Discontinued-ops gain inflated NPAT; continuing PBT swung to NZ$128.5m

Revenue fell 18.9% to NZ$858.9m as the divested business exited continuing operations.

Operating cash flow fell 9.4% to NZ$82.8m. The balance sheet expanded materially: cash rose to NZ$851.0m from NZ$133.8m, gross borrowings rose to NZ$3.4b from NZ$1b, and total equity grew to NZ$5.1b on a total asset base of NZ$9.9b. ROE turned from -1.2% to 22.7%, but that ratio is itself dominated by the discontinued-operation gain.

Acquisition adds balance-sheet context, with NZ$753.8m acquisition price, but borrowings and gearing are the direct leverage evidence.

The NZ$1.1b discontinued-operations gain accounts for roughly 96% of reported NPAT, so the headline growth rate is not analytically meaningful. Stripping it out, continuing-operations net profit was approximately NZ$43.5m. PBT growth of +239.9% is a cleaner read but is flattered by a prior-year loss base; PBT margin of 15.0% sits at the upper edge of Annolyse's historical baseline (three-period mean 5.4%).

Cash generation did not follow reported earnings. Operating cash flow declined while reported PBT swung positive, and FCF-to-NPAT of -2.8% confirms reported profits did not translate into cash. Pre-lease FCF of -NZ$32.8m sits within the company's historical range, but it remains negative, meaning growth and acquisition activity continues to be funded externally rather than from underlying operations.

Leverage expanded substantially. Net debt rose from NZ$876.5m to NZ$2.6b, with gross borrowings more than tripling alongside acquisition activity flagged for the period. Without a disclosed net-debt-to-EBITDA metric or covenant headroom, the absolute change in financial flexibility cannot be sized from this data set, but the directional reshape of the balance sheet is material.

The release indicates Proportionate EBITDAF of NZ$513.9m was delivered above the mid-point of the prior NZ$500-520m guidance band, and references FY23 guidance, although no specific FY23 number is captured in this data set. No formal stated targets were supplied.

The H1/H2 shape is heavily distorted: HY22 contained roughly 92.4% of full-year NPAT and 63.0% of revenue, implying H2 revenue stepped down to about NZ$317.8m and H2 standalone NPAT to about NZ$88.7m. That step-down primarily reflects the discontinued operation no longer contributing in H2 rather than a deterioration in underlying trading. The data does not contain the forward-work or segment-level guidance needed to anchor a clean FY23 read.

Capital raise adds statutory-profit context, with NZ$522.9m capital raised, but recurring earnings and cash metrics carry the cleaner signal.

The result is heavily timing- and balance-sheet-assisted. The discontinued-operation gain explains nearly all reported NPAT, so the headline cannot be treated as a measure of operating progress. The continuing-operations base (~NZ$43.5m) is modest relative to the NZ$9.85b asset base, which means underlying earnings power is still small in proportionate terms.

Cash conversion weakened. OCF fell 9.4% to NZ$82.8m while reported PBT swung positive, and pre-lease FCF of -NZ$32.8m remains negative even after a step-down in capex versus the prior year. Final dividend rose to 12.0 cps from 11.5 cps (+4.3%); the full-year total of 18.5 cps versus 11.5 cps prior reflects interim plus final components. With FCF still negative, the current distribution is not covered by underlying free cash flow and relies on disposal proceeds or external funding to remain sustainable in cash terms.

This briefing cannot assess the durability of recently acquired-business earnings or the prospective FY23 EBITDAF guidance range, neither of which is quantified in the supplied data.