Ann: FY23 Full Year Results Announcement, page-3

I got a reply to my questions by email:

1. No clear reason given why cash on hand was allowed to increase by $13m half on half rather than directing it to get PEP to sub-$50m to save on interest. They just said, we directed cash to get it down to $50m, which I already knew. I guess they might need it for scheduled debt facilities coming due etc, and maybe it's not easy to re-pay the money into PEP 1 month than re-draw it a month later.

2. ECL Provision Overlay - It fell in the 4th quarter (making Q4 look relatively bad, negative NPBT), but the provision is for the full loan book, so it's more fair for it to be attributable to the full year. So the true effect of the provision was to lower NPAT from $18m (pre-provision) to $12m for the FY, and the NPAT for the 2 halves was more realistically around $6m // $6m, not $9m // $3m (my inference). The timing would have reports showing $9m // $3m, but if the provision is realistically attributable to the FY, then $6m // $6m is more realistic.


$6m & $6m is not that bad, in a year when interest/fees on PEP was abnormally high. $4-5m savings might appear next year?



- $25-30m reduction in PEP level (to $50m) is $3.5-4m saved interest.
- 2% immediate reduction in IR on $50m is $1m.
- Further 3% reduction possible based on covenants. I don't know what has been achieved here. = Potential further $1.5m

Interest on $50m if not yet earning the covenant discount = $7.8m left, after paying it down with the raising (vs $14m PA at peak, when we were over the $75m limit). So repaying it to <$50m, or achieving covenant discounts, is how to reduce that remaining $7.8m.