RE: From Motley Fool28 Nov 2023 13:21
~£2.5m of the decline in profits YoY is due to ProTiler share puchase expenses (provision for the expected cost of acquiring the remaining 40% of the ProTiler shares under the terms of the original share purchase agreement). Historically, under old accounting conventions, such costs would have been capitalised rather than expensed. Regardless of whether you agree or disagree with the current accounting convention, most, if not all, of these costs should not be recurring beyond March 2024 (assuming that Topps exercises its option at the earliest opportunity). It should also be noted that these expenses are not tax deductible for purposes of computing corporation tax (they are, instead, deductible for the purposes of calculating any chargeable gains should ProTiler ever be sold).
Also, ~£0.7m of the PAT is currently attributable to non-controlling interests (the original shareholders of ProTiler) and is excluded from EPS atrributable to Topps' shareholders (ProTiler is currently accounted as if Topps owns 100% of the shares and the profits attributable to the original shareholders of ProTiler is then adjusted out via the non-controlling interest line). Once the acquisition of the remaining 40% is completed there should be an automatic boost to the profits attributable to the Topps' shareholders.
For comparison purposes, the adjusted profit before tax is probably a fairer reflection of the profits that will be attributable to Topps shareholders once the acquisition of the outstanding ProTiler shares has been completed and, on that basis and assuming corporation tax at 25%, the adjusted earnings per share have fallen from 5.9p per share to 4.8p per share YoY.
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