A closer look at the numbers
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.