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Re: [sharechat] SKY CITY

From: "" <>
Date: Mon, 30 Sep 2002 19:43:35 +0000

Hi Mike,
>Q what is the difference between reported profit and 
>normalised profit?

To understand how a business is doing, it is often best to compare 
broadly the same business activity over the same time period.

The reported profit is the real profit figure, unfudged.   However, 
if during the year the business reporting its results has 
significantly changed, (for example, by disposing of a 'non core' 
business unit or buying in a new one) then the real results are not 
necessarily indicative of what is going to happen in the future.  

'Normalising' results is often an attempt to show the results of the 
ongoing businesses which the company might argue gives a fairer 
picture of what you might expect going forward.  A normalised result 
is what you intend to compare any profit in the future to.

>Q what is the difference between EPS and cash EPS

Earnings per share can be affected if a company has to write down a 
a large amount of the value of one of its businesses that is not 
performing well (eg Force Corporation).   Such a writedown is usually 
a 'oncer'.  It is a real loss in value but not a cash loss.  If a 
company is confident that such a loss will not be repeated then they 
can prudently plan their business going forward based on their cash 
earnings position.

>Q how can the dividend payout be greater than the 
>reported profit

Simple.  Just pay out more money than you earn :-).  Obviously this 
situation is not sustainable indefinitely.   But if you make a one 
off write off then it can be done if the company is adept at 
generating cash from the assets it has left.


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