Revenue +30.7% but cash conversion fell to 50.2% from 70.9%

Operating cash flow / EBITDAF fell to 50.2% from 70.9% in HY24, sitting below the supplied historical baseline (3-period mean 74.6%, range 61.6–91.3%). The deterioration coincides with a $57m inventory build (NZ$138.0m vs NZ$81.0m, +70.4%), which absorbed reported earnings growth before they reached cash.

Above the operating-cash line, the result was strong on activity and softer on bottom-line profit. Revenue rose 30.7% to NZ$1.7b (upper edge of the historical range, mean 4.5%) and EBITDAF rose 14.1% to NZ$404m, with margin of 23.7% sitting in the historical normal range. PBT fell 5.6% to NZ$201m and NPAT fell 7.2% to NZ$142m, with the effective tax rate rising to 29.4% from 28.2%.

Net debt rose to NZ$1.9b and net debt / EBITDAF moved to 4.78x from 4.58x. The interim dividend was lifted to 16.0c (HY24: 14.0c).

The 50.2% conversion print is roughly 24 percentage points below Annolyse's historical baseline mean, and operating cash fell NZ$48m while EBITDAF grew NZ$50m. Most of the gap is visible on the balance sheet: inventories alone added NZ$57m of working-capital absorption. For a gentailer, that swing matters because it changes the read on how much of the EBITDAF uplift is genuinely available for capex, debt service, and distributions this period.

The dividend is being raised into a weaker cash period. The 16.0c interim takes the NPAT payout ratio to 89.4% from 71.8% in HY24. Pre-lease FCF of NZ$138.0m sits within the historical range but is down from NZ$187.0m, so the dividend lift is being funded against a smaller cash base while net debt has risen NZ$312m year-on-year. ROE eased to 5.4% from 5.7%.

Retail economics deteriorated within a wholesale-led mix. The Wholesale segment result rose to NZ$466m from NZ$383m on revenue of NZ$1.3b, while Retail swung to a NZ$25m loss from a NZ$1m loss on roughly flat revenue. The earnings story this half is overwhelmingly a wholesale story; retail is currently a drag rather than a contributor.

The HY24/FY24 shape implies a second-half-weighted business: HY24 was 45.6% of FY24 revenue, 52.4% of FY24 EBITDAF, and 65% of FY24 NPAT. On that pattern, an annualised HY25 revenue run-rate of roughly NZ$3.4b looks supportable, but EBITDAF and NPAT shape are typically heavier in the first half rather than the second, so growth can flatter early in the year.

The release does not provide guidance on hydrology, hedge cycle, or fuel costs into 2H25, so the durability of the EBITDAF uplift and the timing of any inventory unwind cannot be judged from this filing alone. The current cash gap matters because second-half cash typically has to do the heavier lifting against the higher dividend and the larger debt stack.

The weaker NPAT line is largely explained by a higher effective tax rate (29.4% vs 28.2%) and higher net interest implied by a NZ$254m increase in gross borrowings, rather than by an operating margin collapse.

The cash result is the softer part of the print. Pre-lease FCF of NZ$138.0m is inside the historical range but materially below HY24's NZ$187.0m, and FCF / NPAT of 97.2% only screens well because NPAT itself fell. The NZ$57m inventory build is the single biggest swing factor in the OCF gap; if it reverses in the second half, conversion mechanically improves, but if it reflects committed fuel or carbon positions held into a weaker generation period, the cash drag persists. Capex of NZ$234m (13.7% of revenue) eased slightly from NZ$262m, partially offsetting the OCF decline at the FCF line.

This briefing cannot assess hydrology, hedge-cycle positioning, or fuel-cost dynamics, because the supplied excerpts do not quantify them.