NPAT up 295.7% but gross margin collapsed 1,091bps to 13.4%

Despite that, profit before tax rose 279.6% to NZ$18.6m and NPAT rose 295.7% to NZ$18.2m — outcomes that, on the supplied historical baseline, lift PBT margin (20.9%), NPAT margin (20.5%) and ROE (25.2%) to unprecedented highs versus a four-year mean of -1.7%, -2.0% and 0.2% respectively.

The arithmetic is internally inconsistent without below-gross-profit items: PBT of NZ$18.6m is NZ$6.7m higher than gross profit, so a material non-trading or non-recurring contribution sits between the two lines. Operating cash flow swung from -NZ$27.3m to +NZ$15.7m and pre-lease free cash flow reached NZ$10.2m (Annolyse's historical baseline averages -NZ$11.3m), lifting cash to NZ$42.2m and equity to NZ$72.4m. This is also an amended preliminary release.

• Cost of sales rose from NZ$60.8m to NZ$77.0m on revenue up only NZ$8.6m, halving the gross margin. The implication: core wool-carpet unit economics weakened materially in FY25, and the unprecedented PBT/NPAT margins are not a reflection of trading leverage but of items recognised below gross profit.
• The bottom-line beat sits in unidentified other items and tax. With operating profit at NZ$18.4m versus gross profit of NZ$11.9m, roughly NZ$6.5m of profit comes from non-cost-of-sales lines, and the effective tax rate of 1.8% (FY24: 6.1%; historical mean 12.1%) further widens NPAT growth above PBT growth by 16.1 percentage points. This matters because both inputs look transient rather than structural.
• Cash and balance sheet improved sharply, but partly through inventory. Inventory days fell from 133.4 to 115.5 (below Annolyse's historical range of 157.6–224.6 days), releasing capital, while debtor days rose from 37.9 to 47.9. The NZ$43.0m operating cash swing reflects both restored profitability and a working-capital reversal of the FY24 inventory build.

The interim context is striking: HY25 NPAT was -NZ$8.1m, implying second-half NPAT of NZ$26.4m and second-half operating cash flow of NZ$37.5m on second-half revenue of NZ$46.8m. A swing of that magnitude on a 47.4%/52.6% revenue split is not consistent with a normal seasonal pattern and is more readily explained by a discrete second-half event recognised below gross profit.

The prior-year release flagged a "return to dividends by 2026", but the current release shows no declared dividend, leaving the cadence of any resumption unconfirmed.

Gross margin moved decisively the other way, and the gap between gross profit and PBT can only be closed by items the release does not narrate in the supplied excerpts. The calculation pass flags that non-recurring items are present in the filing, supporting the read that part of FY25 PBT is event-driven rather than recurring.

Cash quality is genuinely better than FY24, but is partly working-capital-assisted: pre-lease FCF of NZ$10.2m benefits from a NZ$1.2m inventory drawdown to a level Annolyse classifies below the historical normal range, which is unlikely to repeat at the same scale. Capex rose 37.2% to NZ$5.5m (6.2% of revenue), indicating reinvestment is stepping up just as inventory normalises lower — a combination that could pressure FY26 cash generation if gross margin does not recover.

This briefing cannot assess the specific composition of the non-recurring items between gross profit and PBT because the supplied excerpts do not itemise the relevant lines.