Revenue surged 18.2% but a NZ$25.6m working-capital build crushed cash

That swing is the immediate cause of operating cash flow falling to NZ$1.8m from NZ$9.9m (-82.2%), and of pre-lease free cash flow turning negative at NZ$-3.1m versus the historical range of NZ$1.9m–NZ$11.4m positive.

Revenue grew 18.2% to NZ$138.1m, an unprecedented high relative to the historical pattern of negative or flat half-year growth, supported by 14% New Zealand growth (driven by additional trading days versus the prior lockdown-affected period) and 32% AGG growth (driven by price increases). PBT was flat at NZ$0.6m (+0.0%), while NPAT rose 50.0% to NZ$0.6m on a lower 13.6% effective tax rate versus 25.2% prior. Gross borrowings rose to NZ$71.1m from NZ$61.5m, with net debt of NZ$59.1m implying roughly 3.9x EBITDA on the annualised current run-rate.

• Trade debtors jumped 52.8% to NZ$42.8m and inventories rose 49.4% to NZ$32.7m, lifting debtor days to an unprecedented 56.4 (versus a 43.7–51.9 historical range). Inventory days at 43.1 remain within the historical range, so the receivables build is the larger driver. This matters because the company funded a chunk of its growth and AGG price recovery by extending the balance sheet, not by converting trading momentum into cash.

• Reported earnings growth overstates the operating read. NPAT grew 50.0% but PBT was effectively flat at +0.0%; the gap is explained entirely by the effective tax rate falling 11.6 percentage points to 13.6%. PBT is therefore the cleaner measure, and on that basis the business is roughly running in place despite 18.2% top-line growth — consistent with management's commentary that margin recovery is still in progress and only began in the second quarter.

• Leverage is moving the wrong way at the same time. Gross borrowings rose NZ$9.5m while cash fell NZ$1.7m, so the working-capital build was debt-funded. Total assets at NZ$285.7m are an unprecedented high versus a NZ$199.8m–NZ$241.2m historical range, which signals operational scale-up but also leaves less room for further working-capital absorption without renewed pressure on facility headroom.

The seasonality shape from FY22 is unhelpful because the second half delivered NZ$-0.9m of implied NPAT against HY22's NZ$0.4m, meaning the prior second half was materially worse than the first — second-half weighting was negative, not positive. Management commentary points to annualised cost savings from New Zealand site rationalisation and continued AGG momentum, but the release does not quantify the run-rate impact for the second half.

Annualising current revenue gives NZ$276.3m, materially above FY22's NZ$236.1m, but without margin recovery and a working-capital reversal that revenue scale will not on its own restore cash generation. The next data point investors should watch is whether receivables and inventories unwind in the second half.

OCF/EBITDA cash conversion of 11.7% is well below the 36.6%–81.2% historical range and the 59.6% mean, and pre-lease FCF of NZ$-3.1m is an unprecedented low versus four prior positive halves averaging NZ$5.0m. Capex was disciplined at 3.5% of revenue (down from 6.2%), so the cash shortfall is not investment-driven; it is working-capital-driven.

On the earnings line, the NPAT lift came from tax. With PBT flat and EBITDA-to-cash conversion broken, the operating durability of this print rests on whether AGG's price increases hold and New Zealand margin recovery accelerates into the second half. Until that is visible, the headline revenue acceleration is best read as a recovery in trading days and price, not as a step-up in underlying earning power.

This briefing cannot assess covenant headroom, dividend policy, or the durability of AGG's price increases without further disclosure.