Thank you for standing by, and welcome to the CleanSpace Holdings Limited Full Year Results Call. [Operator Instructions] I would now like to hand the conference over to Bruce Rathie. Please go ahead.
Good morning, ladies and gentlemen. Welcome to the CleanSpace Holdings investor call regarding its financial results for the year ended 30th of June 2024. My name is Bruce Rathie, and I'm Chairman of CleanSpace Holdings, and I'm joined this morning by Mr. Graham McLean, the CEO of the company. We also have Ms. Bree Greeff, the company's CFO, joining us for the call.
I will say a few words of introduction regarding the results, then hand to Graham, who will take you through the presentation, providing detailed information and perspectives on the company's performance during the 2024 financial year just concluded.
Financial year 2024 has proved to be a transformational year. We foreshadowed mid-July that annual sales grew by 30% as against PCP. And today, we have announced that the stronger revenue has translated into materially improved annual EBITDA numbers and most importantly, Q4 EBITDA turned positive for the first time in a long while.
This much improved financial performance is driven by a number of factors, which Graham will walk you through shortly. As recently announced, Graham will be stepping back into a Non-Executive Director role later in the year, when a new CEO is identified and appointed. It is an appropriate and opportune time for a new leader with relevant industrial experience to join and lead the company through its next phase of growth. The Board is very grateful for Graham's leadership whilst in the CEO role and his ongoing involvement with the company. More generally, the senior management team has done a great job assisting Graham with a material turnaround in the company's performance during the year. The Board also recognizes the support of shareholders as the company has gone through this difficult journey.
I'll now hand you to Graham to take you through his presentation. Thank you. Graham?
Great. Thank you very much, Bruce, and good morning, everybody, and welcome to our full year results presentation. I'll spend the next 20 minutes or so taking you through some key slides highlighting our performance for the year.
So in summary, FY '24, as Bruce said, was a very strong year for us and that momentum has built and continues to build in the second half of the year as we go into FY '25. So we delivered against our objectives for FY '24. We made substantial progress with our industrial-led growth strategy. And as Bruce mentioned, we grew our revenue by 30% over the prior year to $15.7 million. In particular, our industrial sector revenue growth was 35%, and that grew to $15.1 million in the year and that contrast with just 2 years ago in FY '22, the sales for industrial products were just $8 million. So significant growth during the last 2 years.
In addition to that revenue growth in FY '24, we also delivered $4 million of operational cost savings. So we are confident that we have now rightsized the cost base for the company to go forward.
On top of that, we believe we are fully funded to go forward with cash at bank of approximately $10 million, and we do not envisage that we need any further capital with the business in the current state. Operating EBITDA improved by $7 million versus prior corresponding periods in the year to minus $3.5 million for FY '24, and in H2, that was just minus $1 million, so a significant improvement during the year based on the sales increase and also the cost savings.
On top of that, in quarter 4, EBITDA was positive and we also achieved cash breakeven and that excludes the R&D tax refund which was received in quarter 4. What drove this better performance as we went through the year, really driven by the new innovative products that we have launched over the last 18 months and our focus on the top 6 priority markets around the world where we have direct heads -- sales heads in place in those markets.
On top of that, we've also resolved a lot of the legacy issues that the company was struggling with in recent years. So you'll recall that we had very high health care sales. We had a huge spike for a short period of time. We also had a number of COVID-related issues, particularly a lot of inventory in the marketplace and we also had a high cost base 2 years ago. All those issues are largely now in the rear view mirror.
As I look to FY '25 and our objectives for this coming year, our goal is to achieve positive EBITDA and positive cash flow for the year and revenue growth again of 30%. And we have started the first few weeks of FY '25 with continued trading momentum, and the July cash flow, cash flow result, for example, was positive.
The FY '23 results this time last year, I outlined our objectives for the 2024 financial year. So I just thought it worth summarizing how we went against those objectives for the year. And I'm really pleased to say that we have a tick against all those objectives for FY '24. So as I've mentioned, the 30% revenue growth was actually 37% on an underlying basis, excluding a one-off order that we had last year in the U.S. We also increased our gross margin by 2 percentage points to 72% in the year. So a very healthy gross margin results.
