Ann: Update on USA Operations, page-104

I appreciate all the answers and I am fully aware of the deferred revenue not being "bad" and that it helps cash flow enormously.

The problem was the company made a statement where they say the following:

"Therefore, for the year ended 30 June 2017, the revenue recognized for accounting purposes is $9.4m lower than the actual cash collected. The consequence of this conservative revenue recognition treatment is that the cash surplus of $4.2m is reduced to an accounting net loss of $4.2m. In conclusion, the company’s business operations are healthy with a strong and growing operating cash margin."

"Therefore" - BIG use the deferred revenue as the explanation why cash surplus of 4.2 actually shows in accounting as -4.2.

I have no problem with the accounting but with the narrative - in the context, if all expenses/liability on the deferred revenue had been paid in FY17 the explanation would have had looked differently and definitely not being able to state 4.2 as the "result".

It matters in my world because if BIG made 4.2 in FY17 then it is trading at PE 44 and if they made 2.2 the PE is 88. Quite a difference obv.

Since we know the deferred revenue becomes even bigger in FY18 then it would be great to really understand some kind of ratio between deferred revenue and cost of services not yet delivered.

In trying to assess what I think of PE FY18 then I need to understand how profitable BIG actually was in 2017.