Revenue +20.6% drives PBT +28.9% as net debt clears and margins expand

EBITDA rose 27% to NZ$30.4m and profit before tax rose 28.9% to NZ$19.2m. Reported NPAT of NZ$15.4m versus a prior NZ$0.1m is distorted by the prior comparable's NZ$12.6m loss from a discontinued operation; on a continuing-operations basis the underlying after-tax uplift is closer to ~22%. Operating cash flow of NZ$20.2m versus NZ$6.3m took the group from NZ$8.0m of net debt to roughly zero net debt. The declared final dividend is 4.0 cents, leaving the full-year payout at 8.0 cents, unchanged year on year.

MHL revenue grew to NZ$94.4m (share to 35.3% from 31.6%) with disclosed gross margin expanding to 23% from 20%, and Protein revenue grew to NZ$76.0m at 33% gross margin. Minerals revenue fell to NZ$41.2m (share collapsing from 25.6% to 15.4%) despite holding a 40% gross margin, the highest disclosed segment margin. That a 10.2pp negative mix shift away from the highest-margin segment still coincided with a 300bps blended margin gain implies real execution gains in MHL and Protein, but whether FY23's margin level repeats depends on Minerals stabilising.

Forward work gives partial cover. Disclosed forward work of NZ$195m equates to ~72.9% of FY23 revenue. This is meaningful visibility into FY24 trading but leaves a sizeable book-to-fill gap, particularly given the Minerals reversal.

Balance-sheet repair is real but contract balances ballooned. Net debt/EBITDA at effectively 0.00x sits at the lower edge of the company's historical range (mean 0.33x), and ROE lifted to 13.5%, above the historical range (mean 7.0%). However, contract liabilities rose 73% to NZ$45.5m and contract assets rose 90% to NZ$34.2m, indicating that the order book absorbed and recycled significant working capital during the year.

Management cites continued execution of the 2025 strategy with NZ$195m of forward work and stated strength in protein and materials handling. The HY23 shape shows H1 carried 47.3% of FY23 revenue and 47.9% of EBITDA, so the trading shape was modestly second-half weighted on earnings. The read for FY24 therefore rests on translating the forward book into delivered revenue without further working-capital absorption, with Minerals being the single largest swing factor on group gross margin given its disclosed 40% margin and shrinking share.

PBT growth of 28.9% is the cleanest cross-period read because reported NPAT is flattered by the absence of the prior discontinued-operation loss and the effective tax rate moved from 15.2% to 19.6%. The gross-margin gain, EBITDA growth of 27% and ROE step-up confirm a genuine underlying trading uplift, not a tax or accounting effect.

Cash quality is more mixed. Full-year OCF/EBITDA of 66.6% sits at the upper edge of the company's historical range (mean 44.4%), and pre-lease FCF of NZ$14.7m converted to ~95.0% of NPAT. But with HY23 operating cash flow disclosed at NZ$26.0m, the full-year NZ$20.2m implies an H2 operating cash outflow of roughly NZ$5.8m alongside the 90% rise in contract assets. Operating working-capital movement of NZ$7.6m is within the company's historical range (NZ$6.3m–NZ$18.1m), so the build is not abnormal in size, but inventory days at 52.2 sit just above the historical mean of 47.7. Capex at 2.1% of revenue is also notably below the prior 4.0%, which flatters pre-lease FCF.

This briefing cannot assess management's specific FY24 revenue, margin or cash conversion targets because none are disclosed in the release.