By Anchor Capital
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South African Market Review
South African markets closed higher yesterday. Truworths International climbed 7.3%, after it reported higher revenue in 1H15 and forecast retail sales in 2H15 to grow by 10.0% from the previous comparable period. Woolworths Holdings, Mr Price Group and Shoprite Holdings advanced 4.0%, 3.9% and 2.7%, respectively. Sibanye Gold rose 1.5%, after it indicated that revenue in FY14 increased 12.7% from the preceding year. However, Sasol plummeted 3.6%, extending previous session losses which were triggered by its announcement to pay lower dividends due to falling oil prices. MTN Group dropped 0.5%, despite indicating that FY14 headline EPS is expected to be between 5.0% and 15.0% higher. The JSE All Share Index rose 0.6% to close at 52,835.55.
UK Market Review
UK markets finished lower yesterday, falling for the second successive session, dragged lower by weakness in Centrica and energy sector stocks. Centrica tumbled 8.5%, after posting a loss for FY14, and after the firm announced that it would reduce its annual dividend. Babcock International Group fell 5.7%, after losing a bid to provide services to the UK Ministry of Defence. Tullow Oil and Royal Dutch Shell dropped 2.7% and 2.1%, respectively, tracking a decline in crude oil prices. However, easyJet advanced 2.1%, after launching a new route between Stansted Airport and Monastir in Tunisia. BAE System climbed 0.7%, reversing losses from the previous session which was triggered by downbeat FY15 earnings. The FTSE 100 Index declined 0.1% to close at 6,888.90.
US Market Review
US markets ended mostly lower yesterday, as traders grappled with a continued impasse between Greece and its creditors and amid weakness in energy sector stocks. Ball Corporation sank 4.3%, after the company agreed to acquire Rexam for around $6.80bn.Wal-Mart Stores slid 3.2%, after the company announced that wage increases and other spending initiatives would weigh on its operating income this year. Transocean and Noble Energy declined 2.0% each, in line with a drop in oil prices. On the other hand, Priceline Group surged 8.5%, buoyed by better-than-expected 4Q14 results. The S&P 500 Index fell 0.1% to settle at 2,097.45, while the DJIA Index plunged 0.2% to close at 17,985.77. The NASDAQ Index rose 0.4% to finish at 4,924.70.
Asia Market Review
Japanese markets are trading higher this morning. Skymark Airlines soared 25.9%, after a report indicated that a consortium had offered financial help to the airline. Japan Display surged 8.0%, amid reports that the company was planning to build a new facility in Japan to make screen panels for Apple Inc. However, shipping firms, Nippon Yusen KK and Mitsui OSK Lines dropped 1.2% and 0.9%, respectively. The Nikkei 225 index is trading 0.2% higher at 18,304.59. Hong Kong and South Korean markets are closed today on account of a national holiday.
Commodities
At 06:00 SAST today, Brent crude oil advanced 0.8% to trade at $59.81/bl. Yesterday, Brent crude oil rose 1.4% to settle at $59.34/bl. The US Energy Information Administration indicated that US crude oil inventories rose by 7.70mn bls in the week ended 13 February, more than market expectations. Meanwhile, investor sentiment remained subdued after reports indicated that Greece’s request for bailout extension has been rejected by Germany, increasing concerns of a Greek exit from the eurozone.
Yesterday, the Illinois North Central No.2 Yellow corn spot prices rose 2.1% to $3.68/bushel.
At 06:00 SAST today, gold prices declined 0.1% to trade at $1,206.18 /oz. Yesterday, gold declined 0.5% to close at $1,206.84/oz.
Yesterday, copper rose 0.1% to close at $5,766.25/mt. Aluminium closed marginally higher at $1,799.25/mt.
Currencies
Yesterday, the South African rand weakened against the US dollar, after initial jobless claims data from the US came in better-than-expected for last week, suggesting strength in the labour market. Going forward, market participants will keep an eye on the preliminary Markit manufacturing PMI data in the US scheduled later today.
The yield on benchmark government bonds fell yesterday. The yield on 2015 bond declined to 6.17% while that for the longer-dated 2026 issue fell to 7.59%.
At 06:00 SAST, the US dollar is trading 0.2% lower against the South African rand at R11.6620, while the euro is trading 0.1% lower at R13.2569.
