Category: Reports

Forensic Analysis: Findi ASX:FND

📅 July, 2025
🌐 Website: https://findi.co/

Here is a forensic financial analysis of Findi (ASX:FND), based on its FY25 Annual Report (year ended 31 March 2025).

📊 Balance Sheet

Risk Indicator Status Comments
Goodwill >25% of Assets 🔴 Goodwill = $39.7M; Total Assets = $323M → 12% from Tata/BankIT acquisitions, but intangible assets overall ~$62M (19% of total) and rising rapidly.
Rising Receivables Days ✅ Receivables grew only slightly (to $8.2M from $8.1M) while revenue increased ~13%. No concerning rise observed.
Inventory Growth vs Profit 🟠 Not Applicable No inventory reported (services business). Not applicable but flagged as 🟠 to note working capital sensitivity to contracts.
High Borrowings 🔴 Total borrowings ~$123M ($85M current), Net Debt rising, finance costs up ~3x ($29.4M), Debt-to-Equity ~1.9x (258M liabilities vs 64M equity).
Loans to Related Parties ✅ No material related party loans disclosed beyond normal intra-group balances.
Idle Cash 🟠 ~$115.9M cash balance, but significant earmarked deployment. However, cash held exceeds 18 months of opex without detailed return disclosures.

📈 Income Statement

Risk Indicator Status Comments
Revenue vs Profit Divergence 🔴 Revenue up 13%, but NPAT swung from $4M profit to ($12M) loss driven by finance costs and one-off debenture restructure. Underlying profitability questionable.
Capitalised R&D/Interest ✅ No large capitalisation of R&D; most intangible growth is goodwill from acquisitions. No major hidden costs observed.
Extraordinary Items 🔴 $7.2M extraordinary income write-back, improving EBITDA materially. This indicates reliance on non-recurring items.
Tax Rate Drop ✅ Effective tax benefit due to losses. No unexplained low tax rate.
Profit vs Cash Flow 🟠 OCF ($17.5M) materially below EBITDA ($33.3M), indicating large working capital/cost drag.
One-Off Gains Boosting Profit 🔴 Write-back of $7.2M provision plus revaluation gains; without these, EBITDA and NPAT would have been weaker.

🏛️ Governance, Disclosure & Audit

Risk Indicator Status Comments
Auditor Changes ✅ Hall Chadwick continues as auditor. No recent changes disclosed.
Audit Qualifications ✅ Clean audit opinion.
Exec Departures 🟠 CEO change mid-strategy: Mohnish Kumar transitioned to Vice Chairman. No major rationale elaborated.
Transparency Issues 🟠 Extraordinary income and significant transaction impacts disclosed but diluted across notes; segment profitability clarity limited.
Board Weakness ✅ Board includes experienced finance professionals and independent directors.
Executive Pay Misalignment 🔴 Chairman remuneration jumped from $150k to $675k amid swinging to losses. Board remuneration >$1.4M while net loss increased.
Promotional Language 🟠 Repeated promotional claims (“transformative milestones,” “unparalleled financial access”) despite poor earnings.

🧠 Strategic Risk Factors

Risk Indicator Status Comments
Chronic Unprofitability 🟠 FY25 loss was primarily transactional, but 3-year profitability track record inconsistent. Loss narrowing uncertain.
Revenue < Capex 🟠 ~$17M capex + ~$75M acquisitions vs $75M revenue; heavy reinvestment phase with unclear payback timelines.
Funding Dependency 🔴 Equity raises in FY25 ($40M placement + SPP), plus debt refinancing. Repeated external funding critical to operations.
Customer Concentration 🟠 Major contracts with State Bank of India, Union Bank, and Central Bank—customer concentration risk likely >50%.
Pre-commercial Product Risk ✅ Core business operational with revenue streams; no pure pre-commercial dependence.
Short Cash Runway ✅ Cash holdings sufficient for >12 months operations.
Regulatory/Compliance Exposure 🟠 Heavy reliance on RBI licences, acquisition integration risk.
Leadership Turnover During Expansion 🟠 CEO transitioned mid-expansion. Management continuity not fully explained.

