PBT up 26.9% but operating cash flow fell 66.3%

The mismatch is the dominant feature of the result because reported profitability strengthened while the cash backing for it weakened.

Revenue slipped 4.2% to NZ$164.8m, with the dominant Residential Land Development segment lifting share to 55.9% of revenue (from 51.6%) and Hotel Operations falling to 33.5% (from 37.3%). NPAT declined 13.0% to NZ$40.0m despite higher PBT, because the effective tax rate normalised from 10.6% to 21.5%; PBT is the cleaner read on operating performance.

Cash on hand rose to NZ$58.1m and gross borrowings fell from NZ$38.0m to NZ$1.0m, moving the group into a net cash position. Total assets declined 31.1% and total equity fell 26.7% over the year, a balance-sheet contraction not reconciled in the supplied release excerpts. A 3.5cps final dividend was declared after no payment in FY20.

OCF/EBITDA at 39.9% versus 142.5% prior, with operating working capital essentially flat (NZ$-0.1m movement, in line with Annolyse's historical baseline range of releases). The drop therefore is not coming from receivables or inventory days (debtor days 16.1, inventory days 2.8, both inside the supplied historical band). This matters because the property-development cash cycle and tax payments — not classical working capital — appear to be the swing factors, and the release excerpts do not explain the gap.

Hotel PBT was flattered by a one-off land sale. The release notes hotel operations recorded PBT of NZ$13.8m versus NZ$5.5m, with the commentary explicitly flagging a one-off gain from the sale of land. Hotel Operations segment result of NZ$13.8m therefore overstates the recurring hotel earnings power while borders remained largely closed, and the underlying recovery in lodging demand is weaker than the segment line suggests.

Property development carried the result. Residential Land Development contributed NZ$43.5m of segment result on NZ$92.1m of revenue, so the dominant earnings stream is CDL Investments rather than the hotel platform. PBT growth of 26.9% sits well above Annolyse's historical baseline (3-period mean -32.5%), but the durability depends on continued land-sale cadence rather than hotel re-opening.

The HY21 shape (revenue NZ$98.4m, NPAT NZ$25.3m) implies a softer second half on both lines, consistent with hotel demand fading further as 2021 progressed.

The result therefore does not support an inference that hotel earnings have inflected. It supports the narrower read that CDL Investments delivered another strong year and that the group used the cash to clear debt and reinstate a dividend. The gap between PBT progress and OCF progress matters because it leaves the cash backing for FY22 distributions and any hotel reinvestment dependent on a return to normal cash conversion.

PBT growth is genuine but concentrated in property development plus a disclosed one-off land sale that flatters the hotel segment line — so a portion of hotel PBT is not repeatable. NPAT optically fell 13.0% only because the prior-year effective tax rate of 10.6% was unusually low; the 21.5% current rate sits inside Annolyse's historical range and PBT is the cleaner operating measure.

Cash quality is weaker than earnings quality. Pre-lease FCF of NZ$25.0m is within Annolyse's historical range, but FCF/NPAT of 62.5% versus 174.3% prior shows the cash backing per dollar of reported profit has stepped down materially. The 3.5cps dividend is covered 4.5x by FCF and represents only a 22.1% FCF payout, so distribution capacity is comfortable on this year's cash, but sustained coverage requires conversion to normalise.

Balance-sheet strengthening is real: net debt swung from NZ$17.2m to a NZ$57.1m net cash position, and gross borrowings were reduced by NZ$37.0m. The NZ$307.1m fall in total assets is not explained in the supplied release text and weighs on the reliability of period-on-period balance-sheet comparisons.

This briefing cannot assess the recurring earnings power of the hotel platform or the cause of the balance-sheet contraction from the supplied disclosures alone.