Consolidation of the number of treasury shares : the South African experience
CITATION: Vermeulen, M. & Yaffar, Y. 2014. Consolidation of the number of treasury shares : the South African experience. South African Journal of Business Management, 45(1): a118, doi:10.4102/sajbm.v45i1.118.
The original publication is available at https://sajbm.org
Unlike most other values found in companies’ annual reports, there are no accounting standards that prescribe the calculation of market capitalisation and net asset value per share. These two figures play quite a significant role when valuing and comparing different companies. It is also frequently used in determining when a company should repurchase its own shares. In South Africa the number of the holding company’s shares can differ from the total number of the group’s shares after consolidation, as subsidiaries and share trusts are allowed to hold shares in their holding company. The published financial statements of a sample of JSE-listed companies were investigated to determine which number of shares companies use to calculate net asset value per share and market capitalisation, and if it is used consistently. Eight different combinations of consolidated and unconsolidated numbers of shares were found in the calculations of market capitalisation and net asset value per share showing inconsistency in application across the JSE-listed companies.