profit down sp up!, page-2

The announcement states that the September announcement opined that the statutory profit would be $4.6 million (down 55%) for 1H2014, but it goes on to say that statutory net profit after tax for 1H2014 will be approximately $5.6 million, which is $1 million improvement on its September announcement. As this includes $970,000 of one-off reorganisation costs and transaction costs associated with the current merger with SCC, KSC's underlying net profit for 1H2014 is $6.3 million – approximately $2 million better. It is not surprising that the SP went up.

The announcement states that KSC's statutory accounts for 1H2014 will be released to the market on 26 February 2014. I would expect the SP to dribble up a bit more when investors have had time to digest the facts, and ponder on the net impact that merging with SCC may have on 2H2014, and the years that follow. Normally, I do not like growth by acquisitions, but I think that the two companies were so close, that the SCC acquisition makes sense. I have not done the sums to support this view.