Yesterday, the euro declined against most of the major currencies, but strengthened against the South African rand. In a noteworthy news, Germany rejected Greece’s request for the bailout extension, fuelling concerns about Greece’s exit from the euro area. Meanwhile, preliminary data released from the eurozone showed a more-than-expected improvement in consumer confidence for February. Moving ahead, investors will keep a tab on the preliminary Markit manufacturing and services PMI data for February due later today.
At 06:00 SAST, the euro advanced 0.1% against the US dollar to trade at $1.1368, while it has weakened 0.1% against the British pound to trade at GBP0.7366.
Economic Updates
In the UK, CBI trends selling prices registered an unexpected rise to a level of 8.00 in February, compared with a level of -6.00 in the previous month. Markets were anticipating CBI trends selling prices to ease to a level of -7.00.
Switzerland has registered trade surplus of CHF3.43bn in January, compared with a revised trade surplus of CHF1.51bn in the prior month. Markets were expecting a trade surplus of CHF1.20bn.
The National Institute of Statistics and Economic Studies (INSEE) has indicated that EU normalised consumer price index fell 1.1% on a monthly basis in France in January, higher than market expectations for a fall of 1.0%. In the previous month, EU normalised consumer price index had advanced 0.1%.
The eurozone had reported the seasonally adjusted current account surplus of EUR17.80bn in December, following a revised current account surplus of EUR19.90bn in the prior month.
In February, the flash consumer confidence index registered a rise to -6.70 in the eurozone, compared with a level of -8.50 in the previous month. Markets were anticipating the consumer confidence index to advance to -7.50.
The US Department of Labour has indicated that compared with a level of 304.00k in the prior week the seasonally adjusted initial jobless claims in the US recorded a drop to 283.00k in the week ended 14 February 2015. Markets were expecting initial jobless claims to ease to 290.00k.
In the US, the seasonally adjusted continuing jobless claims climbed unexpectedly to a level of 2,425.00k in the week ended 7 February 2015.
The Cabinet Office of Japan has indicated that the final leading economic index registered a rise to 105.60 in December, in Japan. The leading economic index had recorded a reading of 103.90 in the previous month. The preliminary figures had recorded an advance to 105.20.
In February, the preliminary manufacturing PMI recorded an unexpected drop to 51.50 in Japan. Market expectations were for manufacturing PMI to rise to a level of 52.50.
Corporate Updates
South Africa
MTN Group Limited: The telecommunication company, in its trading statement for FY14, revealed that it expects an increase of between 5.0% and 15.0% in its headline EPS compared with the preceding year. Additionally, it expects its attributable EPS to rise between 15.0% and 25.0% compared with the previous year to the range between R16.79 and R18.25.
Truworths International: The retailing company, in its interim report for the 26 weeks ended 28 December 2014, indicated that revenue was up 5.6% to R6.70bn, compared with the same period previous year. It reported its fully diluted headline EPS of 333.40c, compared with 330.70c posted in the same period a year ago. The company expects retail sales for the first seven weeks of 2H15 to increase by 10.0%, compared with the corresponding period a year ago.
Sibanye Gold Limited: The gold mining company, in its FY14 results, indicated that revenue rose 12.7% to R21.78bn from the previous year. However, its diluted EPS dropped to R1.82from R2.55 posted in the preceding year. The company forecast gold production in FY15 to be between 1.61mn oz and 1.67mn oz.
Brimstone Investment: The company, in its trading statement for FY14, stated that it expects to report EPS between 96.20c to 115.40c, compared with 189.90c posted a year ago. Further, it expects its headline EPS to decrease between 32.0% and 44.0% from the previous year to the range of 106.30c to 127.50c.
SABMiller Plc: The company announced the resignation of its Chief Financial Officer, Jamie Wilson. He will leave the group on 31 March 2015, at the end of the FY15.
Remgro Limited: The company declared an interim gross dividend of R1.69 out of income reserves in respect of both the ordinary shares of no par value and the unlisted B ordinary shares of no par value for 1H15.
Discovery Limited: The company declared a gross cash dividend of 465.00c per B preference share for the period 1 July 2014 to 31 December 2014. Furthermore, a dividend withholding tax of 15.0% will be applicable to all preference shareholders who are not exempt.
RCL turns away from frozen chicken: RCL Foods has significantly reduced its reliance on low-profit frozen chicken by producing smaller birds that can be sold at higher prices to restaurants.
