Cash conversion collapsed to 0.7% as brewery exit drove FCF to -NZ$1.3m

The prior-year OCF/EBITDA relationship is denominator-distorted and suppressed by the sign swing in EBITDA, so that prior-year figure is not analytically comparable and should not be read as a normal low or as trend evidence — it is flagged as a data-quality issue rather than a coverage signal. Operating cash inflow fell 99.5% to NZ$0.012m and pre-lease free cash flow swung from +NZ$1.3m to -NZ$1.3m, also unprecedented against the historical mean of +NZ$3.6m.

The headline numbers are reshaped by the divestment of the loss-making brewery. Revenue fell 57.8% to NZ$16.1m, but the brewery exit is presented as a -NZ$3.5m discontinued-operations loss, which is why NPAT fell 63.0% to -NZ$6.6m while continuing-operations PBT improved 23.6% to -NZ$3.1m and EBITDA swung from -NZ$2.0m to NZ$1.8m. Net debt/EBITDA finished at 1.97x, within Annolyse's historical baseline range.

• EBITDA turned positive, working capital released NZ$3.1m (the lower edge of the historical range, where releases averaged -NZ$1.3m), and yet OCF was essentially nil. Because the OCF/EBITDA relationship carries the same denominator-distortion caveat noted above, this should not be read as a clean conversion signal — but the underlying cash gap is still evident: continuing operations did not generate cash even with a tailwind from receivables and inventory unwinding.
• FY21 is not a like-for-like base. Revenue down 57.8% sits well below the historical baseline (mean +69.9%, range -8.4% to +180.2%), but the driver is portfolio reshaping rather than demand; the prior comparable also includes an acquisition contribution. PBT margin of -19.2% and NPAT margin of -40.9% are both unprecedented lows in the supplied historical range, so margin comparability for FY21 in isolation is limited.
• Working-capital balances are stretched relative to the historical pattern. Debtor days at 4.7 and inventory days at 10.4 are both unprecedented highs versus historical means of 1.8 and 6.3 days, even though both fell sharply versus FY20 (14.5 and 21.9 days). This matters because the FY21 release flattered cash, but the closing balances suggest there is less to release from here.

The half-year shape shows H1 delivered 61.4% of full-year revenue but only 37.3% of EBITDA and 6.3% of NPAT, meaning H2 carried both the EBITDA recovery and the bulk of the discontinued-operations loss. With the brewery now exited and three Hipgroup venues referenced in commentary as new contributors, the FY22 run-rate is not derivable from this release. What the result does support is that the continuing hospitality footprint is EBITDA-positive at the new, smaller scale; what it does not support is any read on cash-generative capacity at that scale, particularly given the basis issues affecting the OCF/EBITDA relationship discussed above.

That part is durable. The cash result, however, is the opposite of durable, though any framing of OCF against EBITDA needs the same denominator-distortion caveat applied above rather than a normal-conversion read. Pre-lease FCF of -NZ$1.3m is unprecedented in the historical baseline, and it arrived alongside a favourable working-capital release, so the underlying operating cash gap is wider than the headline OCF figure of NZ$0.012m alone implies.

Capex intensity also stepped up: capex of NZ$1.3m represents 8.0% of revenue against 2.2% prior, partly venue development. That is a discretionary choice rather than a quality flag, but on a smaller revenue base it compounds the cash strain. Total assets at NZ$36.4m are an unprecedented low versus the NZ$54.2m historical mean, reflecting the same divestment effect rather than impairment.

This briefing cannot assess the cash-flow path or capital needs of the reshaped portfolio without forward guidance or post-balance-date funding disclosure, and the prior-year OCF/EBITDA ratio should not be relied on as a normal comparator given its denominator distortion.