Finance and Insurance lifted PBT 4.7% as Auto Retail eased revenue 2.5% lower

Despite that, PBT grew 4.7% to NZ$26.9m and NPAT grew 4.3% to NZ$19.3m, because the segment mix shifted away from Automotive Retail toward higher-margin Finance and Insurance.

Operating cash flow jumped 84.3% to NZ$26.9m, helped by inventory drawdown, but capex more than doubled to NZ$18.4m (8.8% of revenue versus 4.1% prior). Pre-lease FCF still improved to NZ$8.5m, above the historical baseline range of -NZ$31.2m to NZ$5.9m. The interim dividend rose to 7.0 cps from 6.0 cps.

Automotive Retail revenue fell to NZ$146.3m (-6.3%) and segment result dropped 18.4% to NZ$14.7m, with derived gross margin compressing from 11.5% to 10.0%. Finance revenue grew 11.1% to NZ$33.6m and result rose to NZ$8.1m from NZ$5.1m; Insurance revenue rose 4.3% with result at NZ$7.7m. Finance and Insurance together now contribute roughly half of segment profit, which is what is holding the group earnings line up against a softer used-car cycle.

Capex intensity has stepped up sharply. Capex of NZ$18.4m is +110.5% on prior and lifts capex/revenue from 4.1% to 8.8%. That is a meaningful reinvestment shift in a half where revenue went backwards, and it directly compresses pre-lease FCF conversion to 44.1% of NPAT. Whether this is a one-period catch-up or a sustained higher run-rate determines how much of the FCF improvement persists.

Cash generation looks better than the underlying ratio suggests. The 84.3% jump in OCF is partly a working-capital release: inventory days fell to 14.1 from 20.3 (below the 20.3-35.3 historical range) and trade debtors fell 35%. That release will not repeat at the same scale in H2.

HY25 PBT of NZ$26.9m puts the company on track for the FY25 line if H2 holds, but historically HY has been first-half weighted (HY24 was 51.4% of FY24 revenue and 56.1% of FY24 NPAT), so simple doubling of the half overstates the run-rate.

The FY28 NPBT goal is more demanding: it requires reacceleration from the current 4.7% PBT growth pace, which means the Finance and Insurance lift needs to keep compounding while Automotive Retail eventually stabilises.

PBT margin of 12.9% sits exactly on its 12.9% historical mean, and NPAT margin at 9.3% is essentially in line with its 9.4% mean, so this is not a margin-led upgrade. The growth is coming from a deliberate mix shift that improved Finance and Insurance contribution while Auto Retail margin contracted.

Cash quality is mixed. Pre-lease FCF of NZ$8.5m is above Annolyse's historical baseline (mean -NZ$9.1m), but it benefits from inventory-days and debtor-days that both sit at the low end of the supplied historical ranges, so a chunk of the cash improvement is balance-sheet release rather than recurring conversion. Set against capex doubling, the durable underlying FCF run-rate is harder to read than the headline +NZ$2.6m uplift suggests. ROE moved fractionally to 6.7% from 6.6%, still well below the 11.1% historical mean, so the higher asset base (NZ$875.5m, above the NZ$763.6m-NZ$852.9m historical range) is not yet earning at the prior return level.

This briefing cannot assess unit-economic detail within Finance (loan book quality, impairment trends) or Insurance (claims and underwriting margin), which would be needed to judge how durable the segment-driven earnings lift is.