NPAT up 32.1% on 240bps margin lift led by Glassons Australia

The earnings leverage came from a 240 basis point gross margin lift to 60.9% (HY25: 58.5%), achieved despite management's commentary that USD inventory costs remained a headwind.

Glassons Australia did most of the work. Australian revenue grew to NZ$151.8m and its share of group revenue rose to 55.1% from 51.6%, while the segment result nearly doubled to NZ$20.0m from NZ$11.8m. Both New Zealand-based segments also lifted profitability sharply off a softer base — Glassons NZ result doubled to NZ$13.3m and Hallensteins more than doubled to NZ$6.2m.

Operating cash flow rose 26.7% to NZ$53.5m, cash on hand rose 35.3% to NZ$67.5m, and the interim dividend was lifted 18.4% to 29.0 cents per share.

A 240bps gross margin uplift in a period where management explicitly cited continued FX pressure on inventory purchasing implies real pricing or mix discipline rather than tailwind. PBT growth of 33.1% on revenue growth of 14.7% sits at the upper edge of Annolyse's historical baseline (4-period mean 9.1%, range -39.6% to +74.6%), and the 14.5% PBT margin is above the supplied historical range of 9.9% to 13.4%. This matters because the operating leverage is sourced from gross margin, not from cost takeout or working-capital release.

Australia is now the swing factor for the group. With 55.1% of revenue and roughly half of segment profit, the Australian business is the dominant exposure, and its 22.4% revenue growth is what carried the headline. This concentrates the read on group earnings on Australian consumer demand and AUD/NZD translation in a way that was less pronounced a year ago.

Capital allocation tightened despite a record cash balance. The payout ratio fell to 61.7% of NPAT from 69.0%, below Annolyse's 3-period mean of 76.0%, while capex rose 46% to NZ$12.6m (4.6% of revenue versus 3.6%). Cash retained is funding both a higher investment intensity and a step-up in balance-sheet liquidity — total assets of NZ$248.9m are an unprecedented high against a NZ$181.6m–NZ$220.0m historical range.

The HY25/FY25 shape implies the first half normally carries 51% of revenue and 53.7% of NPAT, so this business is mildly first-half weighted rather than back-end loaded. Annualising the current half mechanically produces revenue of roughly NZ$550m versus FY25 of NZ$470.7m, but this assumes Australia's growth rate persists into a non-peak trading period, which the release does not address.

The gap that matters is between the gross-margin run-rate disclosed here (60.9%) and what is achievable in the second half if FX pressure continues. The release does not quantify that headwind, so the durability of the margin uplift is the principal forward question.

FCF pre-lease of NZ$40.9m is above Annolyse's historical range of NZ$18.2m–NZ$35.7m, FCF-to-NPAT conversion was 146.0%, and the operating working-capital build was only NZ$2.0m (within the supplied historical range). Inventory days at 19.3 sit at the lower edge of the 18.6–23.9 day baseline, so the cash result is not being borrowed from a deferred inventory rebuild. ROE strengthened to 23.1% from 19.1%, within the historical normal range.

Two minor cautions. FCF-to-NPAT, while strong in absolute terms, is below the prior period's 158% — cash conversion did soften at the margin even as the dollar quantum rose. And the 46% capex step-up is unexplained in the release, so its impact on future free cash flow generation cannot yet be calibrated.

This briefing cannot assess like-for-like store productivity, online versus physical channel mix, or comparable-store sales, none of which are quantified in the supplied release.