✅ Final Summary

Category 🔴 Red Flags 🟠 Amber Flags
Balance Sheet 2 2
Income Statement 3 1
Governance / Disclosure 1 3
Strategic Risk Factors 1 4

🔴 Total Red Flags: 7
🟠 Total Amber Flags: 10

🟠 Amber & 🔴 Red Flag Overview

  • 🔴 High Borrowings: Debt-to-equity approaching 2x with finance costs tripling.

  • 🔴 Extraordinary Items & One-off Gains: $7.2M non-recurring write-back and revaluations masked underlying losses.

  • 🔴 Executive Pay Misalignment: Chairman and board fees rose sharply during a swing to losses.

  • 🔴 Funding Dependency: Equity raises and debenture restructuring are critical to liquidity.

  • 🔴 Revenue vs Profit Divergence: Revenue rose while NPAT fell into loss.

  • 🔴 One-Off Gains Boosting Profit: Extraordinary income contributed materially to reported EBITDA.

  • 🟠 Idle Cash: Large cash holdings without clear disclosure of return strategy.

  • 🟠 OCF vs EBITDA: Cash flow lagged EBITDA significantly.

  • 🟠 Transparency: Disclosures of transaction impacts fragmented across notes.

  • 🟠 Leadership Turnover: CEO transitioned during major expansion.

  • 🟠 Customer Concentration: Dependence on large public sector banks.

  • 🟠 Capex vs Revenue: Heavy investment relative to annual turnover.

  • 🟠 Chronic Unprofitability: Inconsistent profitability trend.

  • 🟠 Regulatory Exposure: Reliant on RBI licences, regulatory compliance critical.

Forensic Analysis: Findi ASX:FND - 12 month daily price chart with 3EMA and volume indicators

Disclaimer: This information is provided purely for educational purposes. It takes no account of an individual’s personal financial circumstances and hence can in no way constitute financial advice. The above data may be subject to errors or inconsistencies for which the author takes no liability. It is imperative that all investors do their own research or if they need advice, seek it from a qualified financial adviser.

Forensic Analysis: Findi ASX:FND

Forensic Analysis: Big River Industries ASX:BRI

📅 June, 2025
🌐 Website: http://bigriverindustries.com.au/

Here is a forensic financial analysis of Big River Industries (ASX:BRI), based on its Half-Yearly Report for the period ended 31 December 2024.

📊 Balance Sheet

Risk Indicator Status Comments
Goodwill >25% of Assets 🔴 Goodwill of $33m vs total assets of $235.6m (~14%) but note prior goodwill was ~$53m with a $20m impairment this period. High risk due to repeated write-downs.
Rising Receivables Days 🔴 Receivables fell from $56m to $44m in 6 months while revenue fell 3%; however, high impairment charges ($0.7m) suggest collectability concerns.
Inventory Growth vs Profit 🔴 Inventories remain flat (~$71m) while profit has swung to a $17m loss.
High Borrowings 🔴 Debt of $46m with net tangible assets ~$55m; debt to equity >0.9, and large debt relative to equity.
Loans to Related Parties ✅ No evidence of related party loans.
Idle Cash 🟠 Cash declined from $20.5m to $18.8m; not excessive but limited liquidity relative to debt.

📈 Income Statement

Risk Indicator Status Comments
Revenue vs Profit Divergence 🔴 Revenue fell 3% but profit declined over 300% (from +$7m to -$17m) due to impairment.
Capitalised R&D/Interest ✅ No material new capitalised R&D or significant trend.
Extraordinary Items 🔴 $20m impairment of goodwill and $0.5m restructuring costs materially impact profit.
Tax Rate Drop ✅ Effective tax rate is consistent (~30% nominal).
Profit vs Cash Flow 🟠 Cash flow from operations positive ($9m) despite net loss due to non-cash charges.
One-Off Gains Boosting Profit ✅ No gains offsetting the loss.

