I’d held off a discussion about this but I guess now it might be...

I’d held off a discussion about this but I guess now it might be appropriate to make a few comments.  These are my understandings and with all due respect to the KPMG manager who gave me an honorary accountant moniker, I’m not.

My understanding is that one of the reasons the move was so important is that it was critical to being able to fill orders.  In other words the bulk of orders probably haven’t been filled – even if there is a purchase order.  Until the order is filled there is no invoice unless, most unlikely, there is an upfront payment.

In addition they may know the value of orders to date but not necessarily the orders still to be received – those are likely to be indicative only and more could yet come in.  there is still enough time to receive orders and at least start fulfillment, and therefore raise an invoice.

They will therefore only have invoiced a percentage of what they expect to invoice for the final quarter
While they did have 90 or 120 day terms I had thought someone posted a while ago that these had been reduced to 60 day terms as well as a tightening of debtor management that Aaron has reported.  They can invoice right up until the end of the year and that is counted as revenue in accrual terms.

However I have one other thought on this.  About nine months ago they made a prediction on revenue of US$18.5 million and I know they have reaffirmed constantly that they are on target – and that they have been adding to the funnel.  I know also that I have said Nick doesn’t like failure.  But I asked myself, in the light of this discussion, how I personally would feel if they didn’t actually hit that target.

The answer I gave myself was:

• I’d be a little cheesed off about constant reaffirmation and adding customers to the pot that was declared last year, but then
• I’d have to look at growth and whether it was acceptable (my standard) in the scheme of things – including %age growth over the last quarter, how far off from target, what other information about the sales funnel I could glean
• I’d probably want more clarity in the communication on what is meant by the term customer
• And if I had doubt by the AGM I’d probably be looking hard at the remuneration structure.  I guess that’s the benefit of having shares – you get a vote on these things – even if it is a minuscule part of the total shares on offer

And all this is my opinion.  Others will do their own research and form their own opinions

Parsifal