real good announcement, page-24

pracctisingaccounting - i totally agree. The apparent improvement in EBIT is non cash and hence of lower quality. But the big news is how is helps the debt covenant problem disappear for another year. this is the big news in a company people thought was going bust this year. despite it being a non cash profit it is able to be used for debt covenants.

Zwu - GNS will not pay any tax on the $20m now as the income has not been earned yet for tax purposes. However for accounting purposes they are able to recognise the NPV in the financial statements as the accountants have determined that the fees have been earned. This is quite a common situation to have a difference between accounting and tax financial statements. The difference between the 2 is made up through the accounts called deferred tax assets and liabilities. They will put an amount for tax on the $20m into the deferred tax account so tax is provided for but there will be no cash tax payment until the fees are actually received.

As for which method is more realistic? The accounting tax method is clearly more useful for investors but you have to take into account what is actually happening. You will remember that it is common practice to value land, trees and fees on an NPV basis in the forestry industry but as you point out it also comes down to the reasonableness of the assumptions such as tree growth and discount rates and hence is open for some "manipulation".

Lord

I suggest all of these blogs on the accounting are interesting but are really subserviant to the big news hear which is the survival of the debt coventant test....that is the big news for the stock at least for now combined with rising sales of woodchips to Asia...that is also big news.......