Table of Contents
What changed
Revenue grew 1.9% to $378.6m, but profitability and cash both moved the other way. PBT fell 6.8% to $37.1m and NPAT fell 7.8% to $26.1m. Operating cash flow dropped 25.1% to $56.1m while capex more than doubled to $40.2m (10.6% of revenue, up from 5.0%), collapsing pre-lease free cash flow from $56.4m to $16.0m. Gross borrowings were cut to roughly $1.4m and the group remains in a net cash position of about $55.2m, though the cash balance itself fell from $73.9m to $56.6m. Capital return was stepped up materially: a 6.0c interim dividend (versus nil in HY22) plus a buyback programme.
What matters
- Cash conversion deteriorated sharply. OCF/EBITDA ran at 76.2% and pre-lease FCF covered only 61.2% of NPAT, versus 199.6% in HY22. The gap between the "customer and revenue growth" narrative and the cash outcome is the dominant read-through.
- Capex intensity reset higher. Capex rising from $18.5m to $40.2m is the single largest driver of the FCF decline. Whether this is a one-off catch-up (set-top boxes, streaming platform, content rights infrastructure) or a new run-rate will determine sustainable FCF.
- Capital allocation is running ahead of cash generation. The reinstated 6.0c dividend represents 38.7% of NPAT but 63.3% of pre-lease FCF, with a buyback layered on top. That is affordable given the net-cash balance sheet, but it is being funded partly out of the cash cushion rather than period FCF.
Expectations
No formal earnings guidance was provided. Management reiterated an FY23 cost-savings target of $35m and flagged growth against H2 FY22 across core revenue lines. Using FY22 as the shape anchor, HY23 annualises to roughly $757.2m of revenue, about 2.9% above the $736.1m FY22 base — consistent with the "growth continues" messaging but modest. HY22 contributed 51.4% of FY22 revenue but only 43.6% of EBITDA and 42.0% of NPAT, implying FY22 was second-half weighted on earnings; if that shape repeats, the HY23 EBITDA of $73.7m does not in itself signal a step-change in full-year earnings.
Quality of result
The result looks lower quality than the headline suggests. Revenue growth is real but thin, and the earnings decline is not explained by tax (effective rate stable at ~29%) or by a disclosed discontinued operation — it reflects genuine operating compression. On the cash side, capex doubled and receivables fell from $53.8m to effectively $0.8m (26.4 days to 0.4 days), while inventory days rose from 46.7 to 63.6 — a working-capital mix that warrants explanation, because a near-total drop in trade debtors is unusual and may reflect reclassification or timing rather than genuine collections strength. EBITDA of $73.7m is a non-GAAP figure without a full reconciliation in the extracted material.
Unresolved
- Is the step-up in capex a one-off reinvestment cycle or the new baseline, and what does that imply for sustainable FCF and dividend cover?
- What drove trade receivables to near zero in a single period, and does this reverse in H2?
- How is the buyback sized and phased, and what is the combined cash cost of dividend plus buyback against expected FY23 FCF?
- Given EBITDA is presented without a reconciliation, what is the bridge from statutory NPAT of $26.1m to EBITDA of $73.7m?
This briefing cannot assess valuation, market reaction, or segment-level profitability, as no share price, NTA, or segment disclosures were provided in the extraction.
Key metrics
| Metric | HY23 | HY22 | Change |
|---|---|---|---|
| Revenue | $378.6m | $371.7m | +1.9% ↑ |
| EBITDA | $73700m | — | — |
| Net profit after tax | $26.1m | $28.3m | -7.8% ↓ |
| Net cash inflow from operating activities | $56.1m | $74.9m | -25.1% ↓ |
| Interim dividend per share | 6.0c | 0.0c | ↑ |
| Cash and cash equivalents | $56.6m | $73.9m | -23.5% ↓ |
| Total assets | $679.3m | $692.7m | -1.9% ↓ |
Reference: annolyse.ai/briefings/skt-hy23
Analytical metrics
| Metric | HY23 | HY22 | Context |
|---|---|---|---|
| PBT growth | -6.8% | — | — |
| Effective tax rate | 29.4% | 29.0% | — |
| OCF / EBITDA (cash conversion) | 76.2% | — | deteriorated |
| FCF pre-lease | $16.0m | $56.4m | −$40.5m |
| FCF / NPAT | 61.2% | 199.6% | complementary conversion metric |
| Capex % revenue | 10.6% | 5.0% | — |
| Capex | −$40.2m | $18.5m | −$58.6m |
| Free cash flow | — | $39700.0m | — |
| Debtor days | 0.4 | 26.4 | -26.0 days |
| Inventory days | 63.6 | 46.7 | +16.9 days |
| Trade debtors | $777.0m | $53.8m | +$723.2m |
| Net debt | −$55.2m | −$70.5m | +$15.3m |
| Net debt / EBITDA | -0.75x | — | Weakening |
| Gross borrowings | $1419.0m | $3449.0m | −$2030.0m |
| Payout ratio vs NPAT | 38.7% | — | — |
| Payout ratio vs FCF pre-lease | 63.3% | — | covered |
| ROE (annualised) | 6.1% | 6.2% | Weakening |
| HY23 share of FY22 revenue | 51.4% | — | Other half was 48.6% |
| HY23 share of FY22 EBITDA | 43.6% | — | Other half was 56.4% |
| HY23 share of FY22 NPAT | 42.0% | — | Other half was 58.0% |
| Profit from continuing operations | $26.1m | $28.3m | −$2.2m |
Reference: annolyse.ai/briefings/skt-hy23
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.