NPAT up 41.3% but NZ$1.5bn working-capital build cut operating cash 63%

Revenue rose 1.9% to NZ$4.1b, profit before tax grew 30.9% to NZ$237m, and NPAT rose 41.3% to NZ$171m. EBIT margin firmed 10bps to 8.2%. However, net cash from operating activities fell 63.3% from NZ$428m to NZ$157m, driven by an operating working-capital absorption of NZ$1.5b. Annolyse's historical baseline shows recent first-half periods averaged a NZ$732m working-capital build (range NZ$79m to NZ$1.6b), so this period sits at the upper edge of that range.

Capex rose 70.7% to NZ$140m (3.4% of revenue), pre-lease FCF compressed to NZ$17m from NZ$346m, and cash on hand fell from NZ$618m to NZ$409m. The interim dividend was lifted 50% to 18.0 cents per share. Gross borrowings declined modestly to NZ$866m.

• Operating cash fell NZ$271m year-on-year while NPAT rose NZ$50m. Debtor days at 49.1 sit above Annolyse's historical 3-period range (39.1 to 44.5 days, mean 41.9), and inventory days rose to 72.4 from 51.4. Inventories alone grew NZ$490m to NZ$1.6b. This means the earnings beat is being funded by the balance sheet, not generated through the P&L.
• The dividend is no longer covered by cash this half. The 18.0c interim payout equals 85.7% of NPAT but 862.2% of pre-lease FCF, versus 81.6% and 28.6% respectively in HY21. Coverage depends entirely on a second-half cash recovery or a draw on the NZ$409m cash balance.
• Tax flattered NPAT growth versus PBT. The current effective tax rate of 26.6% normalised against a prior-period rate of -31.5% (a tax benefit), opening a 10.4pp gap between PBT growth (30.9%) and NPAT growth (41.3%). PBT growth is the cleaner operating read.

The supplied seasonality context shows HY21 contributed 49.1% of FY21 revenue but only 39.7% of FY21 NPAT and 48.1% of FY21 operating cash flow, implying a second-half-weighted earnings and cash pattern. On HY21 shape, FY22 revenue annualises around NZ$8.1bn.

The release confirms management flagged inventory rebuild and housing investment in advance, but does not quantify when, or how much, working capital will unwind. Without that, this result supports the margin and earnings narrative but does not support a view that pre-lease FCF will recover to FY21 levels.

Net debt to EBITDA of 0.9x is also unprecedented low against a 4-period mean of 3.48x, so leverage is not the pressure point.

Cash quality is where the result thins out. OCF/EBITDA of 31.2% sits at the upper edge of Annolyse's recent historical range, so the conversion ratio itself is not abnormal — but the prior comparable (HY21) was unusually strong in cash terms, and the year-on-year fall reflects a deliberate NZ$1.5bn inventory and housing investment cycle stacked on a 70.7% capex step-up. The earnings result is real, but the cash backing it has been deferred onto the balance sheet, so the read on durability depends on inventory turn and housing settlement timing rather than recurring trading cash.

This briefing cannot assess the timing or magnitude of the second-half working-capital unwind, segment-level prior-period comparables that were not disclosed, or any market-pricing context for the result.