City Lodge to boost rest-of-Africa income: City Lodge Hotels, which is developing two new hotels in East Africa and evaluating at least three other opportunities outside its home market, could generate “30.0% plus” of its revenues outside SA from FY17.
Times Media set for exit from JSE: The JSE’s only newspaper group is set to disappear from the bourse as Blackstar group has made a firm offer to acquire the shares it does not already own in Times Media Group, the publisher of Business Day and the Sunday Times.
Blue Label plans to add prepaid water to portfolio: Blue Label Telecoms is adding prepaid water to its portfolio in a move that will further grow its prepaid business, which is one of the key contributors to group earnings.
UK and US
Wal-Mart Stores: The retail chain company, in its FY15 results, indicated that total revenue was up 2.0% to $485.65bn from the previous year. Its diluted net EPS was $5.05, compared with $4.88 posted a year ago. The company expects FY16 EPS to be in the range of $4.70 to $5.05, and 1Q16 EPS to be between $0.95 and $1.10. Meanwhile, media reports suggest that the company within the next six months would give raises to about 500,000 workers, or nearly 40.0% of its 1.30mnemployees.
Priceline Group: The company, in its FY14 results, stated that total revenue increased 24.3% to $8.44bn from the preceding year. Its diluted net EPS was $45.67, compared with $36.11 posted in FY13. The group is targeting an annual increase in total gross travel bookings of approximately 2.0% to 9.0% in 1Q15. Meanwhile, media reports indicated that the company plans to acquire Rocketmiles for around $20.00mn.
DIRECTV: The broadcasting company, in its FY14 results, revealed that revenue rose to $33.26bn from $31.75bn reported in the previous year. Its diluted EPS was up 4.4% to $5.40 from the prior year. Additionally, the company launched WatchESPN, Other Disney and ABC Internet-Video Services.
Rightside Group: The company, in its FY14 results, indicated that revenue grew 3.5% to $0.19bn from a year ago. It reported a diluted loss of $0.10/share, compared with a loss of $0.58/share posted in the previous year. The company expects total revenue of $0.21bn to $0.22bn in FY15.
Public Storage: The real estate investment company, in its FY14 results, stated that total operating revenue rose 10.8% to $2.20bn from the preceding year. Its diluted EPS stood at $5.25, compared with $4.89 recorded a year ago.
Intuit Inc.: The small business and tax software company, in its 2Q15 results, revealed that its total revenue was $1.48bn, compared with $1.40bn recorded in the same period a year ago. However, it posted a diluted net loss of $0.53/share, compared with a loss of $0.17/share posted in 2Q14. The company expects revenue of $2.08bn to $2.15bn in 3Q15.
Discovery Communications: The company, in its FY14 results, indicated that total revenue was up 13.2% to $6.27bn from the previous year. Its diluted EPS stood at $1.66, compared with $1.49 reported a year ago.
Coca-Cola Co.: The company declared a quarterly dividend of $0.33/share, an 8.2% increase compared with the prior dividend of $0.31/share. The board also announced the appointment of Marcos de Quinto, the Chief Marketing Officer, as an Executive Vice President of the company, effective immediately. Meanwhile, media reports indicated that the company’s offices in Mexico were attacked by protesters with gasoline bombs on Thursday.
Colgate-Palmolive Co.: The company has declared a 2Q15dividend of $0.38/share, 5.6% up from the prior 2Q14 dividend of $0.36/share. The board of directors of the company also authorised a new share repurchase programme providing for the repurchase of shares of common stock having an aggregate purchase price of up to $5.00bn.
Sysco Corporation: The US government filed a lawsuit on Thursday seeking to block its merger with US Foods Inc.
BAE Systems: The company, in its preliminary FY14 results, revealed that sales dropped 8.5% to GBP16.64bn from the preceding year. Its underlying EPS was 38.00p, compared with 42.00p posted in FY13. For FY15, the company expects underlying EPS to be marginally higher than the prior year, including some reliance on anticipated naval and aircraft orders.
Centrica Plc: The utility company, in its FY14 results, stated that group revenue rose 10.7% to GBP29.41bn from the previous year. However, it posted a diluted loss of 20.20p/share, compared with diluted EPS of 18.30p reported a year ago. The company indicated that its forecast FY15 adjusted EPS has been negatively impacted by about 2.50p, primarily due to changes in the external environment.
