DURBAN – ARB Holdings warned on Thursday that its full-year earnings could decline as much as 40 percent, hit by impairment of trademarks and goodwill in the year to end June.
ARB said in a trading update that it expected its earnings per share (eps) to decline by between 30 percent and 40 percent, to be between 34.46 cents a share and 40.21c, down from last year’s eps of 57.44c.
“The expected decrease in eps arises primarily from the effects of the non-cash IFRS impairment of trademarks and goodwill as 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.
Furthermore, certain property values had also had to be impaired below cost given the revision in fair market values since the Covid-19 lockdown. ARB also noted that these IFRS adjustments were excluded in the determination of its headline earnings per share (HEPS).
As a result, ARB expected to report HEPS of between 55.29c and 61.11c, which could be potentially 5 percent higher or 5 percent lower compared to the HEPS of 58.20c reported last year.
The group said the valuations of the put option liability issued to the non-controlling interest in Eurolux and Craigcor had been reduced by between R30 million and R35m compared to the R21.2m reduction in valuation for the comparative period last year.
“This alone represents an increase in eps and HEPS of between 3.83c and 5.87c a share,” the group said.
ARB’s results were expected to be released on or about August 20.
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