Our consumable growth of 28% was satisfactory for the year. Our goal is to continue to grow consumables as our installed base gets bigger over time. So I would anticipate in the future that our consumables grow at a faster rate than our unit sales, slightly behind that for this year, really based on 2 factors: the first factor is that our health care sales declined, they were largely consumables; and secondly, as I'll mention later on, we launched a new product in April. Most of the sales of that were unit sales rather than consumables and that reflects the typical life cycle of a new product, whereas unit sales initially and then over time, it turns to consumable sales.
We delivered our cost savings, as mentioned. We did have several months of cash breakeven or better, so quarter 4 was a breakeven quarter for us on a trading basis. Our H2 cash flow was much better than the minus $1 million that we foresaw. It was $300,000 negative, so very close to breakeven in the quarter -- sorry, in the half. And as I mentioned earlier, we do have sufficient funds to invest for growth going forward with $10 million cash at bank.
And if I just look at the broader trends over the last 5 reporting periods over the last 5 half year periods, this graph on the left shows the blue bar is costs, the green bar is sales and the yellow bar is our EBIT (sic) [ EBITDA ] losses. You can see that our costs have come down significantly over the last 2 years from a high of $13 million in H2 FY '22, down to $7 million in H2 FY '24, so $5 million saving for a half year period. At the same time, our sales have increased by approximately $1 million every half year period. And as a result of those 2 trends, our EBITDA losses are now rapidly shrinking. And as I mentioned earlier, we're actually positive in Q4. So we believe that we now have a lot of the legacy issues behind us and the trends for the future are looking [ right forward ].
Just digging into the FY '24 results in a bit more detail by sector and region. Our industrial revenue growth was 35%, up on the prior year. That is our highest ever sales result in the industrial sector. It represented 96% of our total revenue as a company. Health care continues to jointly decline, and we anticipate that this will now stabilize at around $0.5 million a year as we still have consumable sales in the health care sector.
If I turn to regional revenue, the standout performer was Europe with 65% of the sales of the company in the year and sales in Europe grew 43% in the year, so an outstanding result from the team there. Asia Pacific also had a very solid year with sales growth of 30%. That was primarily in Australia and I'll talk to the trends in a little bit more in a minute.
And then in North America, it was really a year of 2 halves. Although the year was down 9%, we actually built really good momentum in the second half of the year with revenue growth of 60% in H2. So we finished the year very strongly in North America, and particularly those legacy issues that I mentioned earlier are very much behind now and we feel we have turned the corner in the U.S. market.
Our top 4 markets are France, U.K., U.S. and Australia, and they accounted for about 78% of our revenue reflecting the focus that we have on a few key markets where we are building a strong [ sustainable ] position in each of those core markets. As I mentioned, our consumable sales were up 28% in the prior year, and that represented 46% of our revenue. And as I mentioned, our gross margin was up as well, reflecting some higher pricing, but also ongoing work to become more efficient in our manufacturing setup.
So just a bit more on the regions and the sectors, really from a product point of view, we've launched a number of new products over the last 18 months. So at the end of FY '23, we launched Ultra and Pro, which are now our leading technology platform products and they represented more than half our sales in FY '24. So very well established in those markets and have been very, very well received. These are industrial sector products.
We also launched CS Work in Europe and Australia in April FY '24. So we've just had really 2 to 3 months of sales here. It's been a very successful initial launch. And this product is using the same platform as Pro and Ultra, but a lower price points and is what I would call a no fuels product, and that expands our portfolio and market reach as well. So we feel very good about the prospects for CS Work going into FY '25.
We have NIOSH approval pending in the U.S. We're expecting to hear feedback on that any day now, so that we can launch in the fall in the U.S. as well. From a regional point of view, as I mentioned, Europe was a standout performer with over $10 million of revenue in the year and 43% growth. That was really driven by the U.K. at 94% growth, Germany and the other DACH countries at 69% growth and France which is our largest market at 36% growth.
