Table of Contents
What changed
Revenue rose 11.1% to NZ$363.4m, with EBITDA up 6.8% to NZ$87.3m and PBT up 4.3% to NZ$54.3m. NPAT grew only 1.2% to NZ$37.6m as the effective tax rate climbed from 28.7% to 30.8%. Operating cash flow fell 33.0% to NZ$47.6m, capex rose to NZ$14.4m (from NZ$11.8m), and closing cash dropped NZ$20.4m to NZ$78.7m. By segment, Australia grew to 52.4% of revenue (+3.1pp) with margins holding near 20%, while Canada’s segment result fell to NZ$20.5m from NZ$27.0m (margin compressing from ~26.7% to ~19.9%) and New Zealand’s margin eased from ~27.7% to ~22.5%. The interim dividend was lifted to 4.0 cents per share from 3.5 cents.
What matters
- Cash conversion deteriorated materially. OCF/EBITDA dropped from 86.9% to 54.5% and pre-lease free cash flow fell to NZ$33.2m from NZ$59.3m. Inventory built 12.8% to NZ$198.2m, pushing inventory days to 99.3 from 97.8 — the single biggest reason reported earnings quality weakened this half.
- Canada and New Zealand margins compressed. Revenue in Canada was essentially flat (+1.8%) yet the segment result fell ~24%, and NZ margin dropped ~5pp. Growth is being carried by Australia; the read on group operating leverage is weaker than headline EBITDA implies.
- Tax is distorting the bottom line. PBT growth of 4.3% is the cleaner operating read; the 1.2% NPAT print reflects the 2.1pp rise in the effective tax rate rather than weaker trading.
Expectations
No forward guidance or stated financial targets were disclosed in the supplied excerpts, though management references a 50%+ dividend payout policy range. Seasonality is meaningful: in FY22, HY represented 55.0% of full-year revenue but 79.5% of full-year NPAT, implying the first half is structurally earnings-heavy and the second half is thinner. Annualising HY23 revenue gives NZ$726.8m, ~22% above FY22’s NZ$595.2m, but investors should not naively annualise earnings given the first-half skew. The release does not support a read on second-half trading direction.
Quality of result
The earnings print looks less durable than it first appears. EBITDA growth of 6.8% on 11.1% revenue growth signals cost leverage was negative, and the pre-lease FCF/NPAT ratio collapsed from 159.7% to 88.3%. The primary driver is a working-capital build (inventory up NZ$22.5m) rather than a one-off item, which is a recurring call on cash if held. Capex intensity also stepped up modestly (4.0% of revenue vs 3.6%). With no material non-recurring items disclosed and segment margin pressure concentrated in Canada/NZ, the bulk of the earnings uplift is attributable to Australian volume rather than structural margin gains.
Unresolved
- Why did Canadian segment result fall ~24% on flat revenue — is it promotional intensity, FX, cost inflation, or mix?
- Is the NZ$22.5m inventory build tactical (buying ahead of key trading) or a structural stock overhang?
- Gross borrowings and net debt are not cleanly disclosed in the supplied excerpts, so leverage direction cannot be quantified despite the NZ$20.4m cash drawdown.
- The 4.0 cps interim dividend vs pre-lease FCF of NZ$33.2m — what is the post-lease coverage, and how does it sit against the 50%+ policy range?
This briefing cannot assess underlying like-for-like store sales, FX-neutral segment performance, or net-debt and covenant headroom, none of which are quantified in the supplied data.
Key metrics
| Metric | HY23 | HY22 | Change |
|---|---|---|---|
| Revenue | $363.4m | $327.1m | +11.1% ↑ |
| EBITDA | $87.3m | $81.8m | +6.8% ↑ |
| Net profit after tax | $37.6m | $37.1m | +1.2% ↑ |
| Net cash inflow from operating activities | $47.6m | $71.1m | -33.0% ↓ |
| Interim dividend per share | 4.0c | — | — |
| Cash and cash equivalents | $78.7m | $99.1m | -20.6% ↓ |
| Total assets | $550.8m | $538.7m | +2.2% ↑ |
Reference: annolyse.ai/briefings/mhj-hy23
Segment breakdown
| Segment | Current revenue | Prior revenue | Current result | Mix shift |
|---|---|---|---|---|
| Australia | $190.6m | $161.5m | $38.4m | +3.1pp |
| New Zealand | $69.7m | $63.9m | $15.7m | -0.4pp |
| Canada | $102.9m | $101.1m | $20.5m | -2.6pp |
| Corporate & other | $0.2m | — | −$20.1m | n/a |
Reference: annolyse.ai/briefings/mhj-hy23
Analytical metrics
| Metric | HY23 | HY22 | Context |
|---|---|---|---|
| PBT growth | +4.3% | — | cleaner earnings measure |
| Effective tax rate | 30.8% | 28.7% | — |
| OCF / EBITDA (cash conversion) | 54.5% | 86.9% | deteriorated |
| FCF pre-lease | $33.2m | $59.3m | −$26.1m |
| FCF / NPAT | 88.3% | 159.7% | complementary conversion metric |
| Capex % revenue | 4.0% | 3.6% | — |
| Capex | $14.4m | −$11.8m | +$26.2m |
| Inventory days | 99.3 | 97.8 | +1.5 days |
| Trade debtors | — | $0.0m | — |
| ROE (annualised) | 18.9% | 18.9% | Flat |
| HY22 share of FY22 revenue | 55.0% | — | Other half was 45.0% |
| HY22 share of FY22 NPAT | 79.5% | — | Other half was 20.5% |
| Profit from continuing operations | — | $37.1m | — |
Reference: annolyse.ai/briefings/mhj-hy23
This analysis was generated using Annolyse, an AI-powered tool that analyses NZX company announcements. The analysis is based on available company filings and standard Annolyse calculations. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.