On the other hand if we were talking about software which requires continued investment then it would be prudent to factor in the amortisation."
Yes, that is exactly my concern. When I look at the various cases of amoritisation of acquired intangibles getting added back, and the sorts of intangibles in question, I often find myself thinking, "Really? They would still be spending shareholder funds each year on that element of the business, which is being capitalisied to the value of an intangible asset, yet there is no accounting for it in the P&L?"
"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."
Problem I have is that I philosophically think that if TI was a standalone business then something like its customer list probably should be subject to some amortisation charge in the first place.
I've always struggled to buy into the notion of the perpetual intangible asset, and with the pace of change in the corporate landscape accelerating all the time, I struggle more with it each passing year.
As a general observation, I don't think there is sufficient degree of conservativeness in the accounting for the value of intangibles, both in the board room, as well as in the accounting standards.
Whenever I can I make this known to the managers of my investee companies, and encourage them to adopt more conservative treatment of intangible assets, acquired or otherwise.
For a long time I felt the same of lack of prudence when it came to lease liabilities, which were able to be held off-balance sheet until 2019. (And I remember a time pre-2019 when those leases weren't even noted in the accounts! So you'd have cases of a company having a massive financial obligation, but shareholders had no way of knowing it, unless they expressly inquired after it.)
But that's a discussion for another day.
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CAR Price at posting:
$22.95 Sentiment: None Disclosure: Held
(20min delay)