Ann: Results Presentation, page-34

In relation to the issue of bad debts I note:

$1.2m of 'bad debt' provisioning went through in the second half. This means the 2nd half result was $5.9m before bad debts. Add a further $1m for the 2 months of missed Prime earnings and you get to $6.9m........annualize that and you can see that the $11-13m forecast for next year is by no means aggressive.

This company has a long history of taking over-conservative bad debt provisions. If you look through previous years you will see that they have then consistently written them back such that the actual cash lost from bad debts has been very very low.

The provision they are taking for Prime and the provision for the existing business they put through the P/L is really just them being very conservative which they always have been. They have never missed profit forecasts and consistently beat them.

The upshot is that they had an unexpectedly spectacular 2nd half of FY20 and have basically taken a larger than necessary provision in order to set themselves up for next year. That's my reading anyway. Most of their receivables are secured in any event so this is never going to be a massive issue.