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WeBuyCars pays a price for JSE listing

WeBuyCars Dome

Newly-listed WeBuyCars informed shareholders that it expects a significant core earnings increase for its 2024 financial year, with growth of up to 26%. However, its basic and headline earnings took a hit from once-off expenses like listing fees.

In a trading statement released on Tuesday morning, WeBuyCars told shareholders that its core earnings will be far higher for the year through September 2024 compared to the previous year.

The company said its core headline earnings are expected to increase by between 21% and 26%, while its core headline earnings per share are expected to jump by around 12%.

WeBuyCars used core headline earnings to measure and benchmark the underlying performance of its business. 

Core headline earnings represent headline earnings adjusted for certain non-recurring or noncash items that may distort the financial results from period to period.

For example, WeBuyCars’s unbundling and separate JSE listing this year saw the company rack up once-off professional, legal and JSE listing fees totalling R45.0 million.

This impacted its basic earnings per share and headline earnings per share, which are expected to decrease dramatically by up to 65%.

In addition, as set out in the WeBuyCars Pre-Listing Statement from March this year, the company held various call options which gave it the right to purchase the 25.1% shareholding in the Group from I VDW Holdings, for which a call option derivative asset was raised in prior periods. 

Upon adopting its new Memorandum of Incorporation, the shareholders’ agreement was cancelled, which led to the cancellation of the call options. 

The call option derivative asset of R426.5 million was consequently derecognised on 25 March 2024. 

This fair value loss on derecognition of the call option derivative is once-off in nature, non-core and has no cashflow impact.

Therefore, WeBuyCars expects the following changes to its earnings for the financial year through September 2024 compared to the year through September 2023. Its audited financial results are expected to be published on SENS on or about Monday, 18 November 2024.

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