I agree with your analysis
@paulgf
Deferred revenue is overstated as being 100% Collectable.
The Fact that the pool is capped at $20M over time though will be a mixture of both as you need binding agreements to reduce the facility.
30-06-17 $9.4M deferered - If this was shown as a liability then it hasn't affected the P & L or BS position it has given us the wrong assumption on future earnings though. It still sits as a liability.
If they convert 50% by swapping in an out though - 50% of that will actually become deferred revenue.
So at 31-12-17 if they show it as a liability say $20M and they have replaced the other 50% with binding customers then we have the other $4.7M should be real deferred revenue. that is 100% of the liability is now completely deferred.
So the liability can only ever be $20M - they need to sign binding customers to keep using the facility.
So IMO if they have filled 100% conversion of the $9.4M by 31-12-17 then IMO you should still show the $20M as a liability as it is maxed but of that $4.7M is actually binding deferred revenue for the next 6 Months.
So IMO under this scenario the two should be netted off $20M - $4.7M which reflect the true position liability of $15.3M. Perhaps a notes to the accounts.
The liability can only ever be $20M to Finstro as it capped - Finstro don't advance over the limit.
Other peoples thoughts?
Cheers
