Table of Contents
What changed
Revenue fell 2.9% to NZ$652.1m, but the earnings decline was much steeper. Operating profit dropped 44.1% to NZ$10.9m, PBT fell 63.1% to NZ$5.1m, and NPAT fell 48.3% to NZ$3.4m. The PBT/NPAT growth gap (14.8 percentage points) reflects a higher effective tax rate (32.7% versus 30.9%) rather than below-the-line distortions, so PBT is the cleaner operating read and it was materially weaker.
Cash and leverage moved in the opposite direction. Operating cash flow jumped to NZ$36.7m from NZ$7.3m, pre-lease free cash flow swung to +NZ$20.9m from −NZ$6.4m, cash rose to NZ$85.0m, and gross borrowings fell to NZ$197.3m. Net debt reduced to roughly NZ$112.3m from NZ$160.4m.
Segment mix tells the earnings story: Apples (65% of revenue) saw segment result fall to NZ$24.5m from NZ$30.8m; T&G Fresh gained share but its result halved to NZ$3.8m from NZ$7.5m; International Trading swung to a NZ$5.7m loss from NZ$1.9m profit.
What matters
- Broad-based margin erosion, not a single line item. All three operating segments went backwards on result despite only a 2.9% revenue decline. That signals cost/price pressure (management cites international supply-chain disruption) rather than a one-off and weakens the earnings read.
- Balance sheet is clearly stronger. A NZ$48m reduction in net debt, a 13% drop in gross borrowings, and equity up 7.3% to NZ$514.9m materially de-risk the capital structure, even without a disclosed net debt/EBITDA ratio.
- The 6.0 cps interim dividend is not covered by the period's earnings or free cash flow on the numbers provided. The declared interim implies a payout well above HY21 NPAT and ~163% of pre-lease FCF, so sustainability depends on a stronger second half (historically the case for NPAT, where HY20 was 59.8% of FY20) and on continued working-capital release.
Expectations
No stated quantitative targets, forward-work metric, or formal guidance were disclosed. The only shape context available is FY20: HY20 delivered 47.5% of FY20 revenue but 59.8% of FY20 NPAT, i.e. the second half was revenue-heavier but earnings-lighter. Simple annualisation of HY21 revenue (NZ$1.304b) sits below FY20 revenue of NZ$1.413b, though that is not a like-for-like seasonality adjustment. The release does not support a clear view of whether second-half earnings can recover the HY21 shortfall; management commentary points to ongoing supply-chain disruption, which argues against an automatic rebound.
Quality of result
Mixed, and the cash and earnings signals diverge.
- The earnings decline looks operational rather than timing-driven: revenue is only modestly lower, but every segment's margin contracted, and International Trading moved from profit to loss. No non-recurring items were disclosed to explain the gap, so the PBT drop is best read as underlying.
- The cash result is substantially working-capital-assisted. Trade debtors fell NZ$30.2m (receivable days improved to 54.4 from 61.0), partially offset by a NZ$15.7m rise in inventories (days up to 53.3 from 47.5). The NZ$29.4m jump in operating cash flow is therefore partly a collections effect, not pure earnings conversion — especially given NPAT fell.
- FX translation reduced cash by NZ$3.5m, a reminder that the group has material foreign-currency exposure not quantified further in the release.
- EBITDA and free cash flow are not disclosed by the company; there is no non-GAAP reconciliation to test.
Unresolved
- What drove International Trading's swing to a NZ$5.7m loss, and is it structural or a one-off supply-chain hit?
- Why did Apples margin compress despite being the strategic franchise, and is the FY outlook for apples still as strong as FY20 commentary implied?
- Is the receivables release sustainable, or will it unwind in H2 as volumes normalise?
- What is the policy relationship between the 6.0 cps interim dividend and full-year earnings/FCF, given current-period cover is weak?
- Net debt/EBITDA cannot be assessed because EBITDA is not disclosed.
This briefing cannot assess valuation, covenant headroom, or the full-year dividend trajectory because NTA, EBITDA, covenant terms, and a prior-period interim dividend comparator were not in the extracted materials.
Key metrics
| Metric | HY21 | HY20 | Change |
|---|---|---|---|
| Revenue | $652.1m | $671.3m | -2.9% ↓ |
| Net profit after tax | $3.4m | $6.6m | -48.3% ↓ |
| Net cash inflow from operating activities | $36.7m | $7.3m | +404.2% ↑ |
| Interim dividend per share | 6.0c | — | — |
| Operating profit | $10.9m | $19.5m | -44.1% ↓ |
| Profit before tax | $5.1m | $13.7m | -63.1% ↓ |
| Cash and cash equivalents | $85.0m | $66.4m | +28.0% ↑ |
| Total assets | $1168.5m | $1135.7m | +2.9% ↑ |
Reference: annolyse.ai/briefings/tgg-hy21
Segment breakdown
| Segment | Current revenue | Prior revenue | Current result | Mix shift |
|---|---|---|---|---|
| Apples | $425.0m | $440.5m | $24.5m | -0.4pp |
| International Trading | $64.1m | $76.9m | −$5.7m | -1.6pp |
| T&G Fresh | $162.9m | $153.8m | $3.8m | +2.1pp |
| Other | $0.1m | $0.1m | −$11.6m | +0.0pp |
Reference: annolyse.ai/briefings/tgg-hy21
Analytical metrics
| Metric | HY21 | HY20 | Context |
|---|---|---|---|
| PBT growth | -63.1% | — | — |
| Effective tax rate | 32.7% | 30.9% | — |
| FCF pre-lease | $20.9m | −$6.4m | +$27.3m |
| FCF post-lease | $20.9m | −$6.4m | +$27.3m |
| FCF / NPAT | 612.9% | -96.7% | complementary conversion metric |
| Capex % revenue | 2.4% | 2.0% | — |
| Capex | $15.8m | −$13.7m | +$29.5m |
| Debtor days | 54.4 | 61.0 | -6.6 days |
| Inventory days | 53.3 | 47.5 | +5.8 days |
| Operating working capital | $385.5m | $400.0m | −$14.5m absorbed |
| Trade debtors | $194.7m | $224.9m | −$30.2m |
| Net debt | $112.3m | $160.4m | −$48.1m |
| Gross borrowings | $197.3m | $226.8m | −$29.5m |
| Payout ratio vs NPAT | n/m | — | — |
| Payout ratio vs FCF pre-lease | 163.2% | — | not covered |
| ROE (annualised) | 1.4% | 2.6% | Weakening |
| HY20 share of FY20 revenue | 47.5% | — | Other half was 52.5% |
| HY20 share of FY20 NPAT | 59.8% | — | Other half was 40.2% |
| Profit from continuing operations | $3.4m | $9.5m | −$6.1m |
Reference: annolyse.ai/briefings/tgg-hy21
This analysis was generated using Annolyse, an AI-powered tool that extracts and analyses NZX company announcements. The underlying data is extracted from official company filings and verified against source documents. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.