The ASX 200 (ASX: XJO) is up another 0.7% this morning, it briefly went above the 6,000 point mark.
The New South Wales COVID-19 pub cluster continues to grow. The number from the first pub has increased to 13. The Picton Hotel has now also been closed after an infected person visited the premises.
Technology One (ASX: TNE) under attack from a shorter
According to the Australian Financial Review, GMT Research has issued another attack against another ASX share. It has previously attacked other Australian businesses like Treasury Wine Estates (ASX: TWE).
GMT Research claims that Technology One has used accounting tricks to pull forward revenue and profit, hiding a major slow down in the business.
The AFR reported that Nigel Stevenson from GMT Research said that the outfit had estimated FY19 profits were inflated by more than 20%.
One of the issues, according to GMT is that new accounting rules meant revenue should be recognised over a contract’s period rather than booking it upfront. GMT allege that Technology One changed contract renewal dates to get around this.
Credit Corp (ASX: CCP) share price flat
Credit Corp shares are now flat after initially being up a few percent this morning. The debt collector gave an FY20 update about its profit expectations for the year.
Credit Corp has announced that it expects to report net profit after tax (NPAT) between $10 million to $15 million after accounting for the impairment of its purchased debt ledger (PDL) assets and additional provisioning arising from the impact of the COVID-19 pandemic.
Net profit before these adjustments is expected to be in the range of $75 million to $80 million.
The company said that customers have been less prepared to agree and maintain longer term repayment plans. This initially produced a sharp decline in collections and rising loan book arrears. However, some customers have been willing to make one-off repayments which improved PDL collections back to pre-COVID levels.
Credit Corp expects persistently elevated levels of unemployment, which will impact Credit Corp’s credit-impaired customers more severely if they remain unemployed. This will cause PDL collections to fall while loan book arrears will rise.
Management expects to incur an impairment to reflect a 13.5% reduction in the carrying value of its existing PDL assets. Loan loss provisions are expected to increase from 19% of the gross loan book to 24%.
Drop in FUM for VGI Partners (ASX: VGI)
The fund manager announced that its FUM fell by $300 million from $3.2 billion at 31 March 2020 to $2.9 billion at 30 June 2020.
VGI Partners said that the reduction in FUM was almost entirely due to performance. That suggests that its FUM dropped by almost 10% over the quarter due to the difficult COVID-19 circumstances.
VGI Partners recognises performance fees as and when they become due and payable.
However, VGI Partners doesn’t expect to report any material performance fees for the six months to 30 June 2020. This period is its half-year report. As you’d expect from an investment fund, performance fee revenue will fluctuate significantly across different periods.