News: BYL Brierty secured $30 million contract from Newmont Mining, page-29

At least we now now what the trading halt is about. According to Reuters, BYL seeks a trading halt pending pending announcement by Brierty Limited concerning the finalisation of the impairment value of its plant,equipment. Maybe the $22.1m is too large, and must be reduced. The ATO would not allow companies to make tax-deductible impairments at any level they like, and hence auditors would not support unrealistic impairments either.

In my reply to Galba's question, “Have the necessary write downs and impairments all been taken?”, I wrote:

“Probably, and more than was necessary. Total impairment was $20m in H2 plus $2.1m in H1, or $22.1m for the year. Companies often use an annus horribilis (horrible year) occasion to write off the maximum possible, thus setting the scene for the years that follow (less to depreciate and tax credits to offset future taxes and so bump up NPAT, and hence increase EPS). It was only recently that BYL went in the opposite direction, and reduced the depreciation by changing its straight-line method to an equipment-usage method. As a consequence, recent profitable years may in fact not have been that profitable.”

I have always understood (rightly or wrongly) that equipment depreciation was only impaired when it is idle, and perhaps up for sale – not simply because the second-hand market valuations were low. I am not a tax accountant, and the various AASB blurbs are too opaque for me to easily and quickly understand the equipment impairment rules, and the same goes for the ATO website. Let us see what is revealed tomorrow, or the next day.