🏛️ Governance, Disclosure & Audit

Risk Indicator Status Comments
Auditor Changes ✅ No change in auditor (BDO).
Audit Qualifications ✅ No qualifications reported.
Exec Departures ✅ No disclosed executive departures.
Transparency Issues 🟠 Limited disclosure around impairment triggers and expected recovery.
Board Weakness ✅ Board appears independent.
Executive Pay Misalignment 🟠 Interim dividend maintained despite major loss.
Promotional Language 🟠 Optimistic commentary on market “stabilisation” despite substantial impairment and losses.

🧠 Strategic Risk Factors

Risk Indicator Status Comments
Chronic Unprofitability 🟠 Significant loss this period but prior profitability. Watch for trend continuation.
Revenue < Capex ✅ No evidence capex exceeds revenue.
Funding Dependency 🟠 Debt remains high and contingent consideration obligations ($2.4m) still exist.
Customer Concentration ✅ No disclosed concentration risk.
Pre-commercial Product Risk ✅ Core operations are established products.
Short Cash Runway 🟠 ~$19m cash with ~$7m lease liabilities due in <12 months; runway likely <18 months if losses continue.
Regulatory/Compliance Exposure ✅ No regulatory issues disclosed.
Leadership Turnover During Expansion ✅ No turnover disclosed.

✅ Final Summary

Category 🔴 Red Flags 🟠 Amber Flags
Balance Sheet 4 1
Income Statement 3 1
Governance / Disclosure 0 3
Strategic Risk Factors 0 3

🔴 Total Red Flags: 7
🟠 Total Amber Flags: 8

🟠 Amber & 🔴 Red Flag Overview

  • Balance Sheet: Multiple red flags—inventory not reducing despite losses, significant impairment of goodwill, high borrowings relative to equity.

  • Income Statement: Large divergence between revenue and profit, extraordinary non-cash items driving losses.

  • Governance: Amber concerns around maintaining dividends despite losses and promotional commentary.

  • Strategic Risk: Cash runway under pressure and reliance on debt facilities.

Forensic Analysis: Big River Industries ASX:BRI 12 month daily share price chart with 3EMA and volume indicators

Disclaimer: This information is provided purely for educational purposes. It takes no account of an individual’s personal financial circumstances and hence can in no way constitute financial advice. The above data may be subject to errors or inconsistencies for which the author takes no liability. It is imperative that all investors do their own research or if they need advice, seek it from a qualified financial adviser.

Forensic Analysis: Big River Industries ASX:BRI

Forensic Analysis: Catapult ASX:CAT

📅 June, 2025
🌐 Website: www.catapult.com

Here is a forensic financial analysis of Catapult (ASX:CAT), based on its FY25 Annual Report.

📊 Balance Sheet

Risk Indicator Status Comments
Goodwill >25% of Assets ✅ No explicit disclosure indicating goodwill dominance; likely under threshold given SaaS model and modest acquisition activity.
Rising Receivables Days 🟠 Receivables growth implied by ACV and revenue growth; no explicit receivables days trend disclosed—warrants monitoring as revenue expands rapidly.
Inventory Growth vs Profit Not Applicable SaaS business—minimal inventories, but capital equipment sales (~6% of revenue) could create deferred recognition risk.
High Borrowings ✅ Debt reduced significantly to $3.5M (from $11M), net cash position of ~$7M. Low leverage.
Loans to Related Parties ✅ No evidence of related party loans disclosed.
Idle Cash ✅ Cash position adequate ($10.7M) and reducing borrowings—no indication of hoarding.

📈 Income Statement

Risk Indicator Status Comments
Revenue vs Profit Divergence 🟠 Revenue +16.5%, Management EBITDA margin improved to 12.7%, but still net loss ($8.8M). Improving trend but not fully profitable at statutory level.
Capitalised R&D/Interest 🔴 Significant capitalised development: $16.7M (~14% of revenue). This is material and flat YoY, supporting profit margins—requires close scrutiny.
Extraordinary Items ✅ No recurring extraordinary items disclosed.
Tax Rate Drop ✅ Loss-making entity—no abnormal tax benefits disclosed.
Profit vs Cash Flow ✅ Free Cash Flow improved materially to +$8.6M from +$4.6M. Cash flow moving positive.
One-Off Gains Boosting Profit ✅ No asset revaluations or disposals used to boost earnings.

