JOHANNESBURG – Listed investment and property holding company, ARB Holdings, on Wednesday said that it expected its earnings to slide by up to 40 percent in the six months to December 2018, citing changes to its reporting standards and problems at its electric unit.

The news sent the ARB stock down 2.80 percent to R5.20 as the company said headline earnings a share (Heps) would fall to between 22.62 and 24.50 cents during the period.

“While earnings in the electrical division have been negatively affected by the reduction in the number of large projects; decreased spending from Eskom and copper supply shortages affecting the supply of power cables, the majority of the expected decrease arises from the International Financial Reporting Standards, (IFRS) adjustment,” the company said.

ARB said the non-cash IFRS adjustment resulted from an increase in the valuation of the put-option liability issued to the non-controlling interests in Eurolux, of between R9 million and R11m, as compared to the R13.8m income (or decrease in valuation) in the comparative period last year.

“This represents a decrease in the earnings per share and headline earnings a share of between 9.70 and 10.55c per share. This increase in the valuation of the put-option liability is primarily as a result of the increase in the price earnings ratio applicable in terms of the put-option,” ARB said. The put-option liability is sensitive to the its share price, the company said. The put-option liability was issued in favour of Eurolux shareholders.

ARB acquired 60 percent of leading lighting distributor Eurolux for R81m, as part of its long-term strategy to offer a diversified range of electrical products to a wide range of customers. Eurolux imports and distributes light fittings, lights and related accessories. ARB and Eurolux acquired full ownership of Radiant Group from South Ocean Holdings.

The half year results will be released next week.