FPH PBT margin reached 26.1%, lifting profit 37.5% on 14.4% revenue growth

PBT margin reached 26.1%, above Annolyse's historical baseline of 16.6%–21.7% (3-period mean 18.6%), and gross margin lifted 110 bps to 63.0%.

The mix tilted further to Hospital, which grew 17% to NZ$692.2m and now contributes 64% of revenue (+1.8pp). Homecare grew 10% to NZ$395.9m. Operating profit rose 31.2% to NZ$286.1m.

Cash inflows lagged earnings. Operating cash flow grew only 5.5% to NZ$245.8m, and FCF post-lease of NZ$173.2m equates to 81.3% of NPAT versus 110.6% a year earlier. Despite that, the cash balance jumped to NZ$300.0m (HY25: NZ$116.6m) and gross borrowings fell 39.2% to NZ$62.2m, leaving a net cash position of NZ$237.8m.

PBT margin of 26.1% sits 7.5pp above the 3-period historical mean and roughly 4.4pp above the prior top of the range. NPAT margin of 19.6% is similarly outside the recent envelope. This matters because the 37.5% PBT growth is not driven by volume alone — investors need to understand whether the gross margin step-up (mix, FX, pricing, cost) is structural or whether HY26 is benefiting from a temporarily favourable cost or currency position.

Cash conversion eased materially even though absolute FCF is at a record. Pre-lease FCF of NZ$184.0m is above the historical baseline (3-period range -NZ$119.0m to NZ$177.9m), but FCF/NPAT fell from 110.6% to 81.3%. The drag is working-capital absorption rather than receivables: debtor days improved to 42.9 and inventory days fell to 56.3 (below the 63.6–104.9 historical range), but operating working capital still ticked up NZ$7.2m. Earnings ran ahead of cash this period, which is something to monitor in 2H.

Capital allocation has shifted toward retention. The interim dividend rose only 2.7% to 19.0c, taking the payout ratio versus NPAT to 52.3% — well below the 70.6%–105.4% historical band (3-period mean 91.1%). Combined with the reduction in gross borrowings, the group is accumulating balance-sheet capacity rather than distributing the earnings step-up.

The supplied historical pattern shows HY25 represented 47.1% of FY25 revenue and 40.6% of FY25 NPAT, implying a second-half-weighted profile. If FY26 follows that shape, the HY26 base of NZ$1.1b and NZ$213.0m would imply a materially larger full-year outcome than FY25's NZ$2b and NZ$377.2m.

The risk to that read is that HY26 margins are running ahead of the historical range. A repeat in 2H requires the gross margin gain to be durable; even a partial reversion would compress full-year operating leverage despite continued top-line growth.

Revenue grew 14.4%, gross margin expanded 110 bps, and the effective tax rate of 24.9% was actually slightly higher than the 25.8% prior, so tax is not flattering NPAT — both PBT (+37.5%) and NPAT (+39.0%) tell a consistent story. ROE strengthened to 10.9% from 8.0%, and the balance sheet is unambiguously stronger: net cash of NZ$237.8m versus NZ$14.3m, with capex steady at 5.7% of revenue.

The quality caveats are working-capital and inventory-driven. Inventory days at 56.3 are below the historical range, which boosts current cash but is not a recurring tailwind once stocks normalise. Cash conversion stepping down from 110.6% to 81.3% of NPAT means investors should not annualise the earnings line into cash one-for-one. The dividend remains covered by both pre- and post-lease FCF, but the lower payout ratio reflects the company holding back rather than distributing the full earnings uplift.

This briefing cannot assess constant-currency segment margins, regional growth contribution, or any FY26 guidance, none of which are present in the supplied excerpts.