A closer look at the num­bers

Finweek English Edition - - MARKETPLACE -

I al­ways com­ment that trad­ing up­dates are great and an im­por­tant part of the re­sults process, but that we al­ways need to see the ac­tual re­sults to truly un­der­stand the num­bers. Com­bined Mo­tor Hold­ings is just such an ex­am­ple. It re­ported an ex­pected in­crease in head­line earn­ings per share (HEPS) of 25% to 30% but with ve­hi­cle sales un­der pres­sure, surely there must be more to these num­bers. In this case a quick look at the pre­vi­ous year’s num­bers shows a good­will im­pair­ment of R30m and an R8m loss from dis­con­tin­ued op­er­a­tions. As­sum­ing ev­ery­thing else re­mains the same, not in­clud­ing these two items in the cur­rent year’s re­sults will boost HEPS by some 20%, which means like-for-like HEPS growth is ac­tu­ally 5% to 10%. Fur­ther, dur­ing the last year it also con­ducted a large share buy­back, which re­duced the num­ber of shares by around a quar­ter – and fewer shares will boost HEPS – which means the ac­tual busi­ness in all like­li­hood will have a very tough year.

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