The headline numbers for the year ending 31 August 2017 look excellent with revenue up 20.0% to £24.6m and ‘adjusted’ operating profit up 26.2% to £5.9m – yes, it’s that now familiar ‘adjusted’ number that hides something!
Adjusted fully diluted Earnings per Share were up also apparently 22.5% to 28.28p.
A quick glance at the footnote reveals that the adjustment in question relates to share option costs of a whopping £1.5m (2016: £0.3m) – in plain English this equates to a staggering 25% of operating profit. Furthermore, in real terms pre-tax profit of £4.472m was actually only 0.47% up on the prior year, suggesting that staff have actually received all of the benefit, ahead of those nice supportive shareholders who have ponied up several chunks of new capital over the past few years.
We like the way management blithely states that the adjusted number excluding the non-cash share option charge ‘provides a more accurate reflection of the underlying performance…
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