Yes they have clearly mentioned it.it should be approved in the meeting.
Chinwi wrote:I think you have missed the important point in this announcement.
This capitalization is done using revaluation of lands only. They have not used the revaluation of living assets for this, which is under question in the law case. In that sense its good.
Their total shareholdings 71M. They have nearly 200M positive cash flow.But problem is, it is mainly from funds raised from right issue.
Chinwi wrote:
Mean time there is no real cash is involved in this capitalization. No cash in their reserves you can not expect a dividend from this company. If they give a such, it is like Sakvithi paying B from A. ( I think last year they paid 10 cents)
They have transferred some unrealized gains arising from the fair value of biological assets from retained earnings to capital gain reserve. I believe it is a good thing rather than keeping it under retained earnings.They use it for distribution of profit once it is realized in cash.
Their total capital reserve 2233.9M. But they have only 364.3M retained earning losses.They can easily sett off once it is realized.
Yes their admin & selling exp nearly 200M.I think they use the right issue money for these expenses.but they can get get some real cash money from vanila in very near future.
Chinwi wrote:
Very important thing is that their cash outflow by admin & selling expenses is higher than their real cash inflow. That may be the reason for the accumulating losses in their income statements although they show positive EPS & profit at bottom line.
It should be because every year they are transferring retained earning profit to mainly capital reserve a/c.may be due to court case.
Transferred amount from
Retained earning to capital reserve & other resrve 2011=361.3M
2012=283.2M
no wonder why we can see 364M retained earning losses in a/cs.
Chinwi wrote:
You can see this in 5 year summary. Page 7 of Annual report, Retained losses accumulated from 11 million in 2008 to 364 mil in 2012.
http://www.cse.lk/cmt/upload_report_file/631_1346902757838.pdf
but I think they can get at least 10% real cash from revenue by selling vanila. As per valuer Time period to obtain harvest is 4th year from date of planting.A mature vanilla vine would give a total harvest of 15Kg during its maturity.1kg=1280
Planted vines 2008= 2992
2009= 3337
2010=19197(Value more than 350M)
Chinwi wrote:
They show over billion in y/y revenue and only 20% of that figure is real cash.
Even that is obtained by selling plantation agreements to the investors and not from selling any real timber. 80% of the shown revenue is just revaluation of trees including 2-3 year old baby sandalwood plants.
Again, If you just glance the revenue line you may see their revenue has grown from 593 million in 2008 to a healthy fig of 1.19 billion in 2012.
That is actually the growth of trees and not transactions in cash as in other businesses.
Really good observations.What i finally think,if they get income from vanilla as expected,they can cover their day to day expenses.no need more right issues.Gains from biological assets are covered from SLAS.If they will win the court case,they can continue this practice.
There trees are valued once in a three years time (3 Years) to ensure that the book values match the current market values.If it is not match,they have to make entries accordingly.
I believe they maintain their revenue over 1B level in coming years also because this is a circle,they can plant new tress ,get the discounted fair value in to a/c & can set off against reliable losses if it is needed.
our EPF people also doing the same thing.just imagine If no inflow for EPF,what can be the result.
Chinwi wrote:
We know any new plantation company has to face this phenomenon. For tea, palm oil or coconut maturing time is shorter and withing 4-5 years we can get in to a healthy position. When you deal with timber it is different.
I just pointed out some observations (repeated) and do not wanted to come into any argument here.
Somehow I hope they will maintain this journey until they get real cash by felling actual trees. ( after how many years?)
The time period between that and this is critical.