Novatti Faces Going Concern Warning Despite Financial Improvements
Novatti Group Limited reported a 24.1% revenue increase to $50.48 million for FY2025 alongside a 69.7% reduction in losses. However, the company’s balance sheet weakness and ongoing audit spotlight raise questions about its financial sustainability.
- Revenue up 24.1% to $50.48 million
- Loss attributable to owners down 69.7% to $6.11 million
- Underlying EBITDA loss improved 73% to $3.06 million
- Net asset deficiency of $879,000 reflects balance sheet pressure
- Audit ongoing with expected going concern emphasis
Revenue Growth and Loss Reduction
Novatti Group Limited has delivered a notable improvement in its financial performance for the year ended 30 June 2025. The company’s revenue climbed 24.1% to $50.48 million, driven by growth across its payments and technology solutions segments. This top-line expansion was accompanied by a significant reduction in the net loss attributable to owners, which narrowed by nearly 70% to $6.11 million.
Underlying EBITDA, a key operational metric that excludes certain non-cash and non-recurring items, also showed marked improvement. The loss shrank by 73% to $3.06 million, signaling progress in managing costs and operational efficiencies despite ongoing challenges.
Balance Sheet and Cash Position
Despite these positive trends, Novatti’s balance sheet reveals ongoing strain. The group moved from a modest net asset position of $241,000 in the prior year to a net deficiency of $879,000 as at 30 June 2025. This shift underscores the company’s weakened equity base and highlights the need for financial strengthening.
Cash and cash equivalents stood at $2.38 million, excluding assets held for disposal, providing some liquidity cushion. However, the company’s ability to sustain operations and invest for growth will depend on its capacity to raise additional capital or improve cash flow generation.
Strategic Disposals and Discontinued Operations
During the year, Novatti completed the sale of its banking segment, IBOA Group Holdings Pty Ltd, to Eurus Capital Pty Ltd, reflecting a strategic pivot away from non-core businesses. Additionally, Emersion Services Pty Ltd was classified as a discontinued operation, with its assets held for sale at year-end. These moves aim to streamline the group’s focus and improve capital allocation.
Audit and Going Concern Uncertainty
The company’s audit remains ongoing, with management anticipating an emphasis of matter paragraph in the final report. This is expected to highlight material uncertainty regarding Novatti’s ability to continue as a going concern. The auditors will likely point to the need for capital raising, access to debt facilities, sales growth, cost management, and potential non-core asset sales as critical factors for the company’s financial viability.
Investors should note that no dividends were declared or paid during the year, consistent with the company’s focus on preserving cash amid restructuring and growth efforts.
Looking Ahead
Novatti’s improved revenue and reduced losses provide a foundation for cautious optimism. However, the company’s path to sustainable profitability and balance sheet repair remains uncertain. Market participants will be closely watching for announcements on capital raising initiatives and strategic execution in the coming months.
Bottom Line?
Novatti’s financial turnaround shows promise but hinges on successful capital strategies and operational execution.
Questions in the middle?
- What are Novatti’s plans and timeline for raising additional capital?
- How will the company manage ongoing cost pressures while pursuing growth?
- What impact will the disposal of non-core assets have on future profitability?