🏛️ Governance, Disclosure & Audit

Risk Indicator Status Comments
Auditor Changes ✅ No auditor changes reported.
Audit Qualifications ✅ No qualifications noted in the audit opinion.
Exec Departures ✅ Stable leadership, no major CEO/CFO turnover.
Transparency Issues 🟠 Heavy reliance on non-IFRS metrics (Management EBITDA, ACV). Clear definitions provided but high non-IFRS usage warrants caution.
Board Weakness ✅ Board appears experienced, no independence concerns noted.
Executive Pay Misalignment 🟠 Share-based payments remain material ($12.5M), dilutive incentives persist despite statutory losses.
Promotional Language 🟠 Marketing-heavy language (“unleash potential,” “category-defining”)—some caution on optimism bias.

🧠 Strategic Risk Factors

Risk Indicator Status Comments
Chronic Unprofitability 🟠 Still net loss-making, but trend improving with positive FCF.
Revenue < Capex ✅ Capex mainly R&D; total capex not exceeding revenue.
Funding Dependency ✅ No new equity raises disclosed in FY25; reduced borrowings.
Customer Concentration ✅ No material concentration disclosed.
Pre-commercial Product Risk ✅ Core products commercialised and scaling.
Short Cash Runway ✅ Net cash positive; free cash flow positive; no immediate runway concerns.
Regulatory/Compliance Exposure 🟠 Trademark litigation with Adidas in the US—stated immaterial but worth monitoring.
Leadership Turnover During Expansion ✅ No turnover reported during scaling period.

✅ Final Summary

Category 🔴 Red Flags 🟠 Amber Flags
Balance Sheet 0 1
Income Statement 1 1
Governance / Disclosure 0 3
Strategic Risk Factors 0 2

🔴 Total Red Flags: 1
🟠 Total Amber Flags: 7

🟠 Amber & 🔴 Red Flag Overview

  • 🔴 Capitalised R&D/Interest: $16.7M capitalised development costs represent 14% of revenue—material support to margins.
  • 🟠 Rising Receivables Days: Receivables growth may lag collections as ACV expands; trend data needed.
  • 🟠 Revenue vs Profit Divergence: Revenue growth strong but still net statutory losses, though improving trajectory.
  • 🟠 Transparency Issues: Heavy reliance on pro forma/non-IFRS metrics.
  • 🟠 Executive Pay Misalignment: High share-based payments ($12.5M) dilute despite net losses.
  • 🟠 Promotional Language: Very promotional tone; some caution warranted.
  • 🟠 Regulatory/Compliance Exposure: Adidas trademark opposition in the US—management believes immaterial but worth watching.
  • 🟠 Chronic Unprofitability: Net losses persist, albeit with improving trend.

Forensic Analysis: Catapult ASX:CAT - 12 month daily share price chart with 3 EMA and volume indicators

Disclaimer: This information is provided purely for educational purposes. It takes no account of an individual’s personal financial circumstances and hence can in no way constitute financial advice. The above data may be subject to errors or inconsistencies for which the author takes no liability. It is imperative that all investors do their own research or if they need advice, seek it from a qualified financial adviser.

Forensic Analysis: Catapult ASX:CAT

Forensic Analysis: SKS Technologies ASX:SKS

📅 June, 2025
🌐 Website: https://www.sks.com.au

Here is a forensic financial analysis of SKS Technologies (ASX:SKS), based on its FY24 Annual Report, 1H25 Interim Results Presentation, and the May 2025 announcement of a $100 million data centre contract.

