FY22 NPAT up 33.9% but a 133% cash surge was inventory-led

The cash uplift was substantially driven by a $26.4m unwind in inventories (to $137.0m from $163.4m), so the headline cash result reflects a working-capital release as much as trading performance.

Balance-sheet capacity improved alongside this. Total equity rose 15.8% to $307.8m while total liabilities fell 17.3% to $150.4m, consistent with floorplan and bank borrowings being run down as stock cleared. Cash on hand finished at $11.8m, slightly lower year on year. The Board declared a 47.0c final dividend, taking the full-year payout to 62.0c versus 55.0c in FY21.

• Operating cash flow grew at roughly four times the rate of NPAT, with the inventory drawdown alone explaining most of the gap. This matters because once vehicle supply normalises and dealerships restock, that working-capital tailwind reverses, so reported FY22 OCF should not be used as a base for forward cash generation.

• Second-half earnings softened from the first-half pace. HY22 NPAT of $18.1m was 54.5% of the full year, implying second-half NPAT of $15.1m — a step down half on half, consistent with the HY22 commentary that flagged "a number of challenges in the second half." The full-year headline therefore masks a decelerating trajectory into FY23.

• NPAT growth flatters the underlying read. PBT rose 21.4% while NPAT rose 33.9% on broadly similar effective tax rates (28.3% vs 27.5%), with the gap reflecting a sub-NPAT item in the prior comparable rather than stronger current-year operating performance. PBT growth of 21.4% is the cleaner read on the trading business; ROE improved to 10.8% from 9.3%.

Against that, the second-half NPAT step down is broadly consistent with what was flagged, but it does mean the FY22 exit run-rate is below the first-half pace rather than above it.

The release does not support a view on FY23 trading conditions, vehicle supply normalisation, or how quickly inventory will be rebuilt. Those gaps matter because both the cash result and the dividend look stronger when read at the FY22 average than at the second-half exit rate.

PBT up 21.4% on revenue up 11.3% points to operating leverage in a strong-demand, constrained-supply automotive retail market, and the improved ROE of 10.8% (from 9.3%) is consistent with that. Liabilities fell faster than assets, which is balance-sheet repair rather than balance-sheet engineering.

The cash and dividend picture is where caution belongs. The $38.4m increase in operating cash flow sits against a $26.4m inventory release, so a large share of the cash beat is timing rather than durable. The payout ratio against NPAT eased to 61.1% from 72.4%, which on the face of it looks more conservative, but if the inventory tailwind reverses in FY23 the effective payout against cash generation will tighten again. Capex is not separately disclosed in the supplied data, so free cash flow and dividend cash cover cannot be confirmed here.

This briefing cannot assess vehicle-margin sustainability, FY23 supply conditions, or capex intensity because the supplied release does not disclose gross profit per unit, capex, or forward-period guidance.