Sports Direct International: The sports retailing company, in its interim management statement relating to the period from 27 October 2014 to 18 February 2015, indicated that sales for the 13 weeks ended 25 January 2015 rose 2.6% to GBP771.00mn from GBP751.60mn reported in the corresponding period previous year and gross profit increased 7.6% to GBP346.90mn from GBP322.30mn posted for the same period a year ago. It further stated that the board is confident of achieving underlying EBITDA target of GBP360.00mn in FY15.
Rexam Plc: The global beverage can making company, in its unaudited results for FY14, indicated sales from continuing operations fell 2.8% to GBP3.83bn from the prior year. Its net diluted EPS was 48.00p, compared with 11.60p posted in the previous year. Meanwhile, the company stated that its US rival, Ball Corporation, has made a cash-and-stock offer worth GBP4.43bn.
Go-Ahead Group: The company, in its 1H15 results, revealed that group revenue rose 13.8% to GBP1.56bn, compared with the same period a year ago. However, its adjusted diluted EPS dropped to 74.20p from 82.70p reported in 1H14. The company expects profits for 2H15 to be similar to those achieved in 1H15.
Petra Diamonds: The company, in its 1H15 results, stated that revenue was up 16.4% to $214.80mn from the same period a year ago. Its diluted EPS from continuing operations stood at 5.76¢, compared with $5.30¢ recorded in the corresponding period of the previous year. The company has increased its FY15 production guidance from ca. 3.2 Mcts to ca. 3.3 Mcts.
City of London Investment: The fund management company, in its unaudited 1H15 results, indicated that its gross revenue and capital gains dropped sharply to GBP30.98mn from GBP104.82mn posted in the corresponding period previous year. It recorded basic and diluted EPS of 8.71p, compared with 37.81p posted in the same period a year ago.
BTG Plc: The specialist healthcare company announced the launch of a sponsored Level 1 American Depositary receipt programme.
Kennedy Wilson Europe: The real estate company announced that it has recently completed the acquisition of eight loans secured by first ranking mortgages over eight Park Inn hotels across the UK from two financial institutions for around GBP61.50mn.The acquisition will be funded from the company’s cash resources.
Financial Times
Kiev accused of cutting gas supplies to rebels: A new fault line opened up between Ukraine and Russia over natural gas on Thursday when pro-Russian rebels in east Ukraine accused Kiev of cutting off supplies to them amid sub-zero temperatures.
Centrica slashes dividend as losses bite: Centrica cut its dividend for the first time since it was created in 1997 as an “urgent” step to protect its credit rating as falling oil and gas prices led to a 35.0% drop in annual profits.
Barrick Gold reveals asset sale and debt reduction plan: John Thornton has given his fullest insights yet into how he intends to turn round Barrick Gold, rejecting expansion into other commodities and saying the struggling Canadian miner must rediscover the entrepreneurial spirit of its early years.
Largest US shale group sees growth halt: EOG Resources, the largest US shale oil producer, expects its rapid production growth of recent years to come to a halt in FY15, in the starkest sign yet of how weak crude prices are hitting the industry.
Total issues EUR5.00bn in hybrid bonds: Total, the French oil major, has taken advantage of the roaring market for “hybrid” bonds — securities that combine the characteristics of both debt and equity — to issue EUR5.00bn of perpetual notes.
Iran and west narrow gap in nuclear talks: World powers and Iran are making “significant” progress towards a deal to curb Tehran’s ability to build an atomic bomb — so much so that even hawks in the Israeli government consider some form of agreement increasingly possible in the coming weeks.
Tax scandal hits Swiss bank deals: The controversial tax practices of the Swiss private banking industry are threatening to disrupt two potential takeover deals in the sector.
City of London ‘black book’ is called for to track ‘bad apple’ traders: Financial institutions need a private forum to share information about traders who break rules, in order to prevent “bad apples” moving from one firm to another, a group of industry specialists will tell the Bank of England on Friday.
Man Group in talks to buy asset manager NewSmith: Man Group, the world’s largest listed hedge fund manager, is in talks to acquire the London asset manager NewSmith, say people familiar with the situation.
Watchdog ‘marking territory’ with UK market study: The Financial Conduct Authority acquires new competition powers in April over financial firms. It has lost no time in preparing to use them.
