Ann: Becoming a substantial holder, page-10

Hi swanningaround,

I'll make it really easy for you, this is from wikipedia.

"Deferred revenue is, in accrual accounting, money received for goods or services which have not yet been delivered. According to the revenue recognition principle, it is recorded as a liability until delivery is made, at which time it is converted into revenue.^[1]"

https://en.wikipedia.org/wiki/Deferred_income

We can see from the Balance Sheet provided by the company that as at 30 June 2015 the company had a total of 26,984,000 in Deferred Revenue under both Current & Non-Current Liabilities. The total value at 31 December 2015 is now 18,545,000.

This means that 8,439,000 of deferred revenue has gone somewhere....presumably to headline revenue.

Remember the headline figure is 22,889,000. If we take away the deferred revenue to get a picture of how new sales are going then we are left with 14,450,000 which is down by a lot on the last period.

These are simple figures provided by the company. We do not need to know an 'amortisation profile' to understand this.

I'm not sure what part of that you can't follow. Rather than say that it is 'utter crap' can you explain where I am wrong?

You keep talking about burning through ARPU but overall this figure supposedly increased by 5% to 8.83. Any falls in developing markets were more than offset by increases in ANZ. The thing they really burned through was Cash. They had over 30M in cash at June 15 and that is now down to 3m. Sure they 'invested' in Learnosity which contributed about 300K to NPAT but you just need to look at cash flow from operating activities to see that in the 6 months to June 15, operating activities cost them 2m in cash and in the 6 months to December 15 it cost them close to 5m in cash.

Given they only have 3m in cash left, they can't afford to keep running the business like this without having to raise or borrow more money.