Ann: Half Year Report and Accounts, page-13

Thanks for that snippet of insight, @we9smia ,

It might go some way to explaining what would otherwise been a quite strange result

I say strange because while full-year revenue fro FY15 was flat on FY16, it a story of two quite different half-years:

Revenue in DH15 was up 6% on pcp, but JH16 Revenue was 8% lower than pcp.

And that in itself is not overly remarkable, then what is certainly worth remarking is that:

Pre-tax Profit was 11% higher for DH15 than pcp but for JH16 was a whopping 21% higher.

So, looking at JH16 in isolation:

Revenue down 8%, Profit up 21%.

The difference is obviously somewhere in the Operating Cost line, which was an astonishing $2.14m (15%) lower in JH16 than the cost base of JH15.

The main drivers of this were lower Employee Expenses (down by $1.78m, from $8.2m in JH15 to $6.4m in JH16... that's an 22% reduction. Surely not?) and lower D&A charge (down by $0.26m, or 20%, from $1.28m to $1.02m).

Now the lower D&A charge looked a bit cheeky to me, at first glance, but then I noted that the depreciable asset base fell by 18%, so it passes the smell test.

But the thing that has got me flummoxed - and it is the single biggest driver of the result in the second-half - is this dramatic fall in the employee expenses.

I can't see any IT project, no matter how effective it is, delivering that sort of turnaround.

Unless... and this would be a very positive point ... unless the costs of the IT upgrade were booked in JH15, which inflated that figure, which would make some sense (and it would, of course, be a good thing).

For fuller context, here is a listing of Employee Expenses over the past four half-year periods

DH14: $5.66m
JH15: $8.18m (was this elevated level due to the IT spend?)0
DH15: $6.89
JH16: $6.40m

Whatever is going on, it has left EBIT margin at a decade-high.

I guess the best thing to do will be to ask the $90,000 pa man (that's right, still no pay rise awarded to Dr Holmes) himself, but before I do, does anyone see anything that I am missing?