Savor HY24: Revenue up 40% and EBITDA doubles, but still a loss

What changed

Revenue rose 40.4% to $29.1m and EBITDA more than doubled to $3.1m (from $1.4m), producing operating leverage well ahead of top-line growth. The reported loss narrowed sharply, with PBT improving 80.3% to -$0.4m from -$2.1m; because no tax was booked in either period, PBT and NPAT are identical. Operating cash flow rose to $2.5m from $1.6m, and with capex normalising to $0.4m (vs $2.4m in HY23, which included venue build-out), pre-lease free cash flow swung to +$2.2m from -$0.7m. Gross borrowings fell to $11.8m from $13.7m and equity lifted to $16.9m from $14.3m. Net debt/EBITDA improved to roughly 4.3x from 10.2x.

What matters

• Operating leverage is real but the business is still loss-making. EBITDA margin stepped up to about 10.8% (from 6.5%), yet depreciation, amortisation and interest still consume the gain. Management continues to reference an adjusted NPAT excluding "one-off restructuring and interest costs" — no quantified bridge is supplied in the excerpt, so the scale of those add-backs should be treated as disclosed but unverified here.
• Leverage direction is favourable, absolute level is not. Gross borrowings down $1.9m and EBITDA up 133% have dragged the leverage ratio from double-digits to ~4.3x net debt/EBITDA. That is a meaningful improvement but still high for a hospitality operator, and the balance sheet carries a $1.8m bank overdraft at period end.
• Cash conversion weakened even as FCF improved. OCF/EBITDA fell to 80.7% from 121.6% as EBITDA outran operating cash. The FCF improvement is largely a capex story, not a working-capital or earnings-quality story.

Expectations

No quantified FY24 target, forward-work indicator or guidance is supplied in the extract. The only shape context is FY23, which was clearly second-half weighted: HY23 represented just 39.5% of FY23 revenue and 25.9% of FY23 EBITDA. Annualising HY24 revenue naively gives ~$58.2m, about 11% above the FY23 anchor of $52.4m; if the second-half weighting repeats, the implied trajectory is materially higher. However, the extract does not disclose whether HY24 benefited from new venues or a full period contribution of venues opened mid-FY23, so the read-across to H2 is directional only.

Quality of result

Mixed. The revenue and EBITDA gains look operationally driven — working capital moved only modestly ($0.4m absorption in receivables plus inventory), receivable days improved to 6.2 from 7.5, and the result was not flattered by a tax credit. That supports durability at the EBITDA line.

Against that, two items temper quality. First, cash conversion deteriorated by roughly 40 percentage points versus HY23, so the EBITDA step-up has not fully translated into operating cash. Second, the favourable free cash flow swing is predominantly a capex timing effect (capex at 1.3% of revenue vs 11.4% prior) rather than underlying cash generation; a return to more normal reinvestment would compress FCF. The reliance on an adjusted NPAT measure to frame the result as near-breakeven, without a published reconciliation in the supplied excerpt, further argues for discounting the headline improvement at the bottom line.

Unresolved

• What is the quantum and nature of the "one-off restructuring and interest costs" being adjusted out, and are they genuinely non-recurring?
• What is a normalised capex run-rate — is the $0.4m HY24 level a sustainable maintenance figure, or is growth capex simply deferred?
• What drove the deterioration in OCF/EBITDA conversion, given working capital moved only modestly?
• Is the second-half weighting seen in FY23 structural (seasonal venues) or a function of ramp-up from venue openings, and how should that inform the H2 shape?
• What is the covenant position on the $11.8m of borrowings given the improved but still ~4.3x leverage ratio?

This briefing cannot assess venue-level performance, customer or venue concentration, any post-balance-date trading update, or management's formal FY24 guidance, none of which are disclosed in the supplied extracts.

Key metrics

Analytical metrics

This analysis was generated using Annolyse, an AI-powered tool that analyses NZX company announcements. The analysis is based on available company filings and standard Annolyse calculations. 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.