Russian watchdog challenges $25.00mn deposit in Sergei Pugachev case: The Russian state body battling Sergei Pugachev, the exiled oligarch once known as the “Kremlin’s banker”, in a $2.00bn legal case is claiming the collapse of the rouble has left it too poor to make a court security deposit.
Business divided over FCA banking review: Big companies are well-equipped to analyse the “bundled” products offered by large City of London investment banks, but smaller businesses can struggle to assess if they are good value, says the head of the Association of Corporate Treasurers.
UK investment banks face competition probe: Investment banks in the UK face an investigation by the Financial Conduct Authority regulator into possible conflicts of interest and anti-competitive practices.
New Zealand sues Portugal central bank over Banco Espírito Santo: New Zealand’s state retirement fund is taking legal action against the Portuguese central bank in an attempt to recover a $150.00mn investment lost following the collapse of Banco Espírito Santo in one of Europe’s biggest financial failures.
Sanofi appoints Brandicourt as CEO: Sanofi has named Olivier Brandicourt of Bayer as its new Chief Executive, ending a four-month search to replace Chris Viehbacher at the helm of the French drugmaker.
Schneider Electric’s Jean-Pascal Tricoire calls for French reform: The head of one of France’s largest industrial companies has called on the government to push through bolder reforms in the labour market to help boost the weak business environment.
Poor skiing season hits Sports Direct: A poor skiing season in continental Europe took its toll on Sports Direct, with sales growth at the sports retailer controlled by Mike Ashley slowing over the past three months.
LinkedIn to let marketers use more of its data to track users: LinkedIn has launched advertising products that allow marketers to track its 350.00mn users on thousands of sites across the internet and target them with personalised messages.
BT receives broadband pricing boost from European Commission: BT has received a boost in the battle over broadband pricing after the European Commission asked UK regulator Ofcom to redesign proposals intended to protect competitors of the former telecoms monopoly.
UK pension reform ‘potentially dangerous’: A free market think-tank is urging the government to rein in radical pension reforms and nudge savers back towards annuities.
Asda Chief Andy Clarke warns of more turmoil for supermarkets: The British grocery sector is set for two more years of turmoil, the Chief Executive of Asda warned, as the UK arm of US group Walmart reported its first full-year decline in underlying sales for six years.
SABMiller suffers second top level loss as finance director quits: The revolving door in the global beer industry spun again on Thursday when SABMiller, the London-based group behind Grolsch and Peroni, said its finance director had suddenly quit.
Walmart to raise pay of 500,000 employees: Walmart will spend $1.00bn to boost the wages of half a million low-paid workers, as the largest private sector employer in the US responds to public disquiet over income inequality.
Adidas starts search for new Chief: Adidas has begun the search for a successor to its longstanding Chief Executive, Herbert Hainer, who has come under fire from investors unhappy with the German group’s performance.
Batteries suit offers clues to Apple’s car ambitions: A maker of electric car batteries is suing Apple for poaching some of its best researchers, providing further evidence of the iPhone maker’s plans for a big push into the automotive market.
Lenovo under fire as adware leaves laptops vulnerable to hacking: Lenovo, the world’s largest computer manufacturer by unit sales, has been forced to disable controversial software that left users of its laptops vulnerable to hacking attacks.
Twitter goes global to attract developers: Twitter has embarked on an international tour to woo companies and programmers to build new products for the microblogging service, as it continues to try and attract developers to its mobile platform in order to compete with larger rivals including Google, Facebook and Apple.
T-Mobile outflanks US rivals in price war: T-Mobile US underlined its status as the biggest winner in a mobile telecoms price war as it reported fourth-quarter results that beat expectations, sending its shares up more than 3.0% in New York trading.
BT receives broadband pricing boost from European Commission: BT has received a boost in the battle over broadband pricing after the European Commission asked UK regulator Ofcom to redesign proposals intended to protect competitors of the former telecoms monopoly.
Hapag-Lloyd sailings cancelled into May as slowdown drags on: One of the world’s largest shipping lines has cancelled most sailings from Asia to the US west coast for the next three months, underlining the impact of a labour dispute that one analyst estimates reduced US GDP by $40.00bn in December.
