Hi Hk1I agree with you on the cash and accrual basis and will...

Hi Hk1

I agree with you on the cash and accrual basis and will talk about it below. And I think the general market will not move until there is evidence which is fine with me. What I do when investing is gain comfort that what I have invested in will deliver if it does what it says. To me there is no point waiting for confirmation because that's when I will be looking to exit.    

Lets address

Regarding the R&D payment, which was not received during the period, but why wasn't it accrued?  The note in the Director's Report says "refund is expected to be received in the 2nd half of this financial year."  I would have thought it was material enough to make sure it gets lodged and/or accrue it.  The auditors would have asked why it wasn't accrued also. Sounds strange to me.  


From Note 1
Research and development tax offset revenue is recognised when it is received or when the rightto receive payment is established.

Revenue standard requires certainty. If they have not lodged or have not had approval fro the assessment they do not meet the criteria regardless if it is material. 

Even if you add $800k into the cash flow for H1, it is still $475k from being cash flow positive.

Never said anything about cash flow positive I mentioned it would be in profit. But here is my closest estimate on the rebate
2017              4c                                  2018    4C
R&D              670                                         1267
Staff               690                                        1311
Admin            590                                        1030
Total             1950                                        3608     
43.5% rebate    
                       848                                         1569
Actual rebate  843                                          ????

all things being equal we could expect this, but I believe it will be lower due to the type of work and changes to the requirements ie clinical studies are no longer accepted


Actual P&G revenue.
Last year in H1, revenue from P&G was $682k.  This year it was $1,047k.  That is an increase in revenue from P&G of $365k.  This is not much considering the change in P&G payment/invoice terms and all the "hype" from new markets, advertising, Instagram posts, etc that is routinely seen on HC. 

Payment terms only effect the SK2 Pen. The rest stays the same and is like for like. and the pen has just had its first manufacture, so considering that an almost 50% increase is ok 

Interestingly, for the FY18 full year, revenue from P&G was $1,072k for the full year, meaning that H2 revenue was just $389k.  Take from that whatever you like.

Yes this is the seasonal. The SK2 products are the ones that deliver and as they are promo product they only come out to play for half of the year. That is why it is so important to get integrated products up and running and here we are with one available at last but only in its infancy) Given this will continue to rollout and resales occur, the 389k OLAY base will be added to with the pen sales. Yes the market needs the numbers but for anyone who has done the work on volumes can see that SK2 is the breadwinner at the moment and it has been a long time coming. Not to say that when the pen launches with olay that it cannot match the sales as it will have more than likely higher volumes. 

As for all the promos, hype etc. you have to remember as of Dec LY only 1.6m products had been manufactured not millions and 200k of that was back in 2014. Olay who deliver the lowest ropyalty rate sold 1m in 12 months hence the low numbers. 


From a pure accounting viewpoint, a H1 loss of -$788k in H1 and the Cashflow of -$1,275k is never good news.
No headline numbers are rubbish when looked in isolation. But that is not a strategy for investing. The work is done between the numbers. To only look at these numbers without factoring in the 800k for instance was foolish. Like for like is they best way to look at it, not that much work needed to see that the result was much better than was presented. So if you panicked on the results reported and sold then you should not be investing.  Similar if it was a great result. It would come down to why what drove it a one off sale etc.

The rest of your questions on cashflow positive and accounting profit come down to expectation (forward looking) or sit on your hands and wait until it happens.


Now for the rest of your cash vs accrual questions. Sure I agree with your comments

So I will break it down for you

Opening Balance of Debtors made up of



Lets just focus on the revenue ones


so how do we get back to 729
add the GST 43 as this has not been received 
and the prepayment is the balance give or take

So yes you are correct and I took short cut and I shouldn't have but look the next 4c will give us 643k instead of 506k worth of cash.
Now why is knowing the cash for next 4C important. 
1 No need to speculate it's given
2 It shows that given they estimate 750 in expenses we are 100k away from break even on just sales/royalties and not going backwards or stumbling along at 200 to 300k a Qtr like last year or even 160k as accrued in June (above). It highlights that as each product gets launched and rolled it develops and adds to the revenue and forms a new base.
One product does not make a company, and what is evident is the past products being wand like where never company makers, but integrated products will be as we get repeat business and the bonus is that these integrated products at least the pen is attached to a top 10 seller not a bottom seller like the eye wand.  
3 Forecasting forward it is reassuring that we are not far away from achieving a large step in being both cashflow positive and with that showing accounting profit
4 the pattern reduce risk both of a cap raise


 
Going back to my opening statement. I can wait for the evidence to be there in black and white and be buying in at 5c say or I can be getting in at a lower entrance with comfort that the headline results are meaningless when you can factor in certain items occurring. I have said may times a rollout does not happen in one month it can take several months and due to the nature of royalties that means adding 3 months to that but it does happen.

Same with getting paid or not in  a particular Qtr. So PG paid late, its not a bad debt it will come the next. So if you react to that well.. 
 

Thanks its good to discuss stuff.  
 Doesn't happen enough