We are working closely with a number of key distributor partners across Europe and we also have pan European operations. So the opportunity for us to expand into other markets [ in the U.K. ] absolutely there going forward. And in particular, in the U.K., we've appointed some very strong distribution partners, which have increased coverage and penetration from the geographical and sector point of view across the U.K. and also Ireland.
And finally, we have 2 new sales leaders, one in Germany and one in the U.K. They have deep industrial respirator experience, and they will support our plans for growth going forward into the new year. So we feel very positive about the momentum that we have in Europe.
Asia Pacific revenue was $3.5 million in the year. That's really largely driven by Australia. Industrial growth in Australia was 40%, a very strong year. We did have some health care overhang, which is now largely behind us in Australia and also [ Asia Pacific ] as well. We also added a number of new distribution partnerships in Australia and also in a couple of Asian countries, which will help us going forward. And we're in a year of transition in Asia where historically, most of our sales were health care, particularly in Japan, but we're expecting over the next 12 months to appoint some industrial distributors in some key markets. And as we get established there, we would expect some slow sales to start to develop in the Asian markets going forward, but that definitely represents an opportunity for the company for FY '25 and into the future.
And then finally, North America, a very mixed year, a quiet first half but a very strong second half. The growth in the first half was affected by this prior year stocking order. But overall for the year, our underlying growth was 26% but in the second half 60%, and I strongly believe that we turned the corner and transitioned away from health care and are now getting established in the industrial market in the U.S. One of our partners in the U.S. LineDrive, we mutually terminated our agreement in January there. So that business has moved on. We also appointed a new Regional [ Vice President ] in August who has extensive respiratory protection experience in the industrial sector in the U.S.
From an R&D product cost and cash point of view, some key updates. As I mentioned, we're focused on our 6 priority markets where we have sales teams on the ground to partner with our distribution networks. So we are maximizing our resource allocation and our investment productivity and building sustainable businesses in those markets. We also have a very strong R&D and technical strength and team here in Sydney and our innovation will continue with further product launches and extensions in FY '25 and on top of the successful launches that we've had in FY '23 and '24. So that will expand our reach into the marketplace. And we will expect to get a tax refund from the R&D fund of about $900,000 during FY '25, which will boost our cash flow.
From a cost point of view, we've continued to focus on taking cost out of back office. There was a number of employment savings in the year and lots of small savings across all parts of our cost base in the business, but collectively, they add up to a significant amount of money. And we've also continued to focus on implementing lean practice in our manufacturing footprint which is now simplified and we're taking cost out of that as well. So those processes will continue.
We will continue to identify productivity gains going into FY '25, and these gains will release cash for investments to grow the top line going forward. So I don't expect our total costs will go down in FY '25, but what I do expect is we will become more productive and we will start to invest in frontline salespeople in marketing programs, which will then drive additional sales growth and be self-funded into the future.
I was also very pleased to see we had a net reduction in our working capital to June '23. So despite our significant revenue growth, we actually reduced our cash requirement in working capital. Our trade debtors in particular are under very good control. We brought our average debtor days down significantly during the year. And Bree and the team have done a really good job there. We have basically no bad debts.
Our inventory management program continues and our inventory was marginally down at the end of the year, but actually significantly down in the second half, and we continue to manage our trade and other payables extremely well, whilst respecting reasonable trading terms with our suppliers, who we value very highly.
Our cash flow in H2 also improved significantly. As I mentioned at the beginning, it was just minus $0.3 million in the second half. We reduced our materials inventory by over $1 million in the second half, and we anticipate continuing to reduce that into FY '25. We had the R&D tax rebate in quarter 4 and our higher revenue and better P&L leverage has contributed to our better results overall.
Moving to our leadership. I'm really delighted that we have a very strong senior leadership team now. We have a very stable team, and everybody is contributing significantly to the success of the organization. In addition, as I've already highlighted during the year, we were delighted to bring Paul Cassano on to the Board in September. Paul brings extensive industrial and quarrying experience to the Board, and that really helps contribute to our decision-making.
