Ann: FY19 Annual Report (with App 4E), page-48

I agree with you @Madtrader that costs increased FY 2019 and have a bearing on the end result particularly when there was actually an $8m decrease in their PDP purchases. I know that the withdrawal of funding due to the covenant breach is the critical problem to overcome - but beyond that IMO there was an operational problem in FY 2019 which has not been discussed by PNC. Their cash flows in past years indicate as follows : - 2015-2016 increase of $6.2m, 2016-2017 increase of $8.3m, 2017-2018 increase of $35.2m, 2018-2019 increase of $15.5m. That last reduction of near $20m in comparison with the 2017-2018 liquidations when there was only a decrease in purchases of $8m tells me something was operationally amiss during the last reporting period. On top of this the Chief Operations Officer resigned. What happened!

Besides that I do not like accounting practices which bring future profits forward - KJ in his comprehensive reply to the ASX query about the Dec 2018 accounts stated that his literal interpretation of AASB9 allowed him to do so. He considered that his historical modelling and the fact that it might be possible to sell the revalued PDPs at these figures (securitisation presumably as CLH have done with Balbec Capital) should validate his FV accounting methods. But I would disagree strongly with the last assertion - he must be dreaming if he thought he could revalue them to include conservative future profits and flog them to some one else at those sort of figures. However the ASX did not question that assertion. I have found it a little unnerving to reread that query reply now that a lot more water has flowed under the bridge. Read it and see whether it now has much more meaning than it did when you first read it.