Rail strikes risk choking German economy, warn industry leaders: Strikes by a German train drivers’ union could cost Europe’s biggest economy half a billion euros in cancelled shipments, delays and lost work time, industry leaders warned on Thursday.
Babcock International: Lost 5.7% to 996.00p after the UK Ministry of Defence awarded a GBP6.00bn logistics services contract instead to Leidos, a US outsourcer.
AB Foods: Rose 2.0% to GBP30.57 ahead of a trading update due on Monday.
Petra Diamonds: Rallied 7.9% to 188.90p after saying prices, while still muted due to a credit crunch among stone polishers, were beginning to show signs of stabilisation.
Lex
Centrica: upstream without a paddle: Before entering a flowing stream, always test the current. Centrica’s new Chief Executive, Iain Conn, has decided to jump right in. He cut the FY15 dividend by nearly a third on Thursday, citing low energy prices and the need to protect Centrica’s credit rating. This threatens a yield that was expected to be more than 6.0% this year; the shares sank 8.0%. Centrica has waited too long before recognising that its natural gas exploration division is a very high-cost protection against higher gas prices. It is time to exit these assets and move on. Mr Conn, an oil man, replaces another, Sam Laidlaw. Mr Laidlaw had a preference for digging holes, and Centrica’s exploration and production assets grew under his watch. Since Mr Laidlaw joined in FY06, the proportion of total capital spends on E&P rose from zero to a peak of 89.0% in FY12. This focus on E&P has punished shareholders. Operating earnings, adjusted for writedowns, fell 35.0% to GBP1.70bn last year. Two-thirds of that decline stems from Centrica Energy, which includes E&P, and provides 40.0% of earnings. As the owner of British Gas, most of Centrica’s earnings are still from its generation and distribution business. As a utility, Centrica is popular with investors looking for dividend income. The size of the E&P business obscures that investment case, so Centrica has traded at a discount to UK peers for several years. It should get out of E&P soon.
Walmart: at a minimum: For its entire existence, Amazon has “invested” profits to keep prices low and build market share. The idea was that the company would become so embedded among consumers that the absolute volume of dollar profits would easily trump the meagre margins they achieved. The question then is what similar pecuniary benefit Walmart achieves from its announcement on Thursday that it will “invest” more profits as well — by boosting pay for 500,000 of its US employees. Walmart will raise its minimum wage to $9.00 an hour in April and to $10.00 in a year’s time. The federal minimum wage is $7.25 (though several states and cities have set a higher floor). The immediate impact is not insignificant. The company estimates that the increase will cost it more than $1.00bn in FY15, lowering earnings per share by 4.0%. Walmart has annual revenue and operating profit of nearly $500.00bn and $30.00bn respectively. The correct benchmark for labour cost, however, may not be a minimum wage but a market clearing rate — which may now be higher. US unemployment has been below 6.0% since September, and January’s employment report from the Department of Labor showed that wages are up a solid 2.0% over a year ago. Walmart is wise to make a loud splash about elevating wages, at a time when they were set to begin creeping up on their own.
Prudence: sweating the small stuff: The current debate between a group of UK institutional investors and the International Accounting Standards Board may seem equally esoteric to the uninvolved. Should financial statements show a company in a fair (neutral) way or in a conservative (prudent) way? The answer sharply affects results because they involve so many estimates. Imagine a company owns a share valued at GBP100.00. At the next reporting date, it must assess if that is still the correct value. The calculation, based on how long the share will be held and its volatility, usually produces a range. In this case it may be GBP75.00 to GBP120.00. Any figure within that range can be seen as neutral, even if the auditor says GBP95.00 is the prudent number. The company’s Chief financial officer can book the share at GBP120.00 and realise a GBP20.00 profit. The IFRS’s next guidelines (expected before April) will recommend prudence when making uncertain judgments, but only as long as it is consistent with neutrality, which will remain the primary objective. This change is unlikely to end the debate. Investors want prudence back on top (it was central to the old UK rules). They fear the current rules result in overvalued assets, confusing profit figures (which include both real and unrealised gains) and overstated capital available for distribution. That could result in directors approving spending that the company cannot afford. Standard setters see it differently. They think it is most important to show a fair picture. Neutral estimates do this as long as auditors effectively test management’s assumptions. Neutral assumptions prevent management from building a buffer of conservative allowances that can then be used to smooth results.
*Published with special permission by Anchor Capital (ACG)
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