Ann: Market Update - Continuous Disclosure, page-53

@CaptainBarnacles ,

The trouble is, it is hard to know what to infer from this guidance, because it offers no insights into what extent the reduction in profitability is due to the core business or due to non-operating issues, such as foreign exchange losses.

Given the significant differences in timing of revenue recognition and cash receipts it stands to reason that the forex loss on the company's very large Receivables balance ($48m @ 30 June balance date... a huge number in the context of some $100m in Annual Revenue) is likely to be very material when the A$ rises as quickly, as it did over the course of DH2020, and especially during the few days leading up to the 30 Dec 2020 balance date.

That combined with servicing the company's large Deferred Revenues, mean that the currency impact is not merely translational.

This makes me suspect that a significant part of the earnings reduction is likely to be of a non-operating nature.

Which means the downgrade is really not as bad as it might, prima facie, appear.

But it is hard to know until one sees the full set of accounts.

S0 I think that, given the likely extent of the non-operating forex losses (assuming my suspicions are well-founded), management should have provided some greater clarity on what had happened. Because, as it stands, the downgrade announcement probably created more confusion than it provided clarity.

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