Revenue up 9.0% but FCF turned to -NZ$68.9m as 6 Wharf capex doubled

This is Annolyse's historical baseline lowest pre-lease FCF reading on a four-period window with a mean near NZ$15.9m. The cash gap was funded by stepping gross borrowings from zero to NZ$77.1m, taking the group from a net cash position to net debt of NZ$75.7m.

The reported P&L itself was strong. Revenue rose 9.0% to NZ$109.5m, PBT rose 8.5% to NZ$31.8m and NPAT rose 5.5% to NZ$23.2m. Operating cash flow grew 18.6% to NZ$34.8m, ahead of earnings, and trade-debtor days were 31.6, within the company's historical range. The final dividend declared was 4.7c per share, down from 5.0c.

Capex of NZ$103.7m against operating cash of NZ$34.8m left a near-NZ$69m funding gap that debt absorbed in one step. This matters because the equity story changes: returns from FY21 onwards depend on 6 Wharf generating incremental volumes and pricing sufficient to service NZ$77.1m of debt while sustaining distributions.

Margins ran well above the historical baseline. PBT margin of 29.1% sits above Annolyse's historical baseline range of 18.7%–27.3% (mean 24.1%), and NPAT margin of 21.2% sits above the historical 14.0%–19.6% range. The implication is that bottom-line growth has been carried by margin expansion as much as the 9.0% revenue line, so durability of mix and pricing — not just throughput — matters for the forward read.

Tax explains why NPAT growth lagged PBT growth. The effective tax rate rose to 27.2% from 24.9%, which means PBT growth of 8.5% is the cleaner read on operating performance versus the 5.5% NPAT print. The current rate remains within the company's historical range, so this is normalisation rather than a one-off charge, but it removes any tax tailwind from the headline.

HY21 delivered 48% of FY21 revenue and 45.6% of FY21 NPAT, indicating a modestly second-half-weighted shape that the full-year print is consistent with.

The release describes the result as ahead of forecast and guidance, but the relevant gap is forward: the company has committed to a multi-year wharf build and the FY21 release does not, in the supplied excerpts, quantify residual capex, expected commissioning timing, or volume uplift assumptions. Without those, the path from current earnings to debt-serviceable, dividend-covering free cash flow is the central uncertainty.

Operating cash flow grew faster than NPAT, the working-capital movement of NZ$0.7m is within Annolyse's historical baseline, and debtor days of 31.6 are essentially unchanged. The margin uplift is genuine at the reporting line rather than tax-driven — the effective tax rate moved against the result, not for it.

Cash quality at the group level, however, has weakened materially because of investment intensity. Capex at 94.7% of revenue and pre-lease FCF of -NZ$68.9m mean current earnings are not being converted into distributable cash; the dividend is no longer covered by pre-lease free cash flow, and the cash balance fell to NZ$1.4m from NZ$7.9m. Whether this is timing-driven or structural depends on the 6 Wharf build profile that the release does not fully detail. The reduction in declared final dividend from 5.0c to 4.7c is consistent with management acknowledging that funding constraint.

This briefing cannot assess the economic return profile of the 6 Wharf investment because the release excerpts do not disclose project total cost, expected incremental capacity, or required pricing.