Bree has now been CFO in an interim and permanent capacity for a year now and brought a significant discipline to our financial accounting and also our commercial decision-making. And as I mentioned earlier, we appointed a new RVP, Greg Sesny, to our North American business just 2 weeks ago. Greg spent last week here in Sydney, having a deep induction for our business. And we were all deeply impressed with the experience and the knowledge that Greg brings to the respiratory marketplace in the U.S. So we feel very good about our team and our prospects in the U.S. market going forward.
And then finally, we announced my intention to step back from the CEO role later on this year, where we have a successor identified. I will stay on the Board as a Non-Executive Director I remain fully committed and dedicated to the success of the company. And I absolutely want to share my experience and continue the great relationships that we have in the business going forward. So we anticipate a very smooth transition and I certainly will be on hand to help the new CEO be very successful.
And just a reminder of our strategy focus, you will have seen this slide before. The good news is there's no change to our strategy, and that is because our strategy is working and we believe we have huge runway ahead of us. It's a very simple but clear strategy. We are focused on a sustainable growth model with a fitter, leaner organization, which we believe is now rightsized and it's all now about deep penetration into the industrial respiratory sectors where we believe we have a very strong presence and a very strong offering. So we'll focus on the industrial and mining sectors as a priority. We will focus on the 6 priority markets where we have a strong presence, and we have solid foundations for future growth. We have realigned our resources away from health care to industrial, but we will keep our presence in the health care markets and support the ongoing business needs that we have there. So if ever an opportunity arises in health care, we will be available for it.
Importantly, we will continue to be an innovation company, and we will continue to expand our product portfolio into new market sectors and unmet customers' needs. And we believe there are plenty of opportunities to do that in FY '25 and beyond. And as I mentioned earlier, we will continue to focus on building our consumable revenue streams and add additional services and solutions to our portfolios over time, which will add to the customer benefits that we can offer.
And as always, we will tightly manage costs and cash and make sure that our cost base is aligned with business revenue to ensure that we're generating positive cash and profit results. But most importantly, we are in a significant size market. We believe the total addressable market globally is approximately [ AUD 3 billion ]. And importantly, that market is growing at 6% to 8% a year and has a lot of big competitors who really are using the market as a cash cow and not innovating. So there is absolutely a role for a challenger brand that brings fresh innovation, fresh products and solutions to the market and can take market share off the old incumbents.
And just to summarize again the FY '25 objectives that we have as a company. We are planning for 30% revenue growth in the year. We are planning for a positive EBITDA and positive cash flow breakeven or better during the year. It won't happen every month, but we are confident over the year that this will be the case. We expect strong growth in all our priority markets throughout the year, and we will build our consumable revenue streams over the long term. We will self-fund investments to drive growth, so we have the cash available now to make prudent investments, which will drive the top line and that is our priority. And we will get significant P&L leverage. We have 30% growth in sales. We expect cost to grow at less than 10%, maybe in the 5% to 10% range. The new CEO, we're confident we'll be able to continue that growth momentum that we have in place.
And then just to wrap up, a summary of our progress to date in FY '24. We have a strategy in play that is delivering 30% revenue growth every year. We do have a sustainable model which is delivering P&L leverage. We have a number of growth drivers in the business with our innovative new premium products and the future orders that we have. We have a clear focus on the industrial sectors that we play in today and the 6 priority markets, which are all significant sized markets. And we're positioned as a challenger brand that can freshen up the stale market. We will continue to manage costs and cash very carefully, whilst investing for growth, and we will deliver cash breakeven or better going forward. And the early trends in FY '25 see that continuing strong momentum. We are on track to deliver our objectives after 6 weeks. And as I said at the beginning, our July results had a cash flow positive result.
So with that summary of my announcement and showing the results, there's an appendix in that PowerPoint presentation for you to pursue, but at this point, I will hand back to Bruce to take any questions.
All right. Thanks, Graham. Are there any questions that anyone would like to ask it at this point?
[Operator Instructions] At this time, we're showing no questions. I'll hand the conference back to management.
Okay. Well, thank you very much, everyone, for your attendance. We'll keep you posted as the year progresses, but we'll draw the call to a close now. And once again, thank you very much for your attendance and your support of the company. Thank you.
