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.