📊 Balance Sheet

Risk Indicator Status Comments
Goodwill >25% of Assets ✅ No indication of excessive goodwill; balance sheet primarily reflects tangible expansion
Rising Receivables Days ✅ Working capital usage rose slightly due to growth, but receivables remained controlled and cash conversion was solid
Inventory Growth vs Profit Not Applicable Service-based business with limited inventory exposure
High Borrowings ✅ No long-term debt; increased use of short-term facilities remains proportionate and manageable
Loans to Related Parties ✅ No such transactions noted
Idle Cash ✅ Cash used effectively for operations and M&A; no signs of hoarding

📈 Income Statement

Risk Indicator Status Comments
Revenue vs Profit Divergence ✅ Revenue and EBITDA up YoY; NPAT impacted by project timing and cost adjustments but still positive
Capitalised R&D/Interest ✅ No aggressive capitalisation observed
Extraordinary Items ✅ Interim results reflect operational performance; no major one-offs identified
Tax Rate Drop ✅ No abnormal tax reduction noted in interim figures
Profit vs Cash Flow ✅ Operating cash flow strong despite modest NPAT, indicating earnings quality is sustained
One-Off Gains Boosting Profit ✅ No signs of non-operating gains inflating interim profit

🏛️ Governance, Disclosure & Audit

Risk Indicator Status Comments
Auditor Changes ✅ No recent changes; consistent auditor retained through interim period
Audit Qualifications ✅ No qualifications noted in audit/review of interim financials
Exec Departures ✅ Leadership remained stable through H1 FY25
Transparency Issues ✅ Continued clear disclosure of segment and performance data in interim release
Board Weakness ✅ Board composition unchanged and retains relevant expertise
Executive Pay Misalignment ✅ No material changes to pay noted during the interim period
Promotional Language 🟠 Some optimistic tone in outlook commentary, generally substantiated by ongoing growth

🧠 Strategic Risk Factors

Risk Indicator Status Comments
Chronic Unprofitability ✅ Company remains profitable at NPAT and EBITDA levels in 1H25 despite some margin compression
Revenue < Capex ✅ Capex remains proportionate to revenue and growth plans
Funding Dependency ✅ No new equity raised; facilities extended prudently to support scaling
Customer Concentration 🟠 Data centres still account for ~60% of secured work, reinforced by new $100M contract; strategic diversification continues
Pre-commercial Product Risk ✅ All offerings are revenue-generating and commercially deployed
Short Cash Runway ✅ Sufficient facilities and cash flow to support near-term needs; new contract to be funded from existing resources
Regulatory/Compliance Exposure ✅ No compliance issues or regulatory red flags raised in interim period
Leadership Turnover During Expansion ✅ Management remained stable through strategic execution

✅ Final Summary

Category 🔴 Red Flags 🟠 Amber Flags
Balance Sheet 0 0
Income Statement 0 0
Governance / Disclosure 0 1
Strategic Risk Factors 0 1

🔴 Total Red Flags: 0
🟠 Total Amber Flags: 2

🟠 Amber & 🔴 Red Flag Overview

  • 🟠 Promotional Language: Some sections of management commentary continue to use upbeat tone; performance mostly supports it.
  • 🟠 Customer Concentration: Data centre segment remains dominant (~60% of work), now further entrenched by $100M Building C contract; diversification into defence, government and health continues.

Forensic Analysis: SKS Technologies ASX:SKS - 12 month daily price chart with 3 EMA and volume indicators

Disclaimer: This information is provided purely for educational purposes. It takes no account of an individual’s personal financial circumstances and hence can in no way constitute financial advice. The above data may be subject to errors or inconsistencies for which the author takes no liability. It is imperative that all investors do their own research or if they need advice, seek it from a qualified financial adviser.

Forensic Analysis: SKS Technologies ASX:SKS

Forensic Analysis: Cogstate ASX:CGS

📅 June, 2025
🌐 Website: www.cogstate.com

Here is a forensic financial analysis of Cogstate (ASX:CGS), based on its Half-Year Report for the period ended 31 December 2024, and the FY25 guidance update released on 24 June 2025.

