Table of Contents
What changed
Revenue from continuing operations grew 3.2% to NZD$276.1m, a meaningful deceleration from the 21% growth FY23 recorded against its own prior year. The top-line gain was entirely undermined at the earnings level: EBITDA fell 11.0% to $26.4m, PBT collapsed 42.9% to $11.0m, and NPAT halved to $7.7m. The gap between EBITDA and PBT deterioration is notable — it implies a significant step-up in depreciation, amortisation, and/or net finance costs sitting below the EBITDA line.
The tax line amplified the NPAT decline further. The effective tax rate rose to 29.6% from 19.6%, so while PBT fell 42.9%, NPAT fell 50.0%. PBT is the cleaner operating read.
Cash generation deteriorated severely. Operating cash flow fell 70.5% to $6.0m, compressing cash conversion to just 22.6% of EBITDA versus 68.1% in FY23. Capex rose to $9.0m from $5.6m, pushing pre-lease free cash flow to negative $3.0m against positive $14.7m a year earlier. Cash on hand dropped to $11.7m from $21.4m, while gross borrowings more than doubled to $31.7m from $12.5m — shifting the group from a prior net cash position of approximately $9.0m to net debt of approximately $20.1m. The final dividend was cut to 3.0 cents per share from 4.0 cents, a 25% reduction.
Half-year shape data reveals a pronounced second-half earnings fade: HY24 contributed 62.8% of full-year EBITDA and 57.5% of full-year NPAT, leaving the implied second half with EBITDA of only $9.8m and NPAT of $3.3m — a material step-down from the first half's $16.6m EBITDA and $4.4m NPAT.
What matters
The margin compression is the central problem. Revenue grew $8.6m but EBITDA fell $3.3m — meaning incremental revenue came at a cost structure that actively destroyed operating leverage. An EBITDA margin of approximately 9.6% in FY24 compares with approximately 11.1% in FY23. The HY24 interim commentary cited one-off strategic review costs and higher interest costs as partial drivers, but no quantified non-recurring adjustment was disclosed in the full-year release. Without that bridge, it is impossible to distinguish structural margin deterioration from transitory cost drag.
The balance-sheet inflection is abrupt. Moving from $9.0m net cash to $20.1m net debt in a single year — with net debt to EBITDA now at 0.8x — is not alarming in absolute terms, but the speed of the shift is. The borrowings increase ($19.3m) is far larger than capex uplift alone ($3.4m incremental) can explain. The gap likely reflects operating cash outflows, working capital movements, or financing activities not fully visible in the supplied data. Return on equity fell from 13.5% to 6.9%.
The Destination 2030 target requires an 11.5% revenue CAGR from the FY24 base. At $276.1m, the group is at roughly 52% of the $530m FY30 target with six years remaining. FY24's 3.2% revenue growth — while the earnings base eroded — does nothing to validate that trajectory. The strategy has now been extended to 2027 (from the original Scott 2025), which may signal re-sequencing rather than acceleration.
Expectations
No short-term earnings guidance was provided in the release. The only quantified forward-looking commitment remains the Destination 2030 revenue target of $530m.
Against that target, FY24 is a clear setback: the revenue growth rate would need to re-accelerate materially while margins recover to produce meaningful earnings progress. The second-half earnings fade in FY24 means the exit rate into FY25 is weaker than the headline full-year figures suggest — implied H2 EBITDA of $9.8m annualises to approximately $19.7m, well below the $26.4m full-year EBITDA reported.
Working capital metrics improved modestly — debtor days fell from 59.6 to 53.2, inventory days from 52.2 to 48.7 — but these improvements did not translate into operating cash flow, suggesting other cash drains were at work. The release does not provide forward order book or pipeline data, so revenue visibility into FY25 cannot be assessed from the disclosed materials.
The dividend cut is consistent with a board conserving cash given the free cash flow shortfall; the dividend was not covered by pre-lease free cash flow in FY24.
Quality of result
The result has low quality on multiple dimensions.
- Cash conversion collapsed to 22.6% of EBITDA. A business generating $26.4m EBITDA should convert far more than $6.0m to operating cash in a normal year. The working capital improvements were insufficient to offset other cash outflows.
- Pre-lease free cash flow was negative $3.0m despite positive NPAT of $7.7m — the divergence is a red flag for earnings durability.
- The pronounced first-half/second-half split (62.8% of EBITDA in H1) raises the question of whether H1 benefited from contract timing, milestone billings, or other front-loaded items that will not repeat at the same rate.
