Ann: Appendix 4D and Half-Year Financial Report, page-11

The accounting standards in relation to leases may permit them to be represented as a financing item, but often accounting for financial performance for an owner of a business differs markedly from accounting based on the Australian Accounting Standards Board or GAAP.

They can call items of outgoings what they like and can position them wherever thay want, but for me as a shareholder lease expenditure is a very real call on the capital of my company so to me it is most definitively a cash outflow incurred in the operation of the business, i.e., an operating cash flow item.

AASB16 was adopted as far back as FY2020, and it amazes me that people today, including equity analysts, still aren't quite up to speed with how this new accounting standard has changed things.

And the changes in many cases are dramatic compared to pre-AASB16: EBITDA is now significantly overstated compared to before (EBIT is too, but not to the same extent as EBITDA), and you have companies reporting lease expenditure below the operating cash flow line (perfectly legally, but it massively distorts conventional assessment of free cash flow).

Lease interest expense should definitely be reported as an operating cash flow item, but I think it is essential to include lease depreciation there as well.

Otherwise you end up with a statement of cash flows that might not reflect what is happening in reality.

And reality is the thing on which investors base valuations.

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