Horticulture swing drives PBT down 59.6% on flat revenue

EBITDA dropped 46.0% to NZ$30.5m, PBT fell 59.6% to NZ$18.3m, and NPAT attributable to shareholders fell 85.1% to NZ$3.9m. The EBITDA margin of 9.8% sits well below Annolyse's historical baseline (3-period mean 20.4%, range 18.2%–23.6%).

The decline is concentrated in Horticulture: revenue rose 4.4% to NZ$122.6m, but segment result swung from +NZ$15.2m to –NZ$2.1m — a roughly NZ$17.3m move that accounts for the bulk of the PBT decline. Global Proteins was essentially flat (revenue NZ$151.1m, result NZ$30.3m), and Logistics revenue grew 34.3% to NZ$54.4m though its result narrowed.

Net debt rose from NZ$3.2m to NZ$29.8m, taking net debt/EBITDA to 0.98x — still within the historical 0.06x–1.33x range.

A roughly NZ$17.3m swing in segment result on a 4% revenue gain points to margin compression and one-off cost impact rather than volume loss. Management references Cyclone Gabrielle effects on both Horticulture and Logistics volumes, so the read on underlying earning power depends on how durable that disruption proves.

Working capital has stepped up materially. Trade and other receivables stand at NZ$97.3m and debtor days at 57.3 — above the historical baseline mean of 0.9 days and range 0.3–1.3 days. Inventory days of 27.5 are also above the historical 15.0–22.8 range. Operating working capital is roughly NZ$104.7m higher than a year ago, which means earnings quality this half rests on a much larger receivable balance that must still convert to cash.

Headline NPAT decline overstates the operating move. Reported PBT fell 59.6%; reported NPAT to shareholders fell 85.1%. The gap reflects a larger non-controlling-interest share of profit this half (about NZ$10.4m vs NZ$9.0m prior on a smaller total NPAT). For an underlying operating read, PBT –59.6% and management's stated underlying NPAT to shareholders –43.5% are the more relevant measures.

With 1H Underlying NPAT to shareholders of NZ$14.5m, the bottom of the range is effectively delivered, implying a 2H contribution of NZ$(0.5)m to NZ$4.5m. That is a meaningfully less-negative 2H than the prior year's implied 2H22 NPAT of –NZ$6.6m, so the guidance assumes some Horticulture stabilisation rather than a worsening trend.

The historical shape (HY22 contributing 82.3% of FY22 EBITDA and 134.2% of FY22 NPAT) confirms this is a strongly first-half-weighted business, so 2H softness is normal — but the bar for guidance is that 2H must not be as weak as 2H22.

The driver is the working-capital build, not weaker underlying cash generation: pre-lease free cash flow of –NZ$28.7m is actually within the historical –NZ$47.1m to –NZ$18.9m range, reflecting Scales' usual first-half cash absorption ahead of apple-season collections.

This matters two ways. First, the elevated debtor and inventory balances mean a larger-than-usual share of reported earnings depends on second-half collections rather than realised cash. Second, capex remained modest (NZ$4.8m, 1.6% of revenue), so the leverage step-up from NZ$3.2m to NZ$29.8m of net debt is funding working capital, not investment. ROE collapsed to 1.1% from 6.7% a year ago — well below the 6.7%–14.0% historical band — though some of that reflects the NCI mix in attributable profit rather than purely return on capital.

This briefing cannot assess realised cyclone-related insurance recoveries, crop volume and pricing detail by variety, or any segment-level cost reconciliation behind the Horticulture result.