- The absence of any quantified non-recurring charge in the full-year release, despite HY24 flagging strategic review costs, makes it difficult to isolate a normalised earnings base.
- The tax rate increase (19.6% to 29.6%) is unexplained in the supplied excerpts and adds a further layer of uncertainty around whether the effective rate normalises in FY25.
The revenue growth is real and consistent, but it is the only unambiguously positive element.
Unresolved
- What drove gross borrowings up $19.3m when incremental capex and the operating free cash flow shortfall together account for only a portion of that? Are there acquisition payments, earn-outs, or other cash commitments not visible in the release?
- What is the nature and quantum of the strategic review costs referenced at HY24, and were any further charges taken in H2? Without this, the normalised EBITDA and PBT base cannot be determined.
- Why did the effective tax rate jump 10 percentage points? Is this structural (geographic profit mix shift, deferred tax unwind) or a one-off?
- What is the current order book or pipeline, and does it support a recovery in second-half-type run rates? The release provides no forward work data.
- How much of the EBITDA-to-PBT bridge deterioration reflects higher amortisation of acquired intangibles versus cash financing costs — a distinction that matters for assessing whether earnings recovery is realistic without revenue acceleration?
This briefing cannot assess the competitive positioning or customer concentration dynamics that are likely to determine whether the Destination 2030 revenue trajectory is achievable.
Key metrics
| Metric | FY24 | FY23 | Change |
|---|---|---|---|
| Revenue | $276.1m | $267.5m | +3.2% ↑ |
| EBITDA | $26.4m | $29.7m | -11.0% ↓ |
| Net profit after tax | $7.7m | $15.4m | -50.0% ↓ |
| Net cash inflow from operating activities | $6.0m | $20.2m | -70.5% ↓ |
| Final dividend per share | 3.0c | 4.0c | -25.0% ↓ |
| Profit before tax | $11.0m | $19.2m | -42.9% ↓ |
| Cash and cash equivalents | $11.7m | $21.4m | -45.5% ↓ |
| Total assets | $244.0m | $253.1m | -3.6% ↓ |
Source: annolyse.ai/briefings/sct-fy24
Segment breakdown
| Segment | Current revenue | Prior revenue | Current result | Mix shift |
|---|---|---|---|---|
| New Zealand | — | $49.9m | — | n/a |
| Australia | — | $41.5m | — | n/a |
| Americas | — | $82.3m | — | n/a |
| Europe | — | $89.0m | — | n/a |
| China | — | $4.9m | — | n/a |
Source: annolyse.ai/briefings/sct-fy24
Analytical metrics
| Metric | FY24 | FY23 | Context |
|---|---|---|---|
| PBT growth | -42.9% | — | cleaner earnings measure |
| Effective tax rate | 29.6% | 19.6% | — |
| OCF / EBITDA (cash conversion) | 22.6% | 68.1% | deteriorated |
| FCF pre-lease | −$3.0m | $14.7m | −$17.6m |
| FCF / NPAT | -38.6% | 95.0% | complementary conversion metric |
| Capex % revenue | 3.2% | 2.1% | — |
| Capex | $9.0m | $5.6m | +$3.4m |
| Debtor days | 53.2 | 59.6 | -6.4 days |
| Inventory days | 48.7 | 52.2 | -3.4 days |
| Trade debtors | $40.2m | $43.6m | −$3.4m |
| Net debt | $20.1m | −$9.0m | +$29.0m |
| Net debt / EBITDA | 0.80x | -0.30x | Weakening |
| Gross borrowings | $31.7m | $12.5m | +$19.3m |
| Payout ratio vs NPAT | 30.9% | — | — |
| ROE (annualised) | 6.9% | 13.5% | Weakening |
| HY24 share of FY24 revenue | 51.0% | — | Other half was 49.0% |
| HY24 share of FY24 EBITDA | 62.8% | — | Other half was 37.2% |
| HY24 share of FY24 NPAT | 57.5% | — | Other half was 42.5% |
| Required CAGR | 11.5% | — | Destination 2030: $530m revenue by FY30 |
| Profit from continuing operations | $7.7m | $15.4m | −$7.7m |
| Discontinued operation after tax | — | $0.0m | — |
Source: annolyse.ai/briefings/sct-fy24
This analysis was generated using Annolyse, an AI-powered tool that extracts and analyses NZX/ASX 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.