Table of Contents
What changed
The release excerpts describe this as a 1H22 interim result, with revenue of $48.7m disclosed as down 19% on 1H21. The supplied comparison pass, however, benchmarks 1H22 against full-year FY21 ($111.6m), producing a –56.3% figure that is not like-for-like. Against the cleaner 1H21 base implied in the release, the top-line decline is the stated 19%.
Below the revenue line: EBITDA $2.5m vs prior period $4.7m; PBT $1.3m (–35.6%); NPAT $1.0m (–42.1%). The NPAT drop exceeds PBT because the effective tax rate stepped up from 13.8% to 22.5% — with no discontinued operation disclosed, PBT is the cleaner operating read. Operating cash flow swung from +$16.2m to –$1.4m, a $17.6m reversal. Cash on hand still rose to $18.5m from $10.5m (helped by prior-period inflows), total liabilities fell to $38.8m, and equity edged up to $37.1m. Gross borrowings were not disclosed.
What matters
- Cash conversion collapsed. OCF/EBITDA moved from 345% in the prior period to –55% now. Receivable days lifted from ~39 to ~92 and inventory days from ~66 to ~158, driving operating working capital from $31.8m to $33.3m. That build largely explains the cash outflow given EBITDA was still positive at $2.5m.
- Earnings quality softened at the tax line. PBT fell 35.6% but NPAT fell 42.1%; the 6.5pp gap is a tax-rate step-up rather than operating deterioration, so the tax distortion should not be extrapolated.
- Balance sheet remains unlevered. Prior-period borrowings were zero and cash rose to $18.5m, so absorbing the cash outflow did not require new debt. Capital allocation is being directed at plant upgrades to support the wool-only strategy (over half of 1H22 capex on manufacturing improvements, per the release).
Expectations
No quantified financial guidance or forward-work disclosure is supplied, and no stated targets are provided in the extraction. Management commentary describes the result as "in line with management expectations, despite COVID-19 and supply chain" disruption, and flags continued momentum in higher-margin wool carpet sales. The release does not support any specific run-rate read: the second-half shape data duplicates the interim figures, so no meaningful seasonal extrapolation is possible from what is supplied.
Quality of result
The reported profit is real but thin, and the cash result is weaker than EBITDA suggests. Three features argue for caution on durability:
- The swing in OCF is almost entirely working-capital driven (inventory +$1.0m, receivables +$0.4m on a much smaller revenue base), which inflates days-outstanding metrics and leaves the result vulnerable if finished-goods stock does not clear.
- Pre-lease free cash flow was –$3.0m after $1.6m of capex, versus +$13.7m in the prior period. ROE fell to 2.7% from 4.9%.
- Normalised EBITDA was referenced in prior-year material but no bridge from EBITDA to statutory NPAT is provided in the supplied excerpts, limiting scrutiny of non-recurring items.
No discontinued-operation or disposal loss is disclosed, so the PBT-to-NPAT gap is attributable to the higher effective tax rate rather than a one-off below-the-line charge.
Unresolved
- What is the like-for-like 1H22 vs 1H21 comparison on EBITDA, PBT and operating cash flow? The extraction benchmarks against FY21 full year for most lines, which is not directly comparable.
- Why did the effective tax rate rise from 13.8% to 22.5%, and is the new rate the forward base?
- What drove the ~$1.0m inventory build on a smaller sales base — deliberate pre-build to support the wool-only strategy, or slower sell-through?
- What is the revenue, margin and capex trajectory management expects for 2H22, given 50%+ of 1H22 capex went into plant improvements?
- No customer concentration, segment breakdown, or gross margin disclosure is in the supplied material, so mix-driven margin claims cannot be verified.
This briefing cannot assess underlying channel demand, wool-input cost trajectory, or the financial impact of the strategy pivot beyond what is visible in the top-line and cash lines supplied.
Key metrics
| Metric | FY22 | FY21 | Change |
|---|---|---|---|
| Revenue | $48.7m | $111.6m | -56.3% ↓ |
| EBITDA | $2.5m | $4.7m | -46.8% ↓ |
| Net profit after tax | $1.0m | $1.7m | -42.1% ↓ |
| Net cash inflow from operating activities | −$1.4m | $16.2m | -108.5% ↓ |
| Operating profit | $1.7m | $3.1m | -43.3% ↓ |
| Profit before tax | $1.3m | $2.0m | -35.6% ↓ |
| Cash and cash equivalents | $18.5m | $10.5m | +76.2% ↑ |
| Total assets | $75.9m | $78.0m | -2.8% ↓ |
Reference: annolyse.ai/briefings/brw-fy22
Analytical metrics
| Metric | FY22 | FY21 | Context |
|---|---|---|---|
| PBT growth | -35.6% | — | cleaner earnings measure |
| Effective tax rate | 22.5% | 13.8% | — |
| OCF / EBITDA (cash conversion) | -55.2% | 345.0% | deteriorated |
| FCF pre-lease | −$3.0m | $13.7m | −$16.7m |
| FCF post-lease | −$3.0m | $13.7m | −$16.7m |
| FCF / NPAT | -296.3% | 794.3% | complementary conversion metric |
| Capex % revenue | 3.3% | 2.2% | — |
| Capex | −$1.6m | −$2.5m | +$0.9m |
| Debtor days | 91.5 | 38.6 | +52.9 days |
| Inventory days | 157.6 | 65.6 | +92.0 days |
| Operating working capital | $33.3m | $31.8m | +$1.4m absorbed |
| Trade debtors | $12.2m | $11.8m | +$0.4m |
| Gross borrowings | — | $0.0m | — |
| Payout ratio vs NPAT | 0.0% | — | — |
| Payout ratio vs FCF pre-lease | 0.0% | — | covered |
| ROE (annualised) | 2.7% | 4.9% | Weakening |
| HY22 share of FY22 revenue | 100.0% | — | Other half was 0.0% |
| HY22 share of FY22 NPAT | 100.0% | — | Other half was 0.0% |
| Profit from continuing operations | $1.0m | — | — |
Reference: annolyse.ai/briefings/brw-fy22
This analysis was generated using Annolyse, an AI-powered tool that analyses NZX company announcements. The analysis is based on available company filings and standard Annolyse calculations. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.