Taking a bite at SFH, page-13

@natnicnak

It seems to me that our main point of disagreement is the presentation of Current vs Non-Current Liabilities.

For everyone’s ease of reference, here is AASB101.69:

An entity shall classify a liability as current when:
(a) it expects to settle the liability in its normal operating cycle;
(b) it holds the liability primarily for the purpose of trading;
(c) the liability is due to be settled within twelve months after the reporting period; or
(d) it does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period (see paragraph 73).
Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
An entity shall classify all other liabilities as non-current.

At Jun 30th 2017 the total amount drawn from the credit facility was 25.7m$ and was reported as Non-Current. During DH2017, 19.3m$ of that debt was paid down, taking the drawn amount down to 6.4m$, which is still reported as Non-Current.

Now, you seem to be implying that the increase in Payables by roughly 20m$ was merely a reclassification of a previous Non-Current liability to Current, but how is that possible if the 19.3m$ debt repayment was actually settled? The way I understand it from the results presentation is that the Company did actually pay down most of its bank debt, but that resulted in an accumulation of trade-related payables.

Either way, whether the increase in Payables is due to lenders or to suppliers, my question is how the Company is going to be able to roll that deficit beyond twelve months (from the latest reporting date), if Free Cash Flow is likely to be negative after Capex (as you have acknowledged) and without opening a new credit facility.

Appreciate your time on this one: I think it will be helpful for everyone on this thread if we get to the bottom of it.

Cheers