Ann: Appendix 4D and FY21 Half Year Financial Statements, page-29

danny

None of that has anything at all to do with tax. WIP is not taxable so provisioning against it is irrelevant. Billing is taxable. They are predominantly a "no win, no fee" practice which means they have to be conservative with WIP provisioning, it also means that the market simply does not trust the underlying business sufficient to warrant a high p/e (the same applies to Slaters, or will do once they turn around). The market made that mistake once before and hasn't (yet) forgotten. And nor should it - a business like this should trade on a p/e of 10-12, nothing more.

The Right of Use Asset accounting again has nothing to do with tax, and nor has it reduced profit by $4m. Previously they had an expense for rent payments on premises. Now they have to create an asset for the right to use the premises, along with a liability for the contractual rent payments. So instead of an expense for the rent payment they have a depreciation of the right to use the premises and the rent payment reduces the liability to make rent payments. There is also a finance charge component (the initial liability is recorded based on the present value of the rental stream). There is only a minor difference year to year between the old expense (rent) and the new (depreciation + interest). Over the life of the lease for a particular building the expense is the same. It's an idiotic Accounting Standard but there's nothing they can do about it.