📊 Balance Sheet

Risk Indicator Status Comments
Goodwill >25% of Assets ✅ No goodwill recorded; all intangibles are internally developed IP and software
Rising Receivables Days ✅ Receivables stable YoY (~US$10M) despite 19% revenue growth
Inventory Growth vs Profit 🟠 Not Applicable Company operates a services model without physical inventory
High Borrowings ✅ No borrowings recorded; debt-free status maintained
Loans to Related Parties ✅ No related party loans disclosed
Idle Cash ✅ High cash holdings (US$34.2M) are being actively deployed through an ongoing share buy-back program

📈 Income Statement

Risk Indicator Status Comments
Revenue vs Profit Divergence ✅ Revenue up 19%, NPAT up 95% — positive operating leverage
Capitalised R&D/Interest 🟠 Capitalised software dev costs of US$655K (~5% of opex); rising trend should be monitored
Extraordinary Items ✅ No material one-offs or adjustments reported
Tax Rate Drop 🔴 Effective tax rate fell to 25% from 96% YoY due to prior year deferred tax adjustments
Profit vs Cash Flow ✅ OCF US$5.0M vs NPAT US$3.9M — strong cash conversion
One-Off Gains Boosting Profit ✅ No asset sales or revaluation gains boosting profit reported

🏛️ Governance, Disclosure & Audit

Risk Indicator Status Comments
Auditor Changes ✅ Auditor (Pitcher Partners) unchanged
Audit Qualifications ✅ Clean review report with no qualifications
Exec Departures ✅ No senior executive or board departures reported
Transparency Issues ✅ Strong disclosure across segments and revenue categories
Board Weakness ✅ Board comprises experienced professionals with sectoral and governance expertise
Executive Pay Misalignment ✅ No material pay rises; buy-backs and profitability suggest aligned incentives
Promotional Language ✅ Tone of reporting is factual and grounded in operating data

🧠 Strategic Risk Factors

Risk Indicator Status Comments
Chronic Unprofitability ✅ Company remains consistently profitable with strong YoY improvement
Revenue < Capex ✅ Revenue (US$23.9M in 1H25) substantially exceeds capex (US$655K + PPE)
Funding Dependency ✅ No new equity raised; company returning capital via buy-backs
Customer Concentration 🟠 Eisai remains a significant revenue source, especially in Healthcare
Pre-commercial Product Risk ✅ Revenue-generating segments are commercialised
Short Cash Runway ✅ Cash reserves (US$34.2M) and positive cash flow eliminate short-term funding risk
Regulatory/Compliance Exposure ✅ No regulatory or compliance breaches reported
Leadership Turnover During Expansion ✅ Stable leadership during revenue acceleration and segment expansion

✅ Final Summary

Category 🔴 Red Flags 🟠 Amber Flags
Balance Sheet 0 0
Income Statement 1 1
Governance / Disclosure 0 0
Strategic Risk Factors 0 1

🔴 Total Red Flags: 1
🟠 Total Amber Flags: 2

🟠 Amber & 🔴 Red Flag Overview

  • 🔴 Tax Rate Drop: Effective tax rate fell materially from prior period (96% to 25%), with no detailed commentary provided.

  • 🟠 Capitalised R&D: Ongoing capitalisation of development costs suggests rising reliance on deferred expensing.

  • 🟠 Customer Concentration: Eisai continues to contribute a significant portion of Healthcare revenue, posing concentration risk.

🔄 FY25 Outlook Addendum

As of 24 June 2025, Cogstate upgraded full-year guidance:

  • FY25 Revenue forecast: US$52–54M (+20–24% YoY)

  • FY25 Profit Before Tax forecast: US$12–14M (+69–97% YoY)

This reinforces operational strength and reduces future financial risk. If realised, these figures would materially enhance margin quality and further validate the capital return strategy.

Disclaimer: This report is for educational purposes and does not constitute financial advice. It does not account for personal circumstances. All investors should conduct their own research or consult a qualified adviser before making financial decisions.

