As clear as mud

Corporate results can be confusing at the best of times, and when some of the not-so-positive figures presented by the company are hidden in plain sight, then investors and the public's right to know, is infringed.

Lets take the case of the results released by Allan Gray Property Trust Management Limited (Grayprop) or GRY, last week.

One news agency (Bloomberg) reported that the profit for the entity fell 8% after the value of some of its properties declined.

The media statement that was issued made no mention of a drop in profitability and in fact focused on an increase in distributable income, which was up 11.4%.

The same positive statement was issued via the Johannesburg Stock Exchange News Service. So we went to look at the audited financials, which were published elsewhere on SENS, and not generally distributed to the media.

Their audited financial results tell the story.

While total assets were up to R5 770 836, from R4 636 213, profit for the year did drop to R1 424 568, from R1 543 780. Headline earnings per unit were flat at 38.4 cents, compared to 38.5 cents the previous year.

One little gem in the SENS announcement made mention that corporate expenses for the year increased by 33% due to higher borrowings and a higher unit price, both of which contributed to higher management fees.

So what is wrong with this picture? Well, we wanted to know what effect the increase in corporate expenses had on overall profitability. A simple enough question you would think.

Well, not really, because the answer confused us even more.

The answer we got: Quote: "The increase in corporate expenses stems largely from the higher service fee which is itself dependent upon the higher unit price. Interest paid on the higher level of borrowings in the past year also adds to the increase in this expense." Unquote.
 
Editor's thoughts:
Companies have a duty to report their results clearly, so that the average investor can understand all the issues.