Table of Contents
What changed
Scott Technology reported a full recovery across the P&L in FY21. Revenue rose 16.2% to NZD 216.2m, Operating EBITDA swung from a NZD 11.6m loss to a NZD 22.1m profit, and NPAT moved from a NZD 17.3m loss to a NZD 9.5m profit. PBT growth of 151.2% is the cleaner underlying read given tax swung from a NZD 5.9m benefit to a NZD 2.5m expense (effective rate 20.6% in FY21 vs -25.3% in FY20).
Cash generation moved the other way: operating cash flow fell 31.4% to NZD 13.4m from NZD 19.6m, and capex rose to NZD 4.5m from NZD 3.2m, cutting pre-lease free cash flow to NZD 8.9m from NZD 16.4m. Balance-sheet direction was nevertheless positive: gross borrowings eased to NZD 10.9m, cash rose to NZD 12.2m, and the group moved from NZD 3.4m net debt to NZD 1.3m net cash. Equity rose 5.9% to NZD 98.2m and a final dividend of 4.0cps was declared (prior: nil).
Segment mix shifted toward Australasia (51.8% of revenue, up 13.4pp) and China, with Europe's share falling from 36.3% to 25.0%. Australasia drove the result, with segment margin expanding to roughly 17.4% from 0.5%.
What matters
- Operating leverage in Australasia. Australasia revenue rose from NZD 71.4m to NZD 112.1m and segment result from NZD 0.3m to NZD 19.4m. Almost all of the group earnings recovery sits in this one segment — a concentration that will matter on the way up and on the way down.
- Cash conversion deteriorated materially. OCF/EBITDA fell from 168% to 60.7%. Operating working capital (trade debtors plus inventories) grew NZD 4.5m to NZD 50.6m, with receivable days broadly flat at ~46 while inventory days improved to ~39. Earnings quality therefore improved less than the P&L implies.
- Leverage direction has reversed. Net cash of NZD 1.3m and ROE of 9.7% (from -18.7%) restore capital-allocation flexibility — reflected in the reinstated 4.0cps final dividend, equivalent to a 32.5% payout on NPAT and 34.8% of pre-lease FCF.
Expectations
No quantified FY22 target, order book, or forward-work balance is disclosed in the supplied excerpts, so the release does not support a numerical run-rate test against management targets. On shape, HY21 delivered 48.3% of FY21 revenue, 50.6% of EBITDA and 49.5% of NPAT, implying an H2 slightly stronger on revenue but broadly symmetrical on earnings. That is a recovery profile rather than an accelerating exit rate, and it cautions against extrapolating the Australasia margin step-up as a new baseline without explicit management commentary.
Quality of result
A meaningful portion of the earnings uplift looks durable: four of four manufacturing segments were profitable, margins improved in each, and the turnaround is broad-based rather than a one-line recovery. However, three caveats temper the quality read:
- Operating EBITDA is a company-defined measure that excludes impairment and restructuring expenses, and no reconciliation or prior-year adjustment amounts were supplied.
- OCF converted only 60.7% of EBITDA, with the working-capital build absorbing earnings rather than releasing cash.
- The prior-year base included COVID-related disruption, so the 289.9% EBITDA swing partly reflects a reset denominator rather than standalone operating progression.
PBT (up 151.2%) is the more defensible growth lens than NPAT (up 155%) given the tax swing.
Unresolved
- What drove the Australasia margin step-up from 0.5% to 17.4% — volume, mix, pricing, or cost-out — and how much is repeatable?
- Why did receivables absorb cash even as inventory days improved, and does this reflect end-of-period shipping timing or structural terms?
- Is there a quantified forward-work balance to anchor FY22 expectations, and what are the FX sensitivities given four geographic manufacturing segments?
- How do statutory impairment and restructuring charges reconcile to the NZD 22.1m Operating EBITDA headline?
This briefing cannot assess valuation, order-book coverage, or customer concentration, as none were disclosed in the supplied extraction.
Key metrics
| Metric | FY21 | FY20 | Change |
|---|---|---|---|
| Revenue | $216.2m | $186.1m | +16.2% ↑ |
| EBITDA | $22.1m | −$11.6m | +289.9% ↑ |
| Net profit after tax | $9.5m | −$17.3m | +155.0% ↑ |
| Net cash inflow from operating activities | $13.4m | $19.6m | -31.4% ↓ |
| Final dividend per share | 4.0c | 0.0c | ↑ |
| Profit before tax | $12.0m | −$23.4m | +151.2% ↑ |
| Cash and cash equivalents | $12.2m | $7.7m | +58.1% ↑ |
| Total assets | $194.5m | $193.1m | +0.7% ↑ |
Reference: annolyse.ai/briefings/sct-fy21
Segment breakdown
| Segment | Current revenue | Prior revenue | Current result | Mix shift |
|---|---|---|---|---|
| Australasia manufacturing | $112.1m | $71.4m | $19.4m | +13.4pp |
| Americas manufacturing | $37.2m | $41.8m | $4.1m | -5.2pp |
| Europe manufacturing | $54.0m | $67.4m | $6.3m | -11.3pp |
| China manufacturing | $12.9m | $5.5m | $2.5m | +3.1pp |
Reference: annolyse.ai/briefings/sct-fy21
Analytical metrics
| Metric | FY21 | FY20 | Context |
|---|---|---|---|
| Effective tax rate | 20.6% | n/m (loss period) | prior loss period |
| OCF / EBITDA (cash conversion) | 60.7% | 168.0% | deteriorated |
| FCF pre-lease | $8.9m | $16.4m | −$7.4m |
| FCF / NPAT | 93.5% | 94.4% | complementary conversion metric |
| Capex % revenue | 2.1% | 1.7% | — |
| Capex | −$4.5m | −$3.2m | −$1.3m |
| Debtor days | 46.4 | 46.0 | +0.4 days |
| Inventory days | 39.0 | 44.5 | -5.5 days |
| Operating working capital | $50.6m | $46.1m | +$4.5m absorbed |
| Trade debtors | $27.5m | $23.4m | +$4.1m |
| Net debt | −$1.3m | $3.4m | −$4.8m |
| Net debt / EBITDA | -0.06x | 0.30x | Strengthening |
| Gross borrowings | $10.9m | $11.2m | −$0.3m |
| Payout ratio vs NPAT | 32.5% | — | — |
| Payout ratio vs FCF pre-lease | 34.8% | — | covered |
| ROE (annualised) | 9.7% | -18.7% | Strengthening |
| HY21 share of FY21 revenue | 48.3% | — | Other half was 51.7% |
| HY21 share of FY21 EBITDA | 50.6% | — | Other half was 49.4% |
| HY21 share of FY21 NPAT | 49.5% | — | Other half was 50.5% |
| Profit from continuing operations | $9.5m | −$17.5m | +$27.0m |
Reference: annolyse.ai/briefings/sct-fy21
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.