Table of Contents
What changed
Revenue rose 2.4% to $754.1m, with management attributing growth to customer and ARPU gains across Sky Box, Streaming, Commercial and Broadband. Reported EBITDA of $156.4m is not directly comparable to the prior $169.0m because FY22 included a ~$14.0m property gain; on an adjusted basis management cites EBITDA growth of 1.8%. Below EBITDA, PBT fell 12.2% to $70.9m and NPAT fell 18.3% to $50.8m. Operating cash flow was broadly flat at $117.0m, but capex rose to $71.4m from $44.7m, and closing cash almost halved to $56.1m from $138.9m. Gross borrowings remain nominal at $0.8m, so Sky is still net cash ($55.3m) but the cushion is materially smaller. The announced final dividend lifted to 9.0cps from 7.3cps.
What matters
- Capex step-up dominates the cash story. Capex/revenue moved from 6.1% to 9.5% on Sky Box and Sky Pod investment, and pre-lease FCF fell to $45.6m from $74.9m. That alone drove FCF/NPAT from 120.6% to 89.9% and is the main reason the cash balance compressed by roughly $83m despite operating profitability.
- Tax distortion makes PBT the cleaner read. The effective tax rate rose from 23.0% to 28.0%, amplifying the NPAT decline. PBT down 12.2% is a better handle on operating direction than NPAT down 18.3%.
- The non-GAAP gap is the real earnings read. Reported EBITDA fell, yet management highlights adjusted EBITDA up 1.8%. Without a full itemised bridge in the release, the underlying operating trend — a low-single-digit revenue lift partly eaten by a $21.3m net programming cost increase — has to be taken partly on trust.
Expectations
No medium-term targets or quantified forward-work backlog were supplied. Management states FY23 revenue, EBITDA and adjusted NPAT came in within guidance ranges, with capex "slightly above" guidance due to new-hardware investment. On shape, HY23 represented 50.2% of FY revenue, 47.1% of EBITDA and 51.4% of NPAT, implying a 2H that was modestly stronger on EBITDA but slightly softer on NPAT than 1H — a mixed rather than second-half-weighted pattern. The release therefore supports a read of modest top-line traction and broadly stable underlying EBITDA, but it does not support a view that earnings accelerated through the year.
Quality of result
The operating result looks durable in revenue and adjusted EBITDA terms, but headline earnings quality weakened. Operating cash conversion against EBITDA actually ticked up (74.8% versus 70.8%), so the deterioration in FCF is capex-driven rather than working-capital-driven at the cash line. However, programme-rights inventory rose, lifting operating working capital by about $12.4m — a timing-style tie-up rather than a P&L event. Dividend cover against pre-lease FCF tightened materially, with the payout ratio on FCF rising to 30.9% from 17.0%. ROE slipped to 11.5% from 12.6%. The prior-period EBITDA comparison is also flattered by the $14.0m FY22 property gain.
Unresolved
- What is the full reconciliation between statutory EBITDA of $156.4m and the "underlying, adjusted for one-offs" number management is guiding off?
- Is the elevated capex run-rate (Sky Box and Sky Pod) a one- to two-year investment cycle or the new normal, and what does that imply for sustainable FCF and the dividend trajectory?
- Why did the effective tax rate rise ~500bps, and is 28% the new base rate?
- Is the programme-rights inventory build (+$13.4m, inventory days +5.1) a re-phasing of content cost into FY24, or a structural increase tied to the new rights portfolio?
- What is the split of growth between Sky Box, Streaming, Commercial and Broadband, given no segment breakdown was supplied?
This briefing cannot assess segment profitability, subscriber-level unit economics, or any valuation multiples, as none of those datapoints were supplied.
Key metrics
| Metric | FY23 | FY22 | Change |
|---|---|---|---|
| Revenue | $754.1m | $0.7m | +102343.8% ↑ |
| EBITDA | $156400m | $169m | +92444.4% ↑ |
| Net profit after tax | $50.8m | $0.1m | +81570.3% ↑ |
| Net cash inflow from operating activities | $117.0m | $0.1m | +97712.6% ↑ |
| Final dividend per share | 9.0c | 7.3c | +23.3% ↑ |
| Profit before tax | $70.9m | $0.1m | +87697.1% ↑ |
| Cash and cash equivalents | $56.1m | $0.1m | +40248.8% ↑ |
| Total assets | $690.2m | $0.8m | +88742.6% ↑ |
Reference: annolyse.ai/briefings/skt-fy23
Analytical metrics
| Metric | FY23 | FY22 | Context |
|---|---|---|---|
| PBT growth | -12.2% | — | cleaner earnings measure |
| Effective tax rate | 28.0% | 23.0% | — |
| OCF / EBITDA (cash conversion) | 74.8% | 70.8% | stable |
| FCF pre-lease | $45.6m | $74.9m | −$29.3m |
| FCF / NPAT | 89.9% | 120.6% | complementary conversion metric |
| Capex % revenue | 9.5% | 6.1% | — |
| Capex | −$71.4m | $44.7m | −$116.1m |
| Debtor days | 15.9 | 16.8 | -0.9 days |
| Inventory days | 65.3 | 60.2 | +5.1 days |
| Operating working capital | $167.6m | $155.2m | +$12.4m absorbed |
| Trade debtors | $32.8m | $33.8m | −$1.1m |
| Net debt | −$55.3m | −$137.9m | +$82.6m |
| Net debt / EBITDA | -0.35x | -0.82x | Weakening |
| Gross borrowings | $0.8m | $1035.0m | −$1034.2m |
| Payout ratio vs NPAT | 27.8% | — | — |
| Payout ratio vs FCF pre-lease | 30.9% | — | covered |
| ROE (annualised) | 11.5% | 12.6% | Weakening |
| HY23 share of FY23 revenue | 50.2% | — | Other half was 49.8% |
| HY23 share of FY23 EBITDA | 47.1% | — | Other half was 52.9% |
| HY23 share of FY23 NPAT | 51.4% | — | Other half was 48.6% |
| Profit from continuing operations | $50.8m | $62.1m | −$11.4m |
Reference: annolyse.ai/briefings/skt-fy23
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.