Pioupiou,That was going to be my question to you!Key points from...

Pioupiou,

That was going to be my question to you!

Key points from the 1H23 'Statutory' Accounts:

• Depreciation and Amortisation ($58.2m)
• Profit before income tax $51.7m
• Income tax ($16.0m)
• NPATN $50.4m (normalised for GCY writedown, amortisation etc)

My understanding is that the government provides various 'tax incentives' from time to time. Currently these include 'Instant Tax Writeoffs' (Individuals and SMEs) and 'ATO full expensing allowance' (larger companies).

My understnding is that these incentives are temporary and apply through the 'Tax accounts' and not the 'Statutory accounts'.

So in the NWH 'Tax account':

• Net profit before income tax $51.7m
• ATO full expensing allowance ($51.7m) ... or 'up to' $51.7m
• Adjusted net profit before income tax $0
• Tax payable ($0) ... not ($16.0m)
• No Franking credits available!

NWH has pooled new equipment which cost (up to) $51.7m and then it has been fully expensed in the 'Tax' accounts. But this equipment will continue to be included in the 'Statutory' accounts.

NWH has gone down this path because it makes sense financially.

Dividends:
The relevant NWH divident payments are:

• 2H21 $22.5m (5.0c FF) ... or ~$4.5m for every 1 cent of dividend
• 2H22 $31.4m (7.0c FF) ... or ~$4.5m for every 1 cent of dividend

The 1H23 dividend is 8.5c unfranked ... or ~6.0c FF (a 9% improvement over the pcp 1H22 dividend of 5.5c FF).
Note NWH cannot pay 6.0c FF as it has no franking credits.
To convert 6.0c FF x 10/7 ~8.5c unfranked.

The 1H23 dividend payment is now:

• $27.0m (6.0c FF x $4.5m per cent of dividend); or
• $38.6m (8.5c unfranked = $27.0m x 10/7)
• NWH needs to include an additional $11.6m in the dividend payment. Shareholders pay the tax at their individual marginal tax rates.

But NWH is still ahead by $4.4m because it doesn't have to pay the $16.0m tax shown in the 'Statutory' accounts.

Just my take and happy to be corrected!