NPAT up 58% but operating cash flow swung NZ$85m to a NZ$78.8m outflow

What changed

Revenue rose 72.1% to NZ$449.2m and profit before tax rose 53.8% to NZ$56.0m, with NPAT up 57.9% to NZ$39.7m. The top-line step-up reflects the first full half with Apollo consolidated. Gross profit grew to NZ$288.1m but gross margin compressed by roughly 300bps to 64.1%, as cost of sales expanded faster than revenue. Services revenue (NZ$234.0m) and goods revenue (NZ$215.2m) both scaled, leaving the services mix essentially unchanged at 52.1%.

The balance sheet moved sharply. Gross borrowings rose 47.3% to NZ$453.6m and cash fell to NZ$50.3m, lifting estimated net debt to NZ$403.3m from NZ$303.1m. Total assets grew to NZ$1.41bn and equity to NZ$618.4m (up 8.3%). Operating cash flow swung from +NZ$6.4m to -NZ$78.8m, a NZ$85.3m deterioration. An interim dividend of 4.5c per share was declared (HY23: nil).

What matters

• Cash conversion deteriorated sharply. Against 58% NPAT growth, operating cash flow was -NZ$78.8m. Receivable days actually improved to 26 and inventory days fell from 111 to 81, but the absolute operating working-capital proxy still climbed NZ$64.2m to NZ$263.9m as the enlarged post-Apollo balance sheet scaled up. This is the dominant signal in the release.
• Leverage is meaningfully higher. Net debt rose roughly NZ$100m year-on-year to NZ$403.3m. Because EBITDA was not disclosed, a net debt/EBITDA ratio cannot be constructed, but the direction is unambiguously weakening.
• Margin quality softened at the gross line. A 300bps gross-margin compression alongside a barely-changed services mix implies the earnings uplift is volume- and scale-driven rather than pricing- or mix-driven.

Expectations

No FY24 revenue, EBITDA or NPAT target was supplied, and there is no forward-work or order-book disclosure. Shape context from FY23 shows the business was second-half weighted on NPAT (HY23 was 50.5% of FY23 NPAT, but on only 39.3% of revenue — FY23 had a part-period Apollo contribution distorting the comparison). Annualised HY24 revenue of NZ$898.4m sits NZ$234.6m above FY23 revenue of NZ$663.8m, which establishes a materially higher run-rate but does not map cleanly to an FY24 number given the acquisition timing. The release does not support a concrete comparison against any stated target.

Quality of result

The accounting result looks largely durable in the sense that there is no disclosed one-off gain, no discontinued operation, and no tax distortion (effective tax 29.1% vs 30.9%, so NPAT grew slightly faster than PBT off a normalising tax rate rather than an unusual credit). The non-durable elements sit below the P&L:

• The -NZ$78.8m operating cash outflow indicates the reported profit is not converting to cash this half, and pre-lease free cash flow of -NZ$83.0m leaves the 4.5c interim dividend being funded from the balance sheet rather than from period cash generation.
• Gross-margin compression of ~300bps suggests some of the revenue uplift came at a lower unit profitability than the HY23 base.
• Capex of only NZ$4.2m (vs NZ$112.8m in HY23) flatters pre-lease FCF relative to last year, but the HY23 capex line looks fleet-related and is not obviously comparable on a like-for-like basis.

Unresolved

• No HY24 segment revenue or result split was supplied, so the relative contribution of New Zealand, Australia, US, Action Manufacturing and the acquired Apollo operations to the 72% revenue jump and the 300bps margin compression cannot be isolated.
• EBITDA was not disclosed in the extraction, so leverage on a net debt/EBITDA basis and cash conversion against EBITDA cannot be tested.
• The drivers of the NZ$85m operating cash swing are not decomposed beyond the working-capital proxy; the split between fleet/inventory build, receivables timing and acquisition integration cash use is not visible.
• No FY24 guidance, forward-work book, or customer/geographic concentration disclosure is available in the supplied materials.

This briefing cannot assess segment-level performance, EBITDA-based leverage or cash-conversion ratios, or progress against any FY24 target, because those disclosures are not present in the supplied extraction.

Key metrics

Segment breakdown

Analytical metrics

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This analysis was generated using Annolyse, an AI-powered tool that analyses NZX company announcements. The analysis is based on available company filings and standard Annolyse calculations. 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.