Cash burn tripled to NZ$3.3m as losses widened 31% on a 5% revenue decline

Reported revenue fell 5.2% to NZ$9.3m and the net loss widened 30.5% to -NZ$7.4m, with PBT growth of -30.9% confirming the same operating direction (tax did not distort the result).

The cash balance rose from NZ$4.3m to NZ$11.3m, but this came alongside total equity climbing from NZ$11.1m to NZ$21.4m — a NZ$10.4m equity-side increase that points to an external capital injection rather than internally generated cash. Trade debtors jumped 67.9% to NZ$2.6m, lifting receivable days from 58 to 103.

A positive offset: gross margin expanded ~400bps to 71%, and management notes ~75% of revenue is now transaction and recurring (prior comparable: ~70%).

Operating outflow of -NZ$3.3m and pre-lease free cash flow of -NZ$4.2m (versus -NZ$1.8m prior) show the business consumed materially more cash on a smaller revenue base. This matters because cost-base growth outran the top line in a year management describes as "relatively flat… despite COVID-19" — the underlying operating leverage went the wrong way.

Receivables stretched to 103 days from 58. A 44.8-day extension on a falling revenue base added roughly NZ$1.1m to trade debtors and is a direct contributor to the larger operating outflow. For a sub-NZ$10m revenue business, a working-capital absorption of this size is economically significant and raises a collections-quality question rather than a pure growth-mix question.

Mix shift is genuine but not yet self-funding. Gross margin at ~71% (versus ~67%) and the lift in transaction/recurring revenue to ~75% are consistent with the strategic story IKE has been articulating. The economic limitation is that the higher-margin mix has not translated into reduced cash burn — operating costs and working capital absorbed the gross-margin gain and then some.

What the result does support is a clear second-half deterioration: H1 revenue of NZ$4.4m represented 47% of the full year, but H1 NPAT of -NZ$2.5m represented only 33% of the full-year loss, implying an H2 loss of roughly -NZ$4.9m versus -NZ$2.5m in H1. H2 operating cash outflow was around -NZ$2.0m versus -NZ$1.4m in H1.

This matters because the exit run-rate on both earnings and cash is worse than the H1 read suggested, which is the relevant baseline for FY22 even without explicit guidance.

To that extent, the unit economics moved in the right direction.

The cash position is the weaker part of the result. Cash conversion deteriorated materially — operating cash outflow widened roughly NZ$2.3m while NPAT widened roughly NZ$1.7m, with the gap explained largely by the 44.8-day extension of receivable days. The NZ$11.3m closing cash balance therefore does not reflect operational improvement; the equity base grew by NZ$10.4m over the same period, indicating the cash strength is balance-sheet-assisted rather than earned. ROE improving from -51.3% to -34.6% similarly reflects a larger equity denominator more than improved profitability.

This briefing cannot assess pipeline conversion, contracted forward work, or any post-balance-date capital actions, none of which are quantified in the supplied disclosures.