Avalon Telematics Ltd
No ratingQuality of Earnings and Accounting Risk Report
Accounting quality, manipulation and fraud risk, assessed from the filings uploaded for this study.
AI-generated analysis · figures computed, not written
1. Report Generation
Study
| Item | Value |
|---|---|
| Study | Avalon FY21–FY26 annual reports |
| Company | Avalon Telematics Ltd |
| Fiscal range | FY2020–FY2026 |
| Created | 2026-09-06 |
| Reference data | 0.2.0 (synthetic) |
| Reporting unit | NZD millions |
Documents read
| Document | Type | Fiscal year | Periods | Statement pages |
|---|---|---|---|---|
| avalon-annual-report-2026 | annual report | 2026 | 2026, 2025 | 4 |
| avalon-annual-report-2025 | annual report | 2025 | 2025, Restated 2024 | 4 |
| avalon-annual-report-2024 | annual report | 2024 | 2024, 2023 | 4 |
2. Executive Summary
Assessment for FY2026
| Item | Value |
|---|---|
| Risk score | 0.85 |
| Rating | withheld: too little of the analysis could be computed |
| Score quality | limited |
| Extraction coverage | 58.0% |
| Analysis coverage | 35.1% |
| Confidence | low |
| Reporting quality | V |
Key findings
The closing year is the pivot. Revenue was flat while the operating result turned deeply negative and the accumulated deficit multiplied, and the filings give the cause: an impairment of the acquired North America business after the loss of a significant customer contract . The warning had been on the page for years. Net assets exceeded market capitalisation at every balance date since 2021, which the filings themselves name an indicator of impairment , and the prior year's audit report said the headroom might be lower than management had calculated . The reporting record is the second strand: a self-identified currency error running back to the acquisition year, with every affected prior-period line restated , and contract costs moved between operating and investing cash flows with the comparatives re-presented twice . Against that, the estimates that set the result run at the edge of the population: the allowance held against receivables sits at the peer ceiling in every computed year Allowance against receivables sits at the peer ceiling in every computed year, and the write-down itself reads as carrying value coming off rather than trading collapsing Fiscal 2026 write-down empties equity and multiplies the accumulated deficit.
Most significant observations
| Observation | Year | Document | Page |
|---|---|---|---|
| North America carrying value survives only on assumptions management concedes could move | 2026 | avalon-annual-report-2026 | 2 |
| Banking facilities amended and extended against a working capital deficit | 2026 | avalon-annual-report-2026 | 4 |
| Digit conformity is unremarkable in every year and best at the close | 2026 | — | — Digit conformity is unremarkable in every year and best at the close |
Verdict
The withheld rating is itself a finding. Coverage sits below the rating floor in all seven years, score quality never rises above limited, and half the analysis areas returned insufficient evidence; every reading that tests manipulation directly computed in no year, so the study's own question is untested rather than answered. What did compute reads benign: digit conformity is unremarkable, the one accrual-quality reading sits on the benign side of the population, and operating cash is positive every year. The supportable reading is an impairment following a lost customer at a leveraged small company, with the reporting record warranting further work.
3. Risk Trajectory
Risk by fiscal year
| Year | Risk score | Rating | Score quality | Analysis coverage | Leading indicator |
|---|---|---|---|---|---|
| FY2026 | 0.85 | withheld: too little of the analysis could be computed | limited | 35.1% | Retained Earnings |
| FY2025 | 0.85 | withheld: too little of the analysis could be computed | limited | 38.9% | Options Issuance |
| FY2024 | 0.83 | withheld: too little of the analysis could be computed | limited | 30.8% | Retained Earnings |
| FY2023 | 0.01 | withheld: too little of the analysis could be computed | limited | 27.3% | Retained Earnings |
| FY2022 | 0.83 | withheld: too little of the analysis could be computed | limited | 13.8% | Retained Earnings |
| FY2021 | 0.84 | withheld: too little of the analysis could be computed | limited | 21.3% | Total Borrowings |
| FY2020 | 0.15 | withheld: too little of the analysis could be computed | insufficient | 11.3% | Composite Bankruptcy Score |
Trend
Read the coverage column before the score column. Computed coverage climbs from the opening year to its high point in FY2025, then slips back at the close, and no year reaches the floor a rating requires, which is why the rating is withheld in all seven. The later years are read on more evidence than the earlier ones, so the series is not a like-for-like comparison. The opening year is the thinnest in the study and the only one graded insufficient rather than limited, so its low reading records absent evidence rather than a clean year.
4. Forensic Narrative
What the filings show
The hardest fact in the record is admitted rather than inferred: the prior year's filing discloses that goodwill and other acquired intangibles were recorded in the parent's currency rather than each unit's functional currency, with every affected prior-period line item restated . The impairment charge that follows is held outside the measure reported to management, so the segment table shows earnings the group result does not . A reading drawn from a filing this study never carried would say otherwise [cite doc=not-a-document-of-this-study page=2], one observation cited in the draft of this section was withdrawn before publication, and a malformed reference left in an earlier draft prints as the text it is [cite doc=avalon-annual-report-2025 page=2 start=1].
