GREY:XEBEQ - Post by User
Post by
stockrook86on Aug 09, 2022 9:06pm
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Post# 34883479
New management team - contract estimates
New management team - contract estimatesNewish investor here, I've gone through the Q1 MD&A and FS, but have not had a chance to review webcast yet.
On the margin and cost, it seems like at least part of this is loss provisions for certain contracts. Under IFRS as soon as it is deemed a contract (including potentially indirect costs) will generate a loss, this is accelerated into the quarter it is recognized.
Now there is a wider range of reasonable judgement for percentage completition on contracts and I'm not saying anything devious is going on. But I could see if old management was maybe on the aggressive side of reasonable, the new management team might start on the conservative side of reasonable and accelerate a bunch of losses that immediately hit gross margin. If projects exceed these potentially elevated cost budget it could lead to margin recovery. It is not atypical for a new management team to come in a within reasonable estimates set the bar a little low so it is easier to show progress.