NPAT +139%; underlying result swung to a $41.8m loss

The release explicitly states underlying profit swung NZ$230.3m to a NZ$41.8m loss (versus a NZ$188.5m underlying profit in FY20). The reported earnings uplift therefore reflects fair-value and revaluation movements rather than trading performance.

Cash conversion collapsed to 8.6% of EBITDAFI (FY20: 67.5%), which Annolyse's historical baseline classifies as unprecedented low against a four-period mean of 63.5%. Operating cash flow fell to NZ$61.0m from NZ$175.8m. Net debt/EBITDAFI fell to 1.8x from 5.3x, but this reflects an NZ$1.3bn equity injection, with total equity rising 19.5% to NZ$7.9b and gross borrowings down 35.1% to NZ$1.4b.

• This matters because the +139.4% reported NPAT and +149.8% PBT growth are revaluation outcomes; the operating business lost money once asset gains are stripped out.
• Cash quality deteriorated sharply alongside working-capital absorption. OCF/EBITDAFI of 8.6% is unprecedented low versus a 63.5% mean, debtor days jumped to 31.0 (mean 8.3, also unprecedented high), and operating working capital absorbed NZ$10.5m versus a +NZ$3.5m average build. With revenue more than halved, receivables of NZ$23.9m grew 75.7% — the cash conversion problem is concentrated in a small base, but it directly weakens the read on reported earnings.
• Balance sheet was repaired by equity, not earnings. Net debt/EBITDAFI of 1.8x is unprecedented low against a 3.78x mean, driven by the equity raise rather than free cash generation. Pre-lease FCF was still NZ$-134.7m, and no dividend was declared, preserving liquidity while the capital structure is reset.

The HY21 versus FY21 shape is informative: the first half delivered 46.8% of full-year revenue but only 12.4% of EBITDAFI and 6.1% of NPAT, implying an NZ$623.7m second-half EBITDAFI swing — almost entirely revaluation, since implied 2H revenue of NZ$149.6m cannot support that earnings level operationally. This matters because the second-half "improvement" is overwhelmingly mark-to-market, not a demand recovery, and the result therefore does not support extrapolating an operating turn from headline trajectory.

The release flags a new Net Zero pathway and signals positioning for demand return, but provides no quantified FY22 anchor against which this result can be benchmarked.

Three indicators line up: (i) reported NPAT rose while management's own underlying measure fell to a loss; (ii) cash conversion of 8.6% is the weakest in the supplied historical window; and (iii) free cash flow before leases remained negative at NZ$-134.7m despite capex being cut 54.8% to NZ$195.7m. Capex intensity at 69.7% of revenue underlines that the asset base is being maintained against a depressed top line, not that spending discipline has structurally improved.

The leverage improvement is real but balance-sheet-assisted: equity rose NZ$1.3bn while EBITDAFI was inflated by revaluations, so the 1.8x ratio overstates underlying deleveraging capacity. The effective tax rate of 5.9% (versus 1.8% prior) and the 10.4 percentage-point gap between PBT and NPAT growth is a secondary distortion compared with the much larger revaluation effect; PBT growth of 149.8% is itself the wrong operating read, because both PBT and EBITDAFI are dominated by non-cash items this year.

This briefing cannot assess passenger-volume recovery trajectories, regulatory aeronautical pricing outcomes, or the durability of property fair-value gains that drove the reported result.