Ann: Q4 FY20 quarterly business update, page-32

I think that - in the joyous light of the very strong top-line growth - what the overwhelming majority of investors in this company appear to overlook is that this is, at its core, a commercial lending business.

And, as with all business that offer capital for a fee, there is a greater-than-zero chance that not all the capital is recovered.  

In this case, the company is indicating a 1% provision will be raised for unrecoverable receivables:



Now, some might be tempted to argue, "Well, 1% is really a negligible amount, so what's the beef?"

However, 1% of last reported receivables of $32m (@ 31 Dec 2019 balance date) translates to a $320k hit to Pre-Tax Profit.

And $320k equates to around 6% of current annualised Gross Profit of, say, $5.5m (Gross Profit for DH2019 was $2.5m).

So, not the stuff of sheep stations, but something about which to be aware.

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