@Vesupria, In the fog of war that is reporting season, I missed...

@Vesupria,

In the fog of war that is reporting season, I missed your post.

Like you, I like to see the financial statements, of companies in which I am shareholder, to be struck with large doses of conservatism and prudential padding.

Which is why, with DTL, the thing that causes me to go "Hmmmmmm" these days (a lot more than the outsized redundancy expense in the latest result) is the increasing rates of capitalisation of Software expenditure in recent years:

Capitalised Software Expenses as a % of Pre-Tax Profits (%):

FY2004: ZERO
FY2005: 1.0
FY2006: 3.8
FY2007: ZERO
FY2008: 0.5
FY2009: 2.2
FY2010: 0.7
FY2011: ZERO
FY2012: 2.0
FY2013: 17.0 (!!! Investment in Cloud IP, I seem to recall)
FY2014: 12.8 (Ditto)
FY2015: 1.3
FY2016: 11.5


Put another way, these days when I sanitise DTL results, I am far more inclined to normalise them by adding back the Software Expenditure numbers that have been capitalised, than I am to factor into my modelling $1.5m pa redundancy charges going forward to perpetuity.