Cash fell to NZ$3k as operating burn hit NZ$208k on inventory build

This matters because the burn was funded primarily by working capital rather than trading: inventory rose NZ$140k to NZ$533k (+35.6%), extending inventory days to 876 from 696.

Revenue fell 17.8% to NZ$402k and gross margin compressed 656 basis points to 72.5%, so the gross profit pool shrank from NZ$387k to NZ$292k. The PBT loss widened 24.7% to NZ$157k and the NPAT loss widened 56.9% to NZ$124k. Gross borrowings eased to NZ$66k from NZ$82k, leaving net debt broadly flat at NZ$63k.

• With NZ$3k of cash on hand after a NZ$208k six-month operating burn, the business cannot self-fund another half at this run rate. Equity rose only NZ$22k year on year, so something — borrowings, related-party support, or fresh capital — has to bridge the gap.
• Inventory is absorbing cash faster than the P&L losses imply. Inventory days extended roughly 180 days on a falling revenue base, and the NZ$140k inventory build exceeds the NZ$124k NPAT loss. That raises a real question about saleability and potential write-down risk at current margins.
• Gross margin compression on lower volume points to negative operating leverage. Cost of sales rose to NZ$111k from NZ$103k even as revenue dropped 17.8%, so fixed-cost absorption is going the wrong way and the gross profit line is now too small to cover overheads.

The supplied shape context shows HY24 contributed only 37% of FY24 revenue, suggesting a second-half-weighted seasonal pattern that could, in theory, recover the run rate. However, second-half FY24 operating cash flow was an implied NZ$167k outflow, meaning the prior-year second half did not bail out the cash position — it deepened it.

The comparable-period selection is also flagged as inferred rather than exact, so half-on-half precision should be treated as indicative. The release itself characterises HY25 revenue as down 18% and PBT down 25%, broadly consistent with the calculated figures.

PBT growth of -24.7% is the cleaner operating read.

More importantly, the cash result is materially worse than the earnings result. The NZ$208k operating outflow exceeds the NZ$124k NPAT loss by NZ$84k, and that gap is explained almost entirely by inventory build. So whatever durability one might attribute to the reported earnings, the cash quality is poorer still: this is not a timing artefact that will reverse next half unless the inventory clears at full margin, which the gross-margin compression makes harder to assume. Capex was negligible at NZ$3k, so the cash story is purely working-capital and trading driven, not investment driven.

This briefing cannot assess solvency or going-concern status, which require audited disclosures and management representations not provided in the interim materials.