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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » rainmaker & mono

rainmaker & mono

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41rainmaker & mono - Page 3 Empty Re: rainmaker & mono Wed Mar 13, 2013 4:53 pm

Slstock


Director - Equity Analytics
Director - Equity Analytics
They did a consolidation . So nobody "lost" shares. If they held 10 shares then it became 1 . NAV also increased propotionately., After that rights and warrants issue.



@UKboy wrote:I think REEF did reduce the number of shares.

42rainmaker & mono - Page 3 Empty Re: rainmaker & mono Wed Mar 13, 2013 5:04 pm

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
@slstock wrote:They did a consolidation . So nobody "lost" shares. If they held 10 shares then it became 1 . NAV also increased propotionately., After that rights and warrants issue.



@UKboy wrote:I think REEF did reduce the number of shares.

What MBSL did sometime back 5 years so?

If am not mistaken my number of shares came down due to the capital reduction

43rainmaker & mono - Page 3 Empty Re: rainmaker & mono Wed Mar 13, 2013 5:05 pm

UKboy


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@Jiggysaurus wrote:
@UKboy wrote:I think REEF did reduce the number of shares. (for a while)

REEF was in the nature of a reverse subdivision which didn't change the absolute NAV (The NAV per share increased due to the number of shares reducing).

100 shares and NAV of 300 before reverse sub (NAVps of 3)

10 shares and NAV of 300 after reverese sub (NAVps of 30)

No cancellation of shares against stated capital as Rainmaker keeps mentioning

Jiggy. Agree with you.

44rainmaker & mono - Page 3 Empty Re: rainmaker & mono Wed Mar 13, 2013 5:12 pm

Jiggysaurus


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@Gaja wrote:

What MBSL did sometime back 5 years so?

If am not mistaken my number of shares came down due to the capital reduction

Same reverse subdivision as REEF but on the old par value basis (this may be the old companies act book that rainmaker mentions)

MBSL reduced its Stated cap from 1.3 billion to 600 million since they were using the OLD par value method the number of shares came down. Someone having 1,300 shares would have ended up with 600 shares.

45rainmaker & mono - Page 3 Empty Re: rainmaker & mono Wed Mar 13, 2013 5:19 pm

Chinwi


Associate Director - Equity Analytics
Associate Director - Equity Analytics
I think one or two companies did this sometimes ago . They cancelled main holders shares only. Minority dnt get affected. Hence no trouble came from minority.


By the way Rainmaker,

there is nothing called Par Value now . Comp act 2007 changed this concept. It is accepted worldwide now. So reducing par val is a thing in the past.

As there is no par value, share cancelling or reducing the number of shares is not necessary although it is not prohibited. They just can reduce the stated capital without changing the number of shares .

eg. csec / cfvf in 2009



Last edited by Chinwi on Wed Mar 13, 2013 10:58 pm; edited 2 times in total

46rainmaker & mono - Page 3 Empty Re: rainmaker & mono Wed Mar 13, 2013 9:29 pm

Fresher


Moderator
Moderator
I missed a lot? And totally confused.

I was of the view that stated capital or what ever portion of equity is basically an accounting jargon.

NAV = Total assets - Total liabilities, in other words equal to total equity.

This is in case a company liquidates, sells all the assets and pays off the liabilities, what is left belongs to the shareholders. In reality what is recorded on the book will not be what you get. Better to look at tangible NAV in case of companies with intangible assets and even discount timber stocks.

I have never heard of using retained earnings alone for any ratio calculation (maybe my bad if it really exists)

But anyhow, I am of the view, what ever the accounting entries companies do while, doing a capitalization for example is not going to make a difference to the shareholder wealth. In the case of paying dividend, there will be, due to the outflow of cash.

47rainmaker & mono - Page 3 Empty Re: rainmaker & mono Wed Mar 13, 2013 10:42 pm

K.Haputantri

K.Haputantri
Co-Admin
Thanks Rinmaker for your clarification & all who contributed. Its a useful discussion.

48rainmaker & mono - Page 3 Empty Re: rainmaker & mono Wed Mar 13, 2013 10:56 pm

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
Even NAV or Retained earnings may give you wrong signals.
For me , I always look at the cash flow to see where the money has gone. I think they do not keep retained earnings at safe.

BTW, balance sheet and earnings tell you about the past and Cash flow hints you about the future.


49rainmaker & mono - Page 3 Empty Re: rainmaker & mono Thu Mar 14, 2013 2:36 am

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
@Jiggysaurus wrote:
@Gaja wrote:

What MBSL did sometime back 5 years so?

If am not mistaken my number of shares came down due to the capital reduction

Same reverse subdivision as REEF but on the old par value basis (this may be the old companies act book that rainmaker mentions)

MBSL reduced its Stated cap from 1.3 billion to 600 million since they were using the OLD par value method the number of shares came down. Someone having 1,300 shares would have ended up with 600 shares.

Related news
http://www.sundaytimes.lk/040815/ft/16.html
http://www.island.lk/2005/01/09/business10.html

50rainmaker & mono - Page 3 Empty Re: rainmaker & mono Thu Mar 14, 2013 3:27 am

sriranga

sriranga
Co-Admin
May the following link give more ideas (with simple worked examples), If not excuse me for bothering.

https://www.icsaglobal.com/assets/files/pdfs/BusinessPractice_and_IQS_docs/studytexts/financialaccounting2/o_FinAcc_6thEd_StudyText_Chapter10.pdf

http://sharemarket-srilanka.blogspot.co.uk/

51rainmaker & mono - Page 3 Empty Re: rainmaker & mono Thu Mar 14, 2013 7:38 am

glad


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
I think few companies ex. DFCC still uses par value basis!!!!

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