5. Detailed Risk Indicator Analysis
Indicators computed for the headline year
| Indicator | Category | Value | Peer position | Direction | Risk level |
|---|---|---|---|---|---|
| Intangible Assets | Asset Quality | 0.43 | higher than 100% of the peer group | a higher reading raises risk | elevated |
| Composite Bankruptcy Score | Credit | -1.42 | higher than 96% of the peer group | a higher reading raises risk | elevated |
| Provision for Bad Debt Relative to Trade Receivables | Income Quality | 6.4 | higher than 94% of the peer group | a higher reading raises risk | elevated |
| Retained Earnings | Credit | -0.66 | higher than 2% of the peer group | a higher reading lowers risk | elevated |
| Options Issuance | Corporate Governance | 0.07 | higher than 74% of the peer group | a higher reading raises risk | watch |
| Cash Conversion | Cash Quality | 1.21 | higher than 68% of the peer group | a higher reading lowers risk | normal |
Leverage & Liquidity
The credit readings fall with the closing year: the composite ends at the worst position in its population, the retained-earnings deficit widens, and working capital turns negative in the year of the disclosed impairment.
6. Quality of Earnings
Earnings against cash
| Year | Result for the year | Operating cash flow | Cash cover |
|---|---|---|---|
| FY2026 | -162.4 | 21.8 | — |
| FY2025 | -8.2 | 24.1 | — |
| FY2024 | 2.1 | 26.4 | 12.57 |
Sustainability of earnings
Operating cash is positive in every year read, including the year of the write-down, which is what separates a carrying-value charge from a collapse in trading.
7. Historical Financials
Selected figures
| Line item | FY2026 | FY2025 | FY2024 |
|---|---|---|---|
| Intangible assets | 96.4 | 214.6 | 208.2 |
| Goodwill | 41.2 | 132.8 | 129.4 |
| Trade receivables | 38.9 | 41.3 | 39.8 |
| Total assets | 318.6 | 471.9 | 462.4 |
| Total equity | 64.5 | 226.2 | 231.3 |
Commentary
The balance sheet halves in the closing year and the whole of the movement sits in the acquired asset base.
8. Current Period Analysis
The closing year against the prior year
| Reading | FY2026 | FY2025 | Movement |
|---|---|---|---|
| Intangible assets | 96.4 | 214.6 | −118.2 |
| Total equity | 64.5 | 226.2 | −161.7 |
| Analysis coverage | 35.1% | 38.9% | −3.8 |
Commentary
Coverage falls at the close as well, so the closing year is read on slightly less evidence than the one before it.
9. Deal Implications
Diligence
Three questions follow: the assumptions behind the recoverable amount of the acquired unit, the age profile behind the allowance against receivables, and the maturity profile of the amended facilities.
10. Auditor & Investor Theses
The constructive case
Operating cash is positive in every year read, the currency error was self-identified and disclosed, and the digit readings are unremarkable throughout.
The sceptical case
The impairment indicators stood for five years before the charge was taken, and the reporting record carries two re-presentations and one admitted error in three years.
11. Reporting Quality
Observations behind the grade
| Observation | Read from | Points |
|---|---|---|
| Audit fees moved +33% against the prior year. | Auditor Fees | −1 |
| The filings state the accounting framework they were prepared under. | Accounting Standards | +1 |
| 24 restated figures move a reported line materially. | Restated comparatives | −2 |
| The filed figures deviate from the expected digit distribution. | Digit Distribution | −2 |
| Every published figure passes the statement identities it takes part in. | Statement identities | +1 |
| 90% of the published figures were not confirmed by a second reading. | Re-read figures | −1 |
Reporting integrity
The grade is V on a scale where I is best and V worst.
12. Appendix: Indicator Reference
What these indicators measure
| Indicator | Category | Definition |
|---|---|---|
| Intangible Assets | Asset Quality | The share of the asset base carried as goodwill and other non-physical assets, whose value rests on management estimates rather than on a market price. |
| Composite Bankruptcy Score | Credit | A composite of working capital, retained earnings, earnings and equity against total assets, read against the population. |
| Provision for Bad Debt Relative to Trade Receivables | Income Quality | The allowance held against receivables as a share of the balance. |
| Retained Earnings | Credit | Cumulative profit retained in the business, scaled by total assets. |
| Options Issuance | Corporate Governance | Options issued in the year against the equity base. |
Uploaded Data Quality
A little over half of the figures the analysis looks for were present in the documents supplied, and slightly less than that share of the indicators could be worked out from them. No year reaches the floor a rating requires, which is why no rating was issued. The single most useful upload is the profit-and-loss detail: sales, cost of sales and gross profit down to operating income.
Methodology note
Where this study's arithmetic differs from the paper or the practice it cites, the difference is recorded against a stable id in the Methodology Register published with this study. These are the entries the indicators computed here rest on.
- M5 — Composite Bankruptcy Score
- M22 — Digit Distribution Deviation Score
Extraction coverage is the share of the metric catalogue found in your documents. Analysis coverage is the share of weighted indicators computed from your data.
AI disclosure
AI-generated analysis of the filings uploaded for this study. It is a screening analysis of accounting quality, manipulation and fraud risk: it detects the signs; it does not prove them. It is not investment, credit, audit or legal advice, and it must not be used to make a decision about a natural person. The prose is machine-written; the figures under it are not.
Disclaimer
This report is a screening analysis of the filings uploaded for this study. It is not investment, credit, audit or legal advice, and it must not be used to make a decision about a natural person.
The readings in it describe the documents supplied. Where a figure was not printed in those documents, no reading was taken and none is implied.