Here are six high profile ASX technology or ecommerce businesses and how they treat capitalisation of employment expense:
Kogan – 7% ($3,400,000 out of $52,500,000 )
Temple & Webster – <1% ($257,000 out of $45,300,000)
hipages Group – 32% ($13,500,000 out of $42,300,000)
Webjet.com.au – 15% ($28,800,000 out of $186,800,000)
TechnologyOne – 28% ($53,000,000 out of $188,000,000)
Cettire – 71% ($14,200,000 out of $20,000,000)
Accounting standards allow (and in some cases require) companies to capitalise a portion of their technology staff costs.
TechnologyOne and HiPages (both outstanding tech-led businesses) capitalise around 30% of employee costs – the other businesses listed capitalise less.
Cettire has a small tech team based in China working on an eCommerce platform. Today, Cettire's auditor Grant Thornton Australia, signed off on an Annual Report that allowed Cettire to to capitalise more than 70% of their total employee costs. (This is equivilent to almost half Cettire's reported EBITDA).
It would be great to hear from Grant Thornton, who signed off on Cettire’s Annual Report, how this is in accordance with AASB138? How come Cettire's level of capitalisation is so much higher than other, (more technology driven) businesses?
Is every other ASX auditor wrong? Or should other businesses be capitalising a far higher level of technology costs?