abc learning interim net profit up 62 percent, page-31

I think this whole debate comes down to whether the licences are a resaleable item or not. If these licences can be obtained for free or quite cheaply and they do not increase in value like say a taxi plate, then this procedure is similar to claiming revenue from an increase in goodwill.

Then the next question is; how much are ABS increasing their revenue by? On page 11 of their financial report in the condensed consolidated statement of changes in equity, there is an allocation of $2,178,000 for a revaluation of licences. Eliminate this, and their profit falls from $64M to $62M, and their EPS falls from 15c to 14.5c.

Then if we assume that they are increasing license value consistently, we can also assume that their forecast EPS of 36c for this year would actually be about 34.9c without the licence influence. This makes the PE around 21.8x, which is not so expensive given their growth prospects.

I am no accountant and I am self taught at this stuff, so if anyone thinks I am wrong, please fire away.