Revenue tripled on UK reopening but H2 burned $1.5m of cash

The UK & Ireland franchising segment carried the recovery, contributing $6.3m of revenue versus $0.6m a year earlier and now representing 96.1% of group revenue. Group EBITDA was $0.8m, PBT swung from a $2.6m loss to a $0.6m profit (+124.7%), and NPAT moved from -$2.5m to $0.3m (+113.4%).

Despite the profit rebound, operating cash flow turned negative at -$0.1m (FY21: +$0.04m). Because HY22 OCF was +$1.4m, the implied second-half cash outflow was roughly $1.5m. Net debt nonetheless fell to $2.1m from $6.6m, gross borrowings halved to $3.2m, and total equity moved into positive territory at $3.1m from -$1.7m, with the discontinued operation contributing a $0.3m after-tax loss.

• OCF/EBITDA was -12.6% in FY22 and operating cash flow worsened by $0.13m on a revenue base nearly four times larger. The recovery in reported profit did not translate into cash, which weakens the read on FY22 as a normalised earnings baseline.

• Second-half trajectory deteriorated on cash even as profit grew. H1 delivered $1.4m of operating cash and only $0.06m of NPAT; H2 produced roughly $0.28m of NPAT but burned about $1.5m of cash. The composition of earnings shifted further from cash generation as the year progressed, so investors cannot extrapolate H2 profit without understanding why cash moved the other way.

• Balance-sheet strengthening is real but not clean. Total assets fell $9.9m and total liabilities fell $14.7m, alongside disclosed discontinued operations in both periods. The equity swing and net-debt reduction therefore partly reflect structural changes rather than purely organic deleveraging from current trading.

Management commentary frames the result around the UK reopening, with store sales in FY22 at 123% of pre-comparable levels and Q4 trading characterised positively. The shape data shows H1 carried 55.8% of full-year revenue but only 17.4% of full-year NPAT, implying margin improvement into H2 on a profit basis.

What the release does not support is a clean run-rate read. The H2 cash burn, the heavy UK concentration, and the residual discontinued-operation drag mean a $6.6m annualised revenue base and a $0.6m PBT do not yet establish a durable earnings power for FY23 modelling.

Trade debtors fell from $4.9m to $1.3m, taking receivable days from an abnormally high 1,040 to 72 days — the prior figure looks distorted and likely reflects items that have since been resolved or removed via the discontinued operation, rather than a normal collections cycle. That makes the working-capital movement difficult to read as recurring.

The NPAT figure is also affected by a $0.3m after-tax discontinued-operation loss, against a near-zero prior-year discontinued line. PBT growth of 124.7% is therefore the cleaner operating read than NPAT growth of 113.4%, with the 11.3 percentage-point gap explained primarily by the disclosed discontinued operation rather than tax. Net debt of $2.1m against $0.8m of EBITDA leaves leverage at roughly 2.8x — improved versus the prior loss-making year, but still meaningful for a business at this scale where operating cash flow is currently negative.

This briefing cannot assess underlying franchisee unit economics, royalty trends, or the financial composition of the discontinued operation from the disclosures supplied.