Forensic Analysis: Cogstate ASX:CGS

Forensic Analysis: Collins Foods ASX:CKF

🗓 June, 2025
🌐 Website: www.collinsfoods.com

Here is a forensic financial analysis of Collins Foods (ASX:CKF), based on its Appendix 4E and 2025 Annual Report for the year ended 27 April 2025.

📊 Balance Sheet

Risk Indicator Status Comments
Goodwill >25% of Assets ✅ Not flagged in summary; likely below material threshold.
Rising Receivables Days ✅ No evidence of adverse receivables movement or commentary on deterioration.
Inventory Growth vs Profit 🔹 Not Applicable Inventory commentary not disclosed; restaurant model limits relevance.
High Borrowings ✅ Net debt fell to $137.9M with leverage ratio down to 0.93 from 1.07.
Loans to Related Parties ✅ No indication of such transactions.
Idle Cash ✅ Cash deployed toward growth and dividend; not excessive idle cash noted.

📈 Income Statement

Risk Indicator Status Comments
Revenue vs Profit Divergence 🔴 Revenue up 2.1%, but statutory NPAT plunged 88.5% to $8.8M.
Capitalised R&D/Interest ✅ No evidence of aggressive capitalisation.
Extraordinary Items 🔴 $42.3M in non-trading items (impairments, compliance provisions).
Tax Rate Drop ✅ Effective tax rate stable YoY.
Profit vs Cash Flow ✅ Operating cash flow ($181.4M) well above NPAT; strong conversion.
One-Off Gains Boosting Profit ✅ No abnormal gains in FY25 (FY24 included Sizzler Asia sale).

🏩 Governance, Disclosure & Audit

Risk Indicator Status Comments
Auditor Changes ✅ No change noted.
Audit Qualifications ✅ Clean audit opinion.
Exec Departures 🔶 CEO turnover in FY25 with handover to new MD; managed transition.
Transparency Issues ✅ Clear disclosures, especially on impairments and provisions.
Board Weakness ✅ Experienced, diversified board with relevant industry expertise.
Executive Pay Misalignment 🔶 STI forfeited due to low NPAT; LTI vesting tied to performance.
Promotional Language 🔶 Optimistic tone present, but balanced with discussion of challenges.

🧠 Strategic Risk Factors

Risk Indicator Status Comments
Chronic Unprofitability ✅ Underlying NPAT $51.1M; not chronically unprofitable.
Revenue < Capex ✅ Capex and expansion aligned to revenue scale.
Funding Dependency ✅ No equity raises in FY25; debt reduction evident.
Customer Concentration ✅ QSR model, diversified locations; no concentration risk noted.
Pre-commercial Product Risk ✅ Fully commercial model.
Short Cash Runway ✅ Strong operating cash flow and reduced leverage.
Regulatory/Compliance Exposure 🔶 Wage compliance issue noted, under remediation with regulator.
Leadership Turnover During Expansion 🔶 CEO handover during strategy reset and Taco Bell exit.

✅ Final Summary

Category 🔴 Red Flags 🔶 Amber Flags
Balance Sheet 0 0
Income Statement 2 0
Governance / Disclosure 0 3
Strategic Risk Factors 0 2

🔴 Total Red Flags: 2
🔶 Total Amber Flags: 5

🔶 Amber & 🔴 Red Flag Overview

  • 🔴 Revenue vs Profit Divergence: Statutory NPAT collapsed despite record revenues.
  • 🔴 Extraordinary Items: Heavy impairments and provisions weighed on earnings.
  • 🔶 Exec Departures: CEO change during a critical transition period.
  • 🔶 Executive Pay Misalignment: STI forfeited, LTI aligned but past payouts suggest performance sensitivity.
  • 🔶 Promotional Language: Optimistic tone despite subdued results.
  • 🔶 Regulatory/Compliance Exposure: Wage review and Fair Work liaison ongoing.
  • 🔶 Leadership Turnover During Expansion: New CEO amid European and structural repositioning.

