ARB expects lower EPS for year ended June 2020

13th August 2020 By: Creamer Media Reporter

JSE-listed ARB expects its earnings per share (EPS) for the year ended June 30 to be between 34.46c and 40.21c.

This is 30% to 40% lower than the EPS of 57.44c reported in the preceding financial year.

Headline earnings per share (HEPS) for the year under review are expected to be between 55.29c and 61.11c apiece, which is between 5% lower and 5% higher when compared with the HEPS of 58.20c in the prior year.

The group attributed the lower EPS to the effects of the non cash International Financial Reporting Standards (IFRS) impairment of trademarks and goodwill.

“It has been determined that the recoverable amount has been negatively impacted by management’s forecasts of the pressure on projected earnings in the economy in the next few years as a result of the global recession following the impact of the Covid-19 pandemic,” the group said in a trading update.

Further, certain property values have also had to be impaired below cost given the revision in fair market values since the Covid-19 lockdown.

These IFRS adjustments are excluded in the determination of HEPS.

“The valuations of the put option liability issued to the non controlling interest in Eurolux and Craigcor have been reduced by between R30-million and R35-million, compared with the R21.2-million reduction in valuation for the comparative period last year,” ARB noted.

This alone represents an increase in EPS and HEPS of between 3.83c and 5.87c a share.

“This decrease in the valuation of the put option liability is primarily as a result of the decreased average earnings of the subsidiaries and the decrease in the price earnings ratio applicable in terms of the put option.”

ARB plans to release the results for the year ended June 30 on August 20.