Ann: FY23 Half Year Media Release, page-12

Hi Madamswer

Under accounting standards, when a business combination occurs, the acquirer is required to identify, value and recognise intangible assets being acquired which are not permitted to be recorded on the balance sheet outside of a business combination (i.e. by the target when it is operating on a stand alone basis) For example and with reference to Carsales, customer lists were valued at $617m and trade names were $152m. These assets are required to be amortised over their useful life in the Carsales p&l but not if Trader were a stand alone business.

These assets don’t require any additional cost to maintain or service other than the standard marketing or employee costs that are already factored into the p&l. To include the amortisation is effectively double counting these costs.

To put it another way, you wouldn’t normalise Traders p&l down to add in customer list amortisation if it were a stand alone business.

On the other hand if we were talking about software which requires continued investment then it would be prudent to factor in the amortisation.