NPAT up 10.1% on a 22.2% revenue fall as cash dropped 83.4%

The divergence sits in margin: PBT margin reached 66.8%, materially above the 37.1%–59.1% historical range supplied as Annolyse's baseline and against a baseline mean of 50.5%.

Cash generation moved in the opposite direction. Operating cash inflow fell 74.9% to $10.8m from $43.0m, and the cash balance dropped 83.4% to $15.1m from $91.0m, with CDI also acquiring a 4.85-hectare parcel in north-east Hamilton during the half. Trade debtors halved to $1.5m, shortening debtor days from 10.1 to 5.7.

Total equity rose 9.0% to $300.6m and ROE was 7.6% (prior 7.5%); both equity and ROE sit above the supplied later-period baseline.

OCF covered just 47% of NPAT, versus 207% in HY21, and the cash balance fell $75.9m while NPAT was only $22.9m. The release of $1.9m from working capital (debtor days at 5.7 days, well below the supplied baseline mean of 60.7 days) flattered OCF rather than depressed it, which means underlying operating cash generation was even softer than the headline conversion suggests. The cash gap is consistent with land-bank reinvestment, including the Hamilton acquisition, but the disclosed release does not quantify the inventory build.

Margin expansion is mix-driven, not structural. A 66.8% PBT margin against a baseline range of 37.1%–59.1% reflects the specific Auckland and Canterbury sections that settled in the half, not a step-change in cost structure. Durability depends on which lots settle next, not on operating leverage.

Management's "match 2021" target is now front-loaded. HY22 NPAT of $22.9m already covers 73% of FY21 NPAT of $31.3m, but management explicitly conditions the full-year target on new Auckland sales in the second half.

On that pattern, CDI is on track to exceed the stated "match 2021" target, since H2 needs only ~$8.4m of NPAT to reach the FY21 outcome.

The risk is that H2 contribution is not a stable proportion in a residential development business. Management's own commentary that "to make that target we will need new sales" – sourced from Auckland – signals settlement timing rather than backlog visibility. The release does not provide forward-work or contracted-settlement figures, so the read on H2 is dependent on settlement cadence rather than disclosed pipeline.

Receivables at 5.7 days are already well below the supplied baseline mean of 60.7 days, so there is no further working-capital tailwind available to support OCF in H2. PBT growth of 10.4% and NPAT growth of 10.1% sit at the upper edge of the supplied range, which means the result is strong against the company's own recent baseline – but with margin elevated 16.3 percentage points above the baseline mean, mean-reversion risk is the natural read.

The cash position is the cleaner concern. The $75.9m fall in cash, against only $10.8m of OCF, points to substantial deployment into land and inventory during the half. That is investment, not loss, and equity grew $24.7m. But it removes the optionality the prior $91.0m cash pile provided, and the release does not disclose the split between the Hamilton acquisition cost, other land-bank build, dividends, and other outflows.

This briefing cannot assess project-level margins, the full size of the land-bank build during the half, or the contracted forward-sales pipeline supporting management's full-year target.