NPAT jumped 69.6% on a 22.6% rebound, but $17.4m WC build cut OCF 6.9%

Against Annolyse's historical baseline, revenue growth, PBT growth, NPAT growth, NPAT margin (13.3%) and ROE (36.2% versus 22.4% prior) are all unprecedented for the comparable half.

Operating working capital absorbed NZ$17.4m, an unprecedented build against a historical average of NZ$3.5m and a prior range of NZ$-2.9m to NZ$11.9m. That absorption is why net cash from operating activities fell 6.9% to NZ$45.5m even as earnings nearly doubled, and why pre-lease free cash flow fell to NZ$33.8m from NZ$36.2m. Cash on hand was NZ$93.9m versus NZ$98.6m, and the declared HY22 interim dividend is 11.5 cents per share.

• The 22.6% revenue lift and 69.6% NPAT lift are both unprecedented against the company's historical half-year range, but the HY21 comparable was disrupted by the prior year's lockdown. The annualised current revenue of NZ$716.8m is only modestly above FY21's NZ$701.8m, so the rebound is more about timing recapture than a step-change in run-rate.
• Profitability is genuinely wider, not just bigger. PBT margin of 18.4% sits above the company's historical 11.0%–17.2% range and NPAT margin of 13.3% is an unprecedented high versus a 9.3% mean. The effective tax rate of 28.1% is at the lower edge of the historical 28.1%–41.3% range, contributing modestly to NPAT but not the main driver, since the PBT-versus-NPAT growth gap is only 1.2 percentage points.
• Cash conversion deteriorated materially. FCF-to-NPAT fell to 71.3% from 129.5% as inventory rose 16.6% to NZ$101.1m. This matters because the earnings beat is partly being funded by stock build, and the operating cash trajectory is the cleaner read on whether HY22 profitability is being realised in cash.

The supplied seasonality context shows HY21 represented 41.7% of FY21 revenue and 38.2% of FY21 NPAT, so the business is historically second-half weighted. Implied second-half revenue using that shape is NZ$409.4m and implied second-half NPAT NZ$45.2m, but those implied values rely on the HY21 weighting being representative, which is itself distorted by the FY21 lockdown.

The release supports the conclusion that HY22 trading was strong and that the balance sheet remains cash-positive. It does not support a confident view on whether the unprecedented PBT margin of 18.4% holds into the second half once the lockdown rebound fades.

Inventory days at 51.3 are actually below the historical 52.0–55.9 range, so the NZ$14.4m inventory build appears volume-driven rather than a slowdown signal, and capex intensity at 3.2% of revenue is unremarkable. Debtor days at 2.8 are above the historical 1.8–2.6 range, but the absolute trade-debtor balance of NZ$5.6m is too small to move the read.

The cash conversion shortfall is the main quality flag. Pre-lease FCF of NZ$33.8m is still at the upper edge of the historical NZ$3.0m–NZ$39.4m range, so absolute cash generation is strong; the issue is that it has lagged a much larger earnings step-up. Total assets at NZ$653.6m are an unprecedented low against the historical NZ$661.5m–NZ$680.2m range, reflecting the lower cash balance alongside higher inventory.

This briefing cannot assess whether HY22 demand strength reflects a structurally higher run-rate or a transient post-lockdown catch-up, since no forward-trading commentary or guidance was supplied.