CTD (ASX) Ann: Trading Halt

Originally posted by Klutch: ↑

Could you please clarify regarding the capitalisation of IT expenses? As far as I am aware this is fully disclosed in note 8 of the FY18 financial statements. What exactly are VGI alleging CTD have done that is not above board in respect of this?

To me there is nothing earth shattering about the points raised by VGI particularly regarding the capitalisation of expenses which are fully disclosed in note 8 of the financial statements, although i will caveat this by saying i have not read the report my conclusions have mainly come from what i have read in the media and the response provided by CTD.

However at $30+ CTD was clearly overvalued, if I take the top end of FY19 EBITDA guidance as $150m and if i understand managements commentary that $20m of development costs will capitalised and add these back FY19F EBITDA is ~$130m is effectively a multiple of some 16x EBITDA which appears a hefty price to pay.

I have no doubt however they key to determining how hefty that price is comes down to understanding the company's organic growth profile which is a time exhaustive exercise given the number of acquisitions made over the journey and one I have yet to decide if I will undertake.

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Hi Klutch, Buffetman kindly posted a link to the VGI report on the "VGI report should be made public" thread. The link posted is https://docdro.id/SZ3aCWG
Hope Buffetman does not mind me reposting this link.
See Red Flag 13 for alleged Capitalisation of IT costs. CTD say its one of the items that VTG misunderstand so CTD does not address it in its reply. There is very likely a logical explanation as there are plenty of IT costs that in fact should be capitalised, eg lasting additions/improvements to the system, new systems, setting up systems in acquisitions etc. Typical P & L IT expense items may be repair/maintenance type costs. Its likely the high Capital costs booked to IT in recent years was in relation to the acquisitions which were fairly sizeable. I would just like to hear CTD say something like this.
The report to me reads like one of those 'Alien cover up' conspiracy shows that appear regularly on Foxtell. You know they are the shows you are not sure whether they would be better programmed on the Comedy channel.
Regardeless you are left wondering whether CTD have been massaging the books to give the bottom line a boost. The Red flags also include revenue accounting changes which CTD have addressed..

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(20min delay)
Last $14.09		Change 0.030(0.21%)		Mkt cap ! $1.780B

Open	High	Low	Value	Volume
$14.13	$14.28	$14.03	$6.232M	444.4K

Hi Klutch, Buffetman kindly posted a link to the VGI report on...

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