PBT down 20.3% as gross borrowings triple to NZ$118.3m

PBT is the cleaner operating read, and on Annolyse's historical baseline both revenue growth (-3.6% versus a 4-period mean of +11.9%) and PBT growth sit outside or at the lower edge of the recent range.

Gross borrowings rose 240.5% to NZ$118.3m from NZ$34.7m, lifting net debt to NZ$115.2m as the company funded NZ$43.7m of capex against NZ$13.0m of operating cash flow. Pre-lease free cash flow was NZ$-30.7m, broadly in line with the prior comparable NZ$-31.2m but well below the 4-period mean of NZ$5.9m. The interim dividend was held flat at 2.8 cents per share.

• PBT growth of -20.3% and management's disclosed underlying NPAT decline of 32.1% (to NZ$7.2m) both indicate a materially weaker trading period than the -15.1% reported NPAT line implies. The release attributes this to lower trade volumes and fewer vessel calls from supply-chain disruption, Omicron, labour shortages, and extreme weather. The lower tax rate, not improved trading, narrowed the headline NPAT decline.

• Leverage has stepped up while returns have stepped down. Gross borrowings more than tripled to fund the capex programme, with capex running at 86.1% of revenue. ROE compressed to 2.4% from 3.0%, which is below the historical baseline mean of 4.2%. This matters because debt service and depreciation will rise into a period where operating earnings have just contracted.

• The flat dividend is not covered by current free cash flow. Payout versus NPAT rose to 62.2% from 56.0%, sitting at the upper edge of the historical 38.5%–65.0% range and above the 4-period mean of 49.5%. With pre-lease FCF at NZ$-30.7m, the distribution is being funded from the balance sheet, not operating cash, while the capex build continues.

The supplied seasonality shape, anchored on FY21, indicates the business is second-half weighted: HY21 represented 48.0% of FY21 revenue and 45.6% of FY21 NPAT. Annualising the current half gives a NZ$101.4m revenue run-rate, below FY21's NZ$109.5m, so a second-half recovery would need to outpace the seasonal lift just to match the prior full year.

Management commentary points to first-half volume supply constraints easing, but offers no quantified recovery profile. The release does not support either a reaffirmation or a downgrade of any FY22 number, because none has been disclosed here.

First, the tax rate fall accounts for roughly 5.2 percentage points of the gap between PBT growth (-20.3%) and NPAT growth (-15.1%); without it, the decline at the bottom line would track the operating deterioration much more closely, as the company's own underlying NPAT figure of -32.1% suggests. Second, operating cash flow fell 11.0% to NZ$13.0m while capex of NZ$43.7m drove pre-lease FCF to NZ$-30.7m and FCF-to-NPAT to -341.8%. The dividend, debt service, and ongoing build are all currently leaning on the balance sheet.

Working capital provided a modest tailwind rather than a stress signal: trade debtors fell 11.1% to NZ$15.3m and debtor days improved to 54.9 from 59.6, sitting within the historical 50.8–59.6 day range. That keeps the cash story focused on capex intensity and earnings, not collections.

This briefing cannot assess the absolute economic merit of the capex programme or whether the rebuild in leverage is appropriate, because no project NPV, target completion date, or covenant detail is supplied in the release excerpts.