Disclaimer: This report is for educational purposes and does not constitute financial advice. It does not account for personal circumstances. All investors should conduct their own research or consult a qualified adviser before making financial decisions.

Forensic Analysis: Collins Foods ASX:CKF

Forensic Analysis: Xero ASX:XRO

📅 June, 2025
🌐 Website: https://www.xero.com/

Here is a forensic financial analysis of Xero (ASX:XRO), based on its FY25 Annual Report (Appendix 4E).

📊 Balance Sheet

Risk Indicator Status Comments
Goodwill >25% of Assets ✅ Goodwill is present but remains under 25% of total assets.
Rising Receivables Days ✅ Receivables growth is aligned with revenue growth.
Inventory Growth vs Profit Not Applicable Not relevant for Xero’s SaaS model.
High Borrowings ✅ Net cash position reported with no major debt burden.
Loans to Related Parties ✅ No related party loans disclosed.
Idle Cash ✅ Cash is deployed towards R&D, acquisitions, and growth. No hoarding observed.

📈 Income Statement

Risk Indicator Status Comments
Revenue vs Profit Divergence ✅ Revenue and net profit both grew in FY25. Operating leverage appears improving.
Capitalised R&D/Interest 🟠 Capitalised development costs increased. While common in SaaS, trend should be watched.
Extraordinary Items ✅ No major one-off items affecting earnings.
Tax Rate Drop ✅ Effective tax rate remained stable.
Profit vs Cash Flow ✅ Strong operating cash flow aligns with reported net income.
One-Off Gains Boosting Profit ✅ No material gains distorting the result.

🏛️ Governance, Disclosure & Audit

Risk Indicator Status Comments
Auditor Changes ✅ No recent changes in auditor.
Audit Qualifications ✅ Clean audit opinion.
Exec Departures 🟠 Some senior leadership turnover post-strategy shift.
Transparency Issues ✅ Clear segment reporting and cost breakdowns.
Board Weakness ✅ Independent board with tech and financial expertise.
Executive Pay Misalignment ✅ Remuneration structure aligned with performance and shareholder value creation.
Promotional Language ✅ Report maintains a measured tone with data-supported claims.

🧠 Strategic Risk Factors

Risk Indicator Status Comments
Chronic Unprofitability ✅ The company has turned the corner with consistent net profit in FY25.
Revenue < Capex ✅ Revenue well exceeds capex; strong commercial traction.
Funding Dependency ✅ No capital raises; cash flow supports operations.
Customer Concentration ✅ Revenue diversified across geographies and customer bases.
Pre-commercial Product Risk ✅ Core platform is commercial; no major speculative product risk.
Short Cash Runway ✅ Strong balance sheet and operating cash flow provide a healthy runway.
Regulatory/Compliance Exposure ✅ No adverse findings or regulatory actions noted.
Leadership Turnover During Expansion 🟠 Executive turnover occurred amid product expansion and AI strategy rollout.

✅ Final Summary

Category 🔴 Red Flags 🟠 Amber Flags
Balance Sheet 0 0
Income Statement 0 1
Governance / Disclosure 0 1
Strategic Risk Factors 0 1

🔴 Total Red Flags: 0
🟠 Total Amber Flags: 3

🟠 Amber & 🔴 Red Flag Overview

  • 🟠 Capitalised R&D: Growing trend in development cost capitalisation merits continued monitoring.

  • 🟠 Executive turnover: Key changes following new strategic priorities and AI focus.

  • 🟠 Leadership change during expansion: Timing may impact continuity if not well-managed.

Forensic Analysis: Xero ASX:XRO 12 month daily price chart with 3 EMA and volume indicators

Disclaimer: This information is provided purely for educational purposes. It takes no account of an individual’s personal financial circumstances and hence can in no way constitute financial advice. The above data may be subject to errors or inconsistencies for which the author takes no liability. It is imperative that all investors do their own research or if they need advice, seek it from a qualified financial adviser.

Forensic Analysis: Xero ASX:XRO