NPAT up 46% but PBT slipped 2% as discontinued operation flatters headline

The gap is explained by the discontinued operation, which swung from a NZ$3.1m loss in HY23 to a NZ$3.8m gain in HY24, and by a step-up in the effective tax rate to 35.0% from 28.0% on the historical baseline (above the supplied 27.5%–28.8% range). On the operating line, revenue rose 8.4% to NZ$69.8m and EBITDA rose 10.5% to NZ$48.1m, supported by 8% throughput growth and 22% growth in jet fuel demand. Continuing operations NPAT declined to NZ$12.8m from NZ$14.5m. Operating cash flow lifted 73% to NZ$36.8m; gross borrowings rose to NZ$328.3m from NZ$297.3m, holding net debt/EBITDA flat at 6.8x.

• EBITDA grew 10.5% but PBT fell 2.0%, meaning depreciation and finance costs absorbed the entire EBITDA gain plus a small additional drag. Continuing operations NPAT then fell ~11% because the effective tax rate stepped up to 35.0% from 28.0%, well above Annolyse's historical 27.5%–28.8% range. The implication: underlying earnings power did not improve, even though the top of the P&L looks healthier.

• Cash conversion looks strong but capex did the work. OCF/EBITDA rose to 76.5% from 48.8%, and FCF pre-lease of NZ$32.7m is at the upper edge of the supplied historical range (mean NZ$6.5m). However, capex fell 28.9% to NZ$23.3m (33.3% of revenue versus 50.8% in HY23), and operating working capital released NZ$5.5m as debtor days fell from 59.7 to 41.1. So a meaningful share of the cash uplift is timing rather than recurring conversion.

• Capital allocation is being held against weaker cover. The 4.4cps interim dividend (up from 4.2cps) sits at 100.0% of NPAT and 90.3% of pre-lease FCF, both within the supplied historical range. With continuing operations earnings down and leverage at 6.8x, the dividend is supported by current FCF but not by underlying continuing earnings alone.

Against the supplied first-half shape, HY23 represented ~49% of FY23 revenue and ~50% of FY23 EBITDA, so HY24 implies a flat to modestly second-half-weighted full year on continuing operations if current trends persist.

The release does not provide an explanation for the elevated 35.0% effective tax rate or for whether the discontinued operation contribution recurs in H2; both gaps are material to converting HY24 into a credible FY24 NPAT shape.

Beneath that, however, the result is lower quality than the +45.6% NPAT line suggests: the discontinued operation contributed a ~NZ$6.9m year-on-year swing after tax, the tax rate is well above the historical baseline, and continuing operations earnings declined.

The cash result is genuinely strong on the headline but partially balance-sheet-assisted. Of the NZ$15.5m year-on-year uplift in operating cash flow, NZ$5.5m came from working capital — primarily a 18.6-day reduction in debtor days. Capex was also unusually low for the period; if FY24 spend reverts to recent norms, second-half free cash flow will be materially lower than first-half, and the dividend cover on a full-year FCF basis will tighten relative to the HY24 snapshot.

This briefing cannot assess underlying segment economics or contracted forward revenue beyond the disclosed dominant infrastructure segment and the single new 10-year contract reference.