Table of Contents
What changed
Revenue rose 13.3% to $118.4m and statutory EBITDA rose 8.8% to $12.2m (normalised EBITDA $11.7m vs $9.8m). Profit before tax grew 22.6% to $7.4m, but NPAT was essentially flat at $4.7m because the effective tax rate jumped to 36.2% from 22.2%. Operating cash flow reversed from a $5.3m inflow to an $8.8m outflow, a $14.1m swing. Cash on hand rose to $13.7m, but gross borrowings more than tripled to $26.7m, taking net debt to roughly $12.9m (about 1.1x EBITDA) from $2.9m (0.3x). The interim dividend was doubled to 4.0 cents per share.
Segmentally, Australasia Manufacturing extended its dominance to 52.5% of revenue with segment margin expanding to ~19.6% from ~14.3%. Americas flipped to a small loss (segment result -$0.2m vs +$3.2m) and lost share, while China margin compressed to ~3.9% from ~25.1%.
What matters
- Tax rather than operations explains the flat NPAT. PBT growth of 22.6% is the cleaner operating read; the 22.1pp gap to NPAT growth is driven almost entirely by the effective tax rate stepping up ~14pp, not by below-the-line items or discontinued operations (none disclosed).
- Cash conversion broke down. OCF/EBITDA moved from +47% to -73%. Pre-lease free cash flow was roughly -$10.0m versus +$0.8m in HY21. The dividend was still raised, lifting payout versus NPAT to ~66.7% from ~32.8% and leaving the distribution unsupported by period cash generation.
- Leverage direction reversed. Net debt/EBITDA rose to ~1.1x from ~0.3x, funding what looks like an inventory build (inventories +51.6% to $28.5m; inventory days 43.8 vs 32.7). Debtor days actually improved (48.8 vs 55.1), so the working-capital drag is concentrated in stock.
Expectations
No numeric targets or forward-work dollar value are provided in the supplied excerpts; management only states that forward work "remains robust" across Europe, the USA and China. HY21 was modestly second-half weighted (H1 was 48.3% of FY21 revenue, 49.5% of NPAT), so applying HY21 shape to HY22 would imply a full-year revenue trajectory well above FY21's $216.2m — annualised HY22 revenue sits at $236.8m (~9.5% above FY21). The release supports a revenue growth narrative but does not, on its face, support a commensurate NPAT step-up given the tax drag and cash outflow.
Quality of result
The earnings result looks mixed in quality. The operating improvement at the PBT level is real and is reinforced by a genuine margin lift in the dominant Australasia segment. Against that, three factors reduce durability: (1) the inventory-driven working-capital build means reported EBITDA is not translating into cash — a deterioration that should be flagged directly; (2) Americas has turned loss-making and China margin has collapsed, concentrating profitability in one region; and (3) the headline EBITDA benefits from a gap to normalised EBITDA ($12.2m statutory vs $11.7m normalised) that the supplied excerpts do not fully reconcile. The higher dividend is being paid while leverage rises and FCF is negative, so it is balance-sheet-assisted rather than cash-funded this period.
Unresolved
- What is driving the 14pp jump in the effective tax rate, and is 36% the new run-rate or a period-specific distortion (e.g. unrecognised losses in Americas, mix shift to higher-tax jurisdictions)?
- Is the inventory build contracted supply (pre-committed to signed system builds) or speculative buffer against supply-chain risk, and when does it unwind into revenue?
- Why did Americas swing to a loss and China margin collapse — one-off project mix, pricing, or a more structural issue?
- What is the quantified forward-work book, and how does it compare with the prior period?
- What is the reconciliation between statutory EBITDA ($12.2m) and normalised EBITDA ($11.7m), given normalised is the lower figure here?
This briefing cannot assess valuation, order-book size, or management's qualitative strategy commentary beyond what the supplied excerpts and calculations contain.
Key metrics
| Metric | HY22 | HY21 | Change |
|---|---|---|---|
| Revenue | $118.4m | $104.5m | +13.3% ↑ |
| EBITDA | $12.2m | $11.2m | +8.8% ↑ |
| Net profit after tax | $4.7m | $4.7m | +0.5% ↑ |
| Net cash inflow from operating activities | −$8.8m | $5.3m | -267.6% ↓ |
| Interim dividend per share | 4.0c | 2.0c | +100.0% ↑ |
| Profit before tax | $7.4m | $6.1m | +22.6% ↑ |
| Cash and cash equivalents | $13.7m | $6.2m | +121.7% ↑ |
| Total assets | $210.8m | $176.6m | +19.3% ↑ |
Reference: annolyse.ai/briefings/sct-hy22
Segment breakdown
| Segment | Current revenue | Prior revenue | Current result | Mix shift |
|---|---|---|---|---|
| Australasia Manufacturing | $62.1m | $51.1m | $12.2m | +3.6pp |
| Americas Manufacturing | $18.2m | $19.1m | −$0.2m | -2.9pp |
| Europe Manufacturing | $30.5m | $28.2m | $3.3m | -1.2pp |
| China Manufacturing | $7.6m | $6.1m | $0.3m | +0.6pp |
Reference: annolyse.ai/briefings/sct-hy22
Analytical metrics
| Metric | HY22 | HY21 | Context |
|---|---|---|---|
| PBT growth | +22.6% | — | cleaner earnings measure |
| Effective tax rate | 36.2% | 22.2% | — |
| OCF / EBITDA (cash conversion) | -72.7% | 47.2% | deteriorated |
| FCF pre-lease | −$10.0m | $0.8m | −$10.8m |
| FCF post-lease | −$10.0m | $0.8m | −$10.8m |
| FCF / NPAT | -211.4% | 16.2% | complementary conversion metric |
| Capex % revenue | 1.0% | 4.3% | — |
| Capex | $1.2m | −$1.4m | +$2.6m |
| Debtor days | 48.8 | 55.1 | -6.2 days |
| Inventory days | 43.8 | 32.7 | +11.1 days |
| Trade debtors | $31.8m | $31.6m | +$0.2m |
| Net debt | $12.9m | $2.9m | +$10.0m |
| Net debt / EBITDA | 1.06x | 0.26x | Weakening |
| Gross borrowings | $26.7m | $9.1m | +$17.5m |
| Payout ratio vs NPAT | 66.7% | — | — |
| ROE (annualised) | 4.5% | 5.0% | Weakening |
| 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 | $4.7m | $4.7m | +$0.0m |
Reference: annolyse.ai/briefings/sct-hy22
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.