NZ$281m working-capital build cut pre-lease FCF to NZ$51.8m as NPAT fell 31%

That absorption, combined with a 56.0% lift in capex to NZ$191.9m (70.0% of revenue), cut pre-lease free cash flow to NZ$51.8m from NZ$178.0m a year earlier.

Headline P&L moved the opposite way to the underlying narrative. Revenue grew 10.6% to NZ$274.2m, but PBT fell 20.8% to NZ$217.3m and reported NPAT fell 31.1% to NZ$194.0m, while management's underlying profit measure rose 44.8% to NZ$138.8m. Net operating cash inflow fell 19.1% to NZ$243.7m, and gross borrowings climbed 23.5% to NZ$3b.

The NZ$281.0m operating working-capital build is the single largest swing in the result and inverts the historical pattern of releases; with debtor days at 525.4 versus a three-period mean of 134.3, the receivables book is funding a growing share of activity. This matters because pre-lease FCF coverage of the dividend has tightened to 85.1% from 24.7%, leaving little headroom if the receivables cycle does not normalise.

Reported earnings fell on revaluation effects, not operations. PBT growth of -20.8% is the cleaner operating read than NPAT growth of -31.1%, since the prior period booked a tax credit (effective rate +2.5%) versus a 10.7% expense this half — a 10.3pp gap between PBT and NPAT growth. Release excerpts attribute the IFRS decline to lower property revaluation gains, while underlying profit (a non-GAAP measure) grew 44.8% on resale margins, so the operating business is performing better than the IFRS line suggests.

Balance sheet is expanding faster than equity. Total assets rose 22.2% to NZ$12b while gross borrowings rose 23.5%; equity grew only 19.6%. Leverage direction is weakening even though Annolyse's baseline classifies ROE at 10.7% as above normal versus a three-period mean of 1.6%, because that ROE is lifted by IFRS revaluations rather than cash earnings.

The supplied second-half shape shows the prior comparable HY22 contributed only 40.6% of FY22 NPAT and 48.7% of FY22 revenue, so the business is structurally second-half weighted; annualising current revenue at NZ$548.5m would imply continued growth on FY22's NZ$508.8m, but says nothing about whether revaluation gains repeat.

What the release does not support is any view on whether the receivables blowout is one cycle of resale settlement timing or a structural lengthening. Until that is clarified, the gap between underlying profit (+44.8%) and pre-lease FCF (down NZ$126.2m) is the key uncertainty.

Underlying operating progress looks real — resale margins are driving a 44.8% lift in the non-GAAP measure, and segment results show Australia turning from NZ$3.0m to NZ$65.3m, lifting its share of group revenue to 12.1% from 8.5%. Revenue growth of 10.6% is, however, below Annolyse's historical baseline of 13.0%–17.8%.

The cash quality is weaker. Operating cash flow fell 19.1% despite revenue growth, FCF-to-NPAT conversion dropped to 26.7% from 63.2%, and the dividend (held flat at 8.8 cents per share) now consumes 85.1% of pre-lease FCF versus 24.7% a year ago. Capex intensity at 70.0% of revenue is sustaining the build pipeline, but combined with the receivables build it is the proximate cause of the FCF compression. The reported ROE of 10.7%, while above Annolyse's historical range, is flattered by IFRS revaluation movements rather than cash returns and should not be read as a step-change in capital efficiency.

This briefing cannot assess the composition of the receivables build, the durability of the Australia segment uplift, or the size of property revaluation movements embedded in reported PBT.